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Why No Product Companies in India?

Posted on Saturday, Mar 3rd 2007

By Sujai Karampuri, Guest Author

I have already written an article called, ‘Need Product Companies In India’s Growth.’ Before I start writing on what we need to do, I would like to talk about some of the most important reasons that curtail us from spawning product companies. Some of them are obvious-history, post-independent economic policies, our social structure, etc. But I don’t like to list 10+ different reasons for each problem. I like to concentrate on 2-3 top reasons. Here, I list what I think is the top reason why we don’t have technology product companies.

Our obsession with stars and brands

I agree stars are important. It’s the obsession with those stars where I see the problem. We (as Indians) are obsessed with stars and brands. We don’t need to look deep to realize this about us. Our Cinema (unabashedly called ‘Bollywood’) and Cricket has many examples. The whole focus is on one or two individuals while the rest are completely unknown. It applies to our technology space as well. IITs are a brand. Therefore, anything to do with technology in India is referred to IITs while hundreds of universities and other institutes get no mention at all. If an IITian starts a paan shop, the heading goes, “The IITian left his cushy job to start a paan shop right across the street…” If they start some dumb political party, the article reads, “The IITians instead of going to US have sacrificed their careers to start a political party to better India…” A mere contraption of no significance from IITian gets the attention of starving media. This media is more interested in writing ‘This IITian has done…” than writing what he has actually done. The media is only feeding into our own obsessions. They reflect our sentiments- that of ordinary people, the families, and the societies.

The same is true of our software-services companies. Why we did not look at other important industries is because these services companies were hogging the limelight for more than 20 years now. In fact, they are hogging the complete light while the rest of the industry is languishing in the dark. Bangalore, which is supposedly the ‘Silicon Valley of India’ (which I don’t agree at all), has lavish office spaces (look at Infosys and ITPL) which almost resemble a developed world. These are the same office spaces which have been glorified by the likes of Thomas Friedman (who has added more fuel to the celebration of our mediocrity). On the other hand, the same Bangalore provides extremely worse conditions to the industrial sectors where hardware and manufacturing houses are located. I have visited some of these manufacturing places- they don’t have roads, they are connected by muddy paths which have huge cracks in the middle, they don’t have water or electricity and this place looks like a remote village of India in the 16th century. The attention of whole of media, political administration, elite, institutions, investors, has been directed towards software-services companies while other industries do not get basic amenities. Software-services companies get lands at very low price; they get tax-holidays, exporting and importing is easy for them. Meanwhile, the manufacturing and other industry of India is putting with policies of old economy. Here is what I have to say to these software-services companies:

‘Thank you, you have done a good job of re-branding India. You have changed our image from being a land of snake charmers to the land of software programmers’. But my thanks stops right there. ‘You are also the culprit of taking away complete attention from other important industry. You rob us of passion of the young minds to make them Xerox machines. Your growth is welcome, but its avarice and appetite is overwhelming. We are not able to proceed to the next step. Our fear is we will get stuck right here’. There are examples galore where many countries got stuck to a label and that actually turned out to be their doom. South American countries which rode the wave of globalization have now realized that they got ‘stuck’ at being providers of raw material to the Western world. East Asian countries like Malaysia, Thailand, Philippines, etc, are faced with similar situation, where the competition from Taiwan and China has robbed them of their advantage of being the manufacturing houses. There is danger in being slotted that way. ‘We don’t want to be slotted that way.’

What our media, the analysts, the writers, etc, did in their over-enthusiasm and over-excitement is a great damage to India. They said, ‘Since we completely skipped industrial revolution, there was no need to go back to that.’ They insisted on continuing with services industry and professed it was good enough for India. They cited some examples (which are actually very rare) of product-making companies (like IBM) moving to take up services, and justified their jobs and their companies. The media lapped if up, furthered this notion, and made it a ground rule for India. Their message was: ‘If West has products and technology, China has manufacturing, we in India have services!’ The VCs furthered it, the investors furthered it, the entrepreneurs furthered it, and even the government joined hands. Thomas Friedman made millions selling the same idea back to India while making sure he and his country continued to dominate the technology markets.

Young minds of India, even those with passion and enthusiasm to create and innovate, get bogged down by the pressures- created by us- the media, the elite writers, the parents, the teachers. They end up taking up a career at Infosys and Wipro just because of its brand. Seven years of working there, he is not good for a product making company anymore. He is already institutionalized. Only few make it out of that vicious cycle only to face even bigger issues that confront them.

As a step one, we need ground breaking examples. To unshackle ourselves of this caste-ist mentality where in we accept our position in the hierarchy of technology businesses, where we get slotted into one type of industry by the virtue of what our ancestors did. These examples have to be the tough ones. They have to ride their boat against the strong tide. But they have to do it. I see some companies around me taking up this struggle, it’s a long way to go, but I also see that once one case gets successful, suddenly there will be new articles written and soon India will be seen differently.

The industry (even those involved in software-services) needs to consciously promote product companies. Is there a vested interest? Yes, there is. No nation, no industry, no man can make loads of money for himself while the rest around him are paupers. It just doesn’t work. Such disparities are not sustainable. One has to create an ecosystem. Those in the ecosystem need to be making loads of money. That money has to translate to the societies and communities that we live in. That’s when we can go the next higher level of making more monies. A society which has very few stars while the rest are all paupers is not a sustainable system.

Even the software services companies will benefit if there is technology product company ecosystem in India. Where would I want to outsource my work when we become a successful product company? To other Indian software services companies, of course!

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There are a number of factors that can ensure product companies in India.
1. Ensure growth of domestic market. This can be done having laws in place that ensure companies/govt. bodies/essential services to follow strict standards…standards that require additional software/hardware/tech processes.
2. Remove piracy. Rampant piracy removes the motivation to create better/cheaper products.
3. Dramatically increase funding level for univ.
4. I think all the IT biggies should start converting their (major) projects into products (keeping in mind of course all the legalities in place).

Vish Saturday, March 3, 2007 at 8:10 AM PT

Great analysis Sujai! I agree with you that software services sector has taken the limelight in the media. Maybe, because it is the latest success story that came out of Indian political system.

Similarly, IITs are always in the forefront in the media. When I was studying at Stanford, everybody assumed that I was from IIT, Delhi when I told them that I was from Delhi. However, I don’t see a fault there – some of my friends who have studies in IITs are very intelligent and they have proved themselves in tough conditions.

What are the steps that you are proposing? I am really curious to know how we can make big product companies like Microsoft, Nokia, Intel etc. One idea that comes to my mind is changing the perspective of the people towards entrepreneurship. We need an environment where people believe in startups!! I am very hopeful for India as new startups are getting funded every week. So, let’s try to find all possible solutions to this problem.

I don’t think criticizing IITs, Software Services, Cricket etc. will help us in finding the solutions. Six out of eight paragraphs of this blog post just criticize them. It will be great if you could also mention some achievements of the students of other colleges like the political parties they have started etc.

Thanks,
Ankur Jain

Ankur Jain Saturday, March 3, 2007 at 5:46 PM PT

I personally favor product companies over service companies. although i do think that being in the service business has helped companies gain domain knowledge and are actually in a good position to develop great products, if they choose to do so.
One of the things that I do think is a problem is that I am not sure how much is the work for equity culture caught up in India. I started out developing a software product in India but all 3 of the people lost interest because they got a job immediately after (they are still 2 years from graduation).. they got paid Rs 25K/month which is by all accounts a good salary and not something I could compete with.
I think the big software service companies are creating armies of software drones.

Rahul Dighe Sunday, March 4, 2007 at 5:17 AM PT

1] In India most of the Graduates are self-contended with any type of Job, they compare with their neighbors & start fantasizing to become like them. Example: If A & B are Friends, If A got the Job in Infosys [paka service], B starts fantasizing about A & B feels himself inferior and degrades himself. In this scenario B never thinks of starting a company.

2] In India, parents never encourage us to start a company because they want us to marry a good family girl as soon as we get the Job. Which is why i haven’t been to my native village for 1.8 years.

