Indian firms need to scale digital transformation: BCG | Mint – Great
Do you see companies making good progress with their digital transformation roadmaps? What are they doing right, and what can they do better?
Rastogi : For the last 3-5 years, digital transformations have been on the agenda of businesses. Covid-19 was a super-accelerator. Obviously, it was a traumatic period but there was a silver lining in the sense that covid accelerated digital change. Look at electronic payments, digital health, electronic education, and at governments—they really are using digital, which is a huge leap forward. As a result, companies have had no choice but to respond faster, especially when consumer behaviour changes so dramatically.
Asia is, to my mind, well suited to it (digital transformation). We don’t have legacy. We are usually mobile first, both in India and also in many parts of Asia. So , we can actually leapfrog. That is great, because it can be also an innovator that will companies can take back (products and services) to other markets, rather than being the some other way around. But while electronic transformation has become the huge priority, we do not see digital at scale across industries—they (compnies) are doing pilots, which is easy.
Gupta : In Indian, everyone knows that digital transformation is to be done and most companies are in generation two of their modification journeys. However , there will be a clear digital divide (between electronic leaders plus laggards). Certainly, tech companies in Indiare implementing at a far more accelerated pace than, say, many manufacturing companies, other than some really large manufacturing firms. But even as everybody gets digital transformation, they are less successful in getting on with it on a large scale. There’s a nice quote by one of the large tech CEOs who said that the ‘pilot (testing of a project) is going to be the bane of this industry’.
What should businesses do to go beyond fliers, and level?
Rastogi : A study we did recently revealed that only 30% associated with digital alteration projects succeed. We looked at the main factors driving it. Number one, you really need to figure out the business case—what is the problem you are trying to solve, and what value will you get from it? Second is, how do you do this particular in an accelerated way, at size? Third involves forming the right team talent unit. And last is usually senior management commitment— it really needs to be something which is at the core of the business, not a side activity or a hobby. I find Indian traditional companies struggling beyond numbers in order to take the leap of faith.
Are you seeing businesses reduce their IT spends given the particular fear of the looming recession? Will this impact ongoing and new digital change for better initiatives?
Rastogi : We did a good IT buyer survey two months ago, and there were two areas that the respondents put down as priorities. The first is that these people will continue to scale infrastructure and security spending. The second is that anything to do with digital shift will remain a top priority—think about automation and so on. You will also notice that IT services companies have not lowered their forecasts, and neither has Nasscom lowered its industry forecast. Nevertheless , we are seeing spends moving from capex (capital expenditure) to opex (operating expenditure). For instance, let’s state that if one were to spend about $200 million on a project, the particular capex part is the implementation while the opex part is to run services and outsourcing. Also, all of us are viewing almost 15-20% of software services being sold as a service. It will reach an inflection point, and then shoot through the roof.
But do you see Indian THIS services moving up the value chain, given that a substantial portion of their revenue still comes from application, development and maintenance (ADM)?
Gupta : Indian native IT solutions companies have retained their own market share and not lost space. Now, what is actually digital versus what exactly is heritage ADM is definitely actually very difficult to decipher unless you’re an internal auditor. Yet if Of india controls 55% of the global IT spend, and has the labour workforce that’s larger than that, proportionately, then India should not be following global trends—it should be leading from the front. It should be dictating what are usually the future technologies and should be proactively creating those centres associated with excellence—whether they will be for mobility, cloud, AI, blockchain or for that matter, the metaverse or web3. Indian THIS firms, however , are still very, very reactive. This can be the time to seize advantage plus move up the particular value chain. Also, we significantly lack a product mindset.
How do a person feel being a woman tech leader in a field dominated by men?
Rastogi : I’ve been at BCG for 25 years, this is certainly my 26th. I started in Mumbai, and I was the just woman consultant on our team. Thankfully, this has changed now. We are fortunate to be in a different era now. I think it requires both sides to play a role (in promoting the cause of women within tech)—the C-Suite at companies and women too. Hybrid working has allowed a lot associated with people including women to continue working with regard to companies. We would love to see more women in leadership roles inside technology.
