The tech services industry is slowing with lower growth estimates of 3% over the next 3 years, however the largest firms are still technology companies. While large development projects are declining, new areas like AI/ML are emerging. The nature of the industry has changed from large custom projects to standardized platforms and incremental development, reducing costs for businesses. Those adapting to new areas like products, specialized services, and new technologies will succeed, while others may struggle.

2. It may come as no shocker to tech firms across
the world. Tech services as an industry has been
slowing down. Large enterprises don’t seem to
be buying as frequently and fervently as before.
Smaller development projects seem to have
dried up. Growth estimates (Gartner Q1 2017)
to 2020 hint at a 3% CAGR over the next 3
years. At the same time, for the first time in
history, the 5 most valuable firms in the world
are technology companies. If the logic of stock
price being indicative of future earnings,
something seems to not add up!
Being someone who has been working with
clientele in the tech sector for over a decade,
right from the heyday years of 2006, I have had
the opportunity to be an insider in the most
opportune moments as well as the grimmest.
CAGRs of 10-12% seemed to be insufficient to
capture an entrepreneur’s imagination.
Now it’s at 3%.
Is there reason to be worried?
Yes and No.

3. Between 1995-05, a sizable
chunk of the business came
from large enterprise
development efforts with
large organizations starting to
implement technology in
infrastructure to be able to
add efficiencies in operations
and to be able to understand
their operations better. The
big names then were IBM,
Oracle and the like.
From 2005-10, the new
buzzword was cloud with
same big names and adding a
few more. Most organizations
were switching to a new
environment where
technology could be located
differently and accessed from
virtually anywhere. This took
some time to develop as
organizations started to learn
about safety and became
more open. Smaller
organizations jumped in as
now infrastructure costs and
setup was virtually eliminated.
In 2010, there was a tiny
revolution, albeit quiet – SaaS
(I have spoken about this
elsewhere too). This picked
up over time and exploded
the second consumption
switched to mobile devices
and security became a
manageable focus area for a
company. The ‘innovators’
and ‘early adopters’ started
pouring in. The World’s most
innovative wannabes.

4. In 2015, this further matured. With the
evolution of the SaaS business model,
companies now began to be able to deploy
solutions at virtually pennies on the dollar. A
new wave of organizations came swooping in.
The early majority. Very quickly, in under 2
years, the late majority jumped in, pulling in
the laggards as well as the new buzzword
became ‘innovation’. The Bigwigs of industry.
In 2017, this is undergoing an even bigger
transformation. Enter AI & ML. Essentially, if it’s
a problem that’s been solved before. Consider
it solved forever. Imagine self-repairing
software. Code that rights more code.
Doomsday conspiracies aside, this is going
shake things up.

5. While most tech service providers
found a new niche, a lot of the
infrastructure was being made leaner
and more potent. With the client-
server models giving way to service-
oriented-architecture, the billings
initially increase in terms of
development time, but start removing
redundancies in common
requirements across similar
organizations. Now development
effort was incurred once, but benefits
could be shared across the world to
every other organization. This removal
of duplication and redundancy led to
the creation of platforms and
development kits which could easily
be deployed, logic being if a problem
has been solved once, it’s been solved
forever.
With SaaS solutions on a SoA model,
now businesses could buy by picking
and choosing a ready solution and the
custom solution development was
reduced to incremental. This is the
reason that most new tech companies
are either or the 2 – Platform or
Incremental.
A dynamic tip over of balances.
Evidence, the enterprise market will
register 7% CAGR as compared with IT
services which will be looking at under
5% over the next 3 years.

6. If you are a pure services company or a company with run of the mill development strengths
(anchored on cost or labor arbitrage), by building great products, you may have shot ourselves in
the proverbial foot. Incremental development effort hardly brings in as much $$$ as new
development projects do. But it’s not all bad. While the nature of game has changed, the size of
the pie has increased. More and more organizations can afford and are letting in technology into
their businesses. There will be more development effort to come your way.

7. If you are product company or a services company with a defined focus (seeping through the
DNA of the organization) or in a new age technology specialization, you are set. This is the time
to make merry.
The world is now your oyster. It’s becoming easier for people to find you and for you to find
people. There can’t be a better time in history to exist. Your Innovators and Early Adopters are
weeks from each other if you have something worthwhile to give the world.

8. The Bad
Security to get all the
attention. More instances of
security breaches will emerge
as data has become the new
asset class worth more than
the cash flows of a company.
Debate. The debate of
technology taking away jobs
will take up a new heat as
large companies begin to let
go of teams in the advent of
better technology and AI/ML.
The Neutral
Skill-gaps. Education and
knowledge building in recent
technologies and newer
development methodologies.
Consolidations. Industry-wide
consolidation of enterprises
will lead to companies
merging strengths together
and capitalizing on higher
utilizations and lower costs.
The Good
User Vs. You. Businesses will
be keener about user SATs as
now individual users have
more choices and the cost of
switchover is low.
‘Level-ler’ playing field. You
don’t need to be a mammoth
100,000 work-force to deliver
a quality product. A 13-
member team at Slack
delivered a $B giant in under
18 months.

9. Let me quote some Dylan to explain thoughts on the right
conclusion:
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
For the times they are a-changin’
- Bob Dylan
Credits: The Times They Are A-Changin’

10. Disclaimer: The views expressed in this document are
solely that of the author based on his/ her
experiences. It is imperative that you and your
organization seek relevant professional expertise
before implementing the strategies to your business.