This Saturday, on Dec 9th, there was a day-long workshop on Software Product Development Challenges in India. It was held in Bangalore as an add-on to the APSEC 2006 conference. The workshop went really well; kudos to Pravin Bhagwat and Pawan Goyal - the organizers. Hopefully we can find a way to make this an annual event. (Disclosure: I moderated a panel discussion in the afternoon).
Here are my ten takeaways from the workshop:
- There appears to be growing consensus that the “extension model” doesn’t work and “ownership model” is the way forward. As usual, TI is one step ahead of the rest. Giri Krishna showed how they are going beyond ownership to incubation and explained how incubation requires a “managing partner” mindset. However, the reality is that the extension model (also called the job shop model or, more euphemistically, the co-development model) is widespread among many MNC captives and Outsourced Product Development (OPD) firms. Naresh Gupta rightly pointed out that once the extension model takes hold, it’s hard to change the model. So it’s important to get it right the first time. This discussion was reassuring for me as I have long advocated similar positions (see here).
- Samir Palnitkar’s candid presentation brought out the reality of being an R&D manager in India. You just have to invest a lot of time in capability building of your employees. The employment pool, though large, is shallow and good role models don’t yet exist. So building a high performance organization requires three inter-related elements in place: (a) strong capability building orientation that is (b) coupled to an activist career planning program, which in turn is tightly linked with (c) a well-articulated roadmap for their India organization.
- India’s engineering education system is good in parts but broken in other places. The quality is uneven and it doesn’t produce enough post-grads. While there was consensus about the malaise in the system, there wasn’t much agreement on what to do about it. Kiran Deshpande argued for more government intervention while others (like Sanjay Anandaram, Vijay Anand) advocated letting market forces sort out the problem. Anshuman Das wanted companies to make more effort to pick out talent beyond the typical 10-20 engineering schools. Others pointed out that the shortage of product architects and product managers can’t be addressed by the engineering schools and the industry to attract the right people back from US or has to groom existing talent.
- In the discussion about OPD firms, it was pointed out that new business models beyond T&M and royalties are sorely needed. There is too little innovation going on in the front-end part of the OPD business. BTW, I shared my BPO envy with the audience.
- Generally there was strong recognition that the product ecosystem needs to be quite different from the services ecosystem. The funding model is obviously different; career model is different (deep domain skills built over 10 years versus fungible resources); and the cultural paradigm is different as well (not instruction led, but risk-taking mindset). Some people felt that the Silicon Valley “garage” pathway to innovation is beginning to happen in India though the University-lab-to-market pathway is pretty much absent. Much of the product ecosystem discussion reminded me of the debate we have had in NASSCOM circles following my Feb’06 discussion paper.
- One thing that came out of many sessions was that a “slow bake” is integral to this business. Whether you are a TI, Adobe or erstwhile VERITAS it takes 4-5 years to lay a strong foundation. Similarly if you are startup like Tejas Networks, AirTight Networks or Strand Life Sciences you need to plan for a 4-5 years journey to cashflow breakeven.
- From a competitive standpoint, Kumar Sivarajan of Tejas pointed out that they consciously looked for hardware opportunities to pursue that had a heavy software payload. Giri also had a similar take. He said that software was becoming a larger element of every reference design and this was playing to India’s strengths. Another thing that came out was that Strand LS and Tejas had the largest engineering teams in their niches. There was a sense that these kinds of competitive plays will become more common in the future.
- There was a short segment on venture capital where Ashish Gupta gave a quick but insightful overview of the situation in India. He pointed out that about $1b has been raised by VCs from their LPs. So the risk-capital is there but good deal flow on the product side hasn’t yet materialized. He also pointed out that access to capital vastly improves as deal size grows. The early stage and angel investing side of the business is still weak.
- ‘There is a dark side and there a bright side’ kind of theme that ran through the whole day. In that context, several people brought up the challenge of doing version 1.0 of a product in India due to: shortage of product managers and product architects; poor access to friendly sophisticated customers; lack of university research that can be commercialized; and limited availability of early-stage risk capital. Despite these serious challenges, there was good optimism expressed in almost all presentations. The main source of this optimism was the rise of a credible local market. While the emergence of this local market is not a silver bullet, it will set in motion a virtuous cycle that make it easier to deal with the rest of the challenges.
- Towards the end, there was a conversation in a panel discussion about market discontinuities that the local-for-global players and start-local-go-global players can ride. Radha Shelat brought out the significance of the data-center-on-tap model. Vijay Anand discussed SaaS/hosting and its potential in India especially in the SMB segment. Kiran Deshpande made a case for “mobile 2.0” startups and ecosystem. And Sanjay Anandaram was at his scintillating best in talking about the implications of the rise of Asia as a market. It was the view of the panel that the future of product development in India will be significantly shaped by the opportunities created by these major market discontinuities.
This gives you a subjective view of the workshop, I have written this from memory as I didn’t take good notes. So please feel free to add comments if you know of anything I may have left out.
Hi Sharad,
Forbes has an interesting article they posted recently, check out the summary at:
http://mukulblog.blogspot.com/2006/12/indian-firms-moving-into-high-value.html
Thanks,
Mukul.
http://mukulblog.blogspot.com/