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Our Bureau

Mumbai , Feb. 17

INDIAN software service companies will have to figure out a way to compete beyond process and quality competence and low wages to take on the challenge from multinational vendors and keep their growth rates and margins intact, according to Mr Michael A. Cusumano, Distinguished Professor, Massachusetts Institute of Technology's Sloan School of Management.

Addressing a keynote session at the Nasscom Leadership Summit, 2006, he said there were fundamentally two options open to Indian software companies to thrive. One is to employ a hybrid business model, which uses a combination of products, tools, frameworks and components to bring in greater productivity gain. And two, to find ways to create differentiated services that have greater focus on services R&D and building a better brand to keep their revenue realisations high.

Using global product companies as a case study, he said, there was a tremendous shift in the business landscape towards hybrid business models which focus on a mix of both products and services. In 2004, out of 170 companies, over 100 had a hybrid model, with 35-85 per cent contribution spread between products and services.

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