Why Information Technology Companies are Soft Targets?

Why Information Technology Companies are Soft Targets?

As per NASSCOM Strategic Review 2006 figures:

·IT-ITES sector is estimated to grow by 28%, to account for 4.8% of GDP in FY06

·Employment in software and services sector to touch 1,287,000

·Software and service exports to grow by 32%, to reach USD 23.4 billion

·Total IT Software and services employment to reach 1,287,000 in FY06

The Big 4

·Rapid volume growth; clients continued to ramp up engagement sizes with leading
vendors. The top 4 players alone have over 660 USD 1 million + clients,
up from 441 in FY 2003-04 

·The Reserves of the Big 4 as on March 2005 Balance Sheet are 

o Infosys- Rs. Cr 5,106.44

o TCS- Rs. Cr 3,273.04

o Satyam- Rs. Cr 3,153.17

o Wipro- Rs. Cr 3,461.04 (Mar 2004)

· Geographical distribution of India's IT business is extremely uneven.
For instance, of the total exports of computer software and
electronics hardware,the South alone accounts for over 50 percent

·ITES contributes 4% of GDP – expected to reach 7% by 2008

·ITES has created additional 1150000 employment opportunities indirectly in
tertiary industries.Industries such as hospitality, construction,
 transport (specially airline) have seen a surge in demand.

 With such a huge economic dependency without any security arrangements is an
 easy grab for terrorist plot

·A base location of any of these 4 companies hosts more than 1500 associates.

· Let’s talk of the security in these companies. Most of the IT companies when
they present to Fortune 500 clients they showcase elaborate security
mechanism with Robust Business Continuity Plans, but that’s on paper.
All security is outsourced and unarmed security, who will greet & frisk
 all workers and visitors.Check for base and dickey of the cars.
What is the point; this is an eye wash security.
Since no one is armed its just a cakewalk for an armed Terrorist. 

·  Can you imagine the terror that can be caused if all Big 4 locations which
hold more than 1000 software workers are held hostage by collaboration of
different terrorist’s organizations? They might ask for minimum ransom that
could start with Cash Reserves, a sum over 12,000 Crores. I am aware this
money is not just lying on platter but it can be a negotiation figure to
start with. Motives like Freeing their fundamentalist leaders are also
possible.
Remember for a hostage situation a closed catchment area is an
ideal control habitat. 

·  Do these companies have any policy in place for hostage situation?
Incase they don’t, just as we have seen the Kandahar episode,
With a dozen news channels, sensationalizing News everyday,
imagine the emotional blackmail the country will
undergo, when these channels beaming mercy cries from families of the hostages.
Will the Corporate Inc. Succumb to pressure?

· Can the Indian IT companies afford a terrorist hostage which could last for
months? Will India be looked as a safe destination for the Fortune 500 for
outsourcing and consulting? 

·If there is an intelligent economist minded terrorist, you know where he is
going to strike.

·Impacts of 9/11 Attacks on Airline Industry (The Airline Industry Since 9/11:
Overview of Recovery and Challenges Ahead -Dr. Peter P. Belobaba at MIT Global
 Airline Industry Program Washington, DC - March 26, 2002)

Most North American and European airlines reduced capacity and staffing almost
immediately:

· 80,000 layoffs by US airlines alone

· February US airline capacity down by 13% from previous year

· Traffic has “rebounded”, but still 11% lower than in February 2001

·US airlines posted 2001 net losses of $7+ billion.

Post such a calamity in India, The Demand may also be slow to rebound; a chain of negativism:

· With greater focus on Operations, timely deliverables may be affected,
with Increased “hassle” a increased customer ill will result in reduced demand, 

· Client speculation, price sensitivity and purchasing patterns may also be changing

· Revenues & profits will be slow to recover, particularly for new entrants

·Longer Background checks will result in slower Resource Ramp-up directly affecting
Business Model.

· Higher Investment in Relationship building and longer sales gestation periods. 

· The Indian Big 4 will be more affected due to its regional dependency compared to the
Consulting Giants - Accenture, BearingPoint, CapGemini, Ernst&Young ,
Deloitte&Touche ,KPMG & PricewaterhouseCoopers.

Way ahead

· Indian IT giants, who acclaim themselves as best in Global Industry,
 must be proactive rather than Indian government reactive responses like
we saw at Kandahar.

· I have no comments about how proactive the Police and Intelligence Bureau are.
 But we are aware of the proactive nature of the Indian IT Industry.  
Just like we have an Insurance policy that might help us whenever
the D-Day comes, similarly we need IT co.s investing in Security measures
 by outsourcing these to Private Armed security or Police, CRPF etc.
which are cost centric, can move towards a Revenue Model. 

· Greater focus on using Information Technology to cater to security issues.
Creating a vigil culture within the organization is essential.
There is a rich pool of strategic thinkers retired from Indian Armed Forces
available.

· Remember the U.S. Transportation Security Administration (TSA) learns from
Israel's national carrier Al El that hasn't suffered a hijacking since 1968.

· The point is clear; investment cost in the above is miniscule compared to
 Hostage Situation and Post D-Day.Above all workplace must remain a
 nurturing “atman” and not a war zone with fear.