TCS prove Offshoring likely to shake up the industry again

Slightly off topic, but no less important for us as consultants and practioners of change. Likely to have big impacts across many domains and adds weight to my predictions last year that Offshoring will be reignited big style:

<b>TCS’s UK government win could reshape the market</b>

Tata Consultancy Services (TCS) has won a contract with the UK government to deliver the IT system for the Child Maintenance and Enforcement Commission’s future maintenance scheme. TCS has been knocking on the door for a couple of years. To date, TCS Public Sector Director Brian Woodford has exuded plenty of confidence and has talked a good talk about TCS’s global contracts, but has had little to show for it in the UK. This win has put TCS on the map, and with TCS in pole position for major local government contracts in Cardiff and Essex (subbing to T-Systems) we may see more fireworks in coming weeks.
Further details of the value and length of the contract and the extent to which offshoring will be involved are yet to emerge. However, this contract follows on from the troubled Child Support Agency (CSA) bespoke software contract delivered by EDS at a cost of £456 million. TCS will be using commercial off the shelf software. The Child Maintenance and Enforcement Commission was set up in November 2008 to run a new statutory child maintenance scheme from 2011 to replace the two schemes currently provided by the CSA.
Recession is reshaping the public sector IT market
TCS’s win is a big surprise, but it is the first example of how the public sector IT market will be reshaped by the recession. The longer the recession goes on, the more the market will be reshaped in favour of suppliers that can deliver low-cost, high-quality services. Providers with a strong offshore/onshore delivery capability are going to be in pole position to benefit.
A wake-up call for established suppliers
Pressure on established suppliers has been growing from potential new entrants, as the UK public sector is now seen as a safe haven for software and IT services (S/ITS) suppliers. So TCS’s win is a wake-up call to suppliers with an installed base. They have ignored the threat TCS poses to them for too long. TCS’s win shows that audacity is no barrier to success. New entrants can win so long as they meet the normal criteria – a sound offer, a keen price and a proven ability to deliver.
This win will encourage other potential entrants to take the public sector market seriously. They will be well advised to study TCS’s win strategy carefully. TCS has worked hard to understand the market, build up contacts, win friends and influence people. Success has not come overnight.
Time to revise conventional market wisdom
It is time to look again at conventional market wisdom. TCS has demonstrated that success does not depend on being able to demonstrate the ability to deliver, in the UK, contracts of the size and complexity of the one on offer. Suppliers don’t have to have a tier-1 client list to win with a tier-1 client.
TCS’s UK public sector contract win list is hardly impressive. It delivers medium-sized housing and finance systems for medium-sized clients. However, its target audience has consistently been at CEO/board level not IT manager level.
Internationally, however, it is a completely different picture. It is delivering some big systems supporting key government functions for these clients and has demonstrated that it can get fully operational systems running quickly. This includes portals delivering line services, VAT, tax and licence systems, corporate services, unemployment and social insurance, curriculum assessment processing and health services.
Its global client list is in a completely different league. TCS’s clients include the government of India, the provincial governments of Andra Pradesh and Gujarat, as well as the Indian National Centre for Ocean Information Systems (for which it delivers the Tsunami Early Warning System), and various states in the US as well as the Saudi Arabian government.
Last but not least, conventional wisdom has it that the UK public sector would not so openly embrace an offshore player with all that it implies for offshoring services, especially at a time when UK jobs are under pressure. Conventional wisdom holds that the UK public sector will offshore so long as it is within a global delivery model mixing onshore, near-shore and offshore delivery. This is, in fact, what TCS offers its clients in both the public and private sector.
It is not a fresh tactic for a new entrant to play the game so aggressively to win a contract, but it is new for a new entrant to be so audacious about its ambitions. With the Tata Group behind it, TCS has the ability to deliver and win more large contracts, reshaping the public sector market along the way.


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