Raj Sardesh

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Strategic Marketing for Offshore Developers
Raj Sardesh
December 8, 2005
Positioning Products for Market Success
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Mexico and Offshore IT Services
Worldwide Offshore IT Services Export Share by
Region, 2003
Share of Offshore in Total IT Services Pie
Total Global IT Spend (2005) 640 Bn
Latin America accounts for less than 2 of global
offshore IT services while India accounts for 72
Share of total offshore spend
Adopted from IDC, Gartner Nasscom Estimates
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Landscape of Offshore IT Services

• Addressing the gap with India requires very
  focused efforts and commitment.
• Gartners 2003 survey of 36 outsourcing companies
  ranked nearshore application management as the
  most rapidly growing service opportunity.

Range of Services
Application Development
Product Engineering
Systems Integration
ERP Services
BPO
Independent Testing
Consulting
Infrastructure Management
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Offshore Development Customer Requirements

• Cost Savings
• Provider Capability
• Provider Reliability
• Value Proposition

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Customer Requirement Cost Savings

• Onshore/Offshore rates
• Rates based on different categories of resources
• Project-based rates
• Dedicated resources

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Customer Requirement Provider Capability

• Processes Metrics for customer satisfaction,
• Certifications (SEI CMM, ISO, Six Sigma) of these
  processes
• Methodologies vendor defined or standard
• Tools for project management, defect tracking,
  CRM, etc.
• Business models corporate structure, customer
  escalation procedures.
• Infrastructure facilities/security/backup
  power, communication infrastructure/VPN/security
  for electronic connectivity, system
  infrastructure, etc.
• Human Resources number of technical call
  center staff, domain specialists, qualifications,
  ramp-up/attrition rate, policies, admin staff,
  employee confidentiality contracts, etc.

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Customer Requirement Provider Reliability

• Your company profile history, major engagements
• Experience (services and product engineering)
  cost savings for past clients, engagement case
  studies
• Financial health ownership pattern, investors,
  accounting practices
• Management commitment to clients
• Geographical location flight connectivity, any
  local/regional support by the government,
  languages spoken, etc.
• Educational facilities access to local talent
  or any training conducted to quickly ramp up
  resources.
• Customer referencesindustry, size of the client,
  duration of the engagement, etc.

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Addressing Customer Requirements with Successful
Marketing Strategy

• Integrate responses to customer requirements in
  all marketing deliverables
• Create a unique value proposition for each
  solution/industry you are targeting
• Focus on your core competencies and partner with
  other firms to extend your expertise
• Partner with offshore firms that are looking
  for near-shore advantage.
• Create marketing Deliverables with consistent
  messaging
• Web site
• Collateral
• Corporate brief
• Solutions brief
• White paper
• Success stories
• Increase awareness with Analyst coverage and PR
• Create ongoing marketing campaigns to keep the
  momentum going

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Successful Marketing Strategy to Win Early
Accounts

• Find an entry point into new accounts based on
  your previous successes. However, make variation
  based on the U.S. market, competition, etc.
• U.S. in general is significantly more competitive
  than Mexico. And another 50 for Silicon Valley.
  Learn from Silicon Valley but initially focus on
  customers outside the valley.
• For every RFP on offshore development, a customer
  can get multiple bids in days.
• Recommendation -- Focusing on small to mid-size
  businesses would yield better results in the
  beginning.
• Recommendation -- QA Services as an entry point
• Testing is often outsourced with less risk than
  application development or maintenance.
• The work can be easily segmented.
• Testing does not require the offshore resources
  to touch the application source code.
• Most companies underinvest in testing.
• Testing engagements can slowly ramp up and can
  lead to larger engagements.
• Your sales strategy impacts your marketing
  strategy and deliverables.

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Emphasize the Near-Shore Advantages

• Ease of Visa regulations, especially against
  India.
• Important to have quick and free movement of
  resources during the initial knowledge transfer
  phase.
• Advantages of NAFTA, for example, for data
  pertinent to intellectual property rights.
• Giga Researchs Stephanie Moore predicts that
  Mexico and Canada will continue to grow since
  NAFTA helps simplify international agreements.
• Proximity to the U.S. and shorter time
  difference.
• Lower employee attrition rate (if you do) against
  Indian companies that are facing higher attrition
  rates (Attrition will skyrocket in the Indian
  IT Services Arena in 2004. Stephanie Moore,
  Giga Research)
• Dispute the myth of 24x7 work day.
• Reduced travel expenses.

