NASSCOM EMERGE Community Catalyst for Growth of Emerging & Start-Up companies

Raja,

This is a fantastic summary. And it is really great to see to your post so quickly. Each of the points is a separate discussion thread in itself and splitting them might allow specific inputs to flow. What do you think?

Suresh

Thanks for comments and feedback. Biggest single challenge faced by nasscom members as well as individuals concerned within those member cos seems to be loss of identity vis-a-vis other larger IT cos.

It is important that we should first define ourselves ( SMEs) that has distinctive pains and issues to grapple with alomost on daily basis. Once we all power users of this space start adding pains as suffered by each, either as addition under category listed by me or additional not yet covered, and we have sufficient listing with broader consensus, then we can start details drilling of each suffering as people would like to add.

Of course each is distinct and requires seperate chapter, but where are power users with their own ideas and points to compile. Without clear consensus, we can not appreciate mitigation approcahes /recommondations and great ideas to simplify the pains and resolution ideas.

Every nasscom event, SMEs look for magic wand to relive them of pains but copying Infy, Satyam etc puts them into more of pains. Many SMEs do not know what to share for others good- as public service and some are not sure if their luck is a great success or not.

Unless we make this forum as pain sharing /relieving space, we will not get attention /partcipation of CEOs/investors/top management of such emerging cos. Let us join hands to help others ....either through this space or blog....

Hi Rajendra,

It is amazing the way you have listed the "real pains" in such a concise manner. I think I will add a couple of more points and then may be we can put each of them in a different thread and take inputs from our peers in this forum.

1. Global footprints: Small companies are mostly having single delivery centers and presence limited to one country - i.e. India. They need to diversify their presence to compete in their individual verticals to gain momentum and sustain competition. However the smaller the company is, lesser the know-how, legal capabilities and reach. Thus it is very important to collaborate and share knowledge among each other for operating in diverse geographies.

2. Ethics: The industry is touching a new low in terms of ethics. The biggest concern is that if the "building block" of this industry i.e. majority of our employees do not have an ethical alignment, it will be very difficult and stressful to operate in this industry for promoters / investors.

3. Strategic inputs: Most SME cannot hire consultants who can help them in structuring companies in the right way and using equity as a method to retain and attract talent. If I want to diversify in a new domain and I want to hire a Delivery Manager of XYZ (one of the top companies), what kind of cash+stock offer I should make, keeping in the long term interest of the company.

Just a few pointers.

Regards
Abhishek

I think you have got the points all right. However one thing I find missing whenever I have discussions wiuth SMEs is that they are in the business of making money. They dont know where they will get there next sale from and how will they continously keep getting them. They follow a wave pattern, where once an order comes the whole organisatiion is only executing that order and sales go on a back burner. A lot of pain points can be addressed if you keep getting regular cash flow which comes from continous sales and therefore profits. Pardon my stance because I come froom a marketing background but a lot of entreprenuers think from a technology perspective and dont plan for business from a business perspective. And until we can help the SMEs to DO business they will keep having a whole lot of problems. Regards, Animesh.

Hi Rajendra

Great points! From our perspective somee of the key pain areas / issues are:

1. Branding - both from aan internal and external standpoint. Attract talent. How can we get better brandingg without having to spend oodles of money

2. Internal Processes - when is the right time bring in processes without stifling the creativity or flexibility

Regards

Senthil Kumar

I have a feeling that SME should really be a transient one - since if a company decides to be in SME state for long, either the promoter is absolutely commited to keep it as 'S OR M' or he simply does not know how to grow. A healthy SME is one which leaves the SM tag soon. After all the second objective of any business should be to grow. (The first being making money).

Having said that, I would like to combine the issues facing SME into four categories:

1. Relating to investment

2. Relating to Clients

3. Relating to employees

4. Relating to partners

Various issues under 1,2 and 3 have been covered above.

4th point is equally interesting - how does one find a partner? Remember without a mutual trust and comfort, one partner may 'eat away' the other. One thumb rule is that both should be of equal 'size' (whatever that means). But, evidently it is going to be tough. It is something like every parent advising the kid to move only with a student who gets more marks than the kid!

Let me know what you people think before expanding further on the above.

Regards

Sundar

Encouraging to see responses ..many....while I would like to share my points for each response, tonight I will just take up points by Senthil Kumar as seen above

1. Branding for SMEs -- I have been searching for an answer for many years until I found one recently at a nasscom breakfast lecture. Branding means external world/stakeholders recognising the co for something unique or outstanding. That meand differentials with great expectations. That comes from only two aspects--

one is outstanding people representing the co - at senior or junior level, who make impact while talking formally to clients/partners etc or by justifying their case ( with all odds against) to compel customer/partner attention as something interesting and worth.

second is arising out of contracts exceuted and delivered with such a performance that it attracts the attention of peer cos/competitors/ market segment and anlysts.

