The Dynamics of Software Utilization in India

The Role of Software in India's Economy

The Indian software industry plays a crucial role in enhancing the functionality and problem-solving capabilities of various sectors. It is not just about generating revenue; it's about the value addition to other industries. However, the trend of prioritizing exports over domestic consumption is worrisome. When software is exported, the multiplier effect of its benefits is transferred to another country, potentially at the expense of local development.

Understanding the Software Ecosystem

A significant barrier to domestic software consumption is the lack of understanding among consumer organizations about software, its processes, and its costs. Historically, there has been a misconception that software should be free, with the primary focus on hardware. This misunderstanding has been perpetuated by some hardware vendors who have either offered software at no additional cost or convinced buyers that software development is a manageable in-house task. This could not be further from the truth.

Categories of Software

Software can be classified into three main categories:

1. System Software: This includes operating systems, compilers, and editors, which typically come bundled with hardware.
2. Software Packages: Examples include DBASE, LOTUS, and ORACLE, which are general utility programs aiding in application development.
3. Application Software: Tailored to organizational needs, this software addresses specific problems, such as payroll processing, banking, and inventory management.

Application software is what makes IT investments worthwhile for an organization. It is often custom-developed and cannot be purchased off-the-shelf.

The Cost of Software Development

From a client's perspective, software costs can be significant. Using the function points approach to estimate the size and complexity of an application, a medium-sized business application might require around 20 person-months to develop. With software development companies charging between Rs 6 - 10 lakhs per person-year, the cost of such an application could be at least Rs 12 lakhs. This is often more than the cost of the hardware required to run the software. Despite the decrease in hardware costs and the increase in software personnel salaries, many organizations in India still do not recognize the shift in the hardware-software cost ratio.

The Importance of Software Quality and Development Processes

Quality software development is not a trivial task. It requires adherence to well-established software engineering methodologies. Unfortunately, some organizations cut corners and deliver subpar software, which can lead to operational failures and dissatisfaction among users. On the other hand, reputable companies may charge more, but they deliver quality software. Customers often pay a premium due to their inability to discern quality and leverage competitive pricing.

The Customer's Role in Software Development

For software to meet an organization's objectives, the customer must play an active role in its development. Standards like ISO: 9000 for software companies even specify customer involvement as a key factor. Without proper engagement and an understanding of the software developers' capabilities, organizations risk squandering their IT investments.

Conclusion

The Indian software industry's emphasis on exports over domestic consumption is a trend that needs to be addressed. Organizations must recognize the value of software and invest in quality development to truly benefit from IT advancements.

For more insights into the software industry and development services, Icreon is a leading offshore software outsourcing company in India, offering web development and custom application development services.

Interesting Stats and Facts:

• According to NASSCOM, the trade body for IT and Business Process Management (BPM) in India, the Indian IT-BPM industry is estimated to have reached US$ 194 billion in FY2021, with exports contributing US$ 150 billion. This highlights the export-oriented nature of the industry (NASSCOM).
• A study by McKinsey & Company suggests that digital applications could unlock value worth US$ 500 billion to US$ 1 trillion across sectors in India by 2025, emphasizing the potential for domestic software consumption (McKinsey & Company).
• The Indian government's "Digital India" initiative aims to transform the country into a digitally empowered society and knowledge economy, which could further stimulate domestic software demand (Digital India).