Siescoms nasscom the indian software landscape june2014

Editor's Notes

• #3: The Software & Services Industry in India is a major employer of skilled labor in India. There are over 3 million people directly employed in this industry. Presently earnings are in excess of 100 BILLION USD and expected to triple in the next 10 years. As such the SSI employs talent of a huge range of qualifications & background – Back Office, Programming, Development, Support (Amin, HR), Managerial etc. and an MBA would be a definite advantage.
• #5: The evolution of India’s software industry. India’s software exporting industry is one of the world’s most successful information technology industries. Begun in 1974, it grew to around $0.05 bn in 1998. It employed 345,000 persons in 2004 and earned revenue of $12.2 bn, equal to 3.3% of global software services spending In 2012 it has grown to over $100 bn. The industry originated under untypical conditions. Local markets were absent and government policy toward private enterprise was hostile.
• #6: The industry was begun by Bombay-based conglomerates which entered the business by supplying global IT firms located overseas with programmers. In India, government policy disfavoured all types but was least hostile to large, domestic firms. In economic terms, the effect was the same as the more typical protectionist policy. The protected environment restricted the growth of project management and domain skills so that, despite access to a large pool of programmers, the industry could not grow in value-addition. A decade later, mainframe-based programming and manufacturer-specific operating systems and languages gave way to workstation-based programming (80’s) and standard operating systems and high-level languages. These changes modularized the programming function, i.e., programming could henceforth be done independently of the hardware platform and from the other functions of creating software, such as system design. This, along with policy reforms that reduced costs of imported hardware and software, caused the Indian software industry to shift from supplying programmers to supplying software programs. As work moved to India, infrastructural costs increased as a proportion of total costs. This caused the industry to relocate from Bombay to Bangalore.
• #7: The table shows the number of top companies in Mumbai to be 7 in 1980 & 1990 and 4 in 2004 which is only part of the picture. A very important figure is that top companies had a 90% share in 1980 and this reduced to less than 40% in 2004 with a large number of smaller players in the field. Both domestic firms and TNCs developing custom software for export (including internal use) were successful, particularly the former. As a result, they needed more physical facilities than in the earlier recruiting business. Bangalore began to grow in importance in consequence. It had several advantages: (1) Infrastructure was cheaper: Firms were attracted by cheaper real estate than Mumbai (Premji, 2003) and the first software technology park under NCP-1984, with assured supply of electricity and telecommunications bandwidth, was located in Bangalore. (2) Labor was cheaper and in greater supply: Unlike Mumbai and Delhi, with histories of large firms and labor militancy, Bangalore had small companies that were relatively free of union troubles (Heitzman, 1999, p. 6). Further, Bangalore is located at the centre of the four southern states, Karnataka (whose capital is Bangalore), Tamil Nadu, Andhra Pradesh and Kerala, which together produce 52% of India’s engineering graduates. Over time, TNCs, a key conduit for domain skills came to be largely headquartered in Bangalore, adding to its advantage as a center of learning. These included the pioneers, TI and HP, but also IBM, Accenture, Oracle, GE and Dell.
• #8: Indian policy in the 1970s was appropriately described as “statist, protectionist and regulatory.” In IT, the state was the main producer of products and services. Its strategy was to create ‘national champion’ state-owned. These were granted monopolies. The creation of national champions resulted, not surprisingly, in championship-scale failures. It created no output of any significance, crowded out the private sector and produced a labour force of dubious quality. A key protectionist policy was the Foreign Exchange Regulation Act of 1973 (FERA1973). Under FERA-1973, a foreign firm could operate in India only with a minority interest (foreign ownership was restricted to a maximum of 40%). Many foreign firms closed their Indian operations, including firms as diverse as Coca-Cola and IBM, citing concerns about the protection of intellectual property. FERA-1973 thus closed the door to product software development in India by TNCs. Domestic and transnational firms jointly discovered an innovative solution. Since software development could not come to India, Indian programmers were sent to developed countries. It began in 1974 with the mainframe manufacturer, Burroughs, asking its India sales agent, Tata Consultancy Services, to export programmers for installing system software for a U.S. client (Ramadorai, 2002). Other firms followed, including foreign IT firms that formed FERA-1973 compatible joint ventures. Initially, the exported programmers worked for global IT firms. Later in the decade, as IBM grew in market share, end-users such as banks used Indian firms to convert existing applications software into IBM-compatible versions. By 1980, there were 21 firms with annual exports of $4m. The state remained hostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on software) and software was not considered an “industry”, so that exporters were ineligible for bank finance. These protectionist policies favoured established firms with conglomerate interests and access to finance over small firms. Bombay, the country’s commercial capital, became the natural center of the business. 7 of the top 8 exporters in 1980 were headquartered in Bombay with a 90% market share (see the previous table).
