Product Company Vs Services Company
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Product Company Vs Services Company

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Systems Softwaer ...
After having worked both in Services and Product companies I thought of sharing my thoughts and views about the major differences between them. Well, how and where do I start? I've divided my views into various sections which I will be explaining briefly in this blog. My intention is not to conclude that one industry is better compared to the other. Both are equally good and both are needed for the growth of Indian economy. I am just putting down the key areas/points where the difference lies.

1. Work culture: The main difference between a services and a product company lies in the work culture. Most of the people who quit Services companies and join Product companies can not cope up with the culture of a product company and vice versa. Product companies work for years keeping one technology/product in mind. Believe it or not I worked for the same project for more than three years with my previous employer (a leading technology company). My peers who joined earlier to me are still with the same product. In Service companies, most of the projects have their life tenure in a matter of months. Rarely does they span for years.

Product companies work for developing new technologies and products. So the employees need not be looking formal and obedient to any of the customers as most of them hardly interact with their customers. In Services companies the scene is completely different. People are enforced to be dressed formally (which I call as School Uniform). Some companies even fine their employees for not wearing uniforms if they forget to do even for a single day.

2. People assets: People in product companies work in more collaborative mode. Hardly do they show the difference of experiences. Employees are encouraged to mailalk to higher management

echnicians regarding various issues they come across. I don't say that this is not the situation with Services companies. Most of the services companies follow a hierarchy. People are not allowed to directly talk to customers/ clients. Their mails and queries are to be routed through “proper channels”. Where as, in product companies there are no such barriers for information flow. They believe in loss of information if routed through a number of ears and mouths. Better always have a direct connection between source and target.

The other aspect of product companies is they believe people are one of the major assets. Loosing an employee from a product company will be a great loss to the firm. For a new employee to build the expertise in the product, it will take lots of time. So, product companies encourage the employees for policies like rotations where in an employee after having spent a considerable time in a particular product/project can opt for a change in the same company. On the other hand loosing an employee does hardly affect a services company. The main reason being the employees need only programming skills to execute the work. They hardly need to build any product expertise.

3. Targets: Where do the targets come from and how are they formulized? Well, consider a services company winning a project from a client out of a tough competition from other players. One of the major things they commit to the client is quicker delivery over other players. How do they do it? They levy quicker deliverables from the end programmers who eventually have to slog for days and nights in their closed cubes which they believe is the only universe fighting with the code and bugs. Of course after the successful completion of the project the team is taken out for a mouth watering lunch at a 5-starred/business hotel.

Product companies hardly ever deliver their products in the committed timeline. But still how does it work for them? It’s just because that the share of market they are aiming at will still be with them. If you make your product competitive enough with products from other companies, you have your market reserved for you. If you are confident that your product is feature rich and if you can publicize your product properly, you can win more and more share of the market.

4. CMM level: Capability Mature Model. Wait, I'm not going to talk about this boring concept of software engineering which I hope you would all be aware of. Services companies ensure that they are level 5 certified at their early stages of establishment itself. What does it mean to them? Services companies show this as a great achievement to the clients while going for the bidding of projects. I don’t say that this is a flaw with Services Company. But how many projects do really follow this after having achieved to this level?

When it comes to the product companies, one thing they think of is why at all we need a certification by an external organization as long as we know we are producing/developing new products

echnologies which are creating/winning markets for us. Well I heard that one of the major OS producing organizations (which I ever hated) is still at CMM level 3. But it doesn't have any impact on its business.

5. Ways to measure individual performance: Employees in Services companies are measured on the amount of work they do, the responsibilities they take and the client's happiness with the project execution. The more you slog, the quicker you get your promotion, the extra pennies you are paid as performer of the month/project, the decent hikes you get. People never think of whether these are the real ways to measure a person's capabilities.

In product companies you slog for days and go to your manager saying I've slogged for n days to get the code work. The only answer you get is "It is the basic thing that you are expected to do as a part of the team to complete given work in time". Of course there is a potential problem that sometimes you are treated as below average for having spent more time to complete the work. Obviously you should have given the effort estimation properly before committing to your manager. So, what is that needed to get noticed in a product company? It’s the extra things that you do apart from the execution of your work. Patents, Disclosures, White papers, domain expertise, helping customers, online forums you are subscribed to and the list goes on.

