Service companies, by contrast, can use their own R&D to identify future trends. This can give them the means of solving anticipated problems before these impact a client’s business, perhaps also adding new capabilities to increase competitiveness.
Important as these R&D directions are, they are far removed from what a software product company does. Software services companies differ from software product companies in everything from size, marketing, sales and customer support to R&D and strategy.
Services and products are not usually offered within one company. It would no more suit TCS or Wipro to masquerade as a product company than it would Microsoft to pose as a services company; Hewlett Packard is a rare exception. What are often referred to as ‘products’ from Indian companies are in fact branded offerings for financial services, like TCS’s BaNCS and Infosys’s Finacle: almost-ready software systems that can be configured and customised to a client’s requirements in a fraction of the time it would take to develop, say, a full banking or insurance system.
As a rule, software products have been developed by small, agile companies. The idea behind PowerPoint originated with a small company called Forethought; Word and Excel were created by Microsoft in the early 1980s when it was a small company. Product development is typically funded by venture capital companies, which filter out 90 per cent of new products that will fail to survive the risky route to market success and guide the remaining 10 per cent to an eventual IPO and sale.
Though services companies and product companies belong to different business species, R&D can provide a link from one to the other. Tools developed by a services company must be robust and effective if they are to be used by project teams.
Such tools will inevitably have a much wider market (not just among other service companies) if they are spun off and managed in an independent company. Done with care, this need not deprive the creating company of its advantages and can help to realize the full value of the innovation in the tools.
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That is a route no Indian services company has yet ventured to take.
( Dr. Mathai Joseph is a computer scientist and a consultant, and was earlier a senior research scientist at TIFR, Mumbai)
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