Is the transition of white collar IT jobs to manufacturing factories complete?

         Those of us who have worked in a steel factory would remember the familiar scenes at the beginning of the factory shifts. Thousands of factory workers entering the factory premises within few minutes, the security personnel checking everyone has a helmet, gate pass before allowing them in. There would be a bigger rush at the time of shift end when people would be more eager to come out faster. So are these sights also getting familiar at the glass façade IT companies with white collar workers? Well there are no sirens yet to denote the shift end or beginning and some companies do have flexi-timing!

It is not coincidental that many IT companies have started using the term ‘factory’ more often – solution factory, SAP factory, design factory, test factory etc. etc. By factory they mean, they have industrialized the function, just like assembly line in a manufacturing industry. They can scale it to large volumes without impacting the quality. So they relate ‘factory’ to maturity of process and the ones they have demystified to repeatable work by defining the standard processes. They do capacity planning & demand management like manufacturing companies – count people as inventories instead. The non-utilized resources are considered highly perishable inventories.

          But those who left the dust and heat of the factories to get into a glass covered fancy world of IT – the term ‘factory’ my not be all that fascinating. In fact it could be derogatory. It reduces a professional to a non-descript somewhat as bad as, if not worse than mechanical processes. It takes away the creativity and innovations. It forces one to adhere to the processes defined for efficiency and effectiveness rather than any lateral thinking. Few would argue that a larger number of people in Indian IT industry do not work in these factories.

WHY DO IT COMPANIES CREATE THE FACTORIES?

           The main reason behind these factories is efficiency and scale at low cost. It adds to the execution capability of the organization. Some of the facilities are dedicated /captive to specific client teams – what is generally called offshore development centers. This whole concept was supposed to be a game changer in IT industry few years back. The traditional work of application maintenance (and some development) can be best offshored in this model. It was started by pure play Indian IT companies and global MNC companies caught up even faster. In fact the MNC IT companies use Indian development capabilities predominantly in this factory model.

           There are already various reports signifying that the offshoring based traditional IT work might be saturating for various reasons. The factories become commodity as they fast replicate and the margin reduces as the industry catches up. So the meteoric growth in the Indian IT industry fueled by this ‘factory’ model may well be things of the past.

 Are the IT factories bad for employees?

               There are two kinds of workforce essentially in IT – those who like to change a business and those who like to run with it. There could be of course small proportion of people who are indifferent or like both. Those who like to change the business – they like ambiguity, space to exercise their creativity, excitement of doing something new. They are ok with the risk associated but the idea of doing something with predictable output & result is anathema to them. So the caution is for the people with “change the business” mindset getting caught into these factories which are disguised by fancy names at times. The other way misfit is equally worse – though it could be more challenging than suffocating.

                Many IT companies have acknowledged this difference explicitly by separating the two types of work – change & run. Some call the change function as consulting, advisory or program or engagement management functions. They have separated the P&L, annual budgets, responsibilities and skill requirements of people performing these activities. The change function requires client problem solving, domain knowledge and consulting. The aspirations for all IT companies would continue to be strengthening the capabilities on ‘change’ function.

HOW THESE FACTORIES WILL ADAPT THEMSELVES

               The widespread usage of the factories only indicates that the Indian IT like manufacturing industry is maturing. The period of super-growth will slowly transition to sustainable and eventually the growth rate corresponding to the country GDP growth. There will always be a need for these factories to do things at scale in a cost effective way. But the key to sustainable growth will be to have something like an ‘R&D’ centers in the manufacturing companies. The execution capability per se will not be viable – it would be the problem solving and business adaptation capability for the client that would the key. So the factories will sustain/grow only if they add a strong consulting capability for the client context.