in Business & Leadership, Technology

India: Cash Rich, Product Poor

Sramana Mitra wrote on Forbes that India has a lot of venture money now, but no tech products. She goes to explain that:

India’s meteoric rise in the tech world has been driven by providing back-office services. That work puts a premium on skills such as engineering management and coding. Someone else–somewhere else–writes the specifications for the projects. Again, someone else, somewhere else does the market studies analyzing the potential of a new product.

Indian managers have had scarce opportunities to learn the nuances of how global technology markets work. That means that local entrepreneurs can try to position products, but they do so without detailed and disciplined marketing knowhow.

Being in the Indian IT industry, I agree with her that Indian entrepreneurs have the tendency to start service companies because they are low capital, low risk. The cash flow cycles are faster and only technical and execution skills are required.

If I talk about myself and Magnet, over the last decade, we have come up with many product ideas, even developed at least a dozen products. But have not had a rocking success in marketing a single product. That not only because we lack the marketing skills, but also because we don’t have the persistence it takes to launch a product. Over and over again, we put our products out and went onto services because service business was there, generating monthly cash flows for us! And monthly cash flows have been important at all stages for the company!

Sramana highlights the grave side of this! “VCs typically do not like this business model. There are (very) few barriers to slow down competitors keen to enter the market.”.

And that’s happened all around. In the last decade the competition has gone through the roof. As things start getting difficult offering just services, many Indian IT companies have started looking at products and product + service offerings. There are only a few who have succeeded so far, but there are many that are trying.

But I think it requires different skills and tactics to ace the product market! And Indian IT companies and developers need to unlearn a lot and then learn some to succeed. More on that some other time!

But what do you think? Where is this going?

Leave a Reply for Kapil Cancel Reply

Write a Comment

Comment

  1. This is from somebody outside the industry so its just a third-party view. Do you think a product requires a lot more pushing and persistence to go over to the client and take them through the whole thing and make sure they really really need this piece of product you have designed. unlike services a sample of which can be easily demonstrated quickly and the client gets hooked.

Webmentions

  • Evaluating new product ideas at Entrepreneur Geek March 13, 2008

    […] India: Cash Rich, Product PoorLoving what you doIDEA Best Product Designs of 2006On business ideasApple Product Evolution […]