The Indian IT industry’s response to business slowdown

For the last few months, the Indian IT services industry has fretted and worried about the slowdown in the US economy and its impact on business. It has reacted on expected lines:

• predicting a slower growth in top and bottom lines
• going easy on hiring
• limiting salary hikes
• reducing bench strength and increasing utilization
• cutting down on discretionary spends

These are well and good; but what is needed is to use this time to change the rules of the game. Different (and differentiated) business strategies are needed. Companies should explore new models to break the linear relationship between revenues and number of bilable employees. “Build once, use many times” could be one possible approach, wherein a cmpany develops an application “platform” that can be sued for multiple clients. Naturally, adequate security measures will need to be in place, and more importantly, disparate clients must be convinced to standardize processes and not worry about ownership of IT assets so long as business service levels are met.

This may be a good time to target Africa both as a potential market as well as a location for a development center.

Rather than cut back on marketing, this is a good time to pick up desirable media slots at a relatively lower price and lock them down for the next two years or so. That way, 6 or 9 months from now, when the miasma in the marketplace is going, companies will be ready to hit the ground really hard.

This may also be a good time to look inwards and rationalize teams.

Rather than indulge in infructuous navel-gazing, this is the time for Indian IT services companies to differentiate themselves . At a time when clients are woried about costs, Indian companies should start taking the lead in demonstrating value that goes beyond being “body shops”.

Karnataka assembly elections

The first phase of polling in Karnataka went of peacefully last week. Rural areas reported a much higher turnout than urban areas. There is hope that many more younger voters will exercise their franchise. While that remains to be seen, I sincerely hope that voters will cast their votes after giving due thought to the shenanigans that have marred the coalition government over the past 4 years. The coalition partners have spent more time sparring and trying to pull the rug from under each other’s feet than on governance. Not surprisingly, the state’s development has suffered. New investments into the state have slowed down. Infrastructure has not been given as much attention as necessary and Bangalore has palpably worsened.

Yes, the Metro is finally off the blocks- more than a decade after it was first proposed and the first feasibility report was done. But the new international airport has not become operational yet; connectivity issues to Devanahalli remain unresolved and I suspect that for the first 6 months after the BIAL airport becomes functional, it will take more time for passengers from neighbourhoods in South Bangalore to reach the airport and check in than it will to even fly from Bangalore to Delhi or Kolkata. And if the HAL airport remains open (as may well happen), the chaos will only amplify. Interestingly, Bangalore has become a key point on the election manifestos of both the Congress and the BJP- explicit acceptance that the previous governments have let the state capital down badly.

Irrespective of what exit polls predict, the calculus of coalitions and who finally gets to form the government and becomes CM will become clear only towards month-end, when all 3 phases of polling are done and the results declared. Politics makes for strange bed-fellows and my fear is that we may again end up with dirty coalition politics that further stymies Karnataka’s progress. I hope I am proved wrong.

Why beat the dog…

Nearly three decades ago, my grandfather told me a little story. There was this man, who had a pet dog. One day, in a fit of rage, the man picked up a stick and beat the dog. The poor dog dumped right there inside the house. The man had to clean up after the dog. A neighbour, who supposedly watched the entire episode, asked wryly “why beat the dog and why carry the “done”?” In essence, why do something whose outcome will only cause more misery or nuisance- and you have to end up doing something painful or distatsteful to remedy the situation?

I was reminded of this story when I read recently that Vijay Mallya has declared that he has tremendous faith in his team and that he wishes he would get the privilege of sorting things out in the privacy of the dressing room or team meetings. After all, it was Mr Mallya who first spoke to the media about his dissatisfaction with Dravid’s team selection and so on. Dravid, ever the gentleman, simply accepted his franchise owner’s outburst s justified, given the team’s lacklustre performance in the IPL thus far.

Just as Shane Warne alone has not wrought wonders for the Jaipur franchise, the Royal Challengers’ performance cannot be blamed on Dravid alone. In both cases, it is the team that either did or did not consistently deliver. One individual may play a key role on a particular day, but that’s usually it. Sanath’s brilliant century againts Chennai would have been in vain if the bowlers had not bowled well and the fielders had not held catches and effected run-outs. Today’s match, where Dravid scored an uncharecteristically aggressive 75 n.o. (6 sixes and 6 fours, 36 balls) is another example where Dravid has done quite well, but received no support from his team-mates.

Just out of curiosity, I wonder if Mr Mallya also treats the managers in his employ in similar fashion, and what attrition rates at the UB Group are.