• #15: What is NASSCOM NASSCOM is India’s leading non-profit trade organization for IT services. Established in 1988 with 38 members, NASSCOM has witnessed a steady growth in its member strength which has reached 950 members globally over 16 years. NASSCOM members include companies in various IT related industries such as software development, software products and services and even IT enabled services (ITES). What is the use of Nasscom? NASSCOM is the industry association for the IT-BPM (Information Technology - Business Processes Management) sector in India. A not-for-profit organisation funded by the industry, its objective is to build a growth led and sustainable technology and business services sector in the country. The National Association of Software and Services Companies (NASSCOM) is a not-for-profit Indian consortium created to promote the development of the country's IT (information technology) and business process outsourcing (BPO) industries. NASSCOM is India’s leading non-profit trade organization for IT services. Established in 1988 with 38 members, NASSCOM has witnessed a steady growth in its member strength with more than 1500 members today, NASSCOM members include companies in various IT related industries such as software development, software products and services and even IT enabled services (ITES). NASSCOM® is the premier trade body and the chamber of commerce of the IT-BPO industries in India. It is a global trade body with more than 1500 members, which include both Indian and multinational companies that have a presence in India. NASSCOM's member and associate member companies are broadly in the business of software development, software services, software products, consulting services, BPO services, e-commerce & web services, engineering services off-shoring and animation and gaming. NASSCOM's membership base constitutes over 95% of the industry revenues in India and employs over 3.00 million professionals. That my friends is the 'use' of NASSCOM.
• #16: NASSCOM was established in 1988 and is headquartered in New Delhi. The organization has over 1500 members, more than 250 of which are global corporations from other countries including the European Union, the United Kingdom, the United States, Japan and China. (demonstrating that NASSCOM is not only a body for Indian companies, but also can take care of the interests of multinational companies operating in India) The Beginnings NASSCOM was established in 1988, it had humble beginnings as a body of software companies that were trying to get a footing in the global market for software. Once entrepreneurs led by N.R. Narayana Murthy, Azim Premji and Ratan Tata took it upon themselves to build world-class software companies, they realized they needed a collective voice that would lobby with the Indian government and those in the West with which they did business. This lobbying with the Indian authorities was needed for crucial exemptions on taxes and land allotments, as well as removing the notorious red tape for which India is known. Similarly, NASSCOM had to lobby with Western partners to give Indian software companies a toe-hold in their markets and to project a favorable impression of the Indian IT sector. This too worked well, and the rest, as they say, is history. The efforts of NASSCOM and particularly its founders like Dewang Mehta paid off, resulting in the explosive growth of the Indian IT and BPO industry. In early 1991, when the fledging IT sector was still finding its feet, and seeking mentors and visionaries to set it on the path of the future, a young CA in New Delhi, a techie, a “graphics man,” saw what few could even comprehend at that point in time. Dewang Mehta, a pioneering spirit, saw a world where the Indian ICT industry would play a key role. He envisioned a scenario where India would find a place on the global map on the strength of its technology talent and skilled IT manpower. Along with other thought leaders, Dewang Mehta laid the foundation for what became India’s most powerful growth engine—the country’s IT-BPO sector. NASSCOM members are active participants in the new global economy and are admired for their innovative business practices, social initiatives and thrust on emerging opportunities. From evangelizing to brand building, from crisis management to foreign diplomacy, from being an adversarial proponent of a viewpoint to being a partner of the government, from a supporting to a stellar role – Nasscom has, over the years, played many parts. The result: it has been instrumental in the spectacular growth of India’s IT software exports from around USD 400 million in 1991 to over USD 100 billion today.   