Waiting to dance

Raja Simhan T.E.

TEST your memory: in five seconds, try and jot down the names of the first five software products that come to your mind. Hold on to your answers for the next two paragraphs.

At a recent seminar, S. Sriraman of SilkRoute Indchem Ltd, a Chennai-based venture capital firm, set a similar task for his 50-odd audience, mostly from the IT field. He came up with the same result as you probably did. Most who replied had the answer: Baan, SAP, Microsoft's Windows and Office, Adobe and Lotus. No one in the audience could recall a single Indian software product. Did you come up with a similar list?

This, despite there being over 1,000 individual Indian software products and product variants present in the domestic market.

Indian software exports during the last fiscal year ending March 31, 2001, were over $6 billion, up from $4 billion the previous year. However, says Sriraman, in this ``phenomenal'' growth, the Indian software products account for a minuscule share of the total revenue. ``There are hardly any success stories of Indian products abroad,'' he says.

New wine in old bottle

That sounds like stale news. It's been repeated over and over at numerous fora, all right. And, the fact that all of us have to climb the ``value chain'' is also old hat. But what is news is that not too many Indian companies have taken steps on moving up. Many have talked about wanting to become global companies. Few indicate that the direction that they would take would be towards first-class global products. Is it a case of self-doubt, or is it the hard realism that mature companies show?

Cycle times

The reasons for the dismal performance of Indian software products are many, says Sriraman.

For instance, Indian software product companies talk about a longer product cycle time of 18-20 months, while internationally, the average cycle time is less than 12 months. ``The longer the product development cycle, the greater the marketing cost,'' he says.

A major reason for the lacklustre presence of Indian products abroad is lack of marketing initiatives and a poor brand-building exercise by Indian firms, he says.

Interestingly, in the mid-nineties, one reason that companies gave for not marketing products outside India was: no financial muscle. That is no longer an excuse now. At the time of the boom, many companies either raked in and stacked up cash or tapped the capital markets.

IPR and legal issues

Intellectual property rights (IPR) continues to worry buyers abroad of Indian software products.

If an Indian company tries to enter the US market with a software product, a buyer raises questions such as:

Where is the product licensed, in India or in the US?;

What happens if the product fails to deliver the desired results?

What if the whole system crashes thanks to the product? Whom do I take to task then?

Further, buyers, especially after the dotcom bust, now want to know whether the Indian firm has a local presence for easy communication, and also for pursuing legal battles with the local firm, in case of any dispute, he says.

Indian companies should be prepared to answer such questions, and need to do their homework before entering the US market, which is very sensitive, he says.

Recalls Sriraman, ``I was at the receiving end once, when I tried to market a product developed by a start-up firm, in which we have invested. Without doing any homework on the local market, we tried to market the product. However, when the buyers raised all the above questions, we had no answers and had to return empty-handed.''

Change in mindset must

Says Sankaran P. Raghunathan, Chairman, Blueshift India Private Ltd, for Indian products to be successful abroad, especially in the US, they have to be made for that market. This requires a strong understanding of the needs of the target market. Developers cannot acquire a deep understanding of a market, its culture and its consumer behaviour by being in India. They need to be there, to design a product for that market. Development can be done in India, though. This is one high-cost decision, he says.

Further, before a product can be sold in the US, the companies need to test the market in India. This calls for significant investment. For instance, for a software product priced at $30, the test-marketing costs could exceed $1 million.

``Unfortunately, our domestic market does not provide a base for our developers to fix bugs, in case of any faults, before the product hits the international market. Attempting to test and refine the product in the US is very expensive,'' he says.

Says Raghunathan, Indian companies require a certain mindset to be successful in the US market. ``Even strong companies such as the Tatas do not have the courage to take our brands to the US and compete. For example, the Taj Group of Hotels have only a marginal presence in the US and that as franchisees to a US brand. We need a global mindset to be successful internationally. Unfortunately, we think very small. This will not help us grow.''

If you develop innovative products and are based outside the US, you face major challenges achieving and sustaining success in the US market. Competition is intense, the market fast moving, and the legal system more litigious than in any other country, he says.

However, unfortunately, this has not been understood right by Indian firms, who are keen on a US presence without feeling the pulse of the local market there.

According to Sriraman, Indian firms are not really addressing the felt needs of the overseas market and often underestimate the competition abroad. ``Many Indian companies feel they have out-of-the-world products, and are the first in the market. However, there are bound to be a dozen others in the market, with even better products,'' he says.

Says Dr. Alok Aggarwal, Chairman and Founder of the Delhi-based Evalueserve, who had been in the US for a considerable period of time, Indian products lack brand name and marketing and sales skills. There are also multiple concerns -- confidentiality, intercontinental interface and quality.

For success abroad, especially in the US, a strong brand name is a prerequisite. Some prominent Indian brands abroad include Nirma, Infosys, Maruti, Tata and Godrej. These companies had to spend a substantial amount on brand-building. World-class players have one thing in common - a strong brand, which should also be the same for Indian software product companies, he says.

According to Dr. Aggarwal, the benefits of a strong brand include reduced marketing costs, price premiums, a long-term relationship with customers, talent attraction/retention, ease in launching brand extensions and easier penetration of new markets.

For instance, for the software giant Infosys, thanks to a strong brand recall globally, the repeat business was over 80 per cent, and the number of clients was over 275, from 93 in 1998. A strong brand conveys attributes, benefits, values and culture/personality, he says.

The agenda for the Indian product firms should be to create a strong product brand. This can be done by leveraging the existing India brand, a consistent message and communication strategy, understanding the foreign customer's needs, exceeding customer expectations, expertise and focus, marketing and sales in the target locations, and finally quality of work, he says.

Dr. Aggarwal suggests that Indian firms should have offices spread across the regions of interest, employ local people to woo target customers and have a strong, dedicated team, who fully understand the needs of the customers.

Have you marketed an Indian software product successfully in the US? Write in to us at eworld@thehindu.co.in. The above story has scratched the iceberg in terms of the obstacles. A subsequent story will present successful products as case-studies to our readers. Yours could be one such.

Please e-mail us at bleditor@thehindu.co.in if you have queries on computer usage or if you find an interesting way of using the computer.