Innovation for Indian IT industry

John Hagel writes his thoughts on Indian IT services and the innovations it can leverage after attending a NASSCOM conference:

NASSCOM has announced a joint research effort with BCG on “Developing an Innovation Ecosystem for the Indian IT Industry”. This effort in particular seems to be focused on identifying opportunities for the Indian IT industry to collaborate with other stakeholders in the Indian economy to address challenges in providing more cost-effective products and services to the Indian population.

As JSB and I have written, there is an opportunity to pursue “innovation blowback” strategies, using the Indian market as a catalyst for breakthrough innovation in products and services that can then be used to support global attacker strategies designed to challenge incumbents in the more developed Western economies.

There’s no shortage of opportunities at both the product and process level to drive the growth of Indian IT services companies. The sense of urgency that continues to pervade the leadership of these companies will serve them well in identifying and aggressively pursuing these opportunities.

The only thing that stops Indian IT services firms from focussing their strategy and energy on India is the tax regime. Because software exports are not taxed and services with the country are, the incentive for developing IT products and services for Indian firms is low for the Indian IT service providers. Maybe this will lead to the second and third tier of firms to concentrate on this market and develop some killer-app to take to the global field later on.