It has recently struck a five year multi-million dollar deal with Cognizant, the fastest growing Indian IT major listed on the NASDAQ. The scope of the relationship extends from strategic planning, to supply chain planning, and execution to customer relationship management. Yet at the same time Kimberly-Clark gave SAP to Cognizant, it gave accounting and BPO to Genpact, procurement to ICG commerce, and simple maintenance and commerce to TCS. The operative phrase here is “smart-sourcing” with clients simultaneously engaging multiple vendors to leverage best of breed capabilities, mitigate their risks or perhaps a combination of both. An 800 call made by a Kleenex buyer (one of Kimberly-Clarks largest selling brands) in Kansas could get answered by a WNS employee in Pune, who would pull up a custom CRM application designed by a Cognizant team in Chennai, which would plug into a data mining algorithm hosted on a server maintained by TCS in Oakland, California. When a transaction such as this passes through multiple entities, with opportunities fraught for buck-passing, what are the optimal contract structures, performance incentives, service level agreements, and ultimately governance mechanisms that can lead to a happy Kleenex consuming housewife in Kansas?

New Computing Models for Small and Medium Sized Enterprises
Another significant but somewhat more challenging growth opportunity for the IT and IT enabled services industry is to take an inward look and attempt to cater to the fast growing domestic market.

A useful proxy to represent this transition is the fast changing domestic retail sector. India is on track to become the fifth-biggest global retail market by 2010, according to McKinsey. Yet, organized retailing makes up only three per cent of the market, giving enormous scope for ICT led productivity enhancements. Overall, the SME sector of Indian economy comprises over 11 million production units and contributes to nearly 40 per cent of the total industrial production. A recent CITNE study estimates that ICT investments levels in this sector are around 0.5-0.6% of revenue, about one third the global SME average. The same study cites the lack of awareness, the unavailability of credit financing for the current capex oriented ERP, SCM and CRM (the big three enterprise software) products and poor fit between SME requirements and existing products’ (such as SAP) features as the three main reasons that inhibit ICT adoption.
It is here that significant new innovation in business models can lead the way. In particular, the emerging trend of utility based computing, signaled by developments such as SaaS (Software as a Service) and Grid computing hold significant promise. Rather than paying up-front for expensive software products, and then incurring significant training, deployment, up-gradation and maintenance costs, the utility computing framework uses a pay-as-you go model. At the application level, a good example of SaaS is Salesforce.com’s service based CRM offering that disrupted the established CRM product offering from Seibel.