Another indicator for change

Posted on April 30, 2013 by Alok Kumar

It was for the first time that students went on hunger strike to protest delays in on-boarding by an IT company after being given offer letters several months back. This was however only one of the outcomes of several such delays for on boarding by IT companies in last two years. It is difficult to say, who needs to be blamed, but it is simply another indicator of the fact that we have to change the system of providing IT services and having commodity skilled resources to handle the changing business needs globally. Being a consumer myself, I would certainly ask  the validity of using a custom made CRM in place of Salesforce.com. This is just a small piece when we see the adoption of SaS (Software as a service) moving north by every passing year. The fear of security of IT employees and imaginary issues rising out of the fact that  most of them clearly see their jobs in limbo will be soon replaced with the economical reasons if business have to survive. With such a different kind of IT adoption, and rapid change, the current IT companies and their age old method of providing IT services itself comes under the lens of future viability.

The way forward has to be a massive reeducation of each and every employee of these companies emphasizing on the need of remaining current and technical if they have to be relevant to the customer’s changing need. Probably, salaries of each employee also have to be taken up as we treat stocks in stock market. Although drastic, this is still better than creating joblessness due to skill mismatch for the needs of future.

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Learn, unlearn and relearn – The new education paradigm

Posted on April 14, 2013 by Alok Kumar

I was attending lectures of eminent economist Dr. Parag Khanna and got to understand the way our future has been shaping up rapidly. The days of students passing from institutes and getting a job directly will be soon over. This will be replaced with a completely new education system where learning, unlearning and relearning will be a continuous affair for everyone and not just the fresh students coming from college.

The fast changing technology landscape is clearly about how quickly we can become relevant to business needs instead of being struck with the past and become a dead weight for the business. The existing formal education system is not only too expensive but highly inadequate to cope up with such rapidly needs. The current situation of no formal method of continuous education is only allowing few talented individuals to keep correlating with their ecosystem. Such talents continue to remain current and take the role of a change agent. However the vast majority continues to remain either in ignorance or handicapped without formal low cost assistance.

Education, mainly technology, is no more a matter of regional thoughts and practices, but a continuous need to remain current with global changes and demands. This needs a completely new system of education. Very soon, we will see, companies recruiting young professionals with little formal knowledge but highly current knowledge taken from the ecosystem through a combination of social media, formal education and online courses. They will probably write their own degree and keep doing so several times in their professional lifetime.

Coursera, an online initiative of Stanford and Duke University professors is an attempt the same direction and has been rated as the most popular startup of the year.

The reality will soon emerge, keep learning, unlearning and relearning or be prepared to become jobless.

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Virtual CIO service – Value generation for SME sectors through collective shared knowledge

Posted on December 17, 2012 by Alok Kumar

CIO has a very vital role in the growth of any company in these times of technology. From someone who was responsible for churning out financial data under the leadership of a CFO to someone who is at equal footing or even more in board room discussions has been the journey of the CIO over last four decades.

Large companies spend a lot of time and money to get an all-round leader to lead their business IT function. The role has become so crucial that company’s sustainability, growth and profitability, all hinge on the ability of the CIO to enable business. While large companies can hire superstar leaders in managing their IT, issue is mainly with small companies who are not very tech savvy and have almost no access to a CIO like person. Several mid scale companies also have been carrying their IT manager who was more of an execution guy than a strategist as a CIO.

Without knowing the risk of having someone not capable to lead this function, many of these companies run a risk of loosing out in this era of technology excellence and enablement. These companies end up doing things which either is inefficient, not scalable or just something because it was in their plain sight in absence of someone to advice & guide them appropriately in enabling them better.

I happened to stay in a hotel where the point of sale was a standard system and except for room booking and printing invoices, nothing more could be done. This hotel was listed online but on doing online booking, rooms were not automatically booked in the system. Hotel staff relied heavily in several manual processes to keep track of these things, without knowing that there can be something better. In this process, they missed few overnight reservations already done online ending up loosing customers and not knowing how to control the issue.

On the other hand, a Hotel chain was highly efficient and had far less staff to do the same work even more efficiently, because of effective automation. Moreover, system helped them understand the customer’s previous history and offer them with deals, which generated even more business.

The question of how these small entities can have access to good CIOs still remains. There are niche companies, who provide a virtual CIO like services by helping mid and small scale companies in deciding the IT strategies and helping them execute in a shared mode. An informed CIO can help bring down the cost of IT while making the business grow and certainly worth the cost.

