mohanbir sawhney presentation at thinkers50 india

Mohan SawhneyKellogg School of ManagementAugust 30, 2013

India Outside: From IT Services to Technology Products

• Indian exports of IT and BPM services reached $69 billion in 2012

• India controls 58% of the global sourcing industry

• The IT and BPM industry accounted for 25% of India’s exports in 2012

• BPM and Analytics services are the more recent success stories

India leads the world in IT services

Source: NASSCOM

• Software product exports are a paltry $1.5 billion, less than 5% of the Indian software industry.

• There are 3,400 Indian software product companies but the average revenue is less than $600K

• Software product exports have grown at a CAGR of only 10% from 2008 to 2013

• India lags behind China, Israel, Russia and Brazil in software product revenues

But where are the products?

• Banking products like i-Flex and Finacle (Infosys) and BaNCS (from Tata Consultancy Services) are the only notable Indian software products

• While Indian IT majors have excelled in outsourced R&D and product development, they haven’t developed meaningful products themselves

Even the IT Majors lag behind

The Indian IT industry journey

People

Projects

Processes

Products

We are stuck here

Why products? Scaling revenues

Revenues

Time

Products

Services

India can learn a lot from Israel

• Culture of fighting against adversity

• Entrepreneurial mindset and “chutzpah”

• Mandatory military service• Israeli Defense Forces as a leading-

edge customer • Strong connections to the United

States financial community• Startup funding assistance from

Government

Israel’s success factors

• Services are less risky and produce predictable revenues

• The success of Indian IT majors in services limits the need for product innovation

• Entrepreneurial ecosystem and culture still leave a lot to be desired

• Indian companies lack marketing capabilities including branding and marketing communications

Why India lags behind in products

There is a world of opportunity

Cloud infrastructu

re

App economy

Domestic market

• Create a mass-market consumer software service

• Acquire the “first 1 million” customers in India

• Leverage learning and customer base to enter U.S. market

• Trade Indian multiples for U.S. multiples

The “People Arbitrage” Play

Examples of “People Arbitragers”

Arenas of opportunity• Education• Human capital development• Logistics• Financial services• Healthcare• Mobile applications• Healthcare services

What it will take to win in products

Product Investment

Mindset

Marketing Capabiliti

es

Startup Ecosyste

m

We can do it!