A paradigmatic shift in it-offshoring industry from cost-centric to caring-centric

Dr. Asim Chowdhury
A Paradigmatic Shift in IT Offshoring Industry: From Cost-Centric
to Caring-Centric
There is a paradigmatic shift in the competitive IT offshoring industry today. Organizations that
nurture a strong caring culture have emerged as true leaders who can deliver real value to
customers and other stakeholders. By embracing a caring philosophy, offshore service
providers can sustain a committed workforce and serve the broader interests of customers,
investors and the community, more effectively.

P A G E | 1WHITE PAPER | www.rsystems.com
TABLE OF CONTENTS
 Introduction................................................................................................. 1
 How the Philosophy of Caring Drives the Offshoring Industry?.................... 2
 Employees – Fundamental Constituents of a Caring Ecosystem .................. 4
 Caring For Customers: Meeting Changing Expectations............................... 6
 Caring For Other Diverse Stakeholder Groups ............................................. 7
 The Caring-Centric ‘Value Engineering’........................................................ 7
 Conclusion ................................................................................................... 9
INTRODUCTION
Beginning 2014, the Global IT offshoring industry, has undergone a paradigmatic shift. Leadership, once
defined by technology competence and price competitiveness, is waning as offshoring companies have
begun asking for more – something that could ensure a far-reaching business value.
Today, relationship is the new benchmark of efficiency and business value. Organizational
competitiveness is now directly related to how caring relationships are, between offshoring companies
and its partners. It is the degree of caringness that is helping distinguish organizations from one another
and driving long-term offshoring engagements. In essence, it is the caring index that separates leaders
from survivors.
The IT offshoring ecosystem is complex and includes diverse global actors, who have to collaborate
effectively within fast-changing business landscapes. Relationships form the backbone of this new
structure and it runs like a thread throughout the ecosystem – bonding actors, institutions, and the
market. Although the idea of relationship management has been treated extensively in Customer
Relationship Management (CRM) literature, they are myopic as they fail to adequately instill caring as an
organizational culture.
This caring-centric relationship is an idea that impacts the overall functioning of an organization. IT service
providers who deploy caring at the heart of their engagement strategy are more stable partners. It is with
such partners that customers realize business value and purpose. Project-based mindsets are obsolete
and relationship-based engagement is in.

In this whitepaper we will explore how a caring-centric engagement model can transform the way
organizations engage with diverse stakeholder groups, centered on relationships. We will also try to
understand how the caring culture is so central to the offshoring ecosystem and how it helps global
customers flourish and stay competitive.
HOW THE PHILOSOPHY OF CARING DRIVES THE OFFSHORING INDUSTRY?
A rapidly transforming business environment
requires that partners are bonded more strongly.
This is possible only when a caring culture is
deployed across the entire relationship chain by
IT companies, consisting of employees, teams,
departments, customers and the final end-
customer.
Employees are the most fundamental
constituents in this caring culture. When
employees are cared for, they form a caring
collective that meets the expectations of
customers. The value so generated also goes on
to benefit other stakeholder groups in the
offshoring ecosystem, such as, investors,
community and the society in general.
A caring culture unfolds great possibilities. It
helps extend the business dimensions beyond
simple economics and creates synergy and trust.
Several global studies have revealed that
relationships based on caring have the potential
to transform businesses. The study “Leadership
and the Performance of People in Organizations:
Enriching Employees and Connecting People”
(Won-joo Yun and Frank Mulhern,) conducted in
Nov 2009, reframed the concept of business
leadership from a people-first perspective and
examined it across diverse constituent groups
such as consumers, employees, shareholders and
the community. The study reframed the concept
of business leadership from a people-first
perspective and called it “employee
enrichment.”
In service organizations value is experienced in
the form of “intangibles.” This human value is
derived from what Yun and Mulhern call, “flow of
performance.” For Yun and Mulhern, personal
relationships are above everything else and
organizations perform better only when they
deploy adequate mechanisms for tracking and
measuring the flow of performance between
individuals. Organizations thrive by managing
multiple flows of performance between diverse
actors – employees, customers, investors,
community and so on.
A similar perspective is reflected in the book,
Competitive Business, Caring Business (2002),
where Daryl Paulson forwards a strong
integrated approach for businesses which leads
to stability and growth. This, in turn, creates
room for innovation and pioneering exploration.
Daryl suggests that such an integrated approach
is founded on the philosophy of caring that helps
individuals and businesses achieve the
impossible.
Today, “caring about people” and “caring about
the business” are not mutually exclusive. They
are interconnected. Employees bring labor,
innovation, and a host of other things which
define an organization’s success in services.
Similarly, customers provide revenue, profits,
and growth, while investors and shareholders
provide capital and stability. The society and the
community, in turn, provide moral support and
general goodwill that help organizations stay
afloat.

