Note to readers: Hello world is a program developers run to check if a newly installed programming language is working alright. Startups and tech companies are continuously launching new software to run the real world. This column will attempt to be the "Hello World" for the real world.
As the world learns to live with the new normal, India needs to play to its strength if we are to bring back back growth, generate wealth, and create jobs. Instead of trying to compete with China as a manufacturing destination, we should focus on our strength: building software products. Let me explain.
Until now, India was known to the world as a country of software services companies like Infosys and Wipro. These companies mostly hired engineers and billed their offshore clients for the services rendered on a time and material basis. To their credit, these companies are worth several billions, have created millions of jobs, and contribute to nearly 10% of the country’s gross domestic product.
Take a look at the new guard
Now, a new generation of companies is showing that Indian enterprises can not only provide software and back-office services but also build software products and sell them around the world.
The fact that buyers now discover software online makes it easy for us to advertise digitally to them, no matter where in the world they are. This means sitting in Chennai, you could be selling software to buyers in Chicago.
So instead of billing customers on an hourly basis, product companies can build a product once and simply sell licences over and over again. This means better margins and stronger businesses. Cheaper labour costs in India means we can also throw in good quality support on top of the software we sell at a lower cost compared to overseas peers and competitors.
Earlier this month, four Indian companies made it to The Cloud 100 list published by Forbes. Freshworks, the company that I work for, came in at rank 16, Postman at 59, Icertis at 69, and Highradius at 82.
The ranking, in its fifth year, recognises “standouts in tech’s hottest category” based on their growth, sales, valuation, and reputation. This is a significant milestone for Indian software product companies and points to a clear opportunity for India.
If you go by publicly available reports, just these four companies have a combined valuation of $8 billion. There are hundreds of smaller software as a service (SaaS) companies that will soon debut in this list.
Another index, called the Bessemer Cloud Index, which tracks publicly listed software product companies in the United States currently has no Indian company on it. With a potential listing in mind, most cloud companies that serve the global market have been incorporating the companies in countries like the United States or Singapore.
That was to circumvent the outdated listing norms that India had. Last week, the Indian government passed a bill that makes it easier for India headquartered companies to list overseas. So it is only a matter of time before Indian companies debut on that list as well.
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It’s been in the making for nearly a decade but now, the Indian software product industry has come of age. All this is possible because India already has a robust talent pool, experienced product builders, entrepreneurs, and enough venture capital to fund them.
Just like how China went from a nation of contract manufacturers for global brands like Motorola and Nokia to having their own global brands such as Xiaomi, India can easily go from selling software services for multinationals to selling software products across the world — a product nation if you will.
Being a software product nation will also make the country’s economy more resilient.
Unlike tourism, manufacturing, or other brick and mortar industries, the software product industry has proven itself to be surprisingly resilient during downturns, including the financial crisis of 2008 and the current economic crisis forced by the pandemic. The software industry is also cleaner from an CO2 emissions perspective and thus healthier for the nation.Jayadevan PK is a former technology journalist and recovering startup founder. He now works with Freshworks Inc as an evangelist, focusing on efforts around brand building. He’s also a commissioned author at HarperCollins.