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Innovation needed to drive additional revenues for Indian IT-ITeS: Nasscom-BCG news
25 July 2007

Mumbai: NASSCOM and The Boston Consulting Group (BCG) today released the IT trade body''s Innovation Report 2007 on innovation in the Indian IT-ITeS industry.

The report addresses three aspects of the innovation agenda - the factors that form a powerful imperative for innovation; the approach for firms to spur innovation; and specific recommendations to expand the innovation ecosystem in India. It benchmarks the Indian innovation ecosystem with leading innovation ecosystems around the world, and outlines recommendations for developing India''s innovation ecosystem for the country to realize this multi-billion dollar opportunity.

Sharing findings of the report, Kiran Karnik, president, NASSCOM, said, "India has established itself as a distinguished leader on the world stage in the IT-ITES arena - Indian firms have successfully dominated the first two phases of evolution characterised by export led growth driven by factor arbitrage and gaining domain experience and superior delivery capabilities.

However, the industry is now entering the third phase where Indian firms needs to recognize and act on the importance of ''Innovation'' for maintaining their competitive edge and fuelling further growth to challenge global players.

Traditional factors that led local firms through the first two phases are being fast eroded by rising factor costs, geographical and cultural affinity to other destinations, global firms building sizeable Indian capabilities, very few big Indian players and future governance and management challenges for firms if they follow the current linear expansion model."

He added, "Focusing on innovation besides differentiating Indian IT-ITES industry will also allow it to tap additional revenue streams worth $50 billion by 2012."

"Innovation is the top priority for global corporations today-for growth, differentiation and leadership. If the Indian IT industry can further enhance its ability to service this top priority of global corporations, the market opportunity is inestimable," said Lakshmi Narayanan, chairman, NASSCOM.

"While the Indian IT-ITES industry has shown strong revenue growth over the years largely led by exports, investments in deep domain knowledge and IP creation would help fuel this growth story. To sustain high levels of growth, the industry needs to focus on cultivating and nurturing an ecosystem of innovation and institutionalize it. Be it process innovation, product innovation, business model innovation and the like, India is uniquely positioned to define that platform and set newer benchmarks both for the domestic and global IT industry," said Lakshmi Narayanan, Chairman, NASSCOM.

James Abraham, partner and director, BCG, commented, "Support from ecosystem is very important in making innovation at firm and country level successful. Relative to several international examples, Indian ecosystem is weak and requires significant bolstering. The study identifies specific initiatives which need to be undertaken by different stakeholders

The report outlines several challenges faced by the Indian innovation ecosystem such as:

  • Insufficient mentoring and networking support for start-ups and entrepreneurs
  • Lack of entrepreneurs focused on IP development in emerging technologies
  • Lack of knowledge sharing between IT-ITES firms and key user industries
  • Severe lack of funding at the seed / start-up stage
  • No platforms for all stakeholders to interact with each other
  • No market-place for innovation trading in India
  • Tenuous partnership between industry and academia
  • Lack of meaningful collaborations between industry and research institutes

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also see : recommendations to address current challenges

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Innovation needed to drive additional revenues for Indian IT-ITeS: Nasscom-BCG