GS100: 2011 Global Services Compendium
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Some effects of the 2008 recession are still lingering. With the playing field left more difficult for providers through an empty deal pipeline, increased expectations, clients’ reluctance for fresh investments and their ‘no compromise on quality’ mantra, there is much the industry needs to do before it can get back on its feet.

In such a scenario, the formula for recovery is old-fashioned- hold on tight to your existing customers, over-deliver on your value proposition, and be open to looking at new engagement models.

Market Sweet-spots

With most big companies on a spending lockdown and several small companies (worth less than $100 million) shrinking and even going under during the recession, OPDs (Outsourced
Product Developers) are looking to the midsized market ($25-500 million range) for business. “The midsized market is extremely compelling to us because this is where some of the most exciting and current technology development (e.g., unified communications) is occurring. So we intend to continue taking advantage of opportunities with larger ISVs while expanding our footprint to include the mid- market." Jim Walsh, Chief Technology Officer, GlobalLogic had told Global Services (Tracking the OPD Recovery, Global Services Media, December 22, 2010).

Large ISVs (Independent Software Vendors) also present an opportunity. "Large ISVs still represent excellent growth opportunities as they are driving innovation across a number of areas, such as Cloud enablement, SaaS (Software as a Service), Product Lifecycle Management, etc.” Walsh said. Software companies moving to cloud computing and SaaS will have significantly larger opportunities, Karthik Ananth, Director-Market Expansion, Zinnov Management Consulting had said (Tracking the OPD Recovery, Global Services Media, December 22, 2010).

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Besides, OPDs are looking to exploit the opportunities provided by companies wanting to refresh their product lines. "Companies wanting to grow in newer markets want to revitalize their product lines so that they can be rapidly deployed and configured at a lower price point in the newer areas. Companies are looking at revenue generation activities, revitalizing their product lines and broadening their markets by leveraging new technologies." 

The new pricing models (outcome based pricing, revenue share pricing and risk reward pricing) offered by vendors and a higher propensity to leverage them as an antidote to the recession have added to the attractiveness of partnerships. Companies are now looking to leverage the risk-reward partnership model, where the vendors are willing to absorb a certain amount of business
model risk, across the lifecycle of products.

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 GS100: 2011 Global Services Compendium
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