Where is the innovation?

I was in a meeting the other day with the European CEO of one of the major India tech firms. I won’t say who because we had a private conversation over a couple of drinks, but I’d like to echo some of his observations back to the NASSCOM blog audience.

We talked a lot about how many other countries are copying the NASSCOM model. They create a trade body, often called SOMETHING-COM after NASSCOM, then put in place a range of measures to attract ITO or BPO business. It’s understandable that many regions are doing this. In the Philippines, the IT services business is making a huge contribution to the entire economy. When I talk to people from Africa, where several countries are often cited as ‘about to succeed’ in IT services, I often point out that the Indian ITES industry creates more export dollars than the entire GDP of Kenya. The opportunity is clear for all to see.

But, India suffered a major shock with the decline of business in the global economic collapse. Isn’t that a wake-up call for the future?

The countries that are copying India and it’s success in IT and IT-enabled services are by-and-large copying the old model India created – the value creation through labour arbitrage model. That’s not a business model that can go on forever. Doesn’t anyone remember the spiralling wage inflation and huge attrition the industry was constantly battling before the recession?

So is that what many other countries aspire to?

And the Indian tech firms that are now reporting the end of the recession as their numbers get better and hiring starts ramping up again. Are they going to do anything different or just swing back into another growth cycle where they start poaching staff from each other again?

What’s going to be the fundamental innovation in IT services that takes India to the next level?

I had a few ideas when I was chatting in the bar, but I thought I’d start off this conversation on the blog. You are the industry. What do you think?

One Response
  1. AMS

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