Why India’s IT industry needs to shift to products from services
The Bengaluru Tech Summit panel deliberated on challenges holding the IT industry back and agrees that India needs to develop its product ecosystem.
India may be a global leader in the IT services space, but it’s yet to prove its mettle in the product space. The Indian Software Products Industry Index, a B2B report released by industry think-tank iSPIRIT in 2015, stated that the combined valuation of the top 30 software product companies crosses just about $10 billion in valuation.
That doesn’t begin to compare with the country’s top-class IT and services landscape.
So what is holding India back? A panel comprising the founders of three product companies deliberated on this at the Bengaluru Tech Summit on November 16.
What’s attractive about being a product company?
Srinivas Rao, Co-founder and CEO of Indian IT risk management company Aujas Networks, stated that there are two top reasons. He said product companies have higher valuations than services, and that, in more mature markets like the US, with established players, a strong product can help catch the fancy of the Fortune 500 companies and get them to the table.
But the going is not easy.
Vinay Shenoy, Managing Director of semiconductor solutions company Infineon Technologies, highlighted bigger challenges for product companies, including a longer gestation period and tough pricing competition from existing behemoths (like Huawei).
But the experts were unanimous that product companies need to be customer-centric.
Rahul Goyal, Vice President, Intuit, said the customer must be at the core for product companies.
“How we see it is that how will a product benefit a customer. It is essential to fall in love with the problem or pain point and go on to solve it,” he said.
According to the India Brand Equity Foundation, the Indian IT and ITeS industry is divided into four major segments – IT services, Business Process Management (BPM), software products and engineering services, and hardware.
The internet industry in India is likely to double to reach US$ 250 billion by 2020, growing to 7.5 per cent of gross domestic product (GDP). A report by National Association of Software and Services Companies (NASSCOM) says the number of internet users in India is expected to reach 730 million by 2020, supported by fast adoption of digital technology.
But where is the talent?
Being in the security and analytics space, Srinivas said there are multiple gaps in the market. He listed them down, stating:
- Being in a niche space, it is difficult to find talent that understands security with the same fluency as analytics.
- There aren't a lot of people good at product management overall.
- Talent, which can make a great UI experience, is lacking.
For Rahul, the biggest skill missing in the Indian ecosystem to make great products is “courage.”
He said, “The scenario is gradually changing, but the fact remains that to build great products you need to have the courage to fail.”
Vinay offered a different take on the matter. He said that there is no shortage of talent in the country, adding, “The bigger question is whether there is any motivation for this group to build products, and leave their cushy 9-to-5 jobs.”
However, the panel unanimously agreed that the skillsets for product and entrepreneurship are almost the same.
Is jugaad a deterrent?
An audience member had a poser for the panel: “Isn’t Indian jugaad all about putting things together somehow and pushing products to the market?”
Is this jugaad attitude working as a deterrent?
Vinay said the problem lies in the mentality.
“Today there is no alternative in academics. If a final year student wants to pursue the project he's worked on, his institute should support the kid and give him/her access to their infrastructure until it's developed enough to venture out.”
Changing the services mindset
Rahul said: “Everyone needs to think one level deeper about the skilling problem. We need to ask ourselves: are we training folks to build entrepreneurial mindsets?”
Srinivas added that one also needs to think about the viability of products.
“There are not too many global product success stories from India. It’s not just about building great products, but also being able to monetise them,” he said.
So, when we look globally, what is India lacking when it comes to product thinking?
Rahul stated that rather than being stuck on just building great products, India should also focus on building core technologies and disruptions, which might become core to other products, globally.
The product ecosystem in India may seem to be maturing, but it’s important to deal with the services mindset, which seems embedded in the country’s DNA.
Ending on a positive note, the panel said the necessary building tools and resources have never been more democratised.
Rahul added that the foundation to make India a services and IT economy was laid way back in the eighties. That was due to education, highly valued in our societal system, and which helped during the IT boom.
“It takes a rudder to change the direction of a ship. With respect to India becoming a product nation, we are at the rudder stage,” Rahul concluded.