As start-ups rise, Nasscom tries to stay relevant

Bangalore: India’s information-technology association representing the $100 billion industry may change its organizational structure to connect better with a new breed of technology start-ups beyond large exporters accounting for more than half of the software exports.

add_main_imageA six-member committee led by Infosys Ltd founder N.R. Narayana Murthy is deliberating on the future of Nasscom—the National Association of Software and Services Companies—and is expected to submit its recommendations by December. Google Inc.’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 and the current Nasscom president Som Mittal are other members of this panel.

Since it was founded in 1988, Nasscom has lobbied for India’s growing software firms in the top markets of the US and Europe, besides pushing its agenda with the Indian government for better tax incentives. Nasscom has also been fighting a perception battle with US lawmakers and opinion leaders to position Indian software exporters as job creators in the world’s biggest market for technology services.NextMAds

However, as Infosys, Tata Consultancy Services Ltd and Wipro Ltd evolved as global firms and stakes became higher in their key markets, they started focusing on lobbying and image-building on their own.

Nasscom now faces the challenge to not only ensure it remains relevant with its large members that are some of the biggest names in the global outsourcing sector, but also woo India’s next generation firms such as online retailer Flipkart Ltd and office software maker Zoho Inc.

“This (committee) is not about restructuring, it’s more about envisioning what the next decade will look like and preparing for it,” said Nasscom’s Mittal. “Young companies need help mostly in their early years, so how we can help them is an example of what’s the agenda for this committee.”

India’s e-commerce firms are among the new stakeholders Nasscom has to serve. Their requirements both in terms of government policies and private funding are quite different from what a traditional software services firm would need.

“IT services will continue to grow and become larger, but we are now seeing an inflection point for new areas such as e-commerce and digital advertising,” said Google’s Anandan. “How should Nasscom organise itself and accelerate the start-up ecosystem are among areas being fleshed out.”

Indeed, the Indian e-commerce market is expected to reach over $4 billion in four years and revenue from newer segments such as cloud computing will reach the $5 billion mark in five years, according to Zinnov Management Consulting, a researcher. With a 789% increase in product start-ups and a 2173% increase in funded product ventures in the past three years, the Indian technology product economy is on an unprecedented growth trajectory.sixthMAds

Anandan said there could be initial public offerings of up to $7 to $8 billion from Indian e-commerce companies next year.

Global experts tracking Nasscom said the association needs to urgently realign and focus on newer entrepreneurs.

“If Nasscom doesn’t take the lead in teaching Indian entrepreneurs about these advances, then new organizations will emerge that take this role and Nasscom will become irrelevant,” said Vivek Wadhwa, an Indian-American technology entrepreneur and director of research at Duke University’s Pratt School of Engineering.

“The IT industry has plateaued as has the power of the IT departments and CIOs (chief information officers) to which they sell. India needs to find the next $100 billion market. This is in new products and technologies and in new types of services—not the old IT maintenance services,” said Wadhwa, who is also a fellow of the Arthur & Toni Rembe Rock Center for Corporate Governance at Stanford University.

With software applications increasingly shaping the future of hardware devices such as medical equipments and other systems, a new breed of entrepreneurs is rising.

“For instance, one of the questions we at Nasscom have to answer is what role should we play in driving standards across medical devices enabled by software,” Mittal said. “How do we work with these companies because they are not even our members?”

Experts such as Wadhwa said Nasscom can play a role in accelerating these new companies in India.

“One of the biggest opportunities is to help old-line manufacturers take advantage of robotics and 3D printing. Indian companies can be taking the lead in developing these new technologies and helping American manufacturers make the transition. New types of software-based medical devices also need to be developed,” Wadhwa said.

Start-up firms and newer entrepreneurs feel Nasscom can play a role in bridging what they call a growing divide with big software exporters.

“For entrepreneurs like us, it’s surprising to exist in this parallel universe and not see them as often in our world,” said Anshuman Bapna, co-founder of online travel planner Mygola.com. “Nasscom can help set precedence by bridging this divide.”

On its part, Nasscom has started focusing on Indian start-ups by organizing events such as the India Product Conclave, being held on 7 November in Bangalore.

The way forward is to follow models of funding start-ups early in their journey, “the way Israel does through its office of the chief scientist”, said Natarajan of MindTree.

Clearly, the lobby group has to reinvent itself and ensure that it aligns its future plans with expectations of new stakeholders.

“Over years, Nasscom also alienated itself from start-ups in India by continuing to be driven by leaders from large software exporters,” said an Indian entrepreneur who requested anonymity because he did not want to upset Nasscom. “Can it involve newer entrepreneurs in decision-making and agenda-setting?”