What’s wrong with the Indian IT Industry?

  • Post Category:Business

So, I worked in an IT Service company for a couple of years. I won’t say I am an expert on the matter but I have got some reports and some experiences that I will be sharing here.

Now, these reports are not shocking but sad.

There are problems with almost every industry in India but the IT industry suffers from a different kind of issue that we will talk about here.

As we all know, there has been an economic slowdown in India and around the world in fact. But Indian IT industry has had a good growth rate as compared to other industries.

Now, the real issue comes through the reports. According to most statistics and rankings, IT and Software sector is growing at a very fast pace and creating a lot of jobs around the world. The same is happening in India.

India is one of the top IT Services outsourcing destinations, which means that companies from other countries pay Indian IT Companies to do their work.

You might ask what’s wrong with that. There is nothing wrong with that, instead, it’s good that money is coming to India. However, the type of business that we are getting involved in is the major issue.

To understand the issue, we need to understand the difference between IT Service and Software Product companies.

So, Software Product companies are companies that build their own software products. They either sell those products, such as Microsoft selling Windows Operating System or those products provide some kind of service to their customers, such as an Indian company like PayTm that provides payment and banking services to its customers.

On the other hand, IT Service companies such as TCS or Infosys are not actually building their own products. Instead, they maintain and provide support to other businesses. Although some of them have built their own products, however, their major revenue comes from providing services. Basically, you can say these companies do low class IT or software work.

The issue is that most of the Indian IT Industry is made up of such IT Service and BPM companies.

According to IBEF, that percentage is around 70%, while Software Product companies have revenue less than 20% in India, which is sad given that top companies such as Google, Microsoft and Oracle have Indian-origin CEOs. So, why don’t we have enough product companies?

So, the thing is that we are not making enough products, even when our neighbors such as China and Singapore are doing exceptional.

Software Product companies are generally seen to be earning more than IT Service companies. Look at Microsoft, Google, Amazon, Oracle. All these companies have their own signature products.

PWC made a report on Global 100 Software Leaders by revenue in 2014 and guess what, India didn’t have a single company in that list.

There is not a single Indian IT company in the Fortune Global 500 list.

If that’s not embarrassing enough, you will be sad to know that there are only 4 Indian IT Companies in Forbes Global 2000 list and the rankings are embarrassing.

And if that’s not enough, then let me tell you that India ranks 54 out of 60 countries on the 2019 Bloomberg Innovation Index. This tells us that India is not getting involved in innovations and researches.

And this doesn’t end there, India has been ranked pathetically on Coursera’s Global Skills Index, which means that we Indians lack business, technological as well as Data skills as compared to 59 other countries. We have been ranked 50 out of 60 countries on Business Skills, 44 out of 60 countries on Technology Skills and 51 out of 60 countries on data skills.

According to a report by Agile Engine, Indians working in IT Service Industry are paid the lowest salaries among 14 top outsourcing destinations. Basically, we are at the top of the outsourcing destinations because we are are the cheapest labor and we lack skills.

In the same report by Agile Engine, they say that, and these are the exact words “Low-cost offshore locations like India might work for waterfall-oriented companies seeking to outsource routine tasks.” which basically means that the employees working in IT Service Industry in India do monotonous, low-level work. And that’s what I have also experienced.

So, here is my opinion.

We Indians lack innovation. We lack an entrepreneurial spirit. Most importantly we lack skills. We lack the risk-taking ability. Even most established businessmen are not investing in technology companies because they don’t understand them or believe in them.

There is a lot of room for innovation in India. There are so many problems to be solved. So, run your brains and think about what you can solve using software that you can build.