Until recently, growth for most Indian services companies has been a pretty simple matter: win more contracts, take on more staff to do the work — and get bigger.
The problem is, when companies are growing at 30 percent per year and taking on thousands of staff every quarter, managing that expansion becomes a real headache. So many of the biggest IT services companies are looking for smarter ways to boost revenue without boosting staff numbers.
Many companies believe the key to this has something to do with one of the IT industry's latest hot concepts, service-oriented architecture (SOA).
And it's not just the Indian services companies that are homing in on this — the big multinationals are also hot on SOA, but India seems to be a key centre. For example, late last month Accenture announced it was opening a centre in India to focus on SOA, while in October last year IBM opened a 500-strong SOA centre in Pune, predicting the SOA services market will reach $160bn by 2008.
By reusing the functionality in applications, SOA offers the promise of cutting development costs because parts of existing services can be more quickly adapted to serve new business processes. And this means services companies could build systems for customers more quickly and efficiently.
Amitabh Ray, vice president of global delivering consulting and application services at IBM, explained: "What we are doing is creating SOA-based reusable components that will enhance the speed to market so we will be able to do implementations better, faster, cheaper because we are reusing tools… SOA is a big play for us."
Ray said this is about a move from "labour-based service delivery to asset-based" delivery.
But this doesn't mean there will be no need for techies, as Ray points out: "If we are going to asset-based implementation somebody will have to build those assets so we will need programmers." And integration is likely to remain a "big piece" too, he said.
Infosys is another IT services company keen on SOA strategy. Subrahmanyam Goparaju, head of the software engineering and technology labs at Infosys, explained the thinking behind the strategy: "We have been on the lookout for many years to create such non-linear models where we can build systems without adding people."
Goparaju explained that SOA gives suppliers a couple of opportunities: to help make its staff more productive when they are building systems; and also to open the door to new types of systems development and business models, such as business processes offered via software as a service.
India has made a success of selling itself as a low-cost location on the quality of its staff — the next challenge is whether customers will buy into the vision of India as the world's SOA centre too.