3] In India, most people rhapsodize other’s success but never get self motivated enough to start his/her own concern.

4]. There is a lack of awareness about entrepreneurs in India. Only those who have entrepreneurship in their blood begin to search for information due to his Interest in Entrepreneurship. Like me.

5]. There is tremendous lack of awareness about new technology in India. Very few in India know about Ajax, Web 2.0 & the upcoming Adobe’s Apollo project [ which i am much interested in].

6]. People are very very reluctant to learn new things.

7]. Most of the graduates don’t know HOW important product companies are and why.

8] There is trend in India which is inherited like this: Senior to his Junior [who wants to start his own company] “First get experience for about 4 to 5 years and when u become PM you can get your own Clients [again Service company mentality] and start developing your own company”. After 4 to 5 years he is almost 30; Parents start urging him to marry. Once married he never again thinks about starting a company.

9] The person who wants to become an entrepreneur will fail to become one after getting a job in a good company because of the hefty salary.

10] It is hard to find similar mindset [Entrepreneur & Techy] in India. When they think starting about product company they begin to compare with GYM and the rest, forgetting they too were startups once.

Finally, there is a lot more to learn from failure than from success.

Mahesh Sunday, March 4, 2007 at 11:09 PM PT

I think we underestimate the services companies’ achievements — building billion plus dollar revenues out of India in a global market place — even if it is not ‘products’ — is an extremely nontrivial feat. The guys who did this — Infosys, Wipro etc. — are obviously amazing entrepreneurs.
There are instances of product companies from India in software and even in hardware — but yeah we dont have as many globally known products as even Chinese companies.
Re the media pampering services etc., obviously they saw the success and covered them –thats an after effect. I have also seen media covering companies like Bharat Forge etc. in a favorable light. Same for brand IIT etc.
Your article seems dated by about a couple of years — things have already started changing.

Rakesh Monday, March 5, 2007 at 12:23 AM PT

Its hard to build product companies when the markets for these products are elsewhere. Now, with India emerging as a major market for high-tech products/services, its only a matter of time before we have some product-based entrepreneurial success stories coming out of India. I personally know several different entrepreneurs in B’lore working on ambitious product ventures. What is needed now is a combination of (1) govt regulation, (2) infrastructure development, and (3) seed/early-stage support from “mentor” funds/VCs to nurture this budding ecosystem. The service companies have done a great job building up Brand India, and the folks who have made lots of money in the process have an unique opportunity to give back to Indian IT by helping with (3) above.

Dharma Monday, March 5, 2007 at 7:43 PM PT

[...] Karampuri analyses why there are no product companies in India. He also has an interesting thought on how product companies can help India grow. It is quite true [...]

India Needs Product Companies on iface thoughts Tuesday, March 6, 2007 at 3:05 AM PT

Ankur:
In my first post I discussed why we need product-making companies (and I still working out various projections to further make the case). In this post, I started discussing why we don’t have product making companies. The reasons are plenty- I outlined only one of them which came to my mind as the one of the most important reasons.

I wish to follow it up with another post on what we can do as people and nation to promote such product-making companies.

I hope to post it sometime soon.

Sujai Tuesday, March 6, 2007 at 4:10 AM PT

Rakesh:
I do not undermine the present software-services companies. They have contributed a lot to India- its economy, its image, etc. I would not like us to get ‘slotted’ into one type of industry, that’s all. In our over-enthusiasm to project only successes, we seem to create an environment where risk-taking is not seen in positive light. Our obsession with one industry, one sport (cricket) takes a toll on others.

Sujai Tuesday, March 6, 2007 at 4:15 AM PT

I love IT services & ITES industry ! It gives job to youth. Recognition to India about knowledge industry blah blah blah.

And enables us to even do this discussion.

Local market is a big thing for a consumer product. As Vish rightly pointed out at the beginning that the local market is non-existent almost because of piracy and the legal framework which can stop that. A few examples:

[1] Near my house I can buy almost any movie released new or old at a very very ‘discounted price’ on DVD or VCD format that includes latest hollywood movies too.

[2] In one of my previous company we wanted to buy IBM mainframe. The vendor told us if we want to pay by Indian currency they will add a premium to cover the risk of non-payment and in case it goes to court the lawsuit may go for years before they actually can get that money. However, if we pay by $$$ being a part of the STP unit and purchase in the name of our US operation through bank guarranty they will not charge the premium price as it will be very easy for them to get that settled.

[3] Though around 4 years back, I remember meeting a prospect in India who after listening to the complete technical presentation of the solution got very excited and started discussing the cost. Finally said I don’t mind paying for your service and effort but that SQL Server you are talking about, I will not buy that you just install from whatever you have. :D

Everybody of us know the stories around. There needs to be a framework built by the govt which encourages original thoughts are not getting copied unlawfully everybodies IP is protected. I am just wondering what would have been the fate of the IP lawsuites among various product companies in US if those were done in India! Who will take all the effort to build IP and who will fund them in India !

The framework is just not there for IP management and protection. Even there are clients in service industry who doesn’t allow to get the software or data here in India because of very loose law around this.

In our company we run a project where we have a dedicated setup inspected and maintained by the client IT department and even the laptop for the team members are shipped from US by the client.

Besides, it is always easy to build product being ‘near’ the market where the big money is. However, I strongly believe the IT Industry in India is just in it’s infancy and obviously it has a lot of open space to grow.

Santanu Wednesday, March 7, 2007 at 2:23 PM PT

Hello,

I come from an out and out product company with a brand created and nurtured within India…. We continously have to innovate to stay ahead of the competition which we do quite competently……We continously scour the market for need for new products…make our investment in engineering and R&D to come out quality products all the time….

All it requires is a change in a mind-set and mind you the services business within our company is strong too

Rgds…Vijay

Vijay Nair Wednesday, March 7, 2007 at 10:46 PM PT

I agree with most of your analysis. People in India are too brand conscious to accept work with a small startup, even if it pays better salary, but doesn’t have swanky offices or brand name.
I am also not from IIT, rather am from relatively unknown college, but had a similar experience as what Anuj mentioned when I was in US.

Well I founded a product company, but soon realized that I was going nowhere and so switched to consulting as it was more lucrative, and will give me a buffer of cash to depend on, the next time I have some zany idea.

Maybe, I am a sissie, building a product is lot of risk, IMO generally 8 out of 10 products fail, and maybe another reason why there aren’t too many quality products made in India.

Surendra Tuesday, March 20, 2007 at 1:41 PM PT

Hi,

I guess, i had to reply this one. you have rightly stated india needs product companies. But this argument looks good only on your blog. I am from IIT and took the bold step of starting my own company right after graduation. I took support from incubation unit of IIT and subsequently also secured funding from an angel investor. I steered my startup for about two and half years and found that it was not going to go anywhere. Ours was not the only company that failed to cross the chasm. Nearly all the startups founded by my seniors and by my batchmates fell like ninepins, one by one. The ones who survived turned towards servicing. The result was all people who ventured, were even more determined to not to return to india.

Also, i realized in India media and people like you misguide young people and put them on wrong path. India is certaintly not at a stage to support product startups.

Believe me, a product startup requires all together different environment. The ecosystem, required to support a product startup, is totally missing in India. In my venture, i realized i was being experimented on.

My advice to all young enthusiastic people/entrepreneurs.

1) Don’t listen to media, the media is misguiding you, look for concrete examples of success of other startups.

2) Wait! India is still not suited for product startups.

3) Start as service business. yes, even if you want to build a product , start as service company. These VCs and bloggers are misguiding you. when you will starve, these people will not come to save you.

4) Don’t start a company which requires large seed money. Look for web related, service related startup. You will ONLY SURVIVE if you are profitable from day one.

5) Although VCs claim they invest in early stage startups, they NEVER do so. If you don’t believe me see their investment portfolio. They will be willing to listen to you if you are generating revenues or you have a proven background. For example you can start web company:- ex ringtones, photoprinting etc

6) Focus on generating money not on generating technology. In this country, former is better understood than latter.