Caring organizations are powerful drivers of
innovation and organizational growth. In a caring
ecosystem, human relationships are highly
positive, which is characterized by speed,
collective wisdom, dynamic knowledge
exchange, and a strong desire to tread into new
horizons. All these helps create a very conducive
environment for innovation. Customers stand to
benefit from this collective competence and
inventiveness by realizing new breakthroughs.
Figure 1: The Caring ecosystem that drives IT offshoring services today

The IT Services ecosystem is laden with challenges
and opportunities. One the one hand are cross-
cultural challenges weaved together with a complex
technological milieu while, on the other hand,
organizations witness the challenge to sustain
growth and profitability.
The entire caring ecosystem rotates around three
fundamental elements – innovation, growth and
transformation – that plays a cyclical role. A change
in one leads to a change in the other two, often
unleashed through a complex array of elements.
Developing a caring culture, therefore, requires
commitment to meticulous planning and
implementation.
Given the complex terrain, deploying a caring culture
is best done when it is undertaken in a staggered
fashion, across distinct areas of people, processes,
and technologies.
EMPLOYEES – FUNDAMENTAL CONSTITUENTS OF A CARING ECOSYSTEM
Value exchange lies at the heart of the
relationship between the employer and the
employee. Matured offshoring companies
provide employees with a healthy, enabling
environment to learn, grow and execute their
knowledge. These translate into a strong
employee caring culture that can nurture
positivity and flow out in all directions, like a fluid,
bonding diverse stakeholders onto the ecosystem.
New approaches to business economics suggest
that a people-first attitude is central to enhancing
business productivity. By focusing on the personal
growth of employees, employers can ensure a
win-win collective growth and performance.
Matured organizations deploy a caring culture by
addressing two distinct forms – extrinsic
motivation and intrinsic motivation. This is since
the Self-Determination Theory (SDT) emphasizes
on extrinsic and intrinsic motivation that plays a
significant role in propelling individuals towards
higher levels of performance.
Extrinsic motivation drives employees to do things
for external pressure and therefore has a lesser
impact on motivating employees. Intrinsic
motivation, on the other hand, is a better
motivator in the true sense since it is something
that comes from within individuals. Matured IT
service organizations understand this and focus
on long-term motivation, primarily intrinsic
motivation.
Scholars like Skinner (1953) suggest that all
behaviors are motivated by rewards. In intrinsic
motivation, the activities are motivating in itself
since they align individual goals to business goals.
Figure 2: The Distinctive Arms of a Caring Ecosystem

An intrinsically motivated workforce enhances the
collective performance of organizations in
delivering services. In addition, they also ensure
that organizations remain stable, competitive and
future-ready against technological obsolescence.
Another way of looking at employee motivation is
to segregate them into Maslow’s hierarchy of
needs. Social needs, for example, can be met by
organizing family engagement programs. Similar
programs can also be devised for work-life
balance, enhancing wellness and providing
opportunities for innovation and growth.
In his book Employee Engagement 2.0 (2012),
author Kevin Kruse tracked over 30 studies and
discovered that employee engagement has a
direct correlation to increase in customer service,
productivity, sales and profits. He suggests that
engagement is the emotional commitment that
employees have with their organizations and its
goals, which drives higher levels of discretionary
effort.
Another global study – the Gallup eighth meta-
analysis study – conducted in 2012 provided an in-
depth understanding of the relationship between
employee engagement and company
performance. The study spanned 49,928 work
units and involved more than 1.4 million
employees, spreading across 49 industries and 34
countries. The study confirmed a strong connect
between employee engagement and nine
performance parameters, which include customer
ratings, profitability, productivity, turnover, etc.
Further, it revealed that employee engagement
was the most important predictor of company
performance even during difficult economic
conditions.
Human Resource departments play a crucial role
in helping develop a caring work culture. At an
organizational level, many matured offshoring
players also deploy good people practices that are
now measured through the prism of globally
acclaimed processes such as PCMM. Embracing
such holistic and innovative processes help strike
the right balance between organizational goals
and individual goals wherein employees are able
to realize a meaningful existence.
Figure 3: How Organizations align employees to
organizational goals

