Mr. Hotmail raises key issue about Indian IT industry

Sabeer Bhatia, the founder of Hotmail said in a recent interview that Bangalore, the hub of the Indian IT industry is right now more of a Services Valley rather than a Silicon Valley because:

** Be part of the Best Java Blogger 2 Contest (May 2005) **

"I think the reason for this is that many of the large Indian companies
have not been entrepreneurial. Take all the big ones like TCS, Wipro
and Infosys- they are not entrepreneurial. They have stuck to a
business model, but they really haven’t innovated on that – they
haven’t created new products."

Similar comments have been made earlier by lesser names in India,
who think that the services and cheap labour model will not serve India
well in the long run. However in the current excitement of making big money, quick, innovation has taken a back seat.

Some small companies in India are actually doing better and more innovative work than the big ones. The reason being that the smaller companies can’t match the giants like Infosys, TCS and Wipro when it comes to delivering cheap yet quality services. So they have to innovate to survive.

The approach of the IT giants has so far been very disappointing. Not only have they not come out with any innovative products but they also are not making the noises required for innovation to thrive.

This is surely a cause for concern as the companies have recruited thousands of skilled people but don’t have much intellectual property (IP) to boast of.

What do you think? Will Indian IT survive and thrive with just the services model or is a serious rethink required?

Reference:
>> Indian biggies…not entrepreneurial
>> Recruiting Like Crazy

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  • Noname

    Well I alway thougth about the billions of taxes India could reclame from offshore companies.
    Here is my idea:
    If the company builds the car factory which produces 1000 cars and sell it, one definitly has to pay taxes to the state. The question how to value the software?
    Imagine:
    The company A makes a product B offshore.
    Then it makes B * 1000000 copies in place C.
    Then it sells these copies somewhere.
    Technically the product B is made in one place and then ILLEGALLY copied by another department of multinational corporation for some reason (for ex. taxes optimisations).

    The idea if intellectual property exists (?), so being produced in one country and exported to another one it’s logical to clame some part of it for the state as a taxes. How do you like to ask 10% from Windows sell price for the India (China etc…). If trasnational company could illegaly copy the product made in China why China can’t do the same??? Finally it’s just a way to return a ‘stolen’ one… :-))))

  • Noname

    There must be some reason why Indian software companies are being short sighted.