7) Don’t copy US model blindly. US the domestic market is strong thats why so many startups are able to survive. In india, the picture is still not so rosy. $10 per month still means a lot to an average indian. Remember, world’s richest population is in US not in India. So be cautious!.

8) Don’t consider yourself a vagabond. Remember if it had been possible to build product companies in india, people would have done it. Narayan Murthy is lot more smarter and visionary than you. So you need to answer these before you start product company.
Why Now?
Why others have failed?

Most probably you will STOP at that stage itself unless you are a masochist.

Disillusioned Entrepreneur Friday, April 13, 2007 at 10:54 AM PT

Dear Disillusioned Entrepreneur,

Some of your points are true. When Narayen Murthy started Infosys, it was not yet possible to build technology product companies from India.

I don’t know what year you started yours, but even in the late nineties, when I did my product company out of India, not only was it very difficult, Silicon Valley investors used to think it was very risky to have product development in India, so funding in the valley was also very tough. All that has changed completely, as a venture capital industry HAS developed. And, I did manage to get my project funded, at GREAT personal cost.

I take it, that you are not a regular reader of this blog, since we have discussed using services to bootstrap your startup at length on this forum. Companies like Atrenta (2006 revenues: $27 Million; 2007 Forecast: $45 Million) have used this model effectively. I would call that a success story. Wouldn’t you?

Where I agree with you is that building technology product companies requires experience and market insight, not just knowledge of technology. If your core competency is technical skills, then you are better off doing services.

Consumer Internet, ofcourse, is a very different ballgame, and it is easier to do that in today’s India if you choose the right segment to focus on.

I will say this, though, that YOU don’t seem to have what it takes to be a successful entrepreneur.

One, you post anonymously, telling me that you don’t have the courage to stand behind your statements. Sujai Karampuri, who wrote this piece, has his own challenges, but DOES have the guts and the conviction to stand behind his words openly.

Secondly, your post oozes negativity. I personally hate people who are negative. Nothing positive emerges out of a negative attitude. And some of the greatest attributes of a successful entrepreneur are optimism, conviction, and a positive mindset.

Do you think Jamshedji Tata had started his venture with a lot of evidence of successful entrepreneurship already in place?

I am sorry, but I find YOU uninspiring. How would you inspire your people?

Sramana

Sramana Mitra Friday, April 13, 2007 at 12:02 PM PT

Hi!
I think you really put some important points in this article. I am also working on similar to this topic. You have mentioned about Indian service industry, but at the same time Indian product companies are catching up fast. In the last 5-6 years this number is increasing in exponential manner. But still Indian product companies are facing lot of challenges. There are 2-3 factors which need to be improved. As you rightly mentioned, a graduate from say Computer Science or Information Technology is attracted by IT companies, in which he/she looks for brand. Unfortunately India don’t have brand like Microsoft or IBM, the top ten Indian IT companies are mainly into services. The situation doesn’t stop here. The need of IT industry is such that they are hiring even Arts, Commerce graduates.
The solution I think is a combo pack of IT-Education-Government. IT companied need to have some campus programs except from recruitment, which will update the students who are far away from realities. Indian education system is more in theoretical things. Industry can make them aware of realities. Not only in IT India has huge opportunities in sectors like Retail, Biotech etc and technology should be there to drive these sectors.
Government should also come up with some programs which will motivate our young professionals/students to be entrepreneur. Government can probably help them financially. Ultimately I would like to conclude saying we need a growth in all perspective, otherwise we will be considered as Service providing country only.

Thanks & Regards
Ranjan

Ranjan Revandkar Tuesday, July 10, 2007 at 10:50 AM PT

Interesting…

Thrasyvoulos Wednesday, July 11, 2007 at 12:17 AM PT

Good article Sujai.
Mahesh, I agree with all the points in your comment.

The startup culture in India is slowly but surely catching on. There are three Indian startups – Burrp, Pixrat and Khichdee – mentioned in the top 31 non-US startups in a recent article
http://money.cnn.com/galleries/2007/biz2/0707/gallery.web_world.biz2/
Also check out this post by Om Malik
http://gigaom.com/2007/07/24/google-bets-on-start-ups-in-india/

But still, a lot more needs to change before India becomes a entrepreneurial hotspot: the mindset, obsession with brands and one’s position in the corporate hierarchy, the aversion to risk taking and the societal pressure to ‘conform’ and ‘settle down in life’.

Looking forward to see a lot of startup action from places like Bangalore, Hyderabad, Mumbai in the future.

  • Kiran
Kiran Vaka Saturday, July 28, 2007 at 2:11 AM PT

Hi, I have read and agree to may of the reasons and comments from people on this particular topic as to why we dont have many product companies in India. I may be mistaken but the way I see it, the reason for this is just because we dont TRY.

Anupam Wednesday, December 12, 2007 at 5:23 PM PT

I think you are dead on, Anupam!

Sramana Mitra Wednesday, December 12, 2007 at 6:41 PM PT

Thanks Sramana.

I know my comments were a bit harsh and may have sound sarcastic to many of the readers but the truth is that we actually do not have the right kind of attitude. Even though we have all the talent, resources and brains in the world, we Indians are a bit lazy and nostalgic about giving thing a try.

I have come across people who have a mental block and say that you need to be from some IIT/IIM to think different and others cant afford to.

Others say that they do not have enough financial support to start something of their own, though they are highly paid in the MNCs they work in.

I may be harsh but the truth is we are better naukars doing better naukris.

Anupam Wednesday, December 26, 2007 at 5:17 PM PT

Again, you are dead on.

Sramana Mitra Wednesday, December 26, 2007 at 5:23 PM PT

Sujai

I saw a lot of passion coming out in the article. good to see someone seeing and voicing the other side of the coin….

for today’s B school grads like us, persuing a field other than IT takes a lot of conviction even when others are getting paid more and easy…. so it tests your conviction at the placements….. keep writing …. it is a notion that needs to be scaled up…. has a lot of scope

jatin Monday, February 18, 2008 at 1:44 AM PT

I am kinda curious here. There seem to be many people who have burned their hands at products and hence have given their experiences in this blog.

But, a couple of points I was looking for never came up – technical knowledge and maturity levels.

  1. IMHO, product cos require, in addition to the business, market knowledge etc and all other things Sramana mentioned, an excellent technical idea that forms the seed for the product. Something that is quite obviously very novel. In this regard, I find it quite surprising nobody actually touting deep rooted technical knowledge as a pre-requisite. Is it that all the ppl take that as a given and then analyze the other factors?

Where are the Sergei Brins, Larry Pages, Linux Torvalds in India?

PPl should see the trouble product cos have in getting talent in India. Most of the talent simply do not have the technical level foreigners are given to expect in an average engineer abroad.

  1. Might be a sweeping statement but just comparing the average grad in the US who has worked in half a dozen jobs or more and then come to study a subject with an Indian student who has mugged his way to grad school is too much. The American student’s maturity level is way higher than an similarly aged Indian student and he understands money management and market dynamics much better.

Is it less surprising that kids of Indian parents who grow up in the US are more likely to start a product co than their parents.

My point is that in Indian kids scholastic ambitions need to go hand in hand with learning the real world. India kids have very less exposure to the world and parents need to be less protective of them. Kids need to be more rebellious and less dependent on parental approval for their actions.

P.S: I work in a product company and have moved from a services background so I feel the stark difference in the two.

Harish Monday, February 18, 2008 at 5:13 AM PT

We have to agree that many for/against points made earlier are true to the extent that reflects peoples own experience in starting/doing a product from India.

Especially I agree with Harish’s points on key talent and average engr maturity. Mostly engrs in univ/service companies have been grown or groomed to ‘write’ good java,c++ programs and not at higher level thinking of problem solving ie products/mkts/competition. Strangely, the same Indian engr when s/he migrates to West gains all these very fast and can think very differently in a span of few yrs.