Now both these impact making factor should be sustainable and evident easily, not by engaging a celebrity or a reputed author to pen down or an agency which colours for sake of glitter...

Branding come from these factors-- for SMEs--not by special expense but by market recognision of talents/competitiveness or creation of delivery /build/system or product etc...that should be niche and compeling.

Branding does not come by engaging a movie star/celebrity or print /TV media ad etc--for SMEs mainly....Often questions comes from HR dept or marketing /sales dept that we must spend a lot in newspaper ads/articles etc for branding as otherwise they can not perform.....that is not fair and it is sheer ignorence in the context of a small IT service co....with 20-100-250 people , say struggling to sustain and survive.

Of course if you have developed a product per se, with about 10- 20 plus successful sites and case studies..then poularising /creating campaign etc calls for ads/brochures/seminars with chai pani for targetted potential customers.....but that comes a little later ---not in the stabilization satge /foundation preperation stage of the SME.

2. Internal process -- when is the right time bring in processes without stifling the creativity or flexibility...It is one of the most critical parameter for SMEs to stabilise....I can talk for hours...but I will put briefly to share the point alone...

When head count crosses 10-20, start setting up internal process and inist that is complied-- limit to repeatable process areas, not for creative areas.  Start with administrative and accounts areas from day one. Then sales pipeline tracking, and so on. Without documented process, cos do not get transparency, that affects human emotions-politics when head count is small and vulnerable.

Pl do not forget that internal work process means documented (evidence) based work flow. Mental or buddy based repeatable workflow is also a process, but that is  not professional, not secular, not neutral, not robust enough to provide emotion and buddy netral work eco system

Trust this gives enough points for the 2 points raised....let other also join in responding if they.  agree or have different take....I wish to also learn.

Gentlemen,

My two-pence on the second part involving processes is that.

Processes are required everywhere and it doesnt necessarily kill creativity  but rather it boosts by providing the essential sense of security and space.

Processes are easiest to introduce when the team is smaller and that is the sure-shot manner to scale up and sustain in the long term because the flexibilities you have at your disposal then might not be available later on. Procrastination for matters like processes are a good insurance to eat up most of your precious time, energies and resources later on and at the end of it, it may still wear the face of an inefficient compromise.

Like a morning jog, this is an essential habit to keep your organisation healthy and efficient from the word "go".

This thread seems to have reached a grinding halt. Are we saying that we have no more issues or pains to share in terms of Organizational or Establishment related pains and anxieties???

Certainly pains of Indian IT cos are much different than what is faced by overseas cos. We have built in Chalta hai factor embedded in hidden layers of work and attitide which often is not talked openly. We shy away from definitions.....why define my business unit, why define my deliverables, why should we sit on reviews across the table, why should we minutes the meeting before end of the day......why should we just imitate our bosses only ......

Every new or emerging IT SME has a list of pains/anxieties which haunt them frequently in their lifecycle ....Your contribution is requested to at least get them listed for all of us know and be sure they do exist elsewhere in peer cos-- co-brothers under Nasscom...

Raja,

The thread is very important and we must keep this alive and on top ..

regards,

Hari

 

suggest and solicit each CxO level of IT Service Co SMEs as well as other segments to share their list of pains and at least most worrisome issues in their co lifecycle....at least that shows what we are aware of and what remians hidden from us....

Such listing raises the level of sharing in our community..... as self reveletion is the first stage of learning... look for more and from all to make this thread a value piece

One of the challenges for MSME sector in IT is timely delivery of financing at  different stages of growth. I attended a MSME seminar recently where I have an opportunity to interact with several bankers, development institutions and government officials . BTW, MSME means micro, small and medium enterprises. According to the definition of Government of India, in the definition is as follows for service & manufacturing companies

• Classification         Service            Manufacturing
• Micro enterprise       Rs. 10 Lakhs     Rs. 25 Lakhs
• Small enterprise       Rs. 200 Lakhs   Rs. 500 Lakhs
• Medium                   Rs. 400 Lakhs    Rs. 1000 Lakh

The Credit Guarantee corporation of India provides financial guarantee for MSME sector upto Rs. 50 Lakhs which is provided to a scheduled bank for financing MSME enterpreneurs.

The SIDBI CGM in Kolkata , Mr. KS Singhwan shared that about 114372 units have availed the credit guarantee scheme of the government of India and have received loans of Rs. 33180 million . Upto Rs.5 million , the government scheme allows entrepreneurs to avail of this guarantee and scheduled banks can lend to MSME sector , based on this guarantee. Mr. Baheti who is the secretary general of the Tiny industries federation complained that the credit delivery to the tiny segment is less than 2% from the banking system. According to him there are 14 million micro and tiny units in the country and on an average 4 persons are employed by each unit and indirectly about 5 persons are supported by this industry making this humungous number ( about 350 million) of beneficiaries from this sector. According to him 46 % of industrial production and 42 % of exports in India come from the MSME sector. He complained to bankers and administrators the need to step up credit delivery to this sector . He also mentioned that Rs. 500,000 Lakh crores is the Non Performing Assets ( NPA) from conventional lending by banks to industries.

