Reverse outsourcing? Ugh.

The other day I was chatting with somebody about outsourcing industry. The conversation turned to the term that has been widely been used recently - “reverse outsourcing” - Indian companies opening software development centers overseas. My friend argued that the main driver for this trend was that cheap labor was not available in India anymore due to rupee depreciation and wage increases; hence Indian IT companies are forced to look elsewhere.

Though there is some truth to this argument, I felt that it was simpleton logic. No doubt, Indian companies are encountering a slate of market challenges – maturing landscape, depressing margins, and talent crunch. There are other forces that are outside their control such as currency fluctuations, work visa issues etc. However, cost savings alone is not the driving force behind this.

This discussion got me thinking if the phrase “reverse outsourcing” had an implicit negative connotation. For me, reverse outsourcing by Indian companies is the next logical progression of their global growth strategy. Build global organizations, tap into new markets, get close to the customer’s business and execute better and more intimately. The game has changed from cost savings to providing overall value – no more hiding behind the low-cost model. This image makeover from world’s cheap back-office to strategic partner has been long due.

Over the years, outsourcing has become synonymous with “stealing local jobs and shipping off to India”. Though this perception has been changing, it is still looked down upon by general public. I understand media outside India using this phrase but I cringe whenever I see Indian media uses this phrase. Whenever a TCS or Wipro or Infosys opens an overseas development center, reverse outsourcing is generously used to report it. I’m not sure if it is a deliberate attempt by Indian media to get political mileage out of “creating local jobs” in US or Europe.

I may be nitpicking but I would rather use the phrase “global expansion” instead of reverse outsourcing. Thank you.

2008 Black Book Outsourcing Survey: Customer service is a strategic differentiator!

The results of 2008 Black Book Survey are out and its overwhelming theme is that "customer" is back again. News flash to Indian IT service companies – Customer Service IS still a strategic differentiator.

A big so-called surprise in the survey results? The free fall of Infosys. The wheels seem to have come off at Infosys which has been pounded by customers– it slipped from a top ten placing last year to an ignominious 59th position this year. It goes to show that past achievements can carry your marketing message only so far.

No one can dispute the fact that Infosys has worked very hard to create a global Indian brand. Unfortunately, they may be the victims of their own success. My personal opinion, although unsubstantiated, is that Infosys has been focusing more on “marketing a message” than on “creating the right message”. They have squeezed every last ounce of life from the “World is Flat” phrase. If I had a penny for every time a top Infosys executive used this phrase so far, I would have given Warren Buffet a run for his money :)

What Customer Service?

However, I think this malaise is not limited to just Infosys. Some other Indian IT companies may have been placed near the top in this survey but they are still a long way from being classified as truly customer-oriented. Being services companies, you would imagine customer service would be at the forefront of their growth strategy. Yet, it is surprising that for companies with revenues $3B or $4B, “customer service” is an after-thought for the most part. Sure, there are customer satisfaction surveys that are sent out periodically. Sure, the executives meet with customers on a regular basis. Sure, the sales/marketing teams reach out and treat the prospective customers royally. However, this responsibility is peanut-buttered across multiple units making it difficult to have a holistic and strategic focus. At fault is the this new culture of quarter-to-quarter focus that blinds them to what is good for customer and nickel-and-diming that encourages shortcuts.

Customer service is strategic.

The past decade has been very forgiving for Indian IT companies because of the availability of cheap labor and an early-mover advantage. I once heard somebody say that Indian IT companies are successful “despite themselves” - they have been riding the outsourcing wave at its peak and competition at its weakest. Now that outsourcing process has been commoditized wth fierce competition, most of the companies are ending up with similar service offerings. While moving up the value chain, building new revenue streams etc are critical to organizations survival so is customer service. A unique and top-class customer service could be the key to breaking this homogeneity and differentiate from the crowd.

