"The IT-BPO industry in India is on a growth path, expanding across services, verticals and geographies. The industry is also very diverse today — differently-sized companies with different business models."
While the industry has a long tail of small and start-up organisations, this segment is demonstrating vibrancy, innovating and emerging as the future of the industry.
Rajendra S Pawar is the Chairman and Co-Founder of the NIIT Group that encompasses NIIT Limited and NIIT Technologies Limited. Mr Pawar holds a B Tech degree from IIT, Delhi and has also been awarded an Honorary Doctoral Degree by the Rajiv Gandhi Technical University in 2005. He is currently the Chairman of NASSCOM.
The industry has defined an ambitious vision for itself — revenues of USD 225 billion by 2020. While the large and multinational organisations will grow and expand, we need a plethora of successful small and start-up organisations to achieve this vision. This segment will need to contribute to at least a quarter of the industry’s revenues by 2020.
A robust SME sector will in fact, be a prerequisite for the achievement of the revenue target of USD 225 billion by 2020, and if existing trends are an indicator, India’s ‘Small’ is indeed becoming beautiful.
An analysis of the SME segment, in particular the start-up ecosystem, shows that India is entering the software product era where smaller IT enterprises are emerging on the horizon. By the end of 2011, there were around 2,400 product organisations (up from 400 in 2000 and 950 in 2005), with revenues of about USD 2 billion. Over 300 of these organisations are located in smaller cities. More importantly, the VC and angel ecosystem in India is funding, mentoring and advising these organisations. Around 100 product start-ups received VC funding in 2010.
These organisations are developing products for India’s burgeoning domestic market, including smaller buyers and government, apart from the global market. The cloud, mobility, e-Commerce, social media, and analytics are the emerging technologies being leveraged by these organisations to build products and solutions.
The ecosystem simply abounds with success stories — Eko, Zomato, Edserv, mChek, Gradatim, eTechies, Flipkart, Mobme, Zoho, Kinetic Glue, InMobi, Dhruva — organisations that have come up over the last few years, and created a niche for themselves in the market.
This vibrant environment was clearly visible at NASSCOM’s Product Summit held earlier in the year. Vinod Khosla in his keynote address at the event summed it up by saying, ‘start-ups innovate, not big organisations.’
It is apparent that the transition from ‘Small to Big’ is a growing reality, and all that is required is an enabling environment to fuel this movement.
The Government of France has embraced a very interesting ‘cluster-based’ approach to boost the global competitiveness of the country’s economy by powering the growth of its SMEs, generating more jobs and providing support for high-tech activities. This successful initiative comprises 71 clusters accounting for 7,200 firms and 760,000 people.
These clusters bring together large and small firms, as well as educational establishments and research labs, to build on synergies, innovation, and cooperative projects, to emerge as the ‘first’ in their fields.
A similar, focused and out-of-the-box solution is needed for Indian SMEs, to incrementally boost the expansion and revenue contribution of these organisations and position them as champions of change. There are multiple schemes in India that are aimed at supporting this segment. However, the design and implementation of these schemes needs a re-look, so that SMEs can actually benefit from them.
The country’s future growth is inextricably linked to the development of SMEs, and only when India’s ‘Small becomes Big’ can it achieve its vision of being a global economic powerhouse.