Issues Facing SMITs

Volume 15, Number 1 Article by Sanjay Anandaram March, 2003

Issues Facing SMITs :

Why did the large majority of Indian SMITs not grow in spite of the market opportunity and the competitive advantages enjoyed by India in the 90s, asks Sanjay Anandaram, Managing Director, JumpStartUp Fund Advisors. Foremost among the growth challenges that the Indian IT industry must address is the leadership challenge, which has far reaching implications for the vision of the company, professionalising of management and the recruitment of high impact professionals, raising capital from investors and M&As. The leader must realise that the company and the founder/CEO are distinct entities.

Citing Infosys and Wipro, both SMITs in the early 90s, as exemplars of growth through leadership, Anandaram points out that Infosys created competitive advantage out of non-traditional functional areas such as finance and human resources. The promoter team at Infosys has not been hesitant to raise capital at the cost of having their stakes diluted. Wipro has understood the difference between ownership and management by bringing on board qualified professionals and empowering them. Both focussed on creating shareholder value through transparent, ethical, professional means. Industry bodies, special interest groups (SIGs), investors and industry experts must come together and focus on creating leadership paradigms and leaders.

In order to counter their lack of differentiation, Indian companies could follow the hierarchy of suppliers approach of the focussed Taiwan computer industry. SMITs need to make appropriate marketing investments, form alliances, partnerships and SIGs and create a domestic market for IT services and products.

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