Wednesday, March 26, 2008

New business models for IT

The Indian IT industry has witnessed an exceptional growth over the last two decades, led by the 1990s, when companies were notching up 50-100 percent growth rates. Such was the momentum that even the dot-com bust of the early 2000 and the global economic slowdown only marginally impacted growth, keeping it above the 30 percent mark. The excellent performance was in large part due to the vast talent pool harnessed by industry leaders and their investments in process capability.

The global delivery model, created as a result, was a disruptive innovation enabling the industry to comfortably ride the economic downturn of the early 2000. The model is now being universally adopted, leading to commoditization of traditional IT services around vanilla technologies. Companies are differentiating their services by moving up the value chain and acquiring domain capabilities.

Seeing the rapid acceptance of the lower-cost offshoring model, global multinational consulting firms have dramatically scaled up their presence in India. From less than 10,000 people in 2002, the top six global consulting firms now account for a headcount of more than 150,000. This rapid growth and our own success in scaling business have put huge pressure on sourcing and retaining quality talent. As a result, wages are increasing, adding to the overall cost of doing business.

The twin challenges of the appreciating rupee and rising cost structures are accelerating the search for non-linear business models, where revenue expansion does not imply a proportionate headcount increase. The industry is exploring new services for exploiting the offshore potential, building Internet Protocol (IP)-based software assets that can be customized to rapidly deliver solutions, or simply creating innovative commercial models that shift the terms of engagement away from headcount. As I had mentioned at a recent Nasscom meet, three non-linear business options are promising.

Managed services: Services around applications, development and maintenance (ADM) were the first to be offshored. According to a 2006 Nasscom-McKinsey study, this is a $35 billion opportunity. It indicates that offshore services around IT operations represent a $75-$80 billion market. While more than 30 percent of the ADM offshoring opportunity has been penetrated, the field of IT operations is wide open for Indian IT services players.

IT infrastructure has traditionally not been offshored largely because of inadequate communications infrastructure, high perceived risks and limited automation tools. These notions are beginning to disappear.

The remote infrastructure management services segment is growing rapidly, with large organizations providing a complete end-to-end solutions portfolio. This market, incidentally, is not just for big players. Mid-sized organizations, too, have established their presence in it. Global research body Forrester in its report, Smaller India-Based Infrastructure Providers Can Be The Right Size For The Right Clients, has showcased a clutch of smaller organizations building successful models in this space.

IP asset-based services: Delivering solutions around IP assets (frameworks, reusable components, and productized services) is a powerful service differentiator and a significant margin lever. Implementing such solutions requires significant customization—a strength of Indian services providers. Contracts can include both licensing and services components, with support revenue streams, making it another good non-linear option.

Compared with the pure-play products business, IP asset-based solutions will be easier for the industry to adopt. Large players are investing in this capability although revenue streams currently are a small part of their business. Smaller players are taking the inorganic route to acquire such IP assets.

Software as a service (Saas): The philosophy behind Saas rests on the concept of positioning an application as a set of services as opposed to a licence. The customer is charged for usage rather than outright ownership. Recently, enterprise solutions giant SAP announced its “Business by Design” programme in the US, where it will offer its applications at a charge per user per month, which is a path-breaking development in the packaged software world. Saas by its very definition is non-linear, since revenues are linked to usage and the transactions performed. Being a relatively new concept, it’s too early for market sizing but it remains one of the most promising disruptive approaches to delivering IT solutions.

The global delivery model that emerged from India has changed the way IT services are delivered. The industry, in essence, redefined software development by converting the art form of programming into an engineering discipline. The industry has benefited from the early-mover advantage of adopting this innovative process. However, with increased global presence offshore and a challenging environment, Indian IT services providers will need to transform with newer services.

Monday, March 10, 2008

1 mn Jobs in India

Read a news today which states that
" New Delhi, March 10: It is good news for those fresh out of college or for those who are keen for a job change, as a leading HR consultancy firm has predicted one million new jobs in India this year.

Ma Foi Employment Trends Survey (METS), conducted by Ma Foi, one of India's largest HR consultancy firm has predicted a three per cent increase in employment in 2008.

The largest chunk of the new jobs according to the survey would be generated by hospitality sector which is riding high with the tourism boom in the country.

"The Hospitality sector will generate the maximum number of employment in 2008. 426,668 jobs are going to be generated by the Hospitality sector. This sector is closely followed by Health at 295,829 and Education Training & Consultancy at 166,005," says the survey.

It adds that an estimated USD 11.41 billion is expected to be seen in the Hospitality sector in the next two years and that India is likely to have around 40 international hotel brands by 2011.

"The boom in the tourism industry has had a cascading effect on the hospitality sector, which was a result of the increase in the occupancy ratios and average room rates. With the demand continuing to surge, many global hospitality majors have evinced a keen interest in the Indian hospitality sector," says K. Pandia Rajan, Managing Director, Ma Foi Management Consultants Ltd.

While, IT and ITES sector continues with high growth in recruitment at 7.3 and 7.2 per cent, the survey says that it is the Health sector which shows the highest growth in recruitment at 8.9 per cent. "

Coming to the point //IT and ITES sector continues with high growth in recruitment at 7.3 and 7.2 per cent//, is nt crazy where people are getting fired everyday from top level companies with their (HR's) strong judgement, as recession being supplimentary and strategic of the HR?

Tuesday, March 04, 2008

Bits and Pieces of Feb-8

1) I just learned that PlateSpin, leader in the P2V migration market, has been acquired by Novell. Platespin, as per my concern and everybody's an expensive product for converting the Physical Servers(mostly) to Virtual servers(VMware).

I Started working with Novell Technology as my first networking OS which provided major jobs at that time on Networking, mid of 1997. Before completing my course Microsoft's WinNT gained the market and insisted me to get to GUI based OS which is feeding me till now, Touch wood.
Here is the news about the acquistion.

2) Information technology (IT) firms appear to have lost their appeal at the Indian Institutes of Technology (IIT). Campus recruitment figures by major Indian and foreign IT firms have dipped this year, raising further concerns of an industry slowdown.

Firms like IBM, HCL, Hughes Software and CSC opted out of placements this year and hiring by firms like India’s largest IT services provider Tata Consultancy Services (TCS), Infosys and Wipro has dropped.
Bush, said that this is only slow down- a better political word. I know this is going to be a collapse in IT market and will take some to gain, at that time China will be the pioneer and we will fly to China for onsite. So I am packing my bags along with Chinese to Eng books.

3) JetAirways- My understanding and feedback thro friends, shows that it has good service and yes tickets are cheaper than others. AirIndia is the only flight which competes with the ticket prices obvsly not in the service. I guess, from this year onwards I may not get a chance to fly by my fav. BA.

4) Able to read more blogs thro blogkut and finding lot of friends thro blogs. Sameera is one among them who inspired me a lot in these days, she is really in enthu person. The other who is really amzing is Archana. roping them to my mind. I hope most of my CSC friends stopped blogging(seems they gotta work in these days after a decade).

5) Chinmayi- Again blogging more and rejecting my most of criticising comments. I guess, I am the only guy who criticise her for more than 3yrs of blogging tenure. Girls, never liked being suggested and criticised.. is it true?

6) Freezed the coding of BLOGKUT and concentrating more on my new venture classfieds.


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