Add to this one important difference is that in US/Europe, big majors fund or take investment stake in smaller product companies be in Intel, MS, or IBM, Nokia – even if they might not aquire them in the end. Second, in west, VPs from big majors quit to start/mentor startups – which I have not seen in India, barring few. This motivates younger generation in a large sense, ie shared risk.

So, to foster product innovation, IMHO, big indian companies/execs have to do more overtly in local eco systems (blr, hyd, noida) and one has to give a long gestation period ie 2-3yrs of stealth work and funding model (self,angel,vc) should be able to support this. This will hopefully also bring mkt understanding, prd roadmap/mgmt, and competition mindsets amongst engrs at all levels.

Partha Monday, February 18, 2008 at 10:59 PM PT

Very nice article. Building a product company in india or anywhere is a tough job as compared to service industry but then returns are directly proportional to the efforts put in.

Shivani Tuesday, February 19, 2008 at 10:25 AM PT

Another dimension worth analyzing is the average Indian’s risk taking appetite. Pursuing a product-based idea and staying the course in order to improve the odds of success, requires significant time, effort, and often, lots of money.

Very few Indians, specially ones coming from middle-class families (which makes up a good chunk of the demographic), want to speculate/dwell on product ideas as they have been raised in service-class families and evironments, in which their minds have been trained to pursue ideas/opportunities where returns are reasonably assured.

Odds are stacked up high against a product taking off and this contributes to the low numbers.

Uday Kumar Tuesday, February 19, 2008 at 12:39 PM PT

Guys

I may sound a bit poetic in this post though, but thats how I felt like writing here, especially after getting agitated by the anonymous post and thanks Sramana for the fitting response.

Most of what Sujai has said is a ‘in-your-face’ truth (period).

For those who say that its very hard to build a product company in India, let me tell you something. It may be tougher than what you can possibly think of, but right there, you are tested for worthiness inside-out. If you are not strong enough to stand with words like ‘what come may, I know I am doing the right thing and there is no option called quit/loose, I shall find or make my way through’, then the question is: are you an entrepreneur? do u have it in u?

Tough you can find Sujai’s unromantic story at many places on web, this and his own blog too. But here is the story in short what the man told face-to-face(Request to Sujai to correct me if I am wrong anywhere):

For those who don’t know Sujai, He has come out like gold in all the worst possible cases that u can think of, while starting a hi-tech product company in India. I had a chance to listen to him face to face at proto.in jan 2008. The title of the talk was ‘the worst case scenario.’ He told the whole story of how he faced every adverse thing, that can haunt through sleepless nights and take life out of your eyes. He was living on a dream and his team was on the captain’s weightless vehicle of trust. Even when the captain was sometimes clueless about how will he manage the next month’s payroll. But the smart captain never told the team about it and somehow managed it, either by skewing his own urn or stretching his hands on whatever foreign urns he can get his hands to. He emptied all urns of fuel from friends, relatives, etc. over 3 years, promising and convincing them all, about the dreams that he has weaved.

Yes, believe it or not, he almost (almost) bootstrapped a hi-tech product company in India. Can mocking people challenge that? (Go watch this 2min video on my channel, it shall explain everything: http://www.youtube.com/watch?v=0sdm6NnvVuI). If you (mockers) were not able to do that then either you don’t have it in you or you were only out for money and failed because you didn’t make meaning. As Guy Kawasaki says: ‘If you make meaning you will make money for sure, but the equation is not true the other way round. If you make money you may or may not make meaning’. And failing to make meaning can be your very own swamp where you can get doomed.

At last, after 3 years Sujai’s dream was standing at his face in all life and vigor. (And some people quit in 2.5 clueless years)
Sloka Telecom powers the first 5.8GHz WiMAX network in France dec. 2007
On a philosophical note: Can’t imagine that feeling from Sujai, but must be something similar to giving birth to a healthy child after prolonged pain.

As far as service companies are concerned, I have no complaints or complements for them. They have brought good as well as bad things. They are required and are right in their place, believe me I am not contradicting myself here. There is a whole lot of understanding that goes behind this statement, will share it some other time and place. Rather the idea ‘start with a service model and then fuel your product development from service revenue’ is one really good idea and I am onto it.

To conclude this in Sujai’s words:
Given the fact that you know that you are doing the right thing, but things around are in no truce with you, when is the time to say – ‘I quit’?
Is it – When your friends stop talking to you, when your wife stop talking to you. When your wife leaves you. When you parents disown you. When you children feel shy calling you dad. When???
The answer for Sujai and me is: never. (hope I stand by it till eternity)
The answer from the one and only Steve Jobs: ‘You are already naked, there is no reason on earth for why you should not get out there and follow your intuition/gut/heart’
You have to decide for yourself, nobody ever asked you to go and play with fire. It was you who wanted to explore the possibilities and extremes.

As for some anonymous person here saying ‘I worked for 2.5 years and it was not going anywhere. I have seen my seniors, friends startup falling like nine pins’, yes the percentage of people who try but only half way is lot larger and these people contribute a lot to the 90/100 startups fail ratio. Though there are a lot of other varied people and reasons that make this number big. IMO the reason specifically for IIT’an startups falling like ninepins is: They have the luxury to startup in a lot of attention, progress in a lot of attention and then quit for another easy option(since tey are IITan’s). Its like beds all over roll over one to another. Whereas when u r not an IITan, you go bare in thorns. No easy encouragement to start, to continue and failure is eternal sin. You always remain bare * sitting over thorns. http://jaivikram.verma.googlepages.com/venture-aniitanandnoniitancompariso.html

I am facing it myself. Though I wouldn’t mention how, because this is not the right place for that and moreover I am nothing till now to tell stories. Can just say that its been almost an year and I am trying to fly against the current and looking straight in the eye the storm, with a hope under my wings that I will see the dawn some day.

I won’t …. is a tramp
I can’t ….is a quitter
I don’t know ….is lazy
I wish I could ….is a wisher
I might ….is waking up
I will try ….is up on his feet
I can ….is on his way
I will ….is at work

-an illusioned entrepreneur
The author is an insignificant bit till now and trying to become one of the most significant bit, bit-by-bit. Trying to make meaning above all, but not compromising on money too ;). Available for comments, discussions and criticism at
jaivikram.verma@gmail.com
blog(discontinued for long): http://juggernauts.wordpress.com
links:
http://www.linked.in/in/jaivikramsinghverma
http://www.youtube.com/user/jaivikramsinghverma

Jai Vikram Singh Verma Thursday, February 21, 2008 at 2:47 AM PT

*correction
Linkedin: http://www.linkedin.com/in/jaivikramsinghverma

and NOT
http://www.linked.in/in/jaivikramsinghverma

Jai Vikram Singh Verma Thursday, February 21, 2008 at 3:03 AM PT

and NOT
http://www.linked.in/in/jaivikramsinghverma

Jai Vikram Singh Verma Thursday, February 21, 2008 at 3:08 AM PT

[...] Why No Product Companies in India? [...]

Need Product Companies for India’s Growth - Sramana Mitra on Strategy Sunday, February 24, 2008 at 12:43 PM PT

Hi All,

First of all, kudos to the writer, and the active participants in this discussion. I believe I have something to contribute to this sagacious discussion, and here I go.

I work at a startup called Drishti. Drishti is one of the handful Product-based companies in India, and is complete self funded. We have grown at about 150-200% y.o.y. and we hope to take this momentum forward. We are competing with western companies and have already had an award winning product in our kitty. Now we are working on a next generation product, which we hope will make an impact in the communications domain.

Basically, we are a bunch of young guns (average age here is about 26-27) hoping to break the mould that Sujai has talked about here. We started out as a service based company in 2003, made some money, and then launched our product in 2005. It’s been over 2 years, and now we are planning to launch a new, future proof product this year.

A lot of challenges that we have faced have been outlined in this post and the subsequent comments. However, although its still too early to say (we are about $2.5 Mill) we think we are on the right path.

