The strides made by the Indian startup ecosystem over the years have led to the emergence of a strong set of software product companies whose momentum has started to pick up the pace. At present, the segment is dominated by software as a service (SaaS) startups, and the next step in this evolution will be the presence of deeptech companies.
NASSCOM, the leading trade body representing India’s technology industry, has been nurturing software product companies over the years, and expects the export revenue from this segment to touch $30 billion by 2025.
In a conversation with YourStory, NASSCOM Product Council Chairperson Ramkumar Narayanan says, “Our intention is to focus on input metrics, which will help this ecosystem grow, rather than vanity metrics.”
YourStory (YS): How do you see the progress made by the Indian software products segment?
Ramkumar Narayanan (RN): We see an evolution and revolution happening, where software today is an integral part of any solution. There is a lot of software which is getting embedded in all kinds of products, including hardware, and this dominance is primarily driven by deep tech. The export revenue from software products was $13 billion last year, growing at a CAGR of 10 percent, and we should reach $30 billion by 2025. If we are getting brave, then it should be closer to $100 billion by the end of the decade.
It is important to note that the software products sector is starting to come on its own, which is creating market opportunities, jobs, etc., and addresses the broader set of challenges. By the end of the decade, around 70 percent of software product companies will have deep tech embedded in them. There are a lot of exciting companies in areas such as EVs, healthcare, drones, autonomous vehicles, quantum computing, space, etc. We believe by 2030, India will be a major player in the global software product ecosystem.
YS: How would you define deeptech startups?
RN: This is not just a shallow use of technology, but focuses on solving the hard problem in a much deeper way. The approach is to take deep scientific research and convert them into providing solutions. For example, we would look at cyber security protection from the basis of the chip level itself. At NASSCOM Product Council, there is a rigorous method in the selection process for those startups that come into our deep tech platform.
Hundreds of startups apply for our cohort, but only about 15-30 get selected. We are very selective as startups are asked about what is the real problem that they are solving for the customer and how they are approaching it. The focus is on materially moving the needle, and even if we graduate to 100 deep tech startups, they have to be the best and world-class.
At the same time, we are not losing sight of the startup ecosystem where the NASSCOM 10,000 startups initiative has already touched around 8,500 of them, which had a big material impact in terms of raising money and getting market traction or exits. We are looking at the entire pyramid.
YS: What measures are needed to expand the scope of the Indian software product ecosystem?
RN: The good news is that the ecosystem has a good set of experienced founders, serial entrepreneurs, and those with deep domain expertise in certain areas. We also have the engineering talent, but there are gaps in areas such as product management, design and scale, deep analytics, product marketing, etc.
At NASSCOM Product Council, we are looking at how we can address these gaps and bring the ecosystem together. If Indian software product companies want to go global, then we need skill sets in these areas. We are already looking at how we can create 50,000 product managers by 2025, where the goal is to have professionals with the highest skill set, and all the way up to entry-level. NASSCOM has also come out with several initiatives to promote diversity and inclusivity in the software products space.
The second big focus area is deeptech startups, where there are science driven solutions that are solving hard problems. We already have a deeptech club to enable 1,000 such startups who look at both the global and India market.
Out of the 180-odd startups that have come out of our cohort, there have been founders from earlier cohorts who are stepping in now as mentors, besides others from the industry who are guiding them in various areas such as tech support, product management, go-to-market, etc.
In the NASSCOM Emerge 50 list of startups, nine of them have turned into unicorns. Our intention is to focus on input metrics, which help this ecosystem grow rather than vanity metrics.
YS: Will the Indian software product startups look largely at the global market?
RN: We will declare success if the Indian software product ecosystem starts hitting the right metrics in terms of growth, revenue, and material traction in the global market, but we have not forgotten the domestic market. The Indian market has its own dynamics, and we are trying to work with large enterprises where there are new generation chief technology officers (CTOs), who are more open to doing a paid proof of concept with the Indian software product startups.
We have a good number of startups that are looking at the Bharat market and are aiming at deep intervention to solve some core problems, especially in the agritech space.
YS: How do you see the interplay between the Indian IT industry and software product companies?
RN: One thing that has become clear in the last two years of the pandemic is that of digital transformation with the massive adoption of cloud technology. This is driving a lot of market opportunities for deep tech startups as large enterprises are looking at new solutions to bring about this transformation. Here, the IT services companies are advisors to these large companies and they partner with software product startups to do the integration as well as the implementation of the solutions. There is no overlapping circle here, but an intersecting circle and the time is right for such force multipliers. We believe the next 10 years are going to be a phenomenal growth vector for this ecosystem.
