Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 5)

Sramana Mitra: This is for outsourced product development projects, correct?

Roop Singh: I will give you an example. A large telecom company wanted to launch a certain service on the smartphone. They wanted us to do the development for them. We worked with them, we did the development, and we did not charge them anything upfront. Each time they sold a unit of that work and a consumer bought it, we got paid. It is based on a transaction fee.

SM: Basically on this one you did a royalty-based model.

RS: It was a royalty-based model and a gain share model. Every time they gained, we also gained.

SM: So, you are becoming more of a product company, where somebody else’s sales channel is marketing the product that you are part of the product development process of. Your business model is shifting more towards products.

RS: It is developing more towards a productized solution. Today we do about 8% to 10% of our business in that model. That will increase. As organizations want to get into that model with service-based companies, they also need to learn how to operate in that model. Moving to the new outcome-based model also requires a certain governance and discipline that the organization needs to put in so that it is successful from both points of view.

SM: I think this is a healthy evolution in your business model.

RS: To a certain extent, the outcome is up to the effort you and the customer put in. You are both successful at the same time.

SM: Here is an offer that is not entirely based on the body you put on the project. It has certain market dynamics to it too that give you better scale.

RS: It is non-linear.

SM: And I think from a business value point of view, businesses that have that non-linear model have a lot better market cap.

RS: That is correct. In the traditional model, it was the number of people you had times the number of people you placed. You want to get away from that business model.

This segment is part 5 in the series : Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services
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