How the Mid Market Responds in Turbulent Times?

The current economic picture is one that shows a lot of uncertainty and volatility. While large corporate giants have the resources and power to maintain their hold in these uncertain situations, what are the mid market organizations doing? Are they ready for a change?

The mid market is often claimed to be the powerhouse for global economies, the major catalyst for growth. Deloitte’s Mid Market Perspectives: 2011 Report on America’s Economic Growth Engine clearly states that the power of the mid market cannot be neglected. 40 Percent of the United State’s GDP comes from the mid market. And not just the Americas, its has become an equally influential part of the rest of the world today. An interaction with Rajesh Dhuddu, general manager, new product development & marketing, Quatrro, reveals that more than 90 percent global businesses are mid market or SMBs.

So whats happening in the mid market space? How are mid market organizations dealing in the current market scenario?

Realization That IT Can be a Change Enabler

There is a visible realization that there has to be a change. There are lots of internal and external pressures to deal with. Globalization, recessionary fears, increase costs, difficulty in retaining talent and shortage of resources is going to have a lot of impact on how these organizations function. Things that might have worked in the past, might not work any longer. There is cut throat competition from large enterprises, and they just can’t afford to compromise on product or service quality. Viral Thakker, Partner, KPMG, says, “A small or medium sized organization has the challenge to come out with products that give the look and feel of that of big brands.” This is a big challenge. It requires IT investments, talent and managerial skills that most organizations do not have access to. That’s when alternate models like shared services and outsourcing comes to the rescue.

More sophisticated Approach

Experts say that there is clearly a change in mindsets. Mid market organizations are opening up to outsourced IT service models. IT is increasingly being seen as the change enabler and IT spending has increased from the past. Also there is an increased realization of the need to align IT with strategic business goals, bring innovation and transformation. So organizations are clearly becoming more sophisticated in there approach. Even the outsourcing contracts that are happening today reflect these changes. Thakker says, “Its no longer a cost argument, its much more than that. In the long run, the benefits are very likely to outweigh the costs.”

Even the service provider strategies in the mid market, reflect the changes happening. Quatrro that specializes in dealing in the mid market and is the only Indian service provider that offers offshore services to global mid market enterprises. Pointing out Quatrro’s specific mid market strategy, Dhuddu says “A service provider has to roll out services according to the specific needs of the segment. We often have to reach out to them before they reach out to us.” This is more because of the lack of awareness about the type of services available in the market and inability to identify the right solution provider. But as awareness is improving, enterprises are also becoming more demanding and their expectations from outsourcing relationships are going up massively.

According to Forrester’s Webinar, ITO Trends in the Mid-Market: Overcoming Challenges in the Current Climate, these are the reasons why mid market CIOs would think of outsourcing:

  • Reduce total cost of ownership
  • Deliver new systems and applications faster and with improved quality and reliability
  • Retain critical skills and knowledge, while shedding commoditized resources
  • Increase end-user satisfaction
  • Improve internal IT’s business focused capacity
Source: Global Services
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