Why are outsourcing buyers turning to Indian companies as their suppliers? Ravi Ravisankar, chief executive officer of I-Flex Solutions Ltd, a software development company specializing in the commercial banking industry based in Bombay and Banagalore, says the reasons have changed over time.
The original reason that American and European companies considered outsourcing to Indian programmers was reduced cost. The Indians were able to deliver high quality software at deeply discounted prices. And since India has an abundance of trained talent, compared to the scarcity of seasoned programmers in the U.S., Indian outsourcers were able to marshal their forces faster and deliver earlier than stateside software companies.
Today, speed is the more important magnet. The Internet is making information technology a crucial component of any business. For companies like Amazon.com, it is the most important piece. Ravisankar says time to market is now a competitive issue. “Companies ask us, ‘How fast can you develop the software?’ Timing is becoming much more important than the cost of development,” reports the CEO. He points out the cost of a delay can add up to more than price of the entire project.
Indians are also setting the standard for quality in the software engineering process. Carnegie Mellon University and the U.S. Department of Defense created the Capability Maturity Model (CMM), a model to monitor quality in software development
At the Top of the Quality Listing
The highest CMM score a company can receive is five. Currently over 4,000 organizations have been assessed using this model. Ravisankar says only 20 companies have reached level 5. Ten of those are Indian firms; that list including I-Flex Solutions.
Now buyers have a new motivation to select Indian software developers. “Buyers can get low cost, rapid turnaround and high quality development. That’s a huge motivation,” says Ravisankar.
The CEO points out the types of outsourcing assignments Indian companies are receiving have changed over time, too. In the early days the buyers typically did not outsource their business requirement definitions or the interfaces to end users. Instead, in-house programmers handled these important jobs. That limited Indian involvement to the actual software development and testing. The Indians completed much of the work at the buyer’s site under close supervision.
Ravisankar says the environment has changed in the last 24 months. Indian software companies have become more mature. They have proven they can manage large projects. “Today buyers are not just hiring cheap programmers. Instead, they are using Indian vendors to do the end to end work of software development,” says the CEO.
Currently the company employs 1,200 professionals. Its customers include 200 financial institutions in addition to stock exchanges, insurance companies and financial services firms. Its customers come from 69 countries. Twenty-nine percent are from India, Africa and the Middle East. Another 29 percent reside in Europe. The U.S. accounts for 23 percent of its assignments.
Producing The No. 2 Selling Bank Software
I-Flex has two lines of business. The first is packaged software. Products include a suite of package solutions for Internet and wireless banking. It also has a suite of back office products for retail, corporate, and investment banking.
I-Flex launched its core banking program two years ago. FLEXCUBE Corporate is now the No. 2 selling banking package in the corporate banking arena, according to International Banking Systems, a London research group which tracks sales of banking packages worldwide.
Ravisankar says the program offers financial institutions a business intelligence solution. The company’s software enables banks to cash in on the wealth of information they have in their data bases. Armed with that knowledge, they can make strategic decisions that hopefully will grow the bottom line. Using I-Flex software, bankers can study customer profitability, product profitability and customer buying decisions to make educated guesses about the viability of new products.
Banks already have this information. But it’s usually frozen in different software systems. The retail banking software won’t interact with the credit card software, for instance. “Since the information is isolated in different systems, it’s difficult to get a total holistic view of the customer,” says Ravisankar.
Sharing Customer Information On The Web
I-Flex software makes all this disparate information available in one place. Then, customers can “slice and dice” the data any way they want, he continues. Bankers can also share this data with their branches through the Web.
The company also develops custom software for banks. Currently, a big push is e-services which are designed to help banks enter the Internet banking foray. The company also formed a partnership with Sun to create Java solutions for financial institutions.
Citicorp founded I-Flex in 1993. From the outset, the company has always focused on financial services. Ravisankar says his programmers have to have an intimate knowledge of banking and securities regulation to do their jobs. In fact, a large number of the company’s employees were bankers or banking operations managers.
Lessons from the Outsourcing Primer:
- Companies originally selected Indian outsourcing suppliers because of the good results at significantly lower costs.
- Today, companies select Indian suppliers because they are able to develop software quickly. This is a plus because delays can cost more than the project itself.
- Ten Indian software developers exhibit the highest quality in software development according to the CMM model.