SaaS Growth to Drive and be Driven by SMBs

While researching on the advances SaaS (Software as a Service) has made in India two things struck me hard in the face SaaS is not as naive to the Indian Small and Medium Businesses (SMBs) as we in the tech field usually think The major SaaS providers in India are still North American companies, examples being Microsoft, WebEx in the area of collaboration, etc. A recent survey by SpringBoard revealed statistics that predict jaw dropping numbers in terms of SaaS adoption in India. There is also news of Indian players slowly but surely waking up to the SaaS reality. While ASP ( Application Service Provider) concept failed, SaaS, a similar refined concept, was initially discarded as a old wine in a new bottle. However, it seems to have more than just teeth in its bite. Indian Majors like NIIT, TCS are announcing SaaS initiatives. TCS announced a complete new model that they christened 'IT as a Service'. Infosys announced a 'SaaSified' version of their popular Finnacle financial product for banks and other monetary institutions. With former revenue taps running dry, it is just a matter of time before Indian IT majors announce their own SaaS initiative to tap the predicted $168 million SaaS market of India by 2010. SaaS will affect Indian growth in a huge way. Its single most unique advantage of not forcing companies to produce upfront capital for their IT investment will mean that a slew of Indian SMBs will now embrace IT like never before. IT adoption in India will fuel SaaS growth and that in turn will fuel more IT adoption. Its a symbiotic cycle that's getting setup. Its only a matter of time before the wheel starts spinning in full vigor.

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Indian IT - Looking out for business

Two news items caught my attention. One, where NASSCOM has predicted that India's IT growth is very well on its way to meet its targets for the year 2010. The other where Infosys CEO Kris Gopalakrishnan cautioning the industry of slow growth. While the industry trade body seems to predict a rosy future, the industry bell weather seems to be pointing at a grim one. NASSCOM, predicts software and services exports to cross $40 billion and the domestic market ito touch $23 billion in FY08. "Positive Market Indicators" and "Strong Track Record" are being cited as the reason to safely predict that India will reach $60 billion in software and services exports and $73 to 75 billion in overall software and services revenues, by FY2010. A careful observation reveals that while exports are expected to reach from 40 to 60 bln USD in the next 2 years, the domestic revenues which is expected to reach 23 bln USD this year are marked to fall to 13-15 bln USD in 2010. I find this a little hard to accept. I am more gungho about the domestic market being able to sustain the US slowdown and make up for a substantial portion of the fall in exports. On the industry side, things are not looking up. IT stocks are getting battered, margins are being lowered, the Indian rupee is appreciating and the sub-prime crises that is plaguing the US financial markets does not seem to be going away. Add to that high attrition rates, spiraling salaries and shrinking talent pools and you defintely will empathise with the situation that the IT industry finds itself. The message is very clear and loud. To sustain growth and reach the levels predicted by NASSCOM, IT companies need to look and build forts elsewhere while they wait for the world's largest economy to re-emerge from the recession it seems to be sinking into. But where elsewhere? Europe is already being tapped. Australia too is being tapped. Did we forget the burgeoning businesses in the new darlings of the global economy? China and India....Lots of medium and small businesses are growing at frenetic paces and they need software services support their amazing growth rates. Are we missing the fortune right at our feet? Hope not....

