I don't think so until a tectonic plate shifts underneath the Indian software industry to usher in a fundamental change in focus. The word 'back shoring' is gaining popularity. Cliché’s can transition rapidly from fads to facts in this globally connected, word of mouth driven, social powered, internet age.
The genesis of the industry was on a cost saving proposition. The herd pattern took over, large deals got larger and Indian software companies grew from garages to ‘info’plexs. Certification became a fad and everyone chased ‘the CMMI stamp’ to signify quality. With the boom came the bane. Engineers treat companies like guest houses- stay a while, learn and then move on. With such stupendous growth the focus has been on volume as opposed to quality. And over the times, the economic price-demand curve has come to the fore with even base costs in India not being as competitive as earlier deemed.
The cost proposition is waning. I would conjecture a guess that with respect to TCO we are much worse off with offshoring/outsourcing as opposed to doing it in-house. Two key factors contribute to this in my view – first the high management overhead which the company needs to retain in order to govern the project so that they actually get delivered to promise and secondly the cost of quality resulting mainly from the software engineers being perpetually in-transition.
With the core value proposition under threat, quality of delivery in any case being an issue and state of world economy making protectionism and retaining jobs locally a priority, I think this industry needs a shake up to stay relevant.
My two mantras for the industry’s renewal:
· Significantly yank up the volume on project management. Companies end up spending a fortune on management overheads as the project management support from the offshoring vendor is largely appalling, especially the emotional intelligence component which is so critical to delivering successful projects. It becomes immediately apparent that project managers have just grown through the software engineering line and not placed adequate attention on grooming in the art of management. This needs to be addressed at the grass roots level as IT project management is probably more about management than technology. Getting an IT project to deliver its promise is an art and not science and requires leaders at the helm to achieve success
· Lead software engineering innovation – invent rather than just follow. India has captured market share in the business of software engineering but has done little to spearhead the field in terms of innovating it. Most software engineering innovations still emanate from the enviable Silicon Valley. New programming languages such as Ruby, Bid Data management innovations such as Hadoop, NoSQL, great companies built around IT such as Apple, Google, innovations in the mobility sphere such as the explosion of App stores et al have their roots outside India. A passion and fetish for software engineering innovation needs to seep into the IT ecosystem in India. The industry needs to stop thinking and promoting software engineering as a commodity and positioning it at a strong force to get competitive advantage in business. For this to happen, some of the industry stalwarts, the universities, the fund owners, the startups, the entire ecosystem needs to shed its conservative approach to doing business, promote experimentation, spend intellect on research and take bold steps forward to shape the future of business innovation through engineering. This will then create a sustainable comparative advantage and a new proposition much higher in the value food chain than just 'we reduce your costs of software development'
I feel India with its bright minds, its academic grilling and strong foundations, die hard focus of its people to commitment and hard work, its strong cultural roots, its current positive state of mind - has the right ingredients to create a sustainable business model around the IT industry cluster and surmount any threats.
However it is the Internet age afterall. Past laurels are not a guarantee for future sustainability. The winds of change need to be felt and absorbed pro-actively. Bold changes need to be ushered in at a swift pace.
Winners in this age will be defined by their ability to sense and respond to change as opposed to basking in the sunshine of a sinking sun.
You are right,the "magic" will not last; but the "business" will. The Indian IT companies are in the business of commoditised sevices, which is still growing. IBM, Accenture, HP: all have now adopted the "offshoring from India" model. IBM alone employs around hundred thousand people in India and is still regularly arranging walk-in interviews; such is the demand. An IT company in India loses almost 19% of its workforce every year and takes in double that.
ReplyDeleteAsk any insider and you will find that "shortage of resource" is the main issue they have to tackle. The demand seem to be unending. The pressure due to high demand is also one of the reasons why an Indian IT company is not so focussed on innovation. But on the other hand all the major IT players:IBM, Microsoft, HP, etc. have set up their research facilities in India.
One should not forget that this industry was created by demand pull, which does not seem to be subsiding in the near future.
As for innovation, there are a lot of innovative products and services that these companies are spewing out. Those are not as hot as Google but pretty neat and commercially viable. The number of patents that these companies are acquiring every year has significantly increased.
In the future, this "outsourcing/offshoring" business model is going to get more entrenched and will wildly prolifirate as Cloud computing and SaaS get more traction.
Look what happened to Electricity and Telephone! IT sevices will no more be strategic but become commodities or utilities. And, Someone will have to do the "behind the scene" dirty work.
Dear Anon,
ReplyDeleteThanks for your comment. You make very valid points.
I do however feel that business is good right now because the magic was done a long back when the nation's strategists concentrated on creating a robust education system around engineering and in the language of the business world.
If we dont invest in the next wave of value creation at the pinnacle of growth then you risk not having the money or the energy to do it when you are riding the deep slope of the trough downwards. So the money is there now. The energy is there now. The intent needs to be there now as well to invest in the future so that business continues to grow.
cheers Neetan
just came across this post when i am reading a random blog.Intersting to read abt d article.Its not in IT ,in any industry they need to think for the future - a step ahead to survive.. i hope most of the biggies r already doing that , tats how still they survive....Intersting is how the biggies going to create a eco-system arnd their services to survive in the future.Interesting is how these biggies r going to turn themselves from cheap labour to high end value added services for their clients. Interesting is how the profit margin will be maintained in the future when the Value of currency increases across the developing countries.
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