Companies in the IT services sector organize and provide services based on the industry stack. From a provider perspective, value tends to move up the stack. The evolution of the Indian IT sectors has followed this trend. In the early days, application development and maintenance were the most lucrative (given cost arbitrage). Today services are dominating the discussion. In a recent Forbes article , the author claims that Indian firms are adding strategic advisory services faster than ever. In fact, their growth rate is 30% compared to 4% for US companies. In the past when companies crowded a particular layer of the stack, innovative firms created new layers or split existing layers of the stack to suit their strengths. Another strategic move is for companies operating in many layers to create platforms in the lower layers that would make cost the differentiator in that layer and move value added services to the layer above. Firms such as TCS, INFY, CTSH have created internal platforms that helps them deliver efficient services in the lower layers and focus their attention on the higher layers. Initial response from the US based firms have been to create internal platforms and to add offshore delivery centers. This strategy can create competitive parity at best. One other response could be to create a new layer (a design layer) that supports product/service innovation or business model changes.

I am spending part of this week in Milwaukee attending ICIS. This morning's paper carried an article titled 'Designs on a creative career'. The state has lost 15% of their manufacturing jobs in the last seven years. Meanwhile, demand for industrial designers have gone up and they get paid 29.5% more than the average wage of all occupations. The same trend should be seen in other sectors such as the software sector. As a result, we could see the launch of the design economy where IP management, distributed collaborative work technologies and skills could be crucial.