Back to the Future

The monsoons of the year 2004 gave me an opportunity to take a break-from
the industry, the company and most important, the ubiquitous email, sms and
mobile phone world to go trekking in the Himalayas and ponder on what has been
and what will be in this exciting industry-in the next four years and through
this decade. Five insights that flashed through my mind in the Valley of
Flowers, Hemkund and Kedarnath are worth recording and pondering about as the
industry moves from survival to consolidation to a new phase of growth.

First there is no doubt in my mind that the 30% growth track will continue
through to 2008, driven by the growth of insourced Application Portfolio
Management centers for the multinationals, the continued movement of BPO jobs to
India and the expansion of IT services to new markets such as Latin America,
Continental Europe and China- yes China will prove to be as big a market
tomorrow as it is today a competitor and Indian firms who realize that there is
money to be made through development as well as marketing in China will be the
true winners. Beyond 2008, the growth percentages may even accelerate as India
takes its rightful position as the outsourcing destination of choice for IT and
BPO. The $100 bn industry is not a distant dream-it may well be achieved in
this decade.

Indian firms who realize that there is money to be made through development as well as marketing in China will be the true winners

Second, the profitability of Indian Software vendors to a certain extent and
on a larger scale, that of global players like IBM, Accenture and Cap Gemini
will continue to be under pressure so long as the current model of throwing
lower cost bodies at projects and processes continues to be the dominant reason
for offshore outsourcing. With all the global players discovering "best
shore" strategies and even mid tier companies in the developed world
queuing up to discover what (US presidential) candidate Kerry is so concerned
about, every country from Vietnam to Columbia will clamber on the bandwagon and
put intense pressure on bill rates.

Third, new ways of development will emerge as Indian ingenuity discover a new
paradigm for competitive advantage and profitable growth. At Zensar we have
discovered a new wave of success-in software development, product enhancement
and migrations through our automated solution blueprinting framework and in ITeS
through the business process optimization and outsourcing sequence and every
significant offshore services provider will develop their own methodologies to
make the transition less wage arbitrage and more innovation dependent.

Fourth, the CEOs of the industry, individually and collectively through
outstanding organizations like Nasscom will push the envelop of capability and
raise the bar for competition through the discovery and invention of new product
and service opportunities-solution patterns for different vertical segments,
knowledge and tutoring support for the global knowledge seeking community etc
etc. This will keep the IT juggernaut rolling and raise the image of India and
Indians in the world.

Fifth, domestic consumption of IT will really take off—after retaining its
share of the IT pie in the recent fiscal, the government impetus on eGovernance
and the pursuit of IT-led competitiveness by the fast exporting domestic
manufacturing industry will drive higher and higher investments in IT and build
a symbiotic relationship between providers and users of technology solutions
that in turn will accelerate each of the above four factors.

Amidst all these positive trends, there are some areas where the industry
needs to tread carefully. The human resource issue is one which can make the
wheels come off the IT bandwagon. With the industry-institution linkage still
far from satisfactory, attrition and wage escalation assuming startling
dimensions and the aspirations of starry eyed youngsters entering the industry
rewriting the meaning of the Herzberg motivation model every year, finding,
managing and retaining high quality talent is going to be a major focus area for
the industry.

The author is deputy chairman & managing director of Zensar
Technologies and chairman of Nasscom’s SME Forum for Western India Ganesh

Leave a Reply

Your email address will not be published. Required fields are marked *