So many thoughts on this topic... having spent 8 years in various roles in
this industry.... Just a few quick observations here (in no particular
order) on the specific challenges facing the Indian IT industry and some of
the comments in this thread:

   - IT Services is not all about server maintenance or routine sysadmin
   work. Application Development & Maintenance (of bespoke systems), Product
   Engineering, Customisation and deployment of complex packages (like ERP
   systems), and so on cannot be automated with the current state of the art,
   nor are they dull or monotonous drudge work. I have myself worked as a
   contractor for Cisco, maintained critical parts of their embedded OS (the
   original IOS), developed thousands of lines of code, and new features, that
   have powered (in some ways quite literally) the Catalyst 6500, a cash cow
   for Cisco for nearly 15 years. It was a great experience to see engineers
   from humble backgrounds perform high quality engineering for Cisco even in
   its heyday.

   - Innovation comes in all sizes and shapes. We romanticise the Google /
   Apple style of innovation at the expense of other forms. When my former
   boss, at age 34, convinced John Chambers and Cisco at its peak (mid 90s) to
   offshore product engineering work to Chennai, that was business innovation
   too. The situation now is the Indian model is so well understood that there
   are few levers left in negotiation, and the downward margin spiral that
   Sikka keeps lamenting about are defining the mood about the industry (more
   on the margins later). But this is not new either. Even way back in 2007/8
   it was clear to insiders that more innovation is required with the business
   models. We started talking the language of 'Fewer Better People' to change
   the customer mindset from hourly billing to more outcome based pricing
   models. Many companies have seen success in these endeavours. But no clear
   industry-level breakthrough has emerged, and that is a worry. Maybe it
   won't, but that does not mean the death of the industry.

   - What is certainly lamentable is these companies have gotten left
   behind in the latest technology trends and by not paying enough attention
   to building scalable businesses. But the threat of automation and "AI" is
   somewhat exaggerated: the domestic IT demand is just warming up and you can
   be sure that journey is going to start at the bottom of the pricing
   hierarchy; in technology the next wave is always round the corner and they
   only need to survive till the next wave comes around;

   - Mohandas Pai's response has some valid points. Infosys PAT was 21.9%
   in FY 2015-16, which is very respectable. For comparison: Google's PAT for
   FY 2015 was 21.8%. Accenture's was 12.5%. There is scope for players to
   change their cost structure, remove dead wood, and change the reward system
   to make them more competitive viz a viz the MNC biggies. But it is an open
   question on whether they can pull off the execution. Maybe most won't, but
   I do hope at least a few will, and we will all be better off for this
   shakeup.


On Sat, Oct 15, 2016 at 8:52 PM, Srini RamaKrishnan <che...@gmail.com>
wrote:

> Comments?
>
>
> http://www.livemint.com/Opinion/737W8zcjPA6lGWIajRCd6K/Indian-
> software-dies-at-17-from-failure-to-grasp-future.html
>
>
> Indian software dies at 17 from failure to grasp future
> The Indian software services industry died on Friday after a short
> battle with newer digital technologies
> 
> A slowdown alone wouldn’t have stopped the Indian industry if it had
> been able to embrace ‘smac,’ or social, mobile, analytics and
> cloud-based technologies. Photo: Abhijit Bhatlekar/Mint
>
> Singapore: Seventeen years ago an Indian man from New Delhi mesmerized
> the technology departments of global corporations with a doomsday
> story many times more puffed up than the luxuriant crop of hair he
> sported.
> The latter was a wig, and the former was just bad science fiction
> packaged by consultants as a $600 billion hair-raiser. But Dewang
> Mehta, the chief lobbyist for India’s fledgling software services
> industry, carried off both with aplomb, convincing businesses that at
> the stroke of midnight of the new millennium, their computer systems
> would crash because old programs measured years in two digits instead
> of four. The solution, he persuaded them, was to let a horde of
> techies from Bangalore and Hyderabad go through each line of code and
> fix the Y2K bug.
>
> That was the birth of India’s massively successful software services
> industry, which died on Friday after a short battle with newer digital
> technologies. At the time of its demise, the business was worth $110
> billion in annual export revenue.
> The first hint that the end was near came on Thursday when Tata
> Consultancy Services, the biggest Indian software vendor by market
> value, announced a virtual stalling of its business in the September
> quarter from the previous three months. After Infosys followed up by
> slashing its full-year revenue guidance for the second time in three
> months, it was time to turn off the ventilator.
>
>
> #Infosys revenue growth pre-Lehman
>
> A coroner’s inquiry unearthed three signs of decay, the first of which
> shows how Indian companies’ cheap-talent-fueled growth ran out of
> breath. In the four quarters before the collapse of Lehman Brothers,
> Infosys saw revenue increase an average 29% in constant-currency
> terms. Back then, Dublin-based Accenture’s growth was just half as
> high. But there’s nothing exceptional about Indian companies’
> expansion anymore. All that investors have heard from managements this
> year is gloomy commentary on how challenging it’s become to get
> clients to open their wallets. When the companies do make news
> nowadays, it’s more often for dodgy business practices, regulatory
> slaps on the wrist, and senior-level exits.
>
> A slowdown alone wouldn’t have stopped the Indian industry if it had
> been able to embrace “smac,” or social, mobile, analytics and
> cloud-based technologies. But the vendors wasted so much time
> defending their legacy business of writing code for and maintaining
> purpose-built enterprise applications that they failed to make a mark
> in the new digital world.
>
> As an analysis from Mint shows, the dominant trio of Tata Consultancy,
> Infosys and Wipro between them had 1.5 times more workers doing
> digital stuff last year than Accenture. But the revenue they garnered
> was 40% less than what the latter chalked up from newer technologies.
> That makes the typical digital-tech employee of an Indian vendor 25%
> as efficient as his counterpart at the global consultant. This gap
> sets the clock back on Indian companies, which have taken years to
> narrow the productivity differential:
> Maybe it’s just banking clients and their inability to pay like they
> once did. Or perhaps it’s a combination of weak global growth, Brexit,
> protectionism and Donald Trump’s vacillating stance on US visas for
> Indian technology workers. Hoping that turbulence is temporary,
> investors are still paying a hefty premium for future growth. They may
> get lucky for a while. Still, a dead-cat bounce from delayed orders
> coming through would hardly count as proof of life.
>
> The millennium scare got Indian software a foot in the door at global
> corporations. But now the shoe is on the other foot. Robotics and
> artificial intelligence are putting the vendors’ labour-intensive
> business at risk of obsolescence. Even if the concern is as puffed up
> as Y2K, with plenty of growth candidates in the Indian start-up world,
> at least for some investors it may be time to back new horses rather
> than flog dead ones.
>
>

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