How can CIOs help?

CIOs must create the models that can track business risk. In large companies, this is a specialist function; they have departments that look at risk. But ultimately assessing risk is driven by IT and risk models. Small companies may not have a dedicated team or a chief risk officer. But a model still needs to exist and the CIOs will have to enable this.

What about outsourcing? Should Indian CIOs turn to it to improve efficiency?

It's hard to generalize. It depends on individual companies. The decision depends on where a company is in terms of sophistication, markets, products and services. However, I firmly believe that outsourcing makes sense for larger companies in the country. Many of these companies are global and need to have the best IT and IS capabilities.

Evidently, the cost arbitrage doesn't exist here, so there has to be true value delivered. That said, there is still a cost benefit, because an outsourcing partner has built a shared-service capability, which allows companies to leverage scale benefits. Plus companies can take advantage of best practices in their industry. The third benefit is that companies can truly manage IT as a variable cost. And with SLA penalties, companies are creating higher efficiencies and more transparency in how costs are managed. Finally, outsourcing allows companies to move to a pay-for-use model with SaaS or cloud computing. And that's what will probably drive smaller enterprises to outsource. I see the downturn as an opportunity for companies in India to discover the benefits of outsourcing.