Theme of India IT Summit 2012
“Business Strategies for Non-Linear Growth”
Rationale:
Over the years, IT business in India has witnessed a linear growth where companies had to add head count to increase revenue. This model survived the past two decades, but is unlikely to sustain the growth pace given the rapidly escalating employee costs in India and inefficiencies associated with unwieldy growth in employee numbers. What are the current priorities and business strategies for a non-linear growth?
The past two decades witnessed a phenomenal growth for the Indian IT industry. From a meager USD 150 million in FY 1991, the industry revenue reached USD 88 billion in FY2011, forging relationship with over 75% of the Fortune 500 companies and emerging as the destination of choice for global sourcing with over 50% industry share. IT has indeed played a key role in putting India on the global economic map and has changed the way world views us as a country. However, twenty years on, amidst all the euphoria, one question is increasingly being asked. Is the growth sustainable?
Over the years, there has been no perceptible shift in the way even the most successful Indian IT companies operate. While the business models have moved beyond pure body shopping to T&M assignments to projects to fixed fee services, it still remains predominantly offshore-onshore ‘body centric’ services. The value proposition so far has been, and continues to be, cost advantage (low wages) and schedule advantage (availability of large resource pool). IT companies had been increasing their headcount linearly to grow their revenue. This model worked thus far, but will it continue to pay dividends in the future?
Several top Indian IT service companies already employ tens of thousands of people. If such companies are to continue the linear growth strategy, they will have to substantially ramp up their headcount to maintain their current growth rate. This clearly is not a sustainable model due to the rapidly escalating employee costs in India, threat of competition from several other low-cost locations and inefficiencies associated with unwieldy growth in head count. Billing rates that are already under pressure will be squeezed even further. It is obvious that for the industry to maintain their profitable growth pace, it has to change the business model, adding more value to its global customers through delivering more per employee.
The need of the hour is a paradigm shift in approach - from doing what it is told to do by the customer to facilitating business transformation through innovative technology solutions. This move up the value chain would require
- in-depth understanding of customers’ business and access to the best practices & processes of that industry
- consulting skills to advocate and facilitate business process changes
- vertical specialization within their hitherto technology horizontal operation
The two day conference will see industry experts and thought leaders discuss the challenges faced by the IT industry and the strategies required to address them, over four plenary sessions:
- IT Industry challenges for sustaining growth
- Partnering for Global Economic Revival
- Preparedness to Address the Challenges
- Innovation as the way forward
