There was a time when Western car manufacturers sneered at the quality of Japanese manufacturing. Fast forward twenty years, the US and UK car industries have been decimated and luxury Japanese car brands like Infiniti and Lexus have the last remaining high-end Western marques in their sights. Could a similar story be about to be played out by Indian System Integrators (SIs) in the IT outsourcing market or will they be surpassed by lower cost regions? Today some leading SIs are betting on software quality, as Japanese car manufacturers did in the sixties, to stay ahead.
Indian IT services players have grown into large concerns, moving from the lowest price option to top tier suppliers who regularly win highly-competitive bids for Western European IT projects. This growth, tipped to be over 16% this year, has not been without its pain. As demand grew, wages in Bangalore and Hyderabad have risen and the very success of Indian outsourcers has caused ‘employee churn’, as workers move between firms for better wages. The net effect of this is to increase costs, potentially making Indian IT skills uncompetitive.
Now, with global reliance on software greater than ever and the market shares of Indian firms at all-time highs, some of the new Indian outsourcing giants, including, Tata Consulting Services (TCS) are adding a more powerful reason to use them – unbeatable software quality. Quality, as well as value, as the Japanese car manufacturers proved, is the only way to create sustainable competitive advantage over the long term.
Until recently, the issue was how to measure the quality of creative engineering objectively. Recent advances in Software Analysis and Measurement mean that structural quality, i.e. how well the software is written, is not only possible, but with automation, cost-effective.
Needing to justify outsourcing decisions and potential internal job losses, end user organisations were the first to deploy Software Analysis and Measurement. The goal was to set the correct standard and reject poor quality work and so minimise the risk of expensive rework. They wanted to ensure they minimised their ‘technical debt’ as well as reduced IT costs, by checking that code they were paying Indian firms for was being delivered to the agreed standard.
One such user, the European Medicines Agency, with its annual external software development budget of some €15million, stood to gain a lot from such a policy. It chose CAST’s Application Intelligence Platform to act as its ’quality gate’. The executive in charge, Hans-Georg Wagner, explained why: “As a CIO, CAST gives you a way of independently understanding if you are getting value for money and where more savings can be found.”
More recently, such technology is being used to strongly differentiate IT services providers – something Indian outsourcers such as HCL and Tata Consulting Services (TCS) have embraced. They use the technology in two ways. Firstly, to make sure they are bidding correctly and efficiently on IT project tenders by understanding the structural quality of the software they take on. Secondly, in a move echoing the quality movement which half a century ago swept through the car industry, they now offer transparent guarantees of software quality, which clients could even check themselves using the same benchmarks.
Such ‘quality certification’ requires an investment in time, people and processes to ensure software is delivered to the standards expected. However, the enhanced customer service it offers is a strong barrier to entry for less-sophisticated bidders. CAST itself has moved senior personnel out to India in order to work in partnership with the leading Indian SIs. The pay-off will be felt by both premium-branded, high-quality Indian services providers and their customers. To consider an alternative approach, one only has to look at the UK car industry.