{"id":1063,"date":"2015-02-14T13:37:00","date_gmt":"2015-02-14T13:37:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/nasscom-2010_02141\/"},"modified":"2015-02-14T13:37:00","modified_gmt":"2015-02-14T13:37:00","slug":"nasscom-2010_02141","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/nasscom-2010_02141\/","title":{"rendered":"NASSCOM 2015: More MBA, less ABAP is the recipe for India’s Digital success"},"content":{"rendered":"

\"\"<\/a>There’s nowhere better to test the temperature and mood of the global IT and Business Services industry than at India’s NASSCOM Leadership Forum, where the bigshots from all the major India-heritage providers, and the leaders from the major Western-centric providers’ India operations, get together for three main purposes:<\/p>\n

1) \u00a0To be seen as a player at IT services\u2019 premier networking fest;<\/p>\n

2) To partake in presentations and panels that are all pretty much sung from the same hymn sheet;<\/p>\n

3) To have great conversations that cut through the glossy digital lipstick veneer and elaborate entertainment, to debate the reality of whether this industry can truly evolve beyond its current \u201call about scale\u201d predicament.<\/p>\n

And this year, did we get just that \u2013 with a new energy that has been lacking in recent years since the recession. \u00a0What I love about this networking event is the sense of common purpose, community and belonging you get as part of the services industry, which you do not get at most other events (especially Stateside, where some conferences still seem to be stuck somewhere in 2004…).<\/p>\n

At NASSCOM, you don’t feel that outsourcing was that “accidental career” choice you just happened to fall into because you could never figure out what you wanted to do with your life.\u00a0 You actually feel part<\/em> of something – and part of history as well as the future. \u00a0Just bumping into the legendary (and very fit and energized) Pramod Bhasin (the founder of Genpact), who could (and probably should) be lying prostrate on some beach checking the number of zeroes on his bank balance – and hearing his passion for doing more for the Indian services industry – tells you something about the DNA that will keep brand India<\/em> at the forefront of technology-driven business services for a very long time to come.<\/p>\n

How India’s services stars can shine with their Digital lipgloss<\/span><\/p>\n

But let\u2019s not get too carried away by the hype of the moment. India\u2019s services economy has some big challenges, but it really does<\/em> have the nuts and bolts to lead the way into this unraveling Digital future, and play a significant role in the emerging As-a-Service Economy<\/a>.<\/p>\n

There are three dimensions we need to consider when we evaluate India’s ability to continue on its services growth-path:<\/p>\n

1)\u00a0\u00a0\u00a0 Leading with digital technology and an appetite to cannibalize short-term revenue for longer-term profitability and value. \u00a0HfS success probability =\u00a0 90%<\/span><\/p>\n

For example, the more I learn about Robotic Process Outsourcing (RPA), the more convinced I am that some of the ambitious Indian-heritage firms will be at the forefront of development and capability here. \u00a0I am already witnessing a strong appetite to cannibalize some shot term revenue with clients to develop beta solutions that can be re-used for the future, and scaled across multiple clients. \u00a0The common-sense to transform a $10m engagement that has 20% profit margin into a $7m engagement at 50% profit, is not just lip service from the service provider executives attempting to placate cynical analysts, we hear this from an increasing number of clients.<\/p>\n

Meanwhile, too many of the traditional Western-centric providers have massive scale deals involving hundreds, and even thousands, of FTEs and have a real problem when it comes to changing the pricing model at the risk of taking a hit on short term income.\u00a0 Sadly, most of the incumbent service providers are today looking at their current client portfolios and thinking \u201cWhy on earth did we take on some of these low-value FTE-centric deals where the clients refuse to do anything beyond complain about us not taking out enough cost, and are too insecure to increase the scope of the work to create a more value-driven, rewarding relationship\u201d.<\/p>\n