Dewang Mehta (August 10, 1962-12 April 2001) was the head of NASSCOM from 1991 to 2001; born on August 10, 1960, in a sleepy hamlet called Umreth, in the interiors of Gujarat, India he's credited with a large portion of India's momentous rise as a "software giant" He was an alumnus of Bharatiya Vidya Bhavan's Mehta Vidyalaya, New Delhi of 197 by 1984, though it was clearly not his only calling. Right through his student years, Mehta dabbled in an assortment of work, adding to his skills and professional credentials. Apart from a brief flirtation with journalism and a long-time affair with writing, he also participated in politics. Another passion was computer graphics and he learnt about this emerging hi-tech segment at the Imperial College London, where he also had his first encounter with movie and ad film making. His interest in film making went back to 1977, when on a vacation in his village he was introduced to celebrated director of the “art cinema genre,” Shyam Benegal. For two months, Mehta worked with Benegal as a spot boy, absorbing the finer nuances of film making and getting a feel of the action behind the camera. Nasscom Association[edit] The turning point in Dewang Mehta’s life came in 1991 when an old time friend and Information Technology industry veteran Harish Mehta offered him charge of Nasscom, an association dedicated to the needs of the fledgling Indian software industry. Mehta accepted a part-time assignment with the organization that allowed him to pursue his other interests. The period between 1991-2001 was one of transformation and growth, for both Nasscom and Mehta. Each drew sustenance from the other. As Mehta grew in stature, gaining respect within the Indian ICT sector as an industry leader, Nasscom too began to evolve into an association of substance. Software Industry Development[edit] Dewang Mehta played an important role in lobbying the Government on behalf of the fledgling Indian software industry. Mehta’s knowledge of the correct people to lobby, his cooperative stance with IT-related departments such as the Department of Energy, the Department of Transportation, the VSNL and more recently, the Ministry of Information Technology, enabled him to gain concessions while other industries struggled. Recognizing the potential of the software and services segment as a major foreign exchange earner, Mehta launched the India Inc. crusade, where he personally presented the country’s software industry to the world. Today, the software sector has set before itself an enormous ambition of $50 billion worth of software exports by 2008. Mehta played the role of the guru, to central and state governments, guiding them along the path towards IT-fication. He helped at least 19 state Governments draft their IT policies, and create the requisite infrastructure to aid the cause of software within their realms. Besides a dream for the software industry, Mehta had a blueprint for the IT industry and how it could be used effectively to change the lives of India’s teeming millions. He wanted the benefits of IT to make its way down to the grass root levels and his favorite slogan, “roti, kapada, makan, bijli and bandwidth” epitomized the needs of the emerging, 21st century Indian. Mehta died due to heart attack on 12 April 2001 in a Sydney hotel.
• #18: A small event in 1987 – a meeting of entrepreneurs with big ideas in Delhi – went on to change the face of the Indian software industry. For, at the meeting, attended, among others, by N.R. Narayana Murthy and Nandan Nilekani, it was decided that an independent association was needed to represent the interests of the IT software and services industry, and thus Nasscom (National Association of Software and Services Companies) was born. As India’s economic reforms began in 1991, the existence of Nasscom – and its ability to present the industry’s unified view – aided the take-off of the IT sector.