Indian IT companies could start addressing the problem of fragmented customer service responsibility by making customer service, a strategic business unit, to own the overall responsibility of customer experience.

They also have to “engage” the customers as opposed just communicating with them. While the rest of the world is moving to next level of service through various web 2.0 tools, most of the Indian IT companies are still stuck in the old way of doing things.

Should there be a Chief Customer Officer in Indian IT companies any time soon?

Video Game Consoles - Top Energy Gluttons

Going Green is probably the most fashionable thing to do - right after owning the latest gaming gizmo. There is universal support for green causes these days (tree-hugger isn't an anathema anymore) and no demographic is more vocal on these issues than the younger generation.

A new study by Australian consumer agency, Choice may prick the conscience of Generation 2.0. The study rates most of the electronic devices and household appliances in their energy use. It has found that a Sony PS3 console when left running, will consume five times more energy than your average refrigerator! Other energy hogs were Xbox 360, Plasma TV sets, Desktop PCs. The study draws a debatable comparison between Apple iMac and a monitor-less PC saying that iMac uses only two-thirds of energy compared to a PC. The report also advocates a series of energy saving tips. The full report is available here.

As is in any developing market, the first few years are spent on getting things in working order. Efficiency kicks in when the industry has matured and every bit of productivity makes a difference to the bottom line. I hope reports like this create more consumer awareness and eventually force these companies to adopt much greener products.

On the other side, we are always outraged by our higher energy costs and almost always put the blame on anybody but us. We all need to go on a different kind of diet! Can we all watch our energy consumption like single-minded focus we bring to watching our weight? Turning off all electronic items when not in use may the first step.

Facebook open-sources developer platform

Facebook recently announced that it has open-sourced a significant part of its Facebook platform, including most of the code that runs Facebook Platform plus implementations of many of the most-used methods and tags. This is a good move but it may have come a little too late for Facebook.

This is an anti-incumbent move what with Google having already established OpenSocial as a strong common platform candidate. With its more popular developer platform, Facebook was in a great position to create a loyal and thriving developer/application ecosystem. Instead, it is OpenSocial that boasts of a strong club membership with MySpace, Yahoo, AOL, Hi5 etc. Bebo is probably one of the exceptions that support both FaceBook and OpenSocial. While ostentatiously, Facebook wants "to give back to the developer community", it is more of a desperate attempt at playing catch-up with Google. The fact that it did not have any "launch" partners to go with is testament to the urgency with which Facebook scrambled to get this initiative going.

Despite its late entry to the party, it is still a significant move from Facebook. After all, it is one of the biggest social platforms out there before OpenSocial came along. This move attempts to provide the required counter-balance to OpenSocial which did not start out as auspiciously as Google would have liked even though it beat Facebook in the initial sprint. Too many teething problems marred its beginning stages. There are still a lot of open questions around OpenSocial and some of its members have conflicting priorities with the Google partnership. In any case, this move forces both the companies to improve their platforms to become the platform of choice.

How are developers likely to receive this? Facebook loyalists will no doubt rejoice but a lot of developers will now also be torn between two platforms. It doesn't make sense for developers to have competing platforms for the same applications. Developers should be worried about the delivery of value through applications rather than getting bogged down with compatibility issue or having to maintain multiple code-bases.

If Facebook doesn't keep the developers interested and OpenSocial steadily gains acceptance, it is likely that OpenSocial will become the de-facto standard. With that, Google moves one more step closer to creating an internet operating system.

In the midst of all I find one trend heartening - the walled-gardens are slowly giving in.

Microsoft Unveils Multi-Touch Technology For Windows 7

A couple of days ago Microsoft showed a limited demo of multi-touch technology for their upcoming Windows 7 operating system. Microsoft's next operating system with built-in multi-touch technology is expected to enable a whole new set of host of touch-screen applications. Microsoft Chairman Bill Gates said, "Today almost all the interaction is keyboard-mouse. Over years to come, the role of speech, vision, ink - all of those things - will be huge." The news has a lot of people excited for the future of multi-touch technology, if not for Microsoft itself!

