SEAP – the Software Exporters Association of Pune (SEAP) – had its annual general body meeting today. Gaurav Mehra, co-founder and MD of Saba Software, who was the president last year, was re-elected as the president for another term.
At this event, Som Mittal, President of NASSCOM, spoke about the state of the software industry in India.
Here are a few points he made. (Note: this is a live-blog, so it is only a partial report, and I have missed a lot of other stuff that happened – but it is being reported here because something is better than nothing.)
- We are worried about the unemployability of our Technology graduates. We shouldn’t be. US, Germany, Japan and other advanced economies are facing a shortage of technology talent. For example, in spite of the fact that US faces very high levels of unemployment, they still have a shortage in the technology sector. All of that is an opportunity for India which has a surplus of STEM graduates.
- If a country like Kenya can do 40% of its payments by mobile, we should be able to do a lot more. Our mobile penetration is growing very fast. This is a huge opportunity.
- Many people have a (mistaken) impression that Japan is an export oriented economy. This is not true. For most Japanese companies, the domestic market provided a major chunk of their business. And they leveraged this into exports. We need to do this in India.
- Indian software companies should target the Government as a customer. 10 billion dollars are going to be spent on technology. We should capture that. More and more digitization is being mandated. For example, in the last election, 100% of the votes were electronic – in this aspect we are ahead of most advanced economies. But our software companies are not giving enough importance to this market.
- Our software industry should target the SME market in India. It is huge.
- Question: What are the challenges in targeting the domestic market, and what are the ways of getting around these?
- Answer: The challenges are:
- In the past, India was a very hardware oriented market. In the rest of the world, cost of hardware/software/services was split as 33%-33%-33%. By contrast, in India hardware accounted for 70% of the cost. This made life difficult for software companies. Now there is a growing perception amongst Indian companies that software can also cost a lot, and this will help Indian software companies.
- One of the problems in the past was that companies really can’t leverage IT without connectivity. But that is changing fast.
- Another problem that we face is that it is 4 to 5 times more expensive for Indians to buy hardware/software as compared to the western world – if you take PPP (purchasing power parity) into account.
- Government is a large buyer – and there are challenges in targeting this market. Procurement procedures are very long. Getting paid is a challenge.
- Solutions to thess problems:
- In about 4/5 months, you should see a new policy announced by the Government to fix some of the problems that prevent our software companies from serving the government
- Answer: The challenges are:
- Question: Getting qualified talent in India is a challenge. What is the solution.
- Unfortunately, this is a problem, and the situation is unlikely to change for a few years. There are steps being taken, but the results will not be immediate – so for the next 4/5 years, we need to continue doing what we’ve done so ar – that is, take bright students with raw talent and without specific skills, and then train them.