The Indian information technology (IT) industry is getting a new leader at a difficult time. R Chandrashekhar, who will soon take over as president of the National Association of Software and Services Companies (Nasscom), will have to address the feeling that the body has lost its earlier ability to purposefully lead the industry by being ahead of the curve rather than behind it. Imaginative leadership is urgently needed to address two issues. The first is the complaint of small software product companies (which have now formed a breakaway think tank) that the forum has little mind space for them as the industry bigwigs who set the agenda have different priorities. The ultimate game changers are the likes of Apple and Microsoft, and not Accenture. It is true that IBM has over the years turned itself into more of a services company; but then the Big Blue is no longer the superstar that it used to be. The ultimate goal must, of course, be to create India’s own Samsung, but the immediate goal must be to appreciate the importance of innovation and new technology and have an association that fosters it.
The second issue is equally fundamental: urge and aid the industry to change its dominant business model. There is a pressing need to get away from the time and material pricing model for software maintenance and development and get into the fixed price model; enter new technology areas such as wireless and cloud networking; and also charge customers on a pay- per-use basis. This change is a must in order to get out of the commodity end of the business, and Infosys offers a prime example of the pitfalls in the way of making the transition. N R Narayana Murthy indicated during the annual general meeting of the company that it could not lose sight of its bread-and-butter business. It will be unfortunate if the transition process slows down, as the problem was not with the idea but the leadership’s ability to carry the team with it.
Continued reliance on commodity business is revealed by the vehemence with which Nasscom has been publicly opposing aspects of the proposed new US immigration law. It seems the Indian IT industry still relies heavily on sending low-cost engineers from India to work at customer locations even while claiming that body shopping is history. It is all right to lobby for something below the radar, but it is also important to publicly say that the Indian industry is keenly conscious of the need for skilled people in the slowdown-hit economy to find jobs — and that it will do everything to have a win-win situation in which growing prosperity leaves something on the table for all. The need for Indian IT companies to change the way they do business is all the greater because of the target the industry has set for itself — $300 billion revenue by 2020. This means a compounded annual revenue growth rate of around 17 per cent when currently it is around 10 per cent. The industry will have to reinvent itself to achieve this goal.