Touch the future

Touch-screen technologies have been in development for a couple of decades now. They are already in use in ATMs, retail outlets, check-in kiosks, tablet PCs, cell phones, GPS devices etc. iSuppli, a market research firm predicts that touch-screen technology market will double to $4.4B by 2012. The roaring success of iPhone validated consumers’ appetite for new, easy and intuitive ways of interaction. Its mass adoption is also testament to the fact that touch-screen technologies are now becoming main stream.

It is not new. Then, why is this development significant?

Most of the current applications of touch-screen technologies have been around the hardware - screens, touch pads, tablets, cell phones etc. This development is significant in the sense that Microsoft is now proposing the integration of these technologies into the operating system. Well, Microsoft is not blazing an altogether new trail. While Apple & Microsoft tried to put in multi-touch support in their previous operating systems to some extent, they haven't really taken to fundamentally building an operating system with strong support for these technologies.

Who is going to be the winner?

It is a moot point whether Microsoft can deliver Windows 7 as promised. Apple having already had experience with these technologies, can't be far behind. In fact, it may even beat Microsoft in this race. However, Microsoft has the lion's share of the current PC market with its Windows operating system. With internet platforms and online software applications such as Google Docs already eating into its Windows pie, Microsoft needs to exploit this technology which could potentially resurrect its position in personal computing software market.

With its impressive ecosystem of partners and relentless marketing arm, Microsoft can propel this technology to the next level and hasten its mass adoption in personal computing space. The key is whether Microsoft can do a half decent job with this new operating system.

My fingers are crossed.

Is Microsoft's Live Search Cashback Doomed? Not so fast.

(Also posted here)
There has been a lot of buzz around Microsoft's Live Search Cashback program that was announced recently. Most of the commentary has been along the expected lines - Microsoft is the perennial villain and anything it does has to be ridiculed. Consequently, there are very few positive reactions to this move from Microsoft. If the roles between Google and Microsoft were reversed, everybody would be bending over backwards to shower Google with praises like "paradigm shift", "out-of-the-box thinking", "game-changing" the dreaded "innovation" etc.

While I don't have any extra love for Microsoft, I do think that Microsoft has not been given enough credit for this great move. Google has been dominating the search market for a while now. Microsoft needed to do something drastic to be competitive in this area and I personally believe this offering will allow Microsoft to take the fight to Google.

Disruptive Model

While there is no doubt that Microsoft needs to innovate in search technology, this is still a brilliant innovation in the model. At the same time, I concede that there is no single silver-bullet that Microsoft can come up with to challenge Google. Microsoft will need a series of such disruptive innovations - either in technology or in search models to take the fight forward.

Microsoft can withstand the losses

As has been analyzed to death, this program is not going to generate immediate returns for Microsoft. It may even be difficult to keep it profitable for a long time. Nonetheless, Microsoft is sitting on a pile of cash and it can afford to lose some revenue if it means it can attract more traffic. Remember, search is bread-and-butter for Google. Microsoft has other strong revenue streams apart from ad-revenue from search. Microsoft can bleed a little in this secondary revenue stream if it means it can make Google bleed more in their primary market. Hasn't Google been trying to do the same to Microsoft with their web-based software?

Will Google and Yahoo sit idle? Absolutely not. Is this initiative a winner? Can't say. It may still end up a flop. In any case, the search market is about to get competitive again. As most would agree, that will only benefit the users, consumers and advertisers.

Telepresence - Can It Transform Offshore Delivery Model?

(Original post here)
We have been hearing about Telepresence for some time now. Its primitive form, video-conferencing, has been around for a while. Now I think we are at an inflection point in the technology maturity level. Admittedly, Telepresence technology has a better use in other industries than in IT Services/BPO.

