SpringSters - Technology Savvy Bunch

Much has changed in India since the mid-nineties. The opening up of the economy gave India access to foreign markets. One place India grabbed the opportunity was of course, IT exports. But even before all the hoopla of IT services, changes were already taking shape. Small schools in nondescript towns started introducing computers for sixth graders and business systems were being automated using computers. While, automation of systems such as payroll and inventory were not new to India even in the eighties, what was new (world over) was availability of cheap personal computers for everyone from a college graduate to big corporations. Things were chugging along in their own sheepish pace until the mid-nineties, when we realized that the rupee had depreciated to half it’s value while we were sleeping – from 18.1 on 2nd Jan, 1991 to 35.21 on 2nd Jan, 1996.

This is a story that has been told many times, and each time for a reason. The IT services exports boom is of course everyone’s favourite reason. The reason I am bringing it up today is that rupee went up in another curve to about 48 and is back to the level it was in January, 1998. The IT services boom lasted through this curve, and if markets are left alone, we will see a shift in economy towards a higher-value rupee. The rising rupee has the services giants nervous. Nobody likes to challenge status quo, much less a successful organization in an industry that has seen a 30-40% compounded annual growth rate over a decade and more. But we are at another inflection point in the history of India Inc. Rising rupee, increasing wages, foreign investment - all of them together are leaving more money in the hands of people, government and institutions, resulting in higher spending by all. The rising rupee needs to be looked at in its complete context of this new wave. To successfully ride this next wave, it is important to look at what was achieved in the last wave.

Some years ago, a friend of mine and I were talking about what US has gained from India and vice versa. We decided that US companies have been able to concentrate on creative, design, architectural and strategic stuff – the stuff that thought-leadership and dreams are made of. We were left thoughtful and humbled, and we didn’t really end up discussing what India gained. But what I realize today is that during the last decade, we built products that were world class. We didn’t do it for ourselves, so we never owned the intellectual property on what we did. What we did own however, is the intellectual capital in the form of people who built this IP (well most of them anyway). We have a large pool of knowledge-rich, smart folks who can build products. All we need is right direction and good leadership.

To build products, managers and engineers will need to adapt to some important differences from the services business. For example, the business cycle in a services company starts with sales and ends with product delivery. Most managers in the Indian IT business today started their careers with the IT services boom and are all too familiar with this model. As part of the next wave, when we see more and more product companies proliferating the market, these companies will need managers who are adept at building and delivering products not as an end in itself, but as the beginning of a longer and more complex business cycle. The difference is subtle, but has important ramifications for an organization.

This is not to say that the era of services is ending. Far from it, it will evolve into better things and higher-value-chain work. But before we know it, everyone will be talking about the new wave and Indian software products will start selling globally. A decade ago, we joined the IT services industry blissfully unaware of what was brewing and were fortunate to have been part of an incredible boom. In today’s India of choices, the question is, do you foresee another wave and can you catch it right at the beginning?