Two decades after the inception of National Association of Software and Services Companies (Nasscom), a section of the industry is questioning its very relevance.
As Nasscom is about to kick off its 21st Leadership Summit tomorrow, many are also wondering whether the $100-billion information technology (IT) industry has outgrown the industry body.
“Nasscom needs to re-invent itself. It somehow seems that they are stuck in the old mode of lobbying with the government. They need to mature beyond this,” said an industry analyst on condition of anonymity.
Displeasure over Nasscom comes at a time when the industry leaders are struggling due to change business environment. “Despite top line growth, leading providers such as Infosys and Wipro are struggling to meet shareholder expectations. Rupee and wage appreciation, competition from other low-cost locations, investments in non-linear growth, and the cost of hiring staff in non-English-speaking countries (particularly in Continental Europe and Latin America) are adding to the complexity of the challenges facing Indian service providers,” said Thomas Reuner, Principal Analyst at Ovum.
Recently, news reports suggested that 30 companies have broken out of Nasscom to form a new association. Even though Nasscom denied any such move, murmurs have been doing rounds within the industry for some time now. To complicate matters, there were also reports that the business process outsourcing sector was unhappy with the attention given to the IT services players.
However, TCS’ CEO and Managing Director N Chandrasekaran, who is also the chairman of Nasscom, does not think there can be a parallel institution to Nasscom. For, the body has grown in relevance as the industry grew in size.
“It is a unique institution. A lot has changed over the past few years. Nasscom has adapted to the changing times and evangelised the industry. We do have an aspiration of doubling the size of the industry and Nasscom will be there to identify the opportunities,” said Chandrasekaran.
Since last year, Nasscom has been working on a report on setting up a governance structure to help the industry meet its ambitious target of $225 billion revenue by 2020.
According to Nasscom President Som Mittal, the idea behind the exercise is to understand how the world will look like in 2020, what does it mean for the industry, and what are the investments that need to be made now.
The changes driven by technology innovation are coming in short disruptive waves, which have the potential to change the industry’s business model. These changes include, cloud-based technology, platform-based applications, focus on non-linear growth, new geographies and many more. Partha Iyengar, country manager (research) at Gartner, also points out that the industry needs to change from a tech-driven model to sales-driven. “We hear this all the time from clients,” he added. "The industry certainly needs Nasscom, but in a different mode."
Mittal pointed out that the industry body has been working with the smaller companies. "It is certainly not about large companies. We are helping smaller companies for their Visa issues, branding and several other requirements. We have also set up a website called egovreach.in, where we showcase all the tenders that the government has come out with, so that smaller companies, too, can access it," added Mittal.
Kumar Parakala, head of IT advisory for EMA (Europe, Middle East and Africa) region, KPMG India said that the Indian IT landscape has changed for the better.
“India success story in IT is not being sold in a manner it was told a decade back. There is a need to project India as a stable and the progressive destination for outsourcing supported by innovative environment. We need to tell this to the outside world with a greater momentum, energy and enthusiasm and Nasscom needs to do more and uphold India,” he said.
Will Nasscom be able to live up to the new expectations of the industry? “We are hoping that Nasscom will reveal how the leading Indian providers aim to achieve their goal of being perceived in the same vein as the leading Western providers without being burdened with their pitfalls, notably higher cost structures, more complex organisational structures and slower decision-making processes. These details should go beyond the usual noise around big data, cloud and social enterprise, but need to demonstrate how they aim to differentiate with these topics. Only with answers to the points raised, will the Indian IT sector get out of the crisis mode,” said Reuner of Ovum.