DISCLAIMER: The mood of this blog is in some places satirical, for the sake of being casual. No disrespect is intended. There is a generation gap between people from the service era of India Inc and the new generation and leads to some situations where I know my fellow colleagues will understand and be tempted to say the same.
Context
I've been a firm believer that India Inc. has gone about Software as a tail chaser. What that implies is that, instead of focusing on innovation and market capitalization most Indian software companies have opted to be service providers. What this has done is the following:
1. Comoditized Services
2. Be a cheap market to fuel the actual innovators
The reasons for this are obvious, but for the sake of stating them:
1. Large English speaking population and also a large engineer base
2. Currency Arbitrage: $ to Rupee ratio (high ratio implies its easier for Indian companies to survive and be profitable on lower $ rates)
3. Software industry driven by purely by economic motives, rather than cultural or innovation.
etc.
Market Forces applying pressure to change
While to me this was obvious; it perhaps made sense to the big heads only when they started seeing their bottom lines shrink.
With everyone jumping in the bandwagon, competition has gotten much fiercer and since there is no key differentiation, the markets are extremely price sensitive.
Way Out
Some companies opted to be domain experts, and offer software services to certain domains. I think this to be a big eye wash. "If you sweep the toilet of a doctor does not make you one even if you happen to pick a few things up!"
This was the motivation for me to set out and establish my own company; NeuroSys. A start-up that in its DNA is driven by innovation and engineering rather than volume or sales. Since the company is its early years of formation, its too soon to say anymore. However, my motivation to write this blog was not to speak of my company but an article that I read in the paper that excited me and amused me. Excitement because, it was something I perceived about 2 years back and confirms the path of thought backed by current trends and facts. Amused because the pictures of bald heads who are to lead such initiatives. Reminds me of the kind of guys, Apple in its foundation days set out to oppose ..the straight jacketed guys who believed the money was the root of innovation or ..the IBM back then!
The article was published by the Times of India, on May 29th 2011:
...the following inferences apply from the context above:
1. They have realized something not based on a cultural observation or vision, but out of numbers and market pressure. (Market Dictated Vs Motivational change)
2. Innovation is driven by culture, vision and engineering and not just Demand and Supply economics. The Demand for the PC was not there till Apple and Microsoft slugged it out!
Interestingly enough, 1) conflicts with 2). The article has been keen to point that Infosys is thinking correct in the fact that the division would be a separate company to respect that mind set. That I feel they have got right in their thinking, but it also implies a level playing field with other innovative companies.
If the start-up is a puppet company then Infosys will still pull its strings and the start-up facade will break in the face of market pressure and fail to attract the kind of innovators one would hope for. And lets face it, a lot of the innovators prefer to be rebels. Rebels and Pirates don't like to work for large names ..unless its a pirate Ship with a pride factor like working for Google!
Another thing is that a product company does not need to rely on mass but more on agility. Most Indian software companies are mass and pretty much non agile.
It will be interesting to keep an eye on this in the coming years. While the initial thinking looks good and sound, I feel they have too much mass and old thinking to still drown their own new ship.
Moving on the defensive: Product to Services Vs Services to Product
On discussing this with a friend, an interesting argument came up. It is established that any Product company also needs to sell services to deliver the product. In the natural flow these services add to the companies revenues. In fact some product companies rely more on the services for their bottom line,..generated by their product.
Now, is the converse true?
In my opinion, it is not. In my friends opinion it is.
Since this is debatable (not for me for now :), I'll conclude on an in conclusive note.
-Arjun
