Looking Into Future - Part 2

This Article has to be read in continuation with my earlier article – Indian IT – The Next Dinosaurs?

Indian IT Industry has to align with the new paradigm shift and interestingly the scenario is a repeat of 60’s and 70’s of the auto mobile industry when Japanese Industry was trying to breakaway from US automobile industry by implementing process to increase efficiency and reduce wastage. This process which was theorized in US by Juran but was rejected by US Automobile industry was adopted and operationlized by the Japanese is called Just In Time Manufacturing. The basic principle of this process is reducing wastage, increase efficiency, procure when required.

Interesting the Indian IT industry is heading towards the same ill’s which US automobile industry faced in those day’s i.e. Sustained demand, high profit which didn’t force the companies at looking ways to increase efficiency. The Oil crisis of 70’s change this equation as to remain competitive they have to manufacture fuel efficient cost at lower prices, which required cost efficient process and better resource utilization.

Current Situation in Indian IT industry is very much identical , i.e. Decreasing value of $ in combination with frenzied hiring is driving down the profitability of Indian companies , which requires them in order to remain profitable increase the billing rate to the clients . This increase in billing will force the clients to rethink there outsourcing strategy as the basic reason for outsourcing is cost saving’s to client compared to if the same job would have been done Onshore.

So is this driving us towards a JIT in IT industry? The answer per me is yes.

I will propose a supply chain model for IT Industry in my next article.