No clear leader in low-cost services delivery model
Significant investments in skills, processes, tools, locations, and infrastructure are yet to produce a clear leader in low-cost global delivery model (GDM), according to a new Forrester report.
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The report titled Low-cost Global Delivery Model assesses providers' progress in adopting a low-cost GDM by grading the top three vendors from each starting point — onshore (Accenture, EDS, and IBM) and offshore (Infosys, TCS, and Wipro) using 60 different low-cost GDM criteria across three broad categories: current offerings, strategy & market presence. The report concludes that despite all six vendors making significant investments in the area, none is fully entrenched in the leader category. Forrester explains that the offshore players need to add more domain expertise and improve account management to better interface with the business buyer, while the onshore players need to fully embrace CMMI and encourage their account teams to more consistently utilize its low-cost GDM capabilities. Traditionally, major providers have touted their global capabilities as a mechanism for serving clients locally wherever the client happened to be. This is in contrast to the low-cost GDM, which relies on using nearshore or offshore facilities to remotely service clients in other geographies. Higher user sophistication and shifting industry economics are forcing IT services vendors to ramp up their low-cost remote delivery capabilities. This is part of a broader shift to a more distributed, process-centric, low-cost global delivery model (GDM). “The grouping of the vendors is an indication that the move to a low-cost GDM is at the beginning of an evolution which will take place over the next three to five years,” said John C. McCarthy, vice president at Forrester Research. “As providers expand into new locations, develop new capabilities and increase GDM services, Forrester feels they will face unique challenges,” he added. According to the report, a growing number of companies have gained significant experience with offshore, and they are "pushing the envelope of existing providers' capabilities. They are looking to deepen their use of offshore by increasing the percentage of the IT budget going offshore; pushing traditional boundaries of what can be done in remote locations; broadening their base of suppliers by forcing onshore vendors to go offshore; and asking for more offshore vertical expertise." Forrester defined GDM as integrating rich domain expertise, broad technical skills, and project management discipline across a network of low-cost locations through consistent and robust processes, tools, and infrastructure to maximise the timely delivery of superior IT and BPO solutions.