Global Services Blog

a.    
Budgets will continue to be tight.

b.    
Discretionary spend will be minimal, with approvals
requiring rigorous ROI explanations.  “The majority of investments will need positive ROI within
fiscal year and as a result lead times and planning cycles will be short”,  said Applied Materials Deputy CIO, Jay
Kerley.

c.    
Most budgets will be approved on rolling month or
quarter basis

d.    
Most companies SG&A budgets will be flat or down

e.    
Systems integration led by standardization and
migration to common global processes will lead growth. Simplify is the new buzzword.

f.     
Expect to see greater recovery from the financial
services, healthcare and hi-tech sector

g.    
Applied Materials Jay Kerley, adds that “Cloud
computing offerings and Software as a Service offerings will make sizeable market
share gains putting pressure on traditional service offerings”. We are
definitely seeing SaaS make deep inroads while Cloud is often a buzz offering
from many.

2.    
M&A continue but yield little benefits

a.    
Small tuck in acquisitions focused on domain knowledge
continue

b.    
New entrants such as Dell and Xerox impact on the
market will be too early to judge

c.    
Gap between Tier 1 and Tier 2 continues to widen.
Cognizant solidly a Tier 1 player.

d.    
Some niche Tier 2 players will continue to prosper but
focus is key to success

3.    
Pricing expected to be down or flat in spite of many
upward pressures

a.    
Expect pricing pressure to continue

b.    
Pricing will be flat to slightly down compared to 2009
pricing

c.    
Weak exchange rate and weakness of US dollar will put
increased pressure on suppliers

d.    
Increasing trend to move away from staff augmentation/T&M towards
output-based pricing, managed services, etc

4.    
Hiring & Utilization will strengthen

a.    
Expect to see growth in new graduate hiring in
emerging locations but will be mute as suppliers focus on managing bench

b.    
Better firms operate with utilization in the high 70s

c.    
Utilization trends downwards as more new hiring ensues

5.    
Wages will rise creating increased pressure on margins

a.    
Inflation is rising and so expect wages to rise 8-10%
in India and many other Asia Pacific locations, while USA and Western Europe
will see much smaller raises

6.    
Risk Management important to continued growth of
industry

a.    
Greater attention to geographic portfolio

b.    
Great attention to monitoring of risk and compliance
related to supplier base

7.    
Rising Geographies take market share away from
traditional locations but pie growing

a.    
New destinations continue to take a share of an
expanding pie

b.    
China losing some steam while Central and South
America surging

c.    
Buyers will increasingly utilize existing supplier's Global Delivery
Models to provide time zone coverage and realize true 24×7x365 support

d.    
Offshore players will continue to expand and/or setup operations in new
geographies