Software industry asked to tap domestic market

November 6th, 2008 - 6:39 pm ICT by IANS  

Narendra ModiBangalore, Nov 6 (IANS) Gujarat Chief Minister Narendra Modi Thursday urged the Indian IT industry to focus on the domestic market to overcome the challenges of global slowdown.”The Indian IT industry has a rare opportunity to show its capacity to sustain growth momentum by focusing on the domestic market at a time when it is facing challenges of global slowdown,” Modi said inaugurating the three-day BangaloreIT.biz 2008 event here.

In his view, the Indian IT and BPO (business process outsourcing) industry has to capitalise on the outsourcing model and explore growth opportunities in the domestic market.

“There is a vast Indian platform, which remains untouched with the ICT (information and communication technologies) revolution. The IT industry will render a great service to the nation by serving the domestic market and creating a sustainable revenue model in the process,” Modi told about 1,000 delegates at the 11th edition of the IT show at the sprawling Bangalore Palace grounds.

Exhorting the IT industry to move up the value chain by innovating and investing in research and development (R&D), the Gujarat chief minister said the productivity of the Indian IT firms was quite low in spite of its phenomenal growth.

“Even today, the average realisation per employee of an Indian IT firm is one-twentieth or lower than global leaders such as Microsoft and HP (Hewlett Packard). Majority of the revenue comes from low-value addition jobs like manpower provisioning and low-end support, which appears to be a safe alternative adopted by the Indian IT industry,” he lamented.

“Though the Indian IT services and BPO industry has gained maturity by graduating into high value domains such as product development and engineering services, it is still younger compared to many other industries,” he said.

According to Modi, there is a limit to the number of people a company can attract without attrition and then manage the same amount of productivity. This may be a formidable challenge, especially when the cost of Indian IT employee is steadily rising and competition from countries such as China, Philippines and those in eastern Europe hotting up, he said.

“Hence there is need to shift gears. The industry has to invent itself,” he said, and wondered why the Indian IT industry couldn’t develop a MS Windows or create a Google or a Yahoo.

“If an Indian (Sabeer Bhatia) could develop Hotmail and if about 30 percent of Windows developers could be Indians, the task to develop an India-made samurai should not look all that difficult. What is required is a lead of faith and a shift in business and product strategies,” Modi observed.

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