That is it about Indian society that makes us eye all
industry giants with suspicion and actually gloat when their Achilles’ heel
get exposed and shot at? A few years ago, it was the mighty public sector
undertakings that fell victim to their own largeness, overshadowed by nimbler
smaller companies in every industry sector. Success stories like Tisco in steel
and Gujarat Ambuja in cement became abject lessons for all size-haters. It
almost became fashionable to be small. Today, it is the turn of the software
giants to be accused of large benchings and eroding profits–the target of
cynicism, the butt of all predictions of doom!
There is something in our history and culture that makes us
love the underdog. The cheering that a Subhash Chandra receives when he takes on
and gets the better of a Murdoch, albeit for a short time, the case studies that
are written about Nirma when it catches the marketing satraps of Levers napping–all
these are the stuff that warms our hearts. The IT industry has been no
exception, with more young Indians supporting Sun and Netscape than Microsoft.
Hasn’t Infosys been the undisputed darling number one of the stock market all
the way through the nineties with its ability to outwit the Old Economy?!
In recent times, however, we have learnt our lesson. GE has
shown the country what it means to set up a successful IT-enabled business and
TCS and Wipro, in their own inimitable fashion, have powered their way to global
recognition and a renewed endorsement of the ‘Big is Beautiful’ axiom. When
you hear in April 2002 that TCS and Wipro were the only software exporters to
grow 50%-plus, remember two points–you read it in this column first, and in
tough times, it is good to be big.
The virtues of IT bigness
There are three simple reasons why the big will grow bigger
and small players run the risk of being wiped out of the competitive space:
Size seeks size: Which American or European CIO would
want to risk her mission critical applications–for development, implementation
or maintenance–to a small unknown player who might well shut shop tomorrow if
the boom doesn’t return? In the heyday of the Y2K business boom, the joke was–"Our
American clients first want to know who they can sue if things go wrong!"
And while this may have been said in jest, there is no disputing the seriousness
with which companies consider size–of the engagement team, the organization
and indeed the business groups or funding partners behind the company they may
choose to keep as their software partners.
The time is not one of risk-taking: There used to be a
cliché that went–"No IS head ever got fired for buying from IBM."
Bad times inevitably make organizations and their CIOs averse to risk and the
tendency is always to stick to tried and tested partners, even if their work has
proven a little shoddy at times.
Expectation of empathy: The CIO’s job is often a
lonely one and never more so than the process of designing new technology
architectures for new business applications or company ventures. In such times,
with pressure from the board goading the CIO towards action, and a fear of
unknown technologies and applications holding that same CIO back, a familiar
face from a known organization is what every CIO wants. One who understands the
business and technological issues and develops a value-for-money proposition–that’s
what every CIO wants to avoid losing sleep and missing project deadlines or
budgets.
But if all this sounds like great news for the management and
staff of the ‘Top 5’ IT companies in India, there are a few potential
problems too…
Challenges of being big
Nobody would have missed the total panic on the face of the lookout from the
bridge of Titanic when the iceberg was sighted for the first time. When you are
at the helm of a major software organization and see the dreaded ‘R’ word–recession,
or at the very least a prolonged slowdown looming large in front of your biggest
market, the feeling can’t be much different. That’s because the organization
would have already committed itself to new hiring, increments and promotions and
enlarged infrastructure on the supply side, only to see the bottom falling out
of the demand side. And with wary financial analysts and the sensation-seeking
press breathing down their necks, very little room is left for maneuver before
the ship is almost slam-dunking the iceberg!
This is no doubt compounded by the fact that for many young marketers and
project managers in the software industry, the prospect of failure is an
altogether unknown phenomenon. The nineties have seen an unprecedented four
waves of opportunity–starting with the transition from mainframe to client
server and network-centric computing, then the the great ERP boom and the Y2K
bug to the great dot-com phenomenon… In such a situation, the Midas Touch
seemed more the exception than the rule for the chairman of every reputed
software company, with markets yielding a continuous flow of business and joint
ventures and strategic alliances bearing fruit as planned. For people used to
such a predictable decade of success, the game has always been theirs to lose…to
be suddenly faced with a playing field that is diminishing in size and luster in
front of their eyes is clearly a little more than they had bargained for.
Tomorrow’s landscape…
It would be easy and somewhat pessimistic to predict that the landscape will
be littered with the corpses of many software exporter wannabes, unless the
global economies stage a miraculous recovery in the near future. However, as an
optimist, I will have to predict that a few large and small firms will take the
opportunity of the slowdown to refocus their organizations on new markets, new
methods and new capability development to return to their high-growth profiles
in Year 2002 and beyond.
Sure, there will be an inevitable change in the nature of business that the
more successful companies will pursue in the coming year. The cliché end-to-end
solutions will become a reality, with visionary large- and medium-sized firms
providing services from business process optimization and on to knowledge
enablement to intelligent e-commerce and m-commerce solutions. New tricks will
be mastered to move higher up the value chain and the traditional offshore
development and maintenance activity will be supplemented by customer support
and business process outsourcing initiatives.
An indifferent market will also force firms to finally move into the
development of intellectual property and reusable components, all of which may
result in lower revenue and profit growth in the short term, but significantly
improve both capabilities and performances in the medium term. The year ahead
will prove who the real giants are, as also the pretenders…that will be the
fallout in this war for global marketshare.
Ganesh Natarajan
is deputy chairman and managing director of Zensar Technologies and the global CEO of Zensar in the US,
Europe, Japan, Australia, Africa and Asia