• #19: Establish India as a hub for innovation and professional services Deepen the IT-BPM industry’s footprint in its core markets and beyond, by building strategic partnerships with its customers Facilitate growth and maintain India’s leadership position as a trusted and safe place to do business Be a conduit of change through thought leadership, research, market intelligence and membership engagement Work with government to shape policy in all key areas of activities such as skill development, trade and business services Provide platforms for members and other stakeholders to interact and network Expand the country’s pool of relevant and skilled talent Harness the benefits of ICT to drive inclusive and balanced growth India as a hub for innovation and professional services Deepen the IT-BPM industry’s footprint in its core markets and beyond, by building strategic partnerships with its customers Facilitate growth and maintain India’s leadership position as a trusted and safe place to do business Be a conduit of change through thought leadership, research, market intelligence and membership engagement Work with government to shape policy in all key areas of activities such as skill development, trade and business services Provide platforms for members and other stakeholders to interact and network Expand the country’s pool of relevant and skilled talent and harness the benefits of ICT to drive inclusive and balanced growth ‘Transform Business, Transform India’ is the overall objective of NASSCOM and its member organisations
• #20: How it achieves this Mission… NASSCOM has strived to make India world’s powerhouse in IT and ITES. The organization has been a catalyst in the growth of these sectors by carrying out the following functions: Partnership with the government:NASSCOM acts as an advisor to the Indian government at the centre as well as state levels. With adequate representation in various ministries of the government, the organization ensures that the government frames industry friendly policies. It also forms partnerships at the global level for promoting the Indian IT and ITES industries1. Research on IT and ITES:NASSCOM conducts in depth research on the IT and ITES industries to keep its members well aware of the global trends, best practices, threats and opportunities. Support for quality products and services:NASSCOM encourages its members to maintain high quality of products and services with the aim of developing global public confidence for its members and the industry. It also helps the members achieve international quality certifications through regular seminars and workshops on quality standards. Protection of Intellectual Property Rights:The organization is a strong proponent of intellectual property rights. It supports software anti-piracy by setting up hotlines and facilitating law enforcement. Reinforce the brand equity of Indian IT and ITES industries:NASSCOM organizes regular international seminars and conferences to build a brand for the Indian IT and ITES industries. Increase talent pool in India:India has one of the largest talent pool in the world with 300,000 engineers and 2.1 million graduates being produced by its 11,200 higher education institutions each year. NASSCOM ensures that the quality and quantity of professionals in the country increases with time and that the country is able to cater to the global demand of IT and ITES outsourcing services. Partnerships with member companies:The organization provides various services to its members such as the following: Creating business opportunities and sharing of best practices knowledge through forums, seminars and conferences Publishing research reports that provide the members counsel from leading industry analysts. The organization also maintains a database of member companies specifying their areas of expertise. Providing information on global business norms on taxation, regulations, recruitment, etc.
• #21: Initiatives NASSCOM initiatives include: The Domestic Market Initiative, created to integrate the IT and non-IT sectors and to plan for continued IT industry growth. The Innovation Initiative, created to foster and an environment that meets the specific needs of Indian businesses of all sizes. The Education Initiative, created to provide additional training and skill enhancement to improve graduate employability. This initiative also interfaces between industry, academia and government. The Women in Leadership-IT Initiative, created to increase the number of women entering the IT-BPO industry and enhance the career prospects for those women in the industry. The Security Initiative, created to promote information security and compliance through public education and creation of a security-aware environment. Other Initiatives Insights on industry trends Access to NASSCOM research and intelligence that tracks industry trends, growth opportunities and best practices. Access to industry presentations, blogs, discussions and articles. An opportunity to engage with the NASSCOM research team and share case studies or transformational stories. Opportunities to enhance visibility Visibility through features and interviews on the NASSCOM website, as well as the monthly newsletter, NASSCOM Newsline. Speak, sponsor or participant opportunities at NASSCOM events. Chance to contribute to blogs and newsletters as thought leaders. Brand building through NASSCOM awards and recognitions. Opportunity to network, build and share best practices Chance to use the member database on NASSCOM's website to post a trade lead, or participate in one. Chance to share or learn best practices through city level networking sessions on human capital development, data security, contract management, quality, diversity and more. Global trade development Members can participate in opportunities for global networking and build business at NASSCOM's global events, and through delegations and road shows. Network with companies in other countries through their delegations to India. Receive information regularly about policy updates in countries. Understand issues related to visas, immigration through NASSCOM's mobility best practices sessions. Learn about trends and opportunities in markets through country reports
