Outsourcing: Vivek Chopra of Computer Sciences Corp. (Part 12)

By guest author Tony Scott

The Future of Outsourcing

Tony: Let me throw out some big, relatively open-ended questions to you.  If you look out three or five years from now, what you think the outsourcing business is going to look like? Do you think it is going to be significantly larger worldwide than it is today? And will India still be the dominant center, but with more on-shoring here in the United States or near-shoring in Latin America and Europe? Finally, what’s your overall take on where we are going to be, and why and where do you think CSC will fit into that?

Vivek: Those are all big questions. Within this industry, with what happened over the past decade, we were projecting increases of 25% annually when we were all doing our planning cycles for 2008 and beyond. Then the rug got pulled out from under our feet with the downturn in the economy. I think for many of us, the past year and a half has become a lifetime.

Now, I think people have become a little more realistic about setting expectations. But I fundamentally believe that if customers look at what they need to do strategically, and they start looking at outsourcing from a talent perspective, well, I think good talent around the globe is always going to be scarce to come by. So people will gravitate toward the pools of good talent. It will not necessarily be driven by costs. India will have the largest chunk over the next few years because that is where there is a qualified base of people who can deliver the service.

If China changes the ballgame by doing for outsourcing what it did for manufacturing, all bets are off.  Many people don’t think that can happen, but no one expected China to take the lead in global manufacturing, and now, people are expecting it to become the largest economy in the world by 2050.

If I look at the outsourcing industry over the next three to five years, the market will clearly continue to grow. It will not grow at the same exponential rate of 70%–80% that we saw in last decade; it will be probably 10%, 15%, or 20%.

Also, the outsourcing of infrastructure will continue to grow. There will be a lot more done off-shore as infrastructure generally, and in particular data centers, are being virtualized. There is a leap of faith that customers are beginning to take now, and the idea of moving infrastructure off-shore is beginning to gather momentum.

Applications will continue to be driven by the 80/20 model: There will be some piece that will be done on-site, and there will be some piece you can do off-shore. Labor arbitrage will clearly be something which will be accepted as a norm, but that will not be a driver for customers doing applications or infrastructure work.

Tony: It’s talent driven as opposed to cost driven at that point.

Vivek: Absolutely, and there will be a lot more verticalization; customers are going to start asking for a lot more vertical solutions. They will say: “You’re not just going to give me an application which you are going to develop are you – I want to know what you are going to deliver for me.” There is going to be a lot more that is outcome driven. It’s not going to be simply: “How you can impact my bottom line or top line”; rather, it is going to become all about: “How can you impact my business case?”

Tony: True – you can already see the transition in the world of outsourcing to client companies thinking about achieving outcomes that are value-driven.

Vivek: Then the conversation becomes: “How are you are going to deliver value to me which is significantly different, and how are you going to deliver more for less?”

This segment is part 12 in the series : Outsourcing: Vivek Chopra of Computer Sciences Corp.
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