Vikash Sureka - VP & Financial Controller

1. How long have you worked in the IT industry?

I have 15 years of experience in financial management with 10 years specifically in the IT industry. I’m a Chartered Accountant with a Bachelor of Commerce degree from Bangalore University.

2. How important is the involvement of the CFO/Financial Controller in the negotiations of the outsourcing contract?

You could say that the CFO is the glue between business, operations and the financials of an organization and as such should be involved from the proposal stage right through to the conclusion. They play a significant role with regards to the expectations of the client when it comes to structuring deals that help achieve the overall financial goals. They also balance risk vs. return during the negotiations. Internally, their involvement throughout the process makes them the right candidate to drive the contract management process in order to fulfil agreed contractual obligations.

3. What are the biggest challenges facing the offshoring market with regards to testing?

• Any testing provider, be it independent or the testing division of a full service provider, must have a high level of talent. The Indian market in particular is very competitive and therefore hiring and retaining employees is the biggest challenge. Organizations must be careful when choosing their provider, and choose those providers who have a good mechanism to cope with this challenge whilst maintaining global standards of delivery.
• Over the past 18 months, we have seen significant weakening of the US dollar – a fall in excess of 10%. Offshore providers are challenged to offset a significant chunk of this weakness with operational excellence to provide the same level of return to customers.
• With the Indian IT market being so competitive, attrition has been climbing upwards of 15% and salaries have been increasing at the rate of 10-15% p.a. This adds significant pressure on providers to retain knowledge (through reduced churn of resources) and still deliver the required business case for clients.
• Companies seeking offshored testing must better plan their projects and are advised to outsource or offshore larger projects that will take longer periods of time. This not only helps derive higher productivity from vendors but also reduces significant overheads the client organization would generate when managing a number of smaller projects.

4. What have been the changes in the offshoring world over the past 3 years?

• The industry was caught unaware when the US dollar started weakening. This correction looks permanent now and a further drop of 3-4% is predicted over the next 18 months.
• Large multi billion dollar deals are very few and far between now with clients adopting multi-vendor strategies. 10 year projects are now broken down into 2-3 year engagements in order to maintain competitiveness.
• Awareness of how offshoring works has increased and as such, clients now demand more flexibility in terms of managing team sizes and contract obligations. Furthermore, they have now started linking vendors to the desired outcomes of their engagement.

5. How do you think the landscape of IT services will look in the next 5 years?

Over the next 5 years, I believe there will be various occurrences. Firstly, the slowdown within the US market has now become evident and reports state that there will be a fall in IT investment. In contrast, mainland Europe will see an increase in offshoring but in order for the market to realize this growth, vendors will have to be proactive in setting up near shore centers and will also benefit from hiring local staff to minimize language differences and cope with cultural nuances.

Mergers and acquisitions will become more popular which will further affect IT services; testing multiple systems within a single environment will be challenging for the organizations involved.