The covid-19 pandemic has dispelled many long-standing myths. Two such myths that have been cast away in relation to the IT services include; a) the workforce force cannot work remotely and, b) the remote location cannot be outside the city where the office is located.
This has uncovered a paradigm shifting opportunity for the sector. Let me explain.
The pandemic outbreak and the ensuing lockdown caused a large part of the IT services workforce to leave the cities where they work and go back to their hometowns.
All of a sudden, the likes of a Bareilly, a Belgaum, a Bikaner, a Bilaspur, a Bokaro are abuzz with IT services work done in the safe confines of homes. IT services continued to deliver on its promise of an uninterrupted global delivery model without compromising on the health and safety of its workforce.
Firstly, it is important to recognise the role that the availability of Internet bandwidth and 4G network has played in facilitating the remote working options. Not more than a few years ago, the speed of Internet in the hinterland could not have been trusted for a video call. Now, thanks to the rapid proliferation of the telecom networks and the rampant usage of WhatsApp laden with video clips, the bandwidth in effect was ‘tested’ and ready for such an eventuality.
Secondly, it has presented IT services with a great opportunity to relook at their fixed real estate costs in tier one cities as well as the ever-increasing salary bills. Barring real time/mission critical or highly data sensitive delivery, most work can happen from virtually anywhere across the length and breadth of the country.
Here is how it can be implemented:
1. Industry associations such as NASSCOM can facilitate this by creating say 200-seater co-working spaces across 50 tier two and three towns, spread around the country which have been largely untouched by the IT revolution.
2. IT services companies can offer the employees an option, at a reduced salary level (in accordance with the cost of living), to work from their town of choice. Reduction in salaries will not be a great inconvenience for the workforce given the lower costs of living and reduced costs of travelling home. It may reduce the amount of loan a person can avail. But then again, the loan they would need in tier two or three town would be significantly lesser. In effect, the workforce should be better off.
3. The IT companies that sign up for the initiative can have an explicit agreement to not poach talent from each other within the same location. For example, a TCS cannot poach from an Infosys for Warangal from Warangal. These modalities can be worked out to ensure that the investments committed by the companies behind small workforce numbers in each city, work out.
This idea has some very obvious advantages:
A) Reversal of urban migration: this will lead to reduction of the heavy infrastructure load that all big cities carry (for example, Bengaluru and Mumbai), as well as quality development opportunity for the next 50 cities across India (for example, Hubli, Dharwad, Nashik).
B) Reduction of fixed costs: the real estate cost in tier one Indian cities is straining the bottom-line of many businesses without adding significant incremental value to the end produce. Not just in times like this when all costs are under microscopic scrutiny but also in other situations, businesses will like a lighter fixed-cost model.
C) Business continuity plans: natural calamities and political unrests in any large city can create a significant challenge in delivery. A nationwide spread of workforce will create remote pockets resilience and a robust business continuity planning, which will be appreciated by large global customers.
There are some other softer benefits like IT services folks can be closer to their parents and be of assistance through sickness and old age. If successful, this model will also set a template for future growth across all industries. People may just discover higher standards of living outside the humdrum of the metros.
There cannot be a better time for the government to implement this game-changing idea to bring rapid development and opportunities closer to ‘Bharat’. While the government can push it from one side, companies or industry associations like NASSCOM can also take the lead.
The quantum of the workforce across IT services and captives (global inhouse centres) easily justifies the not so significant effort required for this implementation. This indeed can be a paradigm shift for not just the services industry but also for India.
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