Crazy Times

There

is an old Chinese blessing that goes something like this: "May you live in

interesting times!" There is no doubt that these are some of the most

interesting times for the software industry in India. At the time of writing,

the combined effect of the Bombay Stock Exchange imbroglio, the Calcutta Stock

Exchange payment crisis and the profit warning issued by a software major had

brought software stocks to their knees, hitting 52-week lows and searching for a

bottom that remains elusive.

And for those who wonder how such mayhem could occur less than ten days after

the finance minister offered a dream olive branch to the software industry, it

may be worth revisiting some fundamental truths about the history, evolution and

state of the software industry. Only that can enable us to see how we reached

where we have and answer the question, "Where do we go from here?"

From small acorns grow mighty oaks

A recent article on the mighty Tata Consultancy Services traced the early

evolution of the software industry in the country through the vision and

clairvoyance of one man–FC Kohli. In the seventies and early eighties, the

industry evolved through the abilities of TCS and a few other early birds that

leveraged the capabilities of Indian software engineers. Along the way, these

companies also managed to acquire faith with clients like Burroughs and get them

to see an economic value in using Indian talent. The formula for success in

those early days was simple–sell the Indian wage arbitrage advantage to the

American client, ensure that good English and quick learning capabilities could

be translated to large onsite and offshore work and start counting the profits.

Things remained much the same into the mid-nineties, with the only possible

adaptation being in the range of technologies that Indian software exporters had

to master, given that the flavor shifted a full circle–from IBM to Apple to PC

software to Unix and back to IBM. The nature of work remained largely onsite,

with newer companies finding it



easy to do business with consulting firms which held client accounts and got
resources from Indian firms. Time would have stood still but for the great bogey

that germinated in the minds of American CIOs in the second half of the nineties–the

Y2K blitzkrieg.

The millennium bug will be remembered as the great legitimizing event for

Indian offshore software movement. While American and European programmers

preferred to enhance their resumes with newer skills, it was most convenient to

engage Indian firms–either US-based ones like IMR, Mastek and CBSI or

India-based like TCS and Infosys–to take care of the code reengineering that

the Y2K problem demanded. Once millions of lines of code started moving to

India, the two-shore model of software maintenance and enhancement suddenly

gained credibility as the best way to run any large legacy application.

Post-Y2K, the offshore development center became an acceptable or indeed

fashionable mode of working for global corporations, and early-movers of that

time can today boast of multiple ODCs, linked through satellite and Internet

communications to the heart of the their customer’s data processing

establishments. These are providing the core of



the Indian software industry capability. With the top twenty software exporters
today having spread their wings from mission-critical application development

and maintenance to extended enterprise solutions, e-commerce and system software

development for technology creators across the globe, a robust model is in

place. This has seen a constant evolution of business strategy to fit the

technological and managerial compulsions of global CEOs and CIOs.

What’s the crazy new way?

Where then lies the problem? Why are IT services firms suddenly finding

themselves languishing at price earnings ratios of two and three? It is because

the entire software model is not free of flaws. Sure, there have been

outstanding Indian firms which have developed broad lines of business with

domain skills, deep technology capabilities that insulate the organization from

over-dependence on one or two areas and branded services that win recognition in

the global marketplace. For each one of these, however, there are too many

others whose only claim to fame is an office address in America and an

undifferentiated clutch of engineers who are willing to attack any software

assignment with a dollar payment attached to it.

In the slowdown that is less conjecture and more of a harsh reality in the

US, the first victims are these undifferentiated "Johnny-come-latelys"

who rely on layers of consulting firms to place their people. So far, they have

survived on the hand-me-downs of larger players or the occasional non-essential

project work handed out by some firms. What then is the way ahead for serious

players to pull their companies out of the general fear psychosis that pervades

the software sector and shows that they are truly "different"? Three

basic tenets are essential for any new strategy:

n Clear focus on chosen services, technologies and verticals and an

appetite to invest time, effort and money to make a truly differentiated value

proposition and get that across to the target customer community. The "wage

arbitrage" days are over and only by showing a clear understanding of the

real concerns of the customer can Indian software companies move out an

efficient code-writer and fixer status to become true partners to global CEOs

and CIOs

• Willingness to move deeper into
  
  existing client relationships and geographies. Most firms are still
  
  providing just one or two services to any one client, although their own
  
  portfolio of services may be larger. Acquiring or adding a true consulting
  
  capability will enable the focus to shift to the customer rather than the
  
  service. While a lot of noise is being made on the need to be less
  
  US-dependant, most firms are still single or two-office entities, but with
  
  the potential to be much more diversified

• Leverage the power of teams. Too
  
  many organizations are still one-man shows and hardly have the depth or
  
  width of management talent to succeed consistently across geographies,
  
  service lines and domains. A truly global organization demands a solid team
  
  of professionals heading every geography and business area. This team can be
  
  nurtured and sustained only through visionary leadership, empowered by a
  
  truly professional board of directors. Are Indian organizations ready for
  
  global boards and global leadership?

So where is the craziness?

There is an old saying, "The most uncommon thing in the world is common

sense". By that same assertion, the most obvious set of strategies needs an

inherent craziness to stand by the set agenda through the vicissitudes of

changing technologies and customer behavior. This also leaves room for

innovation and allows flexibility to adapt to the changing business and market

scenarios.

To end on a personal note, I was amused when somebody pointed out to me in

Delhi that the very first company in India to receive a Dataquest Award was none

other than ICIM, which is the company I head today in its re-christened software

avatar–Zensar Technologies. It feels good to be part of the folklore and

history and in an entity that hopes to write the future of the software

industry. For all of you like-minded professionals who see India becoming the

fulcrum of the global software universe, let’s take heart, rebuild our

strategies and rekindle the desire that exists in the heart of every Indian

software engineer.

Ganesh Natarajan former president of

Aptech and a founder-director of BConnectB, is deputy chairman and managing

director of Zensar Technologies.