Bangalore: India’s software lobby group, the National Association of Software and Services Companies (Nasscom), plans to expand its focus areas to include Internet and mobile content, software products and the domestic information technology (IT) market, as it tries to address recent criticism that it caters only to the large software services firms.
The latest announcement is an attempt to ensure it’s also relevant to companies such as online retailer Flipkart.
A Nasscom committee led by Infosys Ltd co-founder N.R. Narayana Murthy also recommended setting up five centres of excellence over five years that would focus on areas such as e-commerce and software engineering.
The recommendations of the committee have received “overwhelming endorsement” by member firms, said Nasscom chairman and Tata Consultancy Services Ltd chief executive officer N. Chandrasekaran.
The industry is targeting a tripling of revenue to about $300 billion (around Rs.16 trillion today) by 2020 and expects to get about one-third of that from newer areas such as Internet and mobile content. From software products and the domestic IT market, Nasscom expects to generate about $85 billion in combined revenue by 2020.
Nasscom, faced with criticism by small software product firms that it tended to favour the interests of the larger software services companies, last year appointed a seven-member committee led by Murthy to recommend ways to restructure the association.
Google Inc.’s India head Rajan Anandan, Mindtree Ltd co-founder Krishnakumar Natarajan, Genpact Ltd vice-chairman Pramod Bhasin, Ganesh Lakshminarayanan, head of Dell Inc.’s customer services operations in India, Ashank Desai of Mastek Ltd and current Nasscom president Som Mittal are the other members of the panel.
“We realized we had only four focus areas in Nasscom—IT services, GICs (global in-house centres), business process management and engineering R&D (research and development) services,” Murthy said at a press briefing on Monday.
“If we have to get to $300 billion, there is considerable need to focus on other opportunities, as well as strengthen existing areas. So we have expanded the charter to include Internet and mobile content commerce, products...and if we want IT to make a difference, then we also have to focus on the domestic IT market,” he said.
Nasscom’s executive council will be restructured to include adequate representation for all the seven areas the lobby group is to focus on.
Last month, some 30 software product firms, including home-grown accounting software maker Tally Solutions Pvt. Ltd, along with several product veterans such as former head of Yahoo Inc.’s R&D facility Sharad Sharma and mobile advertising firm InMobi founder Naveen Tewari, formed a separate forum called the Indian Software Product Industry Round Table, or iSpirt.
“I think this is directionally correct. Whether it will be sufficient will partly depend on the new president because ultimately the implementation of the federal structure is conditional on who the new president will be,” said Sharma, who also chairs the Nasscom Products Forum. Mittal’s tenure ends early 2014.
“I think it is a step in the right direction, but whether it will fully deliver what the products industry needs will become clearer once the implementation gets underway,” Sharma said.
ISpirt will continue to coexist with Nasscom after these proposals are implemented.
However, some experts remained sceptical and feel these steps will not make a major difference.
“This is a token symbolism frankly. The products business needs deep pockets, a sustainable business model and sufficient marketing capabilities. If you don’t have that, there will be no sustenance. I don’t think these steps by Nasscom will make a huge difference,” said an analyst at a foreign brokerage who did not want to be named.
While dwarfed in size by the $70 billion software export sector, Indian product start-ups have been growing—from $113 million in revenue in 1999-2000 to almost $2 billion in 2011-2012.
The Indian e-commerce market is expected to cross $4 billion in four years and revenue from newer segments such as cloud computing will reach $5 billion in five years, according to researcher Zinnov Management Consulting.