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Dr Ashish Malik

Newcastle Business School

University of Newcastle

20 November 2012

Connecting work

design and regional

ecosystems: fostering

innovation in high-

technology firms

December 20, 2012

2012 SEGRA CONFERENCE, TERRIGAL, CENTRAL COAST, NSW.

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Presentation overview

• Background

• Context

• Problems

• Opportunities

• Findings

• Implications

December 20, 2012


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India’s IT Industry: A snapshot

• Revenues have increased 15 times since 1989 and has reached to about

US$ 73 billion in 2010.

• Contribution to India’s GDP has grown by 5 times to 6% during the 1998-

2010 period

• Till date the sector has generated direct employment of 2.3 million. Indirect

employment is estimated to be at 8.2 million.

• Broadly, the sector can be grouped into three sub-segments:

– ITHM (IT hardware manufacturing)- small % (0.8%) of the total

revenues

– ITSS (IT software services, including product and R&D development)-

close to 74.5%, of which product development is less than a quarter

– ITeS/BPO (IT-enabled business process outsourcing services)- close to

24.7% and is the fastest growing sector

• Less than 1% of the total firms in the sector constitute 60% of the revenues.

• Concerns over sustainability are emerging- nature of work and the changing

macro environment

• Concerns over low product development (about 20% of the overall revenues)

Innovations….high-tech versus low-tech

• Inverting the business model

• Late CK Prahalad’s approach: Wealth at the bottom of the pyramid

• Context-specific

• Overt versus covert models in high technology industries

• Resource-constrained versus resource-rich

• Barriers and opportunities

December 20, 2012

A presentation to company name | www.newcastle.edu.au

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Background

• India in context

– 64, Innovation Efficiency 1.1

• India as context

– Low overall product /process patent registrations

– High on process, product and business model innovations using

indigenous approaches- Jugaad in the low-end businesses

• Paradoxical findings in the high-end technology sectors:

– Extremely low product innovation performance in the IT industry.

– Yet, different forms of (invisible) innovations noted in the IT industry

• Business model innovation- GDM

• Process innovation

• Outsourcing innovation- R&D on demand

(Kumar & Puranam, 2012)

Assumptions and Questions

Assumption :

The nature and extent of strategic choice affecting innovation can be severely

curtailed or enhanced depending on the leeway people, firms, and its networks

have based on their cultural and institutional contexts.

Questions

• What affects a firm’s innovative capacity?

• Why do some firms invest more than others in key organisational

capabilities?

• How do service providers in the Indian IT industry manage learning from its

external regional and global innovation system?

• What are the key barriers and opportunities?

Research Methodology

Follows a multi-case embedded case design (Eisenhardt, 1989; Yin, 2003) Present paper focuses two business lines from each of the four ITeS/BPO case

organisations Data collection sources: non-participant observation; records and documents;

and semi-structured interviews Begins with a preliminary conceptual framework for ease of within and cross-

case analysis (Yin, 2003; Miles & Huberman, 1994) Main informants include: CEOs, HR, Training, Quality, business development,

and project managers and employees. A total of 41 informants from the above groups were interviewed. Interviews ranged from 60-120 minutes.

Pattern matching and analytic explanation building techniques used. Using a

priori and a posteriori approaches, matrices and explanatory maps developed for analysis.

Purposive maximum variation sampling was employed. Use of case study protocol for enhancing reliability Use of a preliminary framework and review of case study reports by

participating organisations increased validity of the findings

Case organisations Description Organisation A Organisation B Organisation C Organisation D

Enterprise size (December, 2005)

26,000+ employees. About 250 employees. Nearly 50 core employees in India and an outsourced

vendor model of about 550

staff in different cities in

India.

1500+, of which, 900 employees are in BPO

service lines; the rest (600)

are in high-value added IT

networking services.

Enterprise size

(December,

2008) and expansion details

37,500+ employees.

Upbeat on future

expansion. New client accounts and

business lines

added. Additional markets and service

portfolio expanded

since 2005.

450+ employees. Main growth

coming from new service lines

from its UK-based parent. Service portfolio nearly

doubled in volume. A range of

services were added in mid 2006 in the real estate vertical.

No information on employee

numbers because following

the departure of key senior management, its operations

were sold to a small venture

capitalist.

No information on employee

numbers as Organisation D is

now a new legal entity. It has leased its BPO business line

in mid-2006 to another

provider for a period of 10 years. High-value networking

services are retained.

Location visited Gurgaon Gurgaon New Delhi Mumbai

Ownership Multinational UK Joint-venture Indian Indian

Industries served Seven industries,

multiple countries.

Telecommunication and Real

Estate for UK firms.

Hospitals, SMEs in the US. F&A, Insurance, and

Telecom.

