India’s new Software Products Policy : Connecting the Unicorns | Tech-Lovers & Innovators

"India's IT revenue is $168 billion but most of it is services. Software product component is less, it is just $7.1 billion.

That's the key motivation for Union Government to launch new National Software Products Policy (#NSPS) to transform our nation as Product Nation creating 65 lakh jobs by 2025.

Let First Enlighten Why Indian Market Lags Behind?

Fact: The Global Software Products Industry has a size of $ 413 billion, and it is dominated by US & European companies. Talking about our country India, it shares in that pie is minuscule - it is a net importer of $ 7 billion worth software products (India exports software products worth $ 2.3 billion, while it imports $ 10 billion).

Quoting Narayan Murthy’s very impactful line before we get into the actual discussion:

“There has not been a single invention from India in the last 60 years that became a household name globally, nor any idea that led to earth-shaking invention to delight global citizens”.

In this scenario, it is worth understanding why India seems to have missed the software products bus. The reasons behind it are multifarious, cutting across cultural, economic, market, behavioral and societal factors - 

Reason 1: Ambiguous Cultural aversion to Failure: Indian society has traditionally valued conformity and prepares people not to fail. Our family and educational environments are geared for teaching us to eschew risk-taking and avoid ambiguity. But building products is all about managing risk and failure. When you take a product to market from scratch, you take on multiple types of risk - market risk, execution risk, product risk. For many people in India, this is in stark contrast to their social / attitudinal skills and expectations they have built up over a lifetime.

Reason 2: "Simultaneous Selling or Buying” offers the Path of Least Resistance: If you pour water down a heap of freshly dug mud, it will find the path of least resistance and flow along it.The IT services industry leverages the cost arbitrage model via cheaper labor costs. Many of the transactional ecommerce startups in India have used geographical arbitrage to their advantage - once a successful product or model is created in another market, they bring it to India to capitalize on a local first mover advantage, build a large valuation and become the gatekeeper to the market before the (original) foreign innovators arrive in India many years later! But arbitrage means, that while you are taking on market & execution risk, you are not assuming the product risk. This dynamics played out at scale over the years has meant it is easier for a wannabe entrepreneur in India to go the arbitrage way and quickly build out a business using a ready-made template, than go down the software products path, which has a much longer gestation & higher risks associated with it.

Reason 3:  Tech-Lovers: You read this: Product Engineering Knowledge isn’t enough - you need design, product conception skills: To build great software products, you not only need strong technical abilities, but also good design, marketing & branding skills to carve out a compelling product offering. Ask any startup in India - one of their most common problems is the inability to hire good designers and UX professionals. This puts Indian companies at a comparative disadvantage - even if they have the engineers to build the technology, their inability to translate that technology into an appealing user experience often means the difference between success and failure. 

Reason 4:  Impatient Venture Capital This is a complaint you hear often from Indian product startups - the lack of venture capital that’s willing to be patient over the longer gestation cycles software products demand. 

Reason 5:  Inadequate Domestic Market Potential: This is by far the best reason that we need to focus on: Many software products are monetized via subscription models, where the market’s ability (and propensity) to explicitly pay for the service is critical for success. Sometimes (SAAS/enterprise) companies try their model in India, only to discover there just aren't enough paying customers. These startups may then be left with no choice but to either target foreign markets, or in extreme cases just move abroad for business continuity. Thus it has become imperative for the Indian domestic market to grow in size and scale to ensure viability of product startups. 

We all know a general fact that Platform companies from India are a non starter: Platforms are the next evolutionary step for scaled software product companies - if you get to the stage, where other industry stakeholders start building on top of the plumbing you’ve provided (thereby becoming totally dependent on you), that's an immensely powerful position to be in e.g. AWS, Android, iOS etc. This factor assumes even greater importance given upcoming trends in AI, machine learning, deep learning, automation, robotics - the companies which emerge as platform providers may offer strategic advantages to the country of their origin. One aspect that needs calling out specifically is the lack of presence of any platform companies from India.

The Core-focus of this policy:

1. Aim is to develop India as the global software product hub, driven by innovation, improved commercialization, sustainable Intellectual Property (IP), promoting technology start--ups and specialized skill sets.
2. Aim is to align with other Government initiatives such as Start-up India, Make in India and Digital India, Skill India etc so as to create Indian Software products Industry of USD ~70-80 billion with direct & indirect employment of ~3.5 million by 2025.

Major Hitting Impact:

The Software product ecosystem is characterized by innovations, Intellectual Property (IP) creation and large value addition increase in productivity, which has the potential to significantly boost revenues and exports in the sector, create substantive employment and entrepreneurial opportunities in emerging technologies and leverage opportunities available under the Digital India Program, thus, leading to a boost in inclusive and sustainable growth.

End-to-End Total Expenditure involved :

Initially, an outlay of Rs.1500 Crore is involved to implement the programmes envisaged under this policy over the period of 7 years.  Rs1500 Crore is divided into Software Product Development Fund (SPDF) and Research & Innovation fund.

Union Government’s Implementation strategy & targets:

The Policy will lead to the formulation of several schemes, initiatives, projects and measures for the development of the Software products sector in the country as per the roadmap envisaged therein.

To achieve the vision of NPSP-2019, the Policy has the following five Missions & we have highlighted it in a simple manner:

1. To promote the creation of a sustainable Indian software product industry, driven by intellectual property (IP), leading to a ten-fold increase in India share of the Global Software product market by 2025.
2. To nurture 10,000 technology start-ups in the software product industry, including 1000 such technology start-ups in Tier-II and Tier-III towns & cities and generating direct and in-direct employment for 3.5 million people by 2025.
3. To create a talent pool for the software product industry through (i) up-skilling of 1,000,000 IT professionals, (ii) motivating 100,000 school and college students and (iii) generating 10,000 specialized professionals that can provide leadership.
4. To build a cluster-based innovation driven ecosystem by developing 20 sectoral and strategically located software product development clusters having integrated ICT infrastructure, marketing, incubation, R&D/testbeds and mentoring support.
5. In order to evolve and monitor schemes & programmes for the implementation of this policy, National Software Products Mission will be set up with participation from Government, Academia and Industry.

I still remember the earlier days of my professional life, that How the client used to doubt us because they had a stereotypical bad perception about Indian sectoral companies. They not only use to question our R&D expertise but also doubted our product engineer’s capability stack that whether they will be able to contribute on conceptual level (not just fellows who blindly follow the SOW path and build for them). This was an insult to our fraternity that motivated our inner strength to start SoftVan in 2014, so that we can established R&D ecosystem and showcase the value of India's product engineering capacity

What initiative is taken by Softvan that inlines with above mentioned policy?:

A: Connecting Front-Liners Innovator with Tech lover : You can't find the solution without getting in trouble. Front liner who day and day out facing the problem and having solution in mind. However as they are not coming from tech background. They are unable to convert this solution in scalable products.

B: 90DaysToPOC: We created a unique framework using "LEAN AGILE" principles and concepts of "BLUE OCEAN" strategy. So the innovator get the prototype in 90 days and validate in market, start customer acquisition and focus on core business or marketing skills.

C: Connect the right dot at right time: As we are in ecosystem in long and working with stakeholders like COE, Incubation center, Industry giants, and accelerators. We are going an extra mile to see the success of our partners in 360 ways.

If you are startup and would like to register your product under NPSP here is the link https://ispr.gov.in/ and if you are looking to get in touch with us. Feel free to DM!

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