The Hindu Business Line : Sam Santosh, Managing Director and CEO, Calsoft; VIT Business School

Mr Sam Santosh, Managing Director and CEO, Calsoft, addressing students of the VIT Business School. Others on the dais are (from left) Dr K.T. Rangamani, Associate Dean, VIT Business School; Dr D. P. Kothari, Vice-Chancellor; and Dr Anand A. Samuel, Pro-Vice-Chancellor and Dean of the Business School.

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Chennai, Oct. 28 In a vote of confidence for the IT sector, Mr Sam Santosh, Managing Director and CEO, Calsoft, has encouraged students to associate themselves with software development firms and service providers at the higher end of the value chain.

He was addressing students of the VIT Business School as part of the BL Club lecture series. Mr Santosh, an engineer and management graduate from the Indian Institute of Management, Kolkata, said that IT talent continued to be in high demand in the IT firms.

He said the future belonged to the product development firms that could identify individual customers instead of competing for a share of a saturated market.

Mr Santosh agreed with industry experts who felt that there was a need for Indian software services firms to move up the value chain.

Organisations were now assessing their status based on their product-to-services revenue. The thrust towards product development was evident from the fact that direct employment in this field alone was expected to reach two million, with the net value-added by this sector estimated at 3-3.9 per cent, according to Nasscom sources.

With the country losing its labour cost advantage, product companies at the higher end of the value chain held promise for the future. They could expect higher margins since competitors were few and revenues from products added directly to the bottomline even considering the costs of developing software products.

Tangible business

In a paradigm shift, global corporations now viewed India as a nation that could deliver tangible business benefits to their enterprises. The industry should also focus on IT consulting in order to grow in scale and size.

Although Indian IT firms had set high standards in software development, they still had to gain recognition by innovating next-generation tools, languages, technology concepts, and standards.

“IT firms like ours climb up the value chain mainly by excelling in our specialised domains through thought leadership and being evangelists for emerging technologies. We have to focus on creating the right partnerships with the market leaders in various domains to strengthen our positioning in the ecosystem,” said Mr Santosh.

He added that the industry hoped to achieve $60 billion in software and services exports for the financial year 2010 and $73-75 billion in overall software and services revenues.

Forming proactive partnerships with universities in both curriculum development and basic and applied research could benefit Indian IT firms.

The IT industry’s partnership with Indian universities should extend beyond writing case studies or training students by providing software and packaged curriculum for specific projects that might serve the company on a short-term basis, but does not prepare future professionals to become knowledge leaders. Indian firms must be proactive and partner with universities not only in IT curriculum and applied research, but also focus on getting involved with local universities in technology creation. Only a few firms that have actively partnered with universities have R&D capabilities to create technology, concept and process capabilities to become knowledge leaders.