Wipro's CEO maps out a future for IT services firms

Wipro's CEO maps out a future for IT services firms

Summary: The world continues to change rapidly for Indian IT services firms. Here's a peek into how they may evolve, and the forces scripting this change.

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There's a recent interview with Wipro CEO TK Kurien with all the usual stuff about firms in transition, the trauma of effecting change, and other such things. However, embedded in there are three observations that give us a glimpse into a brave new world for software services firms.

1. "We may decide to create a separate structure to manage as a service outside of our current business. While we sell to the same client base and go after the new client base, as a service will become a critical component for us."

Cloud is of course the new, hip word rolling off the tongues of everyone, even if they were resistant to it at first. For IT services firms, the big question is if there's a meaty role there for them as companies start migrating to the cloud. Those companies with critical legacy systems that need to get transported to the cloud will need IT services companies to engineer an integrated solution. But what happens when, in a few years' time, these companies don't need any hand holding and are able to avail of dirt-cheap, off-the-shelf products?

How do you compete in this world if companies can pull HR, workflow, or storage solutions off the net for a fraction of what it would cost if they were to seek an enterprise solution instead?

"The more challenging aspects entail shifts to a marketing- and product-driven business model, where IT services firms have no experience or marginal experience at best," said Alok Shende, founder-director and principal analyst, Ascentius Consulting, in this Mint article.

2. "We're going to invest much more on the front end of the business."

What Kurien is talking about highlights another major shift in strategy for Indian IT services companies — that of hiring more and more people onsite (locally) instead of shipping people from India to work on projects.

Recently, Wipro's CFO Suresh Senapaty also said: "If it happens we have to pay, we have no choice. But going forward, we are looking more at local hiring on onsite and depending less on visas. While the majority of the work can be done offshore, whatever work needs to be done at the client site can be done by locals, and we will not look at deputation."

This, no doubt, is the fallout from the "great visa debacle" of the previous years in addition to the usual complaints of "stolen" jobs due to outsourcing. The biggest casualty of this was Infosys, when US authorities began investigating whether the company committed "fraud" by using short-term visas to bring workers into the country rather than applying for longer-term ones that entailed a more protracted process. While denying and disputing these claims, Infosys decided to pay $35 million as a settlement, clarifying that there were no criminal charges or court rulings against the company.

Of course, Wipro isn't the only one looking at onsite hiring in these tougher climes. Tata Consultancy Service (TCS) is also planning to do so, announcing an increasing of its 1,500-member workforce in the US to 2,000. Almost all the other IT companies are planning similar increases as onsite hiring may just prove to be more cost effective when you add up court settlements and cost of visas, as well as travel and accommodation.

3. "Automation is a reality, and we are going to find a lot more of that happen."

No surprise here. IT services businesses are already being commoditized much like the voice BPO business has been (or, in another category, like the PC business has). The one way to stay alive is automation, which brings down manpower costs and perhaps also reduces human error. For some idea as to where this is headed — remember when cars were completely assembled by human hands? Neither do I.

Topics: IT Employment, IT Priorities, India

Rajiv Rao

About Rajiv Rao

Rajiv is a journalist and filmmaker based out of New Delhi who is interested in how new technologies, innovation, and disruptive business forces are shaking things up in India.

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  • WWW.FB39.COM

    YOu Should open the my name then go to home page for more information
    JulieRoberts
  • Rajiv Rao is just another outsourcing apologist

    @RajivRao "While denying and disputing these claims, Infosys decided to pay $35 million as a settlement, clarifying that there were no criminal charges or court rulings against the company"

    No, that is not what happened. Infosys was caught red-handed committing visa fraud. The U.S. government rarely prosecutes bankers or other corporate criminals, so it did not attempt to prosecute Infosys corporate officers. Infosys pleaded nolo contendere, a/k/a no contest, which means they admitted neither guilt nor innocence. Innocent parties do not use nolo contendere; they plead not guilty.

    Here's the actual plan for Wipro, Tata, Infosys, and other Indian IT outsourcing companies.

    They will continue to repeat the lie in newspapers and magazines that increasing the number of H-1B visas will magically create jobs in the USA. They will do this even though the vast majority of H-1B visas are used to replace American workers with Indians possessing only a B.S. degree. In other words, the people being brought into the country are not "highly-skilled" as is often stated.

    They, along with the patron saint of H-1B visas, Bill Gates, will continue to appear before Congress pleading for more H-1B visas.

    They will continue to illegally use other visas to bring in Indians for contract work. The most commonly abused visas are the B-1, intended for meetings, conferences, and other short business needs, and the B-2, intended for tourism.

    They won't need to hide the fact that the immigration "reform" bill passed by the Senate, S.744, allows for many hundreds of thousands of H-1B visas, because corrupt American politicians are framing this purely in terms of illegal immigration, i.e. amnesty.

    American schadenfreude and the Senate Gang of Eight's fraudulent immigration reform bill S.744
    saucymugwump.blogspot.com/2013/11/american-schadenfreude-and-fraudulent.html
    saucymugwump
  • Congress

    Congress should introduce a bill to choke of Indian body shop rubbish via tax incentives aimed to get US companies to take on the locals.
    Nexus789
  • stay home slumdogs

    Keep out of the U.S. hindus, no more job robbing for you
    GoHomeVisa