Those in the Nearshore who have experience with the ‘India Inc.’ brand know how hard it is to compete with its low prices, aggressive marketing strategy and solid reputation as the global IT destination of choice. But maybe it’s time to stop competing, and start learning.
The National Association of Software and Services Companies (NASSCOM) has represented and promoted the Indian IT and BPO industry for over twenty years, achieving tremendous success both nationally and globally. The question is, can that success model be copied in Latin America to achieve the same results?
Why is NASSCOM So Successful?
NASSCOM was founded in 1988 to increase trade in software products and tech services in India. Beginning with only 38 members, the private non-profit association headquartered in New Delhi has grown to over 1300 member companies operating worldwide. NASSCOM members now constitute almost all of the $60 billion IT and BPO service industry in India, and directly employ over 2.24 million workers. Through its advanced resources and global network, it serves as advisor to both Indian firms and multinationals, to further India’s position in the IT sourcing market.
Lobbying the government – Not only is NASSCOM an investment promotion agency externally, but as the Indian chamber of commerce it is also a powerful lobbying group within the country. “NASSCOM’s biggest achievement was to take a bunch of IT players and strongly position their case to the Indian government”, says PV Kannan, CEO of 24/7 Customer. “They made sure the level of attention was there, and that the IT sector was taken seriously. In fact for the first half of its existence, NASSCOM was more focused on lobbying the Indian government than anyone else. It’s only since 2000 that they’re focusing on selling the destination to other countries”.
This practice of using pull with the government to deal with issues in the Indian ITO scene is key to NASSCOM’s success, and something Latin America could take as a lesson. NASSCOM helped formulate India’s national IT policy in 1998, and also provided the tech policy for 18 out of its 28 states. In another example, software piracy is often a concern in India. NASSCOM made sure the import duty on software was removed, and undertook a campaign against piracy including training programs for the authorities and strong new IPR policies in the government. It also set up the Data Security Council of India (DSCI) which develops best practices for data security in India.
NASSCOM genuinely listens to the needs of its members and represents them to the government. As Kannan says, “Whatever the issue, if a bunch of us followed it to NASSCOM, they would make it part of their agenda and it would get addressed”.
“When you have an active private counterpart like NASSCOM, from a government perspective it really helps to encourage investment. They position the India brand well. “They are a successful case to follow” – Nicolo Gligo, Executive Director USA for the Chilean Economic Development Agency, CORFO
The private initiative: Attitude matters – When it comes down to it, NASSCOM is a private association of private IT companies. In Latin America the onus is on governments or state investment promo agencies to attract foreign capital and improve the business climate, while the private sector has a more laidback attitude of “working with what we have”.
NASSCOM companies on the other hand refused to wait around, and realized that there is strength in numbers. They came together, lobbied their government for years, got things changed, and are now aggressively spreading to the rest of the world, including Latin America. Companies like TCS and Wipro are gaining an ever-increasing market share in the nearshore where they don’t have home-field advantage, because of this aggressive “go for the kill” attitude.
“When you have an active private counterpart like NASSCOM, from a government perspective it really helps to encourage investment”, says Nicolo Gligo, Executive Director USA for the Chilean Economic Development Agency, CORFO. “They position the India brand well. “They are a successful case to follow.”
Focus on innovation and SMEs – NASSCOM’s ability to change with the times is another driver for success. It used to be a big boys’ club. But after the Indian BPO wave died down in 2005, NASSCOM realized that the focus had to be on smaller companies – that was where the tech innovation was coming from. New NASSCOM initiatives included the Emerge Forum for projects targeted at SMEs, a $9 million venture capital fund to benefit smaller members, and a prestigious industry-wide award for the most innovative firm. An intensive mentorship program was also added, where industry veterans interact with small companies to provide advice on strategy and operational challenges.
By contrast in Latin America, the focus is always on attracting the big players. This is sometimes warranted – due to the small size of some countries a large scale investment could influence the entire economy, as with Costa Rica and Intel in 1998. But maybe our focus should be on initiatives to support smaller operations, and encouraging real innovation instead of merely attempting to keep pace with India.
International Cooperation, not Regional Squabbling
NASSCOM is different in that it’s a community effort. Many of the senior executives have full-time jobs running their respective companies, yet are willing to work together and advance a common goal within NASSCOM. But in Latin America in the absence of a unifying body for the whole region, it becomes a game of countries and firms bad-mouthing each other, instead of cooperating to sell the LATAM brand.
There are those who are reaching out to NASSCOM to learn from its success. “Many Central American countries have made visa requirements and permit regulations easier for Indian nationals to come and teach”, says PV Kannan. “They’re eager to understand what NASSCOM has done to market itself”. Public-private investment promotion agencies like MexicoIT and BRASSCOM (Brazil) are also acting as NASSCOM-like lobbying groups on behalf of their member companies.
Nicolo Gligo mentions the Chilean Association of Information Technology Companies (ACTI) that has a partnership with NASSCOM. “For us in the government there is the possibility to interact with NASSCOM to understand how it achieved its success. For private companies the possibilities are even more, and joint ventures are a great idea”.
Copying the Model in Latin America
So would a coordinated strategy like NASSCOM’s work in the Nearshore, or are Latin American countries too disparate for that? Kannan thinks so. “We tend to throw together all these countries under one label, when really they are quite different”, he says. “The growth curves vary. It’s not like India where IT growth was really centered in three cities – Bangalore, Mumbai and New Delhi – and could be easily monitored and focused on. What may be more useful in Latin America is a few regional bodies for similar countries”.
There is much that may not be transferable because of the differences between LATAM countries. But many of the NASSCOM initiatives above have helped to propel Indian IT to the forefront of the global sourcing market.