Winning formula to beat the downturn

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, according to NASSCOM. NASSCOM has also targeted $300 billion revenue from the 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 are also causing a change in customer requirements. IT organisations 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.

‘RESILIANT’

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. They must invest in solutions that not only save money but also help make their organisation 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 organisations need to focus on non-liner business models such as cloud computing and virtualisation, which open up new avenues for conducting business and provide better customer service, thereby driving efficiency into business. Managed services can provide value to customers by making IT costs predictable, maximising reliability and security. • 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 (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 on Information Technology or the ICT Policy by the Department of Electronics and Information Technology stresses on this aspect. The policy encourages IT companies to expand their footprint in the domestic market through benefits such as tax breaks, rebates and subsidies. • Innovation: It is important that IT organisations 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.

THINK LONG-TERM

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. ( The author is Director, ITS, Cisco India & SAARC.)