This is where most of the people feel the itch when they move from a services company to a product company. Your peers will be working more efficiently than you yet proving their expertise by doing the so called extra activities. I've seen people going back to the services companies as they can not with stand the extra pressure in product companies.

6. Responsibilities: I always used to wonder how my class mates have become Team leads/ Module leads with in 2-3 years of joining a services company while I was still an engineer in a product company. Services companies employ lots of fresh engineering graduates and Science students as engineers. It doesn't require a well experienced supervisor to handle them. So, people having a little considerable experience are promoted to manage them. Also, the current IT trends in India are forcing the services companies to promote them early else they will have to loose the man power. When it comes to the product companies, the number of years you've spent doesn't at all matter when compared to the domain expertise you've attained. There will be people around you in a product company working with more experience in the domain and still as level 2 or level 3 engineers. So, a low level engineer has to wait for his turn.

In service companies people hardly know about the other paths of growth in their career. They blindly think that management is the only path in front of them. Product companies have various options like technical path and program management. Service companies too have these paths, but not clearly defined or not many do know the paths of growth.

7. Interview: There is a lot of difference between how a candidate is interviewed for a service company compared to that of a product company. The only way Service Company looks at a candidate attending an interview is whether he can fit into any of the requirements of the company. 99% of the times, candidates are not interviewed by the team he has to go into. 50-60% of the candidates will have to learn/switch to new technologies. Don’t mind, I had to switch from embedded systems to SharePoint Server. Also, the package offered to the candidate is not based on the skills of the candidate. They blindly offer them based on the stringent rules formed by the organization.

The way an interview is done in a product company will be quite amazing. Suppose if your team has a requirement, your team members get to do the interview and analyze if the candidate fits the requirement. If so, send him for a management interview to be done by your team's manager. And then finally comes the HR part. Based on the candidate's skill and the budget allotted to your project and of course the company standards the offer is made to the candidate. Product companies never compromise on the skill set.

8. Job switches: Have you ever wondered why people in service companies keep switching jobs? It is because of several reasons. May be because of you get a similar work, better pay, good travel opportunities, and so on. Suppose if you are in a services company and have worked in .Net technologies for over years. If you are offered a better position, better pay and goodies like a travel opportunity do you ever think of sticking back to your current employer? You will try to get as many offers as possible in hand and choose best among them.

Suppose if you are in a product company working on a die hard technology for which no other company in this universe is working on. Will you be ever interested to move out of your current job? Even if there are a few players around doing the same technology, you will think a lot before taking the step. I've hardly seen people who moved out of a technology company to other and getting a similar work. Mostly you will have to loose either your domain

echnology. You are not guaranteed to get the exact same work else where. So people are reluctant to move out of product companies.

9. Values: Suppose there is a new project from a big company. Service companies usually go with their tender for the project saying that they have so many experienced people readily available to execute the work. But in fact the company announces a mass recruitment for the technology in parallel to the bid. They don’t even care if the candidates are really experienced in the so and so technologies. What they look is only for the number of resources. Have you ever wondered how many people are being trained on Mainframes or SAP or any other major technologies in Ameerpet, Hyderabad? Have you ever guessed where all these people are going to? Also never wonder if you get to see an add saying "Experienced administrators of Windows Server 2008 are needed in bulk" by a services company posting an ad in 2007 itself.

10. Money: I agree that the whole world rotates around Money and not the Sun. So, how does it vary from a services company to a product company? The Indian Services majors who are now generating revenues of a few billion dollars are having employee strength close to a million. Where as the product

echnology majors are around 100 billion dollar players having close to a million employee strength. So, as per the simple elementary class math calculations, people in a product company are blessed to be paid more compared to the services companies.

Hold on, but why lots of Indian youth are willing to join services companies compared to the product companies? The reasons that I found are donkey work which doesn't require brains and lots of travel opportunities. Let’s compare a guy being paid 15 lacs pa in a product company and is put in India to an equally experienced guy being paid 6 lacs pa in a services company and is put up in US. The guy in Services Company is being paid both in India as well being paid in US if he is sent on a short visit. So obviously the guy in a services company earns more compared to the one in a product company.

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