Monday, 13 January 2014

Froggie Tale

They say that if you put a frog into a pot of boiling water, 
it will leap out right away to escape the danger.

But, if you put a frog in a pot that is filled with water that is cool and pleasant, and then you gradually heat it until it starts boiling, the frog will not become aware of the threat until it is too late.
The frog's survival instincts are geared towards detecting sudden changes not slow 
changes. 

This parable is often used to illustrate how humans also have to be careful to watch slowly changing trends in the environment, not just the sudden changes. It's a warning to keep us paying attention not just to obvious threats but to more slowly developing ones. The alert ones survive to spawn elsewhere.

A correspondent from India sees the water warming in the IT services world:- Read it here 

Further comment: 
In an outsourcing and consulting industry context this is an interesting and apposite tale as it underscores what has been happening for some time now. Changes started with Open Source and Plug & Play kit. Users also became more familiar with IT and can do more for themselves. Then Google, Amazon, Paypal, and others turned up the heat and sold solutions direct to businesses.
Thus the old consulting and Outsourcing models were being replaced by cheaper easier to fit and maintainable solutions. This will explain why IT outsourcers and consultants are having a hard time of it particularly in the commercial sector. The government sector being different because they need more hand holding, generally have less able people working for them, and are slow to adopt new methods. The post is focused on India but this shift includes all other countries. The trouble for CSC and similar companies is that moving to the new world requires capital investment in new skills and infrastructures and new business models and cultures, while keeping the old business running. CSC is buying new companies which are partly in the New World and they will provide some growth. But in  general  CSC seems to be unable to come up with the right models or transition to them fast enough. Thus CSC continues to be in decline as evidenced by revenue reducing and missed targets. In the past CSC had cash-cows like UK's NHS and US Federal contracts to keep it going. These are; as reported in earlier posts, 'drying up'. 
The continuing revenue decline hurts many of those involved especially employees, many of whom could be frogs. Will they be leaping from this pot?

Ribbit, ribbit

1 comment:

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