Large Enterprises Turn to Smaller Outsourcing Providers to Decrease Risk

Outsourcing major business processes to major providers, especially offshore outsourcing companies like Wipro and Mahindra Satyam, has been a common fix for decreasing IT budgets in a struggling economy. As these providers support more and more Fortune 1000 and Global 500 giants, many of who are direct competitors, the issue of overuse, and consequently, security, come into play. While working with a more experienced and renowned company may seem more safe, companies like Credit Suisse, who are dealing with very sensitive, private client information are turning to smaller, “less risky” providers to work on their projects.

Initiatives such as risk mitigation and working with niche suppliers is a part of Credit Suisse’s multi-year IT transformation, aimed at creating centers of excellence across India, China, US and Singapore. These centers will specialize in different set of capabilities in the banking domain, such as efficiency, productivity and support. Credit Suisse has been outsourcing its software application maintenance and development projects to Wipro and Cognizant for a few years, but from 2009 forward will work with almost eight smaller, niche firms, such as Headstrong, as the company seeks to mitigate risks associated with two large suppliers. The bank was also reevaluating their contract with HP in the middle of 2009 and was potentially looking to sign a contract with another company for managing their servers and desktops.

Divyesh Vithlani, managing director and chief information officer of Credit Suisse Asia Pacific said, “As part of our second phase of outsourcing, we plan to outsource almost 40 percent of niche projects to around six to eight smaller vendors,” he said. Some of the niche projects would include delivering solutions based on the banking software T24 offered by Temenos, apart from other specific applications. “We want redundancy and do not want to concentrate our risks,” he added.

So what does this mean? For reps at smaller outsourcing companies, this could be a huge opportunity to displace the outsourcing giants that continue to shadow over potential deals with big-time Fortune 1000 prospects. With this competitive insight, you could have a new value proposition to allow you to break into these accounts.  How will you make sure that enterprise IT budgets, like Credit Suisse’s will be spent on your company’s services? It’s all about the competition: these companies compete with each other just as much as you’re constantly looking for ways to gain the upper hand on your competitors. As soon as you mention that one of their competitors has taken action towards solutions like yours, their ears will be WIDE open.

For more current technology initiatives and free technology sales leads in the Fortune 1000 and Global 500, check out our Technology Business Drivers document.

- Carolyn Sebasky
carolyn . sebasky@salesquest.com
978.749.9999 ext. 107