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High risk still an impediment for Indian product ecosystem
By Jaya Kishore B
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Wednesday, 13 August 2008, 00:47 IST
Bangalore: Though Indian IT Product ecosystem is creating the vibrancy of its own kind in India today, the higher risk and capital investment requirements associated with building an IT product than other kinds of IT businesses, have constrained the growth of Indian product ecosystem, said Som Mittal, President, NASSCOM.
He was addressing the tech gathering at second annual NASSCOM Product Conclave that commenced in Bangalore on Monday. "Lack of professional talent with the broader range of skill sets that is needed to manage a software product business, low levels of technology adoption, lack of entrepreneurial ecosystem in the country and absence of sizeable domestic market for software products have contributed to the low emphasis on IT product development in India," asserted Mittal.
However, with the annual revenue aggregate of the Indian Software Product segment is set to grow from $1.4 billion in 2008 to $12 billion by 2015, Indian IT will earn 40 percent of its revenues from Innovation services by that time, he said.
But the things are changing rapidly. Today India boasts of 370 plus pure product startups, which are in the Indian product. Last year India has seen 300 VC investments worth $550 millions in the IT space itself. "With 38 incubation centers in the technology institutions across the country helping these young and bright startups to realize their dreams, Indian product story will be more widespread in the coming times," said Ganesh Natarajan, Chairman, NASSCOM.
Unveiling the latest report released by the premier industry body, "NASSCOM Software Product Study: Outlook for Indian Software Product Businesses", during the event, Subash Menon, Chairman, NASSCOM Product forum said that, today, there are 600 multinational companies undertaking product R&D in their subsidies in India. Several Indian third-party service providers have also adopted the offshore model to offer outsourced product development services to assist clients in developing their IP. "Though some Indian firms succeeded in developing own Product IP, very few of them managed to establish successful product business," he noted.
The Indian software product story so far has been an export driven story with 68 per cent of the revenues coming from just exports of these products. However, going forward, this will change. "Home-grown software product businesses will surely witness an increased acceptance in the domestic market, thereby increasing the revenue share from domestic sales. Key parameters such as proximity of Indian software product businesses to the local market requirements; excellent understanding on localization requirements, and ease of adopting customized and targeted sales approach would fuel this growth," explained Pari Natarajan, CEO, Zinnov.
During the event NASSCOM, for the first time, also organized "Product Expo", a platform for product companies to display and demonstrate their products to the delegates of the conference.
