3i Infotech makes hay while the sun shines

3i Infotech Asia Pacific CEO, Debneel Mukherjee explains why it's time to be brave and tells us what it takes to improve core competencies.

The global financial crisis is well and truly upon us. We have seen deals become much more protracted, decisions on procurement being put-off and credit is much more difficult to come by. But is it all gloom and despair? Well, not only does that cloud have a silver lining, it is also a markedly better picture than what we have read, seen or heard – at least for companies who have what it takes.

The crisis has seen most of the developed economies going into “technical recession”. This is understandable,given the quantum of finance in these countries which was involved in sub-prime lending. However, in the developing countries in Asia, the reaction has been nothing short of knee-jerk. The meltdown of the equities in burgeoning markets like India and China has been as dramatic as the meteoric rise in their valuations, just one year or so earlier. Back then we all enjoyed the gains from the expansion but when it came to bearing the pain from contraction, we are crying foul in panic and fear.

The problem as it appears to be in Asia is more nebulous at best as the two giants India & China are expected to record modest growth withstanding these turbulent times. Rather they would be hit by main-street slow down eventually affecting corporate earnings instead of a financial sector meltdown. These are exciting times when specialization is the key going to forward as we need to master the art of resisting the temptation of doing all by oneself. This is also an opportune period to set the house in order, and weed out activities that do not add enough value to the Organization. The in-sourcing of non-core activities is a classic strategy that would pay hefty dividends as it would go a long way to not only boost one’s ROI but more importantly, free up bandwidth to refine and redefine one’s core competencies.

The Asian corporate world would do well to view the current downturn as an opportunity to weigh what they do well and what their core competencies are. They need to unemotionally examine what they do not do all that well and what could conceivably be done more efficiently and economically by others and collaborate with them.
This financial crisis has splendidly forced us to revisit the strategy of Organizations on the “Build vs. Buy” paradigm. Building ‘in-house’ systems to meet ever-changing customer needs and the dynamic external business landscapes is akin to shooting at a moving target. IT vendors who have ready-to-roll products and solutions are better placed to garner higher rates of growth in this scenario,for their customers simply because,end users do not have the luxury of time, nor deep pockets to build systems from ground up.

End users such as banks and insurance companies are gradually realising that they can neither pour millions out of their hard earned earnings nor can they continue to patronize protracted in house development life cycles of application softwares spread over several years on design, development, testing and roll-out that are inherent in “made to order” IT systems. Instead, Intellectual Property (IP) based solutions “bought” from IP owners would enable customers to crash rollout cycles, with customized ready made systems up and running in no time. As the costs of these solutions are amortized over the universe of customers and prospective clients, the price that an end customer pays is much lower. Moreover these IP based solutions are rich in functionality as their evolution traces down to a fusion of the best practices from around the globe, across several end users.

Credible players in this segment can also facilitate modernization of legacy systems through a phased manner without having to resort to a one-shot big-bang roll out. The smaller but crucial components in this space enable customers to retain their legacy systems, while at the same time, enhance significantly their utility and useful life by being able to effectively talk to the legacy through a built-in system integration tool thus enhancing manifold the whole value of position. The risks are much lower and the overall ROI are attractive.

This is the segment which has seen increasing traction over the past quarter, and is poised for growth. This crisis has ensured that when the going gets tough, the tough get going. These “tough” IT companies are those who had put together years of hard work in research, spend bottom dollars to evolve their IP’s and to create competencies around their IP’s so that these robust IP’s withstand the storm in these turbulent times. The players with a “me too” offering will find the going getting much more difficult in the months to come. Going forward we would witness volatility in the financial markets and only the nimble with high level of specilization would be able to realise opportunities in the new world order.