In comparison to the conventional MSME ,  the IT industry in India employees just about 2 million people. This requires a huge step up if emerging companies have to play an important role and have a voice in the national policies. Quite a lot of techies and IT professionals wish to start companies develop cold feet when they need to figure out how they would survive the start up problems. In my opinion one of the key challenges for the growth of the IT industry in India is to create a large number of focussed entrepreneurs in the knowledge industry. This would help all stake holders and help the industry in growing the world wide market for Indian IT services and products .

It would also help the IT eco system in creating a large talent pool of professionals who can be engaged as sub-contractors in large projects in India and overseas. Net of net , I think credit delivery and financing is one of the key challenges of the emerging IT companies. Bankers typically agreed that though they understand the business model of Larger IT companies, they are still struggling to understand how to finance smaller IT companies .

 

Often observed Business Pains -Limitation of SMEs in IT Services selling could be summarised as below ( Spent full time at GITEX Dubai last month and saw how big and SMEs both handled leads and prospects, similar to what we see in events in our own country)  with lessons and remedy

1. SMEs have flexibility to offer services in variety of way to develop a strong differentiators -extra services- inhouse or outsourced in killing competition from bigger brothers in the IT industry

2. Yet they miss on opportunities ( not knowing or not tracking despite getting to know or not responding adequately with clarity and comfort selling).

example 1: instead of being pro-active or adding value to services being sought, we end up asking too many clarifications that kills the momentum...or respond at face value seriously with no itching to counter and build bridges/build counter strategy..

example 2: instead of putting the best person available, we put across our normal sales staff  , simple with standard approach, awaiting for directions internally, trying to impress internal management in the process with no self doubts ( vulnerable to fear of challanging client need for sake of finding gaps in the interest of the same client and who suffers due to limitation of expertise in the subject which could otherwise be avbl from Idea or Thought Champion or subject matter experts)   

example 3: opportunity requires cultivation, getting chance to sit across client opinion makers/influence generators etc ......but due to intertia we lose track and start focusing on IT HEAD in that client co or purchase fellow, both of them have limitation on definition of that requirement ( I am talking of IT service selling)

better strategy is that all incoming leads are taken forward ( for IT Services /solutions) by Thought Leaders and Champions only...as any one lesser can get you off the track

3. Market opportunities are as vague as shape of a smoke --each lead requires internal benchmarking /debate to identify best way to response. No standard way for SMEs unless it is ready to use products.....even then that can be moulded

SMEs are the only segment of any IT Industry which can make life miserable for bigger players- who have a great credential and track record. Nimbelness,( like Kung Fu fighter) provides that privilege...every lead requires battle to fine tune what client wants and mould that in your own way....

Points I wish to draw attention are 

• such entry level lead tracking and countering to get it remoulded to suit your competitiveness is important .. sr management must be involved instead of leaving to people with just sales designation
• initial phase of client lead/ need is the best phase to counter RFP or client need

Several IT SMEs suffer on this count, mitigation or smartness otherwise could help them survive in the competition game ...otherwise we may get ignored for pure weakness of ourselves...

Just a thought for SME pains and survival

 

 

Rajendra

 

These are very valid issues. As SMEs we try to run a tight ship with little excess capacity, and suddenly this need for a quick prototype or demo arises to clinch a possible lead.  We try to scramble our best guys for this, when they are already involved with a zillion other activities. Things become more difficult if there is some "technology" element involved which requires some learning or preparation.

What is the best way to handle this ? Should there be a dedicated "prototyping" team associated with Sales and Marketing ?

Regards

Atul

This discussion thread is for collecting business pains as known and experienced by Indian IT SMEs and mitigation suggestions on organizational level.

Runnning tight ship indeed. Never a spare capacilty and never a bench available.

Your query could be more appropriate for Sales and Marketing thread or High performance...thread. But anyway let me give my take as possible mitigation...

Can not afford to have a proto dev team... all beefing up/showpiece building etc incl tech stuff add ons should be done by same team who understand the BUILD or PRODUCT version deeply. Only they can do better with smartness....It is all part of daily chaos and managing in its stride...no other way

Getting your best people to do a prototype is something to watch out for. Already customers have a perception that all consulting companies including the large global ones do a "bait and switch" where great sounding guys show up for pre-sales support and vanish once the contract is signed. If the prototype people cannot continue on the project, the client may have some issues!