Here are some thoughts of Sanjiv Gossain, UK managing director of Cognizant,

The role of information technology in a business has changed rapidly in the past five years. Since its conception, the primary goal of the IT department has been to improve efficiency and reduce cost. The emergence of the outsourced IT function, using a low-cost workforce to run low-impact operations, only enforced this view. However, those days are set to come to an end as cost-cutting, while still vital, is no longer enough. According to a recent survey by the Economist Intelligence Unit, 83 percent of chief executives now believe that within three years, IT's predominant purpose will be to enable revenue growth and actively drive business performance.

When the concept of outsourcing first emerged, clearly its real goal was cost-cutting. Imported, low-cost labour on temporary visas was used to supplement existing staff. The second generation corrected some of the limitations of the first, with work sent offshore while regional marketing offices representing the outsourcer were established to provide a degree of local contact and support. Cost-effectiveness immediately improved - through the offshore relocation - but the model was still insufficiently equipped to perform anything beyond basic engagements. In many cases early outsourcing deals failed because work was very poorly defined before being "thrown over the wall". When inadequate results were delivered, the immediate need to revise and resolve meant that any short-term cost savings disappeared.

So the model evolved once more: a stronger focus was again placed on local geographic and industry expertise, but with reducing operational costs still the primary objective. Local offices with project-management capability were set up to enable productive, day-to-day liaison and to resolve previous issues with poorly defined functional and technical specifications. With this model, outsourcing providers could be relied upon more to deliver complex projects that required significant ongoing discussions.

Today we're seeing a fourth-generation model, which puts long-term business impact at its core. Characterised by seamless integration between provider and customer, IT providers taking this approach combine...

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Tags: outsource - offshore - cts - cognizant

Prashanth Rai