Indian ITES sector shot into global prominence in the first decade of the 21st century with world-class service delivery models focused on operating efficiency across a wide range of business processes. While there is widespread acceptance that India is a prominent and important locus for carrying out business processes, there is also the perception that India is not quite ready for moving into the next phase of growth. The current economic conditions have forced IT vendors to innovate and survive the turbulent times. During the first act, there was minimal differentiation amongst the top-tier Indian ITES providers. To make matters interesting, many multinational IT vendors have also set up operations in India to neutralize the cost leadership advantage while claiming to be more innovative.
As I watched the quarterly results from the ITES sector, it shows that they have continued to show double digit growth in revenues and margins. What steps have they taken to do that? In the first 90s, they specialized in moving work overseas. This was followed by making IT programming services a commodity and delivering it using a global delivery model. This approach has also been applied to entire business processes that created the BPO industry. Their unique approaches to building the IT infrastructure, sourcing talent, and utilizing knowledge management systems were of great help. The capabilities required for the next act are quite different. One approach taken is to move up the IT stack and deliver consulting services. They have also done some innovations in the business models by linking their payments to customer success factors. The birth of the knowledge process outsourcing industry has created a new industry around decision support. I am sure that there are many other innovations currently happening. A colleague of my Venkatraman (from Boston University) and I are studying this industry to understand the new moves that are being invented by the ITES industry. It is our hope that other businesses can learn from this sector.
What are some of the interesting projects that are taking place within the ITES sector? What new competitive moves are being created at this time? We hope to shed some light on these questions this summer. Watch this space for updates.