Mumbai: On 7 September 2001, I had written an article, Challenges of the new Nasscom, for the edit page of the Business Standard. The piece, which coincided with the takeover by Kiran Karnik, former managing director, Discovery Channel India, as the chief of the National Association of Software and Services Companies (Nasscom), had discussed the fresh priorities for a post-Dewang Mehta (former president, Nasscom) world.
One year down the road, Nasscom is apparently once again at the crossroads of the information superhighway. A recent McKinsey study for the business process outsourcing sector a revisit of some of the assumptions of the 1999 Nasscom-McKinsey study, intransigence by some special interest groups within Nasscom, like information technology-enabled services (ITeS), animation and small and medium enterprise, to hitch their wagons elsewhere, and declining domestic growth rate (16 per cent versus the earlier 30 per cent) necessitates an uncoloured strategic thinking.
New strategic paradigm
The labour factor price model of year-on-year growth depending on Indias cheap-trained labour is not interminably elastic even though in the $500-billion IT services and IT-enabled services global market Indias share is less than 1 per cent. Major independent software vendors such as Microsoft and Oracle are looking to, in Oracle CEO Larry Ellisons words, leapfrog their growth rates on the back of Chinas burgeoning domestic IT demand (last estimated at about $30 billion). It is time to consciously and proactively de-risk our current growth model.
Our obsession with competitive advantage should give way to comparative advantage. That is to build brands, whether they are services, products or productised services, which clearly impact the world. Ultimately, arbitrage strategies are the low way to compete and do not create sustainable value in the country of operation. Comparative advantage does. In India we have a stock of knowledge that allows us to compete effectively in any country across the world. This should be leveraged.
We also need to pay attention to the domestic market. The reason why the Netherlands emerged as a hub of telecommunication software growth was the fact that its domestic industry drove 54 per cent of demand. The reason why Japan emerged as a leading semiconductor player was that the domestic market bought 60 per cent of the entire output, thus giving it economies of scale, and subsequent global competitive advantage.
The need of the times is to:
- deepen the domestic market, thereby de-risking the growth model and creating critical mass for global play;
- create a clear suite of credible brands, and defensible intellectual property rights; and
- communicate the value proposition and message to the world at large.
Portfolio of initiatives
Nasscom will need to take some visible steps to achieve the defined strategic objectives. This includes increased adoption of IT on a larger scale in India than at present. The various organs of government, non-governmental organisations, and autonomous bodies provide the channels to achieve this penetration. Understanding the public system and governance is particularly important to encourage closer government-private sector interaction and facilitate the IT enablement of basic governance and public systems.
Parallely, we need the governments significant expertise in these areas for partnerships, deployment and commercialisation both within the country and across the world. For example, harnessing the wealth of service and consulting expertise available within organisations in the science and technology, defence, and atomic energy and space establishments. This will substantially increase domestic demand, IT penetration and international accessibility for various products and services.
India Inc brand building initiative
It is clear that Nasscom must have a single-minded and publicly stated focus on this. Ideally, to embark upon a global marketing and branding exercise, Indian software should set aside about 1 per cent of its profits and create an India brand equity corpus to fund this exercise. Hitherto the industry has been spending only a fraction of this, preferring to rely on viral equity and track record to speak for itself.
While good press relations and column centimetres are one component of this, albeit an important one. Any marketing communications specialist will tell you that that these things work best as part of a broader global integrated marketing communication exercise a plan with the clear purpose of articulating and communicating a simple, compelling and consistent message.
But none of these will ever take off if it is done ad hoc and piecemeal. If India indeed wants to become what Japan is to electronics or Taiwan to electronic components, these initiatives would have to be driven overall by a spirit of public-private partnership. Nasscoms role would be to strengthen itself organisationally to undertake this and act as a nodal agency empowered to help the various key players to comply and commit.
Roy has 16 years experience in information technology. He was vice-president (technology) at Star TV, South Asia; chief operating officer, Euro RSCG Interactive, the worlds No 1 Interactive and e-consulting company; and chief technology officer, Euro RSCG Advertising, India and Middle East. He has also worked with the United Nations, Vienna, and the Department of Atomic Energy, India. He can be contacted at: