InformationWeek > India > India's Next Step > August 8, 2005

A very insightful article by Paul McDougall at InformationWeek magazine. Paul is the resident Outsourcing expert at InformationWeek and has written many good articles on the subject. Here he writes about the "Next Step" in the evolution of the Indian software industry - the move to selling software products as opposed to only services.

While selling software products bring to the mind the specter of Indian companies getting even higher value addition and hurting US based competitors, the reality is likely to be different. In a mature free-market economy like USA, there is always room for competition and competition brings with it the added advantages of better products at lower cost for the customers and eventually results in an expansion of the market itself. This compensates for ay market share loss for the existing players.

Besides, software product development is becoming increasingly like car manufacturing. The so called "Japanese cars" like Toyota Camry and Honda Accord, etc. may actually have as much local content as cars from GM and Ford. Similarly, to sell products to US customers, Indian software companies are making great investments in establishing a team in US that works closely with potential customers in pre-sales, post-sale implementation, training and on-going support. These teams become the core of knowledge in these enterprises and continues to be expanded in USA to stay close to the customers.

Another advantage with Indian software companies offering products in the USA market is the new opportunites that it offers to US partners to offer more customer friendly business models. For example, document management used to be a very expensive, enterprise technology - where the customer had to invest huge amounts in software license fee and hardware to achieve the benefits. My company - Newgen Software - partnered with a Silicon Valley startup to offer Document Management to Enterprises as a hosted, subscription only business model. We are now trying to offer similar solutions in the Business Process Management area with our US partners focusing on vertical and horizontal segments of the market.

Read more in this article by Paul McDougall...

InformationWeek > India > India's Next Step > August 8, 2005:

Here's the reference to my company in this article:

"Like other foreign software vendors that saw big opportunities in the United States--SAP among them--Indian companies increasingly want to turn their local successes into a greater U.S. presence. That includes business-process and document-management application vendor Newgen, which says it has a 40% share of the Indian market for software that connects workflows. The company wants to partner with vertical-apps developers in the States to aim its offerings at health care, financial services, and the government. 'People take us more seriously now because many of these enterprises have themselves gone to India for services,' says Sanjay Kalra, VP for business development.

While he's focused mostly on large companies, Kalra believes the low price of the company's various business-process modules, which cover functions such as invoicing and accounts payable, also could appeal to the small- and midsize-business market. 'Even a company with only five or 10 people in accounts payable could break even on our product in a year,' he says. 'They could get rid of three people.' That raises the specter that low-cost automation will join outsourcing as a threat to U.S. jobs--again, thanks to India.

But that may be jumping the gun. While the comfort level with Indian IT expertise has greatly increased, and the cost savings of using lower-priced software is attractive, going up against name-brand players in more established Western markets won't be easy. Newgen offers a lower total cost of ownership, Kalra says, but he concedes that the U.S. market for the software his company sells is mature."