Business Today Web Exclusive

Software Round-up

A quick look at the Indian software sector.

Any industry that grows at a compounded annual growth rate (CAGR) of 46.6 per cent, as Indian software has done from 1994-09 to 2002-03, should make investors sit up. It is an industry worth an estimated Rs 47,500 crore, according to ICRA, in export revenue alone (that's a little more than $10 billion).

That's good money. But barring a few players at the top, India punches much below its weight in the global software arena. This is because a large fraction of the work done is fairly ordinary stuff -- being done here just because you get software coders on the cheap who can work at whatever time suits overseas clients.

The industry, however, is ambitious. And is ascending the value curve in global software. Instead of doing basic work, companies have started offering solutions to problems in specific expertise domains (or 'verticals', along which Infosys proposes to restructure itself, capability block by block). Some companies, such as i-flex with its FlexCube banking software, are actually entering the high-return, high-risk arena of packaged software. This involves in-depth market knowledge and marketing expertise of a rather high order. The capability, that is, of entering the global prospect's consciousness at super-low cost.

While cost management is something any company can do, playing the game at the most-evolved level is something else altogether. A few more brand successes, and Indian software would look like doing what the Japanese did with cars -- move up from tinpot clangers to sophisticated high-sensibility need satisfiers over just a couple of decades. That was quick. A business of 0s and 1s should be quicker.

Issue Contents Write to us Subscription Syndication