Another IT revolution

Another IT revolution

Employees of Satyam, Wipro, Infosys and other information technology (IT) companies have reason to cheer. IDC India’s September report forecasts the domestic-managed IT services market to have a compounded annual growth rate of 24.9% to touch $2.78 billion by 2010. Actual growth may well be far above IDC predictions, thanks to a revolution waiting in the wings.

William Ralph Inge, early 20th century professor of divinity at Cambridge College once said: “Every institution not only carries within it the seeds of its own dissolution, but prepares the way for its most hated rival."

The factory system of production may have done just that. It not only fuelled unprecedented economic growth, creating modern technology, but also hiked oil prices; today the two factors threaten its very foundation. Virtual offices may not be far away.

Factory production revolves around transporting employees to work and back. With oil price and air-conditioning bills shooting up, the model is becoming increasing unviable. Also, with rising incomes, employees demand a greater premium on long hours of travel (the work-leisure trade-off).

While 19th and 20th century competition was between hierarchical organizations (IBM versus Microsoft, Nokia versus Motorola, Sony versus LG), today, firms are up against an entirely novel creature—“collaborative organizations". Flickr, for example, is a worldwide photo-sharing website which relies on millions of individuals to tag and categorize photos. A hierarchically organized library would hardly manage to compete.

Some of these collaborations (such as free software Linux) depict “power law distribution", where 80% of value comes from 20% of the programmers. Such firms are not burdened by low-value employees since they cost nothing but a login ID. Clay Shirky, professor at New York University, in a 2005 lecture explains how a revolution may be on the way as more organizations become collaborative.

The logic of collaborative structures is quite opposite to hierarchical ones, i.e., transport work to employees. These organizations are empowered by secure networks and enabling software applications. The opportunity for Indian IT firms if rising energy bills animate Shirky predictions is mind-boggling.

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