Comments on: The Quest for Higher Bill Rates http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/ Meandering Musings on Globalization Wed, 09 May 2012 17:39:30 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: swami http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18859 swami Tue, 20 Jul 2010 16:59:44 +0000 http://6ampacific.com/?p=894#comment-18859 What would qualify as a good "solution"? As opposed to a service or a product? What would qualify as a good "solution"? As opposed to a service or a product?

]]> By: Swapnil Pundle http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18802 Swapnil Pundle Sat, 17 Jul 2010 05:28:09 +0000 http://6ampacific.com/?p=894#comment-18802 The pressure on billing rates will exist as long as the customers know the effort involved. Knowing the effort involved gives customers the power to shop around and negotiate rates. Higher billing rates (i would rather call it higher profitability per project team member) can only happen when the effort involved is not disclosed to the customer. I think there are two ways to do this. One is to comeup with some black box offerings (products, solutions etc) and the other is to have innovative engagement or pricing models (something like what IBM did with Bharti Telecom in India). In both the above scenarios the customer is guaranteed an end-result, he has no business asking for the total effort, type of effort, billing rate etc. Here's one example of an innovative pricing model. Wipro runs the helpdesk for all users across India in the company I work for. The pricing is based on the no of assets (desktops, laptops etc) and not on the no of resources deployed by Wipro or on the no. of calls logged. I am sure Wipro can make a much higher profit per resource if they get the execution right. The pressure on billing rates will exist as long as the customers know the effort involved. Knowing the effort involved gives customers the power to shop around and negotiate rates. Higher billing rates (i would rather call it higher profitability per project team member) can only happen when the effort involved is not disclosed to the customer.
I think there are two ways to do this. One is to comeup with some black box offerings (products, solutions etc) and the other is to have innovative engagement or pricing models (something like what IBM did with Bharti Telecom in India).
In both the above scenarios the customer is guaranteed an end-result, he has no business asking for the total effort, type of effort, billing rate etc.
Here's one example of an innovative pricing model. Wipro runs the helpdesk for all users across India in the company I work for. The pricing is based on the no of assets (desktops, laptops etc) and not on the no of resources deployed by Wipro or on the no. of calls logged. I am sure Wipro can make a much higher profit per resource if they get the execution right.

]]> By: Dip http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18789 Dip Fri, 16 Jul 2010 10:03:49 +0000 http://6ampacific.com/?p=894#comment-18789 There is over emphasis on quarterly result and investor reaction. Stock falling 3-4% on day of quarterly results should not be given undue importance. You act on the short term pressure of QoQ topline/bottomline - there is no way you can get out of commodity business. There is over emphasis on quarterly result and investor reaction. Stock falling 3-4% on day of quarterly results should not be given undue importance. You act on the short term pressure of QoQ topline/bottomline – there is no way you can get out of commodity business.

]]> By: Krishna http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18774 Krishna Thu, 15 Jul 2010 12:13:43 +0000 http://6ampacific.com/?p=894#comment-18774 Commoditization happens only where entry barriers are low. Innovation therefore will have to go the extra mile of delivering nuanced solutions at affordable costs. Copy cats may easily replicate the service, but may not so easily meet the end customer cost if the innovator deploys low cost funds and resources. For an established vendor with significant free cash in its balance sheet (which would otherwise go as large doses of dividend since the management is risk averse) and benched resources, it should be easy to start selling `at cost' to ward off wannabe upstarts. Think of how Times of India, Mumbai keeps all other newspapers at bay as it bundles TOI and Eco Times at Rs.140/- a month, logging huge volume off-take that indirectly promises higher ad revenue because of larger circulation and readership. IT vendors just don't get it because of their excessive margin fixation. The day they shed that and find a better use for their free cashflows by means of serious innovation, they'll get a life. Commoditization happens only where entry barriers are low. Innovation therefore will have to go the extra mile of delivering nuanced solutions at affordable costs. Copy cats may easily replicate the service, but may not so easily meet the end customer cost if the innovator deploys low cost funds and resources. For an established vendor with significant free cash in its balance sheet (which would otherwise go as large doses of dividend since the management is risk averse) and benched resources, it should be easy to start selling `at cost' to ward off wannabe upstarts. Think of how Times of India, Mumbai keeps all other newspapers at bay as it bundles TOI and Eco Times at Rs.140/- a month, logging huge volume off-take that indirectly promises higher ad revenue because of larger circulation and readership. IT vendors just don't get it because of their excessive margin fixation. The day they shed that and find a better use for their free cashflows by means of serious innovation, they'll get a life.

]]> By: Madhu http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18738 Madhu Wed, 14 Jul 2010 00:25:06 +0000 http://6ampacific.com/?p=894#comment-18738 Great points. May I add that 'solution' providers need to start thinking beyond their partnerships boxes ? IT service providers truly lost a great opportunity to innovate early on the XAAS stack (Infrastructure/Platform/Software), possibly entirely due to their current linkages with SAP, Oracle,IBM et al. We are yet to see evidence of established service providers having an appetite for taking risky bets at the cost of losing their place in the current value chain. Great points. May I add that ‘solution’ providers need to start thinking beyond their partnerships boxes ? IT service providers truly lost a great opportunity to innovate early on the XAAS stack (Infrastructure/Platform/Software), possibly entirely due to their current linkages with SAP, Oracle,IBM et al. We are yet to see evidence of established service providers having an appetite for taking risky bets at the cost of losing their place in the current value chain.

]]> By: rustey http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18737 rustey Wed, 14 Jul 2010 00:05:42 +0000 http://6ampacific.com/?p=894#comment-18737 Basab, Indian companies have to learn to compete better. At this point the competitive strategies are "Ident-i-Kit", with absolutely no creativity. All companies are talking about large account relationships, multi-line-selling and...ahem...non-linear models. <a href="http://2m1b.wordpress.com/2010/07/14/results-seaso/" target="_blank">http://2m1b.wordpress.com/2010/07/14/results-seas...</a> I just asked this question on my blog: Is the salmon-season over for the Indian big bears? Basab, Indian companies have to learn to compete better. At this point the competitive strategies are "Ident-i-Kit", with absolutely no creativity. All companies are talking about large account relationships, multi-line-selling and…ahem…non-linear models.
http://2m1b.wordpress.com/2010/07/14/results-seas…

I just asked this question on my blog: Is the salmon-season over for the Indian big bears?

]]> By: IT Results season: How long will the Salmon season last? « Two MBAs, One Blog http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18736 IT Results season: How long will the Salmon season last? « Two MBAs, One Blog Tue, 13 Jul 2010 23:55:32 +0000 http://6ampacific.com/?p=894#comment-18736 [...] As many of you know, I am working with Basab Pradhan on a book on Offshore Services. We’re offering an insider’s view into the industry, and explaining the workings of the industry as part of the book. In a recent post, Basab talks about the quest for higher bill rates. [...] [...] As many of you know, I am working with Basab Pradhan on a book on Offshore Services. We’re offering an insider’s view into the industry, and explaining the workings of the industry as part of the book. In a recent post, Basab talks about the quest for higher bill rates. [...]

]]> By: Kalpesh http://6ampacific.com/2010/07/13/the-quest-for-higher-bill-rates/comment-page-1/#comment-18733 Kalpesh Tue, 13 Jul 2010 19:30:21 +0000 http://6ampacific.com/?p=894#comment-18733 Kickbacks? How else (other than sheer expertise/competence) one can charge high? Kickbacks? How else (other than sheer expertise/competence) one can charge high?

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