Software product development gaining momentum in India
It’s a paradox that most people find difficult to comprehend. India, a superpower in software services, remains a minnow in software products.
Consider this: Indian software products companies have a combined turnover of $1.4 billion (Rs 6,361 crore); Microsoft, the largest software company in the world, alone has annual sales of $60.42 billion (Rs 2.74 lakh crore). Not surprisingly, India’s share of the global software products market is 0.5 per cent. But there’s a thin sliver of sunshine that is now beginning to break through the clouds.
Software product development is gaining momentum in this country—more than 100 companies, out of a universe of 500, were incubated in 2007 alone. And venture capital funding for technology companies operating out of India is growing a little faster, at 43 per cent, than VC funding as a whole, which is growing at 42 per cent.
In absolute terms, Indian software products companies have received an estimated $1.3 billion (Rs 5,907 crore at current rates), in VC funding between 2005 and 2007.
There’s more. The eco-system in India is becoming more favourable for software product development. NASSCOM predicts that the global demand for software products will grow by almost $130-150 billion over the next seven years and Indian companies can grab about 10 per cent of this incremental market by 2015.
So, funding isn’t a constraint, entrepreneurs are jumping onto bandwagon and there is a huge market— domestic as well as global. Does that mean that the time has come for Indian software products? Not quite. Why?
India is still ill-equipped to meet the manpower needs of a thriving software products business and secondly, there is not enough official encouragement. Says Ganesh Natarajan, Chairman, NASSCOM: “The Software Technology Parks of India (STPI) scheme must be available for software products companies that are starting out. Small product companies, typically, start out in garages and they cannot set up shop in a Special Economic Zone right away.”
However, the manpower question worries Natarajan more. “In countries that have successfully built a software products industry, youngsters train to join product companies from the age of 18.
That kind of awareness doesn’t exist here,” he says. Natarajan feels that the answer is to have more vocational courses at Indian universities but adds that it will take a generation for it to take root. So, will an Indian company ever develop and own a branded product like MS Windows?
The short answer to that is: Unlikely, at least in the short-to-medium term. But over a longer period, some of the companies featured here, and the many others that aren’t, may well develop killer products that go on to dominate the world.
In the following pages, we feature seven companies that, according to NASSCOM, can lead India’s charge into the software products space.