Key Services Customer care, finance and accounts

(F&A), insurance,

and market analytics.

Customer care and F&A.

Medical Transcription (MT) & F&A.

IT networking, knowledge process outsourcing and call

centres.

Competitive strategy Highly

differentiated services.

Slightly differentiated. Mass-service and slightly

differentiated

Slightly differentiated.

Enterprise age Established in 1997

as captive.

Established in 2004 as third

party.

Established in 2000. Established in early 1990.

Quality management capability

Team of 200+ Six Sigma black belts.

Strong TQM and

Lean Six Sigma culture.

Small but growing quality management team and

capabilities. Six Sigma and

COPC certification.

Six Sigma staff & quality staff (QAs) monitor MT

work from vendors. No QAs

in F&A service line.

Centralised and decentralised team of quality managers.

December 20, 2012

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Table 2: Analysis of work design, training practices and organisational capabilities

Practice/

Capability

Organisation

A

Organisation B Organisation C Organisation D

Type of learning Formal and

informal;

technical and

behavioural

Formal and

informal; Mostly

technical

Formal and technical Formal and informal;

technical and

behavioural

Investment in learning and

development

Very high,

including a

focus on

career

development

Medium and need-

based investment in

skills. Limited

investment in career

paths

Very minimal as most

service delivery was

outsourced

Medium to low levels of

investment in learning

and development

Work design Mostly

Taylorist with

some service

lines allowing

task

discretion

All Taylorist and

excessive control

and monitoring

orientation

High control and

monitoring work

orientation

High control and

monitoring for low-end

contracts and low control

and high flexibility for

complex services

Client specifications and

flexibility

High High and Medium High and Low High and Medium

Market orientation

-Sensing

-Disseminating

-Response

H

H

H

M-H

M

H

M-H

H

H

H

H

M

Learning orientation

-Commitment

-Open-mindedness

-Shared vision

H

H

H

H

M

M

M-L

M-L

M-L

M

H

M

Quality management

capability

-Commitment to quality

-Continuous improvement

-Information sharing

H

H

H

M

H

M

M

M

H

M

H

M

Quality management

systems (Activity

description)

Strong

infrastructure.

Centralised as

well as

decentralised

structures Six

Sigma, ISO,

Lean Six

Sigma

culture).

Evolving quality

management

infrastructure (Six

Sigma and COPC

certification).

90% of core staff tasked

for quality monitoring

for MT work received

from its outsourced

network. No quality

resources for the F&A

business.

Well-developed teams of

centralised and

decentralised quality

managers.(ISO, CMM

and Six Sigma

infratsrcutures exist)

Types of innovations Business

model,

process and

product

innovations

Process innovations Business Model Process and product

innovations

H=High, M=Medium, L=Low, M-L=Medium to Low, M-H= Medium to High

December 20, 2012


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Organisation A

Work design

Our solutioning strategy is that we understand customers’ needs and then see

what solutions we might provide, whilst also keeping in mind our resources and

capabilities. Not as if one size fits everyone.…We have a very strong solutioning

team there upfront. So what happens is that when a business comes up and

says I am running this problem, at that time when we do the solutions

architecturing that might lead to some changes in the processes at their end,

their training, thinking, methodologies, and deliveries.

Process innovations

So, we recreated the form. We advised the client of the new design and

suggested that if you change the design in such a manner, we would be able to

address a very big problem at our end. … Identify how can we improve the

process and advise our client about the process improvement. Based on our

advice, the client changed the process, and then, we make the necessary

changes to the process. In the last year, we would have given close to about 245

ideas on process improvements.

December 20, 2012


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Organisation A Quality Management Capabilities

• See identifying a new idea is done by people in quality, they then break it

down into smaller parts and bring about process improvements, once this is

done then it becomes the responsibility of the trainers to make sure this

knowledge is disseminated. So, actually, training is an integral part of

operations. Project Manager- Insurance

• We have to constantly look at better ways of improving our information

gathering tools from the shopfloor level using methodologies such as Six

Sigma and Lean Six Sigma. Project Manager – Finance and Accounts

• There was a time when we only developed metrics and measured defects,

but now we have developed metrics around quality of our deliverables.

Which, by the way I know that there is not a single training vendor around

the world that has attempted to develop metrics or the quality of the

deliverable…. Having done so, we won so many awards last year. I haven’t

come across such a structure or metric in any other organisation. Very

shortly we will be putting an IP [Intellectual Property] application for it.

Project Manager- Content Solutions

December 20, 2012


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Organisation A Learning Capability

• Typically we want to challenge things only when we are drafting something

new for our customers. This happens only when we are designing the

solutions architecture for our customers. At the build-up stage, people who

are involved are solutioning and functional guys, including operations and

business development.

