Time has come for Indian IT industry to look for differentiators to be competent and grow in the current market scenario. The global recession is definitely bringing shock waves to the industry and our history show that we are always reactive to the market condition rather than proactive. In the boom time none care about the resource utilization, high cost hiring and state of the art infrastructures acquired at a premium price in costly localities. Once the reality hit, at least few companies started pressing the panic button, and as usual pink slips are considered the easiest strategy to reduce cost and show continuing profit. Does this kind of strategies will save the industry long time? Definitely not, first reason is, in a down time you reduce resources and start tightening the belt, sure the market will bounce back. Only unknown thing is how long it will take for that, but that’s going to happen undoubtedly because the current generation will not be able to live without the banks, financial institutions, and all other products and services, this society can’t do a reverse gear to get back into the 18th century, where what we see necessary today was not even thought off. So the bottom line is economy will revive back and markets will stabilize again.
Then what? Definitely the demand will come back for all these services including IT, where few companies will be put into a scenario; they don’t have enough resources to execute the projects. This will result in the boom time mad recruitment where the potential employee will ask for the sky and employer under the pressure will give whatever asked. This scenario in each recession/boom cycle leads to a bunch of issues. The major being high cost resources with less loyalty and commitment.
But can we avoid all this, sure not, some of these issues will exist and there is no viable solution for them, especially on reducing manpower on a troubled time and hiring at high costs, this will be the game going to be in future also. Possible impact of high cost of services is definitely that, off-shoring to India will become less lucrative to the western world, and they will start pulling out these operations to other parts of world where it is cheap. This is sure to happen if we operate in the way of resource provider to the world IT industry, look at the case of Dell moving out from Ireland where they started their operation in 1990, so after 18 years in a country the corporate is moving to Poland where the reason for move is Poland labor costs are 1/3 of Ireland costs. So being a manpower supplier to the industry we can’t survive for a long time. The moment cost advantage is gone all these companies will pull out the operations from here, so what we can do to avoid this.
Look at the way most of the IT work is getting done in India now, we say you tell us your business and what we need to do we will get it done for you, except for the time management and resource management all other directions in most of the projects are given by the client, we do little value add or provide suggestions to them to improve their business. We need a basic change here instead we have to tell the client, we know your business and we know how we can improve your efficiency using IT. If we don’t drive the business from this angle and develop the real competencies of our work force to think making better solutions we will lose out to the low cost countries in near future. Time has come for us to think beyond the technology and understand the business of customer where we suggest solutions and improvements rather than client saying what need to be done and we provide 8 hour billed resource to the client.
Another area of competency required is in fixed budget projects, Indian IT companies in large except for the big 4 or 5 are less competent in the fixed bidding area, we traditionally worked in the T & M mode of projects and still feel comfortable staying in that area. Being the market getting competitive day by day and every business started counting each penny they spent the T & M model is not going to stay here for long. Now the biggest challenge in fixed budget projects is the resource utilization, sure Indian IT industry clock anything between 70 to 80% utilization of resources, but the bigger issue is resources not assigned to any project or in the so called bench. We need to make sure the utilization levels are optimized across the organization.
Next come the much talked about IP creation, every Indian IT company is talking about IP creation, but how many have a committed program for IP creation and the required R & D facilities, our IP’s are revolving around processes, nothing more that. Time has come for Indian IT companies to be more serious on the IP creation and take it to the next level rather than having an R & D unit where all un-billed resources are parked. I am not saying the number of IP filed in every year has to be the largest from our country, even if we file few let that be of great value.
Next come the much talked about IP creation, every Indian IT company is talking about IP creation, but how many have a committed program for IP creation and the required R & D facilities, our IP’s are revolving around processes, nothing more that. Time has come for Indian IT companies to be more serious on the IP creation and take it to the next level rather than having an R & D unit where all un-billed resources are parked. I am not saying the number of IP filed in every year has to be the largest from our country, even if we file few let that be of great value.
Market share is one of the factors which looks odd in the face of Indian IT companies (pardon me for differentiating between Indian IT company and Multinational operating out of India). Indian IT companies has very less market share of the Indian IT business and recent studies shows that multi nationals operating out of India are much ahead in the Indian market share and recent study shows that some of them may even control 50% of the Indian IT business in coming years. It is a known fact that Indian companies don’t have much foothold in own market and has less idea about how to do business with Indian companies. India being one of the biggest markets for every one starting from consumer products to cars definitely IT also holds big future in this market, ignoring the Indian market will definitely cost a lot for the Indian companies.Survival of the Indian IT story will definitely depend on all the above things and how fast we will turn around our business model.
