The Indian software products industry’s revenue to date—taken over the past five years—is valued at $6.1 billion. The disproportionate balance between domestic sales and exports notwithstanding ($4.2 billion and $1.9 billion, respectively), it has a promising future, unlike other segments of the information technology process management industry. Globally, this market is about $411 billion today. Fast-paced as it is, huge opportunities await Indian software products companies—approximately 5,000 of them—if the government can take appropriate steps now and usher in much-needed change. While the recent Draft National Policy on Software Products is noteworthy, here are a few suggestions which could yield better results.
Ease of doing business is essential. Numerous regulatory compliances can lead to unintended oversights. A single repository of all applicable laws, compliances and their associated processes would serve better.
A support framework for product development is required, as products upgrade or even relaunch for long-term sustainability. For undergoing testing and evaluation, investments in test beds is critical. In-house investments can be steep, and shared resources supported by the government should be the favoured approach. The need for facilitation cell(s) for technology transfer and licensing in paramount. In addition, the principles guiding tech transfer and licensing have undergone major shifts because of the Internet, and Indian companies should be prepared to enter into contracts under these new paradigms.
To address this, it is recommended that a joint initiative under the ministry of electronics and IT (MeitY) and the industry be undertaken, to facilitate acquisition and commercialization of technology. New technologies have led to standards and patent rules which are still nebulous to many ecosystem players, and it requires a high degree of sensitization. Hence, platforms need to be created to facilitate such discussions to also include interoperability, integration, scalability, cybersecurity, and provide assistance in building global partnerships and access to global best practices.
The talent requirement of product companies is unique. Future-ready products are expected to be developed based on the mere articulation of needs and specifications. Talent accelerator programmes in partnership with industry will help create industry-ready professionals from a wide-ranging resource pool of engineers and other graduates. In addition to the ubiquitous need for tech skills in high-end technologies, the need for country-specific language skills must also be emphasized. Strong business communication is an essential prerequisite and its deficit has an adverse impact on growth.
The software products policy should amplify the government’s start-up initiatives, not just replicate them for software product start-ups. For instance, a registry of software product start-ups being supported under various programs can be created (voluntarily); they can then be mentored in a targeted manner. Furthermore, incubators and accelerators need to be set up in other geographies to provide greater market accessibility to start-ups.
Also, the support schemes should not be restricted to product start-ups alone, but structured to benefit the product segment as a whole. Products require upgrades, new releases and technology changes almost every other year, as a rule. Heavy investment in R&D creates a dire need for a targeted scheme that will incentivize companies to develop new products.
Often, government procurement falls back on specifications with reference to the Gartner Magic Quadrant, or by referencing products/platforms by name. This leads to rigidity and filters out prospective Indian vendors. For the domestic market to mature, it is essential to have wider participation which could lead to better price discovery as well. Here, Nasscom’s product excellence matrix may be highlighted. It includes specific product features with an expanded outreach. The government, along with the directorate general of supplies, should evolve a software product purchase method, including a comparison framework, to help in decision making as the government increasingly relies on e-commerce platforms for purchases.
The fund of funds (Rs10,000 crore) should reside with MeitY, not the ministry of finance. This will expedite decision making and deployment. The early promise demonstrated by domestic products is encouraging, and an innovation fund should also be created to cater exclusively to resident Indians.
The exports market (software products) remains small, but there is no reason it should languish. Emerging Indian products require new geographies to build scale to get brand positioning right. An organization which will function like an export promotion council, but exclusively for products and innovative technologies, is a must. And it would be beneficial to set up helpdesks in Indian embassies/high commissions which would function as advisers on local laws and market information.
India is third in terms of the number of tech start-ups. We have more than a 50% share in outsourcing, but in software product exports, we feature among the also-rans. Mobile penetration, demographic dividend and our mastery of the offshore development model can catapult the nation forward—if we harness the next wave of growth.