Why innovation is the future of the IT services industry

30th Jan 2019
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There is a paradigm shift in the IT service Industry to be more innovation-driven. With the growth of digital technology and increased competition, IT Services companies can longer profit by providing cheaper, faster services. 

While the growth of the technology service sector has been consistent and significant from around $177 billion in 1992 to nearly $1.4 trillion in 2017, it has never been at a helm of gaining any meaningful attention. This is primarily because the key differentiator for IT Services has always been underscored by a single promise - “cheaper and faster”.

This led to the industrialisation of the entire technology services market to create a new age of blue-collar jobs and industrialisation for the service providers who have traditionally made profits from large transformational programme implementation and support providing extremely long-term lock-in for the customer and the clients. This has resulted in changing the overall DNA of the organisation to large factories of training and process standardisation.

Digital technology is reshaping the future of the IT sector

With the emergence of digital technology, technology majors including IBM, Accenture, TCS, Wipro, Infosys, etc have shifted to training and upskilling new staff. But the entire business model and engagement model with the customer has not essentially changed. The main challenge is not exactly changing the wrapper to “outcome-based pricing” but how we transform the model to provide innovation hubs.

Millennials have transformed the business thought process and the way business models work. IT service providers have moved to an “As-a-Service” model for software, infrastructure, and execution.

Growth of Innovation-as-a-Service

Technology is changing fast. Tech startups can be born anywhere with access to the right talent, capital, regulatory support, and free markets. To get ahead, companies across industries need to innovate fast and be more responsive to customer needs. To sustain differentiation, innovation is necessary. Traditional software services companies need to transform from providing “technology arcitrage” to “innovation arbitrage”, and be prepared to undertake innovation services.

According to a study by PA Consulting Group, two-thirds of organisations feel innovation is crucial for survival. As products and services become more specialised, there will be a greater need for speed, talent, and collaborative innovation. Software development factories that focused on cheaper, better, faster will have to transform into innovation hubs. Companies, both big and small, are investing heavily in custom software solutions specific to meet business needs.

There is a greater need for speed and customisation. Hence the IT service-based organisations would now have to focus on :

  • Re-innovating the business model to support innovation, i.e., cloud, cognitive computing, Internet of Things and everything as a service to provide the requisite competitive edge for the companies.
  • Develop products and solutions for the segment of the customers to address the pain points of the customers.
  • Groom significant talent who can leverage new technology and innovate.

The future of technology services would be focused on either providing a customised differentiator for the customer or to provide innovative solutions for the existing problems. Success will come to those who adopt an innovation-driven approach and new innovation-as-a-service model.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

 

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