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Service Is The Key

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The Indian IT services industry has grown almost tenfold from about $8 billion in 2000 to over $88 billion (estimated aggregate of IT software and services revenue),  employing about 2.8 million people. Despite economic uncertainties in Europe and lower technology spending in the US, Nasscom pegs 2013 export revenue growth at about 11 per cent.

The Indian IT services industry has gone through several phases, each time reinventing and adapting itself to meet the changing demands of the global customer. From developing applications to maintenance and support, it has morphed into an integrated services provider, ready to ride the internet and telecom boom and take on next-generation technologies. From leveraging the erstwhile cost advantage/price advantage model to offering more services at the same rate; from an offshore outsourcing model to consulting-led model, the industry today is seeking new service delivery models to remain competitive and relevant.

Today, the industry stands on the threshold of another reinvention and the subsequent leg of the journey will be dictated by next-generation technologies and innovative models of service delivery. The path the industry players choose next is going to make all the difference. Those who step onto the right path will emerge as tomorrow’s winners.

Technologies Pushing The Frontier
Key technologies that are pushing the frontier of the industry are cloud, mobility, analytics, and social media along with security and data management and IT modernisation.

Cloud is not the next big thing, it’s already here and happening. The industry is currently seeing an increase of cloud-services providers who are offering integrated services and specialized services and all that lies in between. Whether it is Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) or Software-as-a-Service (SaaS), customers are looking for providers who understand all the nuances of cloud, who know precisely the demands of the business and offer them in models best suited to their needs.

The advent of mobile devices (smartphones and tablets) is changing the way business is done today. Businesses operate in an “anywhere and anytime” environment. Organisations across the world are opting for Bring Your Own Device (BYOD) approaches, and access to enterprise apps on any mobile platform and device is the norm. Creating, deploying and managing mobile apps and devices is really the future of the game. Social media is another huge trend that is fast catching up in the business context. Enterprises, both Business to Business (B2B) and Business to Consumer (B2C), are now looking to engage with their customers, suppliers and employees to drive better collaboration, customer intimacy and innovative channels of communication.
Today, the rate at which data is created is astounding. The proliferation of data, along with varied formats, brings with it huge opportunities in analytics. Business Intelligence (BI) and data warehousing technologies have existed for some time now; what makes the data into ‘Big Data’ is the velocity, volume, variability and the unstructured nature of the data. IT players are now looking at combining data from sources including social media – blogs, tweets, posts, emails, videos, mobile conversations, and other sources, along with traditional structured data from the ERP or CRM systems to derive unimaginable insights.

With customers demanding data anytime, anywhere and on all platforms, IT players need to find ways to manage these devices along with the proliferation of data. They also have to ensure security of these multiple devices and environments, while offering interoperability across several platforms.

Players who are able to simplify, standardise and automate their technology and related processes will emerge as leaders. And players who are able to combine the power of tech themes, driving the convergence of these technologies, will emerge as winners.
Delivering Business Outcomes
Today customers want business outcomes. They are not interested in the number of people or the number of hours; they want better business value and outcome, at the same rate of course.
In terms of engagement models, customers today are looking for strong partnerships, deeper engagements, and innovation and leadership qualities. To get there, players in the industry must re-invent themselves, not only in the services they offer, but in ways they deliver the services and how they engage with their customers.

Domestic Opportunities Beckon
Opportunities to service the domestic market are also improving. Along with emerging markets like Russia, China and Brazil, the Indian domestic market is poised for growth. Industry experts peg the growth at 17 per cent CAGR, reaching $15 billion by 2014 from $8 billion in 20105. While American and European markets are looking at the second wave of IT, by seeking modernisation of their legacy systems, India, backed by strong fundamentals, a conducive environment and a supportive government is seeking new technologies along with an as-a-service model to meet its IT needs. Early players in this space will stand to gain.

Companies looking to bring their global experience to the domestic market will have to adapt themselves to the specific needs of Indian customers in terms of sales, customer engagement models, solutions and offerings and delivery methods.

Tomorrow’s Winners
To get ahead as leaders, the industry must look beyond horizontal offerings and gain specialisation through vertical expertise. This will give them that extra edge and be more relevant to the customers and the segment in particular. Financial services, insurance and manufacturing along with hi-tech and
telecom have been the major drivers of the IT service industry thus far. But healthcare, retail, and media, among other emerging verticals are catching on, and predicted to grow faster in the coming years. The industry needs to ramp up and build expertise in these areas.

The industry will have to find smarter ways to deliver business outcomes, rather than just satisfactory project delivery. Starting with gaining deeper insight into the customer’s business, creating stronger relationships, having clear and measurable outcomes, and partaking in risks, industry players will need to optimize their business operations and find smart ways to execute projects across platforms, devices and locations to drive true measurable value. Such a method provides value to both the customer and the service provider.

To keep up the impressive growth, the industry will need to find smarter ways to nurture and grow in-house talent, as well as grow inorganically through acquisitions. Industry players need to invest in training and find new ways of nurturing, and more importantly retaining talent, in an industry where attrition is the norm. To retain performers, organizations need to carve out exciting growth paths for their employees in order to deter them from moving on to the next company that offers an increment.

Along with talent-investments, acquisitions will form a crucial part of the industry landscape, as it gears up to meet customer demands. Through acquisitions, industry players will be able to enhance portfolio, gain specialised IP and expertise. The industry could see more mergers and acquisitions in the coming years especially in the areas of emerging technologies both in the IT products and services space.

The Indian IT services industry is poised to re-invent itself and is raring to go into its next growth phase. Tomorrow’s winners will be those who can walk on the path as masters of technology, armed with domain and vertical knowledge; those who can delve deep into the customer’s psyche and forge powerful partnerships that yield true outcomes, and above all deliver IT through innovative and next-generation models.

(Raman Sapra is Executive Director and Head of Strategy, Technology Themes and Consulting, Applications & BPO, Dell Services)