Over the years, one has been talking about how innovation is becoming critical to the IT-BPO industry. Research, in fact, has conclusively shown that the Indian IT-BPO sector can beef up its export revenues by at least USD 10 billion by 2012, by taking the unbeaten path and embracing innovation. Interestingly, Indian IT companies are already on this path. Many have increased their focus on R&D and are focusing on creating products and services that open up fresh revenue streams for them. Unlike the past, when innovation had more to do with performance improvement, today, it is about building IP that can actually cause tangible impact on the profitability of organisations.

Q1 How important is it to bring innovation into the product portfolio for IT-BPOs?
Q2 Is greater R&D an answer for all companies hoping to harness innovation to enhance revenues? What kind of percentage allocation should companies have for the same?

1. The IT-BPO industry has demonstrated operational effectiveness (doing things better) and as an industry, established its credentials in the area of best practices, efficiency and low cost. However, these alone are not sustainable strategic differentiators. We have enough instances of competition in the form of China and Philippines trying to play catch up using a similar value proposition.

   Changing world dynamics is necessitating the need for the ability to proactively deliver value of a higher order of magnitude. The only way that can be achieved is by pre-empting and understanding the needs of the customer, and innovating to deliver the extra value. What will set the Indian IT-BPO industry apart in the long run will be its capability to innovate arrest new stuff, apply it and create value.

   At Impetus, we believe ‘innovate or perish’ has to be the mantra for success. Furthermore, academic innovations, while definitely required at a fundamental level, may not lead to revenue generation. Instead, we need to innovate keeping the customer in mind, which will lead to revenue generating ideas. It is therefore critical for IT-BPOs to understand the market and the mindset of the customer, and create incremental or revolutionary innovations that will serve user needs and add value to their overall user experience.

2. R&D has, for long, been the differentiating element creating avenues and means for better and higher value delivery. How much R&D is a function of the market, customers, and the overall context of an organisation. Just scaling up of R&D investments might not be the best solution for all situations, rather, smarter R&D, applied and applicable R&D, makes a lot of sense. Also, R&D is as much a central function, as it is the responsibility of every employee. It is important to build such a mindset within companies.

Praveen Kankariya, CEO, Impetus Technologies Inc.

1. At Zoho Corp, we see innovation as the best way for sustained growth. Back in 1996, we started off with Web NMS, a network management platform for telecom OEMs. In 2002-03, we customised Web NMS for enterprises by building ManageEngine OpManager. The ManageEngine brand now has more than 25 products, catering to an enterprise’s various needs. Again in 2005, we branched off with our SAAS offerings – Zoho.com. Zoho.com now has over 20 services and has garnered recognition worldwide.

   Other than these innovations at the product level, we also have process innovations like the Zoho University, (selected as a finalist in NASSCOM’s Innovation Awards 2009).

   Many students belonging to the lower economic rung of the society discontinue their education after finishing higher secondary. This is the talent we are tapping at the school-leaving level through the campus recruitment process. We teach/train them in our in-house ‘University’ and make them our employees once they finish their training programme.

2. R&D and innovation go hand-in-hand. We do believe all companies should invest in R&D, as it will help them in thelong run. How much should they invest in R&D is a matter that companies will have to decide individually.

Aravind Natarajan, Zoho Corp

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