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At a
recent workshop conducted in the Harvard Business School on commoditization of
IT and the likely impact on growing IT and BPO destinations such as India, there
were two schools of thought-one which felt that the American and European
companies, which did not wake up and 'smell the coffee' of Indian offshoring,
would soon be left in the cold as their faster and nimbler competitors cut costs
to the bone and became more attractive to their customers. The other school of
thought, however, sounded the warning bell when they said that the spiraling
cost of manpower in India would soon see a level playing field being created
again when American and Canadian companies would be able to compete with Indian
firms based on their comparable costs and superior knowledge of customer culture
and needs.
As always, neither is
completely true and there are arguments for saying that the current penetration
of Fortune 1000 clients and the emerging quality standards of the Top 50 or so
IT and BPO firms in India-will see the wave of success move further with no
threat of competition. But there is no doubt that there is a real danger of IT
being commoditized and becoming more of an infrastructural requirement for major
global corporations as predicted by Carr in his controversial HBR article. The
move towards packaged products and solutions is beginning to dampen the
enthusiasm for custom building new software solutions with all the concomitant
development and support headaches. This could well mean either a lessening of
demand or a change in the nature of expectations from traditional Indian
providers. Hence, it is probably not a year too soon that the new wave that is
slowly cresting in India with support from industry associations such as Nasscom,
is the innovation wave, and while the traditional models of cost, quality, and
growth through new sales and M&A continue to satisfy the needs of today's
shareholders, the innovation movement is preparing to create a new growth curve
for the industry much before the present growth model begins to plateau.
What indeed is
innovation and how does it impact the capabilities and fortunes of the Indian
industry? Eric Chen and Kathryn Kai-Ling Ho of the CapGemini Center for Business
Innovation have said that in order for something to qualify as a true
innovation, it should simultaneously meet three basic criteria. It must engage a
creative process, be distinctive and yield a measurable impact. The Nasscom
Innovation Forum through its initiatives across the industry, from large to
small firms and IT to BPO has set out to do just that.
After kindling the
interest and appetite for innovation in professionals and industry chiefs,
Nasscom has now embarked on a significant quest to find, reward, and recognize
innovation in all aspects of the industry.
In the IT sector, the
middle-tier firms have been plagued in the recent past by the problems of flight
to scale by their customers, galloping manpower, and infrastructure costs. High
costs of new customer acquisition and difficulties in retaining and motivating
people because of the 'scrape and paint' nature of maintenance work. The
response by at least a few companies has been fascinating-they have completely
revisited their value proposition and built technology frameworks that automate
the mundane tasks of migration, programming and support and given their people
the chance to become architects rather than plumbers. This has also reduced the
dependence on people, enabled a new global delivery model to emerge that is less
dependent on brick and mortar campuses and captured the imagination of a new
generation of savvy customers. In BPO the intense focus on new processes and the
conscious migration from commoditized call center kind of BPO to more knowledge
intensive process outsourcing. All this has provided a new impetus to the sector
and injected new motivation into the work force.
The road ahead for the
Innovation Forum is to shortlist companies and they will get an opportunity to
present at Nasscom 2006-India Leadership forum in Mumbai. VC and industry
mentoring will be offered to shortlisted companies. Mentoring will also be
provided by academia to interested firms to refine their value propositions for
the global market.
The creating of a true
culture of innovation in the industry is based on a strong belief that building
organization wide innovation culture will be the only sustainable growth
strategy of the future and any ongoing success of companies or the industry
itself that is not driven by organizational innovation capacity will either be a
lucky coincidence or a temporary arbitrage opportunity. The development of a
macro-culture of innovation akin to Silicon Valley in its heyday supported by
investments in an innovation micro-culture in different geographies and segments
of the industry will be some of the focus areas. The forum proposes to make
significant investments in research and education to propagate the innovation
culture and develop a set of values and behavioral factors that are designed to
bring out the tremendous curiosity, creativity and human urge to experiment and
attempt path breaking innovations through collaboration, team work, and
motivation. In addition, the development of inter company innovation clusters
and the installations of a true Innovation system in participating firms whereby
an integrated set of processes, policies and tools that link corporate strategy
to new sources of value (products, services and processes) cab be
institutionalized in order to create sustainable competitive advantage.
The path of innovation
in any industry is the path less trodden, but it is also one that bears the best
fruit for any industry. The glory days of the Indian industry truly lie ahead!
This article is a part of an exclusive series with NASSCOM
on 'IT Innovation in India'
Authored by: Ganesh Natarajan,
deputy chairman & MD, Zensar
ganesh@dqindia.com Page(s) 1
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