How can client Short-list the right Outsourcing IT service provider?

Large IT services firm try to offer all types of services to every other client in the market. Most often one in the system realizes that what the big IT services firms are selling to client is really their internal complexities rather than what the client really wants. In good times, clients are willing to tolerate all this complexities and buy services/their internal complexities from large IT service firm. There are few reasons for it:

1. De-risking service delivery by the brand name of the services firm (large IT services firm), rather than their ability to deliver flawlessly.
2. Clients often convince their internal stakeholders by saying that the are paying premium for the brand accretive outsourcing. For example when you are outsourcing to Cap Gemini by paying them premium rates that makes big news in media as the perception built among the stakeholders in the market is that the client is spending on preparing for "high performance" business
3. You must've heard the famous saying, "No one got fired for hiring IBM for service delivery". Large IT services company often have good relationships with boards and senior stakeholders that it affords a middle manager facilitating the decision on the large IT Services vendor easy. As you know the middle manager is just aiding the senior client leadership team to make a safe choice :-)...


You'll often note from above that in a thriving market client is willing to pay premium for the "Value" rationale and buy the complexity of large IT services firm. In difficult times that may not be the case, client is wanting to buy specific services that are simple to manage and enables the client businesses to be run without much complexity. Imagine in this situation if we still try and sell complexity, value and premium service to client!

It is no surprise to see the quarterly results of the Indian Pure play IT services firm continuing to keep their y-o-y revenue growth flat though there are lot of clients who are cutting down agressively on discretiionary IT spends.

Having understood the problem scope, what characteristics should the client look for while selecting the right IT Service provider:

1. Simple service offering.
2. Willing to be flexible (comercially and operationally) to suit client service demands.
3. Demanding less if not zero upfront investments from client in terms of transition cost, setup cost, etc.
4. Ability to pass on lot of cost saving back to client through various levers at the disposal of the IT Service provider.
5. Providing the required value in service and not overplay and charge premium for even the basic client service requirement.
6. Understand clients position in market and engage in a mutually beneficial relationship, rahter than trying to protect your interests alone in an already difficult market. Some of the cases here are that some IT services firm go an extra mile to protect themselves from failure points (on SLA, paymet terms, etc.) and try and inpose a very tight legal T&C.
7. Last but not least, be willing to make investment for the client especially in areas where you dont have a strength. This will help you in more than 1 ways, help you build/strengthen your own service offering at a marginal cost while at the same time provide the basic service to client.

I'm sure client would have access to the competitor analysis for Q1'09 for Tier 1 players and Indian Pure plays from their TPI's. ofcourse, they can gain the above insight with some difficulty from the TPI's/analyst reports.

Now compare the above with the leadership position of the IT firms mentioned in the earlier article? What are your views on who is best positioned to emerge out of the current scenario competitive and well-positioned to serve long term in IT Services outsourcing market?