The Road to Large Tech Corporations in India

While India has been the birthplace for numerous successful tech services companies like Infosys, Wipro, and TCS, the country has yet to produce giant global product firms like Microsoft and Google.?

However, the prevailing tech climate of the country is perfect for the foray.?

India currently has a booming SaaS space that did not exist in the past.?

The SaaS industry contributed $12–$13 billion to the Indian economy in 2023, emerging as a significant sector driving the country to a brighter future.?

The country's B2B SaaS industry shows positive growth indicators despite global macroeconomic problems. According to the EY-Upekkha report, ‘Bellwethers of Indian SaaS', 8 out of 10 CXOs are aiming for an AAR growth of 50% or more in 2023.

Low-cost technology stack, stable governance, strong banking system, globalization of the markets, and the desire for more make-in-India products, are boosting the IT startup ecosystem and will continue shooting it upwards in the future. With digitization, internet adoption, and cloud technology taking center stage after the pandemic, SaaS products have emerged as high-value productive businesses in the current economy.?

India responded well to the market shift, becoming the cradle of sophisticated next-gen SaaS brands like Zoho, Freshworks, Browserstack, Postman, and others. The challenge, however, lies not in creating a few more of these brands but for the Indian tech space to launch native large tech corporations aiming to solve problems faced by organizations across the globe.?

The challenges:?

Absence of desired talent pool:?

For India to develop tech think tanks, crucial career paths like product management needs to get well-defined in the country.?

Most Indian tech organizations depend on technically skilled engineers to function as product managers. While experienced product managers act as mini-CEOs in the global tech space, their Indian counterparts often lack the required business understanding to comprehend the product and business strategy fit. Insufficient understanding of other product management aspects like sales, market research, customer expectations, and branding are contributors to the existing skill gap that exists among product managers in India.?

The situation requires better implementation of mentorship programs, academic courses, and internship opportunities to train Indian product managers in developing innovative approaches to generate successful business results.?

Funding crunch in India:?

Investors are shying away from investing in Indian companies for reasons like increasing inflation globally, regulatory changes, rising interest rates, political conflict in Europe, and the fears of an oncoming recession. As the macroeconomic paradigm changes, venture capitalists and investors are cautious about making new deals with Indian businesses. As per the popular market intelligence firm Tracxn, equity funding in the tech space fell from $12.1 billion in Q1 2022 to $2.8 billion in Q1 2023. Such a lack of funding will hinder the growth of innovative tech and premium quality products from meeting the market demands.?

Misplaced marketing and branding efforts:

Successful product companies need to go beyond technical and architectural skills. They should also incorporate market research and create robust marketing strategies that align with an ideal product-market fit. This is where Microsoft's Zune comes to mind.?

Zune was launched in 2006, five years after Apple's iPod, and featured an interactive interface and high-quality audio. Though Zune had some capabilities that iPods didn't, many of the potential users of the product (who had already purchased iPods) didn't think Zune was addressing any problem in particular. To top it, the marketing campaigns focused only on niche audiences from the music space, ignoring the border market requirements, thereby failing to generate the audiences' interest and sales. Unfortunately, misplaced? product-market fit and inadequate marketing efforts shelved the product in 2011.?

In a competitive market with multiple similar products vying for attention, Indian tech companies should emphasize establishing a proper product-market fit and revamp their branding strategies to highlight the product's desirable feature that solves the target audience's established problems. Much like Zune, even the best products can take a hit without sufficient research and effective marketing efforts. The situation is all the more challenging for intangible goods like SaaS products requiring a unique approach and value proposition.?

Want of local support:

A business needs the support of the local market to succeed. In the US, product-innovation companies partner with customers looking for sophisticated products to stay afloat in a competitive market; the situation is different in India. Despite the worldwide end users investing $490.3 billion in 2022 on public cloud services (including SaaS), Indian end-user spending stood at ?$7.3 billion in the same year. One reason for this disparity is the inability of Indian companies to understand the customer persona. Indian enterprise customers require a stronger hand-holding approach in their journey to adopt SaaS applications.?

To fulfill this need, companies are required to adequately train their executives to provide better after-sales and implementation support. Further, indigenous companies must rework their product capabilities, provide ease of use, and create effective go-to-market strategies.?

But even while certain gaps exist, India's technocrats and engineers have displayed their innovative and disruptive capabilities by creating the India Stack– a native software platform combining digital assets like Aadhaar, eKYC, UPI, eSign, and DigiLocker to usher the age of Indian digitization.?

As a part of the “India Stack,” UPI as an innovative payment technology infrastructure emerged triumphant and piqued the interest of several nations attending the ongoing G20 meeting, which includes UAE and Singapore, two of the leading countries pouring substantial funds into the country.?

The wide popularity and acceptance of the India Stack highlight the success technology can attain when the government, the private sector, and the country's prospering tech ecosystem come together. A similar growth environment is required for Indian product companies to evolve into tech giants and reach their full potential.?

What we need??

India has the required components to facilitate the hyper-growth of Indian product companies. All that is left to do is sanding a few rough edges.

Industry vs. Academic collaboration: Learning from the launch and eventual boom of the US Silicon Valley, it should come as no surprise that close interaction among the industry, government, and academia will be a critical driver to accelerate the growth of the Indian product ecosystem. This close collaboration among the various bodies will also bridge the skill gap that threatens the country's future. The existing teaching pedagogy across all levels of educational institutions in the country must encourage and nurture the imaginations of young graduates, coders, and engineers. Young minds and go-getters require a runway to try unique product experiments without fear.??

More product incubators required: Though the country has a slew of highly successful product incubators like SaaSBOOMi, Nasscom Deep Tech Club, and 10,000 Startups, the growing tech ecosystem needs more specialized incubators to aid entrepreneurs in their product development journeys.?

The future of the Indian product space also depends majorly on the key takeaways the emerging software companies gather from the recent bank runs in America and Europe. Recently, the former head of HR at Infosys and chairman of Aarin Capital T.V. Mohandas Pai stated that businesses operating within the country with a majority Indian workforce must “ be careful" and resist any pressure they face from their investors to set domiciles abroad.??

Besides our abundant tech talent, responsive administrative bodies, and robust banking system, the government's continued effort and current policies launched in the FY 2023-2024 budget are promising. The substantial allocation of funds to the Ministry of Electronics and Information Technology and the aim to set up Skill India International Centres to train Indian youth in new-age tech like AI robotics and 3D printing will facilitate economic growth for the country while driving the Indian product space towards a brighter future.