How can Indian software industry move from linear to non-linear business models?

Abstract

The Indian IT Services industry is in the cross-roads now and is facing one of the most difficult choices in its brief existence of glory. This industry, which has drawn attention all worldwide (for good and bad reasons), may not be able to continue on the growth momentum using the traditional business model. The traditional business model of revenue linked to headcount or effort required for delivering the service is being challenged by the client and the Management. The Management has realized that this model will not be sustainable for growth. On the other hand, the clients would like the industry to take on risks and be their true partner where their success and revenue is tied to the business outcome. The Tier 1 companies have already announced in their Annual report that they have embarked on strategies to transition to non-linear models of engagement with their clients. This is a challenge that the industry has been trying to address for last 3-4 years but there is no clear winner yet. This report has been prepared based on the inside look at how the companies are trying to address this problem. We have also applied the management techniques and tools to arrive at a roadmap for transitioning to a non-linear revenue model. The Change Management that this program will trigger is large and complex. The changes will span across the departments and functions within the organization, the client organization, skill-set, structural, system, cultural and mind set changes. The companies will need to form task force and carefully plan and develop well laid out strategies to implement it. The companies will realize other tangible benefits in form of resource flexibility, less pressure on rate cards and improved margins. The industry will become more productive, agile and focused on value articulation to the client. This will make the industry more matured and help position the industry as not just on providing technology solution but solutions to business problems as well. Hence, this transition may lead to a paradigm shift in the positioning of the industry and may move them up the value-chain .