Playing catch up with commoditization

by Ashvini on April 25, 2011 · 2 comments

in My Personal Thoughts

Technology evolves at extreme ruthless pace. What is useful in existence today is going to be replaced tomorrow.

Al Ries talks about loss of usefulness in his book “The rise of PR”. He mentions that whatever thing loses its usefulness becomes an art. Some ( or many) years back horses were used to draw the carts. They were replaced by engines forever. Washing was done by hand by mostly women. Now anyone with a washing machine can be master drycleaner.

Think about your job. How fast it will become art? How long will you be needed? How long will it be before “machines take over”. Even if you want to be in a job what will make you tick? What will stop slowly inching doomsday of commoditization.

Processes were commoditized, sliced and moved to countries such as India and Philippines. It is called here as BPO, KPO and all other O’s. Glamorous names you say but still it is commoditized work looking for cheaper places.¬† Soon this work will move from India and Philippines to much cheaper countries.

Commoditization is now happening in IT services. There are thousands of programmers well versed in latest technologies. Definitely the good ones are scarce but if you slice the problem/solution right and commoditize it, anyone can do the required coding.

The money in commoditization is in the scale. If you have 100k people you can handle 1k project while if you have 200k people you can handle 2k projects.

However , commoditization can never create  solutions. It can only work that has been handed over to it. With time customers will look for solutions that help them in their business. If you are in commodity business, it will be very difficult to make the leap and move into solutions design. So it is a good time for both IT companies and their employees to start developing some differentiation than just being a commodity provider.

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{ 2 comments… read them below or add one }

Veronica Cervera October 31, 2011 at 6:35 am

Everything is slowly becoming capital intensive. This is okay, I suppose. I just hope it does not affect innovation in the long run. If we go back to history, successful companies like Apple and Microsoft and Facebook did not do things this way. They focused on the product first, even before they thought about being a company. Success and fortune just came in as a result. And that’s why these companies were able to innovate.


Aswain April 26, 2011 at 11:33 am

Very harsh reality. But anyways, nothing comes at a price. Commoditization doesn’t look good but I believe it has become a necessity today. One of the major things to consider here is the cost. It has to controlled finally. But anyways, I agree. Customers finally seek solutions instead of being made to live with commodity full life.


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