Outsourcing: Joe Lawler, Chairman, President And CEO Of ModusLink (Part 3)

Sramana Mitra: I have two questions about the market and its size: What does the rest of the market look like? Who are the players? If it is a $25 billion market, you are $1 billion.

Joe Lawler: Well, the biggest chunk is those that are doing these packaging or returns management or fulfillment services in-house. We have reported that Sony is a new customer with us, and we are one of the first outside suppliers Sony has ever used. They have always done their supply chain activities in their own operations. They began by outsourcing select packaging to us. The in-house piece would be a big part of it. We estimate that this is probably still about 70 to 75 percent of the overall market. Then there are the contract manufacturers like the ones you just mentioned. They would represent somewhere in the 10 to 12 percent range, and there are the folks who look just like us who would make up the remaining 10, 12, or 14 percent. >>>

Outsourcing: Joe Lawler, Chairman, President And CEO Of ModusLink (Part 2)

Sramana Mitra: I see. So, the Flextronics and the Foxconns are doing the hardware part and they are sending it to you. You are doing the software and the packaging, I suppose, the outside packaging that is localized, and then you are shipping it to the retailers or the distributors?

Joe Lawler: To be precise, Flex and Foxconn and all the others that are located over there, do do a lot of this packaging in the regions themselves. Sometimes that is absolutely economical, but the point is that forecasts are never 100% right. Oftentimes you wouldn’t postpone 100% of a particular product. You might postpone 20%, 30% or 40% of that product. The model that we take to the OEM basically says, we can do 100% of the packaging region. Often times that does make sense, but sometimes it is to take the peaks and the valleys and really try to level out your demand requirements in the region as opposed to try and anticipate months before the demand really hits. >>>

Outsourcing: Joe Lawler, Chairman, President And CEO Of ModusLink (Part 1)

By Sramana Mitra and guest author Aditya Modi

About Joseph C. Lawler
Joe Lawler is ModusLink Global Solutions’ chairman, president and CEO, with executive leadership responsibility for the vision, strategic direction, and performance of ModusLink Global Solutions and its subsidiaries. As CEO, Lawler oversees cross-company operations, financial management, and strategy implementation.

Prior to joining the company in August 2004, Lawler was executive vice-president at RR Donnelley (RRD), an $8 billion global printer with 30,000 employees. At RRD, he was responsible for seven business units as well as the corporation’s government affairs and corporate marketing efforts. During his 10 years with the company, Lawler succeeded in diversifying RRD’s business portfolio and driving growth through his integrated solutions approach. He was also known for his work designing RRD’s executive talent committee, global leadership team, and officer development program. >>>

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. >>>

Outsourcing: Alexei Miller, Executive Vice President Of DataArt (Part 8)

Sramana Mitra: There is another trend I’m tracking that I would like your comments on. There is this notion of multiple supply chains developing in the software outsourcing world among large enterprises, large banks in your case, or large medical insurance companies, and so on. Clients are working with their primary outsourcing partners, wherever they are, like the tier 1 suppliers. Then for specialized expertise these tier 1 suppliers are bringing in the tier 2, tier 3, more mid-market outsourcing vendors for specialized expertise. Is that something that you have seen, or have you been brought into clients by other tier 1 outsourcing vendors? >>>

Outsourcing: Alexei Miller, Executive Vice President Of DataArt (Part 7)

Sramana Mitra: I have a couple of follow-up questions to what you said. What other companies do you see in deals? When you are competing for a particular deal, what kind of competitors are you seeing? >>>

Outsourcing: Alexei Miller, Executive Vice President Of DataArt (Part 6)

Sramana Mitra: That is the most competitive part in every region. We are seeing getting that talent is the most competitive part of the value chain. How do you compete in that space? >>>

TCS, Infosys Broadening Geographic Reach

According to a market report released by the Everest Group, the global outsourcing market grew at a compounded rate of 6% from 2008 to 2010. IT outsourcing (ITO) transaction volumes grew at an annualized rate of 5% during the period, while business process outsourcing (BPO) transactions increased 12% during the same period. The market recovery was led by the banking, financial services, and insurance sectors and by North America.

The report also discussed major delivery trends and noted that Asia continued to lead offshore activity with 39 new delivery centers set up in India last year. Eastern European cities saw 32 new centers, followed by 27 in Latin America, 25 in the Philippines, 16 in China, and six in Africa. The trend seems set to continue through this year with leading Indian IT players setting up new centers in Asia and expanding hiring in emerging regions. All this is consistent with our forecasts in the Top 10 Outsourcing Trends post that the outsourcing destinations will broaden greatly this decade.

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