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Friday, September 07, 2007

Farmed out sourcing or Farmed Outsourcing ?

I had this dilemma while titling this post. Should I call it “farmed out sourcing” or “farmed outsourcing?”

I was reading this article in Business Week that raved over a new model of outsourcing adopted by Anantara Solutions of Bangalore. To battle the rising wage costs / attrition / shrinking numbers of employable engineering talent in India, Anantara has adopted a truly global model of breaking up and farming out pieces of work to any corner in the world that has the requisite supply of qualified talent at affordable economics – that once India had. Even as it just has 40 employees on its rolls, it has an ecosystem of 25 other companies including Russia, China or Singapore, with a total of 2,500 employees that are specialists in everything from Java coding to software testing. Resultant cost savings are huge in this break up, farm out, re-integrate and deliver model. Rather than having huge fixed costs, like TCS, Infosys, and Wipro, Anantara pays for value received--and billed to clients. That is incredible leverage.

This trend of farming out sourcing, is indeed the kind of innovation that would sustain the fortunes of India’s IT vendors in the long term. This may partly compensate for their own inability to develop deep domain expertise in client businesses (to take on global majors IBM, Accenture and EDS that have begun their dance on home turf) besides near absent investments in its own R&D (that explains the fat margins) to develop patented innovations in on-demand product suites that delight many an existing and potential client spectrum.

I like the BW expression “disrupting the disruptors” ! It also means importing competition to India’s overhyped bulk of downright mediocre IT talent that got away with fatter pay packets just because of excessive demand. Indian workforce needs a few hits like this badly, just to regain the semblance of modesty that they were once famous for, but long forgotten.

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