Thursday, January 30, 2014

Managerial challenges in 2014 for mid-size software companies (in India).

Most of the mid-size software off shoring companies in India have been growing their business for past 8 years. They have substantially grown during this time and have globally expanded their services to many more countries.

I have noticed that there are many reasons for their success. To name some; most of these companies are run by their business owner or partners who are technically qualified. Their focus has always been more on USA and Canada from the beginning due to major cost difference in skilled labor cost. B2B business (projects) from USA, Canada and Europe was initially easy for them to grab. Demanding customers were comparatively less since low cost application development in India was just fine for them to manage their profitably of their businesses. Global image of India as an excellent outsourcing destination with highly skilled engineers was being established; thanks to companies like TCS, Wipro, Infosys, I-gate etc.

In nutshell, I would call it an “organic growth phase” which helped getting macro level success for many mid-size companies in the business of providing offshore services. Also there are many similarities observed in these companies.

While going little deep into my analysis, some visible flows have come up on the surface. During organic growth phase, customer satisfaction was on back seat and focus was always on high-volume execution, delivery and financial results. Management structures in most of the companies were orthodox (Old factory model of management) based on command and control and execution of task in fastest possible time was the main focus. Managers were controlling teams in “task master” manner. Most of these companies still use the same command and control systems and they  use “more pay for more task completion” as motivating tool along with the threat of job loss. 

When employees feel that speed, delivery and results are the only things that matter to their management, they start drifting away from "ownership" of their projects. Start becoming reluctant to risk taking and do not come out with new ideas, concerns, or even doubts since they feel unsafe to say what they have in their minds.

Even with all these flows, the overall success ratio was high between 2000 and 2012, why because demand for low cost services was much higher than the offshore service providers and there were enough knowledge workers available at low cost in India which enabled consistent development and delivery of services.

Like it happens with every new business, organic growth cycle has already started moving toward its end. It is also cropping up some new challenges for mid-size companies in current times.

Beginning 2013, it has been observed that B2B project inquiries from USA have substantially reduced (one of the reason could be president Obama’s restrictions on outsourcing). Clients have become much more demanding compared to previous years. More than project "execution & on time delivery", perceived value of "business benefit" is largely increased among service buyers.

Above changes in buyers behavior are increasing and also impacting both "customer experience" and "user experience". 

Unfortunately management strategies have still not changed in most of the mid-size companies and artifacts of it has resulted in unfortunate legacy systems which still exist in many companies. 

Many companies still consider monitoring employee output through their daily time sheet. Unfortunately long prevailing management structure of command & control system has blinded these companies to initiate the most important shift in their structure.

Organic growth phase in business also has a life cycle and signs of it are felt by almost everyone. It is time for the business owners to wake up and initiate the required changes in their management structure. A new structure which can inspire & enable employees to solve unanticipated technical or commercial issues. Identify, explore and introduce some different approach to execution and increase their customer life cycle. 

Allow identified performers to experiment new ideas leading towards better customer experience. Respect them by promoting to higher position. Senior managers are required to strike the right tone of transparency, knowledge sharing, direct support and humor to encourage their teams.  

Encourage employees in every possible manner and allow them to “Think-Learn-Move and Win”. It will be introduction of “execution-as-learning” in its true sense. Think about it.

Bhartesh Sagar
January 30, 2014

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