Modi's budget recognises software product startups as a growth engine

Modi's budget recognises software product startups as a growth engine

Budget 2014 holds the promise of transforming India from just an IT/ITeS outsourcing hub, popular for providing cheap tech labor, to a turf boasting of indigenous software product giants. This calls for hiring versatile techies with an entrepreneurial streak within emerging software tech start-ups

According to NASSCOM there are about 15,000 technology start-ups and SMEs operating in India. Among the large number of SMEs mushrooming in various industry verticals in India, you might ask why this number—specifically within the IT industry—is significant.

The reason is simple. Imagine India emerging as hub of even a handful of indigenous software product giants which run a business comparable to the scope of business of say, HP and IBM. Undoubtedly, this will have a direct impact on the contribution of the IT industry to the Indian economy and also on the absorption of Indian techies by the emerging domestic software product companies.

Tech hiring in the past primarily for IT-ITeS companies

In the past, a major chunk of hiring of Indian tech resources happened within the IT-ITeS industry, with tech professionals being hired at much lesser compensation package than anywhere else across the globe. According to NASSCOM, within India, the IT-BPO industry has created direct employment of 2.2 million and indirect employment of eight million. By 2020, the figures are expected to shoot up to more than 10 million.

Data from TimesJobs.com indicates that currently there is demand for more than 4,700 jobs for entry level candidates in the software space, the biggest chunk of it being in the software development space. According to this data, maximum (roughly 40,000+) software centric jobs are available in the mid-level, where candidates have experience ranging between 5-8 years. This demand is mainly from large tech companies.

Added to this is the huge potential that tech start-ups hold to generate tech jobs within the software product development arena. Considering that India is a hub of brilliant tech resources, why have we not emerged as a hub for software product companies? This inspite of the presence of about 15,000 tech start-ups who have already built their own tech products and solutions.

The answer is a lack of capital as well as lack of proper mentorship which is essential for building the core technology product and also the need to pump money to build proper marketing and sales pipelines to give visibility to the products.

Modi government’s budget that proposes setting aside Rs 10,000 crore for start-ups and SMEs is a move that would give the much needed monetary push to these budding companies. Most importantly, this is the first time that a government has recognised Indian software product start-ups as an emerging industry that holds immense growth potential and has promised special focus on these start-ups.

Budget pushes software product start-ups: Versatile techies to be in demand

There is a huge difference between the kind of tech talent that was so far in demand within IT-ITeS companies and the kind of tech talent that would be in demand in the coming quarters.

Explaining, Sanjay Swamy, managing partner of AngelPrime, a Bangalore based technology incubator, “Typically within the IT-ITeS companies, revenue generation is directly proportional to the number of IT support professionals hired and consequently the number of projects being worked upon. But within a product software company, the key focus is on building a robust tech resource pool that is constantly doing R&D centered on the software product being built.”

Swamy says that a number of experienced tech professionals might like to leverage on the government’s fund backing for start-ups and look at starting their own software product companies. There would also be an increase in demand for young and versatile tech brains with an entrepreneurial spark to build the core R&D team of software product companies. This would also fire up the need for technology marketing professionals who have proven expertise in positioning tech products in the competitive market already mushrooming with tech start-ups and large tech vendors.

Techies can catapult themselves to larger business roles within start-ups

Within software product start-ups, the key criteria that is looked at while hiring tech professionals is a quiver full of strong skill-sets and versatility rather than the number of years of experience. Swamy says that the fact that a particular professional has been working within a tech company for a particular number of years is not going to be enough anymore, when the candidate is looking or a job in tech start-ups.

This means exciting compensation opportunities for young techies who have exceptional skill-sets to jump into the start-up environment. If they are able to present a strong argument on how their expertise in a particular tech domain can contribute in building the start-up’s business and realize better ROI, the compensation package offered might be much more promising than what a large tech vendor could offer.

Apart from the salary aspect, a job role within a tech start-up can actually catapult techies to larger strategic business roles, if they show business value and innovation. This is conventionally not easy to achieve within large tech companies where there is a defined hierarchy of growth.

Though the fine print of the Budget proposals are being awaited, the Rs 10,000 crore debt and risk capital fund proposed to be released in the form of equity and soft loans will definitely give a huge boost to the tech entrepreneurs who have been nurturing brilliant tech products but did not have access to capital so far.