Speaking at the IDC briefing sessions in Bangalore and New Delhi in the least
week of August, I was bemused to note both the lack of knowledge and the
considerable interest of the participants in the opportunities for Indian
software exports beyond the traditional US and Western Europe markets. After
years of extraordinary success in getting business from the USA and UK, there is
great merit in recognizing that there is a bigger world out there.
Some of the statistics provided by IDC make a compelling story. Even today,
the US accounts for 62% of Indian software exports and Europe (24%). The
offshore work done for companies outside the US and UK probably contributes less
than a couple of percentage points to the country’s software revenues. The
reasons–lack of cultural compatibility, difficulties of communication in
languages other than English and most important, the rather half hearted
initiatives that have been taken to woo customers in these markets!
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There are several myths about these smaller markets–first, that there is no
profitability here. While this may be true for Singapore and the United Arab
Emirates where the preponderance of Indian systems chiefs leads to reluctance in
parting with significant monies when dealing with Indian vendors, the gross
margins that can be realized from projects in Japan, Australia, South Africa,
even Saudi Arabia and parts of Latin America, are certainly worth the marketing
efforts. Another myth is that markets like Canada and the Gulf are only worth
opportunistic body shopping attempts–the reality is that the markets give us
what we chase and a conscious attempt to move projects offshore has resulted in
rich dividends for a handful of companies who have penetrated markets like Japan
and Saudi Arabia.
If there is one statistic that is worth considering, it is the projections
for GDP and IT services spending growth. While the optimists believe that GDP
growth in the US will be restored to 3.4% by 2003 (the continuing slide in the
stock markets would tend to belie that expectation!), and European growth rates
would climb to nearly 3%, the real high performers would be the developed and
even the developing Asian markets. The other sign is the expectation that the
Compounded Annual Growth Rate of IT spending will be 14% in the Asia Pacific,
13% in Latin America and 12% in the Middle East and Africa.
There is a significant need emerging, particularly in markets like Japan and
Latin America for providing quick solutions to migrate their applications from
legacy systems to Dot.Net or EJB architectures and also to build new systems
using component and solution blueprinting approaches rather than the traditional
analysis, design and programming cycle. This, as well as the area of providing
high quality security solutions hold tremendous potential for Indian software
providers in the years to come.
How does one approach these markets? Is it enough to make an occasional
visit, appoint an agent who speaks Arabic, Spanish or Portuguese as the case may
be? These kneejerk responses can prove to be a recipe for disaster. The first
step is to have people in the territory who understand the local language and
culture and are well trained in the products and services of the firm. This
needs to be followed through with experienced people available to meet with
clients in the territory. And most important is the need to sensitize
consultants in the territory about the local culture. If the intent is there and
strong actions are taken, there is reason to believe that these markets can make
up 30% of Indian software exports in the years to come.
Ganesh Natarajan is the global CEO of
Zensar Technologies