An article at Global Services Magazines focuses on Tier 2 Offshore providers, suggests that contrary to the prevalent notion that the lower rungs of the offshore ladder settle for the crumbs of the Offshore business left by the Tier1 players at lower rates and predominantly application maintenance work isnt really the case. In fact there is a strong play ground for them but they need to get a few points in place.

Excerpts from the article:
Ever so often, especially when reports of cost escalations in India surface (as they did recently with Apple's decision to back away from their plans to grow their presence in India), the talk turns to its impact on - and the consequent demise of - the Tier 2 providers.

Why? Because there is a misguided assumption that at lower rungs of the offshore ladder, providers are playing for cut-rate applications maintenance work, and the "big boys" get all the large deals, unsolicited, and have top talent lining up to work.

No one makes this assumption more than the employees of the Tier 2 firms themselves.

We disagree. The Tier 2 offshore IT service providers have a lot going for them, beyond their ability to provide lower labor rates.

Market conditions. The median deal sizes are getting smaller (a trend likely to continue into the near future), and enterprises are beginning to approach service firms for specialized skills.

Customer focus. Tier 2 providers are more agile, flexible and adaptable to different client environments, and give enterprises a greater level of control over their offshore initiative.

Our advice to the Tier 2 service providers would be to focus on better managing the sales processes and aligning it with the client's sourcing process in order to begin closing more deals. Organizational changes and mature marketing capabilities are sure to increase deal flow. To close these deals, Tier 2 providers will have to get better at structuring deals, especially in multiprovider environments, and work with sourcing consultants who may be involved in influencing deals and managing the RFP process.

Source: 1

Prashanth Rai