This is something, even larger companies can take advantage of eventually, using he collective wisdom of thousands of CIOs globally.

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Too much focus on Infy results

Posted on October 14, 2012 by Alok Kumar

Once again Infosys did not perform better than the market expectations. The result was expected as it is directly reflecting the global sentiments. For Infosys, certainly it is more than the global economic stagnation. It is a loud and clear signal for change of the business model and the company approach to the market reality.

In any case Infosys now does not deserve so much of media bashing. The company was darling of investors for last so many years and still is in positive growth while most of the global companies are struggling even harder. The CFO of the company stepping down should not be seen as a fallout of lower than expected results for the company. In a way, this is a positive move of a seasoned leader who wants his next line to grow up.

Narayanamurthy did a great job and retired with grace handing over the reins of the company to the next in command even though he could havecontinued for several years more. These are signs of mature leaders. However, precious little was done by them in changing the direction of the company which they require the most. From a predominantly a US based market and typically a body shopping model to a product and platform company is not something which can be now easily achieved. This change would need two Narayanmurthy and several years of time.

The question is however, does Infy have so much time before it recedes into a shadow of itself?

 

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Slowdown calling for new ideas on value generation

Posted on September 9, 2012 by Alok Kumar

Slowdown has continued for long and slowly seems to be becoming bolder. Indian government issues are increasing by the day with skeletons of corruption falling out of cupboard with ever increasing frequency. Policy paralysis seems to have added to the slowdown woes to the common man in form of increased cost of living, joblessness and increasing desperation.

On the brighter side, history is proof that even from the most abysmal situations societies have come out even stronger. Post World War era is a proof where devastated countries stood out to become prosperous once again. In such a situation too, business leaders now need to stand up eliminating wastages and start working out products and services which will bring high value to the customers. While such changes are anyway bound to happen over period of time, such an economic slowdown situation can only push business leaders to hasten such initiatives.

Looking at Technology alone, we can see that Indian IT scenario has been a story of unprecedented success and growth. However, this gave rise to IT companies focus on profitability more than anything else. Over three decades, the business model being followed by these IT companies have come under threat as it was the case of typewriters at the time of start of personal computers. Last typewriter was produced two years back in Godrej in Mumbai ending the era of the great machines which started in 1874 in New York and ended up in 2010 in Mumbai. If leaders of IT companies feel that even their business model will last for more than a century, in that case the decline curve has already set in.

Models have to be reinvented to bring higher value to customers in form of outcome based services and pay per use models. Customers are waiting to get a taste of services where someone truly acts like a partner sharing their risk and successes.

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Infosys finally hits India Shores

Posted on August 10, 2012 by Alok Kumar

Infosys gets an order from Indian Postal services for more than 300 cores. This is a major change of policy for Infosys who never bothered to even look at Indian business for providing IT services just a few years back. The reason is very obvious. Indian companies refused to be duped with such high rates like what Infosys was easily able to get through US and European clients. Finally when going is getting tough, the most valuable Indian company of yesteryears has been forced to look home for business.

The difficult part of getting this business done will be not managing finances but managing employee aspirations who are used to going onsite which are far more advanced and get better money making opportunity. Now onsite will mean Bihar, Jharkhand, Orissa and so on where probably getting a good hotel itself will be a problem for these pampered lot.

On a more serious note, this shift also signals a great opportunity for Indian companies and Government where the best minds can create the same magic which helped transform western world in technology. Even if Infosys have to spend more than what they earn in this deal, their contribution to Indian Post and to the Indian public at large through this project would mean a lot to India.

We look forward for this new Avtar of Infy which TCS has already been since very long. This time, TCS will get competition even in India from Infy. It is certainly going to be good for everyone.

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Brand values diluting – big IT contracts being broken down for cost saving

Posted on July 19, 2012 by Alok Kumar

Large contracts have been a common phenomenon with large IT companies. Margins from such contracts would go way beyond traditional profits IT service providers would make over years with such engagements. Such contracts however were complex and needed the service providers to be large enough and having enough experience to take on such deals. The key differentiators with large IT companies have always been that and the premium demanded by them was therefore justified.