What’s your perspective on technology startups that are burning huge amounts of cash and have seen their particular insane valuations take the beating?
Rastogi: Technology is a very powerful driver of innovation and disruption. Now, there has already been a hiccup called tech valuations, which sometimes distracts from this overall message. So yes, technology valuations possess fallen, more for incumbent tech players. Now, some of that was just potentially, you know, correction in the market. But despite the dip, if you look at value creation in global equities, $9 trillion of the $11 trillion (market cap) will be driven simply by tech in the last five years–that’s a massive number. Plus that’s while of end September, even after accounting for all the corrections we’ve seen within the market. I actually see interruption happening in two parts. One is usually what I call technology as a disruption for additional industries — taking real customer pain points, and a technology-first approach to solve that will. And after that we have all those companies along with emerging technologies. But (despite the drop in funding) I believe early stage investments will continue, especially for companies that have reasonable fundamental economics. I also see India because a huge hotbed associated with innovation along with China and the Southeast Asia.
Exactly how should senior executive and business leaders leverage disruptive technologies like datanalytics, AI, blockchain, metaverse plus Web3. 0 to name a few?
We touched on electronic, which includes data analytics anyway. That’s kind of far more mature compared to some of the various other technologies a person mentioned. But if I just take the metaverse as one example, because it is a much-searched term on the internet, all of us still have in order to get to the things i contact big use cases and big worth cases. I do believe we have to reach an inflection point, whether it’s on the hardware, software, or even the kind associated with content that is available. Now, it’s anybody’s guess whether this particular happens in the next two many years or the next five yrs, but there will become an inflection point due to the fact there is definitely so much funding for this.
My advice to CEOs would be that at least pick a couple of areas of experimentation. When you notice retail, regarding example, a lot of the luxury players are already selling NFTs (non-fungible tokens — that’s real business with actual money. You can take it further to fitting trial room, etc. Therefore , there are real make use of cases here. Hence, figuring out few areas associated with experimentation can be important because if you start only when you hit the particular inflection stage, it will be really late.
We always overestimate the short term, plus we underestimate the long term. And I think that’s exactly what’s happening in the particular metaverse. Therefore, depending on which usually person and which sector they are in, and in which function, there are systems you may have to invest in. You choose a few bets. And for a few, you start getting an earlier adopter, whereas with the rest, a person wait and watch because it is impossible to chase all of these places.
Other than the company digital separate, a third associated with the world’s population suffers from lack of meaningful access to technology. What ought to governments, businesses and institutions need in order to do to address this issue?
Rastogi: It is the topic that will I’m passionate about. About three billion of our world’s population is suffering from the digital divide. And I’m not really talking regarding infrastructure since about 95% of the world is living next to a network. It’s exactly what I call accessibility, meaning can they actually use it in a way that is that makes sense, and in the best speeds, and so forth? Can they actually afford this? Do these people know how to make use of it in the first place? There is certainly no one answer in order to this problem. I looked over what India has been performing over the years. Plus I am deeply impressed because Indian has created that base level facilities on which, you can drive the following set of things. But the problem is making it accessible to all people.
Gupta: Given the GDP per capita of Of india, actually, the particular inclusiveness index of India has been higher upon tech–Covid had a lot to do with it. So, from an India standpoint, I’m a bit more enthused plus bit more optimistic about the path that has been traversed, especially in the last 2 to three years. I’m extremely hopeful that India will certainly provide the impetus to work on the particular rest of the electronic inclusion elements.
Just how often do you visit Indian?
Rastogi: We left Of india about two decades ago. But I perform have family here. And now obviously given I actually run our global business for TMT, I carry out come here intended for that, but then there was COVID that will hit the world. Yet I do come in from least a couple of times, two or three times a year. I took this (global) role over three years back. It’s already been fun, since I think I’m the particular first Native indian practice area lead globally and associated with Indian origin. It gives me a great vantage point.