The death of Indian IT services?

Thanks to the cloud, Indian IT services face a bleak future if they don't embrace change.

Vivek Wadhwa, a prominent former technology entrepreneur, vice president of Innovation and Research at Singularity University, a Stanford University Fellow, and big-picture thinker of all things tech, recently wrote about a hugely disruptive trend taking place in the technology arena that has massive ramifications for Indian IT.

His basic point is that while Indian outsourcers have not "become less capable of servicing Western needs... It is that their customer base — the CIO and IT department — is in decline". Wadhwa points out that customers of Indian IT today are easily able to "download cheap, elegant, and powerful apps on their iPads that make their corporate systems look primitive... They are user customizable and can be built by anyone with basic programming skills".

This is a trend that I also wrote about in a recent article for ZDNet by focusing on two companies — a "new economy" Indian company like Snapdeal (offering "daily deals") as well as Bajaj FinServ, which is straddling the age-old industry of auto loans.

Both companies have vigorously embraced the cloud for their IT solutions. While Bajaj Finserv still relies to some degree on customization, Snapdeal has put its entire technology infrastructure in the cloud. What is increasingly clear today is that IT is being relegated to its core competence — ensuring the stability of the company's IT ecosystem — while its other departments can simply plug and play software-as-a-service (SaaS) products to get the job done.

For instance, marketers today can use a proliferation of SaaS apps to tweet catalogues and roll out customer loyalty programs. Management can pull cheap and elegant off-the-shelf programs for their workflow, HR, and accounting needs. Web developers can chose a dizzying array of platforms to customize their solutions. Even classic IT-related functionalities like hosting and storage have been upended by infrastructure-related apps that come with popular solutions that optimize data accessing functions.

This is a killer trend. These cloud solutions are cheap, require no heavy upfront capex (unlike current IT services solutions) or maintenance, and give companies something that has become a must today — faster time to market. As Wadhwa correctly points out, if IT services companies don't adapt smartly and expeditiously, they're toast.

So, what should they do in the face of this onslaught? Wadhwa puts his finger on other parallel trends sweeping the world — in robotics, artificial intelligence (AI), and 3D printing, which have begun to introduce self-driving cars, voice-recognition systems, and computer systems that can make human-like decisions. While these technologies are becoming ubiquitous and inexpensive, Wadhwa said that America's manufacturing plants aren't up to snuff in rolling them out en masse as yet.

This is where India's IT services firms should step in, added Wadhwa. They can "help American firms design new factory floors and program and install robots ... provide management consulting on designing new value chains and inventory management ... operate and monitor manufacturing plant operations remotely" and so on, in what he says is a trillion-dollar market opportunity.

However, the window to take advantage of this opportunity may be fast closing. So, if IT services players don't want to go the way of computer hardware manufacturers, voice-based BPOs, and other such commoditized businesses, the time to act is now.


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