labor arbitrage Archive
Consequences For Customers From Current Services Industry Disruption
On April 26, 2018 In Thought Leadership
The services industry is in disruption, pivoting from highly profitable but mature labor arbitrage factories to a rapidly growing, immature new market based on automation and software-defined market with digital platforms generating value. Most large companies have outsourced numerous IT and business process functions and now depend on the supply chain of services. However,
Indian Service Providers Coming to Grips with Talent Challenges in the Digital World
On August 28, 2017 In Featured, Thought Leadership
India’s service providers are slowly coming to grips with the decline of the arbitrage model and the shift to digital models. The digital era brings the providers three challenges regarding talent. Over the next three to five years they will need 30-40 percent fewer people than they needed for arbitrage-based work. Second, digital talent
The Cognizant Dilemma
On February 22, 2017 In Thought Leadership
A very public debate has been taking place between Cognizant and Elliot Management Corp – the activist investor that bought a $1.4 billion stake in Cognizant a year ago. Effectively, Elliot has actively sought to alter the course Cognizant’s board has taken for dealing with the changing situation in the IT services industry. As
The Infosys Dilemma
On February 17, 2017 In Thought Leadership
Is Infosys moving in the right direction? At the end of 2014, I blogged that Vishal Sikka, who had been on board as CEO and MD only a few months, had made an effective start in reshaping the company’s strategy. In Q1 2015, I blogged about how Infosys was aligning with the digital direction
IT Future Shifts from Labor Arbitrage to Productivity
On February 7, 2017 In Thought Leadership
The labor arbitrage/offshoring model is powerful and relatively simple — compared to investing in productivity for U.S. workers over the past couple of decades. Perhaps your company is like most enterprises in America, having opted for this strategy to achieve cost savings. I believe it’s important to recognize that the arbitrage/offshoring model took companies’
80/20 Stands on Its Head in the Services Industry
On May 18, 2015 In Thought Leadership
The mantra of 80/20 (80 percent offshore, 20 percent onshore) has been the war cry for the services industry for the last 10 years. It has stood for the absolute sweet spot for a services player, particularly in terms of maximum leverage of offshore talent. This has been the most profitable space. Providers that
Lessons from IBM
On May 11, 2015 In Thought Leadership
Have you noticed how few service providers have the ability maintain a market leader role when the market changes to favor new technologies, or new service models? It’s very difficult to make this shift, and I’ve seen very few companies achieve the shift – let alone do it three times. Just one. Wow! If
Price Takes a Beating in the Services World
On April 23, 2015 In Thought Leadership
What I’ve predicted for several years is now happening and the global services industry is experiencing a pricing war. The industry’s core arbitrage marketplace is moving from modest pricing competition to an intense pricing war. Providers’ prices are coming down not by 3 to 5 percent but in some cases by 20 to 30
Why Hasn’t Automation Made Much Progress in Services?
On April 13, 2015 In Thought Leadership
I hear people in the services industry asking why automation hasn’t taken off yet. Actually, as long as I’ve been in the industry since the 1980s, we’ve been working on automation. Back in 1983 we were talking about automating business processes and the elimination of most of the people in the services value chain.
KABOOM! Is an Implosion of the Services Market Coming?
On February 26, 2015 In Thought Leadership
There is rising concern among the Indian service providers that their arbitrage model is about to go through a significant and abrupt change – and not to their benefit. As I look at the various factors driving their concern, I see a set of challenges that will fundamentally reshape the industry and create new
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