Indian IT companies are moving from Services to Products

For almost three decades, service companies dominated the Indian information technology industry. Indian IT industrialist N.R. Narayana Murthy, Co-founder of Infosys, was quoted as saying: “India needs to position as an ‘innovation’ destination, build products and add value by strengthening its existing areas and looking at new ones. This clarion call is resonating amongst others in the Indian industry at a time when winning deals and getting Fortune 500 companies to open up their technology budgets are getting harder.

IT firms like Tally, envisioned doing so — starting a firm which would conceive, create and sell products — in 1986. It has been predicted that to sustain in the long run, Indian IT companies will need to focus on both – product development and services. Cut to present, product development services has become the Holy Grail of the Indian IT industry today. According to Thomas Kurian, President (product development), Oracle, “Indian IT companies are making the transition from services to products, demonstrating maturing capabilities.”

Companies are becoming more porous, able to reach across sections promptly and to compile skilled minds with thorough knowledge. According to industry observers, the IT industry is undergoing an enormous technology shift and it is but natural for the Indian services companies to move from delivering services to building products. Reason being, these companies started as offshoring, then they moved to build process outsourcing, to higher-value services, and now they are getting into products.

With copious data and analytic tools, companies are getting better and better at customizing products and services through the conception of ever-improving consumer fragments. Companies offering Product development services are looking to services as a way of increasing profitability and leveling out the revenue cycle. There is also a strong business situation that manufacturing companies have to change from selling products to creating new services. The Reason is the opportunity to create new revenue streams and the need to prove stronger value to customers.

However, the other reason for the sudden transformation in the IT service industry can be attributed to cloud computing. Earlier, when companies wanted to use software, they needed data centers, hardware and people to operate it. Now they can easily use any software through a browser. Cloud computing has opened the market for IT products. The other reasons are increasing use of mobile & mobility-related applications and data explosion through the internet have fueled the possibilities even further. And as customers move from existing systems to the cloud, IT companies need to invest in them heavily as this transition happens.

“For the first time software-as-a-service can be delivered at multiple price points and that is becoming a huge opportunity for the product guys,” said Sharad Sharma, Founder of IT product body iSpirit.

But, with many IT companies moving from services to products development, the service sector is facing tough competition. There are many factors responsible for the reversal. Typically, the nature of demand has changed as buyers’ requirements have grown more sophisticated and demand tailored solutions. With information being readily available on the internet, customers have become conscious and therefore, purchase decisions that were previously controlled by companies, are now in the hands of the buyers. Also, customers expect companies to solve their business problems and measure value based on outcomes. As customers are becoming less loyal, it has become even more important for companies to glue their customers to the brand by providing services.

In turn, these changes have caused companies to dramatically change what they sell. The contribution has shifted from single-product to multi-product ranges, and the product-based sales have replaced sales of solutions as product features, functionality and cost have become less relevant than consultative selling that’s tailored to the customer’s industry or business.

Each situation is resulting in overused, misapplied sales resources and missed business opportunities for service-based companies — a slithering intricacy that rears expenses and can repress growth.

About the Author: CEO of Planet Web Solutions Pvt. Ltd, Nilesh Kothari is a veteran of Web Development Industry & an avid Internet Marketer, since Year 2000. Over the past one & half decade, he has devoted his extensive skills & experience to the service & online growth of businesses of all sizes. Time & again, he has extended his contributions to the maturing Digital Marketing Industry with his innovative Ideas & Solutions crafted for Businesses.

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