I read this article on S&B advice for CEO on how to prepare for difficult times....Let me relate this to some of the IT firms that mushroomed all over India:
1. Acquire captive units of clients whos operations are sub-optimal...just as you note they are 10-20% more expensive then running thorugh a boutique offshoring company
2. Shop for acquisitions...but dont do an AXON one plz....
3. Screw your employees as they are 80% of the operation cost for IT companies..they have nowhere else to go! (Apologies for being rude but I think it is more effective to use strong words)
a.Put them in any project any technology...throw them into the first available project....if they dont survive fire them
b. If your employees ask for change or roll off from engagement lower their performance rating
c. reduce their salaries
4. Anyways IT companies are cash rich and dont need long-term debt (well corporate Financiers will disagree) so we can raise funds on carry huge assets on balance sheets that needs recapitalization (hopefully the operating leases are not revised here)...so use all the cash and diversify into other businesses (for example I know one few large corporates in India going into "Green" business :-)...
5. Take more forward covers and currency options....well you anyway lose them due to volatility...no doubt the currency futres in India is shining like a Star...
6. Invest in Innovation...good for integrated players..what about Pure IT services companies! Just buy more companies in the market to provide integrated services....diversifying into products is not a bad idea after all...
7 Take more risks and bid agressively for deals with lower margins...something is better than nothing...
Any other views!
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