Indian IT Industry: Where do we go from here?

Indian IT industry has been the subject of discussions from Beijing to Washington D.C for different reasons. Indian IT majors have managed to build a solid foundation, on which they need to grow. But the going is getting tougher with every passing day. The global economic downturn forced them to take a step back and take stock of the situation in much greater detail. The question is, is Indian IT ready to scale the next frontier. There are no easy answers.

Firstly, as far as the IT outsourcing pie is concerned, all the low-hanging fruits have been plucked. Indian IT needs to change their mindset of getting better margins by going for a better fresher - lateral mix. It does not work that way anymore. The bigger players like IBM & HP have an edge here. They not only have thriving consulting practices which fetch them better margins but also help them go after bigger deals. Indian players have been very slow in building required domain expertise in order to have a decent consulting revenue.

Secondly, the Indian IT majors never focused seriously on the domestic market. Most of the big-ticket domestic deals have been bagged by IBM before these guys even started taking notice. This clearly shows that our IT majors never focused on corporate strategy. Even if they had strategy teams, they lacked focus. Just having a couple of MBAs will not do wonders unless there is clear direction from the top.

One aspect that most of our IT majors including global biggies have ignored so far is near-sourcing. Instead of outsourcing to India, companies in the US can move their jobs to low cost locations in the US itself. Some of them could be cheaper than the tier-2 cities in India in terms of the overall cost (people + overheads). With project release cycles getting shorter, the near-shoring model would work out better. Jobs will stay in the US and Obama will also be happy.

In summary, unless the Indian IT majors pull up their socks and build up the necessary domain expertise and come up with appropriate strategies to scale up, they will sink without any trace.