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Eco-systems for the technology sector

What makes an industry, which has already achieved great success with a ten-fold growth of revenues in the last ten years crave for more? Ganesh Natarajan tells more.
Hindustan Times | By Ganesh Natarajan, New Delhi
UPDATED ON JUL 10, 2007 02:40 AM IST

What makes an industry, which has already achieved great success with a ten-fold growth of revenues in the last ten years crave for more?

Why do we need to build and strengthen eco-systems to build a more inclusive climate of innovation where all the players — the global multinationals, the billion dollar firms, the score or more mid-tier players and the hundreds of entrepreneurs, all thrive and succeed?

The answer lies in the enormous potential that remains to be tapped in the global world of outsourcing. Recent NASSCOM projections show that for the $17 billion of IT revenue clocked by Indian firms and the $9 billion done by our competitors that global offshore industry is seven or eight times larger and the gap is even wider in Business Process Outsourcing.

Where the addressable market has large ‘white spaces’ in major industries and the need is moving from simple call centres or transaction processing offshore to complex high-interaction business processes that need careful management of workflows. And with more and more consolidation happening across the industry, smaller companies will have to choose their niches and value propositions with great research and ask for and get excellent support to be able to hold their own against domestic and international competition.

Any supportive eco-system needs active participation by industry bodies, large and medium companies, educational and research institutes, investors and government and governmental bodies. A study of the successful eco-systems that have evolved in other parts of the world show a continuum from the largely government driven efforts in Israel Singapore and Taiwan to the democratic participation by all players in Silicon Valley and the multi-country Eureka initiative for innovation in Europe. In India the weakest link has been the financing institutions — while Silicon Valley has an abundance of angels, venture capitalists and private equity funds, India has only recently seen the arrival of early stage VCs who do not have a debt financing mindset.

A lot can be expected from the government as well. For an industry, which has built its global presence and reputation with excellent support from government, a helpful tax regime and the introduction of the well thought through Software Technology Park (STPI) scheme early in the day would be just two examples.

Future sustenance of entrepreneurial firms will happen only if the they get support to find and exploit suitable niches and continue to get the benefit of tax and other incentives to hold their own against larger brethren and small firms in other tax and incentive friendly regions in China, Poland, Malaysia, Vietnam, Dubai, Philippines and many other emerging locations.

Will we see forty or more cities, a thousand entrepreneurs and 10 million or more youngsters participating in the next stage of growth and success as India consolidates its position and compete with China’s Yantze Delta’s position as the world’s factory?

Will the outstanding partnership between the government, Nasscom and the industry that has seen a truly global industry emerge in the last 15 years or so continue to thrive in India? It certainly would be good for the country!

The writer is Deputy Chairman & MD of Zensar Technologies.

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