Commerce minister Kamalnath says it is time Indian IT vendors targeted the country's domestic market, notably, its middles and lower segments. The minister may not have read our earlier post,in which we had said the same thing. Agreed,it makes a difference,coming from the minister.Mr Kamalnath's call for IT to look inwards came at the Nasscom India Leadership Forum 2009 meeting in Mumbai.The minister reckoned that the time for the IT sector to consider it future strategy was NOW. Looking inwards is the best, and probably, the only way to go for Indian IT vendors, considering the scale of domestic market waiting to be tapped. Mr Kamalnath mentioned that hardly two percent of India's population used computers.
Didn't realise, did you, it was so low;and we count ourselves as a fast-moving economy. Anyway, Mr Kamalnath, while pointing to the direction IT vendors need to take, could have as well given us his thoughts on how they could go about reaching out to the middle and small-scale segments of domestic economy.
In suggesting an inward-looking strategy the minister would need to respond to in-house scepticism, as reflected in a comment by Ashutosh Didwania, IT professional. His perception is that our domestic market isn't mature enough to convince the IT majors that they need not look beyond national boundaries.
We see a perceptional difference here between what the minister says and Mr Didwania's take on the approach IT vendors' adopt to tap domestic market. Going by Mr Kamalnath's reported statement, it is for the IT majors to do the convincing (not the other way about) and educate uninformed segments of our domestic ecomony, about the efficacy of using IT application to improve efficiency and productivity.
To quote Mr Didwania further, 'IT service sector,..based on the demand-supply chain...needs (domestic) demand to be significant in order to make business sense...An IT services company...is bound to depend on selective projects. It's not about selling products to millions, it's about providing services to the select few which as a matter of fact are very rare in India... Indian market has a long long way to go before it can attract IT biggies in a significant manner.
IT companies scaling down profits or employees accepting lower perks is simply not an option as for that to happen there needs to be a strong domestic base, which currently is way off target.
Mr Didwania's comment reflects the mindset of an IT professional. Those who dismiss the idea of IT scaling down revenue expectations would do well to consider this. In the prevailing global situation neither our IT companies nor their employees can hope to see anytime soon the kind of pre-recession profits/salary levels they had got used to for so long.
If only our IT companies and their staff were to lower revenue/pay level expectations, it would facilitate reaching out to the vast untapped segments of our domestic economy. TCS, they say, has its smaller centres (say,Gauhati) workng for domestic clients. Domestic market accounted for seven percent of TCS total revenue. Infosys earns 1.5 percent share of its total revenue from domestic clients. Moving to Tier II and III centres - Nagpur, Jaipur, Ahmedabad, Pondy , Mysore - where IT companies offer lower compensation packet to their empyees may well be a major first step to seeking domestic clients.
Maybe CNBC, NDTV-Profit and other business channels should line up talk-shows to assess the industry mood and mindset on an inward-looking IT growth strategy.
