Page 150 - DMGT522_SERVICES MANAGEMENT

Unit 7: Delivering Services on the Web

It has been an accepted fact that technology would shorten business process, remove repetitious Notes
work done by human hands and – with rising wages – lower the cost of production and
transactions. Post-liberalisation, there has been more inclination to adopt technology strategically
by Indian firms. There are other controllable and non-controllable factors that go on to dampen
the total effect, like the increased hiring of subordinate staff in Indian banks, although there has
been a marked decline in the strength of officers and clerical staff. In spite of the scale of
adoption, there has been relatively little research to date, in India, on mapping the effectiveness
of the strategic shift or its impact on competitiveness. There has been no correlation found
between investments in IT in services and productivity and profitability. In fact, coinage of the
term “information technology paradox” arose from the inexplicably slower growth in service
productivity when compared to manufacturing with equivalent investments in IT.

Note Tata Consultancy Services uses its technology for Knowledge Management (KM)
which helps in their quality analysis and proposals for their clients.
Some of the reasons for information technology not having the desired impact on services are:

Wasteful and inefficient use of IT: It was being used to automate inefficient systems and
processes without any corrective measures on the systems. There was no guarantee that
competent people were handling the IT systems. In the India context, it was illustrated by
the classic case of PSUs going in for IT without upgrading people’s capabilities.
Lagged effect: The positive effects of IT, if any, were taking time to be effective.
Outdated methods of productivity measurement: Current methodologies of measurement
were not reliable for services where its unique characteristics make it a challenge for
quality assessments.
Impact of other problems: IT may be only one of the factors affecting service productivity.
Level of aggregation: Effectiveness of IT should be viewed in isolation to any department,
but in relation to the service firm as a whole.
The socialists were strident in their criticisms that technology adoption by the management was
only a ruse to avoid being accountable to stakeholders, and there is a need for more research in
this area—to study the trend and its impact on competitiveness. This unit analyses trends in
technology adoption in the service sector by global and Indian firms and investigates their
effectiveness and impact on their respective competitiveness. The intention is to highlight the
following:
The erstwhile attitude and perception of the Indian labour, management and the bureaucrats
on technology adoption

Technology as a ‘Viagra’ for productivity and competitiveness
The paradigm shift of PSU stakeholders with regard to the utility of technology
Technology as the final equaliser for Indian firms in global competitiveness
Dangers of ‘over-expectation’ from technology.
The reasons for the adoption of technology by the service industry are many and varied:
Expanding or preserving market share, market presence and market size: These are accepted
performance measures and benchmarks for a service firm’s power which can be leveraged
in supply negotiations.
Lowering or avoiding risks or alternative costs: High technology makes many judgments
more accurate and service better.

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