Outsourcing: Alexei Miller, Executive Vice President Of DataArt (Part 9)

Sramana Mitra: I think part of this trend is also because outsourcing as an industry has come from very low-end, commoditized work. You know, Y2K is where it all started, remember?

Alexei Miller: Of course, I remember! It is so big now, and what people talk most of the time are the two polar ends of our outsourcing work. You are correct, there has been a lot of talk about this, and a major reason outsourcing exists is because of this low-end work. It still represents a vast portion of outsourcing work.

SM: That is the part where the multiple supply chain approach is irrelevant because low-end work is something that commodity workforces can deliver on.

AM: Yes! But if you look at industry as a whole, there are also stories of the high-end work being done by the premium vendors, the Accentures, of the world. Then there are consulting companies that take a more holistic approach. Accenture today has been commoditized to a large degree, but what I mentioned is still the image of Accenture that many people have in their heads; let’s put it that way. What is happening is that those two poles of the outsourcing spectrum are fairly well defined. You and I, and many people in the industry, more or less understand what they are talking about when they talk about those kinds of work. But there is this vast gray space in between where interesting, viable work is done for clients, maybe not global, multinational clients, but the medium-sized market to which I intend to come back again. There, work is defined both mentally and in terms of processes.

That is where the next evolution of outsourcing is going to be. That is the area where it is not boring. You know, low-value work is to a large degree boring, the sums of money that people are spending are not boring. High-end work as defined by Accenture is in my book boring, but this mid-market is definitely not.

SM: Well, I don’t think high-end work is boring, but I think you are right that the specialized work in the mid-market is interesting, and the lower-end work is boring. I don’t think the higher-end work is boring at all.

AM: What I mean by boring is that what they compete on is that in that market segment it is not based on the subject and substance of the work. It is a marketing and branding exercise; from the technologist’s standpoint, a lot of the work is boring. People choose between Accenture and IBM global services more often based on branding decisions, the board of director’s affiliations, and things of that nature than on anything else. It is a selection mechanism and survival mechanism that could be happening anywhere else; in a way, it has very little to do with the actual substance of the work being done. It is boring in that sense. It is boring because the substance of work has been flushed out of the conversation. The old saying goes that no one ever gets fired for hiring IBM, and it is true today.

SM: Got it, very good. Is there anything else you want to discuss? I think I got a good picture of your business as well as your perspective of the industry. Is there anything I missed asking you?

AM: I could talk about the types of clients we serving particularly in the mid-market and why industry expertise is valuable for many hours, but I don’t want to bore you too much with that. In terms of the trends discussion, I truly think this is the sector that is overlooked both by vendors and to a large degree by analysts who keep discussing trends that are not relevant to that industry, so it is both a challenge to us and an opportunity. An opportunity in the sense that there is a game for which we can create rules ourselves; it is where you can be creative in explaining things.

SM: Yes, it is also an opportunity. There are various types of specialization, you have found your niche and you have developed specialization in a certain set of domains and verticals. There are other companies, younger, smaller outsourcing companies that could create specializations in other domains that are following the same strategy to cater to SMEs and to specific verticals and domains.

AM: Absolutely. It is where you have a reasonable chance to both educate your client and learn from your client at the same time. This is an opportunity that more often than not, you don’t get with very large corporations where what they do is defined by what Gartner says in yet another report. The rules of the game are far less defined in this sector, and that is what makes it very exciting!

SM: Excellent! So, let’s keep in touch.

AM: Thanks very much, Sramana. It has been a pleasure talking with you.

This segment is part 9 in the series : Outsourcing: Alexei Miller, Executive Vice President Of DataArt
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