Nasscom wants Indian outsourcers to innovate

Indian outsourcers have typically been associated with strong processes for services delivery rather than with innovation. A trade organization now wants IT services and business process outsourcing (BPO) companies to focus on innovation to increase revenues.

The National Association of Software and Service Companies (Nasscom), in Delhi, said Wednesday that Indian outsourcers have to go beyond taking advantage of India's lower costs for staff and other expenses.

Indian companies have built domain experience and offer superior delivery capabilities, but they now have to differentiate by focusing on innovation in their businesses processes, business models, and in creating intellectual property (IP), said Rajdeep Sahrawat, vice president at Nasscom, in a telephone interview on Thursday.

Indian outsourcing companies are already up against rising costs, including staff costs, and competition from multinational services companies that are also building services delivery capabilities in India, according to Nasscom.

Indian outsourcing companies could focus on building reusable IP assets that could help them cut down time to deliver services to their customer, or develop new technologies that are useful to customers' IT infrastructure, Sahrawat said.

This strategy of innovation has the potential to add $50 billion to the revenue of India's outsourcing industry by 2012, according to a joint study by Nasscom and management consultancy firm The Boston Consulting Group.

The study released on Wednesday recommended creating a business network that encourages innovation in the country.

As a first step in this direction Nasscom has proposed setting up a professionally managed fund that will provide angel stage funding to startups. The fund, which will raise money from industry, will start with about $25 million.

Although there is a lot of risk capital chasing deals in India, not a lot of it is available for funding new ideas and providing seed capital, Sahrawat said. Technology companies in India have typically found it difficult to raise funds at the angel stage.