Over past two decades several of Indian IT companies had a good rise in their fortunes. They inched closer to Big 5 consulting companies. All these happened because of several factors
- Low cost alternative
- Global presence in several countries
- Offering 24×7 services
- Better and bigger talent pool
While all these helped Indian IT services to grow faster than brick and mortar business anywhere. Along with this growth came some problems such as
- Higher salary
- Lower productivity due to attrition
- No Innovation
- No / minimum investment on newer technologies
- Management focused on cost savings
All the above has caused profits of some of the Companies such as Sonata, Mindtree to drop. This trend might continue for the other tier 2/3 players if they focus on openration costs as way to survive.
IT service providers need to revisit their strategy, focus on innovation and new technologies as
- Cloud becoming dominant in SaaS, PaaS and IaaS most the IT services players will feel the pinch. The SLA’s will be managed by cloud vendors and this might cause loss of revenue in managed services or reworking on cost for IT service providers.
- Innovation such as iCloud, Google sync will draw customers to look at a new paradigm where Network, System and database administration are more so managed by Cloud players than IT service providers
- With less investment in newer technologies and more focus on cost savings the management will have staff with no knowledge of latest trends and happenings in the Industry. This might lead to retrenchment of work force.
Gone or the days where IT services will develop large applications. Force.com, Amazon and Google Apps have applications which are ready and can be customized to needs. There are thousands of these applications which can be used as is. IT service providers bubble is sure to burst if they do not think of innovation, Cloud as path for transformation to their clients.