However, this differentiator also stands to get diluted very soon. A new trend has started in US and Europe where the customers are not renewing these deals but breaking down the whole work into several smaller components and opening up for mid scale IT companies to take up at far lower cost.

This tread has infact impacted large companies including Infosys, IBM , Accenture and many other big names. The message from market is coming out loud and clear “Show us the value or else we will find ways to reduce cost”. One is thing is almost certain that high margin game in commodity technology services which covers more than 80 percent of the global IT services needs will be over very soon.

 

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Misaligned organizations – Guranteed failure

Posted on July 8, 2012 by Alok Kumar

Change has been the only permanent thing in the world ever since the word was invented. Over last couple of decades, changes have been rather more rapid than what we have seen earlier. Apple came back from almost nothing in the market to the top leader in technology in matter of less than ten years. Nokia went down from the market leader in mobile to struggling mobile maker. Sony Electronics posted heaviest loss ever after decades of top presence in market. Blackberry is almost becoming a history after being the global leader in its field ever since smart phones were thought off. There are ample such things happening around us and many more waiting to happen in near future. The question which comes very often in mind is, what is the reason which makes a company loose its market position so fast to someone who is so new in the field. In some cases the relevance of the business for the leader itself becomes a question mark. The common thing behind all such up and down stories have been the vision of the leadership and even more important the alignment of the organization with that vision. Sony, which remained market leader in electronics for decades with revolutionary inventions like Walkman and many more, lost its ability to deliver anything substantial. The key reason to this failure has been attributed to the lack of alignment of the organization leaders with the common vision which was the reason of its success in its first place. Leadership in Nokia did not bother to ensure that the vision they had with its initial success was relooked and implemented. Eventually, their vision was far short of consumer expectations who got far more than what Nokia gave to its consumer. Without any solid vision, alignment obviously was not possible leading to a spiral of problems for the Finnish mobile giant. For a successful organization, it is imperative that leadership creates a strong vision, keeps the same updated and ensure that the same is cascaded for alignment and implementation of actions to achieve the same across the organization.

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Infosys 3.0 – The future version of Infosys with no release date

Posted on June 10, 2012 by Alok Kumar

KV Kamath spoke about Infosys 3.0 in the AGM in an attempt to put the lack of vision of Infosys management under the carpet. The new version  of Infosys, although declared does not seem to be either in making or even with any kind of release date. It is coming out clear again and again that Indian IT companies have worked too hard to milk lower risk opportunities in global IT by merely filling the labour gaps of western market. There was no attempt how so ever feeble to also attempt something as risky as being done by US companies since the IT itself started. The  principles of business have always remained the same, low risk, low gains, high risk, high gains.

While the attempt to move to product and platforms company itself is a welcome one, it is to be seen how Infosys can achieve this big change. It  seems a difficult thing to do because the company has not been learning from its past mistakes and continue to bask in its past glory.

The only way the transformation can be successful would be by creating a separate company dedicated to do things differently with different management and probably washing off all influence of Infosys. The two entities can then together work for Infosys 3.0 vision. Either way, the ultimate sufferer is the employee of the company whose growth is reduced and job security gets further impacted.

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Changing outsourcing landscape

Posted on June 7, 2012 by Alok Kumar

Technology companies are putting up a brave front even under pressure with their increasing bench. While it is not anything new that service providers use bench to get new business faster, in tough times like this, it is a double edged sword. Companies like Tech Mahindra do not keep bench and prefer to be lean and thin even with a risk of loosing new business opportunities. Infosys and TCS are more bullish and they traditionally play with more bench. Situation however seems to be changing differently this time. Most of the companies are now looking at more permanent change to reduce cost. There has been several instances of renegotiation of contracts where cost reduction was as high as twenty five percent with same level of services. High inflation in India is putting pressure on companies to contain their input cost, but customers are becoming increasingly aware of increasing dollar against rupees. Many of them are asking benefits to be passed on. In one interesting case, two vendors from India fought out on this benefit with customer to get the order. It is visible that desperation is increasing with only cost reduction as the prime motive of customers as against several non cost based parameters in earlier deals. The biggest looser is Infosys as their image of premium vendor has taken a thrashing and they are forced to take a reality bite instead of completely loosing out.

The year ahead will be getting tougher with lesser deals, increasing bench, increasing input cost and reduced margins than ever before. The next threat is the commoditization of several lucrative services of yester year which will force change the shape of IT outsourcing in coming years.

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