|
The
allegation that Nasscom is a club for large Indian software
companies has always floated around. But Kiran Karnik,
the new Nasscom president, is determined to do away with this
tag, and is now courting smaller IT companies with a vengeance.
Rajneesh De and Srikanth R P report
Quite
a few were of the opinion that the untimely demise of Dewang
Mehta had sounded the death knell for Nasscom as the apex
body for India Software Inc. His successor, the suave Kiran
Karnik, was viewed by many as lacking Dewang’s drive
and lobbying abilities. But after six months at the helm,
Karnik is proving many of his detractors wrong, going by some
of his innovative, and in some cases, daring initiatives.
One of the biggest beneficiaries of Karnik’s zealous
drives seem to be the SME companies, traditionally overshadowed
by the software biggies, and in these bad times, bearing the
brunt of the slowdown, as compared to the larger guys who’re
in better shape.
 |
According
to Karnik, SMEs need a foothold to compete in the
market and this is precisely what he plans to do |
The
truth is that 70 percent of India’s software exports
come thanks to the Big 5 club: TCS, Wipro, Infosys, Satyam
and HCL. And even more lopsided is the fact that the top 20
companies generate 95 percent of exports. Karnik laments that
the total software exports of SMEs is almost negligible as
compared to the big guns. The concentration of large revenues
in the hands of just a few does not bode well for the proper
growth of the collective Indian software industry. Phiroze
Vandrevala, Nasscom chairman, agrees with Karnik. “The
larger Indian companies are growing even larger, while the
smaller companies are being increasingly wiped out.”
In his role as president of Nasscom, Karnik is therefore going
beyond the obvious and wants Indian software SMEs to matter.
Accordingly, in the last few months, Nasscom has had a series
of meetings with members from the SME segment, and is now
working on ways to resolve issues faced by the SMEs.
“We
don’t want to push the already entrenched Wipros and
the TCS’ but want to ensure that the SMEs which have
been increasingly getting wiped out from the global scenario
get a strong foothold in the global market,” says Karnik.
Simply put, most of the Top 20 already have the financial
muscle and clout in the international market, and they hardly
require any handholding from Nasscom today. With their dynamic
leaders and strong technical expertise, the Infys, Wipros
and TCS’ can now compete against an IBM or EDS in the
global arena. But the crying need of the hour is to enable
SMEs to reach out to international customers, as in many cases,
these companies too have tremendous potential, only to lose
out due to the lack of financial firepower. And this is exactly
what Karnik seeks to redress.
Big
plans
To prove that his words do not remain merely on paper, Nasscom
under Karnik has proposed a series of initiatives for the
SME segment. On top of the agenda is drawing up a refurbished
and exhaustive marketing initiative, which is absolutely essential
since most SMEs operate on shoestring budgets. Nasscom has
proposed that SMEs should form a cluster of companies whose
business interests do not clash with each other. This would
enable financial pooling and enable all these companies to
launch aggressive campaigns. Dilip Ganeriwal, CEO, Dess Technologies,
one such SME from Mumbai, welcomes the move and feels that
the blessings of Nasscom behind such an initiative would allow
SMEs to venture into hitherto uncharted waters. However, Karnik
is at pains to drive home the point that Nasscom would be
taking a closer look at the viability of the business model
of each and every company before throwing its weight behind
them.
To add more chutzpah to the marketing campaign, Nasscom would
also help them establish tie-ups with bigger companies, both
global and domestic. This would enable SMEs to use the brand
image and marketing muscle of the bigger companies to penetrate
niche markets. Karnik realises that this initiative would
require careful treading over, since there will be instances
of conflicting business interests in many cases. But, he feels
that eventually this would help not only in removing the lopsidedness
in current export figures, but in the long term will beef
up India’s total software exports.
Going
global
Nasscom is also thinking of leading a delegation of only SME
companies to Malaysia and other South East Asian countries
which Karnik feels are great markets for Indian IT SMEs. Also
on the anvil is a Nasscom delegation to Israel in April, which
too would include a fair sprinkling of SME companies. This
would also give an opportunity to many of these small companies
to study and possibly adopt the Israeli model. Israel has
a host of small companies concentrating only on niche technology
areas, and many of them are now virtually world leaders in
their niche, yet lucrative domains. Many Indian SMEs could
follow this model rather than going for end-to-end solutions,
which is economically prohibitive.
 |
Vandrevala
says the move will help SMEs hold their own against the
big boys in the battle for marketshare |
And
to tout the technology expertise of SMEs, Nasscom is taking
a proactive stand in sending out newsletters to large organisations
abroad about the technology strengths of smaller companies
in India. This has resulted in smaller companies bagging quite
a few orders from huge giants abroad. Case in point: A large
US financial firm was planning to shift its entire back office
operations to India and they wanted it in a short period of
time. Nasscom identified a small Pune-based SME set up and
managed to bag the lucrative contract for them. Says Karnik,
“If there was an open public tender, this small outfit
stood no chance of bagging this deal, as it would have surely
gone to either one of the Big Five or at least some one in
the Top 20.”
In many cases, other Indian companies do not know even the
technology strengths of the SMEs. Therefore, not only companies
abroad, but even India Inc. needs to be imparted with this
knowledge. Since some SMEs have domain expertise in specific
vertical markets, Nasscom is planning an industry section
that will help in tapping sectors like power, chemical, and
entertainment amongst others.
There are also a number of SMEs who have developed good technologies,
but for lack of financial muscle cannot file for patents or
IPR in the US. Nasscom will now act as a conduit between these
companies and VCs to encourage funding for such potential
IPRs. In addition, Nasscom would also encourage bigger companies
in similar domains to fund and look after such IPRs. This
might, in some cases, even result in mutually agreeable acquisitions.
Will
the government help?
Karnik also feels that even the Indian government needs to
encourage SMEs in different ways. Nasscom is asking the government
to remove bottlenecks for the SMEs. For example, if small
companies have to approach the government for loans for setting
up new technology ventures, the government could look at removing
existing bottlenecks like requirement of balance sheets for
three years and waiving off bank guarantees. Asks Karnik,
“Many of these SMEs are mere start-ups, so how can they
produce three years’ balance sheets? And steep bank guarantees
would also be very prohibitive for them.”
The first decade of Nasscom involved intense lobbying under
Dewang to obtain government concessions and establish India
Software Inc.. That aim has now been more or less achieved
what with the software sector achieving 30 percent growth
even in a flat year like 2001. As the annual Nasscom jamboree
in Mumbai this year declared, we now need to sustain this
growth. And the development of SMEs would play a major role
in this. Therefore, Karnik seems to be moving in the right
direction, in an organised manner. If his initiatives come
to complete fruition, he will be assured of his place in the
pantheon of India Software Inc.
|