New Opportunities
Indian IT companies have hit a slow growth path due to a variety of factors such as rupee appreciation, slow economy, and increased competition in outsourcing. It is true that Indian IT companies arguably pioneered the offshore model. However, US-based IT services companies have quickly learned to play the same game. The current traditional Global Delivery Model has matured and is no more a key differentiator. Onshore, Offshore, Nearshore, Right Shore, Anyshore are passé. It is time to have a "shore-proof" delivery model.

I personally feel that the Telepresence technology is one that has the potential to trigger some innovation in the offshore service delivery models. Of course, technology alone can't provide a competitive advantage if commoditized - an exception being early adoption. It is how one uses the technology that brings out the differentiation.

Current Offshore Delivery Model and Challenges
By its nature, global delivery model involves people from different geographies, cultures and social backgrounds. Most of the communication in the current model happens over e-mails, long early-morning or late-evening telecons, web conferences, instant messages etc. Videoconference is very rarely used in most offshore companies. Talk to anybody that works in a global delivery model, and they are sure to blame the "other-shore" team for any problems in the projects/programs/products.

Can Telepresence Improve It?
Most of the current challenges are related to communicating with e-mail or phones. Teams miss precious non-verbal clues such as body language, moods, and cultural nuances when communicating over these traditional channels.

Some of the immediate effects with the adoption of telepresence technology could be:

• More effective communication between the teams leading to better execution and improved team dynamics


• Reduced travel costs - Initial knowledge transition or requirements gathering phase can happen without the teams traveling; Project/Program/Customer Reviews; Sales presentations; Conceivable elimination or reduction of the role of a pure onsite "coordinator"


• Team meetings - Brain-storming with customer, onsite, offshore teams

Prohibitive Cost
No doubt that these systems are expensive at $200K-400K and upwards, not to mention the maintenance costs. Connecting key development centers in different geographies may be the first step. These can act as hubs servicing multiple customers, projects and teams. An account review where 2-3 executives from an offshoring company travel across the globe for a day or two, will cost about $20,000. I think a basic telepresence pays for itself after 15-20 such virtual meetings.

Indian IT industry uses a convenient the excuse that they have competitive edge over China and other alternative offshoring destinations because of its large pool of English-speaking engineers. While it is true to some extent, that gap is narrowing very quickly. If you add technologies like this to the mix, communication becomes less of a hassle. China or Vietnam or Malaysia could see this as a disruptive technology to challenge Indian IT companies.

Should Indian IT companies such as TCS or Wipro or Infosys seriously consider it or is it too soon to think about it?

HP Poised For Further Growth

(Original post at my other blog)

HP on May 20th reported slightly-better than expected 2008 second-quarter numbers.   Revenue at $28.3 billion grew up 11% from year-on-year.   It also raised the year-end revenue guidance from $114.2 billion to $114.4 billion.   More financial details are available here.

EDS, Emerging Markets, Cost-Cutting – Great Confluence!
I believe that HP is on a solid ground to move to the next stage of sustained growth in the long term.    For me the confluence of the three themes - EDS, Emerging markets and HP's (or Mark Hurd's) track record in cost-cutting initiatives - looks particularly promising.

If, and that is an important if, HP can integrate EDS without a lot of indigestion, it is going to be a key growth driver for HP in the next decade or so.   With one swoop, HP not only added new expertise in Technology Services (specifically in Infrastructure Services) but also positioned itself very strongly in emerging markets.   At $14B EDS WAS a decent bargain.

Another reason I think HP will succeed in building much more in emerging markets like India, China etc is that these aren't new markets for them as such.   HP has already been in the market for a while, so there is enough local sales, service and cultural know-how.   Now with the purchase of EDS and the potential of bundling related services with its products, HP will be able to consolidate its position.   Also, the domestic IT market in countries like India and China is now growing at a faster pace than in developed countries.   Infrastructure Services is one area where IBM has won lot of large deals in the recent times in these markets.   With EDS' USP being Infrastructure Services, HP is in a much more solid ground to directly take on IBM in these markets.