CARING FOR CUSTOMERS: MEETING CHANGING EXPECTATIONS
Today, the way global customers look at IT offshoring relationships has undergone a sea change. They are
no longer impressed with attractive pricing or lofty sales pitches. Instead, they seek partners who can walk
the extra mile and help meet their needs in diverse technology, function and industry domains and have
the ability to ward-off pressures of technological obsolescence.
Here’s a snapshot of changing customer expectations over the years:
Experienced offshoring partners understand this changing nature of customer expectations and deploy a
strong caring component in their operational philosophy.
TRADITIONAL PROJECT-CENTRIC MINDSET THE CARING-CENTRIC MINDSET
What do you want us to do? We will evaluate your pain areas and give you a complete
solution.
The product will be running fine. The product will be running fine. We will be there for you,
24x7.
What else do you want us to do? We are ready to handhold you through your entire
technological journey.
Tell us what technologies you want us to use. We will work out the best technologies for you that can
address obsolescence and help you stay ahead of the race.
Sorry, our resources do not have the ability to go beyond
this.
Don’t worry, our resources have a steep learning curve and
they will go to any extent to help you realize a great
application/product.
Our costs are fixed. We are sorry we cannot negotiate that
further.
Don’t worry about costs. We value our relationships and
we will work out best ways to meet your expectations
within the limited budget.
Sorry, we do not have competency in this technology. We
are focused on a specific set of technologies.
We agree that we have no competency in this new
technology but we can develop that in the next couple of
months. We can also engage a partner with expertise in
this new technology area.
The dimensions of caring have a broad scope
when applied to offshoring relationships. They
spread across project management, quality,
infrastructure, people management, resource
mobilization, research & development, adoption
of new technologies, time-to-market, scalability,
Early 2000s Mid 2000s Late 2000s 2013 onward

etc. All these elements broadly form the “Caring
Index,” the new determinant of excellence in IT
Services.
When offshoring partners discard the traditional
provider-customer relationship and adopt a
holistic relationship-centric engagement
strategy, they emerge as strong market leaders.
In addition, such a model of engagement is
disruptive in nature and helps create a stronger
brand identity in the industry.
CARING FOR OTHER DIVERSE STAKEHOLDER GROUPS
All organizations operate within a broad
ecosystem and therefore the culture of caring
extends to other stakeholders groups. These
groups include investors, industry, community
and the society, each impinging on businesses in
interesting ways. When organizations fail to
extend the culture of caring to these
stakeholders it risks being isolated, powerless,
and insignificant.
For investors, the idea of caring signifies effective
financial management, to ensure a steady return
on investments (ROIs). Financial prudence
cushions the organization from unforeseen
market shocks. Similarly, in caring for industry
associations, organizations forge a strong bond
with diverse groups which helps create a positive
impression across the ecosystem.
In caring for the community and the society,
organizations embrace community development
activities, such as CSR etc., that helps stabilize the
business environment around them. The
goodwill and positivity it generates echoes far
and wide and builds a strong support base. It also
helps sustain a strong brand equity, which in
turn, generates immense goodwill about the
business.
THE CARING-CENTRIC ‘VALUE ENGINEERING’
Deploying a caring culture in engineering services
can help us realize a new kind of engineering
excellence. Such an engineering model seeks to
balance the social and technical dimensions of
engineering, that can be best termed as “Value
Engineering.” Value Engineering is a holistic
engineering framework that enhances
engineering output and gears it to provide lasting
customer value. Here, transactions give way to a
strong relationship-based engagement. Such
reformulation, in turn, generates trust, builds
confidence and provides long-term value.
Value engineering in IT Services emerges from
every aspect of organizational functioning, such
as, people, technology, infrastructure,
communication, project management and so on.
Every small restructuring impacts other areas
since relationships operate in a network. For
instance, if an organization focuses on
competency enhancement of its resources, the
benefits passes on to the entire value chain. A
continuous generation of value also requires
investments in innovation, R&D and
improvisations in a host of other areas of
organizational functioning.