It may take a while, but our ambition is to make it big as a PRODUCT based company. How large we make it is a question yet to be answered, but we have come quite far.

Lot of folks here harbor doubt regarding feasibility of starting and sustaining a product based company. I agree that good planning, R&D, Sales & Marketing go a long way in making it successful, but I guess we are ignoring something important here – We probably fail when it comes to products and technology, because we don’t give enough due to innovation, or following the right processes. For instance, many startups I have met are just duplicating successful western
models in India (just look at how many “Netflix”s are in India) What they don’t understand is that sometimes an idea that clicked elsewhere may not click in India. Just look at Walmart in China.

A product based company needs a lot of discipline, patience and the will to say “NO” for short term benefits. We Indians sometimes get too carried away with short term profits to actually see the larger picture in entirety. We need to adhere to a particular belief. For instance, I have talked to some folks in India who would gladly take up a great project that offers ample and quick money even though it may not be aligned with the long term ambitions of the company. That lack of discipline is what’s leading to high mortality of such companies who have great ideas, but cannot stick to the discipline required to make those ideas realities.

Just my two cents.

P.S: You may check out our company (Drishti) at http://www.drishti-soft.com. You may also check out the corporate blog at blog.drishti-soft.com
I would love to know what you think about us.

Any feedback is truly welcome, and I am looking forward to the follow up to this post :)

Ankur Sharma Tuesday, March 11, 2008 at 3:23 AM PT

Ankur, Congratulations. Thanks for sharing the information about your company. I am curious as to why you are self-funded … By choice? Sramana

Sramana Mitra Tuesday, March 11, 2008 at 10:26 AM PT

Thanks Sramana, I wouldn’t say that we are self-funded by choice. We just haven’t pursued it very seriously yet. We have been able to grow without any external assistance so far, but now we may need to look at that option to sustain the kind of growth we are targeting.

We are in talks with many VCs who have shown some interest, but we are still in the discussion stage. We may go in for some serious funding very soon.

-Ankur

Ankur Sharma Wednesday, March 12, 2008 at 4:49 AM PT

Well, keep us posted, Ankur.

Sramana Mitra Wednesday, March 12, 2008 at 4:59 PM PT

Most certainly. In the meanwhile, here are few related websites that can give you more insight into the kind of initiatives and things we are doing:

Customer Portal:
http://www.dacx.net (This is exclusively for our customers and one of the first of its kind for ticketing and logging issues)

http://www.dncregistry.in
We have actively taken up the cause of DNC in India and are collaborating with various people in the industry

blog.drishti-soft.com
Corporate blog from Drishti’s marketing and management teams

We are also coming up with some more initiatives that I shall discuss soon.

In the meanwhile, I’d be glad to talk to any other product/service based startup based out of India for knowledge sharing. I am sure we can all help each other out.

Ankur Sharma Thursday, March 13, 2008 at 3:14 AM PT

Never think we can start a product company in india. Americans are not fools, They never buy indian products. They need indian corporate labour to work for their products.

Srikanth Friday, April 4, 2008 at 12:20 PM PT

Says who?

Sramana Mitra Friday, April 4, 2008 at 1:17 PM PT

Guyz,
comments are impressively diverse!!! Can I request those who burned their hands previously: Can you give us a situation/reason(s) for the failure of your product company? I mean there has to be a reason, right? At least we can guess what factors make Indian product start-ups fail. Or may be that can create a few donts for us who hope to come up with a start-up sometimes in 3-4 years!!!

Sid Friday, April 4, 2008 at 8:06 PM PT

This is great article and excited to see the discussion around the product based companies.

Though I am not happy with the startup scene in India, I will say it is improving and we will see many startup – yes product based!

One of the key thing to make things happen in this direction is rise of angel investors. We need many senior technologist, either in India / returning from abroad to think about investing in startups. Another thing, I would like to see is formation of angel groups. Well the angels groups for India would have to be quite different than in US – we can’t just follow US model and this is the reason we are not successful in angel space yet. We have lot of people who have money and can become angel but they don’t have the right experience and knowledge to guide the startup. On the other hand we have lot of experience and knowledgeable people but they don’t have enough money to fund startups. So the angel groups in India which will work are those that would try to bring these two kinds of people together.

Another important thing to happen is young people need some kind of platform which pushes their entrepreneurial drive and also provides feedback / support them in their endeavor. What this should be exactly I don’t know but I am interested in learning what is required. It depends on the reasons why even the “capable” and “passionate” people join some big firm rather than starting a company. It would be good to hear from you (capable and passionate) people!

Other important thing to happen is for germination of entrepreneurship culture in various schools and colleges.

Prashant Sachdev Tuesday, April 8, 2008 at 9:01 PM PT

The Article is Timely, but the Analysis is Wrong

Sorry to say it, but this Article lacks real depth.

I agree that we love brands, stars etc. Who do not? Even in US/Canada/Japan it is the same case. Though, there is an iota of truth in it, it is NOT entirely the right reason. And in India the context is different.

People love a SRK movie or a Tendulkar century because it looks like a fantasy, so different from reality of their day to day life. And lets them forget the harsh realities a moment. In US though, it is more about having a celebrity status.

I have been to both Product and Services (and they are best in class). For someone sitting in US or Canada the reality gets distorted; statement likes “China in manufacturing, India in services”. It is just not right.

The reality is very different in India. And we have seen this industry for quite some time now, around 15 odd years.

Truth No – 1:: Product companies thrive on loyalty

If you look at the attrition rate of Wipro/Infy/TCS, it is a headache. It is between 15%~20%, which means one in every 5 leave.

And people who leave are normally better as they better offers.

Can you imagine you are going to launch a product which involves a lot of dedicated attention and your team of 20 is short of 5 important resources in 6 months? You simply can not build a product like that.

I will not get into why people leave from Services. That is a different context.

Truth No – 2:: Home grown Product companies
will come from cities where people have the similar culture

India is a country where you have around 20 official languages. Not a single city in India has a cosmopolitan outlook (Mumbai was very close, but recent MNS work blacklisted it)

When you are in a product company, a substantial amount day and night is involved in thinking of technology. Also, with this you bring in your own culture. A Tamilian will be always more comfortable to talk in Tamil, rather than English. It does not create the same kind of passion. Similar is the case for a Bengali or a Marathi or an Oriya.

Home grown product companies are most likely to come from a Chennai, a Pune or remotely a Calcutta. However, it is still difficult for them as they do not get the right kind of talent, and even if they get it is difficult for them to retain.

And India is not the US, where English is the common language. And interestingly all developed countries speaks only one language, be it Japan, the US, France or Germany.

Though you try to have a multi-cultural company, we are so mentally handicapped based on culture/region/language, it becomes nearly impossible.

Truth No – 3:: Product companies do not pay well for the amount of work

Consider a person joining a “Tier-I” services company and a person joining a product company from India.

The salary gap will be maximum USD $1,000 to USD $2,000. After 3 or 4 years you feel frustrated as the other person from Services would have earned more, just by virtue of sitting at an onsite location.

Even in the long term, they do not pay highly. A person with over 7 years of experience will earn USD $2,000 to USD $3,000 in a product company.

Even from MNC (base out of India), the highest salary offered does not match with a rookie software professional sitting in US. This is a shame, but true, as the business model is based on cost cutting.

Truth No – 4:: You do not grow in an Indian product company

Very few Indian product companies have even more than 2,000 employees.

For every business, the idea is to have money and stay profitable. However, not many people will like to code after spending 10 years in a company.

You need to grow and face different challenges. With 2,000 employees, where is the space to grow?

Truth No – 5:: With all the hoopla surrounding the IIT/IIM, we do not have real talents

It sounds harsh, but has IIT ever produced a Nobel Laureate? (I think III-Kgp has been over 50 years now)

Also IISc has not given a single Nobel Laureate post independence.

Have you ever heard someone from IIM building a multi-billion dollar company? (IIM-A have been there for pretty long)

People who join IIT or for that IIM have had the right kind of input, background and they prepared early and got in. Beyond that it was about getting the right kind of money.

