Mint, New Delhi Pankaj Mishra column
Feb 04, 2013 (Mint - McClatchy-Tribune Information Services via COMTEX) --
India's information technology association representing the $100 billion industry is facing questions that even some of its members, especially the large services firms, are finding increasingly difficult to answer as they grow bigger in revenue, staff strength and complexity.
For the first time since Nasscom -- the National Association of Software and Services Companies -- was founded in 1988, the trade association is facing a revolt from smaller firms focused on software product development who are beginning to break away from the pack to establish their own, focused groups and think tanks.
These firms say they have been forced to form their own association as Nasscom has not been able to address the issues and needs of the software products business. 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.
After years of watching their much bigger software services counterparts hog the centre stage and drive initiatives from Nasscom's executive council -- the highest decision-making body of the association, some software product firms have decided to split from the first family of Indian IT.
On Sunday, the Times of India reported 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, have formed a separate association called the Indian Software Product Industry Round Table, or iSpirt.
In the over two decades since it was formed, Nasscom has become a reflection of its biggest member firms including Tata Consultancy Services Ltd, Infosys Ltd, Wipro Ltd and other software exporters. Over the years, top officials at Nasscom have devoted most of their time lobbying for immigration issues in the markets of the US and Europe apart from pushing the government in India to offer better tax incentives.
Experts say while Nasscom has lobbied effectively on larger industry issues, the unique needs of smaller firms have been overlooked.
"It was interesting to see the knot finally cut," said T.R. Madan Mohan, founding partner of consulting firm Browne & Mohan that advises fledgling ventures on their strategies. "Many product companies despite having built successful revenue models found the central platform regrettably inadequate in addressing issues related to setting aside in e-governance or defence issues or continuation of section 10 (a) and 10 (b) tax advantages. While in spurts these organizations legitimized their existence through annual events and policy papers, the need for continuity in focus and articulation was woefully missing," Mohan said.
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 its part, Nasscom has acknowledged the growing need to restructure its organisation. As Mint reported in November last year, a seven-member committee led by Infosys founder N.R. Narayana Murthy is deliberating on the future of Nasscom. 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, Ashank Desai of Mastek and the current Nasscom president Som Mittal are other members of this panel.
Among recommendations, the Murthy committee is proposing that Nasscom become "7-councils" organization that has specific bodies representing interests of domestic IT, product firms, start-ups and large software exporters among others. This committee plans to announce its recommendations and even start a restructuring of Nasscom in the first week of March.
One of the biggest promises made by the newly created iSpirt is its flat organizational structure with no plans to build a large association having offices across the country.
"iSpirit with its flat organizational structure and less of "Delhi-centric" syndrome shall benefit the product ecosystem. The acid test would be how effectively the product playgrounds, Bangalore, Pune, Chennai, would integrate and own the movement," said Mohan.
For Nasscom, the biggest challenge would be to ensure that it's able to hold on to its positioning of being the single platform for the industry while meeting the aspirations of smaller, fast-growing firms.
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