Indian motion

India has long been associated with the provision of low-cost and high-quality software; not innovative systems that will help define business processes.

But IT directors should take note that more and more young US and European IT professionals are now heading to India, because of the creative opportunities offered in technology research and development.

Sanjay Verma, managing director of service specialist ITC Infotech, says development in India is fast moving away from a cost focus towards innovation.

‘There is no other option,’ he says. ‘As long as we continue to focus on cost, someone else will “do an India” and beat us at our own game.’

Verma believes the know-how built up in Indian IT companies can pay dividends.

‘We can use our expertise at re-engineering services and reducing costs to help create value,’ he says.

‘For example, the Apple iPod is a fantastic consumer product, but nobody would buy one if it retailed for $1,000 (£572). Value is the key word.’

The low-cost and high-quality attraction of India, therefore, is still important.

‘You can never forget the cost argument in any industry,’ says Verma. ‘Cost and value will always remain important.’

The development of innovative services is likely to be the preserve of creative startups or larger companies with a significant research budget.

B. Ramalinga Raju, chairman of Satyam Computer Services, says the future will be more intensely driven by knowledge and sophisticated customer requirements.

‘Customers are asking how can you improve the bottom line and time to market – and they provide their specification. We have never had a situation like this before,’ he says.

‘They used to ask about how many lines of code we could produce or how many engineers we could supply – everything is now about business value and improving service.’

Preparing the host workforce will be an issue. Subramaniam Ramadorai, chief executive of Tata Consultancy Services, says employees need to be more curious about opportunities.

‘We need more sceptics entering the workforce, not those who always comply,’ he says.

Mumbai locals describe archaic text books and an approach to learning that would have been old-fashioned in the UK two or three decades ago.

So is Indian creativity and innovation ultimately doomed because of the rote system of learning that is prevalent in schools? Ramadorai does not think the situation is incurable.

‘As an industry we are starting to focus less on graduate availability and more on suitability,’ he says. ‘We need to encourage curriculum development, student loans and more choice, to create new market opportunities for people.’

India, therefore, needs to tap into a culture of innovation. Michael Guilbault, analyst for US-based corporate research group TBR, says that Indian technology companies need to climb the value chain.

‘They need to be looking at package implementation, enterprise software, systems integration and building add-ons to existing client systems,’ he says.

‘A full consulting service is the key to this change, but most international marketing so far has been based on the effect of Bangalore. For Indian companies to become established as full-service consulting players, they need a brand.’

Indian industry leaders believe they can tap into a new wave of innovative services, but there is a danger that rampant globalisation of services may not be to everyone’s taste.

Thomas Friedman, author of best-selling globalisation guide The World is Flat, says worldwide relationships will not create service homogenisation.

‘I think global connectivity and services, such as online publishing via blogs, will allow increased localisation,’ he says.

Friedman believes that global competition will stimulate new services.

And if his point of view is correct, innovation will flourish in a political environment that is open and fair – and India, after all, is the largest democracy in the world.

Universal challenge

Indian technology companies are spearheading a revolution in international services to offer a truly global delivery model, rather than the accepted view of offshoring – where most of the staff were literally offshore.

Creating a fully international service, from consulting through to delivery, is the next step for major Indian organisations. And it means some of the established international players will see new rivals enter the tendering process for contracts they might have won in the past.

A good example is the recent £150m IT support contract, awarded to HCL Technologies by the Dixons retail group.

International service giant Logica CMG was in the running for this contract, but was ejected from the bidding process by the Dixons board.

Eamonn Kennedy, research director at analyst Ovum, says that HCL has whipped away the remaining doubters’ comfort blanket.

‘This deal is proof that Indian-based outsourcers have what it takes to beat the established players,’ he says.

Both TCS and Infosys have already established strong consulting units that can compete with global providers.

The growth in strength of full-service Indian technology groups is just one innovation to emerge from India. As the global delivery model becomes more accepted, expect the world to change again.

Mark Kobayashi-Hillary is the author of Outsourcing to India: The Offshore Advantage (Springer) and a board member of the National Outsourcing Association. www.markhillary.com

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