Conversely, most of the leading Indian-centric providers have built up their businesses on a plethora of mid-size deals ($5-$25m) where the FTE model simply will not make sense for their clients in 3-5 years\u2019 time \u2013 why pay for the same 20 bodies every year?\u00a0 They will want to see some incremental improvement on cost and efficiency, and will change to a new service provider if their incumbent insists on a status quo scenario.\u00a0 What\u2019s more, RPA will shift services to be delivered smarter not cheaper<\/em>, where business-centric staff can focus on delivering services at higher value, as opposed to surplus numbers of programmers and transactional staff being employed simply to keep workflows and operations functional.<\/p>\n

There are a few Indian-heritage providers today who must be thanking their lucky stars they never dived headfirst into the lift-and-shift BPO business \u2013 it\u2019s so much easier to drive value into less complex engagements, where there is less risk as stake to make a few sensible bets for the future.<\/p>\n

With regards to mobility, I have only been impressed with the focus of many Indian-centric providers to embed consumer-centric mobile processes into enterprise solutions.\u00a0 Digital is about bringing the service providers closer to the customers <\/em>of their enterprise clients, and is driving the need for capable mobile, social and analytical solutions to be weaved into the service delivery.\u00a0 And however to do this, you really need to be able to transform the automation layer for clients, which is the foundational building block for digital transformation.<\/p>\n

And last, but certainly not least, is analytics.\u00a0 I am only impressed at the appetite of Indian-heritage firms to take on analytics service for clients, no matter how small or complex the client requirement.\u00a0 Without trying to make a sweeping generalization (and clearly failing to do so), Indians just love<\/em> data.\u00a0 Analyst firms hire analysts in India because they are just so adept at foraging around for data points, crunching them up and presenting them.\u00a0 The challenge here is going beyond generating great data \u2013 and truly interpreting it for clients in relevant business contexts, which takes me to the second dimension\u2026<\/p>\n

2)\u00a0\u00a0\u00a0 Leading with business services.\u00a0 HfS success probability = 60%\u00a0<\/span><\/p>\n

This is where India\u2019s stars are facing some significant challenges, namely transitioning and training staff to approach client solutions from more of a business, and less of a technology, context.<\/p>\n

In 2020, I am willing to bet my house on the fact that NASSCOM will be all about business<\/em> solutions, with noone being remotely excited by the digital plumbing that has made it all possible.\u00a0 So what does this mean for the millions of developers who just live for code?<\/p>\n

It means we\u2019re going to need a bit less tech and a lot more business-context support.\u00a0 It means India\u2019s universities need a bit less ABAP and a bit more MBA.\u00a0 It means India\u2019s most ambitious service providers will be investing heavily in world-class HR to identify their talent potential, retrain it and frame entirely new career paths. \u00a0It means India\u2019s services industry leaders and populace are going to have to demonstrate a stomach for change, the likes of which they have never experienced.<\/p>\n

At NASSCOM, about 40% of the service providers I spoke with really get what\u2019s happening, and are already making some investments to make this tech-2-busness shift; about 30% recognize what\u2019s going on, but are still figuring out their play; however, a good 30% are like deer in the headlights \u2013 they just can\u2019t grasp the change and I generally worry whether they can continue on a healthy growth path, and can break out beyond their pure-tech<\/em> approach to service delivery.<\/p>\n

Yes, talent transformation is a big, big challenge for India\u2019s services economy, but it\u2019s not as if all the North American and European service providers and consultants are making massive investments to change their delivery model?\u00a0 Most of they seem more focused on shedding costs than buying capability.<\/p>\n

3)\u00a0\u00a0\u00a0 Managing the pace of change clients demand. \u00a0HfS success probability = 75%<\/span><\/p>\n

This is critical, in my opinion.\u00a0 Nearly all of the solutions today are largely being driven by vendor-push as opposed to client-pull, which is fairly typical as new ideas and technologies are launched onto the market.\u00a0 At HfS, we get calls from clients to discuss Digital, RPA and so on, but more because they just want to know what the fuss is all about, than the fact they are ready to move with an executed strategy and plan.<\/p>\n

Most of the traditional incumbent Western-centric providers are masters at managing the pace <\/em>of change that works for their clients.\u00a0 In my experience, services clients are falling into two quite distinct camps;<\/p>\n