Chronological Study Of Operating Models For Global

Published Date: 02 Nov 2017

Abstract

The objective of this thesis is to analyse the factors that create competitive advantage through global delivery of IT services. Research on this thesis consists of a review of IT services market and globally distributed operating models for IT services. A simple framework is created to analyse global delivery models (GDM) used by It services companies. A few companies, including TCS, have pioneered the GDM and hence the framework created is used to analyse TCS ’global delivery model. Finally, recommendations are made, based on this analysis, to enable firms to gain competitive advantage by looking beyond the adoption of global delivery models for IT services.

Introduction

Motivation

Globalisation of companies, market, improvements in global telecommunications, and information technologies have led to companies utilising globally distributed teams of delivery of software service in an effort to leverage top expertise globally, maximise cost savings, and to provide maximum satisfaction to all stakeholders in the project.

Globalisation, along with rapid advances in technologies, challenges the paradigms of what, how, and where IT services are delivered and consumed. The emergence of low-cost off shoring of IT services to cheaper locations, such as countries in Asia, has created a significant and irreversible impact on the entire IT services landscape. The global delivery model (GDM) helps IT services companies to deliver value to its customers. Yet, given the scenario that all the top IT services firms are maturing in their offerings, how would they remain competitive in the next five to ten years? What do they need to do beyond GDM to retain, or gain, the competitive advantage?

Thesis Purpose and Structure

This thesis studies the global delivery model for IT services and its markets, defines evaluation criteria for global delivery of Information Technology (IT) services, and applies those criteria to evaluate TCS, a leading global IT services company. Based on research done in this thesis work, recommendations are developed for IT services companies to remain competitive in the next five to ten years.

Chapter 2 focuses on the chronological study of operating models or global IT services, based on geographical distribution. Sector wise, as well as region wise, analysis of the world IT services industry is done in this chapter.

A simple framework is created in Chapter 3 to critically analyse the IT service ecosystem, and the various inputs to the value chain, to ensure that the GDM s working. This chapter maps the value-flow among with various stakeholders in the global IT services company, and the relationships between them. The framework used is based on many system design and management skills that the author learned while participating in the System Operations Management (SOM) programme at the London School of Business and Finance. The framework was approached from a holistic viewpoint by identifying the key elements within the system "Global delivery model for IT services", and defining the important relationships between those elements.

TCS has been evaluated as a top leader in Global Delivery of IT Services in the Magic Quadrant for Application Outsourcing Service 2012, developed by Gartner Research (2012). In Chapter 4, TCS’ GDM is evaluated using the framework developed in this thesis for analysing competitiveness of global delivery model. Here the GDM adopted by TCS in the last few years, along with the results of the execution of these strategies, are analysed.

In Chapter 5, various recommendations are provided to improve GDM for IT services based on observations from the case study and research done as part of this thesis work. This thesis concludes that the GDM is fine, as of now, but for companies to grow and remain profitable, while adding value for the customers, they need to adopt holistic, global and systematic approaches to the design and delivery of IT services.

Literature Review - Chronological Study of Operating Models for Global IT Services

Introduction

Globalisation and technological advancement, over the past few years, has created challenges and opportunities for companies to rethink their business strategies for IT services delivery in order to compete in the flat world. Erran Carmel explains that over the past couple of decades there emerged two key changes in the way software was developed. The first change was the spread of software development activities from industrialised nations to developing nations. The second was the transition from the traditional, centralised form of software development to globally distributed software development with teams working on the same project across geographies, time zones, and cultures.

This chapter will present the historical overview of the evolution of operational models in IT services based on geographic locations. The evolution of operating models, driving factors, challenges, state of IT services market, and the location preferences in the delivery of Global IT services are reviewed in this chapter.

Evolution of operating models for global IT services

Over the years, new operating models for IT services evolved with the development of new software technologies and due to the impact of globalisation. According to Cusumano, "because of the potential for rapid change in the marketplace, software companies must combine extraordinary levels of structure with flexibility. Companies must pay constant attention to strategies and business models as well as continuously evolving their technical skills and core technologies". Figure 1, shows the changes in operational imperatives, business disciplines, and sourcing actions over various time periods. These changes had an impact on the evolution of IT services operating models.