Apologies for the plug but I wrote a piece a year back:
So my point is that the problem isn't with IT companies - they will survive
as IBM and HP etc have, and perhaps grow in single digit percentages and
generally get a lot lower price to earnings multiples. They do stuff no one
currently wants to do and overhauling a system to use stuff that other
smart people want to use is too expensive. (Like COBOL - it may be outdated
and all that but it still forms the basis for an irrationally large part of
banking) This work will continue until you have removed the very need for
the basis that the older software has been required, so there will always
be business for the Infy/TCS/Cognizant types from this kind of maintenance
But things can change very fast. 10 years ago I couldn't imagine that BigCo
would be able to manage something like 5000 servers using less than 5
people including bringing more up when required, at run time, with complete
reporting/control available even on a mobile phone app. It's possible now.
It's routine now. And as more companies are discovering it is, the on-site
and off-site infrastructure work that was handled by the IT cos has seen
dwindling business. SAP now offers a cloud based pre-setup solution, where
you need none of the server infrastructure - only the initialization pieces
which the IT cos still do; but at some point SAP will create modules that
are one-click installs for the kind of industry you are in.
Automation isn't robotics - you don't need machine learning or AI for most
of the work required. For instance much of the testing work that is done
tends to be checklist driven, and some of that has already been automated
at multiple levels using tools. What these IT cos should have been doing is
buying the product companies that build these tools, but they simply don't
have the DNA. (I would even say buy minority stakes in them with a board
seat) Their own products are absolutely crap; see the quality of the stuff
TCS and Infy have built for say the MCA, versus teh quality of design that
seems to be in teh new Modi camp (vidyutpravah.in for instance or such).
I heard of a bigco - a friend works there - where an insurance company was
being pitched by various vendors for a certain solution. The big Indian
names went in with the powerpoint smoke and mirrors thing and offered
things like 6 months to a year to finish with X headcount etc. A russian
company with the founders as programmers pitched a working prototype that
they said would take a couple more weeks to finalize and they'd get it live
in amonth at a cost that was not even in the same area code forget the
ballpark. They actually won the project and BigCo guys had multiple
meetings to "create risk mitigation techniques" and such things. It's kinda
I think if IT cos react, they will get lean. If they get lean, many many
people - and I'm speaking thousands in bangalore alone - will find out that
their skills are drastically short of the real world requirement of jobs.
This is the problem - not that the IT cos won't survive. IMHO.
Capital Mind: Financial Macro and Market Analytics
On 16 October 2016 at 15:34, Bhaskar Dasgupta <bdasgu...@gmail.com> wrote:
> i was interviewing for one of the IT corporates some time back for their
> COO position and once i managed to dig a bit into their financials, i
> backed out. the majority of their revenue streams are from processing in
> advanced stuff, processing code, processing transactions, processing
> quality control. They do this very well. Very very well. standardise the
> process, six sigma the shit out of it, hire the great unwashed herd of
> graduates pouring out of the universities - retrain them to be great
> processors and great business model. But this kind of model is very
> susceptible to dis-intermediation from further advances in technology. When
> I asked if can have some serious seed funding to develop products rather
> than just provide services, there was a bit of a hoo ha. I think a product
> plus service model is the best option, create great products and then have
> a long tail in services and maintenance contracts. we have some of these
> products but not enough. not easy to develop products - the eco-system
> isn’t there yet.
> so whilst i don’t think its the end of the road, but for example, every 2
> months I am in a conference where vendors pitch up talking about robotic
> process improvement or AI and how they are showing 20–50% reduction in warm
> bodies in agency/outsourced/offshored units. Where will these 20-50% of
> highly trained processors go when the infosys or TCS lets them go?
> Thankfully the economy is ginormous and we are well accustomed to poverty
> and pain and still have the joint / extended family to fall back upon. But
> for the IT industry? pain...
> i agree with Srini, changing careers is not easy for us desi’s….(says the
> man who has made a career of changing careers, heh).