From IT services to software products

May 23, 2019 12:19 AM

With the focus on technology start-ups and R&D, India can make a stride in software product development space, continue its brand as a global IT leader, and become a wealthy nation, eventually bringing prosperity to all.

Policies like these will definitely rev up the growth of the IT industry by promoting software products business ecosystem, stimulating entrepreneurship and innovation for employment, building skills, and improving access to domestic and international markets.

By Omkar Rai 

Ruling over software services exports for two-and-a-half decades globally, India is synonymous with the new normal of technology disruption. Now the time has come to shift focus from software services to software products, to capitalise on the dynamic global trends in technology adoption. Against the backdrop of a high performing IT-BPM industry, the country needs to reinvent itself as a products superpower. The advent of emerging technologies has disrupted business processes and global enterprises are sprinting towards faster adoption strategy to leverage the benefits. While outsourcing the IT services of an organisation to a trusted Indian technology partner was the standard practice for MNCs to optimise the cost arbitrage, rapid evolution in Industry 4.0 technologies has necessitated companies to relook at the strategy. Now, the technology priority is much of a core business strategy and the initial adopters are unequivocal winners.

According to a recent report, the global software products market was $515 billion in 2018, with 7.4% growth. The overall growth of global software products in 2018 was driven by intelligent solutions based on Industry 4.0 technologies, cloud, connected infrastructure and cybersecurity products. At the same time, the market size of Indian software products industry in FY19 is $8.2 billion, of which $5.5 billion is from the domestic market and $2.7 billion from exports. Although Indian software products industry just accounts for 1.6% of the global market, given the global opportunities in this segment, India can strive to capture the largest pie of the global software products market.

India has successfully established a matured IT ecosystem comprising 18,000 IT enterprises, 7,700 technology start-ups, 4 million IT talent, robust R&D institutions, policymakers and academia. The Indian IT industry, which clocked $177 billion revenue in FY19, is expected to reach $350 billion by 2025. The large technology and engineering talent pool is an advantage to India’s technology leadership. The country produces 2.6 million graduates every year with STEM degrees. It’s not far when many of the budding tech start-ups would transform themselves into tomorrow’s global unicorns, and not just in value, making India a superpower in innovation and entrepreneurship.

Given this growth trajectory, the government must visualise a new India with initiatives that will propel the success story further. Keeping a tab on the past successes and a bright future, the government has initiated many niche programmes such as Make in India, Digital India, Atal Innovation Mission and Start-up India, which are focusing on the creation of indigenous products and a digitally-empowered society. Software products are central to India’s mission for digital transformation with social inclusion. Today, sectors like healthcare and education are grappling with the challenges of uneven access to the citizenry. Universal accessibility to education and healthcare will be possible when the last person in the queue would avail the benefits without any discrimination. The role of software products for enabling these two sectors to become digitally inclusive is paramount. Digital platforms like IndiaStack and National Health Stack can lead to a paradigm shift in government-to-citizen (G2C) service offerings. While the government is foreseeing a trillion-dollar digital economy in next 4-5 years, it’s imperative for the IT industry and start-ups to leverage the humongous opportunities available in the digital transformation journey of the country. The drive of innovative software products companies will make all the difference to the government’s vision by delivering superior software products that can be integrated with software stacks. When public digital platforms are coupled with groundbreaking software products, it will result in adding hundreds of billions in economic value.

The National Policy on Software Products 2019 is an impetus to transform India as a software products nation and drive the country as a global leader in conception, design, development and production of intellectual capital-driven software products and accelerate the growth of the entire spectrum of the IT industry. Industry expects collaboration for the purpose of tech products creation in the country. To achieve these objectives, the NPSP 2019 envisions a 10-fold increase in the share of global software products market by 2025. The policy also envisages the creation of a cluster-based innovation-driven ecosystem by developing 20 sectoral and strategically-located software product development clusters with integrated ICT infrastructure, incubation facility, R&D/test beds, and mentoring and marketing support. It targets nurturing 10,000 technology start-ups, including 1,000 such start-ups in tier-2 and tier-3 cities, to generate direct and indirect employment for 3.5 million people by 2025. Policies like these will definitely rev up the growth of the IT industry by promoting software products business ecosystem, stimulating entrepreneurship and innovation for employment, building skills, and improving access to domestic and international markets.

As India has embarked on leveraging the potential of frontier technologies—AI, AR/VR, IoT, robotics, 3D printing—a strong IT industry base and demographic dividend will play a disruptive role and change the IT landscape. In the times to come, we will see more start-ups, entrepreneurs and product companies that not only create world-class products using cutting-edge technologies, but will also develop products that can resolve societal issues, bridge the digital divide and augment inclusive growth.

We need a collaborative approach amongst all the stakeholders including industry, academia, R&D institutions, government agencies and state governments. Indian IT behemoths have already started shifting their mandate from software services to software products development. With the focus on technology start-ups and R&D, India can make a stride in software product development space, continue its brand as a global IT leader, and become a wealthy nation, eventually bringing prosperity to all.

The author is director general, Software Technology Parks of India

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