The Trouble with the Indian IT Industry!

I have been observing and discussing with friends the state of Indian IT industry and some trends have become pretty obvious. Here is what seems apparent to all:

• Salaries in India are rising while the numbers of graduates to recruit are not enough
• The Indian IT companies and MNC companies in order to hire talent are going to lower grade colleges to hire.
• Turnover in employees is very high – sometimes unacceptable. It is not uncommon these days for projects to have had 4 Project Managers in India by the time the project is delivered from start to finish!
• The standards amongst the experienced people have fallen! It is fairly common for a person with 2-3 years of experience to become a Project Manager role.. and be counted as a "Senior" resource! Such people do not measure up when they go abroad for onsite projects.

So, how are the companies coping up? They are trying new places to hire folks and retain them. New schemes are used to retain employees and keep them motivated.

So, the goal is fairly straight-forward.. right? Just lower the costs. WRONG! The right thing to do when the cost is going up is to INCREASE your productivity not lower standards!

By that I mean do these things:

• Create methodologies, knowledge database, tools, training programs, regular training delivery to get the best out of people. Not everyone in a US company is an engineer out of MIT. But the tools and methodologies that say, an Accenture or IBM comes up with provides enough base and wherewithal for a normal forensic undergrad major to become an effective consultant. That is where I believe the next battle will be won between the IT companies! Those with effective tools and methodologies will be able to bring the normal folks up and running and help them to hit the ground running whereas the rest will have to run with mediocre people using third-rate levels of tools and methodologies.
• Reduce the non-value-added activities that the consultants have to do. Improve the administration tools so that it takes far less time for a consultant sitting in Capetown, South Africa to enter his time and expense, order his business cards, and upload his project documents without wasting time! Also, he/she should not have to worry so much about his/her visa/bank accounts/where to get a cell phone etc. Hire 2 HR folks instead of 1 more consultant to get the best out of the guys who face the client! It is a SHEER waste for someone who earns the company revenues to go and do admin work… THAT is a systemic FAILURE.. PERIOD!!
• Strategies for growth should win over fiefdoms of status-quo. Because the IT companies have grown so fast, they have given rise to big "fiefdoms" within these behemoths (at least by Indian standards). So what happens when the change is in the offing? They resist! Try telling some Vertical chief that he needs to improve in one the top 5 Indian IT companies.. he will flash the Revenue Growth, NPM, Market Cap, and the latest article from a Business-week or a best seller on Amazon to ridicule you. The fact, however, is that the time to go down from 25-30% NPMs and sky-high growth margins to mediocre ones will be mere months when the things go downhill!! Only those who are good and robust – which means flexible and able to adapt – will survive!

Way back in early 1990’s Nirma was the new "kid on the block" in the detergent business. Its rise was spectacular and the margins were just fascinating! Hindustan Lever Ltd. (HLL) – Unilevel subsidiary – was nowhere in the race against it! So, the headline in one of business magazine screamed "Nirma Beats HLL in the detergent sector". I could not help my laughter! Success does indeed bring confidence, but in India – specially the corporate sector – it brings a strange flavor of cockiness!

My first thought was – HLL was HLL for last 60 years!! When Nirma is the Nirma for next 50 years, could we even start the comparisons!! Sure enough, HLL struck back and with a vengeance!

I am not saying that Indian companies cannot succeed against the Multi-nationals, but that getting to the top of the hill the first time is NOT the time to rejoice! The harder part is staying there! If I was at the top, I would be downright scared and exercising harder to keep myself nimble and ready to fight harder!

Successful people eventually become their own caricatures. So do organizations! So, WINNERS BEWARE!

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