Outsourcing: Philips Increases Work to India
Royal Philips Electronics, one of the world’s largest manufacturers of lamps and healthcare equipment, has announced that it intends to bring down its operating costs by up to 30% over the next two years. Its strategy is to reduce the number of IT suppliers from around hundred to nearly 10. It will also be outsourcing more of its software development and support activities to India. Experts estimate that the total value of its outsourcing projects during this period will be around $500 million.
“As part of our ‘One Philips, One IT’ initiative, we plan to consolidate our data centers (over 400 currently), bring down the number of suppliers and move more work to our center in India,” said a prominent member of the company’s management committee. “We want to leverage our outsourcing partners and Indian operations more than ever before,” he added.
“Going forward, we would like to outsource our entire helpdesk to a single vendor — — — the discussions are already on,” he added. By the first quarter of 2010, Philips plans to use only one global service provider for managing its 40 helpdesks around the world, he also stated.
But competition is hotting up for the large Indian outsourcing companies. Just delivering computing infrastructure maintenance is no longer going to cut ice; European service providers like T-systems are offering enterprise business applications bundled along with infrastructure maintenance. Philips is in fact going to announce an outsourcing contract with the same T-systems in the near future, and this contract will include SAP as a service.
Philips has also planned to invest more in business intelligence software.
Source: The Economic Times, Friday, 9 October 2009.
As always, FYI 🙂
