Our economy is growing at less than five per cent annually. Manufacturing is shrinking. Even the IT services industry is struggling to eke out 10 to 12 per cent growth and is unable to absorb as many engineering students as before. The biopharma story has fizzled out and Ranbaxy, once a flag bearer, is in free fall. Yet, in the midst of all this gloom, a new industry is blooming.
The blooming, buzzing story is software products.
In 2013, Zoho, a Chennai-based software product company, crossed over into the billion-dollar market capitalisation club. Last year, InMobi, a Bangalore-based mobile ad-tech player, did the same. This year, Quick Heal from Pune will become a billion-dollar baby. Think of it, the Indian software products industry is producing one Biocon sized company every year!
Behind the bloom are two powerful trends. The first one is about software as a service (SAAS). Gone are the days of buying big servers, expensive software licences and bulky implementation services. Increasingly, business software is just rented and used by employees much the same way you and I use Yahoo! mail.
This seemingly small shift has momentous implications. Since a software product company doesn't need an army to sell and deploy its business applications any more, size is not an asset; focus is. So a plethora of small, single-minded product start-ups have emerged. And some of them like Zoho, InMobi and FusionCharts are causing waves globally.
The best days are still to come. SAAS is spreading like wildfire. Doctor's offices are using it for less than the price of Cafe Coffee Day latte. Apartment complexes are using ERP-type (enterprise resource planning) SAAS business software for Rs 15 per apartment per month. Lots of small companies in Peenya, Bangalore or Okhla, Delhi are using world-class payroll and leave management SAAS business software for Rs 10 per employee per month. Basically, SAAS is going into nooks and crannies where no business software has gone before. Just as mobile phones brought telephony to the masses, SAAS is bringing useful business applications to all small and medium businesses (SMBs) globally.
Complementing this SAAS trend is a grassroots movement for strengthening the product ecosystem in India. Trade bodies have become passe. In their place, volunteer-driven think tanks and communities have come in. They have built market catalysts that drive scale growth. This has not only increased M&A activity but has also brought thousands of SMB buyers and dozens of global CIOs (chief information officers) to the table. As a result, a new glow is visible.
With fireflies starting to light up the sky, a realisation has emerged that we must create space for technology product companies in our business firmament. To do so, most people understand that a new product DNA is needed. The traditional services DNA just does not make the cut.
A few years ago, we dreamt of Infosys besting Accenture on the global stage, and about Dr Reddy's Labs becoming another AstraZeneca. These dreams did not pan out. Now we are on the threshold of Zoho being the next Intuit. Let's not blow this chance. Let's give software products the policy oxygen they deserve.
Sharad Sharma is Co-founder, iSpirt