Goodbye Renting IQ, Hello Co-creating IP

The perfect storm is beginning to brew for the Indian IT and BPM  industry in the world of digital transformation, Trump administration and smart code. Some of the challenges are worth recounting:

Over a period of time Indian costs for top talent has grown. While differentials are still there, it is not significant or is losing significance fast. However, concentration of top talent in India is hitting threshold levels, making it a lucrative destination for creating IP work but not necessarily renting IQ from

The low level skills that ‘code coolies (porters)’ used to transport physically to US destinations, supported by a large army of developers in backend India, created the single largest round the clock factory in the world. H1 B visa crisis precipitated by the Trump administration is disrupting the supply lines. The impact is estimated at 5-10% of margins supported by the H1 B army

 Machine learning, Artificial Intelligence is beginning to hack at the middle layer of this army. Code writing is becoming more and more menu driven. The difficult codes are written by the best developers and seems to be dispersed more in China, Eastern Europe and Russia and Silicon valley, than necessarily Bangalore. That’s where future value lies  

Chatbots are going  to hit the BPM industry very hard. Chat Bots , particularly consumer facing ones, like Wechat have allowed China to leaf frog a part of the entire Voice Services and Help Desk journey. China was a poor service economy, but it can leapfrog to a better one, without having to create the services economy that India created. On the other hand B2B tools are going to hit very hard the L2 (level 2) and L3 (level 3) desks that the BPM companies run

Platform aggregation is a big challenge for the entire IT services companies. To take an example – Meru (a cab service company in India) has a call centre which traditional was  more manpower intensive than say Ola (a cab aggregator), whose call centre you would have seldom called. Ola’s call centre is actually the driver, whose number, the AI driven Chatbot provides to you. The same is true for Airbnb Vs hotel operators

The skill refresh needed today is estimated at 25% annually. Most of the workers have lived, earned well and seen their stock rising over the last 20 years without having to do more than put effort, travel and impress their clients, whilst delivering on either maintaining legacy or implementing ERP, CRM and MES systems. [The oversimplification and rather harsh statement, is just to put across the point, and definitely not factually true for many]. They also practiced the waterfall methodology mostly and had to pay lip service to Agile. Suddenly, Pilots, Agile, Ventures, Minimal Viable Products (MVP), Minimum Viable concepts (MVC) is the new lingo and currency, that one needs to learn. Tough !

On the client side, millennials are entering the workspace, who are digital natives and much more comfortable with and exposed to some of the lingo above. They are also saying that lets move to the Cloud for services rather than have clunky systems on premise. Good bye server support, installation, network optimization and L2 /L3 desks. Google managed to save 40% energy costs in servers, thanks to AI from its UK acquisition Deep mind in 2014

A lot of earlier work is disappearing. I remember having earned good dollars from the world's largest search engine company cleaning up maps and also supporting them in rectifying listing data on small companies. Now, the same company is beginning to offer collaboration, communication and hosting for companies, potentially eating up into newer streams

What to do? Tough and no clear answer. But some free thinking would be - First and foremost acknowledge, that who moved by cheese is on its way. Secondly, make strong decisions to change business model. Third, focus on the newer revenue streams coming in from AI, Blockchain, Chatbots, Big Data, Connected Consumer, Digital Diet, IOT, 3D Printing etc. Fourth, embrace diversity and move away from cheap and hardworking Indians only, to a more diversified and balance lifestyle oriented workforce, yet managing margins and growth. Goodbye renting IQ, hello creating IP. As Mr Narayanamurthy has said, use this crisis to do what the  the Japanese automotive companies used the import quota in the 80's to achieve

The views expressed are those of the author and don't necessarily reflect that of his organization. The author is a Digital evangelist and curious about surviving and thriving in a digital economy