For Mid sized Indian IT Companies Road ahead is Bumpy and Challenging one. STOP Strategize and Proceed with Appropriate Plan is the watch word
Principal Consultant:
Mr.M.V.Subba Rao M.Sc (Tech)
Volume 1.0 Date: 31 July 2007
All Major IT companies are posting 25-30% Year on Year robust growth for the last few years. This Trend is likely to continue for foreseeable future, a close examination shows this may not be the case with mid-tier and small companies. The reasons could be many like- Reduced margins, Appreciating Rupee, Non fulfillment of Client SLA, faltering delivery schedules, competition from majors for retaining Quality clients and attrition of KEY manpower. Those mid-tier companies serving niche markets are also not spared. They face continuous threat of Merger/Acquisition from large companies either to enhance their service/product portfolio or to reach out to new Geographic areas. These challenges assume paramount importance for midsized IT companies as they have not invested adequately on Key issues. One of the reason could be as a small company they have to grab every business opportunity without really worrying about long term strategy. Over the Years IT industry as a whole is witnessing certain anomalies, which are obscured by decent growth and profits. This article tries to identify some of these challenges and put forth certain strategies to counter them.
Noticeable Present issues:
1. Too much emphasis on learning software development tools rather than on Information to Knowledge transformation techniques, tools and Infrastructure. Diluted focus on verticals like Education, Health care, Entertainment-governance etc..
2. Too much ado about theoretical methodologies to circumvent client demands rather than serious effort to automate them across the organization. No percolation of Knowledge across the organization and efforts to transform scattered information in to tangible organizational knowledge
3. Leadership vacuum at Organizational and Employ level. No new technology breakthroughs, Few Indian IT patent registrations are ample testimony of this fact. IT companies are willing to take Risk Free second fiddle role of fulfilling client wish lists rather preempting with Client counseling with specialized knowledge during project definition stage-acting like real Consultants.
4. IT industry is not showing maturity of standard industry but prefers to be a set of Glorified Resource Contractors, the competition is degenerated in to successful employ pouching strategy
5. The Global delivery model with 45% on-site and 55% offshore employ deployment with out adequate IT infrastructure for project management and project tracking of client deliverables is a serious impediment for successful completion of projects
6. Companies are not Articulating Long term strategies, emphasis is on quarterly business growth and consequently new employ additions which may in long term poses threat of health of the industry during growth Plato and sluggish times. At best the industry could be shot term Investor friendly.
7. Lack of sharable national IT infrastructure to make Indian IT companies more competitive by taking care of security, redundancy and 27/7 connectivity problems
8. Though there is substantial Domestic IT growth, it is mostly concentrated in hardware related sales but not in applications for state/central governments. Local bodies and Industries l. India is not setting itself as Role model for other developing countries to capture tomorrows business from them
9. SLAs are increasingly becoming one-sided consequently client pressure on projects is mounting prohibitively high
Emerging scenarios:
1. Client billing preferences are changing from Hourly Billing to Fixed Bid
2. Rupee appreciation is start showing up on Margins
3. ITES business proportion growing much faster than IT services and are becoming more mature offering engineering and other professional services
4. Employ attrition will increase phenomenally due to job satisfaction, pay compensation, health hazards and lack of career growth opportunities
5. Sustained client engagement with Quality service will be up-hill task more and more Delivery Managers desert the companies unable to meet deadlines
6. New client acquisition Marketing costs increases while retaining existing clients with new billing rates will erode seriously margins
7. Clients demands on data security and fallback backup sites redundancy IT infrastructure demands NEW capita investments
8. Employees and Infrastructure Insurance costs mounts
9. Markets seriously considers Quality of IT infrastructure as a key parameter in Company valuations apart from employ strength
Futuristic possibilities:1. Growth in IT business tapers, present employment generation rate per unit of additional business will come down drastically while ITES business increases drastically
2. Employ salary rises will be steep while head count reduces other words employ skill demands are going to be high
3. Attrition problems will be reasonably addressed
4. VISA regulations assume critical for the IT industry as a whole
5. Cost effectiveness of Out sourcing works to India will erode, it is no longer a cheaper destination but Preferred Skilled professionals destination
6. The share of contract and Part-time employees increases dramatically in salary bills of the organizations
7. Demand for Domain specific languages (DSL), Reusable components, Process automation tools, Data security, access control and data mining tools will increase.
8. The share of Customized software development will come down. Clients prefer multi vendor participation which warrants vendor to develop on standard Frameworks so project deliverables are predictable
Strategies to counter above challenges
1.
Deploying Organizational KNOWLEDGE BASE as an effective means to counter competition and to nurture employ creativity
2.
Deploying Web based Collaborative tools as an effective means to exchange information across the organization and to TURN information in to KNOWLEDGE
3.
Deploying Organizational CRM as an effective means to Attract NEW CLIENTS and Retaining EXISTING CUSTOMERS
4.
IT INFRASTRUCTURE Planning for Offshore Development & TESTING and executing CLIENT END DELIVERABLES
5.
DATA SECURITY POLICY Planning for Offshore Development & TESTING and Operational CLIENT END DELIVERABLES
6.
DATA SECURITY Planning for Offshore Development & TESTING and Operational CLIENT END DELIVERABLES
7.
Deploying Web based Project Management as an effective means to Track Client deliverables and schedule
8.
Deploying Web based Testing tools as an effective means to ensure Quality in CLIENT DELIVERABLES
9.
Interfacing issues of CLIENT END DELIVERABLES with existing CLIENT IT Infrastructure and 3rd Party Plug-inns
10.
Tracking CLIENT END DELIVERIES with appropriate Version/build mechanism and installation procedures and compatibility
11.
SLA preparation and execution could make or mar projects
12.
Selecting appropriate Business Model could be critical for long term companies financial stability
13.
Thrust on Training and nurturing future managers with shared common company vision though participation in decision making process