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Creating your Value Proposition

• Who is your competition? Highlight companies
  from Mexico (softtek?) and India or other
  countries.
• What services do you offer (BPO or offshore
  development services)?
• What industry domain expertise do you have?
• Do you have any products that can be combined
  with your services to create unique solutions?
• What is unique about your solution offering that
  would differentiate yourself from your
  competitors?
• What are the key benefits customers would derive
  from using your solutions/services?

• It is not enough to position yourself as a
  general purpose offshore development services
  provider.

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Creating Value Proposition
Value is the trade-off between benefits and costs
Value Benefits
Cost

• Where Value is the worth to customers.
• Benefits are the financial and non-financial
  advantages that customers derive
• Costs are the financial and non-financial
  expenditure required of customers to receive the
  benefits.
• Customers do not always go for the lowest
  cost alternative. They would rather pay based on
  value.

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Creating your Value Proposition

• Position your services offering by articulating
  benefits into three key messages.
• Highlight the features and/or services that allow
  you to offer these benefits
• Aggregate all services positioning to create
  value-based company positioning.
• Example We are a leading near-shore services
  vendor backed by ten years of experience with SEI
  CMMI Level V offshore capability--for small and
  mid-size firms in the financial services
  industrythat delivers significant ROI, more than
  30 cost savings, and results in increased
  customer satisfaction.

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Collateral

• Use company positioning as a lead-in to services
  positioning.
• Emphasize three key messages from the services
  positioning consistently throughout all marketing
  deliverables.
• Web Site
• Your web site should have sections along the
  lines of -- About Us, Solutions, Industries,
  Customers, Partners, News, Contact Us, etc.
• Create an English language Web site. If you have
  a bilingual Web site, offer an easy way to switch
  the language on the home page.

• Collateral is an entry fee to play!
• Corporate Overview - covering company background,
  services, customers, contacts, etc.
• Product data sheet (if your company has products)
• Solution briefs at least one per specific
  industry or specific horizontal solution
• White Papers at least one per specific industry
  or per horizontal solution
• Customer Case Studies for successful
  referenceable implementations

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Analysts and PR

• Periodically brief the analysts at Giga, Gartner,
  Forrester and IDC who follow offshore services.
  Getting positive analyst coverage is important in
  the long run. They are influential in
  recommending services to customers.
• Speak at pertinent industry events (Svase.org,
  Churchill Club, etc.) that customers attend so
  that your companys name is better known.
• Hire a PR firm and announce ongoing news,
  especially, customer success stories, partner
  announcements, etc.
• Plant articles written by professional writers in
  industry publications (both online and offline).

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Lead Generation/Marketing Campaigns

• Segment prospective customers by industry, name,
  opportunity, etc.
• Research the industry, industry trends and best
  practices, potential target customers and their
  management teams.
• Create smaller online campaigns that are
  personalized or referral based. Use Linkedin
  (www.linkedin.com) or your network to get
  referrals into new accounts.
• Use a CRM system such as Salesforce.com or
  SugarCRM to keep track of customer contacts and
  to follow up with customers on a regular basis.

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Summary

• Create a unique value proposition of your
  offering and your company
• Create compelling marketing collateral to
  generate interest.
• Win early customers with sharp focus.
• Rely on your network for a successful U.S. market
  entry!

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ProductMilestones

• Established in 2001 in San Francisco/Silicon
  Valley, ProductMilestones is a consulting company
  specializing in product and marketing strategy,
  positioning and strategic marketing for emerging
  and established firms in the software arena.

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Our Customers
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ProductMilestones Services Roadmap

• From market assessment to product/services launch
• Strategy combined with Precision Tactics
• Introductions to potential customers and
  partners.
• Project-based and low cost retainer-based
  Marketing Advisory Services

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Questions?
Positioning Products for Market Success