The Hindu Business Line : Software cos fail to make a dent in home turf

IT is not merely the attraction of dollar revenues from the US market that seems to be taking the sheen off the domestic IT market for Indian software product companies.

A mix of factors, such as fixation for foreign IT products, delay in payments and painfully long sales cycles, is making it difficult for Indian software product firms to clinch sales deals in home turf, which is slated to grow anywhere between 24-26 per cent this year.

"Generally, Indian customers do not have confidence in Indian products. We, as a country, still think overseas products are better and it is true in the case of technology buyers as well," Mr Subash Menon, President and CEO of Subex, says.

Agrees Mr Anil Bakht, Chairman and Managing Director, Eastern Software Systems (ESS), which focuses largely on the Indian market. "At times, technical employees at Indian user companies prefer working on a foreign product as it enhances their profile, compared to working on a lesser known Indian product."

Interestingly, fear of reprisal too seems to drive an IT buyer's preference. Mr Bakht said, "If an established foreign ERP product failed to meet the user's objective, few would blame the person who chose the product." Not so, if product were Indian.

But, that fear seems misplaced. According to Mr Menon, "Buying software is not like buying a consumable item. There is scope for conducting due diligence and for testing the software. Taking an informed decision is possible."

Mr Menon said that it was different in countries such as Sweden where the market supported local products. "Local proximity becomes very important, and a local vendor not only understands the needs better but also provides better support," he pointed out. Further, Indian companies typically delay making a decision in the hope that that would drive down the price. Mr Menon added, "A buyer once kept delaying a purchase decision in order to bring the price down, without realising that it also affected his productivity and increased his cost of business," he added.

Mr Bakht confirms the length of the sales cycle in India is 2.5 to 3 times that of US, but attributes it to the early stage of technology absorption in India.

Mr Sunil Mehta, Vice-President, Nasscom, feels that it's only a matter of time before things heat up here. "Most obstacles that product vendors face in India are true for any evolving software market. It's not India-specific."

Also, large Indian IT user companies prefer to develop their own software as each buyer feels that his requirement is unique, he says.

Mr Ashank Desai, Chairman, Mastek Ltd, says that a crowded seller base is the IT seller's nemesis in India. The market is too small with global players adding to the crowd.

"So, long sales cycles are not a reflection of an IT buyer's incompetence." He added that not me-too-products, but niche applications alone could survive.

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