Opportunities for product development for Indian IT companies

Abstract

Going forward, Indian IT companies are likely to face innumerable challenges in their path towards higher growth. The current study looks at the product development route as a way to appropriate "value" and its implications for the Indian IT industry. The study focuses on the factors for success in products business and the opportunities for software product development and marketing for Indian IT companies. It looks at the industrial sectors for which there is sufficient market for software product development. It looks at the competition in this regard. The study identifies the geographies which the companies can target. The study also considers the strategy the companies can adopt to be successful in products market. Summary The global software product market is about $180 billion. NASSCOM data reveals that Indian companies developing software products have a minuscule 0.2 percent share of the $180 billion global market for software products. This market is similar in size to the consulting market which could be the other way to appropriate value. Even though there may be a few common things between services and products, the approaches differ not only within key management areas, like marketing, but even in the relative importance of the key management areas. While product marketing issues are most critical to the overall success of product companies, superior human resource management and software engineering are more important in professional services The key success factors for software products by the Indian software companies would be Product and Product Mind set - This refers to the actual quality of the product so that it can stand on its own in the market and the organizational culture that is conducive to product development. Market Insight and Product Marketing - Having a sound knowledge of the market opportunities is what market insight is about. Product marketing here refers to building brands and developing distribution channels. Continuous Innovation with Internalized Systems to Capture Domain Expertise - It is closely linked to the product mind set. Ecosystem and Investments. Given the current situation of the industry within Indian scenario, the Indian companies should look at niche products in the areas of embedded systems, banking and financial sector and communications (telecom and data comm). The other areas are attractive but we believe that the Indian Software companies at present should focus on these areas where they have a high level of domain expertise, which is critical for the success of the software products. Also it seems appropriate to target the emerging markets (in India and Asia) and then the US market and later to expand into other geographies. The exact strategy for the product marketing would vary based on the profile of the company launching the product, the product segment and the market. On abroad level, the companies should use the value based pricing model while pricing its products. To be cost effective, during the initial few years, products should be launched under the corporate brand. In future they can move to product-based brands. The companies should use multi-channels to push their products in the markets. Partnerships with channel partners would be crucial in this effort. The companies should use bundling of the services with the products effectively to gain more client business. In the product space, the Indian Software Companies would face challenges at country, industry and finn level. These challenges at country level include IP protection laws and education, at industry level include driving the standards and at finn level include organization structure and conflict of interest with services business. The Indian companies must work within the system to tackle these issues to be successful in the product space.