Last but not the least - the cost-cutting opportunity is real.   EDS, as most people agree, has a lot of fat that can be trimmed.   Who better than Mark to turn it into a lean and mean machine again?   Cost-cutting goes very well with the strengthening of "offshore" presence where less-expensive labor will add to the profitability.   EDS already has a strong India presence.

While the next few quarters may not bring in ground-breaking revenues, HP does look very strong for the long term investments.   It is no-brainer that how HP integrates EDS will define its future for the next 5-7 years.

HP-EDS Merger - Effect on Indian IT Companies

(Posted first at my other blog.)

HP's plan to buy EDS for $13.9B is one of the bigger news of last day or so and it obviously has everybody's attention.   Analysts, bloggers and just about anyone in IT has already commented on this development with much more insight than I would have.   A lot of strong theories are floating around as to why this deal happened (cloud computing, scale in services, profitability etc).   While its hard not to connect EDS' strength in data centers with HP's core hardware skills and chalk it up as a huge investment in infrastructure/cloud computing space, I want to quickly focus my comment on a few things concerning Indian IT industry.

Indian IT providers (SWITCH companies) will definitely be viewing this development with a hint of worry.   These companies are investing a lot in their infrastructure offerings now that the bread-and-butter IT services such as ADM, BPO have hit a maturity level.   They have just started winning big in this space and are now able put up a fight against an IBM or Accenture.   They also have their sights on Indian domestic market where IBM has done well.   Now they will have another titan to compete with.   Both IBM & HP can provide a more integrated service offering - hardware, software and services - than these companies.   Added to that, HP will now have a strong positioning in government-related deals which typically are more stable and run longer.   Thus, HP will have its hand on the handle of the entrance door in such deals.

While HP covers some ground (infrastructure that is), it remains to be seen if it can effectively compete with IBM at all levels.   If only HP can pick up a strong business consulting organization.   Game on, then.

Coming to SWITCH companies - unless they evolve from a single-dimensional (Services) to multi-dimensional (H/W, S/W, Services), they will have tough time ahead.   I think the easy ride of offshoring is over. Execution and process excellence which these companies pride in are as important as strategy but it alone can't provide competitive advantage.   Time to plan for future is now since HP will saddled with integration issues with EDS deal.

A final thought.   Some have said that HP wants to get on to outsourcing/offshoring bandwagon.   If HP was looking purely at that, it would have considered buying an Indian IT company with better margins.   Obviously, Mark Hurd has a bigger plan.   Does he have one more integration/turn-around in him?   It will be interesting to watch how this plays out.

Indian IT Outsourcing - Changing Gears

(Published earlier at my other blog. )
A recent BusinessWeek article "Indian IT Companies Eye New Strategies" talks about the non-linear growth models that the Indian IT services companies are working on. It comes at a right time and I echoed similar thoughts in my earlier comment as well.

Necessity of the mother of innovation
Potential US Recession or not, organic growth models of the Indian IT service companies are providing diminishing returns as the revenue base grows. Companies are always trying to figure out where their next $1B is coming from. While we have been hearing about the companies moving up the value chain for a long time, it seems that the urgency has increased in recent times.

Looking for new or more efficient revenue streams
Companies have evolved from traditional revenue streams to innovative models.

Fixed revenue - Basic services supported fixed revenue stream. Revenue was directly tied to manpower.

Incremental revenue - Incremental revenues were addressed with the process improvements (CMMI) and basic productivity enhancements.

Exponential revenue - It is possible with the de-coupling of growth and manpower. With the creation of automation processes & tools, frameworks, solution accelerators etc is the key. Selling products such as Infosys' Finacle, TCS' BaNCS are some examples. Creation of Solution Accelerators that dramatically reduce the amount of work. While it isn't a new idea what with re-usability having been a key focus for these firms all these times. It just happens that it is now moving from operational level (productivity enhancements) to strategic level (key differentiator).

Another example is the trend of platform-based BPO - moving away from the traditional BPO of managing customer's processes and systems.

Self-perpetuating revenue stream
This is an interesting prospect going forward. How can the IT service firms create something once (one-time SG&A) and generate value/revenue repeatedly with minimum effort and overhead? This goes beyond the platform-based BPO where the expertise is productized and sold to multiple customers with required customizations. Another idea could be royalty-based revenue - create a product/service for the client and get into a royalty agreement to get a recurring revenue. This already happens with OEM software but it will be interesting to see how IT firms can take it apply it to services.

New Growth Markets - OPD
Another market that is getting a lot of attention is Outsourced Product Development (OPD). This space is currently dominated by smaller and niche players. While tier-1 IT companies have product engineering groups that support bigger ISVs (Independent Software Vendors), the relatively smaller deal sizes compared to generic IT services are the reason for lack of serious attention so far from these big players. However that may be changing because of the potential for this market coupled with the slowdown elsewhere.

Outsourcing has matured!
The first phase of outsourcing where cost/location arbitrage ruled the roost is almost over. Now come the exciting, perhaps tumultuous even, times for the Indian IT industry. Some will survive while others fall wayside or get acquired. The stage is set for the next IBM from India. Who will grab the chance?

Mobile Internet

We have all long hated the cell phone companies for their expensive plans and unfriendly services. The recent developments with Verizon, ATT and T-Mobile all starting to offer $99.99 unlimited plans are good for the consumers. I would like to see more power to the consumers such as complete elimination of activation/termination fees and easy transfer to other carrier providers.

While thinking about what other conveniences I would like to have, I have realized that the cell phone companies currently do not provide just the data plan - to access the web. I don't like the voice+data bundle - just want the data plan. I can't lug around my laptop everywhere, so free wi-fi or a broadband card like the ones from Verizon don't cut it for me.

I would like to see a portable device such as mobile phones or mp3 players providing such plans. Better yet, free internet on mobile phones ala free wi-fi spots?

Its time for a disruptive business model so the power is shifted back into the hands of the consumer. Its time to from $99/month plans to $10/month. A couple of half-baked thoughts:

1. A portable internet device could eliminate the need for a cell phone because if the web access is good, I could use a lot of web phone services either free of cost or at throw-away prices. This model has the potential to avoid a lot of overhead charges that you would have with a regular cell phone provider.
2. Here is a stretch. Since most of the free services these days seem to revolve around ad-driven revenue, can somebody dare to think of providing free wireless phone service with mobile ads? :) A Google AdSense driven model could scan the conversations and send relevant ads to the mobile phone :)
   

Crazy. I know. I still think we need a "game-changer" to shake up this industry. I'm pretty sure that day is not far away.

In-line Video Ad-blocker

If you are just crawling from under a rock, here is some news for you. The future is digital. More and more content is getting distributed over the internet in digital format. Online video is now everywhere. YouTube has become part of our existence. With more eyeballs getting glued to online streaming content, can advertising be far behind? Video ads, in-line ads with various levels of interactivity are the new advertising models.

I can't think of a time I enjoyed an advertisement while watching a video online. I am sure I'm not the only one that feels this way. I hope I will have at least the following options to get around this pain.

In-line Video Ad Blocker
You have an ad blocker for everything. Pop-ups. Banners. Even the new video advertisements. Why not for the new wave of in-line video ads? I'm sure there is enough market for people who don't want to look at any advertisements distracting them from watching the content. This Ad Blocker could be extended not just to the internet but various other devices we use such as mobiles and Web TV.

Ad-free Content
Ok. It is not new. Nonetheless, the digital distributors who respect the content user's right to not be pummeled with the ads, can offer content without advertisements. I will certainly pay premium for the ad-free content just like I do for the ad-free channels in my cable.

Lets see what the future brings.

Live Video Site

Online video sharing sites are dime a dozen now. Web sites like Youtube, Metacafe, Videoegg etc. make it very easy for anybody to share their videos. What these sites don't offer is live videos. Anything ranging from live political speeches, live scientific activities, live concerts. Anything that is happening right now!! They has always been live streaming video but I thought one web site to be like the live version of YouTube would be cool.

Cool idea but new it wasn't. After digging a little bit I found a web site Justin.tv that offers everything I imagined. It seems quite easy even for a non-geek to just beam out their lives. I'm sure there are more such sites.

Another idea that is a non-starter.

PS: Technology is a such a double-edged sword. Its only a matter of time before somebody uses this tool to commit a "live" crime just for the kicks.

Recession is good for Indian IT companies

Triggered by an article in BusinessWeek about Tata Consultancy Services' (TCS) pay-cut.

Reduced pay. Pink slips in the air. US recession killing Indian IT industry. Time to write the obituary of Indian IT outsourcing industry. Well. Not quite.

Well, recession is here and so are the fears that Indian IT companies' golden run is over. While there will be short-term pressures on these companies, this slowdown can be the much-needed catalyst for these firms to move out of their comfort zones and into the next level.

Is the TCS' pay cut harbinger of tougher times?
I hope so. Indian IT firms have been riding the wave of outsourcing for the last few years. It has already been established that while the predictions of the demise of Indian IT are premature, Indian IT firms are entering a more competitive landscape. They may not be able to maintain their spectacular growth rates 20%-40% of yesteryears due to variety of factors - strengthening rupee/falling dollar, wage inflation, increased competition in the form of alternative outsourcing destinations and presence of MNCs like IBM, Accenture etc in their backyard.


Still, it is not a crisis.
No doubt the Indian IT companies that are heavily dependent on US market are going to feel the squeeze in the immediate future. Nonetheless, these are not fly-by-night companies. They have honed their outsourcing skills over the years and have developed global delivery capabilities rivaling or arguably in some cases surpassing well-established multi-nationals. Over the years, they have shown excellent execution skills moving beyond cost arbitrage alone. More importantly, though the stocks had been hovering in the stratosphere, these companies did have their feet firmly on the ground. All in all, the fundamentals are still strong for Indian IT companies.

Recession a good thing.
The current recession may be a good thing to happen to Indian IT companies. Not just because of the conventional wisdom that in these times companies have to cut more costs and hence will turn to more outsourcing. That may be true but one thing the recession does is to offer a chance for the Indian IT companies to think hard about themselves. An opportunity to look inwards and realize their strengths, weaknesses, go after new markets etc. After all the other side of challenge is an opportunity. For far too long, the companies have been on rise. As alternative outsourcing destinations, models and trends emerge, the Indian companies will have to improve their value-proposition.

I hope the recession will have these companies focus on the following:

1. Lessen dependence on one market and fine-tune their de-risking strategies.
Though all top-tier Indian IT companies have been trying to consciously reduce their dependence on US market, the recession will only hasten this process. The current slowdown is a blessing in disguise for these companies. They will be better off planning now for the future when US is not going to be a dominant market any more. Europe is of course getting lot of attention thanks to the strong euro.

2. Focus on the potential emerging markets.

So far, the mantra has been harvesting and now is the time to sow the seeds. Beyond the developed markets, there are huge opportunities in emerging economies. So far, Indian companies have been reaping the benefits of their expertise in developed markets. Now is the time to sow the seeds in emerging markets where the next level of revenue stream will come in.

Invest in BRIC markets to gain early mover advantage. It is only a matter of time before outsourcing in these countries become matured. Turn these into strengths before they become competitors. This is where the next billion dollar revenue going to come from.

3. Efficiency and Productivity
This is an area where Indian IT companies already hold an edge over other multi-national companies. Nonetheless, the companies will be forced to squeeze out more efficiencies to meet increased expectations from their customers.

