We need to break free from the traditional outsourcing model

The benefits of offshore outsourcing are now well understood by the large software companies. Almost all the major software companies are rapidly increasing their investments either directly, or through a major outsource vendor. US based I-Vantage Inc. is delivering a unique 'Global InServe' outsourcing model for the software development organizations to set up their base in India. 

Zia Askari from CNS spoke to Amit Maheshwari, CEO and Founder at I-Vantage Inc. about this new outsourcing model and what would it mean to the growing ITES/BPO industry within the country.

What is the essence of 'Global InServe' and how would it benefit the outsourcing or ITES companies?

'Global InServe' outsourcing model breaks the traditional offshore outsource path available to the majority of software development organizations by delivering an additional 20 percent to 30 percent cost advantage. The cost advantage is gained through the direct ownership of the facility, combined with the management service provided by the vendor.

This sets a new benchmark in terms of cost savings. The fact that subsidiary based exports to the US from India doubled from $ 5,54,000 in the year 2001 to $ 1.2 billion in the year 2002 indicates that the tide has changed and more companies are now looking forward to this.

Our service provides a comprehensive platform for the creation and ongoing management of a subsidiary based offshore operation. The facility is fully owned by the parent organization and delivers the crucial competitive edge through cost-reduction, scalability, control, security of intellectual property and quality assurance of the core IT operations.

What is the value proposition you plan to offer for the companies who opt for this model?

In addition to the operational benefits of the low cost of product development, smaller clients have a good chance of becoming attractive acquisition candidates for larger global players who always look to leverage the offshore business model in their specific industry.

With our model, a company can have control over its intellectual property, processes, resources and more importantly a control over costs and all this is not possible with a traditional outsourcing model.

How is this model different from the traditional outsourcing?

In today's scenario global delivery centers in India are becoming means of gaining competitive advantage. As of now Oracle and GE, both globally renowned IT organizations, have more than 2,400 and 5,000 associates in India, respectively. This speaks volumes about the opportunity that we have within India.

Traditionally, when a company wants to set up its offshore operations in India, they usually go for a lease agreement. This might be fine for the short term plans of the company but not good if the company has long term strategy for India. With our model you can own your offshore facility. Also there is no need to pay anything to the third party outsourcers. Usually, these third party outsourcers charge enormous margins of about 100 percent to 150 percent. Typically offshore pricing per source per month comes out to be around $ 3,000 and this is quite huge because if we take out the salary ($ 700) and overhead ($ 700) then the margin is huge and this is why a lot of people are into this business in India.

What has been your experience in working within India?

As of now we have three worldwide clients including ADP. We have worked with ADP's Automobile Dealership Management Software Company at APD Wilco's facility in Hyderabad. They had more than 20,000 customers worldwide and they sought to leverage global resources to control costs of ongoing business activities. Knowing the costs of offshore operations, they searched for a more economical relationship than with outsourcers who operated on 100 percent to 300 percent margins. 

We established their operations in Hyderabad in the fall of 2001 with five professionals, within a period of six months we grew to 70. We hired and trained their employees, and provided an onsite delivery manager and coordinator in the US. All this has helped them save more than $ 2 million so far in their Indian operations. So the Indian experience is good so far.

What is your roadmap for company's Indian operations?

We are a US based organization and we started our operations in the year 2000. We have our development and call center facilities based at Hyderabad and Kolkata in India. We have a work force of 30 professionals globally and we will continue to grow as we move forward and this growth will depend on the number of clients that we acquire.