Very few want to do something on their own.

Truth No – 6:: India is a 10th/15th world country (we are not even a 3rd world as posed
by the media)

There are 3 basic necessities of a human are food, clothing, and shelter. And over the years, “transportation” has been added.

Even in the so called silicon valley of India, Bangalore, with a comparatively good salary you can NOT have them in a way, which will induce creative thinking (a blog on that). For everything India, you have to fight. Now just think about someone who is from a small town in India.

When you do not have the basic livings, when will you creatively think?

Truth No – 7:: We are Risk Averse and Failure is a Stigma

India is NOT the US. In Silicon Valley, a good failure is considered to a badge of honor.

We hate risks. Even today a person in Govt. department is favored in many places of India (somewhat dented after the emergence of IT) compared to someone in a private sector for marriage proposal.

We still think Business as a remote career choice compared to a job! It has been the culture. And it is NOT going to change soon.

Truth No – 8:: Our education system is in 19th Century

The education system is outdated in India. We are still following the same pattern of British Raj and in some places the Nehruvian socialist pattern.

Even a very simple and practical one like working students paying for tuition fees have NOT been introduced.

What we read is of no use in the industry, even if you read join a core industry? In real life your ability to think creatively, leading people, problem solving helps more than “mugging up” and scoring 90%.

Nevertheless, I do completely agree with you that we need product companies to go to the next level.

The head count based model is not going to work. I did not hear much about Infy/Wipro/TCS etc., 10 years back and if they continue doing the work based on the current model, I will not hear them either, 10 years from now.

Satya Narayan Dash Wednesday, April 16, 2008 at 2:24 AM PT

Developing a product needs different people and most of our universities doesn’t develop innovation-friendly culture. Research attitude is missing.

There are more reasons, I will pen down my observation.

AjiNIMC Thursday, April 17, 2008 at 8:21 PM PT

good article.

Apart from the reasons mentioned, I would also like to say that we Indians are very short sighted, and want to become quick millionaires/billionaires.

One case to point out is that of a company in Bangalore which was started by some 18 something engineers who made great strides in VOIP in early 2000. After a couple of years of good cutting edge advances they sold of their company(and product) to Intel for some n million dollars. If they had continued in doing what they might have done, we could have possibly had a new AMD or a new Intel in India which could have spurred a new hardware revolution.

Developing a product also needs a state of mind where only your vision(not $s) drives you for some years. It is your faith and confidence in your product that will keep you going and you won’t see anything in terms of $s for continued periods of time. Again, this is not possible for us because of previously mentioned reasons.

sanjay.

sanjay manchiganti Wednesday, May 14, 2008 at 10:34 AM PT

Here is another article which discusses a similar issue and in a more detailed manner.

http://seekingalpha.com/article/76511-where-are-indias-innovative-companies-products-and-solutions

Tks
Saswat

Saswat Praharaj Thursday, May 15, 2008 at 3:04 PM PT

We have a ‘someone superior will give a job to us and we can happily sit in a niche club gloating aout our world-class success and failure of the other Indians around us’ kind of dreamy attitude. Those who do that must realize that we are not world-class, not even in software. Solid research and development is the way to go. We need a government/private industry created ecosystem too.

Ak Tuesday, June 3, 2008 at 9:17 PM PT

‘If West has products and technology, China has manufacturing, we in India have services!’ Only a donkey would think like this. Services are just an offshoot of technology and services never create new technology unless you put in large investments.Continuing to ignore other sectors like manufacturing, hardware, metals, mechanical industries, electrical and electronics, to the benefit of IT will cripple India one day. However we badly need the revenue. To grow India atleast needs stable electricity and energy sources. Also we need a constant supply of natural resources, metals and minerals. If we lag behind in any of these fronts, R&D will just be a dream and in a few years time, we will only be capable of that – dreaming!!! I also think we need one more thing that is seriously lacking, a self-pride and belief in the things we create. Continuous improvement would also not hurt.

Ak Tuesday, June 3, 2008 at 9:43 PM PT

To all naysayers – I call BS. I started out-and-out products company from my dorm room in IIT Kanpur with 3 of my batchmates with my own money. No VC, no business plan. Just plain old-school entrepreneurship. We didn’t do well initially but I stuck – and do did my team. Investment never happened – but customers did. Eventually, we turned quite successful. We’re planning an IPO now – and our revenue-per-employee beats anything infosys can come up with.

I suggest look at SaaS models – 37 Signals – and closer home ZOHO. Find inspiration from them.

Shashank

Shashank Wednesday, June 4, 2008 at 12:58 AM PT

Shashank, What is your company/product? Sramana

Sramana Mitra Wednesday, June 4, 2008 at 1:05 PM PT

gr8 article..
freshers and young aspirants like us hardly have knowledge about this kinna stuff.
i can see two such product companies that are making their presence felt in the global market..
krawlers and the other is pramati..
i think that real so called I.T starts now..

miyur Thursday, June 5, 2008 at 1:44 AM PT
  1. I have to disagree with Sramana on the fact that the Indian scenario was not ripe for product companies. Take a look a HCL and Wipro computers in the late 80s. The mini-computers were state of the art. HCL where I worked, had 16 CPU NUMA boxes (4 x 4 CPU) with parallel compliers. All this on std UNIX and open source BSD. And the world’s first RDBMS ! Is that sufficient innovation ? I could go on and on.

HCL couple have gone on to become Red Hat baed on its BSD OS .It didn’t. It could have have marketed its products in the US. It tried but not having a proper VP of marketing, it was an effort doomed to failure. Also quality was never the strong forte of Indian companies ! But Nadar and Premji do deserve credit for beating the likes of Sun Micro in technology albeit for a very brief period.

Ultimately they gave up on howm grown products and went the body shopping route.
can’t blame them, shareholders would have demanded it. This was the mileu that spawned the likes of Narayana Murthy and the rest. He chose to ignore HCL’s or Wipro’s innovation but used their services model.
Good business decision but bad for the products industry.

At this time, the govt standardized on POSIX (n Windows allowed !) for all public sector companies. POSIX was still new back then so a whole host of custom SW consultants came up. But none took the opportunity to go on to package SW. The opportunity was always there.

Look I agree product startups were tough back then. I tried to get VC funding in 1988 for a 100MB floppy disk idea. The fact that you had to fill your business plan in triplicate was enough to kill the idea ! We tried selling custom designed PC add on cards to fund our project but manufacturing in India in the 80s was a bad idea and we closed shop. But we at least tried. I guess fresh grads out of school were not too credible either !

  1. Fast forward to the 1990s. Now the VCs are there but reluctant to fund product companies. We tried doing open source consumer appliances in the late 90s. Could not get funding so recast ourselves as a services company and got funding (but refused it since we had a good cash flow by then !). Remember this was with a team of 5 industry veterans and 100 + man years of experience ! On hindsight the key problem was that the VC industry in India in the late 90s did not have sufficiently strong eval teams locally.

3.Now the current scenario. As a firm believer in the never say die principle, I am trying to get a new networking product off the ground.
To cut a long story short, the response often is why don’t you do a nice Web 2.0 product to attack the teenage market and stop wasting your time taking on the likes of Cisco !
We have other revenue sources so we can sustain ourselves. This time I think the VCs are OK with product companies but certain domains seem to be taboo. Or it could be that my B’Plan was just pathetic !

But I keep asking myself why I keep trying to base my startups out of India even though I have settled outside India . I guess it is simply to prove a point. Would be far easier to base it out of the US but one cannot ignore the fact that the Asian market needs local products, at certain price points and with feature sets that simply cannot be conceived out of the US. Value engineering comes naturally to Indians. Products conceived by Indians and engineered by Indians I believe (perhaps foolishly) will have value wired into them. I refer to things like use of open standards, ease of use of 3rd party modules to allow low cost upgrades, long product lifecycles. Not sure if value is part of the culture of the current generation though.

