It’s one of the paradoxes of our time. India is the go-to country for the world’s IT requirements, but Indian companies are among the least IT-enabled. Why is this the case?
To start with, demand lagged the global market for a long time. While the world transformed its processes and invested in technology, Indian businesses were happy to rely on manual processes and shunned investments in technology. Forced to look outwards, Indian professionals discovered a world hungry for their talent. The industry grew rapidly and software became the career of choice for a generation. Ironically, this created new opportunities for Indian businesses — which started benefiting from the world’s rediscovery of India and the potential of a growing domestic market. Meanwhile, they were plagued by a shortage of quality manpower and needed to move towards system-driven organisations. Here’s where the happy story ends.
When domestic companies start looking for IT talent, they struggle. Most of the talent is drawn by the large IT service providers or the back-ends of global technology players. These companies offer a brand, global exposure, career growth and skill up-gradation. A domestic company struggles to offer any of these — and certainly not the overall package. Unfortunately, even services firms focused on the Indian market struggle to attract talent for similar reasons.
An Indian company has a difficult choice when it embarks on the technology journey. Attempt to create its own IT capabilities — a battle it will almost certainly lose — or outsource the work to a domestic-focused IT provider. Many companies oscillate between the two models. Few companies are able to build their own IT capabilities. Even those that manage this task are often grossly inefficient. In our experience, they function at 25-50 per cent of the efficiency of a top-line IT services provider. Most companies have the Hobson’s choice of going with an outsourced service provider. But which one? The top Indian IT firms do not really serve the domestic market — at least not the SMEs. So, one has to choose amongst a bunch of smaller providers — who are typically struggling with organisational issues themselves, and offer very variable quality.
Make the best of it
As an Indian SME, one’s options may appear limited. However, there are several practices that can be used to make the best of this situation. Some of these may seem obvious, but it is surprising how many companies try to do it differently.
A company must strategically distinguish between IT infrastructure management and application development. Today, it is almost impossible to internally develop a high-quality, scalable application development organisation. One has no choice but to outsource. Infrastructure management is different. Even though several outsourced providers exist, it may be possible to manage this internally.
While outsourcing, spend a lot of time on vendor evaluation — this is a partnership, not just a contract. Opt for companies that have overcome the basic scalability challenges — and are no longer one-person dependent. Many companies prefer to work with smaller vendors as they are easier to “control”. In reality, however, such companies face too many growth challenges of their own to be long-term partners.
Look for the crucial middle-management layer and the quality management systems that allow a company to scale effectively. (“Rocket Singh” kind of companies are good for the short term, but are too dependent on one person). If needed, hire trained vendor management people for the job. Importantly, don’t be swayed by the sales pitches or personal relationships — buy what you need and not what is being sold.
Approach costs differently — think of the sustainability of the relationship and the health of your vendor. Unless the vendor makes reasonable profits, he will find it hard to invest in his people and will be hit by attrition — and his service standards will lower themselves over time. It may be a little counter-intuitive, but sometimes it may be better to be soft in the negotiations.
Think of your IT strategy as one that involves a series of interlinking blocks — rather than a universal solution. It is easier and faster to build the blocks, and any problems can be localised. Universal solutions are hard to find, and very difficult to create.
Avoid re-inventing the wheel for products that are already available in the marketplace. One can get multiple vendors to service an established product — and cannot be held to ransom by a developer. In general, a global product may provide better value than a home-grown solution. The initial cost may appear high, but the long-term cost and, more crucially, reliability is almost always lower.
For companies that are in the process of moving to an ERP, start with plain-vanilla implementations. First get the processes automated, and then find ways to improve them. Trying both things at once rarely works.
Build a programme management layer within the company, or ally with companies that can manage IT projects with outsourced vendors. Even with the best-of-breed vendors, it is critical to have the right programme management capabilities.
It’s still a rocky road, but following these practices can significantly improve the chances of implementation success for an IT buyer. However, if this market is to truly improve, IT suppliers must find a way to crack the Indian market. More on that subject in another column.
Source:http://www.thehindubusinessline.com/ew/2010/06/28/stories/2010062850110300.htm
