Indian IT to Make Four Drastic Changes in 2014 to Survive 2020
With the IT industry changing the way it did 13 years ago, Indian service providers are facing existing challenges they must provide an immediate response to that will be a critical determinate of the industry's future.
To overcome these challenges and obtain long-term success, India is making four drastic changes in 2014 that will take at least five years to take full effect. These include scaling, talent regeneration, re-engineering engagement models and developing newer markets
Zinnov, a leading market expansion and globalization advisory firm, released an outlook for the Indian IT landscape in 2014 that shows margins are predicted to go south, with growth pegged at 15-18% over the next five years from commoditization of services.
Emerging technologies are causing disruption and consumerization. Zinnov says that if India continues to do more of what is has been doing, they will only hurt service providers further.
"Indian service providers need to urgently initiate a series of transformational initiatives across multiple dimensions – Scale, Talent, Market, Models and Capabilities," said Sundararaman Viswanathan, manager-consultin for Zinnov. "It is critical to embark on these sooner rather than later, although this can be like walking on water while attempting to still deliver quarter-on-quarter numbers. For survival and growth into 2020, a resurgent and proactive IT industry in 2014 is a must."
Scale: The ability for Indian IT service providers to grow sales and delivery beyond $1 billion has reached a capacity. Reorganization will allow service providers to acquire local sourcing opportunities and work around protectionist measures. Acquisitions will have to move from capability augmentation to building scale, according to Zinnov.
Talent Regeneration: Delivery changes has been the main focus for Indian IT service provider leaders over the last few years and will need to be taken over by ambitious and aggressive sale-orientated leaders to be successful. Removal of top-level employees will force new talent to work harder to fill the positions. Employees will be responsible for seeking training rather than the employer providing it for cost purposes. Other changes include role shifts, sales teams being responsible for farming, new views on accounts/customers rather than the typical quarter-on-quarter and a shift in skill sets.
Re-Engineering Engagement Models: Indian service providers have been unable to effectively build their export business or work with MNC captives (GICs). Service providers will need to build innovative, low-overhead models to improve delivery margins that domestic transactions don't allow for. These changes start with hiring college graduates, selling value-added services in combination with core services, increasing automation, adding linear components to deals and creating just-in-time delivery structures.
Developing Newer Markets: Indian service providers will need to shift their focus from identification and investment in whitespace in both the market and technology to researching new markets. Examples of this include building capacity in social, mobile analytics and the cloud; investing in Europe and Japanese markets; and investing in domestics business from global players. Service providers have already started looking at the mid-market segment in the U.S. for growth. In order for service providers to achieve growth in these regions, they will need to demand leaner delivery models, innovative pricing structures and have an increased presence at the customer site.