The flawed golden goose
Blind Men and the Elephant by Was Rahman
and Priya Kurien
Reviewed by Sreeram Chaulia
One must live with a golden goose to tell its faults. For
the envious outsider, the bird seems an unmitigated boon
bestowing endless bounties, but the insider knows where the
chinks lie. Experienced information technology (IT)
professionals, Was Rahman and Priya Kurien are the perfect
insiders to dissect the six-decades-old IT industry, now
worth more than a trillion dollars.
In a prophetic new book, they argue that the industry may
have revolutionized the global economy, but in the same
breath, it has under-achieved its potential.
The authors begin by asking why corporate customers
persevere with the IT services industry even though "40 to
55 percent of its projects fail or get cancelled due to
over-runs and quality problems". (p18) The timeliness and
budgetary discipline of the industry's projects leave much
to be desired. Conceptually, IT systems and services solve
business problems and contribute to commercial success of
clients. However, it is "increasingly difficult to quantify
the economic benefits that IT delivers to businesses". (p77)
With this paradox as backdrop, the authors proceed to
examine the types of business problems for which IT has
arisen as a fix. Manufacturing firms need to manage huge
data flows from raw material ordering to final delivery. IT
companies like Oracle and SAP address such problems and oil
clients' supply chains. Prior to the invention of IT
applications, absence of data streamlining in the
manufacturing sector caused long lead times for consumers.
Higher-end business problems (eg creating a new market for a
product) are more challenging because IT services firms
might be acting as "downstream" implementers of software as
well as strategic advisers in an uncertain corporate
environment. Given what Rahman and Kurien call the
"simultaneously fascinating and frustrating IT services
industry" (p44), corporate clients could pay a high price
for such problems if they choose the wrong tech firms as
consultants and application developers.
What makes matters worse for problems higher up in the value
chain is that "knowledge workers" of the IT industry have a
poor understanding of the business world. They are burdened
with fanciful jargon and specialized terminology that
distances customers. Unlike other services industries such
as hospitality or retail, IT is "immature at communicating
with customers in their own language". (p73)
Large IT firms offer all three types of services, viz
consultancy, application development and support. Whether a
firm bags a deal depends on its capabilities along the types
of services it can bring to the table as well as on
inter-firm competition. Good proposal writing and selling
oneself in meetings and presentations are key skills to
persuade prospective clients to award contracts. To generate
demand, IT firms resort to tactics ranging from cold calls
for getting a foot in the door to networking with corporate
stakeholders who authorize buying. Innovative marketing
campaigns build brand value and "recall factor" in the minds
of prospective customers.
On the supply side, the main task for IT firms operating in
a highly competitive labor market is to find skilled
professionals, (re)train and retain them. Optimal
utilization of human capital and maximization of revenue
productivity (revenue earned per employee) are important in
this people-intensive industry teeming with inter-firm "wars
In the second section of the book, Rahman and Kurien change
track to investigate the factors that shaped the historical
development of the IT services industry. The earliest
computing devices in the 19th century benefited the US
railroad and insurance industries by reducing time and cost
of handling large volumes of transactions. The US military's
demands to improve artillery accuracy in the world wars
propelled computing in the first half of the 20th century.
Usage of computer applications for business spread in the US
and Europe from the 1950s. IBM was training more than 14,000
programmers in 1957. Interestingly, as is the case today,
"it was very difficult to teach business to a programmer"
and IT departments within corporations ominously "abdicated
accountability from the business side". (p121)
Software services firms grew rapidly in the 1960s under the
leadership of the American company, Electronic Data Systems
(EDS). IT applications were applied to modernize traffic
management, road building, airline ticketing and so forth.
From this decade itself, large projects were significantly
behind schedule and exceeded budgets by three times the
original estimate. The North Atlantic Treaty Organization
even held a conference in 1968 on the difficulties of
meeting deadlines and specifications in software projects. A
"mindset that nothing could be done about this" set in,
"leading to an acceptance of the unsatisfactory state of the
industry both by users and creators". (p132)
The US economy's recession in the 1970s threw half of the
3,000 IT services firms out of business, a pattern that
would recur subsequently. It revealed the industry's
vulnerability to external winds of world economic slumps,
which bring severe pressure on businesses to justify IT
By 1980, thanks to Oracle's relational databases that
refined payroll operations of businesses, the IT industry's
revenues shot up. The advent of enterprise resource planning
(ERP) software and attendant consultancies took IT services
to new heights. New easy-to-use languages geared towards
commercial applications and independent advisory firms such
as Gartner Inc and Forrester Research became popular.
