Monday, June 25, 2007

Marketing Myopia - ITES Sector

How new technology developments can alter the ITES sector landscape?Are Indian Companies prepared?

Marketing management, second lecture at IIM Bangalore, professor asked me, “What is Marketing Myopia?” I was clueless. I forgot to read the Kotler last night. Hey, it was my first week at IIM. I was still not used to late night grinds. Thanks to this incident, I internalized the concept of Marketing Myopia to the extent that I started looking for Marketing Myopia in every industry’s growth statements.

What is Marketing Myopia? It is shortsightedness like when people tend to define their industry so narrowly that they are not able to see the trends which can threaten their industry. Railroad management thought that travelers want trains rather than transportation and overlooked the growing competition from airlines, buses, trucks, and automobiles. Slide rule manufactures thought that engineers wanted slide rules and overlooked the challenge of pocket calculators. There is no such thing as growth industry. There are only growth opportunities. The organizations too often are looking into a mirror when they should be looking out of the window

Take the case of Information Technology Enabled Services (ITES) industry. The euphoria surrounding that India has hit the gold mine and ITES service export will rise to US $ 100 billion in near future. Further analysts are predicting that India has attained leadership in lower end ITES and its time to move up the value chain and India’s ITES service exports could cross US$ 175 billion by 2020 (Source: Nasscom) . There is talk of lack of human resources to cater to the forecasted demand but there is little realization about trends which could upset these forecasts.

Here also people are defining ITES narrowly and taking India’s leadership for granted. ITES is IT Enabled Service, not the IT Enabled Service which can be done at India. Surely ITES will rise but not necessary it will be outsourced to countries like India. The reason is development in Information technology itself. The increasing ease in use of picture with voice will threaten current trend of outsourced ITES in India. At present the people, who can speak English and learn accent by practice, can do the same work being in India as an American at New York. But imagine when using voice and picture together will be possible at affordable rates. Every one needs a face to talk to. So people making enquiry calls from US would like to see an American face or face from India or china answering their queries? Or in telemarketing calls, an Indian male face will get better response or a beautiful female face from California? So the call centers, telemarketing, customer relationship management, technical support ITES jobs are threatened in future from combining picture with voice. They will again move back to where they started from, that is their home countries.

Second technological trend is maturation of speech to text technology. As technology matures it will be common for speech to be translated into text with reliable accuracy. So the transcription services are going to be threatened. Another trend is automation in it self. Development of new applications which can automate the back processing work will reduce the requirement of human labor. So the back processing works are also threatened. Another trend is cloud computing, which should reduce the IT maintenance manpower drastically.

Time will tell how these trends unfold and how Indian companies respond to that. No doubt ITES will grow, but not ITES which Indian companies are considering. Sir, this is another example of Marketing Myopia.