I have written about how appirio, a salesforce and Google focused systems integrator is packaging service as software.
Zach Nelson, at NetSuite, lays out the same challenge to resellers
“VARs are going to have to change their business model or go out of business. They have a math problem they need to solve. Great Plains has licence up front of $529k. Then the VAR gets one to three times as much to implement, so that’s up to $1.59 million. NetSuite you pay $176k subscription per year. If I charge you that, can I charge you $1.59 million for services? No way. So the challenge for VARs becomes how I reduce the cost by 10x.”
His suggestion – like appirio – deliver more condensed and highly leveragable services as software. (Update: Zach reminded me NetSuite has been using the term "service as software" for a while now)
BTW – he does not touch on BPO, but that market is ripe for a huge re-think also as I wrote here