Indian IT Services companies have enjoyed an unprecedented ride for over 20 years; the industry has grown from practically 0 to 100 Bn$. When something has worked so well for such a long time, why change anything ?
This is not to suggest that the companies are not trying to change. They see the new emerging area – SMAC as it is collectively called – to include Social, Mobile, Analytics and Cloud. But the change that is being contemplated is to understand this area, develop incremental capability and augment revenues from this area. Most companies are tracking revenues in this area separately. While this revenue is fairly small, true Cloud and other SMAC services companies have revenues of 10s of billions of dollars (depending on what numbers you include).
The Chairman of one large Indian IT Services company recently said that SMAC projects are “small” because “organisations have not embraced these technologies in such a large way that we could get a $100 million project or even a $30 million project”.
To use a bad analogy, this is not very different from how brick-and-mortar companies viewed e-commerce. Initially, they denied the trend and even if they saw e-commerce mushrooming, the revenues were too small to make a difference. The rest is history – a number of them went out of business, and many others are struggling even today. And a few of them are now trying to catch up with industry leaders.
What is required first of all is an open acknowledgement that Cloud is “disruptive” to their existing business. Next comes investment in this new paradigm – not an investment in their existing Services business to “add this incremental capability”, but investment in creating a new “Cloud ecosystem”, either as an acquisition or building it ground up outside of the current ecosystem. To go back to my previous analogy, Amazon would never have gotten to where it is today had it been a Business unit of Borders. I see most Indian IT Services companies making this mistake.
In short, don’t vent out, (re)invent !!!