Tuesday, April 9, 2013

50 percent of Fortune 500 to have IT centres in India by 2015, Study


At least 50% of the Fortune 500 companies will have their inhouse IT/ITeS centres in India by 2015, according to a study by globalization advisory firm Zinnov. The study finds that India is already home to about 200 wholly owned IT/ITeS centres of MNCs, making it the most preferred offshore destination compared to 120 other offshoring locations across the globe. 

The study noted that there has been a resurgence over the last two years, with about 10 new IT/ITeS centres of large MNCs getting established in India in 2011 and 2012. Companies from US continue to lead in this, followed by European majors. Amongst the Indian cities, Bangalore garnered the lion's share in terms of new centre setups. 
Banking and financial services companies leverage India the most for their IT and ITeS operations and there are close to about 45 large BFSI MNC centres in India as of 2012. This is an increase of about 10% from 2010. Healthcare and life sciences is emerging as a large category amongst the MNC centres that deliver IT and ITeS services. Large healthcare / life sciences companies like Royal DSM and Sigma Aldrich have recently opened their shared service centres with intentions to deliver IT services during the course of time. Some of the existing players like Novartis and Cerner have been growing their capability from India. 

Some of the large corporations, traditionally known for outsourcing multi-year, multi-million dollar contracts are also setting up their centres in India. Allstate recently set up its own centre in Bangalore and so did Wal-Mart, British Telecom, FICO, and State Street. 

Sundararaman Viswanathan, manager - consulting, Zinnov, said, "Two primary reasons for the uptick in insourcing through the MNC centres are (1) The CIOs are refurbishing their entire IT with modern IT and hence want to do it themselves, (2) The CIOs want to re-imagine some of the legacy business IT systems which they had historically outsourced so that the legacy systems can regain their competitive edge." 

"It is interesting to note that the reason for setting up new centres is far more strategic in nature than the tactical reasons of cost arbitrage and scalability," he added. 

As these centres are re-imagining their functions and working towards delivering high end, value added services, they are undertaking large portfolio rationalization initiatives. This will result in them franchising significant portions of the work to the service providers in India. And the opportunity arising out of portfolio rationalization in these MNC centres is expected to be $1 billion for the Indian service providers. 

On the other hand, the study finds that the centres that have been operational for over five years now are undergoing phenomenal transformation as well. There are three key trends amongst the well-established ones: The centres are actively engaged in the CIO strategy of refurbishing the legacy systems with modern IT (social, mobility, analytics and cloud); 
Leaders in these centres are taking on more of global roles, which enables them to become a strategic and permanent fixture in the overall IT/ITeS strategy; MNC centres are increasingly moving away from the traditional scalable model - where they used to provide flex capacity to the parent - to a platform model where the centres help the parent in expanding the business horizons.

No comments:

Post a Comment