Change is the name of the game for Indian IT services companies
The changing needs of clients, the emergence of new technologies like AI and the millennial workforce lead IT firms to prepare for a new wave of disruption.
The IT industry is going through a sea change, thanks to the emergence of AI and Machine Learning. Gone are the days of long-term contracts in the integration business where the primary model was to build applications or develop and maintain them. Now, they have to even contend with working with the gig economy - where the millennial generation freelances rather than working for someone - as the biggest threat to hiring.
The change is everywhere. The challenges for the IT industry include changing needs of clients, consumerisation of IT, technologies like AI, and a changing workforce. But if you change nothing, nothing changes.
And the IT industry is readying to adapt to the change.
According to Nasscom, it is a $160 billion industry and will be a $250 billion industry by 2020. With a market opportunity this large, the IT Industry is already investing in Blockchain, AI and ML, along with analytics, to stay ahead in the game. The industry is going in with adding value to clients with outcome-based business models, where they will charge initial upfront fees but will also make money if the outcome increases revenues.
The panel, 'Indian IT Services Pitch for Newer Heights: Breaking Barriers,' at the on-going Bengaluru Tech Summit, said the IT industry has to solve client business problems with tech and not focus only on building technology.
From strength to strength
NS Parthasarathy, EVC and COO, Mindtree, said, “The IT industry should not be worried about change. There have been evolutions and we will go from strength to strength. But the change today is different from that in the past because business models are changing, thanks to customer expectations.” He added that in the next five years there will be more change than in the last 20 years.
“Ten years ago I was looking at the best coder or algorithm builder; now we need an orchestra player, a guy who can understand all technologies and stitch the best.”
This is the biggest threat to the industry because they have to now manage people differently and must work with organisations who want agile IT to solve a business challenge. IT services companies can also work with the gig economy to build software fast. It's not about completing projects, but about solving business problems quickly.
Sarvesh Mahesh, CEO of Tavant Technologies, said, “The good thing is that the demand for software is at an all-time high. Do you want a toothbrush with an app or not is what consumers will decide? That’s how organisations are working. Nike thinks like a software company now with the way they can design shoes by partnering with their consumers.”
He added that they can do new things in IT, create new business models and that “change is a good thing”.
Adding value with small teams
The IT industry today uses the word design thinking to understand how to address client needs with fewer people and add maximum value with a small team. There is no need for 70 or 80 people on a project anymore. Case in point is Amazon, which works on the single pizza concept (where you need a team that can live off a single pizza). This is the future of IT.
Sudhir Tiwari, MD, Thought Works Technologies, India, said: “Our clients tell us that IT has moved from a support function to becoming core. Clients are looking at themselves as software companies and we need to be prepared for that. We should not miss this wave of disruption.”
Sudhir is absolutely on the money because companies like Volkswagen and General Motors think about themselves as software companies where they own customer data and want to serve them digitally. So IT companies need to learn fast and be nimble.
George J Mattackal, MD, CGI, Information Systems and Management Consultants, said that the future was only bright because the industry has always managed change.
“The industry is growing because of skills that exist in the country. Our customers look at India as a nation than can take them towards a transformational digital journey,” he said.
The challenge today for IT Services is managing people and the cultural change. There is a lot of unlearning the industry has to do; it also must invest in automation. Companies like Infosys, Wipro and TCS are already working on that change. Others, it seems, will soon follow suit.