In the IT services space, reducing growth rates and increasing pricing pressures are making it difficult for investors to realize the targeted IRR. While there is still considerable steam left on demand side growth, it is bottom line and long term business viability that are causes for concern. In a new world, where all IT companies have access to low cost talent pool and increased commoditization of pure play offshore offering is hitting bottom lines, where do leadership look for competitive advantage. Here is the number of strategic and operational questions company leadership is asking:
- What are my revenue multipliers; Is it high end IT services offering, product or semi-product space, transaction based services, Infrastructure automation, SAAS or cloud computing and how should I build it with minimal investments.
- Do I have some hidden capabilities that I built as a service provider and now can be repackaged and sold as a high end service offering?
- How can I rapidly reduce cost in order to counter constant price reductions? How can I distinguish my more productive, less productive and counterproductive assets and how can I rationalize them?
- Do I know which projects are making money for me and which ones are not?
- Am I ready for revenue or margin shocks? Do I have sufficient variability in my cost structure to align myself with the rapidly changing business environment?
Over the next few years, executives in IT organization will have to remain focused on improving bottom-line, reducing operational costs while investing in innovations that hold out the promise of top-line growth. They must do all this while keeping an eye on a changing client expectations and rising tide of low-cost options.
Orcapod can provide strategic and operational support to its client in following areas to meet commoditization challenges and unrelenting cost reduction goals.
Service Portfolio: Building services portfolio and constructing client centric service offering by leveraging existing and low hanging capabilities.
Service Offering Rationalization: decoupling revenue and headcount correlation, developing product or semi-products strategy.
Strengthening Service Offering: Transaction Based Service, Infrastructure Automation, SAAS, Cloud Computing, Products & Semi Products.
Demand Driven Talent Acquisition: To build strategies that goes beyond on-demand hiring. Develop cost efficient channels, tools and processes for aligning talent supply chain to business demand.
Value Driven Talent On-boarding: To develop data driven approach to shorten supply chains for fast response and lower talent inventory loss. Develop tools, rearrange HR policies and build methodologies for planned on-boarding, productive utilization of benched resources and faster staffing.
Vendor Development for Cost Reduction: Develop vendors and alliances for faster turnaround and reduced cost of operations. Build an approach for profitable outsourcing of non-core activities.
Activity Based Service Costing: Data driven analysis of service cost for ensuring accurate cost allocation, right pricing and improved competitiveness.
Revenue & Margin Shock Absorbers: Planned approach for converting your capital expenses to operational expense; leading to flexibility in cost structures and better preparation to deal with revenue variability.
Optimizing Investment in Talent Retention: Structured and data driven analysis of various layers of organization hierarchy to distinguish between value adding and value eroding layers. This is to ensure that organization investments are going at right places.
Building Tools, Methodology & Processes for Delivery Excellence: To develop intellectual property around proprietary tools, methodologies and process helping in much needed differentiation and improved certainty.
Cost Optimization & Asset Sweating: Benchmarking and finding opportunities of cost optimization across cost heads and strategies to improve asset sweating. Implementing process improvement initiatives like lean management.
Pricing Models: Building innovative pricing strategy for existing and new offerings.