Thought Leadership

Winning in the Downturn

Winning in the Downturn

Raghavendran B, Director, ITS, Cisco India & SAARC

Over the past few years, the IT Services industry has been credited with putting India on the global map as the largest knowledge based economy. This sector contributes nearly 8 per cent to our country's GDP (NASSCOM). NASSCOM has targeted $300 billion revenue from IT sector by 2020 and announced expansion of its focus to include internet, mobile technology and cloud computing.

However, economic uncertainty, rising protectionism and frequent changes in the regulatory environment have deeply impacted this 'sunrise' industry. Global recession and growing costs of delivery have thrown up additional challenges while competition from other emerging countries has furthered the woes.

Changing economic environment and market conditions is also causing a change in customer requirements. IT organizations are expected to drive innovation in tandem with changing customer needs and expected to focus on providing overall experience to ensure a services play rather than a pure product play.

In order to sustain current and past growth levels, industry players need to take a long, hard look at their strategies and explore alternatives that will help insulate their businesses against economic headwinds. The need of the hour is to evaluate how IT organizations are using technology and how they can monetize technology by providing the right solutions to customers. They must invest in solutions that not only save money but also help make their organization more nimble and resilient. Some ways to do that are by:

  • Redefining the workspace: With geographically dispersed teams and client locations, effective collaboration is important to ensure business continuity. Advanced video and unified communications tools can help connect employees across geographies in real time, reduce the need for travel, save costs and enable seamless exchange of information.
  • New business models: IT organization need to focus on non-liner business models like cloud computing and virtualization which open up new avenues for conducting business and provide better customer service thereby driving efficiency into business. They can offer bundled cloud services that allow clients to focus on growing the core business. Managed services can provide value to customers by making IT costs predictable, maximizing reliability and security. Cloud computing technology can be used to drive efficiency internally and used as a platform to provide services to customers.
  • Tapping new markets: As they continue to grow and expand, it is important that IT companies explore opportunities that lie beyond their core markets and enter new verticals (healthcare and education) and geographies (like Brazil, South Africa, even Europe and Asia pacific.). Rather than tighten the belt and wait for things to get better, they can expand the portfolio of solutions, tailor them to meet local business needs, keeping in mind the budget, needs, goals, challenges and develop a plan that will enable customers to not only survive but thrive. From an India perspective given that the domestic market has grown faster than the export, there is a huge opportunity on the domestic front fuelled by the Indian Government's increased emphasis on upgrading technology infrastructure. The National Policy for Information Technology or the ICT Policy by the Department of Electronics and Information Technology (DeitY) stresses on this aspect. The policy encourages IT companies to expand their foot print in the domestic market through benefits such as tax breaks, rebates and subsidies.
  • Innovation: It is important that IT organizations look to drive innovation and differentiation by applying cutting edge technology to create solutions that are vertical specific and can address the business outcomes for the customer. This will help them move up the value chain.

Conclusion

Economic uncertainties often make businesses go into a cost-cutting mode. While this is natural, businesses need to think long term and view the downturn as an opportunity to rebound. They must invest in strategies that help to gain market share and have an upper hand when the market picks up. While doing that, they must use the slowdown to understand customers, build better solutions and emerge stronger.

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