The interesting aspect of the software product business is that by its very nature it offers non-linear growth in revenues in comparison to the growth attained by the addition of a number of FTEs (Full time employees). According to NASSCOM’s Software Product Study 2008, while the maximum revenues generated per FTE in IT services has a limit, the revenues per FTE in the product business can go as high as USD 1 million per FTE. Currently, the global average revenue per FTE in the software products business is USD 270- to 3,00,000. However, the Indian average revenue per FTE in software products ranges from USD 66-70,000. A potential therefore exists to increase the revenue per FTE to the global average over the next few years.

Due to the non-linear model, revenues of USD 9.5-12 billion can be generated by bringing an additional 26-31,000 engineers to Indian software product companies. While at the moment, entry level talent is readily available, domain and niche experts are conspicuous by their absence. A key priority for the Indian software products industry is to not just increase the number of FTEs in the team, but acquire high quality people with the right skill sets.

The NASSCOM Study shows that while the talent base in functional areas such as application development and testing is large, specific expertise in segments such as UI (User Interface) design, architecture, product marketing, release and configuration and product management is extremely limited.

The fact is that domain experts bring value to software product companies by providing industry-specific knowledge, rich experience, leadership capabilities, alongside perspectives on customer challenges. Software product firms must therefore draw domain experts by providing them attractive career growth and a conducive work environment.

The Software Product Study also indicates the following:

• There is a gap between the total product development talent available in 2008 and the incremental talent needed by the sector in 2015.
• The need for talent in functional areas such as application development, systems programming, database programming and network programming will rise, though meeting this slightly less complex and entry-level requirement will not pose too much difficulty.
• The paucity of talent, in areas such as UI design will become acute over the next 5-6 years. Attracting fresh design school graduates to the technology business will remain a big challenge.
• The huge gap between the total product quality assurance talent and total programme management/product planning talent available currently and the incremental talent required in these areas by 2015 will persist.
• In the area of release management, a niche skill, Indian software product businesses will face tough competition in attracting talent.
• While India has a significant installed base of release management expertise in the area of IT services, these professionals do not have experience in managing product launches and releases, managing subsequent product releases, patches, updates, platform interoperability, etc.

The NASSCOM Study also indicates that as of now, Indian product development talent is to be found in IT companies including MNC R&D Centres, indigenous product engineering service providers and software product businesses.

Clearly, both MNCs and Product Engineering Services providers have played an important role in nurturing and developing product expertise in India. While the MNC subsidiaries were the first to build product development talent, to fuel the growth of their R&D activities, Product Engineering Services providers have been constantly honing the expertise of their product development talent, in an effort to create higher value for customers. A number of these companies have additionally sets up Centres of Excellence (CoEs), which have provided a robust platform for building deep domain expertise.

The NASSCOM Software Product Study also shows that:

• Currently there are around 1,40,000 professionals working in the software product development space in India. Of this, while 68,600 are engaged with MNC centres, around 53,200 are working with service providers and 19,000 with Indian software product companies.
• A large part of the talent is now geared to deliver across the products development life cycle.
• While a portion of the talent is working in development, quality assurance and support functions, a small number is getting involved in the product concept and design phases.

At the end of the day, it is becoming clear that India has the talent pool which can be harnessed to create IP in the software product arena, provided relevant training and grooming is provided. At the same time, software product companies must collaborate with engineering colleges and work closely with academia to develop curricula for courses such as Object Oriented Development and C++. By cultivating engineering institutes as Centres of Excellence, the industry can also bridge the gap between academic education and the requirements of the software product industry. In order to widen the talent pool, the sector can also harness the power and experience of Indian expatriates across industries who are working with the R&D centres of MNCs (in the product management and technical architect functions) or setting up their own ventures in the country. Expatriate talent in Mumbai, Bangalore and Delhi/NCR can be hired by software product companies to expand their base of high quality expertise.

This base can be supplemented by the stream of fresh talent emerging from India’s top engineering and technology institutions, that is suitable for the software product development business.

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