The Non-Linear Winners  |  October 30, 2008  

The need for non-linear revenue models finally dawned on service providers. Having reached a significant size and scale, they need to be able to offer solutions or services to customers which are not just based on billing the time of their employees. This new paradigm is known as “non-linear revenue,” where revenue growth is independent of the growth of the billable employee base.

So why such a shift at this point in time? I guess the reasons are twofold: First, it is getting harder to find scores of employees in the talent crunch. Secondly, the long-term sustainability of a pure linear revenue stream is questionable.

Under business pressures, companies outsourcing are expecting more for spending less. Interestingly, the wave is driven by evolving customer expectations for bundled, platform-based solution offerings over just white collar workers. That is why service providers are aggressively in the process of developing the depth of expertise in various industry segments and domains, enabling non-linear revenue generating solution offering.

Apart from a pure technical capability requirement, such a trend has commercial implications for service providers. It calls for a change in attitude from a relatively risk conservative one to a more risk assuming and investment oriented attitude. However, risk comes with the potential promise of a higher reward. Time will tell who is able to capitalize on this new wave in the IT and BPO services industry. For now, let’s sit back and watch for the emerging winners

Dinesh Goel, Director, TPI
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