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Countering the Rising Rupee

With the rupee breaching the 9 year high against the US dollar yesterday by appreciating to 40.23 a dollar, Indian exporters have started frantic efforts to kick off counter measures that can sustain their eroding margins. More so for the Indian IT industry that clocked exports worth $31.4 billion for the fiscal 2006-07. So what are the top 3 players in the Indian IT industry doing to weather the seemingly 'here-to-stay' storm. Short term firefighting Forex Hedging Gains TCS, the number one IT services provides in India, according to analysts, has shown how hedging can help during times like these. While Infosys, the Indian IT bell weather registered a 300 basis point decrease in operating margins (A 1% rise in the rupee against the dollar affects operating margins by 30 to 50 basis points.), TCS maintained its previous quarter performance. TCS had about $2.5 billion outstanding in hedges on June 30. Lower Provisioning of Taxes Declaring lower amounts to be set aside as payable to the tax man at the end of the fiscal is one way in which quarterly gains can be boosted. Lower wage hikes Wage hikes are definitely poised to take a hit. India's IT exporters are now walking the tightrope between escalating wages and the appreciating rupee, not to speak of demanding clients. Lobby with the government to intervene to halt the appreciating rupee Long term adaption Increase services to emerging markets in Gulf and Asia Top IT companies in India differ in terms of their diversity of client geographies. While the US contributes to 63% of Infosys's revenues, TCS has diversified revenue sources ranging from US, Europe, Gulf and even the Indian domestic sector Fill up previously less lucrative spaces like 'Assurance services' in emerging market Domestic testing or 'assurance services', an IT service market at the lower end of the spectrum that the big players couldn't care less about all these years, now has got back their attention. This will lead to some serious competition in the domestic market as the big players prepare to channelize their resources into newer

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Infosys Strategy best among Application Outsourcing Companies

The Forrester report citing Infosys as the leading strategist among the several Application Outsourcing providers in North America comes as no surprise. The report states that "Infosys is among the strongest offshore providers in applications outsourcing (AO). Like its contemporaries, its rapid growth indicates that it is competing effectively in the AO market. Infosys is not always viewed as the most price-competitive of the offshore providers, but its strong reputation for cultural fit among North American customers allows it to compete effectively with multinational corporations (MNCs) and offshore rivals alike." In fact I wouldn't be surprised if I find other offshore players in the list too. The reasons are multifold. The key one I believe is the kind of marketspace that the offshore players are competing for. With homegrown players like Infosys, Wipro, TCS and Satyam competing in North American and European markets, they are bringing the home advantage of cheap offshoring while evolving new strategies to fit their Global Delivery Model to suit the cultures of the markets they are penetrating. This involves not just trying to offer what the client wants, but grooming entire business units that serve the client to respond to the finer requisites of making the client comfortable as he outsources his work to these new kids on the block. The other not so comforting factor that the Indian players need to constantly allay is the client fear of getting his work outsourced to half way across the globe. Another brilliant strategic move by the Indian companies is in expanding to the emerging BRIC economies of Brazil, Russia, India and China faster than their North American companies like EDS, IBM, Accenture. They are foraying into these new markets with two purposes in mind. One to capture new clients and two to develop new offshore development centers that they can then plug into their GDM model to serve clients across time zones even more seamlessly. The Forrester report is a recognition of the huge strides Indian software MNCs are making just 1.5 decades after their appearance on the global stage.

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RFID providing dual benefits to Infosys

Its one thing to deploy technology solutions as proof of concept applications so as to benefit the company to showcase its technology know how to its clients. However, deploying applications as proof of concept for the mutual benefit of its employees as well as lend credibility to its commitment in the eyes of its clients is much more desirable. Infosys, the bell weather of Indian IT services has done exactly the latter with its RFID application. Infosys has designed and deployed a vehicle access-control system using EPC Gen 2 passive RFID tags. For those hearing the term for the first time, relax. RFID stands for Radio Frequency IDentification. These are small chips or chips embedded on plastic cards that can hold information and pass it on wirelessly to a reader which scans a given area of influence. For more refer to HowStuffWorks and Wikipedia. What Infosys has done is this. Deploy RFID readers across its multistory car-parks. Employees have been issued RFID tags to be placed against their windscreens. Whenever the employee approaches within 3 meters of the RFID reader, the system reads the information in the RFID tag on the employee's windscreen, authenticates him as a Infosys employee and lets him access to the car park area. Prior to this being implemented, the employee had to stop over and roll down the wind shield to swipe a RFID card against a card reader that could only read in the vicinity of a few centimeters. This used to result in serpentine queues of cards waiting outside the car park area just waiting to get in. Now the same technology extended has not only helped ease employees' lives but is also getting new orders for the company. For the detailed story, go here

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