IT Services Industry – System Integrators – Way forward

This follows my post in LinkedIn few months back. I was writing about the state of affairs in Indian IT Services Industry. You can access it here.

A year has passed and we still see the same old story. Anyone who follows Vinnie Mirchandani’s blogs (access here) will understand it.

Recently, Narayana Moorthy (founder of Infosys) lamented the absence of any real innovation coming from India. And Vishal Sikka spoke about identifying / analysing problems rather than solving them after someone identifies them. 

The Analysts and Strategists alike call “blurring of Products and Services”. It might be worthwhile to take a step back and think this through. Is there a real blurring or merging? If you look back, in every space, products were replacing services or redefining the way services were performed.

You bought a vacuum cleaner. The service of cleaning / dusting the house that was done previously by your maid was replaced by the vacuum cleaner.

You bought a dishwasher. It replaced the washing of vessels by a maid or by you.

When you bought a car, which replaced the service provided by a horse. And a driverless car replaces the service provided by a driver. But you still travel from place to place in that.

You have heard these things as part of the narrative of the current “age of disruption”. However, it is not a disruption. The service performed by someone or by something was done better by something else. 

If in the case of vacuum cleaner, it was a human being who was replaced, in the case of a car, it was an animal which was replaced.

However, you still got the service. The “service” in itself was not disrupted. 

You visited another location by airplane for a conference. This was replaced by a product of “Video Conferencing”. Or, in future, by BEAM, as per Peter Diamondis.

But what was disrupted was only the travel part. Not the part where you communicated with others or attended someone else’s communication. You still did it sitting in your favourite couch.

Coming back to the present. In my opinion, the whole concept of “blurring lines between Products & Services” is misleading and in my opinion, this is where Indian IT Industry is making a mistake. They look at their business and think they are providing a Service. And as a result, the moment one talks of “Products”, they go defensive and start talking about being in Services industry and not in Products business.

And totally miss the reality that the so-called “Products” actually give the “Service”.

Transforming themselves to providing “Service” through “Product” is not going to be easy for an industry which was the largest job creator, linear modelled with FTE count and tasted medium-to-large contract values.

The only way the industry can re-invent itself is to innovate – not in the name of process automation to perform a service, but to take a re-look at the whole problem chain and provide solutions that nullifies the problem at the root. Not to introduce a software program with a “robotic process automation” tag and yet still provide the same service.

Taking the human out of the equation is not innovation. It is again a temporary painkiller. The only way will be to take the problem itself out of the equation with solutions. That’s really innovation.

However, this will mean:

• Cannibalising one’s own revenues;
• Trial-Error-Trial-Error-Succeed cycle for which risk taking becomes an innate requirement;
• Ability to look at “Products-that-provide-service” as a separate stream, while creating them and not to measure them through the legacy “Service” mindset;
• Leapfrogging and thinking about Long-Term compared to Q-o-Q earnings.

To me, this appears to be the only way the so-called System Integrators can survive and re-invent themselves. They need to realise that the so-called “Products” actually are providing “Service”. And nothing wrong in “Service-thru-Products” business.