The situation changes when you move up the value chain as you so clearly demonstrate.
But when a company builds its business model on hiring huge numbers of warm bodies to throw at drudgery that is rapidly being automated now even in the enterprise .. nobody at all in enterprise IT dreamed even five or six years back that a group of say ten people could single handedly provision a data center worth of servers, os and software installs, networks etc using puppet, chef, software driven networking and all that. And several of them kept hiring manual testers long long after other companies switched wholesale to test automation. And entry level tech support kids where a lot of that went over to more intelligent context sensitive help, chatbots and such. Try to lay the lot off and they even face litigation and demands for trade unions - something that pampered industry least expected though entry level employees earn about as much as a driver does. --srs > On 22-Oct-2016, at 12:35 AM, Sriram Karra <karra....@gmail.com> wrote: > > 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. >> >>
