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Thought Leaders in Outsourcing: Interview with David DeWolf, CEO of 3Pillar Global (Part 6)

Posted on Wednesday, Nov 20th 2013

Sramana Mitra: Based on what we have discussed so far, what trends are you observing and aligning yourself with?

David DeWolf: The biggest trends we are looking at are the trends of what traditional industries are doing. As we look at product development services, what we are noticing is that more and more traditional industries – services companies in the financial sector, in the media, or in healthcare – are becoming software companies. Fundamentally, these companies don’t know how to be software companies because it is not their core business. But it is rapidly becoming essential for their business, and they require help. They are looking for a partner to outsource innovation to. That is one of the core trends – making sure we stay in touch with those industries that tend to innovate faster than other industries.

We see that with a lot of content and data-rich industries. We talked about the media industries for quite a bit. Information services is another one. Education is one that is in the very early phases. You see a lot of venture capital money being thrown into education. Has it matured to the point of media, where the economics of the industry have been totally disrupted? It has not. But what is fascinating is to look at the dynamics of what is going on now, compare them to the digital media revolution that occurred 15 years ago in the media sector, and see similar components taking place. You can project out that this same total disruption of a sector that turns the economics on its head is happening. We look at trends like that and at some of the disruptions taking place, and we see great opportunities for us.

SM: I think you are absolutely right. Education is going to get itself into a bit of a precarious position in the next 20 years. It is also very exciting. Some of the changes are going to be very positive and interesting, but there are worries in the industry that it can become nonviable, just like the media industry has become nonviable.

DD: That is right. If you look at the value proposition, there are not many industries you can point to. In fact, education may be the only one you could, where the service that is provided has become increasingly commoditized. Today it is normal to have a bachelor’s degree. It is not unique or differentiated. That is very much commoditized, and its value has gone down and continues to go down in the marketplace. Employers are saying over and over again that graduates are not prepared for the workplace. Yet despite this commoditization, the price is going up, and it is simply not sustainable. That is the precarious position you are talking about.

What is happening right now is that a lot of people are throwing money at technology problems. What will eventually happen is that it will stop being about the technology or the delivery mechanism, and the entire system will be reinvented. Once that is done, it is at that point that the technology will really snap into place and enable the new ecosystem that has been created. That is where not just the incremental investment in this space will take place, but the exponential investment. That is what we believe is coming down the road.

SM: I agree with most of what you said, except that I think the big trend is that for universities and colleges that have a differentiated brand, in that whenever you see a resume from a certain school, it says something. Those classes of schools are going to do fine. Below that is where the commoditization is going to happen, and it is going to become difficult to sustain the business model of the industry.

DD: I think that is an interesting point. If you look at what is happening at those universities with brand names, what you are finding is what the leaders of all industries do when an industry gets to this phase do. If you don’t disrupt, you will be disrupted. So you see the Stanfords of the world embracing alternative learning mechanisms. They are actually forcing the disruption.

If you look historically, the value that has been driven from those top brand names has really been the network. It was the education for a while, but now it is more and more the network you are pulled into. Now that they realize they are differentiating less and less, they are embracing this total disruption that is coming. I think that is what will make them stand out in the future as the leaders of the past. This is an example of the type of innovation that is taking place, where universities are experimenting to figure out what steps to take. I think there are some fundamental business problems with MOOCs [massive online open courses], for example. That doesn’t mean MOOCs can’t be an impetus for a change that evolves into something else.

This segment is part 6 in the series : Thought Leaders in Outsourcing: Interview with David DeWolf, CEO of 3Pillar Global
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