A debate is raging in the $100 billion Indian information technology sector over whether Nasscom—founded in 1988—should split itself to serve the growing aspirations of smaller, software product entrepreneurs who have been living in the shadow of much bigger software services firms for over two decades now.
If Nasscom has to stay relevant, it must collapse its “large-format”, five-star conferencing programmes, used successfully over the years with bigger member firms, and listen better to a small, but growing community of software product entrepreneurs who are dreaming to create India’s Google Inc. and Microsoft Corp.
These software product firms are led by a mix of veteran and newer maverick CEOs such as Sridhar Vembu of online office software maker Zoho Corp., who just don’t relate with anything Nasscom. Vembu spends time shuttling between his Silicon Valley office and Zoho’s development centre in Chennai all year. Unlike the software services business that’s used to multi-million dollar projects and large payrolls, software products require deeper engagements with fewer customers. And instead of broad-based industry lobbying, these firms need discussions around intellectual property apart from establishing links with potential customers in India and overseas.
So it was no surprise when last week that some 30 software product firms, including homegrown 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 InMobi founder Naveen Tewari, formed a separate forum called the Indian Software Product Industry Round Table, or iSpirt. While dwarfed in size by the $70 billion software export sector, Indian product start-ups have been growing. From $113 million in revenue during 1999-2000, the Indian software product industry is now worth $1.81 billion (2011-2012).
On Monday, Nasscom denied that iSpirit was a break-away faction. “As stated by iSpirit, the focus is to create a policy think tank on software products and not an industry association,” Nasscom said in a release.
The real issue behind this growing alienation is the mindset of working with larger services firms. Even when Nasscom organizes a conference for start-ups or product firms, it tends to follow the same format of five-star conferencing where grey-suited executives sit on a dais to give their versions of Indian IT’s future.
Later this month during February 13-15, Nasscom will hold its flagship annual event for the software services sector in a posh five-star hotel in Mumbai where top executives, analysts, investors and media will gather to be part of several sessions on the future of the industry. These sessions have a bunch of speakers from member firms, their customers, and sponsors on the dais and everybody else inside the room has to sit and listen.
In what appears to be a mid-life crisis for Nasscom, software product firms are not the only community looking beyond the trade association founded in 1988. Now with iSpirt already formed, it will inspire other groups including start-ups to explore a platform of their own as they seek more of “unconferencing” and informal weekend get-togethers to seek the next big ideas, potential co-founders and investors.
In Bangalore, the city considered to be India’s Silicon Valley and clearly a hotbed for the country’s most promising start-ups, Mobile Mondays, Startup Weekends, and several other informal but focused group discussions are much more popular than any other industry event.
Last year, Nasscom realized it needs to do a rethink and it appointed a seven-member committee led by Infosys founder N.R. Narayana Murthy to recommend ways to structure itself for 2020. Google’s India head Rajan Anandan, MindTree Ltd co-founder Krishnakumar Natarajan, Genpact Ltd vice-chairman Pramod Bhasin, head of Dell Inc.’s customer services operations in India Ganesh Lakshminarayanan, Ashank Desai of Mastek Ltd and the current Nasscom president Som Mittal are other members of this panel.
Unfortunately, this committee still lacks a real maverick product entrepreneur who could help the industry see ways to re-engineer itself and learn from the world’s best-known start-up and product ecosystems including those in Israel and the Silicon Valley. Six of the seven members are from IT services and BPO backgrounds.
Among recommendations, the Murthy committee is evaluating to propose that Nasscom become an organization with different councils representing interests of domestic IT, product firms, start-ups and large software exporters among others. This committee plans to announce its recommendations in the first week of March.
But a lot depends on whether Nasscom is bold enough to reinvigorate and transition from owner to a curator of ideas, especially when it comes to smaller product firms.
Nasscom needs to find a way to curate these ideas and informal events and not just impose a larger association framework. Nasscom needs to allow some of these breakaway units to evolve on their own through initial handholding, just the way any mature parent do.
And in doing all this, hopefully Nasscom will also find its old, start-up self that its energetic past president, Dewang Mehta, so passionately built during 1991-2001.