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Financial Express Article, 26/04/2010, Ganesh Natarajan
 
 
The green shoots of recovery seen in India in the closing months of 2009 have strengthened to robust growth forecasts following a rather tepid performance for India’s IT sector. The results season in progress has demonstrated that the IT and Business Services industry in India can withstand the vicissitudes of fortune in global markets. Firms have has built strong forts across key customer segments that cannot be assailed by temporary downturns and recessions. However as in all industry sectors anywhere in the world, the traumatic period of the last eighteen months has demonstrated that only truly innovative firms who are quick to predict respond and react will thrive irrespective of the environment.
The Information Technology industry in India is one sector which has harnessed the power of innovation in all its forms – product and service innovation, process innovation and business model innovation, to record the fastest growth in a decade that any sector in any part of the world has achieved. The story of this sector’s rise through the early days of wage arbitrage and offshore process quality to the present success of innovative IT firms is the envy of many nations today who are seeking to emulate and surpass its success. To a lesser degree, Financial Services in Brazil and Telecommunications in Africa have used innovation to blaze new trails and China, already having established a near monopoly in low cost manufacturing has turned its attention to outsourced business services for the world.
The results of these investments in innovation for the successful firms in the IT sector are visible and the strategies adopted span the entire canvas of innovation. The larger firms like TCS and Cognizant have focused on customer retention, going the extra mile to ensure that services innovation continues to give them the edge vis a vis global competitors, the more successful of the early stage companies have been able to identify and exploit discontinues in key market spaces, whether it is Beyond Core with its outstanding process optimisation solutions for BPO firms or Global Talent Track’s work with leading IT firms to fine tune their pre recruitment talent identification and development mechanisms. And the most interesting impact of innovation has been in the mid tier segment. While many firms have floundered, a few like Persistent and Zensar with their focus on business model innovation have demonstrated resilience in the face of environmental adversity.
The Zensar case, now being written up for Harvard Business School is an interesting one. One of the first companies in the world to be certified as SEI CMM Level 5, the highest level of process quality excellence, the company has built a unique business model with the ability to service its clients through a multi=shore model where analysis of requirements is done collaboratively at the client site, design of applications is done from offsite and near shore centers in all continents and development, migration and testing done through automated tools and framework that greatly reduces time to market and predictability in its solution delivery using a global delivery model. During the period of the current slowdown, Zensar surprised most industry watchers by refusing to slow down its new product and service offerings and launching a new Impact Sourcing service that offered guaranteed value improvement in key technologies and processes. The result has been continuing growth and significant order booking and confidence that these successes would pave the way for an even brighter future in the post recession area.
The global downturn has caused a fundamental rethinking of the nature and scope of business in most economies. As financial structures, organization hierarchies, customer access and response mechanisms and the management of global supply chains came under sharp scrutiny, mature organizations in key industry sectors chose to reengineer their processes, improve productivity of people and technology and focus on a minimized cost model to keep bottom lines intact even as top lines remained flat. In the coming year, many new opportunities will be available for user firms, predominant among those being cloud computing and the use of hosted solutions for managing the entire supply and demand chain. The ongoing focus on cost reduction will be both a challenge and opportunity for solution providers.
Innovative firms across industry segments have shown the way to continuing success and progress even when economic head winds have threatened to slow progress. Clairvoyant leadership, a culture that rewards entrepreneurial risk taking and celebrates success and processes that lend themselves to rapid innovation and new idea mobilization and implementation on a sustained basis are the recipe for success in the coming decade which will provide more challenges for all firms. Will many Indian firms show that they have what it takes to be among the winners? Only time will tell!
   
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