I am just back from the whirlwind that is Nasscom India Leadership Forum 2013 in Mumbai, India. The Nasscom event is the premier event for the Indian IT services marketplace. Besides meeting great people, eating too much wonderful Indian food, and seeing action star and local legend Amitabh Bachchan in-person, the event provides a chance to check the pulse of the most important geographic hub for the IT services marketplace. 

Here are some of my key findings from the trip:

Network infrastructure is the basis for all funding of telco activities; as such, telcos must not only keep the cash cow alive, but also strengthen it. Management of network infrastructure is easily belittled as a subject for engineering nerds — but it must be treated as a key strategic matter.

Outsourcing the management of or sharing network infrastructure delivers many benefits, and we expect telcos to do this more and more in the years ahead. Telcos need to balance the simultaneous requirements of cost control, enhanced business flexibility, and innovation to incorporate the right approach to external network infrastructure management into their future strategies. Equipment vendors, meanwhile, must adjust their business to keep up and partner with traditional IT services providers.

Many more telcos are moving toward sharing or outsourcing some or all of their network assets and operations to partners or suppliers, becoming “telcos without networks.” This provides an opportunity for some telcos to shift their focus and resources to:

• Cost control and transparency. The decision to share or outsource network assets and their operation is primarily driven by financial needs, in particular to bring the total cost of ownership down, spread expenditures over time, and allocate costs in a more transparent manner.
• A better customer experience. Increases in data traffic require telcos to enhance their network and service delivery infrastructures and improve network coverage in order to maintain the quality of the customer experience. Moreover, telcos face regulatory requirements for improved rural network coverage, which can be more readily satisfied by network outsourcing.

The past few years haven’t been kind to software developers. Having the equivalent of a US master’s in computer science and having spent the first 20+ years of my professional life developing mission-critical software products and applications, I have had a hard time adjusting to the idea that developing software applications is a cost to avoid or a waste of time for many CIOs and application development leaders. It seems to me that we have been giving more emphasis to contracts, legal issues, SLAs, and governance concerns but forgetting about how IT can really make a difference – through software development. 

Nevertheless, outsourcing kept increasing, and packaged apps exploded onto the scene, and software developers “outplaced” from enterprises. People started to believe they could get more value and good-quality software cheaper…but could they really?

With BT, digitalization, and customer centricity exploding, today is the perfect moment for application development leaders to review their application development sourcing strategy and align it to their BT strategy.

Why? Many reasons, including:

1. Software is the most important enabling technology for business innovation.
2. Clients use software every day. It’s become part of their life, and they enjoy the experience. Better software makes a better experience.

Rumors became official on Tuesday: Siemens succeeded in finding a viable partner to buy its IT Solutions and Services (SIS) business. For all of us following the market in the past it wasn’t a surprise that ATOS ORIGIN is paying €850 million to take over Siemens’ IT business. This sum is a mixture of shares, bonds and cash, which will make Siemens a prime shareholder of ATOS for at least for a five-year period. In return ATOS will provide Siemens with Managed Services and System Integration worth €5.5 billion over a period of 7 years.

Question: What does this mean?

In the short run, even though this transaction will make ATOS the biggest European-headquartered IT service provider (with an expected combined revenue of approximately €8.7 billion in 2010 growing to an expected €10 billion in 2013) the direct impact for the IT user market will be minor. The mentioned outsourcing contract effectively represents one of the largest deals globally, but the impact on clients will be minimal as SIS delivers a significant amount of services to Siemens today. Second, ATOS ORIGIN is currently running a major restructuring program called TOP. And those projects combined with an acquisition of the mentioned size will be a challenge — at least. Thus meaning that ATOS ORIGIN’s focus will either be to finish the TOP program and then integrate SIS or extend TOP to include SIS. Either way the new organization will need some time to form — and so will the market impact.