How Will Life Be After the IT Slowdown?

These mellow notes of Joni Mitchell in her evocative number, The Circle Game,

could well describe the Indian IT industry in its present state of uncertainty.

The great US slowdown truly seems to be going in despondent circles. There is a

slight flutter of enthusiasm sweeping through the stock markets and CIOs alike

and predictions for the revival of the US economy range from October this year

to July next year. The seasons that move in circles could well be the quarters

of indifferent performance that we are seeing. And the painted ponies that go up

and down could be the stock market and economy pundits who continue to

contradict each other and even themselves, as their moods swing from irrational

euphoria to downright pessimism.

But the silver lining is that like all bad times, these too will pass and

there is no reason to doubt that the US economy will bounce back sometime and

pull up the sluggish British and German economies as well. The question will be

whether the Indian IT Industry can then automatically resume the merry making of

the nineties or whether it will face new challenges for continued success.

The new realities

Joni Mitchell was certainly right in the context of technology cycles, but

there are still a lot of lessons to be learnt and new beginnings to be made in

the technology era of the 21st century. Nothing perhaps exemplifies this more

than the much-talked-about HP takeover of Compaq. Just a few weeks after sipping

wine with Bill Gates and Andy Grove in San Jose to celebrate the 20th

anniversary of the IBM PC, the CEOs of the two mega corporations in the computer

hardware industry have realized and acknowledged that the PC era is well and

truly over. The writing has been on the wall ever since Larry Ellison talked

about the network computer, perhaps prematurely, a few years ago. But the

slowing down of PC sales and a negative growth in the current year have spelt

the sure end to the 20-year PC lifecycle.

The writing has been on the wall with newer access devices replacing the PC

as the one form of e-mail retrieval and the robustness of today’s PCs ensuring

that replacement with a newer model is more a fad than a necessity. When I see

the versatility of the I-Paq that is my worldwide traveling companion, and the

relative unemployment of my ThinkPad, I realize that the reality is not far from

home! And while the HP-Compaq merger drama is still being played out in the US

and European stock markets, the cycle of change has clearly been set in motion

by just the announcement of the intention.

The other sector that had reached the peak of inflated expectations towards

the end of the last decade only to flounder into the abyss of user reality, is

the telecom and wireless wave. With bids for telecom circles getting bigger and

bigger in both the Indian and international markets and the 3G wave threatening

to sweep the world, the birds were singing in the lands of Marconi and BT and

our very own cellular and pager operators.

Things have changed to such an extent in just a couple of months that the

very survival of Marconi seems to be uncertain. Majors like BT and Ericsson are

staggering and except for the very ambitious players like Bharti and Reliance,

the Indian sector sees telecom wannabes disappearing faster than the sound waves

they originally created. Bandwidth availability is still a constraining factor

and the killer applications that would have faced the pace of bandwidth

availability in sectors ranging from entertainment, education and information

are still under development in most countries.

The software sector is of course, suffering from the over hype that it

created in the last five years and it is time for a "back to basics"

approach where only mission critical applications are receiving budgets for

maintenance and enhancement in an era of shrinking corporate budgets.

One of the few successful companies in the game of collaborative solutions

and knowledge management has realized that it is no longer possible to lure

chief information officers with "Smoke and Mirrors". They have to get

down to understanding the "pain points" of the customer and instead of

throwing technology and methodology jargon at the customer, will have to

configure specific solutions that have demonstrable value in solving customer

problems. Today, they are solutions for customer complaint handling, patient

diagnostics and equipment maintenance that make this happen and make the elusive

dollars pour into their coffers.

Back to basics: Up the value chain?

If all this sounds familiar, it is because the need to move up the value

chain has been an ongoing refrain, first in the software exports sector and now

across all sectors of IT. It is no longer adequate for software companies to

flaunt their technology wares and use alliances with the Big Blue and other US

technology pioneers to win the battle for customer orders. Expertise in industry

verticals coupled with a deep understanding of issues across the value chain

from the customer to the enterprise to the supplier will be the differentiator

between the winners and the also rans in the international exports markets in

the coming years.

The good news is that Indian software companies are not alone in their war

for customer mind-share. Every organisation from the Scients and Viants of the

dot-com era to the Big 5 with thousands of consultants to the boutique

management firms with deep customer relationships, is facing the impact of the

slowdown. It will need visionary chief executive officers, nimble-footed

marketers, consultants and technology practitioners to lead their companies

through the marshland of slow economies to the promised land!

In other sectors too, the value chain exists and will have to be exploited by

successful companies. The title "access devices" given by HP-Compaq to

one of their proposed new divisions shows the glimmer of light that exists for

the hardware industry in today’s changing infotech arena. This will open up a

host of new opportunities for infrastructure and network builders and give

technology architects and administrators the place in the pecking order of

information technology specialists that they have unfortunately been denied by

the dot-com whiz-kids in recent times.

Does that mean a fresh lease of life for many of the over 50 EDP managers who

never really bought into all the new hype anyway? Keep those retirement plans on

hold, folks!

Ganesh Natarajan is

deputy chairman and managing director of Zensar Technologies and the global CEO

of Zensar