Steve Forbes calls India global leader in software tech services; here are reasons why Forbes is dead wrong in his analysis
Harish Baliga
Oct. 18, 2009

India is set to become a global leader in technology services as software companies move up in the value chain, the Chairman and CEO of business publisher Forbes said on Saturday.

"They are global players in certain areas, they will be leaders," he said. He said that companies such as Tata Consultancy Services, India's top software exporter and its smaller rival Wipro were already undertaking complex software projects.

Steves Forbes is looking at the current scenario and fails to understand the complexity of the software technology market place that will dominate the next several decades.

Software technology/engineering is still in its infancy compared to other fields of engineering. For example, civil engineering is 5,000 years old while software engineering is only 60 years old. In early stage of technology business life cycles, products are custom made. For example, in late nineteenth century and early twentieth century cars were primarily hand crafted and engineered. It was mostly custom made and treated as a service industry than an automation industry.

Software, till today is also a service industry. Indian software companies are really employment agencies who come to American companies and say, ‘tell me what you need, we will get it done.’ These Indian companies have failed to create a single viable software product like ERP systems – SAP, PeopleSoft, Oracle Business Suits and so on. In spite of boasting the largest software engineering professionals in the country, Indian software products just do not exist. These companies have made some feeble attempts to market their software (custom made) to Middle East, Africa and so on. But in reality they have failed as real software companies.

Software coding based on some requirements is easy. What requires real talent is in marketing a pre built software and sell the same to many companies. It needs, vision, business strategy, operations management, and superior software engineering skills. Indian as a nation, and Indian so called software companies have failed as software product manufacturers.

Think about Japan. Japanese companies built bad cars for many years. They finally beat the Americans in auto industry in eighties and never looked back. But remember, they made auto products right from the beginning. They never came to Americans and told them, “tell me what you need, we will provide you cheap Japanese labourers to build your cars.”

Where India went wrong can be a case study in every business school “Business Strategy” course and Mr. Steve Forbes did not get it.

Compare Indian Space Research success with her failure in creating a single software product. Business strategy cannot be short term driven. It needs a long-term perspective. Indian rockets hardly could make it to the sky in early days. United States shut its door to Indian Space research Organization for many decades. It was the best blessing in disguise for the Indian Space Research Organization (ISRO). They researched and build indigenous technologies with great effort. They did not service back end of American companies. They instead built real space crafts and went after real space missions. Remember, Indian Space Research Organization is an Indian Government company, it is not guided by the short term needs of Bombay Stock Exchange. But Indian software industry was right from the beginning controlled and run by industrialists like Tatas and others who never understood the real difference between automobiles, spices and software. They could smell easy money in supplying people at lower cost taking advantage of exchange rate differential between US dollar and Indian rupees. In the process Indian software companies are now slaves of the American corporate back end needs. As America plunges into depression, Indian outsourcing IT industry will get wiped out.

There is some source of light at the end of the tunnel. As America and Europe is forced to shut the door to software body shops in India, may be like Indian Space Research Organization, Indian software companies will rise in the real value chain and create some excellent software products that will be used all over the world in future.

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