IT & Procurement Organizations across industries worldwide have mastered the sourcing of “Run the Business” Services. The sourcing models in existence today have matured over a period of time and these models fulfill the organizational needs from a sourcing engagement with a service provider.

“Application Development” or “Change the Business” services on the other hand are still in the initial stages of evolution as challenges involved in AD are unique and IT organizations are experimenting various models and seeking innovative constructs from service providers. One of the key challenges in “Application Development Sourcing” is the growing Capability gap between skills required across the various stages of the entire CTB life cycle viz.  Right from Conceptualization (blue printing / Business case establishment) upto execution (Design, development, testing and implementation).

While the former needs niche consulting skills and business appreciation, the latter is more of technical expertise. De facto view that customers adopt is to have multi- vendors co-existing i.e. one vendor for each of the Business/ Technology division. There are inherent challenges due to nuances in each of the SDLC phases.

Customers are exploring newer AD Strategies and are contemplating to have exclusive vendors for “Design & Build” (proven core- competency of IOPs) and “Plan” / Business Organization  phase(Similar to Helpdesk being retained by infrastructure Vendor and outsourcing of L2 and L3 services to OSPs).

HCL through working with Customer IT Teams has evolved in building effective AD organizations. Gen 2.0 outsourcing organizations are attempting to evolve beyond the segregation into “Plan” and “Design & Build” Organizations, i.e. classification of systems into “Differentiation”, “Innovation” & “Record” based on utility of system. Another trend that’s prevalent among the AD organizations is, there is a clear interest in a very lean core team (Similar to KTLO in ASM) to have “Plan” activities functional whilst earlier approach was to have heavily loaded Development team.  The advantage of having a lean core team is twofold – a) optimal Business case & b) responsibilities of Knowledge management and transfer is bestowed upon a set of core team members.

Upcoming years will see the Industry exploring various options (not restricted to above) and a proven AD model will evolve.