• #40: Does Indian IT need Nasscom? Only if it is restructured to provide industry with dynamic leadership and effective advocacy 'Do we need Nasscom' is like asking 'Do you beat your wife', so no one associated with the Indian IT industry can dare be politically incorrect to such a question posed to him! Having said that, Nasscom faces perhaps one of its toughest moments in its remarkable two-decade-long journey today. Every professional service organisation (PSO) — trade, industry, investment promotion — around the world is faced with declining memberships, a struggle to remain relevant, an inability to embrace innovation in delivery of products and services and last but not the least, a gridlock with both national and international governments in persuading them of the PSOs' agenda. Given this overall scenario of most PSOs, Nasscom has done a Rajinikanth for India, a terrific national service. Nasscom's power comes by virtue of its being the face of the $100 billion Indian IT and ITeS industry, which is expected to grow to $225 billion by 2025. Over the years, by hiring some of the foremost lobbying firms in the world, Nasscom has got its voice heard at Capitol Hill and Europe and done so remarkably well. However, there is no gainsaying the fact that a TCS or an Infosys can do anything that Nasscom does — except in collective issues such as immigration and taxation — and do it much better. So how can Nasscom remain relevant? N R Narayana Murthy, the globally respected face of the industry, has submitted his report on restructuring Nasscom, which includes verticalisation to take care of product companies and BPOs who often find themselves as 'second-class citizens', non-linear growth of the industry, extended terms for the chairman, etc. Today, the industry is virtually under siege by the Indian government, especially by the tax administration, which views them almost as adversaries, something not good for India. Nasscom has failed spectacularly in persuading the Indian government that these are the crown jewels of India and that crown jewels need to be preserved, protected and nurtured. Nokia, Microsoft, Vodafone — almost every global R&D based firm operating in India is today one step away from shutting shop, if the pending tax issues running into millions of dollars are not resolved, as of yesterday. Nasscom must take this up as a war to be won. Government should be an ally of Nasscom, provided the latter has a healthy relationship with it, such that Nasscom should take over and run India's investment promotion efforts overseas in every knowledge-based industry, leveraging its significant network in the process. Nasscom must establish, in partnership with the government, India Investment Centres across major capitals and become the single window for FDI to explore India. It should do so through an automated, fair and transparent system, through which all its members get equal opportunities to succeed. The other sensitive issue that Nasscom has been debating internally is the fact that its own governance structure needs a rethink. The worst kept secret of Nasscom is that its Executive Council (EC) largely 'rubber-stamps' decisions taken by the Past Chairmen's Council (PCC). Today, Nasscom is in a peculiar situation where the PCC is bigger than the EC! While the experience and guidance of past chairmen is worth its weight in gold, yet whether it's desirable from a corporate is debatable. The answer lies in significantly strengthening Nasscom's secretariat and electing an EC (including past chairmen) that is deeply committed to giving their most valuable resource, their time. More importantly, the Nasscom president's job can't just be another job; it has to be a mission. When Egon Zehnder seeks out the next president, the job description must demand 'a missionary zeal to place India's and Indian IT industry's flag on the moon, both literally and figuratively'. This can't be a post-retirement, 'governor' kind of job in Indian politics. What the industry really needs today is a Dewang 2.0. Nasscom presidents, apart from the dynamic Dewang Mehta, have been 'retiring' captains of industry. Such ingrowth cannot be healthy for any organisation. One is compelled to draw a parallel with the RBI and Indian Railways both of whom are wholly ingrown organisations, which hardly leads to organisational renewal or dynamism, which is critical for any PSO whose members are in an industry that changes almost every six months! Apple dumped the iPod Mini less than 18 months after its huge success, which saw over $1 billion in revenues, and brought in the Nano. When 30 member companies form a splinter group 'iSpirt', the question to ask is, why iSpirt? Obviously Nasscom is failing to address some needs of at least a section of its members. Semantically, one can argue that a think tank is not a trade body and vice versa, but hasn't Nasscom in partnership with McKinsey, Everest, Forrester and others been providing thought leadership to the industry? If yes, where did it fail? Nasscom should remember the pangs of its own birth out of another association, amidst deep discontent. In that sense, this is a wake-up call. Nasscom is ripe to move into the next orbit of growth, or get disrupted. What choices it makes for itself will determine not just its own complexion, but also that of millions of young Indians — and India — along with  
