The opportunity for smaller tech firms

By July 20, 2018Articles

For many such firms, it may be feasible to continue to focus on conventional technologies; for the more ambitious, there is an opportunity to morph into a full-capability digital transformer

Digital acceleration is the need of the day for all medium and large corporations worldwide and the surge in demand for digital solutions and services shows no signs of abating in the near term. A full strength digital offerings set is the biggest opportunity for digital product, platform and services providers in India and worldwide with the consequent imperative to build capabilities and offerings which can help their customers service their own customers better.

In the first flush of results declared by the IT majors at the end of the first quarter of the current fiscal, it is becoming apparent that the period of re-adjustment to different buyer groups, shorter and smaller contracts and higher levels of flexibility to execute digital contracts, is being mastered and the growth numbers are beginning to move from the zone of worry to respectability and hopefully by the fourth quarter back to the teens in terms of percentage growth.

The road ahead seems clear enough for the billion-dollar club and while a few may get dragged down by their legacy or inability to add the design thinking, customer behaviour and user experience skills needed to compete successfully in the changing market, Indian majors are nimble enough to follow the tracks laid by Accenture, Globant and some of the Big Four and must transition to a new model for future success. Our experience at 5F World and Kalzoom working with some of the leaders in management consulting and private equity and serving both large services and cross-border mid-tier digital companies have shown that organisations need three capabilities to succeed and scale in this new world:

  • A strategy which encompasses full-stack digital solutions capability from user experience design to SMAC to IoT and cyber-security and a marketing and sales capability to sell to the C-suite.
  • Managers and consultants fully conversant with digital and armed with specialist skills in one of the core tracks of digital technology.
  • Career development, learning, mentoring and community platforms to keep sales and delivery folks continually updated with new developments in the digital world.

What is needed is a strategy that encompasses full-stack digital solutions capability, from user experience design to SMAC to IoT and cyber-security

The question that inevitably comes up is what is the future of the
smaller firms that have competed in the past by being a nimble and often a lower cost alternative to the large firms for dual shore applications and infrastructure development and support. On last count, there were over eighty technology services firms headquartered in India with revenues between one and five billion rupees and if one adds to that firms of a similar size headquartered in the USA and English-speaking Europe, there are probably over three hundred firms competing for their share of the digital pie.

For many of these firms, it may be feasible to continue to focus on conventional technologies with a cloud orientation, develop skills in implementation of e-commerce packages and continue to be the second or third choice for digital development and support dollars. But for the more ambitious, the opportunity exists to morph into a full capabilities digital transformer firm, with name recognition in their chosen segment. Speaking with firms who have undertaken this transformation or are planning to make it happen in this year, the following approach seems to be working which could be considered by most CEOs who would like their firm to emerge as the success stories of the new world:

  • Candid third party assessment of projects undertaken and intellectual property created by the firm with a view to identifying a domain and a set of capabilities where there are distinctive capabilities.
  • Assessment of organisation readiness in strategy, structure, culture, technical and marketing capabilities for the new challenge.
  • Comprehensive strategy development with workshops and definition of capabilities to be enhanced or developed, ways of partnering and selling to garner new business and expand footprint in existing accounts.
  • Identifying avenues for organic as well acquisition led expansion in core markets and carefully chosen new geographies.
  • Conceptualisation of digital platforms to be created and products to be reengineered with multi-tenancy options and AI capabilities.
  • Digital bootcamp workshops for all technical and sales people to increase the level of knowledge of digital and the applications clients are envisaging to get closer to their own customer needs.
  • Allotting each member of technical staff to two or three of the nine digital tracks and providing intense training to create competence and capability.
  • Identifying the career tracks for the technical team members and installing a customised learning platform for ongoing learning, mentoring and community participation.
  • Taking stock of progress on a milestone basis and identifying ongoing steps to take the organisation further on the path to digital success, doubling revenues in three years and tripling in five years.

Success in the exciting word of digital is not a pipe dream for any firm, whatever be its size if it is committed to defining and sharpening its value proposition and making a concerted effort to grab opportunity share. May the most hungry and prepared firms win!