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Capitalism 2.0 - can that be the next business strategy for the Indian IT Industry?

May 30 2014

Capitalism 2.0 - can that be the next business strategy for the Indian IT Industry?

I’ve been interacting with a lot of industry stalwarts off late from various companies and more often than not I feel that I am missing a big point; and then I being an eternal optimist feel that may be they need to think differently – how in the world will they grow at 25-30% year on year, or beat market’s expectations by doing their business as usual ?– IT spends are not going to increase as much, virtually every big company in the world is on their portfolio and they are not going to increase their IT spends as much - the cloud is eating into what otherwise would have been their IT services to an extent- the overheads are increasing, billability rate is not.. Decision making, many a times, is almost at a snail’s pace. They all believe that they want to try different things and pick up what makes sense – create products, solutions, services and see what clicks.

On the face of it, yes, you have to try and see if it actually works out and there isn’t any harm in it. In fact, it’s a great way to go about it, but the core impediment in this is by far the dogma of existence and the way of operation; and that I think is a of a tall order when it comes to changing that. And not only that, but the ideas within the company will also come with its own overheads of how the company operates, how the environment is and how successful has it been in the past with other ideas. Bringing in a fresh perspective and thinking is a nightmarish affair. Most of them I interacted with at a leadership level said one thing in common – “its a slow process, the change needs to come in but it will be at a pace. We should start seeing results coming through soon” – I applaud their conviction, probably that is indeed the reason they are in this business for so long.

There are a lot of "ideas" riding on this across the board – non-linear growth, discontinuous growth, products, reusability, solutions, nimble organizational environment, so on and so forth and each of these ideas are moving forward at their own pace - . But that is like asking a corrupt government to stop being corrupt – not that it is not possible, but it’s a long shot, given the sheer size and volumes at which the change has to come right from the systems to the culture and the core mindsets of the very people driving it. The bigger players are losing control and direction at many places.. Capitalism in the IT services industry will have to re-invent itself.

The world, in my opinion, will move to well distributed economic growth across companies – we are already seeing that happening. We are seeing smaller companies replacing bigger ones in many places – for the niche technologies and ideas that they bring onto the table combined with the hunger with which they operate and the skillset they bring onto the table.

I personally think that that is a latent market to capture. The question is how do you go about it? Given the fact that you are a big company, not wanting to associate yourself with smaller company, remain risk averse and at the same time grow in this latent market? What if one gets into helping startups grow while partnering with them on an equity business or on a profit sharing basis?

Are we not missing the point here? The latent market where the revenue is directly there is just being let go because many of the bigger players may see it as a risk of associating themselves with the startups – and these startups are in various industries – IT, green initiatives, retail, healthcare, social commerce, gadgets. Why not capitalize on that, help startups develop the software platforms that they want to develop (say at cost or for free) and then grow non-linearly along with them, either through profit sharing or by taking an equity in these companies?

An interesting point to ponder upon is that the world’s economic turnaround is largely dependent upon these entrepreneurs trying to do something of their own. If an IT leader helps them make this work, wouldn’t you be also supporting the global growth while making room for your own growth as well?. Will this not be a win-win situation?


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