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									Strategic Marketing for Offshore Developers

December 8, 2005                   Raj Sardesh

                   Positioning Products for Market Success
       Mexico and Offshore IT Services
  Share of Offshore in Total IT Services Pie    Worldwide Offshore IT Services Export
                                                Share by Region, 2003
  Total Global IT                                            Latin       Middle East
  Spend (2005): $640 Bn Offshore,                          America, 2%   & Africa, 2%
                          7.5%                                                   Others, 1%
                                                          China, 7%

                                                     Europe, 8%

                        Non-                                                            India, 72%

             Latin America accounts for less than 2% of global offshore IT
             services while India accounts for 72% Share of total offshore spend

Adopted from IDC, Gartner & Nasscom Estimates
Landscape of Offshore IT Services

                                        Addressing the gap with
                                         India requires very focused
          Range of Services              efforts and commitment.
   Application           Product
  Development          Engineering
                                        Gartner’s 2003 survey of 36
                                         outsourcing companies
    Systems           ERP Services       ranked nearshore
                                         application management as
      BPO              Independent
                                         the most rapidly growing
                          Testing        service opportunity.

  Infrastructure        Consulting
Offshore Development: Customer Requirements

   Cost Savings

   Provider Capability

   Provider Reliability

   Value Proposition
Customer Requirement: Cost Savings

   Onshore/Offshore rates

   Rates based on different categories of resources

   Project-based rates

   Dedicated resources
Customer Requirement: Provider Capability

   Processes – Metrics for customer satisfaction,

   Certifications (SEI CMM, ISO, Six Sigma) of these processes

   Methodologies – vendor defined or standard

   Tools for project management, defect tracking, CRM, etc.

   Business models – corporate structure, customer escalation procedures.

   Infrastructure – facilities/security/backup power, communication
    infrastructure/VPN/security for electronic connectivity, system infrastructure,

   Human Resources – number of technical & call center staff, domain
    specialists, qualifications, ramp-up/attrition rate, policies, admin staff,
    employee confidentiality contracts, etc.
Customer Requirement: Provider Reliability

   Your company profile – history, major engagements

   Experience (services and product engineering) – cost savings for past
    clients, engagement case studies

   Financial health – ownership pattern, investors, accounting practices

   Management commitment to clients

   Geographical location – flight connectivity, any local/regional support by the
    government, languages spoken, etc.

   Educational facilities – access to local talent or any training conducted to
    quickly ramp up resources.

   Customer references—industry, size of the client, duration of the
    engagement, etc.
Addressing Customer Requirements with
Successful Marketing Strategy

   Integrate responses to customer requirements in all marketing deliverables

   Create a unique value proposition for each solution/industry you are targeting

   Focus on your core competencies and partner with other firms to extend your
       Partner with ―offshore‖ firms that are looking for near-shore advantage.

   Create marketing Deliverables with consistent messaging
       Web site
       Collateral
           Corporate brief
           Solutions brief
           White paper
           Success stories

   Increase awareness with Analyst coverage and PR
   Create ongoing marketing campaigns to keep the momentum going
Successful Marketing Strategy to Win Early Accounts
   Find an entry point into new accounts based on your previous successes.
    However, make variation based on the U.S. market, competition, etc.

   U.S. in general is significantly more competitive than Mexico. And another 50%
    for Silicon Valley. Learn from Silicon Valley but initially focus on customers
    outside the valley.

   For every RFP on offshore development, a customer can get multiple bids in

   Recommendation -- Focusing on small to mid-size businesses would yield better
    results in the beginning.

   Recommendation -- QA Services as an entry point
       Testing is often outsourced with less risk than application development or
       The work can be easily segmented.
       Testing does not require the offshore resources to touch the application source code.
       Most companies underinvest in testing.
       Testing engagements can slowly ramp up and can lead to larger engagements.
   Your sales strategy impacts your marketing strategy and deliverables.
Emphasize the Near-Shore Advantages

   Ease of Visa regulations, especially against India.
       Important to have quick and free movement of resources during the initial
        knowledge transfer phase.

