Indian Software Services Industry: The Changing Landscape SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Indian Software Services Industry: The Changing Landscape
Set in 2015, the case describes the evolution of the Indian software services industry from being a supplier of software professionals for onsite projects in the 1990s to becoming an innovation partner of enterprises embracing digital transformation in recent years. The $132 billion industry has become the preferred destination for Information Technology and Business Process Management outsourcing needs of global clients as also the largest private sector employer in India. In the mid-2000s, the widely acclaimed Global Delivery Model pioneered by the Indian software services firms not only enabled them to grow exponentially but also forced a change in strategy of global software services firms such as IBM and Accenture. To match the operating costs of Indian software services firms, the global firms were forced to adopt an offshore-centric operating model and set up large centers in India. The period ensuing the global financial crisis in 2008 saw two significant developments: a reordering of industry leadership among firms, and digital technologies gaining traction. This emergence and integration of digital technologies has implications for delivery cycles, pricing models, customer expectations, and the competitive scenario, among others. The case draws attention to a discussion of these issues. The case comprises three broad sections. The first section discusses the industry's evolution after India's economic liberalization in 1991 and the Y2K opportunity that provided a fillip to the industry's growth. The second section describes the global delivery model of Indian software services firms, its impact on global software majors, and evolution of the competitive landscape amid the global financial crisis in 2008. The third section describes the actions of various firms with the advent of digital technologies, and briefly discusses the opportunities and challenges for incumbent firms.
Swot Analysis of "Indian Software Services Industry: The Changing Landscape" written by J Ramachandran, Ramya Krishna Murthy, Pranav Garg includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Software Firms facing as an external strategic factors. Some of the topics covered in Indian Software Services Industry: The Changing Landscape case study are - Strategic Management Strategies, Competitive strategy, International business and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Indian Software Services Industry: The Changing Landscape casestudy better are - – wage bills are increasing, geopolitical disruptions, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China,
digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Indian Software Services Industry: The Changing Landscape
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Indian Software Services Industry: The Changing Landscape case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Software Firms, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Software Firms operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Indian Software Services Industry: The Changing Landscape can be done for the following purposes –
1. Strategic planning using facts provided in Indian Software Services Industry: The Changing Landscape case study
2. Improving business portfolio management of Software Firms
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Software Firms
Strengths Indian Software Services Industry: The Changing Landscape | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Software Firms in Indian Software Services Industry: The Changing Landscape Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Software Firms in the sector have low bargaining power. Indian Software Services Industry: The Changing Landscape has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Software Firms to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Software Firms digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Software Firms has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy in the Indian Software Services Industry: The Changing Landscape Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Software Firms has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Software Firms to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Software Firms are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Software Firms in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Software Firms
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Software Firms does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Software Firms has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Indian Software Services Industry: The Changing Landscape Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Learning organization
- Software Firms is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Software Firms is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Indian Software Services Industry: The Changing Landscape Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Software Firms is present in almost all the verticals within the industry. This has provided firm in Indian Software Services Industry: The Changing Landscape case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Software Firms has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Indian Software Services Industry: The Changing Landscape - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Software Firms is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by J Ramachandran, Ramya Krishna Murthy, Pranav Garg can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Indian Software Services Industry: The Changing Landscape | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indian Software Services Industry: The Changing Landscape are -
Aligning sales with marketing
– It come across in the case study Indian Software Services Industry: The Changing Landscape that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Indian Software Services Industry: The Changing Landscape can leverage the sales team experience to cultivate customer relationships as Software Firms is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Software Firms, firm in the HBR case study Indian Software Services Industry: The Changing Landscape needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Software Firms has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Indian Software Services Industry: The Changing Landscape should strive to include more intangible value offerings along with its core products and services.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Software Firms supply chain. Even after few cautionary changes mentioned in the HBR case study - Indian Software Services Industry: The Changing Landscape, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Software Firms vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Software Firms has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Software Firms has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, J Ramachandran, Ramya Krishna Murthy, Pranav Garg suggests that, Software Firms is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Indian Software Services Industry: The Changing Landscape, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Indian Software Services Industry: The Changing Landscape HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Software Firms has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Indian Software Services Industry: The Changing Landscape, is just above the industry average. Software Firms needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Software Firms needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Indian Software Services Industry: The Changing Landscape | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Indian Software Services Industry: The Changing Landscape are -
Manufacturing automation
– Software Firms can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Software Firms to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Software Firms has opened avenues for new revenue streams for the organization in the industry. This can help Software Firms to build a more holistic ecosystem as suggested in the Indian Software Services Industry: The Changing Landscape case study. Software Firms can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Software Firms can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Software Firms can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Software Firms can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Software Firms can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Software Firms can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Software Firms can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Software Firms can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Indian Software Services Industry: The Changing Landscape suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Software Firms to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Software Firms to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Software Firms to increase its market reach. Software Firms will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Software Firms in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Software Firms can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Indian Software Services Industry: The Changing Landscape External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Indian Software Services Industry: The Changing Landscape are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Software Firms.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Software Firms will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Software Firms in the Strategy & Execution sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Software Firms needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Software Firms in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Software Firms can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Software Firms is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Software Firms has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Software Firms needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Software Firms high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Indian Software Services Industry: The Changing Landscape, Software Firms may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Stagnating economy with rate increase
– Software Firms can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Software Firms business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Indian Software Services Industry: The Changing Landscape Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Indian Software Services Industry: The Changing Landscape needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Indian Software Services Industry: The Changing Landscape is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Indian Software Services Industry: The Changing Landscape is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Indian Software Services Industry: The Changing Landscape is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Software Firms needs to make to build a sustainable competitive advantage.
