Ramifications of Scale in the 'High Growth' IT services industry

Certain high growth industries such as ‘IT Services industry’ have much higher growth rates than other mature industries and hence are faced with unique problems of rapidly scaling up the ‘delivery machinery’ to meet the growing demand in the market. This includes scaling up the factors of production applicable to IT services industry such as skilled people, infrastructure, Sales network, Alliances with partners, Logistics etc) in a shorter period of time compared with other industries.

I am listing down the different areas where higher growth rate poses challenges:

1.    Impact of  High Growth On Customer Satisfaction

        Increasing Scale due to growth often results in the reduction in the bandwidth of the top management for each of the individual customers and portfolios. The leadership team needs to be supplemented and the second layer of leadership enabled to interface with customers and empowered to address customer concerns so as to maintain the same levels of customer interfacing, same levels of issue resolution, same levels of customer response time etc as before.

2.    Impact of High Growth on Delivery Excellence

Delivery is the most important aspect of the business as it is the core competency around which the whole organization revolves and this is the main service offering to the customer. The quality of the deliverable is of utmost importance as the reputation and image of the company revolves around the end deliverable/offering to the customer. Increased scale of operations puts intense pressure on the delivery leadership team (both middle as well as senior levels) as the focus is dissipated and distributed among the various delivery programs. The delivery processes and methodologies may not be able to sustain the load of increased scale and may start creaking under pressure.

3.    Impact of High Growth on Operations Effectiveness

Improving operational effectiveness becomes important to scalability because small improvements in operations translate to large dollar amounts when compounded with scale.

4.    Impact of High Growth on Talent Management

Talent is the key to the success of any initiative in the IT industry where talent is the main input/raw material to all the processes. Managing talent in a high growth industry is always a major challenge. Growth is impeded due to unavailability of well trained, experienced and skilled talent on time. Recruiting new talent, enhancing the skills of the in-house talent and equipping and facilitating the talent to take on higher roles at a short notice are some of the key challenges

In my next blog I will talk about how each one of these challenges can be mitigated and successfully attacked.