   Advantages of NAFTA, for example, for data pertinent to intellectual
    property rights.
       Giga Research’s Stephanie Moore predicts that Mexico and Canada will continue
        to grow since NAFTA helps simplify international agreements.

   Proximity to the U.S. and shorter time difference.

   Lower employee attrition rate (if you do) against Indian companies that
    are facing higher attrition rates (―Attrition will skyrocket in the Indian IT
    Services Arena in 2004.‖ – Stephanie Moore, Giga Research)

   Dispute the myth of 24x7 work day.

   Reduced travel expenses.
Creating your Value Proposition
   Who is your competition? Highlight companies from Mexico (softtek?) and
    India or other countries.

   What services do you offer (BPO or offshore development services)?

   What industry domain expertise do you have?

   Do you have any products that can be combined with your services to
    create unique solutions?

   What is unique about your solution offering that would differentiate yourself
    from your competitors?

   What are the key benefits customers would derive from using your
It is not enough to position yourself as a general purpose
offshore development services provider.
Creating “Value” Proposition
    Value is the trade-off between benefits and costs:

     Value =     Benefits

    Where Value is the worth to customers.
    Benefits are the financial and non-financial advantages that
     customers derive
    Costs are the financial and non-financial expenditure required of
     customers to receive the benefits.

     Customers do not always go for the lowest cost alternative.
     They would rather pay based on “value.”
Creating your Value Proposition

   Position your services offering by articulating
    benefits into three key messages.
       Highlight the features and/or services that allow you to
        offer these benefits

   Aggregate all services positioning to create value-
    based company positioning.
       Example: We are a leading near-shore services vendor
        backed by ten years of experience with SEI CMMI Level V
        offshore capability--for small and mid-size firms in the
        financial services industry—that delivers significant ROI,
        more than 30% cost savings, and results in increased
        customer satisfaction.
   Use company positioning as a               Collateral – is an entry fee to
    lead-in to services positioning.            play!
                                                   Corporate Overview - covering
   Emphasize three key messages                    company background,
    from the services positioning                   services, customers, contacts,
    consistently throughout all                     etc.
    marketing deliverables.                        Product data sheet (if your
                                                    company has products)
                                                   Solution briefs – at least one
   Web Site                                        per specific industry or specific
       Your web site should have                   horizontal solution
        sections along the lines of --
        About Us, Solutions, Industries,           White Papers – at least one
        Customers, Partners, News,                  per specific industry or per
        Contact Us, etc.                            horizontal solution
       Create an English language                 Customer Case Studies for
        Web site. If you have a bilingual           successful referenceable
        Web site, offer an easy way to              implementations
        switch the language on the
        home page.
Analysts and PR
   Periodically brief the analysts at Giga, Gartner, Forrester and
    IDC who follow offshore services. Getting positive analyst
    coverage is important in the long run. They are influential in
    recommending services to customers.

   Speak at pertinent industry events (Svase.org, Churchill Club,
    etc.) that customers attend so that your company’s name is
    better known.

   Hire a PR firm and announce ongoing news, especially,
    customer success stories, partner announcements, etc.

   Plant articles written by professional writers in industry
    publications (both online and offline).
Lead Generation/Marketing Campaigns

   Segment prospective customers by industry, name, opportunity,

   Research the industry, industry trends and best practices,
    potential target customers and their management teams.

   Create smaller online campaigns that are personalized or referral
    based. Use Linkedin (www.linkedin.com) or your network to get
    referrals into new accounts.

   Use a CRM system such as Salesforce.com or SugarCRM to
    keep track of customer contacts and to follow up with customers
    on a regular basis.

   Create a unique value proposition of your offering
    and your company

   Create compelling marketing collateral to generate

   Win early customers with sharp focus.

   Rely on your network for a successful U.S. market

 Established in 2001 in San Francisco/Silicon
 Valley, ProductMilestones is a consulting
 company specializing in product and
 marketing strategy, positioning and strategic
 marketing for emerging and established firms
 in the software arena.
Our Customers
    ProductMilestones: Services Roadmap

   From market assessment to product/services launch

   Strategy combined with Precision Tactics

   Introductions to potential customers and partners.

   Project-based and low cost retainer-based Marketing Advisory

   Positioning Products for Market Success

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