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The Indian IT outsourcing industry has achieved substantial scale and very impressive growth. NASSCOM estimates that, for the financial year ending in March, the industry will grow to $31 billion in revenue, 32% over last year’s revenue. The industry now employs 1.6 million people, driving much broader prosperity within India.offshore bank formation companys providers..........


Those are some really good observations. Indian IT is not content resting on its laurels - they are trying to do more.

On innovation blowback, I think that captives have a greater chance of utilizing some of the opportunities they present than the regular third party service companies.


John - an illuminating article. I argue in recent sandhill piece that The well-designed global network begins to deliver goods when organizations configure their innovation networks for cost and manage them for value. I foresee for the service industry that the world is beginning to see a shift from a Vertically Integrated Model to a Globally Distributed Process Network. Its time for offshore firms to look at Business Model Innovation for sustainable competitive advantage

Sharad Sharma

John – As usual a nice thoughtful post. You are absolutely right about innovation blowback opportunities. Like you, I associate these with bottom-of-pyramid activities. BoP ecosystem is still nascent in the IT industry in India. But things are looking up. Increasingly the IT ventures are leveraging existing BoP ecosystems to move forward. For instance, the existing BoP ecosystem in healthcare is underpinning the creation of low-cost, high-quality medical diagnostics/imaging equipment (based on embedded sw). The banking example that you mention is also based on a similar connection. Primary education is another area that’s seeing lots of BoP innovative activity that is not (yet) getting press attention.

If one looks through conventional eyes of invention-based innovation, India doesn’t have a strong story to tell. But its important to realize that India’s IT innovation landscape is not a replica of what exists in the West and will probably never be one.

My take is that India has four distinct, yet overlapping, IT innovation ecosystems. One of those is the nascent BoP ecosystem.

The second one and perhaps the most interesting one is the jugaad-innovation ecosystem. This is generally associated with IT Services and BPO. It’s grounded in a traditional improvisational, can-do, gritty mindset that’s been combined with proven continuous-improvement methodologies to generate process and business model innovation. A number of companies, big and small, IT and non-IT, have learnt to make this work successfully. As this knowledge becomes more dispersed it will continue to underpin more success stories.

Then there is the emerging products ecosystem. Right now this is tightly coupled to the Silicon Valley ecosystem. VCs, seasoned professionals and market insights are freely flowing back and forth between the two ecosystems. The dominant startup model is the cross-continental model where the customer facing roles are based in the US and the business strategy and engineering roles are based in India.

Finally there is invention-centric, research-to-market type ecosystem. This is in a pathetic state today. This is largely because there is too little academic research happening and not enough PhD students are coming out of the system. I am not optimistic about things changing in this area anytime soon.

I write about all these four innovation ecosystems in more detail in an invited article, “IT Innovation Landscape in India”. This article was part of the “Top 100 Innovators” handbook that was given out at the leadership summit. You can find the electronic copy here… http://orbitchange.com/blog/2007/02/09/innovation-landscape/


I normally dislike spending time meetings organized by NASSCOM because most of the talk is highly overrated and does not solve much purpose and these an opinion I formed after attending many of these meets.
But if I had known you would be present there I would have attempted to be present there :)

In your writing you mentioned and I think it quite fascinating. Interestingly in India there have been no networks around which could foster innovation, recent movements like barcamp & mobilemonday though serve different purpose in the rest of the world , it is increasingly being looked at as a starting point of the talent networks that you mention. Infact some service companies that I know are getting involved in it quite seriously.

- Rajan

Sanjay Dalal


Thank you for sharing this state of innovation and talent in the Indian IT industry.

I visited India in 2006, and my observation was that the Indian IT companies are strong innovators of services and consulting in BPO and Offshoring. They are also becoming better in Knowledge Process Outsourcing as you have pointed out.

However, the Indian IT industry does not fully serve the needs of software within India (ironical) owing to the business model disparity in serving overseas versus local cusotmers. Also, only a handful of Indian IT companies have really gone beyond service innovation into real product innovation of their own. This is possibly the ultimate quest: can Indian IT companies create world class software? Today their primary domain expertise is fulfilling specific implementation, consulting or project assignments; this is not to say that the technology companies who are offshoring to India are not finding solid talent to create great software in India. In the longer term, as wage arbitration achieves parity, and more nations fulfill the outsourcing/offshoring needs, the Indian IT companies will need to innovate beyond the service innovation in order to compete.

For example, could there be a next Microsoft or an Adobe in the making in India? I believe most Indian IT company CEOs would tell you not yet, not today. This also means that software companies in the U.S. are better able to address the needs of customers.

Do you foresee a software market analogous to the electronics market where the core product design is done in the U.S., however the manufacturing is conducted overseas in the next ten years? If that does happen, would this increase the overall revenues of software companies in the U.S. and create more higher value jobs?

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