Build for India, Sell to the World Date:   Wednesday , March 03, 2010 For decades now, Indian software companies have built software for customers around the globe, but very little of that software is sold as an Indian product. A recent Zinnov study says that more foreign software is sold in India ($1.84 billion) than Indian products are sold worldwide ($1.42 billion). But that can change – and SaaS can be the game-changer. With SaaS, Indian software companies have a tremendous opportunity to gain mind and market-share worldwide. And, in my opinion, the way to do it is to begin in our own backyard. This is not new strategy, by the way – the Japanese did it in the 1950s, the Chinese in the 1990s. Build products that succeed locally, and then take them global. But honestly, will that work for India? Is India a good proving ground for ‘worldwide SaaS domination’, if I can arrogantly set that as the objective? And what internal strengths we have, which can be used to make it all happen? I’ll attempt to answer these questions in this article. First, let’s look at what makes the Indian market a great option for selling SaaS in. SaaS sells best in small and medium businesses (SMBs). And India has the second largest number of SMBs in the world (35 million, after China’s 44 million). Eight to ten million of these SMBs have five or more employees and are thus targets for business software apps in the next few years. Since SaaS mostly sells on a per-seat basis, that’s a market of over 40 million users in various roles. So, from a ‘total addressable market’ perspective, software marketers can’t ask for anything better. * As large as the market is, it is as varied, too. As a growing economy, we’re throwing up all kinds of businesses every day. There are large, identifiable sectors like education and healthcare, as there are small segments like companies that store post-dated checks for their customers. And each of these businesses has something different about itself. As software designers, this works in two ways for us: it provides enough variety to identify patterns and design generic solutions, and it also provides lots of opportunities for domain-specific solutions. * The market overall is fragmented, with no large players in most segments. And the fact that new businesses are appearing every day makes long-term projections very difficult to make. But, unlike in the West, the cost of sales is low enough for us to side-step – even leverage – this fragmentation. With a well-designed SaaS solution, software companies can provide local solutions on a national basis. Unlike in box-selling, SaaS offerings need only an Internet connection to deliver, so selling is all that is required, most of the time. * Indian customers are tough negotiators, so making a ‘deal’ happen is time-consuming. But these negotiations are great opportunities to trot out all your value propositions and sales arguments, work through the best (and worst) sales-objection-handing techniques and identify those that work best – for the lowest sales cost possible. If you can convince that trader with centuries of ‘dhanda’ in his veins that your software is worth paying for every month, you’ve got a heck of a sales argument. * Indian managers are generally more willing to accept new technology than most Western managers. Whether it’s because we don’t have a whole lot of technology already, whether it’s because managers here are not as jaded as elsewhere - whatever the reasons, there’s an opportunity to build a large software business fairly quickly here, thanks to local demand. That growth can be parlayed for going global next – or even in parallel. * There’s a common refrain that Indian customers are bad paymasters. I don’t know how true that is generally, but the nice thing about SaaS is that companies ‘pay to play’. The telecom companies have laid out a great model for us to follow – pay in time or lose your service. With some thought and some adroit programming, you can put together a system that reminds people about their bills and cuts off access till paid. So the ways of dealing with bad paymasters are really in your hands, since there’s nothing you’ve installed on someone else’s server. There are issues about things like data security and Internet connectivity in many SaaS sales, but these are standard sales objections that one must deal with. Typically, it is best to either deal with these issues head-on or find prospects where these are not issues – the others will catch up soon enough. Let’s now take the other step. You’re thinking ‘global’ – can you really do that out of India? I believe we can. In fact, we have unique advantages in India that will work well for us elsewhere. Let me describe some of them: * Having built software for global companies, Indian developers have a huge amount of domain knowledge about the world. Whether it’s about how an insurance claim is processed in Supai, AZ, or about how a doctor operates in St. David’s, Wales, we have the knowledge. And that’s the kind of knowledge that can be taken advantage of to build a world-class software product. * Customer support is a major issue in SaaS success. And we have the largest number of customer support personnel anywhere. Yes, we have all been frustrated by those clueless fellows we’ve talked to about a credit card issue, but they’re diamonds-in-the-rough, needing training and direction to turn customer disgust to customer delight. And we can do this cheaper and in larger numbers than anyone else can in the world. l Marketing has been said to be weak among Indians, but Indian companies like the Hinustan Unilever Limited (HUL) have been amazingly successful in sculpting marketing messages and taking them to the remotest corners of the country. And Indian ad agencies consistently win Lions at Cannes (23 ‘metals’ in 2008). Combining that quality of marketing strategy and creativity with software, we can certainly build global SaaS brands and businesses from here. * Sales success is synonymous with aggressive, presentable, and personable Western salespeople. SaaS sales, though, need a lot less handshake and a lot more value-proposition. SaaS sales can happen nearly always via email and the phone, with Web based demos where needed. This truly alters the playing field - younger, less experienced sales teams can be as successful as grizzled veterans of the trenches. * Mobile phone usage in India is growing faster than anywhere else in the world. And integrating a phone into a business process is critical, whether by GPRS or SMS. Using this geography as a crucible, companies can develop innovative mechanisms for mobile phone use in the business context - something that can then be grown to apply to any part of the world. I am not trying to sweep under the carpet the challenges here - like bad infrastructure, badly written code, lack of customer-service mentality, and lack of ‘product’ mentality among the developers. But this is not about what is, but what can be. And ‘what can be’ is clearly some large SaaS companies out of India and, importantly, lots of smaller, specialized ones. Will yours be one of them?