Indian software services industry-Analysis of business cycle, slowdown and future strategy

Abstract

The report has been organized under the following chapter: Chapter 2: Discusses the onset of the current slow down and what is its impact on the world economy. The severity and average durations of the earlier slow down periods is analyzed to find out how severe and how long (predictions) will this current recession last. It was observed that the current slow down, though highly global, would not last longer than 9 to 11 months. The severity is not very high. Chapter 3: Business Cycle historical perspective unfolds the history of cycles, their duration and impact in the current cycle because of IT. It draws similarities and differences in case of IT industry and looks at the demand variance. The duration of downtrend is decreasing. Chapter 4: We take up the case of Indian Software services to study the impact and salient features in the given scenario. What are the trends observed and how are Indian firm juggling with these changes. A value chain analysis, with respect to Software Service industry, is mapped in the given scenario. Five levels are identified, with level 1 being the lowest, where body shopping is the prime business and level 5 the highest, which is consulting business. The majority of India Software Service Industry appears on level 1,2 and 3. Chapter 5: The impact of the slowdown is discussed with reference to various happenings in the industry. The slowing growth in IT spending, price pressures and layoffs are some of the prime indicators and trends. Chapter 6: Based on the interviews, forecasts and analysis of trends we have recommended focus areas for the Indian Software Industry for the downturn. The prime recommendations for the companies are > Develop a balanced approach, partly concentrating on the lower end (to sustain their business) and partly higher end of the value chain in pursuing market opportunities and prepare themselves to face the future competition from the low-cost countries. IT enables services have a huge market > Target a fairly diversified mix of demand segments as well as diversified geographic market to hedge the risk.Developed efficient cost optimization delivery models. > Focus towards branding the services. Basically, identifying niche-servicing markets. > Mergers and Acquisitions to improve the market presence at all levels in the Value chain. > Enjoy the flexibility to re-deploy their resources to fit the emerging scenario Chapter 7: A complete picture of conclusion and action points is evolved. Companies that are flexible, nimble and able to adapt themselves to the changing forces, maximize the utilization of the resources with the changing market, are bound to excel.