"Allowing access to key tools makes the digital natives productive at workplaces"

Written by Alokananda Chakraborty | Updated: Sep 15 2009, 07:00am hrs
Organisations that are effective at integrating business and technology deliver significantly better growth and operating margins. And no one understands that better than Partha Iyengar, VP, distinguished analyst, regional research director, India, Gartner. He actively tracks the business models of the leading offshore services vendors from India and other emerging countries and their competitive positioning with the traditional global service providers. He spoke to FEs Alokananda Chakraborty on the issues before the Indian IT services marketplace.

Lets begin with social networking, the most talked about platform today. A lot of companies block access to social networking sites because theyre afraid of employees wasting time. Who is using social networking in productive, creative ways Will MySpace or Facebook become models for business interaction

Social networking is being leveraged effectively primarily by what Gartner calls Type A companies, who tend to be the most aggressive (bleeding edge) users of IT, because they believe it gives them a critical competitive edge. These companies are using social networking in various areas like recruitment, marketing activities, monitoring and managing market perceptions in this new medium, and generally looking to incorporate and use some of the open collaborative aspects inherent in social networks to help drive greater levels of collaboration within the enterprise as well.

In a country like India, with its inherently lower average age of the workforce, especially in the IT sector, more progressive policies regarding the use of social networks is imperative. This younger workforce, the so-called digital natives (with the older generation being digital immigrants) just expect to have access to all of their collaborative interfaces, of which Facebook, and (to a lesser extent) MySpace are a key part. Not having access to these may in some ways actually reduce the productivity of this younger generation.

Unlike the older generation, the digital natives are inherently multi-tasking in nature and believe in normally having a work-life balance, unlike the older generation which has to make a conscious and separate effort to achieve this balance. Hence allowing them access to the key tools that drive this inherent work-life balance is a key part of keeping them productive in the work-place. In the future, these employees will make decisions on which companies they would prefer to work for, based on issues like access to what they consider absolute requirements even in the workplace.

When most business executives think about IT, its usually when they forget a password or the printer breaks. In other words, the role of an IT professional in an enterprise is reactive. Going forward, how do you see the role of the IT professional changing

The successful IT departments of the future will be those that increase their business relevance to the business and not be seen as just the back office techies that dont have any direct relevance to business issues.

This will start with the role of the CIO in the enterprise of the future, where the CIO will need to be seen as more of a business leader and not just a technology wonk. In terms of lower levels within the IT department as well, the professionals that will be more valued in the future will be those that have greater business skills and acumen and have achieved a level of personal credibility with the business for those skills.

The growth rate of offshore outsourcing to India is expected to come down considerably, as new clients are increasingly including other countries in their evaluation, Gart- ner has said. Where exactly does Brand India stand now

It is true that new countries are coming in to the offshore fray and companies, especially the larger ones, are looking to add (not necessarily replace India) more countries to their portfolio of either actual work being done from those countries, or as candidates for consideration in the future.

However, India still remains the only country in the leaders quadrant of our country assessment. The bulk of the other countries have more niche skills at much lower scales than India delivers and it is difficult for them to actually challenge Indias dominance.

Clients are also wary about jumping to other countries that cannot (and almost all of them cannot) deliver the same level of process, quality, skill levels, vendor ecosystem and overall capabilities that they are used to from India.

The only country that can potentially challenge India in terms of overall scale, China, is still at least three to five years behind India in terms of addressing the English speaking market (the largest market for offshore services), though China is ahead of India in terms of addressing the Japanese and other double-byte countries.

So overall, while the country options are increasing, there is no imminent threat to Indias dominance off the offshore services paradigm in the near to medium term. However, in the longer term, India needs to address its biggest challenge, the areas of infrastructure and education reform, in order to continue its leadership of the offshore services industry. If these areas are not addressed on a war footing, India will undoubtedly fall behind in the longer term.

The tech sector has seen revenue slump in recent quarters as consumers and businesses react to the worldwide slowdown by cutting spending on data centres, computers and other tech gadgets. When do you expect growth to resume

From an overall sentiment perspective and a return to growth of IT budgets overall, the first signs of recovery will come within the next quarter or so, though there will be a residual impact of the slowdown into 2010. The return to growth will also be varied geographically, with some regions (for example, Asia-Pacific) rebounding quicker while North America, Europe and Japan will see a slower recovery.

How do you see the governments stimulus packages around the Asia Pacific moving the demand picture

Most of the stimulus packages have not really been IT specific, but more in terms of generating overall consumer demand. In that sense they have not had or will not have a direct impact on the demand picture. The impact will really come as a secondary impact as the economies turn around, businesses head back towards growth and hence need to restart their IT investment efforts in terms of improving efficiency, productivity, customer support, innovation etc. In some markets like India, the increased focus of the government on time-bound projects to improve the quality of governance as well as improve transparency levels in the citizen government interface will spur specific demand, as we are seeing.

Do you see more consolidation in the tech industry in India, particularly, in the communications space

There will undoubtedly be more consolidation in the IT industry in India, but the biggest impact is likely to be felt in the IT services industry, where the combination of a resurgent domestic demand coupled with global sourcing demand increasing again will create both challenges and an opportunity for companies in this segment. Some will seize the opportunities to combine with or acquire other providers, whereas others will lose the challenge and be candidates for mergers and acquisitions. The communications space has yet to evolve to a more expansive value chain (value added content creators etc) before we see significant consolidation activity there.

Is it true that a lot of small to medium size BPO companies are concentrating only on the top line growth by undercutting prices

There are a number of smaller firms that have been fairly aggressive in their rates, out of a fear of losing business. Some of these fears have been misplaced, and has in fact led to unwarranted undercutting of prices. Overall though, the rates free-fall has started to taper off and will likely remain flat through the rest of 2009.

New research from Gartner paints a surprisingly bright picture of business intelligence (BI) tools spending globally, with greater than 20% growth last year. What drove this growth and what are the major trends in the industry

With the intense economic pressures on companies in most industries, which has reduced the focus on new incremental IT investments, there has been a stronge focus on increased leverage of IT investments already made for better and quicker decision making to help cope better with the economic crisis. This is where increased leverage of BI comes in and we have seen the increased investments of BI to improve leverage of existing software investments to improve management effectiveness and quality.