With the growth of the global IT outsourcing industry, several organizations in India have grown and prospered making their presence felt around the world. However, the share of Indian IT organizations in this vast market is still relatively small.
While a few of the original software SMEs such as Infosys, Wipro, Satyam etc. have grown significantly there are countless others that were either closed down or are barely surviving. When these organizations first started, there were hurdles in dealing with the overseas business climate which was alien. They were skeptical about the competence of Indian organizations and the wisdom of outsourcing to development centers half way around the world. Legitimate concerns about project management and control weighed heavily on the minds of technology managers who were responsible for outsourcing decisions. The worldwide telecom infrastructure was not as advanced as it is today. And certainly the local telecom infrastructure was woefully inadequate. Obviously, as the Government took steps in providing incentives such as tax exemptions on export income and steadily improved the telecom infrastructure, these organizations leveraged their learning curve in terms of customer needs and market knowledge and grew in a spectacular manner. These organizations have braved impossible odds and succeeded, and further, have eased the way for other Indian organizations by establishing credibility in terms of value and quality and not just cost arbitrage.
So why should it be any different for today’s SMEs? Can they not exhibit the same grit and determination without depending too much on Government help and chart their own course? The answer is both yes and no. First, the world is getting to be a more flat place in terms of access to technology, best practices, and factor prices with other countries posing a threat. Second, India has set itself very ambitious goals for software exports. Third, India is also experiencing a talent crunch with a scarcity in the number of industry ready graduates. Fourth, it is clear that some of the SMEs may need to be guided in terms of understanding the new global industry landscape and having realistic aspirations of profitable growth. And yes, the SME mindset itself will need to change.
When HYSEA was first established, the emphasis was more on managing the regulatory and compliance aspects with Software Technology Parks of India, access to internet connectivity and economical and convenient office space. Today, HYSEA is reviewing its priorities and approach to suit the new realities of industry conditions and “next” practices that would enable Hyderabad based SME organizations to both survive and thrive and contribute towards ambitious export target goals for software. Therefore, a more focused approach to enabling SMEs was made a priority by the HYSEA Management Committee. Towards this objective, it was decided to conduct a needs assessment survey among the SMEs in Hyderabad.
The first question, of course, in everybody’s mind was “What are the parameters that decide classification as an SME”? The traditional industrial definition was the level of turnover. Another parameter for an IT services company could be the number of
employees. Other parameters included geographical dispersion of operations and offices in various overseas markets. One senior executive mentioned that an SME should be defined by the potential value addition that can be done by an enterprise. It should also take into consideration the intellectual property of an enterprise as opposed to the turnover alone, which is a very narrow old economy definition.
Keeping the above parameters in mind, a sample of sixteen organizations in various domains, were picked for the study. The interviews were conducted with the CEOs, CFOs, Vice presidents of operations, and functional heads of Human Resources and Quality. While the detailed findings will be presented in a separate SME forum, the following were the areas covered during the interviews.
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