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August 2008, DATAQUEST
 
Surviving The Financial Meltdown - The It/Bpo Agenda
 
My friend of three decades, Dev Bhattacharya of the Aditya Birla group, a man who has consulted and led companies across multiple sectors including IT and BPO and lived to tell the tale, has a simple suggestion for CEOs who are running for cover fearing the fallout of the recent financial crisis – get off your butts, go out into the market and read the signs of a changing world. In that change you will find the new opportunities that will define the future of your company rather than get drowned by the doom soothsayers who are forecasting the early demise of the IT industry!
So where is the truth between the hype that emanates from some quarters and the doom and gloom that the pink papers always love to predict! Is there reason for a major panic for the IT and BPO industry in India? Not really – we have seen such worrisome collapses before, probably the biggest of them being the Dotcom bust that saw billions of dollars in market capitalization on Wall Street evaporate and quite a few jobs on both sides of the pond lost. In the current situation too, there could well be a medium term opportunity to get into the heart of a major led IT led restructuring of the entire global financial services sector. Indian IT firms are already well embedded in the development and support processes of most of the major investment banks and brokerages and the incredible domain competencies they have acquired could well see the employment of thousands of professionals in a redesign of the global financial systems in 2009.
Having said that there will certainly be troubles in the short term. The global demand environment has been sluggish since the beginning of the current financial year, which has resulted in a lowering of the revenue growth guidance for the year to the low twenties. The Indian IT-BPO sector is a part of the global ecosystem that has been facing uncertainties and cannot insulate itself from the travails of its key customers, particularly in the banking and mortgage sectors. The mitigating factor is that ever since the sub-prime crisis began last year, many companies that were being directly impacted had prepared for this. The industry has already tightened its belts, improved utilization and reduced bench strength and this turn for the worse will not substantially change the guidance or the outlook of the significant players in the sector.
Does this in any way impact the achievement of the sixty billion dollar export goals that the industry has targeted for the turn of this decade? The preliminary analysis of the current situation indicates that the impact will be short term and company specific and though all strategy planners will continue to keep a watch on any further downstream impacts, there is no likelihood of any catastrophic happenings or announcements from the industry in the coming months.
India's value proposition continues to be strong. As an industry, we have worked as partners with our customers and will continue to do so, even as the financial services sector realigns itself. During the last few years, Indian IT and BPO firms have moved from being peripheral services of contextual services to becoming the epicenter or at least an integral part of the core value chain in customer business processes, which is what gives us the confidence that no process transformation will be contemplated or undertaken without the active involvement of India’s large professional manpower. If there is some panic in the ranks today with many television channels already pronouncing a fading of interest in business schools in the entire financial services and investment banking career opportunity, young aspirants can rest assured that the future opportunities are real and promise to be more exciting than the current quantum and quality of work done by the services industry.
The true imperatives for the coming months can be an extension of the simple Dev Bhattacharya advice -At the firm level, diagnostic exercises on the present state of innovation activity and the path to reaching a desired state of extensive innovation need to be undertaken so that serious projects are planned and executed. New product creation in intellectual property oriented firms and process innovation to look at new delivery methods and collaboration with customers and partners should be attempted in all services firms. At the eco-system level– the government, research and academic institutions, financing agencies in addition to the firms and the association need to work in concern to build an enabling environment for innovation. Major initiatives have already been announced where liberal arts and science degree programs in colleges are being augmented with vocational skills provided through a combination of technology and facilitation to transform the employability of tens of thousands of young industry aspirants. And finally for all industry aspirants, it’s never too early to start planning for a vocation even when they are in college so that they will enter the workforce better prepared for the challenges of what is undoubtedly going to be a tougher world!
 
   
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