Tuesday, April 25, 2006

a ‘Made in India' software product?

Indian IT industry is going places. But when will the world see a ‘Made in India' software product?

Some days back, in an interview, a head of a software company said with a hint of pride that his company was as old as MNCs like Oracle, Microsoft and SAP. And that his company, during its incubation period, also made products that were similar to those made by the US IT giants. I was quite impressed by the statistics and was happy to know that our own IT companies were peers of the global majors—at least in age if not in turnover and product offerings. But the more I thought about it, the more I wanted to know where our IT firms went wrong and why they lost out in the race to dominate the global software product market.

I scanned a few articles on the Net, talked to my peers and seniors. The answers were too predictable: lack of technical knowledge, limited financial resources, lack of creative environment in companies and so on. But even as I tried to understand the interplay of factors that could have directly or indirectly undermined the growth of Indian IT firms, one thing struck me strongly. And from my perspective, I could see that lack of market for software products in India was responsible for the slow growth of the IT industry during the incubation phase.

Put simply, software is created to solve problems. But most of the time, these problems stem from sources generally outside the IT industry. If we look into the history of software giants like SAP, Oracle and Adobe, we would find that they came into existence to solve some business related problems. In the next stage, they ramped up their technical knowledge to create newer domains and technologies. Most of the RDMS or ERP firms owe their existence to companies in verticals like automobile, telecom, banking and aviation. These companies needed IT tools for better inventory management, customer relations, data gathering and analyses. And the software companies came to their rescue, producing a range of products over a couple of decades. These products were the result of collaborative efforts between different teams that worked with a common goal and vision.

Many of these software product companies in the US and Europe were born in the 1970s and 1980s. At that time, India was still struggling with challenges like poverty, lack of education, laggard industrial growth, dearth of technological resources and shortage of manpower. Software was the last thing that crossed the minds of our policy makers. India missed the industrial revolution bus of the 1970s. So software companies in India did not get the opportunities to provide solutions to the kind of problems that beset industries in the US and Europe. The academia of that time was totally out of synch with the software revolution happening in the IT centres of the world. Even in the IITs, computer engineering was not a regular course. So as a cumulative effect, technology development was never given the priority status that it deserved.

Today, though India's software service industry offers a wide range of offerings and services, it still lacks product development capabilities. Many of the IT companies have crossed the $1bn-mark. This is much more than the turnover of small product companies like Macromedia (now acquired by Adobe systems) and Liquid Machines (acquired by Microsoft), and comparable to companies like BEA. But still we are not seeing much happening in the arena of innovation. One problem is that our companies are too big and the revenue per employee is very low compared to product companies abroad. As a result, areas like R&D get neglected for want of financial resources. The few companies that do sink capital in technology development expect a quick return on investment which is generally not possible in product development. The educational system is hardly keeping pace with the technological advancements. It is not surprising that we hardly see the presence of Indian companies in global technological meets. Leave aside creating new technology, I am not sure how many companies actually work on cutting edge technologies like AJAX, XForms, Storage Services and Web Services.

At the same time there are some positive developments too. Over the past few years, niche Indian companies have come up in the horizon. A company like Hungama is already active in the mobile gaming area. To inculcate the idea of innovation we have to undergo a change in the thought process. Rather than thinking from a shorter perspective, the software companies should invest in future. The developers should be given constant training on newer trends in IT industry. If we want to make a mark in the global software arena, we need to become software innovators. And for that to happen, we need to develop an education system that not only nurtures creativity and innovation but also incorporates software development in the curriculum.

The article was written for Business World India by Yugal Joshi, a software professional


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