Home >opinion >online-views >Disruption is a big opportunity for Indian firms

Large corporations are much like individuals who have visceral reactions when it comes to accepting sudden change. When faced with such change, or just the threat of it, we first give way to feelings of fear, uncertainty and doubt—followed by a period of denial, anger and finally acceptance.

What isn’t so patent—and not often discussed—is the last stage: the stage of herd mentality that follows the stage of acceptance. Everyone rushes to the same solution since they feel they absolutely have to do something to keep up with their peers.

Witness the rise of offshore IT and BPO. What was once anathema to many western companies became a rush to the same destination: India. This herd mentality was fantastic for our India-based IT and BPO service providers, who mopped up billions of dollars in business from clients. In fairness to the offshore revolution, it also led to lower cost operations for clients.

Nasscom’s famous ILF conferences just a few years ago featured western CIOs each boasting about how many thousands of people they had working for them in India—at service providers, and at their own in-house centres. In those days, in-house centres were pejoratively called ‘captives’. There were even discussions around ‘synthetic’ captives (Indian operations run by service providers with a ‘buy’ option for the client). One such was the Wachovia-Genpact deal, and I still remember the Indian-American Wachovia executive who smugly informed his Indian audience at the conference that Wachovia’s assets were much larger than the combined assets of India’s entire banking system—while I squirmed in my seat since he was there at my invitation. Well, Wachovia doesn’t exist any more—it was ‘disrupted’ by the 2008 financial crisis and had to be bought out in a US government-engineered deal. Thankfully, our Indian banking system still exists.

But I digress. The point of this column was to talk about the herd mentality that has now formed around ‘digital disruption’. It is now so mainstream that it is no different than the accepted norms of ‘business process re-engineering’ of the 1990s and the ‘offshore transformation’ of the noughties. Firms now have ‘planned internal disruptions’ and ‘disruption strategies’.

At a recent dinner-table conversation I had with a senior HR executive of an American firm, she regaled me with stories about her firm’s ‘planned disruptions’—purposely overhauling HR policies at her firm, thereby allowing for next to zero internal control over things such as leave management and employee expense reimbursement. My take was that this would lead to chaos, since people would quickly start gaming these systems to their advantage—which is a natural, instinctive response to knowing that you are not watched.

“Planned disruption" is an oxymoron that beggars belief, especially since disruption as we have actually experienced it only occurs when an upstart competitor comes up with a newer, faster, cheaper and more technologically advanced way to serve your client base. How can you ‘disrupt’ yourself when you don’t know what’s coming and what you need to change? Considered (but quick) responses to actual threats that emerge on the horizon may be a far more intelligent thing to do. When people plan an elective surgery like a Lasik or a hair transplant, they subject their body to what they know is an invasive and painful procedure, to either see or to look better. But they aren’t likely to go and plan an elective coronary bypass anytime soon just because they are 40 years old and other 40-year-olds are dying of heart attacks. The intelligent thing to do would be to have a check-up to make sure they are not in danger. But individuals in a herd are seldom intelligent.

The same is true of mature companies—the need for intelligent response to a threat has already instead led to the last stage—the stage of herd mentality. Even the venerable Bank of England has recently said that it wants to “Uberize" itself. The fact that there has already been real-world ‘disruption’, often brought about by digital technology, has only increased the fear among mature client firms. Witness the Ubers, Amazons, MakeMyTrips and others who have made dinosaurs out of the traditional businesses they upended.

This herd mentality among mature clients is a goldmine for IT and BPO services firms that are nimble enough to capitalize on it. The one-eyed will end up leading the blind, who are still in doubt about what ‘digital disruption’ means. However, since they have now ‘planned’ for it, just like everyone else has, it means that they can go in and upset whole pieces of their business in fear of a threat. The fear of being left behind is a powerful motivator.

However, guides need to hold the hands of the people they are leading, not sit half a world away. This calls for India-based providers to significantly increase their on-site presence with soothsayers of digital doom and disruption, much like their non-Indian competition is doing. Managing client firms’ old hardware infrastructure and maintaining their ageing software applications may soon be passé, but the world of ‘digital disruption’ has opened up a massive new opportunity. And if you can’t convince, you can always confuse. Either approach will lead to more coin.

Siddharth Pai is a lead consultant at Tekinroads Consulting LLP.

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