Monday, 25 February 2013

Indian IT must cross Japan hurdle for next $100 billion: Experts

As the Indian IT industry crosses $100 billion (about 5.4 lakh crore) in revenues and aims for the next $100 billion, it cannot afford to ignore Japan, the world's largest IT market after the US. Most large Indian information technology providers have been present in Japan for close to 20 years but success has been slow in coming.

Of the $125-billion Japanese IT services market, Indian service providers get only $500 million. Embedded services contribute another $500 million, according to technology researcher Gartner. In all, Japan contributes less than 2% of India's software exports.

"If we fix the language and culture issues, growth will happen," said N Chandrasekaran, Nasscom chairman and chief executive of Tata Consultancy Services.

For instance, India's fifth-largest software exporter HCL Technologies trains all its employees working in Japan to speak and understand Japanese.

But even bigger is the cultural barrier. Unlike their western counterparts, companies in Japan do not do big bang outsourcing. They initially look for proof of concept, and if that works and they are comfortable with the vendor, then the relationship progresses to the long term, said Sameer Kishore, corporate vice president who heads the Japan business unit for HCL Technologies.

"From my experience of working in this market for a fair bit of time now, organisations here value relationships," said V Sriram, senior vice president and head of Japan business for Infosys.

Attitudes in Japan are also changing, forced by the rapid pace of technology changes. "The battlefield is shifting to software," said Nobuhiko Hidaka, president of Gartner Japan. Companies, which previously followed a 'rice-farmer culture of doing everything same every year' and were more inward-looking, are now changing as they globalise.

Hidaka said most applications used to be custom-built, but as Japanese companies go global, custom-built applications are being replaced by more standard packages. "Because attitudes are changing and Indian providers are winning in the global IT market, the door is open for the first time for India." In addition, the CEO is getting younger and chief information officers more westernised.

US IT providers, which have a 14% share of the Japanese IT services pie, are moving in to tap this opportunity. Firms like IBM, Accenture and HP-EDS are well-entrenched compared with the Indian providers. However, most of their operations are staffed by Japanese locals and done out of Japan.


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