‘India must focus on application outsourcing’

Rahul Gupta

Q. What has been the market reaction to the launch of the company's neoQA assurance program?

The global perspective on outsourcing engagements has evolved. Global companies are looking more towards offshore sourcing, rather than more traditional on-shore models. With the shift, additional risk factors need to be addressed and companies are looking to third party advisors to decrease these risks. In a recent Ross Research survey analysis on the value of using third-party sourcing advisors, global companies indicated that using a sourcing advisor enabled them to reduce their risk by over 50 percent.

On the supplier side, firms are looking towards being more than a vendor and want to become a strategic "outsourcing partner". In order to do this they are looking towards third parties to verify performance abilities, delivery on SLAs, pricing models, HR initiatives, etc.

neoQA benefits both the buy and sell side of outsourcing agreements. By measuring core capabilities and delivery functions, suppliers can more clearly demonstrate their strategic partnership abilities and buyers can be assured that they are partnering with the best firm.






Q.How do you plan to take the company's assurance program neoQA further?


The neoQA assurance program is gaining increased awareness and recognition among clients and suppliers in the outsourcing industry. In the past six months we have seen a dramatic increase in the number of clients requesting the neoQA assurance program prior to selecting their final outsourcing partner.

A key reason for this trend is the visibility clients gain into the suppliers' performance ability, infrastructure and other such areas that provides assurance. And because neoQA has turned into a client requested, client-driven assurance model, we are also seeing increased interest among local suppliers as well interest from supplier geographies such as China, Russia, Philippines and Ireland. Third-party verification of supplier delivery capabilities has become an increasingly important criterion, as companies look to source projects and business processes offshore.






Q. How critical is neoQA in the changing business environment?


In the aftermath of recent natural disasters, terrorism and equipment breakdown, businesses have recognized more than ever the need for an organization to be prepared. What has also happened over the past few years is that country options have expanded and other countries in place of India are being considered as great or potentially great outsourcing centers. The expanded options also have varied the level of risks-often one of the key factors in choosing one firm or one country over another.

The effect this has had on Indian and other offshore IT companies' business plans is three-fold: companies will continue to invest in building 'best practices' business continuity plans, they will invest in marketing that plan effectively and they may invest in outside expertise/or audits to perform in-depth reviews of the plan to assist in pointing out improvements.

Clients seek to have that extra "something" from offshore suppliers to set them apart from the other countries and from the other firms and to assure them that their sourcing partners are the best choice for their unique needs. This is where a neutral, third party assurance program like neoQA can provide value.






Q. What is in it for software companies?



In today's business environment, any supplier, be it software domain or back office operations, needs to have the ability to demonstrate results and to provide some type of assurance against offshore sourcing risks. Sourcing engagements coming into India and other outsourcing geographies have graduated from mere initial coding jobs to more diverse areas like data warehousing, call centers, back office, payroll processing etc.

With the increase in engagement size and scope, the risks increase. The necessity for suppliers to clearly demonstrate their strategic partnership abilities is across domains and not merely restricted to software companies.






Q. What is the kind of revenues you are looking from this program?



neoQA is a key capability and intellectual property of neoIT. It is part of the offshoring lifecycle. It is not a driver of revenues for neoIT. Revenues for neoIT are driven by advisory and sourcing management to companies looking to outsource. neoQA is part of every offshore deal for neoIT and has been primarily buyer-driven. While neoQA by itself generates less than 5 percent of neoIT revenues, it is an important factor as to why clients engage neoIT to manage the entire offshoring lifecycle.






Q. Is neoQA certification a good marketing tool?



Gartner recently reported that third party due diligence programs that verify delivery capabilities are critical for the success of outsourcing engagements, especially offshore engagements. This demonstrates the advantage of a third party certification focused on performance ability and deep infrastructure review. neoQA can definitely be a strong marketing tool for suppliers.






Q. How many new suppliers does neoIT predict will be certified by neoQA and what are your plans to create awareness for this?



Our client pipeline leads us to estimate that there is a strong demand for neoQA for IT and BPO suppliers of Tier I and Tier II and specialized niche players. We estimate that another 25 to 50 global suppliers will apply for neoQA certification over the next year and an even greater number of buyers will request neoQA due diligence as part of their offshoring process.






Q. How do you foresee the growth of BPO in India? What would be the role of neoIT in this segment?


Current trends indicate that companies continue to outsource critical non-core projects and processes, and so outsourcing has graduated from mere software projects to include areas like ODC, ASM, BPO, back-office operations, disaster management, data recovery, data security, etc. Project and deal sizes are increasing rapidly and it is not unusual to have deals over $50 million.

neoIT predicts that many, if not most, of these large, long-term projects in IT Outsourcing of applications will be sourced to Indian companies - this huge potential could easily double India's exports, but only if India continues to demonstrate its ability to address traditional and emerging risk factors.

Over the past 12 months, neoIT, with its offshoring experience and unmatched supplier knowledge, has facilitated the sourcing of over $250 million for clients and now foresees the management of $750 million to $ 1 billion of client offshore sourcing deals in the next 12 months. The opportunity for suppliers in India and other major outsourcing geographies lies in their ability to clearly demonstrate their ability to execute these large, long-term contracts.

neoIT's outsourcing assurance and offshore supplier due diligence program, neoQA, is one part of the process that buying organizations are looking at to reduce their offshore sourcing risks and to ensure that the suppliers they partner with consistently deliver high quality and timely results.






Q. Who are your customers in India?



India primarily serves as a supplier base for neoIT and strongly enhances our Global Services Network. neoIT buyers are Global 2000 firms from USA, UK and Australia. neoIT's Global Services Network is a knowledge source of over 5,000 vendors, the majority of these companies are from India, but also include emerging and developed outsourcing hotspots such as China, Russia, Philippines, Singapore, Vietnam, Israel and Ireland.

Over the past two years neoQA has verified delivery assurance for suppliers such as Syntel, HCL-T, VJIL, Hexaware, HPS, ADSI, Netkraft, Infogenie, Eximsoft, Kshema Technologies and other leading outsourcing firms. We continue to see growing interest in the program among local suppliers and other offshore outsourcing supplier geographies such as China, Russia, Philippines, Singapore, Vietnam, Israel, Ireland and Malaysia.






Q. Do you have any channel structure in place?



Yes, neoIT has a strong channel program. neoIT is neutral in its approach to suppliers and advises only buyers and so its channel program includes similar neutral leading players. Some of these channel partners include TPI, Lawson, IndiaTimes, CIOL and SIIA.



One leading partner is TPI, a global sourcing advisory firm. Combining neoIT's offshore sourcing knowledge with TPI's on-shore sourcing experience, we deliver global and offshore sourcing lifecycle management solutions to our clients. One of the key steps in sourcing lifecycle management is supplier due diligence and capabilities assurance, which is delivered through the neoQA program.