Why India’s IT firms should huddle up for the future
At the National Association of Software and Service Companies (Nasscom), members unilaterally support efforts towards addressing industry-wide challenges, but compete fiercely outside. Let’s look wider afield.
One thing is clear that even in a VUCA (volatility, uncertainty, complexity, and ambiguity) environment, the death knell has been sounded for silos. The value chain is far too complex today for the players not to collaborate. Re-skilling is not restricted to employees but has been extended to include the vendor network. Inasmuch, the idea of platformisation has gained ground and building the marketplace has been the clear focus.
Extinction is nothing new; it has occurred in the past but this time it’s happening at a pace that is three or even five times faster. On the one hand, it is frightening and breeds a fear-mongering narrative, but equally on the other hand, it presents an unprecedented opportunity for those who are prepared.
First, whether one is into creating products or providing services, the final outcome will be measured from a customer experience standpoint, a bar which is continually being raised. And, with digital as the primary mode of communication, disgruntled customers’ feedback can be scathing and unforgiving, and can make the ever-elusive stickiness hard to acquire. How do you make them come back?
Secondly, it’s about living the collaborative attitude, as I said earlier. Thirdly, it’s all about speed -- of change and innovation cycles -- but most importantly about building trust. Finally, it’s always about adding value, which is no longer closeted by the age-old idea of economic value addition but includes the society and environment. All of which are now commonly clubbed under the Triple Bottom Line.
Making an impact
According to an article in MIT Sloan Management Review, the DNA of successful companies will be based on two capabilities -- digital and leadership. Those which score high on both fronts are likely to have a positive impact on profitability, which can even be 26%. On the contrary, those faring poorly will be adversely impacted, as much as minus 24%. Based on these capabilities, almost all companies will have profitability impacted within a range of +26% to -24%. This is precisely why digital transformation is profoundly reshaping the boundaries of competition.
In 2017, the global digital transformation market was estimated to be $445.4 billion. Growing fantastically at a compound annual growth rate of 24.3%, the market is expected to touch $2,279.4 billion by 2025. This is one side of the picture. Flip it over and we see that, by 2022, no less than 54% of employees will require significant re-skilling/upskilling of some form. Without an iota of doubt, the competitive advantage of companies is being redefined by talent availability or its lack thereof. Expectedly, nations are following a similar trajectory.
To be fair, everyone realises this, including governments worldwide. Most are doing something about it while others still languish in confusion. Equally, very few (if any) have hit the sweet spot, which means, there’s a skill gap in learning and development. Moreover, the situation is far from uniform. In some industries (such as tech, media and professional services), the chasm is considerably narrower than those still mired in legacy. Essentially and within specific industry cohorts, too, there is a wide array of players being classified as digital leaders, followers and laggards. A lack of preparedness in digital transformation is a global concern which many Fortune 500 CEOs have admitted.
Closer home, the Indian infotech (IT) sector has been making convincing progress towards sustaining its position as a trusted global transformational partner. The investment in skilling and development by our industry has crossed the Rs 10,000 crore mark already, and is expanding rapidly to keep up with meeting the avowed goal of training 1-1.5 million people additionally (in digital) within the next three to four years. Right now, we have 450,000-500,000 such people with niche capabilities in emerging tech, easily among the highest.
These extensive efforts have not gone unnoticed either. According to India Skills Report 2018, the country’s employability has risen to 47%, where engineers are the most employable. Despite the protectionist wave in the United States, multinational corporations there continue to seek engineering talent from India. Even the United Kingdom views the Indian tech community as a valuable partner. There’s a general consensus that, in the post-Brexit era, Indian IT professionals there will get a fair deal. Even non-traditional markets like China, Japan, West Asia and North Africa are seeking partnerships with Indian IT players in their transformational journeys.
‘Futureskills’ is an industry response catalysed by Nasscom. The future is envisioned through a 10-70-155 matrix, which means, 10 emerging technologies (analytics, artificial intelligence, cloud, Internet of Things, blockchain, and others) will yield more than 70 roles and require 155-plus new skills. In addition, it’s not an either-or situation at all but it’s about leveraging the combined power of technology. It will be quite impossible for any single entity to nurture all these capabilities in-house. That’s why I propose a coalition of competitors, which creates a distinct space for shared learning, collaboration, partnership and co-creation even as members continue to compete elsewhere to garner market share.
Digital adoption in India will be very different from that in the United States and China. We have to always remain mindful of the fact that our strength as a nation lies in the kind of talent we have. After all, how many nations produce 2.5 million STEM (science, technology, engineering and mathematics) graduates annually and employ nearly four million people in IT? While the size definitely provides a distinct advantage, ultimately it will be about speed. As Klaus Schwab, founder of World Economic Forum, says, “In the new world, it is not the big fish which eats the small fish, it’s the fast fish which eats the slow fish.”
The writer is the president of Nasscom. The views expressed are personal.