When all the strengths and weaknesses are taken into consideration, it appears that any viable strategy in this product category should be woven around the following factors.
Enhancing productivity ad achieving value addition in the first place, the problems of low productivity and low value addition have to be tackled. The revenue productivity per person in the US, Ireland and Singapore was $86,000 $42,000 and $31,000 respectively in the first half of the 1990s. India’s productivity was only $21,000. By late 1990s, the figure for the US had gone up to $181,000 and for Singapore to $112,000. India was lagging far behind. Experts point out that India should have a minimum individual productivity of $ 58,000 to compete effectively.
Domestic computer base has to be strengthened:
A well developed software market within the country is an essential requirement for carving out a solid position in the world markets. But domestic computerization has been rather weak in India. Many industrial undertakings in India are yet to computerize; and sectors like transportation which have a lot of potential, still have a lot to do when it comes to computerization. In India, in the software business, exports have been consistency larger than the domestics business. In the 1990s the share was 5:3 in favor of exports. Had the domestic base been stronger, Indian firms would have fared much better in exports.
Personnel must be developed rapidly:
Availability of the right kind of manpower must also be ensured. At the current manpower growth rate, India will fall short of trained software professionals. A crash program for generating computer professionals at a much faster rate is called for. Substantial enhancement in training facilities in terms of quality as well as quantity is needed. There is a mismatch between the training imparted by India to her software professionals and the skills required in international markets. This gap has to be eliminated.
Telecom/datacom facilities need enlargement:
Telecom and datacom facilities, so basic to software development and exports, have to be enhanced. Offshore projects, in particular require sophisticated telecom infrastructure. A comparison with the competing countries indicates that the telecom infrastructure in India is just above average, while that of Ireland, Israel and Singapore is rated strong. If India wants to improve its ranking, it has to improve its telecom facilities. This will require the provision of high speed datacom links by the government at internationally competitive prices.
Product/ market selection:
As highlighted by the study referred, Indian firms have to concentrate on top of the line products, which allow higher prices and margins. It means a real shift from the existing trend of low priced, low-tech solutions.
In the matter of markets, it appears that a wider geographic coverage may be essential Indian companies will now need a larger of the non-US markets. For example, there is a great potential for Indian software exports to countries like China and Switzerland. Switzerland is one of the highly computerized societies in Europe, and software market is estimated to be around SFr 6 million.
A study by a Swiss software consultant has found that Indian exports to Switzerland could be enhanced manifold, provided Indian companies penetrate the market though a local partner. In fact, TCS followed this route and won a large contract from the Swiss Securities mad Exchange Agency (SEGA). It succeeded in this regard after linking with the Swiss company, Teknosoft.
China is emerging as another high potential market. China has a huge domestic market in IT; sales of IT products are in the range of $20 billion. The Chinese want software in their language. The strategic move by Infosys to hire Chinese software personnel to penetrate the Chinese market is a welcome step.
The conclusion is obvious. With proper product-market strategies and infrastructure up-gradation it is possible for Indian IT firms to become major global players.