We believe that the new generation of Indian software products will have a big impact on improving government, labor, and social productivity. It will make governance more data-driven, small businesses exponentially more productive, and communities more connected.
In India, the majority of economic activity takes place in the informal sector. For the first time ever, self-employed individuals are able to use technology to become efficient and competitive. For instance, a self-employed driver can now be part of a taxi network and have access to new customers. Or a small bus operator can use RedBus and have a state-of-the-art seat management system. In fact, now any small business can embrace a game changing business application easily. This is creating unprecedented opportunities for individuals and smaller firms to create value in their business. As this revolution unfolds, it has the potential to make the informal sector the new engine of economic growth.
Large businesses everywhere are in the midst of massive change where competitive intensity is increasing, where barriers to entry are reducing sharply, and where margins are hard to sustain. There are many ways to characterize the shifts taking place. Hierarchies to networks. Stocks to flows. Centralized to distributed. Broadcast to peer-driven. One-way to two-way. Command and control to community. To cope with all this, a new generation of IT infrastructure and applications is getting deployed. Indian software products are making their mark in this space and several startups have become leading players on a global basis in their specific categories.
Leadership in software products offers a unique opportunity to re-position brand India. Until the 1990s, there was no industry in which India was seen as a leader; no industry with which India’s name was inextricably linked. That changed with India’s ascendance in the software services industry. When India, for the first time, was featured in the World Economic Forum at Davos; when Indian industry leaders were for the first time sought out by foreign governments as advisors; even when an Indian industry was for the first time the reason for heated debates in the US Congress and the target of important legislation – in all these cases it was India’s success in the software services industry that was the driver.
India’s success in software services also led to the birth of a whole range of outsourcing activities to India including BPO, KPO and LPO.
Yet, in spite of the huge commercial success of the software services industry, the benefits to brand India have been circumscribed. At a broad level, this is because software services are essentially a business-to-business (B2B) activity. The brands of software services companies become visible only thanks to the persona of their founders and CEOs, their performance on the stock market, and their recruitment activities. Therefore, their brands (and by extension, brand India) don’t get a high level of visibility outside India except, perhaps, in MBA curricula.
Though India’s advantage in software services transcends cost advantages, it is not unusual even today to see India’s success in software services referred to politely as a labor cost arbitrage story or sometimes more acerbically by references to cybercoolies and other such derogatory terms due to the lack of inherent IP.
Every country that has made it big on the world stage in the last many decades has had prominent brands that have powered their growth story. Twenty years ago, it was Sony from Japan. Today, it is Samsung from the Republic of Korea. India needs similar brands that can power its global image.
How can India use the foundation created by the software services industry to go to the next level in terms of global branding and soft power? Software products offer one viable route. If India were to have the equivalent of a Google or a Yahoo, that could do the trick.