Will iSPIRT empower Indian IT products?

Will iSPIRT empower Indian IT Products?

The creation of iSpirt has evoked mixed reactions- despite that, think tank's like this are much needed to jump start the nascent Indian IT products space.

"Debate is so much better than denial", said Julie Walters the famed British actress and comedienne in a TV interview long back. This in a way reflects many of the issues the Indian IT industry faces today. As we look at the FY 13 results of many IT majors, it points to a ‘bigger slowdown' on the anvil - but openly many deny the impending gloom.

As the services space gets increasingly cluttered the companies in the fray are trying to differentiate themselves. But are Indian IT firms re-inventing enough to take on the challenges of the new normal? Do they have a clear ‘de-risking' strategy? Do they have enough alternate ‘lean on' when one geography fails? Often when asked to IT company CEO's large to small - the answer many times is one of cautious optimism.

When author Chetan Bhagat called Infosys a ‘body shop' couple of years ago- it created ripples and a strong backlash and tons of pumped up conversations eulogizing on ‘meritorious services' rendered by Indian IT services companies. But there was a section of the audience who did ponder over that - not just from an Infosys perspective or reference - from a broader industry perspective and asked - Is there some truth in what Chetan Bhagat asked? Sure there is, if we do not do enough products and foster IP driven R&D set ups then we risk being called ‘body shoppers' and truth always hurts.

That boils down to the fundamental question- why India is not able to replicate at least partially the traction it has in the services business? And interestingly even the Top 5 companies which have products in their portfolio does not clearly break out their non-linear revenues

Why we shun home grown IT products?

Clearly at this point in time Indian IT companies need to re-invent and look beyond services. From an industry perspective, they also need a platform to jump start IT product initiatives. Interestingly one is seeing the beginning of some action on these lines. Take the case of the creation of iSpirt (Indian Software Product Industry Round Table) - about 30 companies (most of them members of NASSCOM as well) have banded together earlier this year to create a like-minded platform sharing for IT products companies in India.

Sharad Sharma, one of the key founding members of iSPIRT tells DATAQUEST, "We are trying to create a community that elevates software product industry. Bangalore has a startup community and what we intend to do is to create a community for software products on similar lines. Using this platform people can share business models, discuss issues and seek guidance from each other. Our approach is multi-pronged- we will be handholding by way of workshops and other modes, that will help address common problems product companies face."

Sharma also takes pains to emphasize that iSPIRT is not an industry body that threatens or competes with NASSCOM. "We were surprised by the reactions to the iSPIRT creation. In fact we are open to collaborating with big industry bodies like NASSCOM that can make a difference at a policy level as it would be easier to address issues."

We also checked with Ramco Systems CEO Virender Aggarwal and asked him his thoughts on the creation of a think tank like iSPIRIT. He says, "Certainly it's a welcome move. I personally think NASSCOM has done a spectacular job in the IT services space and it would certainly help if it can replicate that success to IT products as well. But I consider, more than product development, where Indian product companies fail is in marketing the product. The marketing efforts have to be proportional. If you spend too much time on development and least time on marketing activities, then your product is bound to fail."

Ramco is one of the early movers in the enterprise business apps space. Right from its Marshal ERP to eApplciations to Virtual Works and now its cloud platform ‘On Demand ERP', it certainly has carved a niche. And it is seeing an increasing up take in the western markets for its aviation suites. Moreover its cloud based ERP has seen good success domestically as well. But Ramco to reach at least this scale and size need to pump in millions of dollars over the years and despite the investments, its profits over the years has remained flat not been much impressive, but Ramco is bullish on its outlook.

There are multiple risks involved in product development and up front development costs is the one that inhibits most companies in taking the plunge. Building an ERP like what Ramco has is not an easy task. But many companies does not have the dedication that was demonstrated by companies like Ramco, which has worked with singular product focus.

Where do we go from here?

Body shopping- though sounds crude is considered as a reality. The services business executed via the third party ODCs out of India runs on the sole premise of cost arbitrage. While Indian outsourcing companies beg to differ with various Global Delivery Models (GDM) and their colorful sourcing models to companies like iGate even pitching on outcome based model as against the typical time and material model - the bottom line is we are a low cost geography and companies outsource for cost savings and quicker project turnaround times.

Clearly as we move forward, think tanks like iSpirt might be a blip in the large services ocean we are right now, but companies in the products fray must support initiatives like this and change that blip into a ripple that can create a difference in upping India's ante in the IT products space.

What's your view on India developing global quality products? Do you have any ideas on how this could be made to happen? Do you have any experiences (good or bad) to share with the industry? Please let us know and we will be happy to carry them. Also if you are interested in writing on this topic for The DQ Week, please write to us and feel free to comment.