|
Page - 1
Executive Summary
Indian software companies have been in the business of application development and maintenance for global clients for a decade now. This model of doing business has been a high revenue generator so far bringing a high return on investment (ROI). However, in this age of competition, price undercutting and rise in salaries, this model may not yield the desired returns for long.
Figures prove that had market forces been solely allowed to influence the revenues of Indian software companies, they would have been in the red since 2003-04. The depreciation of the Indian Rupee and the infrastructure facilities provided by the Government at a low cost have so far minimized the effects of these market factors. Therefore, it is imperative that Indian software companies look at the higher end of the value chain to sustain themselves and improve their profitability.
There are two broad ways Indian software companies can move up the value chain - consulting and product development.
Indian companies have built up substantial domain knowledge through application development and maintenance to get into the business of consulting. However, as a first step, they need to metamorphosise their image of low-cost back-office service providers to product developers and domain consultants.
Product development, on the other hand, is a high-risk business. This is because the product might fail in the market, thereby sinking the entire investment made on it. However, the pros far outweigh the cons. By not getting into the business of product development, Indian companies are likely to miss the exponential revenue growth associated with successful products.
The major areas where Indian software companies can make their mark are: -
Next
* Contributed by -
Jaydeep Chakraborty, BE (ECE) from NIT Durgapur,
Chitrita Bhattacharya, BE (ECE) from MNREC (NIT Allahabad),
Currently pursuing PG Program in Management from XIM, Bhubaneswar.
|
