Nervous Aussie CIOs ready to offshore: Satyam

Summary:Australian chief information officers are still somewhat nervous about moving IT services offshore, according to the local boss of Indian outsourcer Satyam, who maintains the delivery model's day has nevertheless arrived. "To what degree is a difficult question to answer, but yes there is a level of nervousness," Satyam's Australia and New Zealand country manager, Deepak Nangia, acknowledged in a recent interview with ZDNet Australia.

Australian chief information officers are still somewhat nervous about moving IT services offshore, according to the local boss of Indian outsourcer Satyam, who maintains the delivery model's day has nevertheless arrived.

"To what degree is a difficult question to answer, but yes there is a level of nervousness," Satyam's Australia and New Zealand country manager, Deepak Nangia, acknowledged in a recent interview with ZDNet Australia.

Satyam specialises in application services outsourcing (for example, Oracle and SAP) and has built a strong customer base in Australia with names like Qantas, Unilever and Coles Myer. The vendor has around 950 consultants servicing the Australian market, with some of those located in Sydney and Melbourne centres and others in their Indian headquarters.

Nangia said his company believed that most of that anxiety on the part of CIOs was due to a lack of awareness of how an offshored solution would actually function.

One answer could be to take a few days out and see how it all works on the ground.

Nangia said many of Satyam's customers that had visited the company's centres overseas had built "a bigger comfort zone" with the concept. And according to the executive a lot of Australian CIOs have paid a visit.

"I would say a very large percentage of the CIOs of Australian organisations have in the last 12-18 months made a number of visits to the offshore locations," he said.

"To be fair, they're not just considering India. They're considering China, they're considering the Philippines, they're considering now even Singapore and Malaysia, which are turning out to be low-cost centres.

Even with a personal tour, Nangia admitted the offshore delivery model might not fit every organisation's needs.

"In certain cases offshoring may not be applicable at all. So it might not be nervousness, it might just be the right decision for them not to go for an offshored solution for their environment," he said.

Mature market
Despite the degree of nervousness still around, Nangia is confident offshoring's day has come, particularly in the application services area which is Satyam's speciality.

"The last year or two years has been when the offshoring aspect has been embraced," he said of Satyam's operations in Australia. "We didn't push the envelope with our customers to look at offshoring, till they were comfortable with us as a service provider in the first place."

A window of opportunity has opened for Satyam and other outsourcers over the last few years as the so-called "big bang" outsourcing contracts of the '90s come up for review.

"When we came into the market, the entire outsourcing market was driven by three or four organisations like CSC, EDS, IBM. And the kind of outsourcing contracts they had were ten-year contracts, and used to encompass everything, from infrastructure to applications," said Nangia.

The executive said a lot of Australian organisations had become more open to talking about multi-vendor outsourcing and offshoring ideas. "We've seen it open up a fair bit, and it's been a very quick road for us," he said, noting Satyam's business had increased locally since it got serious and opened a development centre in Melbourne in 2000.

While most Australian organisations are yet to send significant amounts of IT work offshore, some segments have recently indicated their acceptance of the idea.

For example, a national newspaper reported last week that the National Australia Bank would move 81 jobs to India by April next year in a deal with Accenture. The move reportedly follows similar recent actions by ANZ Bank and Westpac.

Satyam's Asia-Pacific applications support deal with Unilever signed last December contains offshoring elements, with much work to be done from Satyam's Hyderabad, India headquarters.

According to Nangia, offshoring as an aspect of IT project work (as opposed to pure support) primarily became attractive when organisations were looking for skills that were not easily available within their own geography. "And secondly where [staff] turnover is very high," he said.

For example, he said, offshoring a call centre could allow for extended hours of availability, and the ability to allocate reliable and long-serving staff to low-level support work that workers would quickly tire of in a mature employment market such as Australia.

The amount of work that each organisation could send offshore could also vary tremendously according to their individual needs, Nangia said.

"For certain Australian clients, we have done almost 90 percent work offshore and only 10 percent onsite," he said. "And in other cases we've done almost 80 percent here and only 20 percent offshore."

Topics: CXO, India, Travel Tech

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