• #41: Doubts over association's relevancy In a separate report by Business Standard Wednesday, some observers questioned the relevance of the association founded 20 years ago, and whether the IT industry has outgrown it. Discontent with Nasscom comes as major IT companies are struggling due to changes in the business environment, the report said. "Despite top line growth, leading providers such as Infosys and Wipro are struggling to meet shareholder expectations. Rupee and wage appreciation, competition from other low-cost locations, investments in non-linear growth, and the cost of hiring staff in non-English-speaking countries, particularly in Continental Europe and Latin America, are adding to the complexity of the challenges facing Indian service providers," said Thomas Reuner, principal analyst at Ovum. "Nasscom needs to re-invent itself. It somehow seems that they are stuck in the old mode of lobbying with the government. They need to mature beyond this," added an industry analyst who declined to be named. Kumar Parakala, head of IT advisory for Europe, Middle East and Africa at KPMG India, said: "[The] India success story in IT is not being sold in a manner it was told a decade back. There is a need to project India as a stable and the progressive destination for outsourcing supported by innovative environment. We need to tell this to the outside world with a greater momentum, energy and enthusiasm and Nasscom needs to do more and uphold India." In the same Business Standard report, Nasscom chairman Chandrasekaran said the association has kept up with the times. "It is a unique institution. A lot has changed over the past few years. Nasscom has adapted to the changing times and evangelized the industry. We do have an aspiration of doubling the size of the industry and Nasscom will be there to identify the opportunities," he said. Earlier this month, 30 software companies announced they were breaking away from Nasscom to form a new association. The Indian Software Product Industry Round Table (iSpirt) said it aims to share its expertise and collective experiences with members, and create a larger awareness in society and government about the critical role software can play, which are issues they cannot effectively carry out under Nasscom.
• #42: India should be branded as a centre for innovation: Nasscom panel (www.bissinesstoday.in) IT industry lobby Nasscom on Monday shared the recommendations made by a committee that looked at the body's role, going ahead, and its organisational structure. The panel was chaired by Infosys co-founder and Chairman Emeritus N.R. Narayana Murthy. The Murthy report has suggested that Nasscom re-align its structure to focus more on emerging sectors such as Internet and mobile commerce, software products as well as the domestic market. Vertical councils should shape the agenda of the body, the report added. Other focus acres include: IT services, Business Process Outsourcing, Engineering, Research and Development, and Captives or the Indian arms of multinationals. The report also highlights the role the lobby needs to play to re-brand India as a business destination - from a country of order takers to a centre for innovation. Nasscom and Murthy insist that the re-branding is essential because "what we do is what should be reflected in the brand". "Given that we want to become end-to-end solutions providers, given that we need more interactions at the boardroom level, with CXOs, we said it is right to brand India as a proactive provider of solutions rather than a reactive developer," said Murthy, addressing a query from BT on the need to re-brand the country, during a press meet in Bangalore. In the current business climate, where unemployment is still very high in developed markets, "outsourcing" has become a dirty word. Nasscom has silently worked to change the terminology the industry uses. For instance, Business Process Outsourcing (BPO) is now being called Business Process Management (BPM). To position India as an innovative solutions provider, the Murthy committee has recommended Nasscom holds many more international events, publishes research and case studies, and hold workshops to enable an innovation culture. Other suggestions include enhancing Nasscom's effectiveness by expanding its membership from 1,303 members now to 3,000 new members in five years. Of the current members, only 400 are actively engaged. The Murthy report wants Nasscom to provide knowledge and certification facilities in specialist domain areas. Apart from Murthy, other members of the expert committee included Krishnakumar Natarajan, CEO of Mindtree; Rajan Anandan, Managing Director of Google; Ganesh Lakshminarayanan, President of Dell India; Ashank Desai, founder of Mastek; Pramod Bhasin, former CEO of Genpact; and Som Mittal, President, Nasscom. Nasscom says the Indian IT industry can touch $300 billion by 2020 from $108 billion now. To become an enabler and remain relevant, it has to move fast in adopting the committee's recommendations