To sum up if you know how to get a ration card in India, I am sure one can manage to get VC funding for product companies ! Try getting one and you will know what I mean !

MD Tuesday, June 10, 2008 at 11:16 PM PT

nice chain.. it’s really motivating and inspiring.

archi Wednesday, June 11, 2008 at 5:07 AM PT

[...] source : http://sramanamitra.com/2007/03/03/why-no-product-companies-in-india/  [...]

India Need Product based IT-ITES companies..? « Share your thoughts Monday, June 16, 2008 at 4:05 AM PT

How about companies like Iflex, Subex, 3i-infotech, Cranes software, Ramco Systems ?
Are these not software product companies.
Things change slowly but many of your points are true especially about our obsession with brands and the pressure to settle down. US is diffrent place with 13.8 trillion dollar economy obviously there is a lot more scope for enterpreneurs in US. And even there I heard that the actual guys who try to be enterpreneurs is less than 1% of total population. Indian economy is still a long way off from achieving scale(we do not have enough electricity in metroes yet). India can possibly develop small products(or more correctly packaged applications) for the US and other developed country markets. India is still small despite 9% growth. And we need not just software product companies, we need product companies in a lot of fields. What is India famous for apart from oustourcing ? nothing apart from Yoga maybe :)

Sandeep Deshpande Sunday, July 20, 2008 at 1:03 AM PT

[...] In her blog [Indian IT Industry: The Next 8 Years], Sramana Mitra delves into the cost aspect and points out that with an average increase of 15% year-on-year in the cost of the commodity, an undifferentiated capacity leasing model will soon loose its labour arbitrage advantage. “So what would need to happen in the next 8 years to find another sustainable competitive advantage for India, considering that India doesn’t do IT products? [...]

Commoditization and Labour Arbitrage « Kishore’s Law of Capacity Leasing Wednesday, October 1, 2008 at 7:23 AM PT

Very nice article and very versatile chain of comments.

Let me begin with that I work with an IT Product company. The company has been developing one of the most promising product in Human Resources Management.

The Product is – EmpXtrack On Demand Human Capital and Talent Management Software. (www.empxtrack.com)

My experience says that it is right time in India for a product company.

One big difference in a product company and a service company is Intellectual Property. A product developed by a company is its IP and company can earn recurring revenues by developing it once and selling multiple times. While the value of a Service expires as soon as it is delivered to client. So while service company can remain profitable from day one, it has growth limitations. On other hand, though it takes lots of efforts to develop a product and convert into a useful commodity, it gives long term results.

Gireesh Sharma Wednesday, November 19, 2008 at 10:40 PM PT

India doesn’t have a real product company (i think except for Tally accounting software) purely because of the mind set. Here people want product ( & relative knowledge) to be developed at the cost/risk of a few customers. To top it all product reach involves lots of marketing cost that too no promoters are willing to spend.( because customers are not funding it :) )

Mukunth Monday, November 24, 2008 at 1:22 AM PT

its excellent yaar

Manjit Saturday, November 29, 2008 at 12:58 AM PT

I agree with the basic premise of this blog however I am not convinced of the reasoning’s behind the why there are no product companies. Here are what I believe the fundamental reason’s

1) The Indian society and the most of the primary education system do not foster “enquirer” minds.

2) Most Indian are good at analysis, designing and to so extent innovative product development; however lack marketing and sales skills.

3) Most Indian’s have a tough time articulating their thoughts/idea’s for various audiences.

Having experienced the struggles of entrepreneurship, working for small companies in India and US, I can definitely assert that we are no better or worst at product development then anybody else in the world. It is our lack of salesmanship that puts us on the bleeding edge.

Sanjay Tuesday, May 26, 2009 at 1:57 PM PT

Hello,

Your article is nice, but there are lot of things that you do not consider. It is a one sided view point.

Regarding Brands & Stars, I believe success does not come easy, there is reason why the Top performers are given top status. However having said that I do agree that there is too much obsession, which again is to intended to grab attention.

You must understand why did service companies in first place did to reach the top. they gained through software export and never considered india as a market for software. This is because india does not posses a mature auidence to accept software products. This is the primary reason for lack of innovation in that area.

Also you are completely underestimating the innovation capabilities of indian service industry. They can fish out new products had there been a good market for them to grab. however the share of pie in service is too large for them to neglect.

I completely find no value in arguing between service and product, the only thing a consumer is bothered is the solution to his problem he/she does not care about methodology. I believe that how companies also have to view. Take the cheaper path.

Praveen Kumar Friday, July 10, 2009 at 3:43 AM PT

Praveen,
I think you are right.
One more important point is the horizon in which these things have to be viewed. On an average, it takes any where between 20 to 30 years for people to build large enterprises and Infosys took more than 25 years to reach where it is today. Graduating from college and want to make a billion dollar company in 3 years kind of thought wont work. You need to sustain…fail a couple of times…maintain your cashflow… doesnt matter where it comes from and then re induce that cash into what you want to persue…Probably the ‘meaning’ of what you want to achieve. The media will eventually start looking at you…

Sasi Thursday, August 27, 2009 at 2:12 PM PT

This is stupidity. Competition & market condition decides fate of any industry. If industries could have survived by planning, none of the industry would have ever seen down turn.

marketIndia Monday, September 28, 2009 at 3:58 PM PT

Hi Sujai,

I do agree on few of the points made by you. I would like to add here that the education system in India is also to be blamed. we are following the education system designed by the british who wanted Indians to be only clerks (do what we are asked to do) because to get british clerks from england would have been an expensive matter. Still today that hangover is there we are very good in service industry where somebody else is dictating us what to do. we are very good in saying ” how do we serve you”.

Creative / out of the box thinking, risk taking traits have to be instilled in majority of us. For that I believe it has to start very early in our career – -our school days. Our education system needs to revisited if not revamped.

Aurobind Rath

Aurobind Thursday, October 1, 2009 at 12:43 AM PT

Hi
i am in third year of computer engineering in a non-IIT college:-).I navigated to this blog while surfing the net to find some material to read about a curriculum subject we have- product design. And i would like to thank all the people who have contributed to this blog.

Most of the companies that come to recruit students from our college are service-based. That places only one option before those who want to pursue a career in a product-based company- start your own!
I personally feel that Indians need to change their attitude about workplace and job. We CAN make and we ARE making money out of service-based companies. But that doesn’t make us technologically advanced. In fact, few years down the line, some other developing country make overtake India in this sector. I don’t mean to say that we should beat US in the race for product development but we can at least start to venture into this domain.
This way we can be self-reliant and save lots of money.This is because there ARE youth in India who HAVE the creativity and technolgical soundness to contribute actively to product development. It’s just that they don’t get the right platform and support from society.
If we plainly accept that”India is like this and it WILL remain like this”, we are doing nothing but spreading negativity further.
We need to be proactive and ready to take challenges and trained in entrepreneurship if we want to survive and emerge as a dominant contributor in product development on an international level.
Aafreen.

Aafreen Friday, February 5, 2010 at 7:34 AM PT

Hey guys, as something to cheer up…….First Indian browser has been launched ….it is called EPIC……this might be the first step….but we all can do a lot to balance that step and get higher on the ladder…start using …build applications for it…and so on…. i have started going through it to do my bit….

Rahul Friday, July 16, 2010 at 11:44 AM PT

point (3) about parents hindering their children to start companies is 100% right. many indian parents want their children to earn high marks in school, get degree in famous colleges, join a mnc/infosys/wipro/etc and earn lots of monies, next marriage, next grandchildren, and imposing the same life on those grand children.

kabeer Saturday, September 18, 2010 at 6:31 AM PT

Hi Sujai,

I came across your article because I googled for "product companies in india"! This is a question close to my beliefs (as in beliefs that I practice – I'm co-founder of one of India's upcoming semiconductor product companies!).

