6.6.08

Best Practice - Go-to-Market partnerships

A vendor recently asked me how they could move up the value chain, in an "out of the box" kind of way.

My short answer to any vendors who read my blog: Help your clients sell their stuff in India (or where ever your delivery centers happen to be).

One thing I look for when I evaluate a vendor for my FastRFP portfolio service is something I call "Value-Added Partnership Capabilities."

Few of the service providers I've looked at through the years think this way, so it's clearly "out of the box." But, as India shifts from "labor arbitrage center" to "global economic superpower" over the next decade, ISVs (and other US enterprises) will eventually figure out that there's money to be made in India, selling what ever product it is that their ITO and OPD partners help them produce.

Imagine how they'd view their ITO and OPD services if their vendor signed up to develop India as a sales territory, and signed on with a sales quota!

If an enterprise has a 20 person development team with a vendor in India, that probably represents around $1M annually in cost to them. If the same vendor signed up for a $1M sales number, it would allow the enterprise to have a balance-sheet neutral development center.

If the vendor developed India into an even larger sales territory, they could potentially become a profit center for the enterprise. At which point it will be in the enterprise's economic best interest not only to stay with the vendor (rather than leaving for another cheaper service provider), but also to find new work for them.

You could even set the deal up in such a way that any excess over the $1M mark would automatically result in new headcount (rather than profit taking) for the vendor, so the whole endeavor became a self-funding development or service delivery franchise.

To the best of my knowledge, no one has built this model in India yet. The first company who can do this will potentially change the ITO and OPD landscape.


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