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Friday, April 29, 2005

Is the Indian IT Industry losing it's Edge ?

In an article of the above title in the Business Standard Mumbai Edition dated 27th April 2005 (Page 8), Dr. Sridhar Mitta of e4eIndia and Mr. Shankar Sharma of First Global debate the above issue. (I could not find an online edition of the above article.)

Dr. Mitta makes two points - The Indian IT Industry should focus on the BOP (Bottom Of Pyramid Opportunity) and also adopt a Consortium Approach. While I fully agree with his first viewpoint, I am not too sure as regards the immediate implementation possibilities of his second suggestion based on past experience.

Kaytek has worked as a part of consortium of Indian Software Companies in the past and there are several business and technology interfaces that need to be settled between the Consortium Partners for it to work effectively. But it can be done and perhaps is the only way out for small and medium sized software companies to be able to scale their operations globally.

Mr. Shankar Sharma makes a point that I have all along believed in - The Rising Capital-Output Ratio of the Indian Global IT Services Organizations.

For every extra incremental dollar of export outputs, increasing amount of incremental Capital Investments are being Required.

Mr. Sharma is quite pessimistic about the strategies of Indian Software Companies. He forgets that these large investments in India by software companies are increasingly hosting critical Knowledge Assets of Western Customers. This Intangible Assets Group value is increasing daily (not decreasing). So there is some element of scaleability in the Model due to Intangible Assets, if software companies can leverage it well.

For more on Intangible Assets, this visual on our website might help.


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