I was thrilled to read your article – not because I agree with you – but because you have echoed my very thoughts and words!! I have talked often to my friends about India's obsession with a single star and how most Indians don't seem to realize that there can be – no always will be – multiple stars in any field of achievment. For a country that has so many languages, gods, cuisines, communities…. it is very surprising to me why we can't digest the concept that there is never just one single superstar!

[continued]

Hemant Mallapur Tuesday, January 25, 2011 at 6:01 PM PT

[comment continued from earlier..]

I too get peeved at Indian media's permanent obsession with "Who is #1" – whether it is Sachin in cricket or "stars" of movie world – they like to simplify to the #1 or the one superstar. Nothing in nature echoes this – while our solar system may have one star there are countless stars in the universe.

When you talk about how Indians (investors) have attention span only for success of Software services companies and how the media obsession with them completely overshadows any attempts at product development! Based on compiled stats from public co.s I found that a product company from US (semiconductor) will outscore a SW services company (Indian) by a factor of 8X on both the top-line and bottom-line. With Indian costs those bottom-lines could look very healthy – a reason why MNC's spotted the opportunity in India! Wonder when India will wake up to its own potential!

[continued]

Hemant Mallapur Tuesday, January 25, 2011 at 6:03 PM PT

[comment continued from earlier....]

Again I echo your thoughts about how Indian media likes to make simplistic one-liner stereotypical conclusions such as "since India has bypassed the mfg opportunity we need to only focus on the services opportunity which is working so well for us". The reason why economies of Germany, Taiwan and Japan have prospered inspite of their small populations is because of their products and the huge profits they bring. A giant country like China when it gets into products can simply race ahead of others. And India can sit pretty with its simplistic one-liner conclusions.

While it's great that India has hit upon the well-paying low-risk services mine of silver it should not be limiting itself as an economy from finding a gold-mine of technology product co.s. There is effort and risk in prospecting for a new mine but there are potential rewards too!

Regards,
Hemant

Hemant Mallapur Tuesday, January 25, 2011 at 6:04 PM PT

Well, I disagree with the writer here… In a recent townhall meeting with our CEO here in Pune, he asked a question to a hall full of Indian folks who were experts (experienced managers, software programmers, designers & the likes).. The question was- How many people are here who have read an article in a technology magazine & thought to themselves- "shit, that is my idea"!!!
The answer was- 0, a big 0 out of about 500 people!!
So, the problem does not lie with the government, the media, the idols.. it lies with us.. People.. without new Ideas.. to be specific, how we are trained & not taught.. We are not taught to think.. We don't have questions like- how many windows does your home have or how many trees do you cross on the way to school everyday? No. We are only trained to answer close ended questions. Hence we never bother or take the efforts or don't know how to think out of the box. Even in product development companies here in India, you'll notice that the products are mostly conceptualized somewhere in the US & developed here.

Tejas Tuesday, May 24, 2011 at 2:55 AM PT

Dismal.

Sramana Mitra Tuesday, May 24, 2011 at 1:42 PM PT

I think we can not ignore the education system wherein most of our student end up learning poems and literature (those are also important) and are not exposed to hard core technology oriented education. How many of us at an young age has the willingness and knowledge to learn and start something like Facebook or Microsoft. Everyone can not get through IIT or it's not proved also that only an IITian has the expertise to do so. This has to be rooted in the early schooldays by the education system, environment which gives us the base. Rest depends upon the person his willingness and interest to become an entrepreneur.

dixita Thursday, August 11, 2011 at 5:30 AM PT

Hi,
Iam from India and an Engineer(Electrical).
I think we do not have product companies because of the following although there could other reasons also-
1) Cultural- We are not risk takers; what do i mean by that, our generation of educated people have seen safe cushy even though less paying government servants as their parents.
2) Education system- With our kind of approach, look at the present education system, at least earlier a guy in the indian education system would study hard including roting to come first…now you just have to look at students to come to conclusion ITS A DISATER HAPPENING.
3) Enginnering- Any countrie's Engineer are always at the forefront of product innovation, well mostly.There is beautiful opportunity to capitalize on that…ITS CALLED-"FINAL YEAR PROJECT"-Look at our system-you have to submit the project thats it, no corporate partnerships-not much,and over emphasizing submission for marks, has combined to make us what we are today…Brand and Personality Seekers("Some body else makes the products and creates wealth")

Soundaram V Saturday, September 17, 2011 at 5:16 AM PT

(1) Its hard for a startup in India to sell to Western markets (sales channels' etc.). Indian market in B2B is non existent for innovative products.B2C market is hard to crack unless there is immediate cost benefits. (Highly cost reduction driven rather than luxury)
(2) Acquisitions as an exit strategy is rare and again – need connections to the West to succeed. Even if product was made say for one of the big Indian firms, they would prefer to vertically integrate rather than acquire a product from an unknown startup.
(3) So entrepreneurs are left with either "smallish" more service ideas – Redbox, Flipkart, etc and not really product focused.

Da Truth Tuesday, November 1, 2011 at 6:47 PM PT

At the end of 2011, these statements are no longer true. We have companies in 1M/1M that are building full blown product companies from India.

Sramana Mitra Wednesday, November 2, 2011 at 3:31 PM PT

There is one and only one reason of the lack of product based companies……"Fear of failure"

Tinku Saturday, November 5, 2011 at 4:21 AM PT

Very Interesting article !

I liken the services industry as " You scratch my back. I'll scratch your's" . Although very crucial for our economy, over the long run services alone will never get us anywhere. Evolving a strong Eco system for product companies ( not just SW products) is need of the hour.

Ashok Sunday, November 20, 2011 at 9:16 AM PT

I don't agree with most of the reasons stated. It more to do with our culture and our ecosystem. Startups have still not got its recognition as a brand in India. In India people know biggies like Infosys and TCS and if somebody is working for those biggies, he is highly respected by families and relatives and there is so much of social pressure even if someone wants to pursue his/her dreams. Startup ecosystem itself is not mature enough in India if you compare it with Silicon Valley.

Anand Agarwal Thursday, December 1, 2011 at 2:12 AM PT

It takes talent,hardwork with patience to start a product based company. Most of us don't have anything of mentioned.

noComments Wednesday, December 7, 2011 at 6:37 AM PT

That’s way too cynical for my taste and for most of the readers of this blog.

Sramana Mitra Wednesday, December 7, 2011 at 4:08 PM PT

Please think IITian those are going to abroad fron India.

Ashu Sunday, December 25, 2011 at 9:59 AM PT

I have never see such clear vision on this major problem. I have understand this 7 months ago and determine to start a product based company in india. Really the ecosystem never agreed with my decision , i denied to work for infosys. And now i know what i am doing.
Thanks a lot sramana, You rule..

nikhil yadav Thursday, February 9, 2012 at 12:41 PM PT

I don’t rule, Nikhil. I want you to build a great company, and rule your market :-)

Sramana Mitra Thursday, February 9, 2012 at 1:55 PM PT

Hello all,

1. I see POVERTY is main reason for all the problems in India. India has only 75% literacy population and no idea how the literacy is judged. Important is to read, write and speak English.

2. Many of the communities do not see English education in India. As multilingual society there is a lack of communication.

3. I don't see a constant growth or innovation in India in any sector. We are a community who do not accept new things fast.

4. Need for more practical education.

5. Need for research.

I say with so many engineers in Infosys, Wipro, TCS etc.. Even if one guy had thought of a mobile OS like Android. All the money in the world will be flowing into India.

charan Monday, February 13, 2012 at 1:42 AM PT

Infosys decided not to build products in 1998 :) It is just easy to sell/lease engineers than products :)

Guest Friday, August 31, 2012 at 7:35 AM PT

First of, it was a brilliant article.
I am a final year Mechanical Eng student in NIT – Calicut. My dream is to get into the product development field and to guide teams to bring out amazing products. I plan to do my Post graduate in the same. But i wish to work before i head out for studies. Anyone has any ideas where in India, an engineering fresher like me could get started in the product development field??
Repondez S'il Vous Plait…

praveenksam Thursday, October 11, 2012 at 10:19 PM PT
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