Digital technologies are transforming our world. Enterprises are adopting data driven decision making models, while customers are communi- cating via mobile and social media platforms. In its recently announced Q2, 2016 results, NIIT Technologies, which carved out digital services as a separate business, has seen that efforts in digital were rewarded with new wins and strong growth. Two major airlines went live during the quarter with their new responsive websites providing a whole new digital experience to their customers. A large customer also went live on a cloud-based SAP HANA solution on a multi-year transaction pricing model. “Digital now accounts for 15% of total revenues,” says NIIT Technologies CEO & joint MD, Arvind Thakur. “Digital disruption is real. In new digital world, customers need support in problem definition itself. This requires new capabilities which go beyond problem solving to actually defining the problem itself,” he tells Sudhir Chowdhary in a recent interaction. Excerpts:

Are we truly empowered and enabled to transition into this ‘digital world’?

We are seeing feverish adoption of mobile internet, cloud technology, digital payments, and digital identity —technologies that will define and develop a robust digital footprint.

In my opinion, the following three elements need to be aligned for us to be successful amidst this digital transformation:

Infrastructure availability—Mobile devices have increased exponentially in the country and companies can innovate to leverage this platform to enhance customer experience. However bandwidth availability is a constraining factor.
Availability of applications— Even with infrastructure in place, availability of applications is necessary to deliver value. Good news is that many start-ups are getting the funding and the government has also identified citizen centric applications to be put in place.

Ability of people to use technology—Putting in place the infrastructure and applications would be of little use if people do not know how to use the technology. Digital literacy therefore needs special focus.

The environment is conducive for transition to the digital world but all the above three elements need to be developed in a balanced manner for transformation to be successful.

How are companies embarking on a digital journey, and where are they going wrong?

Most IT companies have recognised the disruptive nature of new emerging technologies and have embarked on their digital journey. They are beginning to invest in new technologies and are retooling their existing workforce on these new skill sets. However in order to deliver value, companies will need to also focus on developing creative skills. We now need to look beyond engineering and embrace talent from different disciplines including fine arts.
Perhaps the area which would be the most challenging to address is the culture. The industry through its investments in process capability has converted the art form of programing to an engineering discipline.

In the digital world however there are no clear cut specifications as customers themselves are experimenting with business models. The mind-set of the workforce has to shift from doing what they are told to do well, to identifying opportunities to value add. To get the entire workforce aligned requires strong management will and an investment which is not trivial.

For companies embarking on the digital journey the simpler task is to build technology capability. A bigger challenge is to build the creative capability and where companies are going wrong is underestimating the challenge of the culture change.

What should companies keep in mind when facing digital disruption?

Digital disruption is real. This requires new ways of doing things. The industry has grown on the back of a value proposition which has essentially been around cost arbitrage. In new digital world, customers need support in problem definition itself. This requires new capabilities which go beyond problem solving to actually defining the problem itself.

To operate in the new digital world you need to have a bimodal mind set. One which is traditional and regimented focussed on stability and get things right the first time, and the other, which is new where you need to execute quickly, try new things, experiment and fail fast. In the old world, you executed to a well-defined process as you cannot afford to fail. In the new digital world, you have to try new things rapidly, so it is better to fail fast than to fail later.

You are a global IT services firm, what all markets are you focusing on in the digital services space?

As a company we are very sharply focussed on a few select industry segments. This has enabled us to build deep domain capabilities to understand our customers business which is essential for digital services. Our digital strategy is built around four domains:

* Digital experience—Putting together multichannel solutions that provide a great experience to our customer’s customer. The travel industry is one segment where we excel in delivering a great digital experience phase. Our travel customers have consumers who are all mobile. To give them a great experience we create mobile solutions. With digital services, traditional websites which are desktop based deliver a seamless experience when the traveller switches to mobile. We have worked with many airlines to make their websites responsive in this manner. A good example is that of the world’s leading chauffeured limousine company where we put in place a mobile platform integrated with the GDS to provide their customers with a great digital experience.
* Analytics—Analytics is about understanding our consumers and customers. We launched a solution in the US called “Digital Foresight” which can predict customer churn before it even happens and advise our customers on the same. We can also direct sales energies of our customers towards consumers who are more likely to buy their product. Our analytics solutions are strong in the financial services sector; we also have our own analytical products in specialised areas of insurance which enable risk aggregation.
* Cloud—We are engaged with many of our clients in helping them migrate to the cloud.
* Digital integration—Digital solutions usually involve a creative element that would be culturally oriented to the geography in which the customers are. This plays to the strength of entities which traditionally have on-site resources. These digital platforms need be integrated with the legacy systems where the data resides. Integration costs could be as much as 50% of incremental investments. Digital integration is therefore attractive and as it plays to our offshore strengths. This is an area where we wish to assume a leadership position. In order to do so, we made a strategic investment and acquired an integration company—Incessant Technologies, which provides end-to-end digital integration services.

How much does digital services contribute to the overall business?

Last quarter, digital services contributed to 14% of our overall business but now in Q2 FY’16 the number has increased to 15%.

How is NIIT Technologies differentiating itself from the competition in this space?

Our strategy is simple, to “focus and differentiate”. Our services address specific select industry segments and this is our USP. These include travel & transport, BFSI, and manufacturing/distribution. This focus has enabled us to build deep domain understanding, an understanding of industry specific platforms, and creation of industry specific IP. We compete on the strength of this specialisation and with teams that are aligned to our service vision “new ideas, more value”, to constantly innovate and provide exceptional value to our clients.

However our greatest strength is our culture, a change we embarked on two years ago to address the changing expectations of our clients. The culture aims to ‘Uplifting Service Levels’ of employees across all levels. This is being accomplished through a structured intervention which included education of the entire work force.

Besides education, uplifting service involves several interconnected initiatives encompassing many aspects like an engaging service vision, a platform for ideation and of course voice of the customer. Our service vision ‘New Ideas, More Value’ fosters a culture that promotes innovation and constantly seeks to find new yet simple ways to add value for our customers.

When implementing the quality culture during the early years of our software business we had brought in one of the quality gurus of the time, Philip Crosby. Now as we embark on uplifting our service levels we have inducted Ron Kauffman, who is a thought leader on service experience, to facilitate the change.