(This is an article by guest author Yogesh Pathak. Yogesh is founder of Path Knowledge, a consulting, advisory, and research firm based in Pune.)
The last 2 decades have been wonderful for the software industry in India, with a terrific contribution to India’s economy and aspirations of it’s middle class. This article reflects (in short) on these 2 decades, provides a perspective on how the next decade could be, and implications for careers.
This was the first real ‘growth’ decade for India’s software industry, though the industry’s pioneers (e.g. TCS) had been around for a while. It was a golden decade for careers in the sense that demand for skilled manpower consistently exceeded supply, salaries were always in the top quartile (relative to other professional careers), and companies experienced tremendous growth. The growth of the PC platform, the client-server revolution, and early stages of the Internet revolution, with bubbles like ERP and Y2K to boot, all contributed to IT hypergrowth globally, and since India was a part of it, we benefited hugely from this. Virtually all of India’s global contribution happened in software services, not products.
This was also a growth decade, though more so for the larger companies. In some ways, the big 3 offshore companies (Infy, Wipro, TCS) perfected the art of scale-up while leaving many of their SME competitors behind (which anyway grew handsomely). As India experienced more global integration, so did it’s software industry. Body-shopping gave way to true offshoring. Some decent product companies emerged. Indian IT’s technology time-lag with US vanished. On the negative side, the impact of two global downturns (2000-02 and 2008-09) was felt directly in India’s software circles. Careers in India’s software industry had to be charted a little more carefully through this decade (unlike being handed on a platter). This was because higher supply of skilled manpower created better resource availability, and also because companies focused on fresh graduates to keep their costs down. A lot more BE/MCA/BCS/MCS or other such programs in CS/IT were launched providing more quantity of graduates, but not necessarily better quality. Companies had to actually increase their investments in training. The product startup phenomenon emerged in early part of the decade at various IT cities in India, and became much more visible in the later part, thanks to the web 2.0 bandwagon and a general growth in entrepreneurship. Whether this phenomena generates true economic output remains to be seen. Overall, this was still a decade of happy, secular growth for companies, as well as employees.
The next decade (2010-20):
The next decade could be different and interesting not the least because of following reasons. These are not claimed to be authoritative predictions but more like indicative trends and observations.
- The IT platforms we are familiar with, are undergoing churn at a higher velocity. It’s cloud and virtualization at the back-end and mobile, tablets, cameras, sensors, and other futuristic gizmos at the front end. This impacts IT business models, their software needs, their development platforms, and so on.
- The cost of software development continues to go down. This is due to falling prices of hardware, the efficiencies due to virtualization, the growth of open source, more startups (read: cheaper products), and a generally high supply of IT graduates, especially in India. Due to this, globally, ideation and product development itself stand to be commoditized, putting a stretch on how companies will differentiate themselves. Many may give away their products for free while not fully figuring out alternative sources of revenues like ads, services, revenue shares, and so on. This has implications for the entire ecosystem. e.g. In case of valuing enterprise software product companies, real monetizable customer base (and future revenue streams from them) will matter far more than the IP/uniqueness of the product.
- For all sorts of products, IT and non-IT, product development cycles will shrink. This puts pressure on development teams and demands high amounts of efficiency, innovation, and automation. This creates opportunities for tools, testing, and solutions companies.
- Some opportunities for new products include: reduction in energy consumption across all forms of IT, security, data organization and analysis, and personalized healthcare. e.g. As IT becomes pervasive, finding its total energy consumption footprint will become an increasingly complex problem.
- The value associated with post-graduate degrees in Computer Science/related fields continues to decline, because you can always pick up “hot” skills in the industry if you are motivated and thus increase your market value. Formal education will matter less and less. The phenomena of bright programmer kids dropping out of school to do jobs/startups will happen in India on a wider scale.
- However, for those interested in R&D, post-graduate education will continue to serve as a great formal introduction to the method of research and the span of their research area. Knowing how to do R&D may not be enough — how to commercialize it will matter equally.
- Large enterprises, the mainstay customers for IT services companies, will become more demanding. They will want IT development to be more predictable (like manufacturing) in quality and costs. This will need more process/tools innovation among their vendors and also increase automation. Growth in automation and new tools may eliminate many IT plumbing, BPO, and KPO project opportunities, putting pressure on services revenues, though this will tend to happen gradually. Large IT/BPO services firms will need to cut a lot of fat among their billable and non-billable resources, especially if they can develop a smart cadre of leaders to run their projects and service lines. Human-based BPO in particular will soon become a commercially unattractive business sector.
- ‘Early and rapid skills acquisition’ will become important for students and fresh graduates if they want to survive in this industry. Downturns will be more pronounced and more people will lose jobs when that happens. So graduates will need to plan careers carefully and figure out the entire bouquet of skills (not just tech skills) for them to grow in a company. At the same time, due to more R&D, product development, and entrepreneurship happening in India, opportunities for graduates will increase. As always, entire new sectors will also emerge and they will need IT (Think of uploading photos to Facebook as a space tourist 🙂
About the Author – Yogesh Pathak
Yogesh Pathak is the founder of Path Knowledge, a consulting, advisory, and research firm based in Pune, and works in providing the following services to clients:
- Venture capital fundraising advisory and strategic consulting to startup companies
- Knowledge services to global clients: Business analysis, technology and market research, financial analysis, etc
- Management consulting services to clients in India and globally
For more details, see the Path Knowledge website.