My wife and I are like the service industry, particularly the arbitrage-based talent service industry – maturing rapidly. These days, while we think about how we’re moving into our golden years with the prospect of being surrounded by loved ones and hopefully grandchildren, I think the prospect for the service industry is quite different. Sure, our income slows as we age. But we’re aging gracefully, and my wife seems to get sweeter every year. But I feel the prospect for the service industry is different.
There is no doubt that, as the service industry matures, there are some very unpleasant aspects. We see profit margins being squeezed, particularly as they face the difficult challenges of shifting to different business models, driven by digital and automation. We’re seeing signs that the Indian service providers that have been flexible and highly attentive are now displaying less-pleasant attributes. Facing slowing growth and shrinking margins, they are pushing back on their clients and adopting some of the less-savory attributes of their more mature cousins, the MNCs. Their behaviors remind of a line in the Dylan Thomas poem – “Rage, rage against the dying of the light.”
I think all industries struggle when they start to mature. But automation technologies will have a huge impact on the service industry and force it into a different service model. My wife and I in old age face less vigor and a series of challenges. But we view this period in our lives similar to lines in a Robert Browning poem: “Grow old along with me! The best is yet to be ….”
So is the best yet to come in services? The industry’s challenges are substantial, and it remains to be seen whether, like a butterfly, the industry can go into a cocoon and come out as a different business model. That is what we hope for. However, any kind of metamorphosis is painful and difficult. That level of metamorphosis is not done easily, and we now see the early stages of the industry wrestling with this challenge.
I think the twin forces of markets maturing and disruptive technologies forcing changes point to a turbulent and painful few years ahead.