4. Focus on other revenue streams beyond their bread-and-butter services
Almost all of Indian IT companies are already doing this. Strengthen consulting, IP, Automation Tools, New Products & Services etc. Diversification is - not in terms of portfolios - but in revenue streams. Moving up the value chain is a cliche. Creating new value chains is what is required.

5. Buying of US companies
What better time to buy out US companies than this environment of weakening dollar and recession? This can be either to acquire new industry vertical/skil lor deepen expertise.

6. Buying of other Indian IT companies
There are a lot of small and medium-sized companies in India supporting outsocuring. Not everyone of them is financially strong to endure a sustained recession and wage inflation. This is an opportunity for the bigger firms to gobble the smaller ones operating in niche areas such as Outsourced Product Development, Gaming, Open Source Technologies etc.

7. Correction in wages and weeding out weaker performers
For years, the Indian IT engineer has been put on a pedestal just like their western counterparts before outsourcing picked up pace. They had it easy over the years demanding and getting outrageous compensation and selling loyalty for a pay hike. It is probably a good thing to bring the much-pampered Indian Software Engineer down to earth because in some cases the compensation is ludicrously high compared to the individual's value proposition. If this slowdown forces companies to tighten their recruitment processes, all the good reason to continue to do so.


In summary, though the fall-out of this slowdown has short-term consequences, Indian companies will have a huge opportunity to come out better and stronger because of this.

Big Business Mantra - All you need is a start!

Start with one outstanding product or service. Check.
Ride on that to become a one-trick giant . Check.
Prowl the market for disruptive innovators.
Bully and buy them out. Check.
Get the customers in the bargain. Check.
Kill competition. Check.
Stifle innovation. Check.
Replace industry-leading products with mediocre ones developed in-house.
Create monopoly. Check.
Bundle needed stuff with what customers don't need to decimate new players. Check.
Oh, btw. Wear the biggest smirk on your face. Check.

Free The Net?

These days the word dotcom has been replaced by Social Networking. You can't go through an IT magazine or a web site that doesn't mention this phenomenon and its advantages. Use masses to create value or a product or a service.

A few months ago, I got to thinking about my internet needs and the ridiculous amount of money I was spending on it. Internet is becoming so pervasive and a lot of people in the developed world can't think of living without being "connected". So, why is that it is still so expensive anyway? I mean - why shouldn't Internet be cheap or even free? Yes, a handful of companies such as Earthlink, NetZero have already done that by giving free internet but you had to put up with annoying ads. With the advent of Wireless connectivity, I use the same connection on more than one computer at home. No brainer.

So, I thought - here is an opportunity. If I can share my connection across multiple computers at home, why shouldn't I share and even resell my internet connection around my community? Good idea, I thought. I found a little later, a couple of companies like Meraki and Fon are already already doing that they have been around long enough.

Another idea that is a non-idea.

Thoughts That Occurred Too Late!

I admit that I have spent better part of the last decade sleeping through the developments in the IT industry . You see, I began as an average software programmer like most others and for a long time, my world only consisted of projects, deadlines, defects, quality metrics, CMM et al. I never bothered about the bigger picture - how does what I do fit in industry, trends that are shaping up the future, and just plain awareness about what is going on outside my "bubble". Of late, I have awakened to find the exciting side of the industry. That got me to thinking .. hmm, I wonder what I can come up with this new found knowledge.

That brings us to this section - Thoughts That Occurred Too Late. To satisfy my ego, I have dared to document all the half-cooked ideas that are sprouting in my brain. Unfortunately, in these fast times, I'm finding that some of my so-called "ideas" are outdated by at least half a decade or more. In any case, I thought I would at least write it up as a note to myself to see what could have been. All these thoughts are new to me but not to the world apparently!!! What are ideas anyway if they are not acted upon.

Indulge me, please! And do share if you thought if you had great idea only to find that it has been documented and used elsewhere.