iGate’s ad campaign reveals flaw in traditional outsourcing model

iGate, in a move away from the norm of other IT outsourcing companies has launched a unique advertisement campaign on Wednesday, that is said to be a ‘multi-million dollar’ undertaking to put a halt to the traditional way of billing services adopted by the companies in technology outsourcing industry. This campaign by the American multinational corporation is launched in order to change the billing services outlook of the corporations in North America, and shift it from an ‘efforts’ based one to one that is implemented based on the results and outcomes of projects.

igate ad campaign

As of now, the companies adopt a ‘time and material’ model in which the clients pay the technology outsourcing companies based on the cost of the labor and material spend as well as the time spend on the project. The clients are most often billed on the basis of hours regardless of the quality of the outcome of the project.

iGate, which provides IT, consulting as well as BPO services, has made its opinions known about the existing system and has emphasized the propagation of the outcome-based strategy. According to this strategy, the clients will be billed according to the result of a project. More than 80 % of the firm’s revenues are contributed by the American continents which make up its largest market.

According to Phanesh Murthy, the CEO of iGate, the old model followed in traditional IT outsourcing, where clients are billed on a flawed metric based the amount of effort to execute a project, does not propagate the concept of risk sharing, reducing productivity. This model is fast-changing to keep up with the times. IT service providers in India provide support to their clients by the development and maintenance of software and hardware. Murthy reiterates that, the traditional ‘time and material model’ which has been in vogue ever since the beginning of the Indian IT industry has significantly reduced innovation in the sector.

The company, has already set the wheels in motion to target all kinds of media platforms to bring in a shift in outlook of companies towards their outsourcing models and to imbibe the ‘Business Outcomes’ method while partnering with the clients. This will help increase the company’s productivity and would emphasize innovation to a greater extend.

iGate had made one of the biggest acquisitions in the IT industry of India when it acquired Patni Computer Systems in 2011 for $1.2 billion. The company which has sales amounting to about a billion aims to attain $ 3 billion mark in revenues spanning the next five years. The company, based in Fremont, California, had sales of $271 million in the previous quarter.
North America is the major contributor of revenues to the Indian IT industry which is over 60%. The industry is poised to cross the $225 billion mark in revenues by the end of 2020.

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