• …one way we challenge people…, what’s stopping you from developing

something new…. Then the customers come back and say, no no.. this

doesn’t work for us. So, they have the fire burning inside them to excel and

go back to the customer with better solutions, they are constantly speaking

to our customers and showing them something that is at a higher level. The

customers too, get interested as they get to work on a higher level and the

benefits of upskilling are huge.

December 20, 2012


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Organisation B Work Design

• Predominantly control oriented- “One word that can capture the essence of

business process outsourcing work is control.”

Nature of Contracts: Client Specifications

• …in terms of products we really cannot do much about it as the agent goes to the

manager and discusses his problem but at the end of the day if the client is not willing to

change the product offering we cannot do much as we are only providing the services.

Quality Management Capabilities

At times the client does not have an idea of what the specifications should be so we

contribute from our own standards, that this is what people have requested us and this how

it has to be done. This happens at the service level agreements stage with the clients….If

the client has a very haphazard way of dealing with its accounts then we try and streamline it

with the use of this application/ tool…. We provide them with the reengineered processes, it

may be very similar to their current process, but certain aspects in the boxes in the flowchart

may differ, or it can be a completely redesigned and reengineered process, so yes some

suggestions are made. Then again the client may implement this right then or may do it later.

December 20, 2012


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Organisation C Work Design and resourcing

• See, there’s a concept which we call–a mosquito. You’re living in this room

for the last five years, and you know that there is a mosquito; you will never

try to kill that mosquito because you have a habit of living with that mosquito.

But let’s suppose if you ask a new person to come in this room, he will have

a 1000 ways to kill that mosquito. So if a person you are hiring is raw, or

from a different industry, he’ll have more ideas and there will be more

thoughts on how to improve to the process, rather than the person who is

working on that particular process. It is a human habit that we’re used to

malfunction,….But the person who is going to coming from outside will

definitely know how this can be changed.

Small and agile: Effective external hiring

• Earlier what we are doing is we were manually punching the data in the system. But

one of the team members from this team designed a macro in Excel, which actually

asks when the data has been received from a client in Excel Format. So …they have

designed a template which can be uploaded into the software, so earlier it was a six

hour job, but now it is a six minute job. So, these three people are continuously looking

at areas for improvement and challenging it.

December 20, 2012


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Organisation D Client specifications

• For example, if you see our US process, 100% focus is on the script

because that’s what is provided by the client. If you see a UK process we

have some generic training. So, that really depends on the client’s

involvement. Some clients [US-based] may be very specific, this is the kind if

training and some clients may not be that stringent on the kind of training

which we give. It really depends on the client. …some clients they don’t

come in and they are not that much involved.

Global Network

• We don’t have the data to probably compare statistically …Oil companies have a lot of

human right violation issues, or are involved in corruption. Probably, intuitively you can

say that …but we don’t have data to support. … Suppose I am looking at the telecom

companies based out of Scandinavia, and I see that the company has somebody who

has covered the structure details and has found out that Nortel’s data points are very

awkward, how are telecom companies in Scandanavia structured? Either Nortel is a

different company or there is something seriously wrong with this analysis. That drives

us to look further as to what is wrong. It is trying to get in the shoes of an analyst and try

to think ….Those kinds of issues emerge. That takes a little bit of time.

Critical to building innovative capacity is a bundling of organisational

design choices:

- Work design is critical but not a sufficient condition

- Training and a learning culture is extremely vital

- How firms make choices for developing their learning and training

infrastructures is important

- A related and often less considered area is the additional

capabilities firms develop to sense external information and

operationalise it in their service delivery

Innovations in a geography is extremely context-specific and is influenced

by numerous socio-political influences

Access and ability to change the mindset of your network partners and

clients is most important- colliding of multiple contexts in a regional,

national and global network of provision

Conclusion

December 20, 2012


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India’s IT Industry: A snapshot

• Revenues have increased 15 times since 1989 and has reached to about

US$ 73 billion in 2010.

• Contribution to India’s GDP has grown by 5 times to 6% during the 1998-

2010 period

• To date the sector has generated direct employment of 2.3 million. Indirect

employment is estimated to be at 8.2 million.

• The sector can be broadly group into three sub-segments:

– ITHM (IT hardware manufacturing)- small % (0.8%) of the total

revenues

– ITSS (IT software services, including product and R&D development)-

close to 74.5%

– ITeS/BPO (IT-enabled business process outsourcing services)- close to

24.7% and is the fastest growing sector

• Less than 1% of the total firms in the sector constitute 60% of the revenues.

• Concerns over sustainability are emerging- nature of work and the changing

macro environment

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