Smaller firms in IT industry growth

By agencies   |   Tuesday, 08 February 2005, 20:30 IST
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MUMBAI: InfosysÂ’ chairman Narayana Murthy has urged smaller IT firms to enhance their contribution to the industry's growth to make the tech sector globally competitive. Addressing a session of the Nasscom 2005 business summit here, Murthy said the domestic IT industry should increase their investments in building brand equity in the global marketplace. "The IT industry depends too much on the top five companies," Murthy told the business delegates here, adding 60 percent of industry's earnings in the current fiscal would come from the top five companies. "This is not healthy. This is also risky. We need to have many smaller companies participate in this growth since smaller companies can adapt better to the market than larger companies," he said. Murthy urged the smaller companies to try to become better niche players with a view to corner a larger slice of the total industry earnings. The investments by Indian companies in building brand equity was also very low, which acted as roadblocks in competing with bigger global players, he said. "Barring a few companies like Infosys, very few companies spend even 0.1 percent of their revenue in building their global brand," he said. "Most of us are reactive generalist-programmer type of companies rather than proactive-specialist kind of companies," said Murthy, adding Indian firms must focus on value players instead of cost arbitrages to become competitive. According to Murthy, very few Indian companies focused on providing specialized end-to-end solutions. Urging the local software makers to leverage global talent, he said most of the companies had still not become multicultural in their employee profile. Referring to the roadblocks in the growth of the IT industry, Murthy said the government as well as the companies needed to focus on improving higher education and research and development activities. "Our investment in research and development technology is still low at less than one percent in the average company. Our patent numbers are very low. "The focus on higher education reaching global standards has not been the top agenda of the country and that is bound to tell up on our effort in the long-term," he added.