January 10, 2005
(Computerworld)
Success Breeds Problems for Bangalore
As a location for IT outsourcing, Bangalore, India, is still the place to be. "It's far from past its prime," says Eugene Kublanov, a vice president at neoIT Inc., an offshore outsourcing consultancy in San Ramon, Calif. Bangalore still has the best concentration of IT talent in India, beautiful high-tech business parks and good weather, he says.
But the boom in offshore outsourcing is also putting strains on the infrastructure in Bangalore, which faces stiff competition from other cities in India for outsourcing business. The No. 1 complaint about Bangalore is that drivers face hours-long traffic jams on chaotic, inadequate roads. That's followed by complaints about the airport, which badly needs to be upgraded or replaced.
"The infrastructure [in Bangalore] requires a significant amount of investment, or the city won't be able to sustain its growth," Kublanov says.
A neoIT study of the best cities in India for outsourcing ranks Bangalore second, trailing the city of Gurgaon. Pune, Hyderabad and Chennai are nipping at Bangalore's heels, according to the study.
Perhaps the biggest challenge for outsourcing firms in Bangalore is the hyperinflation of IT salaries, which were up 15% in 2004, Kublanov says.
For outsourcing firms, "it's becoming very expensive to do business in Bangalore, by India's standards," he says. "Their fees aren't going up 15%, so their margins have to give," which is why Bangalore giants such as Wipro Ltd. and Infosys Technologies Ltd. are starting to set up additional operations elsewhere.
The most useful parts of recent business and IT management books.
The book: Privacy: What Developers and IT Professionals Should Know, by J.C. Cannon (Addison-Wesley, 2005).
Finally, there's a privacy book for IT managers instead of policy wonks. This isn't the perfect privacy book, but it has useful sections on improving privacy at Web sites and providing multilevel access controls for databases so that only certain employees can see the most sensitive information on a need-to-know basis.
A key message is that privacy needs to be baked into IT applications from the outset—yes, just like security—and the book provides a detailed methodology for exactly how to do that. The trick will be overcoming resistance from application development teams who fear this will make projects take longer. (Advocates could point out what regulatory fines and press exposure will do to the company's stock price.) The author also urges companies to follow one of the oldest data privacy principles: Don't collect more data on people than you really need. But with today's emphasis on CRM and terabyte-size data warehouses, I'm afraid that advice will be ignored.
Things to Ponder
• Buzzword alert: Domicity Ltd., an IT consulting firm in Toronto, is using the term Metanet to describe the interlocking group of various networking technologies, such as public and private packet- and circuit-switched networks, and terrestrial and satellite-based wireless systems. It's bigger than just the Internet.
• What do CIOs like most about their jobs? Variety, solving business problems and working with innovative technology were the top three answers in a survey of 100 CIOs conducted by Merrill Lynch & Co. in New York. What they really hate is budgeting.
• One of the megatrends over the next five years will be "microcommerce," says Gartner Inc. Think of Apple Computer Inc.'s iTunes online music store, where songs cost 99 cents, and the fact that consumers have spent millions of dollars on cell phone ring tones, which can be downloaded for a few dollars each.
Midmarket IT Priorities for 2005
1. Replace or upgrade PCs
2. Upgrade security
3. Deploy or upgrade a major applications software package
4. Upgrade Windows desktop operating system
Base: 770 technology decision-makers at U.S. medium-size businesses (100-999 employees)
Source: Forrester Research Inc., Cambridge, Mass., November 2004
The IT Economy
• Analysts peg this year's IT spending growth at a healthy 5% to 8%, but "a few trends will weigh down most companies and leave little for the innovative IT purchases that drive competitive value," says Tom Pisello, CEO of Alinean LLC in Orlando. Mandatory purchases and hidden "taxes," such as security and PC upgrades and spending on Sarbanes-Oxley Act compliance, will consume much of the IT budget but add little real value to the business, Pisello says. Plus, shadow spending outside the IT department's control will continue to take up 10% to 20% of a company's overall IT expenditures. Pisello says the key to "extracting meaningful value" will be reducing the total cost of ownership of required purchases and thereby freeing up funds for innovative projects such as Web services, mobile computing, business intelligence and radio frequency identification.
Buying Intentions
IDC researchers say their index of business IT demand (below) shows that user spending expectations have dropped a little, but buyers are still somewhat bullish. In fact, in a real switcheroo, IT buyers are more optimistic than vendors are these days, IDC says.
The buyer intent index is based on monthly surveys of 400 to 500 U.S. CIOs and business executives, who are asked about their IT spending expectations for the next 12 months. Results are weighted to be representative of the U.S. market. An index of 1,000 means zero growth. Caveat: Buying intentions don't always lead to real spending.
Source: IDC's FutureScan, Framingham, Mass., December 2004