Managing and fostering a culture of innovation in Indian IT service companies

Abstract

This project serves to understand the culture of innovation within the Indian Information Technology (IT) Services companies. The definition of innovation by Peter Drucker - "change that creates a new dimension of performance"1 is taken as the central theme and for the Indian IT services industry this can extend to "innovation" in products, services, operations and delivery mechanisms. The current trends of innovation in the Indian IT services sector is studied and looked at in detail, understanding how the sector grew from bring a low cost talent supplier for application development and maintenance to being a global force with world class processes and a superior global delivery model. The current status of innovation is then explored looking at the barriers that may be preventing innovation in the sector. To further understand the dimensions against which firms innovate the model framed by Davila, Epstein and Shelton (2005)2 was chosen. The model has six levers which are the drivers of innovation and they fall into the category of Business model change and Technology change. The model was then expanded by the authors to have three more levers under the category of organizational change. A sample of six IT firms, three Indian and three Multinational IT Service Companies (MNC) with subsidiaries in India were chosen to assess the perception of innovation amongst their employees against these nine levers. It was noted that though there were not many difference between the two sets of companies on most of the levers there was a slight emphasis on the value proposition and the collaboration levers leading towards innovation. It was also noted that employees in the MNC s perceived that their rewards and incentive system for innovation was better. Finally, recommendations are given on how the Indian IT firms can inculcate a culture of innovation and capture maximum value from the innovations to take them forward into the next decade. The cost arbitrage factor for India will no longer be the key for maintaining the impressive growth rate in revenue seen over the last two decades but it will be innovation across products, services, operations and delivery mechanisms that lead to greater revenue, profitability and market share.