Value Engineering can also be best managed by
deploying “Value Stream Mapping,” a technique
initially used in manufacturing. In the IT Services
sector Value Stream Mapping can be used to
improvise processes and meet organizational
goals. This technique is extremely flexible and
can be used across diverse areas by deploying
diverse formats.
Communication plays a crucial role in developing
a caring-centric organization. Communication
serves as the catalyst that helps develop
relationships with different stakeholders.
Robust, well-defined and continuous
communication strengthens collaboration
between individuals, teams and functions and
also helps address cross-cultural challenges.
However, value engineering is an ever-shifting
goalpost in the offshoring industry. What is of
value today may not be valuable tomorrow. An
effective way to manage this change is to
benchmark value continuously, by deploying
powerful techniques such as Value Stream
Mapping. Following are some crucial aspects of
caring-centric “Value Engineering” w.r.t. IT
offshoring services:
 THE DELIVERY ROBUSTNESS
Delivery robustness is determined by evaluating
the maturity of processes. Experienced partners
deploy several efficient and robust models,
systems and matrices that seek to continually
enhance delivery performance. Some examples
of these include measuring customer feedbacks,
streamlining client visits, and offering real-time
remote visibility of teams.
 THE CONTINGENCY PLAN
Contingency plans are integral to offshoring
services and they relate to a wide area of
operations, including Disaster Recovery, IPR
security, infrastructure backup, resource
management etc. These contingency plans are
defined and guided by changing customer
expectations and are therefore subject to timely
revisions.
 FUTURE READINESS
Caring organizations have robust plans to
withstand technological obsolescence and
competition. Today, the velocity of technological
obsolescence is extremely high. It is estimated
that the rate of external and functional
obsolescence of technology has become faster
several times over the past one decade.
IT offshoring players who want to stand out of
the crowd, deploy effective strategies that are
derived and enhanced through experience.
Future readiness in IT services is best assessed
by mapping changes in people, processes and
technologies.
Figure 4: The tenets of Value Engineering

CONCLUSION
Today, buyers and sellers in the offshoring
industry appear to have lost their intimate
relationships, which are strongly impinging on
organizational growth. This is largely because of
the inability of offshoring partners to manage
complexities in offshoring relationships, in the IT
Services space.
Business sustenance calls for offshoring partners
to move away from older transaction-centric
relationship model and instead invest on
relationship-centric engagement models. A caring
philosophy should form the backbone of all
offshoring relationships as it can unleash long-
term value in the offshoring ecosystem.
Motivated workforce, business stability,
guaranteed growth, and increased ROIs are some
of the many accruals from such a caring
ecosystem. It also helps cushion offshoring
engagements against market fluctuations and
challenges of obsolescence.
A caring culture can be begun with a “people-first”
mindset, since employees are the cornerstone of
the services ecosystems. There are ample number
of global studies that suggest how employee
engagement can enhance the productivity of
organizations. Employees form the value chain
that extends to the customer and other
stakeholders. Eventually, the offshoring
ecosystem settles around a new kind of
engineering excellence, “Value Engineering.” The
new Value Engineering model signifies a
meaningful, holistic engineering engagement
founded on strong human relationships.
How can organizations embrace a caring culture?
While there are no definite mechanical strategies
to transform organizations into a caring entity, it
is best when deployed in a time-bound fashion,
across different stakeholder groups. Ideally, it
should be deployed in a staggered fashion in
small measurable steps within an organization,
across diverse functions. The positivity and
goodwill developed therein will automatically
flow out to customers and other stakeholders.
However, the strategies deployed by individual IT
Service organizations, to transform themselves
into caring entities, vary widely. These strategies
largely depend on the organization’s size, nature
of services, engagement model, services delivery
model and so on, which leaves ample scope for
developing contextual plans to best fit needs of
individual organizations.

ABOUT THE AUTHOR:
Asim Chowdhury is the Global Head of Marketing and Communication of the R Systems Group. He has
more than 17 years of experience in marketing, communications, business strategy, journalism, and
research. Asim earned a Ph.D from the Delhi School of Economics, Delhi University, and has also been a
European Union research scholar under the Indo-European research program.
ABOUT R SYSTEMS
R Systems is a leading OPD and IT Services company, which caters to Fortune 1000, Government, and Mid-sized
organizations, worldwide. The company is hailed as an industry leader with some of the world’s highest quality
standards, including SEI CMMI Level 5, PCMM Level 5, ISO 9001:2008, and ISO 27001:2013 certifications. With a rich
legacy spread over two decades, we generate value that helps organizations transcend to higher levels of efficiency
and growth. Quite like the Oyster delivering the Pearl.
For more information, visit www.rsystems.com or Email: rsi.marketing@rsystems.com
© 2016 R Systems International Limited. All Rights Reserved. All content/information present here is the exclusive property of R Systems International Ltd. The
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A paradigmatic shift in it-offshoring industry from cost-centric to caring-centric