The financial turmoil of the past few months has hit
world markets harder than at any time in living memory, and the IT
industry is of course not immune. We are currently seeing an
all-too understandable IT investment decision postponement and
delay across many sectors. Nevertheless, as cost savings hit the
top of the CXO agenda, IT services' intrinsic role in fostering
consolidation and integration, and enabling process and
productivity enhancements indicates it will not all be bad news for
the IT industry, writes AS Lakshminarayanan, vice-president and
head of TCS Europe.
Furthermore, unlike the dotcom bust period when there was
indiscriminate spending in IT and therefore doubts raised on the
value of IT, the business leaders have now come to recognise the
contribution IT can make in their drive to make the businesses more
efficient and agile.
The issue though for many is, are the management teams stable
enough as they go through a period of churn and change? Stable
teams are surely focusing on long term cost restructuring,
simplifying their products and processes and improving their
customers' experience - for these will not only take costs out but
also set the company up for the growth period that is sure to
come.
Complicating things, however, are last year's attacks on Mumbai
and news of corporate fraud by one of the India's largest
outsourcers. I believe these are only temporary set backs.
Terrorism and unfortunately, fraud have now become a global
phenomenon and India is no exception
In its 40-year history, my own company has witnessed many market
booms and busts. Throughout this time, we have focused on value
creation for all customers and stakeholders with a disciplined and
professional approach that is in the DNA of the 140-year heritage
of the Tata Group.
Effective spending, targeted investment and strong leadership
are the key to ongoing growth and long term success - both for the
industry, and that of its clients. A new paradigm in business
leadership is called for, one that is based on integrity, trust and
an entrepreneurial spirit: focus on customer service, quality,
value, collaborative innovation and excellence in delivery (to
budget and specification).
The above may sound simply like common sense, but questions need
to be asked of all potential IT services partners: has investment
continued, even in the downturn? Is there evidence of the global
footprint, diversified business model, quality service and
long-term financial strength that proves longevity and will be
critical in surviving the downturn?
Acquiring Citigroup Global Services for $0.5bn late last year
showed that TCS for one continues to invest where a strategic fit
will drive future development. TCS has over 130,000 trained IT
consultants working across 42 countries. Its Global Network
Delivery Model of more than 80 global centres provides reliable,
scalable and cost-effective delivery of services and solutions
around the world, and it also some of the lowest staff attrition
rates in the industry. It amounts to the global sourcing of
services and solutions.
Because of this, TCS can be confident of its business model and
long term, sustained growth potential. Others that are recognise
that long term business success - especially in a downturn - is
founded on this long term sustainability - backed by strong ethics
and respect for the individual, the environment and
communities.
And for those companies, the opportunities to grow their
customers' and thus their own businesses are out there: they just
need to offer clients certainty. As late as September 2008,
Forrester found 45% of firms planned to increase use of
applications outsourcing, and 43% to increase use of infrastructure
outsourcing and move more work offshore - a clear opportunity for
IT services companies.
No-one is suggesting the year or so ahead will be easy, but the
need for the benefits of global IT expertise will prove to be
greater than ever.