Nasscom aims to generate $10 billion from IT products by 2020. The industry body has announced initiatives to help
the $2.2 billion products sector to quadruple in the next seven years. Venture capital (VC) investments into software products space is also picking up as investors are seeing it as a viable business model to park their funds.
The Indian connection has been a regular feature in the product innovation cycle of the world’s technology giants for over a decade now. Even as the Indian arms of these multinationals have grown from being small software support teams to product builders in their own right, the country’s $108 billion IT-ITeS industry now has the software products space firmly in its sights.
For India’s IT services industry, the move into products needs an approach that’s in complete contrast with its globally renowned services model. While some of the top players have tasted success with their early attempts—like Infosys with Finacle and TCS with BaNCS, both products in the finance sector—the lure of getting into the big league is now attracting smaller companies and even start-ups.
Experts feel over the last few years there has been a gradual shift in the way product innovation is perceived despite a nascent ecosystem and lack of right talent even among the IT-services organisations in the country that hire in large numbers.
“We have been in the products-space for only less than a decade. Building products is risky and difficult. It requires knowledge, domain expertise and customer interaction. These expertise takes time to develop than building a services company,” says Mukund Mohan, director at Microsoft Ventures, who heads the Asia-Pacific and Africa operations, largely out of Bangalore.
Mohan points out that the lag in building global products out of India is due to the gap in knowledge and the ability to take risk. “I see that improving though.” InMobi, PubMatic, Visual Website Optimizer and Freshdesk are firms that are making a difference. Entrepreneurs with expertise in building products will drive that change, he adds.
According to angel investors and venture capitalists, while the first wave of entrepreneurship was largely services oriented here, the new generation entrepreneurs are more focused on building products with usually a global market in sight. Services have now become a big boys game and hence everyone is keen on developing global products.
According to Rishikesha T Krishnan, professor of corporate strategy and policy at Indian Institute of Management-Bangalore, the country needs