In the 1990s, IT firms made a killing from the panic
surrounding the Year 2000 (Y2K) problem and the rise of
Internet-based sales concepts (e-commerce). The sudden
prospect of reaching out to a large target audience across
the world at very low costs attracted hordes of venture
capitalists into the industry. Once the dot-com bubble burst
in 2000, many IT firms lost their clients and bit the dust.
The 1990s also witnessed India record a dramatic spurt in
its IT services sector by riding the new wonder horse of
"globally distributed work" (or outsourcing).
Rahman and Kurien point to widespread hype as a constant
spur of the IT services industry. The industry's hyperbole
about "the next great answer" to business problems creates a
mystique around a particular technology. Demand outpaces
supply in the ensuing rush and IT firms hire unspecialized
programmers to catch up, thereby hurting the maintainability
and long-term viability of applications. At the end of each
such promise cycle, the market realizes the real worth of
the exaggerated claims.
The other key feature of the IT services industry's rise is
the mushrooming of intermediaries or generalists who advise
enterprises on how to become more efficient by implementing
computer systems. The authors refer to "power shifts"
towards consultants that occur whenever corporate customers
adopt attitudes of negligence and dependence on techies.
Section three of the book profiles leading IT services firms
and their recipes for success. IBM comes in for special
mention because its research and development division
pioneered creation of technology when its counterparts in
other firms were interested only in finding usage for new
technologies. Years before IBM's peers realized the value of
brand management, it made the computer a prestigious machine
by showcasing in glass cabins for window gazing. EDS piloted
the outsourcing model by becoming the virtual IT department
for client businesses and governments. Accenture, a truly
global firm with representation from different countries, is
the other big influencer of the industry whose consultancy
model set off achievers like Deloitte and Capgemini.
In the new millennium, evidence appeared of the arrival of
Indian challengers to the industry heavyweights. With world
class engineering and management graduates, India emerged as
the biggest offshore talent pool for IT services.
Predictability, timely delivery, and quality at lower cost
were the triple pillars on which Indian IT firms such as
Tata Consultancy Services, Infosys Technologies, and Wipro
Technologies became market favorites. The authors credit
Indian companies for raising the industry's slack standards
but say that possible new entrants like China and Eastern
European countries could threaten Indian firms by being
lower-cost substitutes. China is unlikely to upstage India,
though, since the former's IT services are still bundled
In the final section of the book, Rahman and Kurien consider
future scenarios for an industry where change is permanent.
The most optimistic picture is of accelerating growth by
leaps and bounds fueled by ever-greater need among
businesses for personalized IT services. To "keep customers
delighted", IT firms would have to effect a "shift of work
culture" by better deciphering the business dimension of
A second speculated fate of the industry could be an end to
the current growth and entry into a maturity phase. Here,
the market stops looking infinite and IT firms will have to
devise a way to steal away business from their competitors.
Medium-sized firms may disappear due to the recourse of
mergers and acquisitions available to large firms.
A third plausible script for the industry is of a rules
change that would reorganize the fundamentals. For instance,
the present labor-based, programmer-intensive model of
application development and maintenance might be replaced by
automation. Rahman and Kurien are sanguine about
"commoditization" of more and more applications that would
have a drastic impact on labor market demand for software
The most pessimistic projection for the industry is that
chip-embedded humans or drastic alterations in banking and
finance (the two biggest clients of IT services) could
render IT redundant. The industry’s horizon watching is so
negligible that it would be unable to survive such a deluge.
Shortening boardroom careers of chief executive officers and
tunnel visions of quarter-to-quarter earnings have made
long-term strategic visions a casualty in the industry.
Rahman and Kurien end on a sombre note that "there may be
some shocks ahead" for which the IT services industry would
be caught unawares if it clings to complacent habits.
The merit of this highly reflective book lies in its focus
on the weaknesses of a phenomenon that has rewritten the
modern way of life. The authors' insistence that the IT
industry should waste less and think more debunks the myth
of its unstoppable "rise and rise".
Blind Men and the Elephant. Demystifying the Global IT
Services Industry by Was Rahman and Priya Kurien. Sage
Publications, New Delhi, 2007. ISBN: 978-0-7619-3620-6.
Price: US$29.95, 317 pages.
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