Financial Daily from THE HINDU group of publications
Tuesday, Dec 17, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 17, 2002 |
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Info-Tech
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Interview `Cos lack market focus' L.N. Revathy
COIMBATORE, Dec. 16 INDIA has established a niche in software service exports, rather than on the export of software products. This is perceptibly clear from the National Association of Software and Services Companies (Nasscom) listings with 800 companies in the software services space as against 50 firms engaged in software products. According to Nasscom, the revenue from software service exports touched a high of Rs 26,850 crore in 2001-02, while the product exports stood at Rs 1,500 crore only. The reason for the poor response to product making, according to Mr Vishnu Dusad, Managing Director, Nucleus Software Exports, was that the Indian companies lacked focus on particular market segments preventing them from `fabricating' the knowledge gained from various projects into mission critical and innovative solutions. Nucleus Software Solutions Pvt Ltd — in the consultancy and financial services space — has four wholly owned subsidiaries in Singapore, US, Japan and Australia, besides a branch office in London and development centres in India and Singapore. Apart from an array of IT services, the company offers a series of software products particularly on the retail banking front. Excerpts from an e-mail interview: The reason for very few companies taking to software product making? The service route is definitely easy when it comes to investment and order standpoint. Here again, most Indian software companies compete on lower cost to win projects. The lack of focus on any one particular market, in understanding technologies for building the product and evolving innovative solutions across the value chain to remain on top has hindered our progress in the software product making space. Companies relied heavily on the US and in the aftermath of the September 11 attack, these companies have started to record a downturn in their fortunes because of the industrial slowdown in. What in your opinion are the key success factors for a product company? A thorough understanding of the market requirements, area specific approaches and above all the ability to team up with local partners to create a distinct brand identity in each market/area is imperative. Considering the strengths and weaknesses of the domestic players, do you think the Indian companies should look at building products only or services as well? The key would be to ensure domain specialisation, which would help the domestic companies move up the value chain. The market for services will always be there, but the key drivers for success are domain knowledge coupled with technology expertise based on market expectations. Why have the Indian software product companies failed to emerge as prominent as their service counterparts? While revenue is related linear growth in manpower in an IT service company, the product company is not constrained by such relationship. Its revenues can grow geometrically or even exponentially compared to its manpower growth. A product driven solution is much more attractive than developing the same solution through a specific project. The customer's investment is well protected since technological changes are taken care off by upgrades. Comprehensive, customised, user-friendly products can be made. What about the revenues? The cost of a product driven solution is much more attractive than developing the same solution through a specific project.
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