Save The Tech Tiger

I told you so'' is the first thing that comes to mind when I see the rapid erosion in profitability, growth rates and stock prices of our hallowed tech giants. Once untouchable, these Tendulkar-like titans are now feeling the wrath of a press that once kissed the ground they made Powerpoint presentations from.

The market has woken up to what it understands best: earnings. Say that your earnings will go down, and no matter how you buzzword it, a punter will do the same to your stock price.

So how can we save the Indian tech tiger? Chest-beating won't help. Here, then, are a few prescriptions.

1. Accept reality. The honeymoon is over. The market doesn't think you're God any more. The man on the street is now talking about your billing rate. Your business lies exposed. You're not a software company: you sell hours. You're a remote staffing company, accept it.

2. Accept that reality will continue. Repeat after me, ''my billing rates will not go up, and my costs will not come down''. The world has seen that you can operate at $10 to $20 an hour. Those prices aren't going to go up, ever. What you're earning now is more than you'll get next quarter. And you can't give your people decrements. Your margins and stock price will go down. Accept it. To get out of the jam you're in, you have to rethink your business.

3. Understand the volume-value law. You're in a commodity business. Some sell kilos of cottonseed, you sell hours of C++. That by itself isn't bad. But understand how it works. When price is the differentiator, the winner is the player who has the highest volume. This is good news for the Infys and Wipros. Not so for the second-, third- and fourth-rung firms. How are you going to compete when a Bangalore bigshot with 10 times as many people quotes $10 a hour to your client?

4. Understand this law, again. This can work in your favour if you're smaller. Move away from commodity work. Pick a niche where you can charge a premium. If you're private and flexible, this might be a good time to look at your bench, and pick quality over quantity. Or map a path where you keep bread-and-butter services going till the jam of product revenues kicks in.

5. Dinosaurs tend to get extinct. What if you're a bigger player? You don't have to die, like Triceratops. You can adapt, like Microsoft. Gates has bet his entire company, and entire fortune, several times on his hunches. Can you? Or will you choose the supposedly risk-averse path again?

6. Safe is risky, risky is safe. People keep telling me that products are riskier than services. I keep disagreeing. Please, if anything, the market is saying the entire software services sector is risky, and getting out of these stocks in a hurry. Take the path well travelled, and you'll find yourself in a traffic jam. Software product companies don't face commoditisation. Take the step.

7. Products do NOT cost a bomb to market. Some misguided gent from Infy said a software product costs $200 million to market, and every Indian has been running away ever since. Balderdash. Look at the software on your desktop, in your phone, in your business. I can bet not one was made by a company that started off with even $2 million in the bank. Yes, marketing costs grow as you have competition, but you pay for that from profits. The better the software, the less it costs to market. You use Google, Yahoo, Hotmail, ICQ, Norton. When have you ever seen an ad for these?

8. You need product marketing. You've done well when others write the specs and you build the product. But 90 per cent of the value is in the specs, not your code. Do you understand global customers well enough to know their problems, craft a solution and sell it to them?

9. Trust gut, not education. You need to find product marketing people and work for them. But where are they? Remember, our IIMs train people to be mechanics on FMCG machines. That won't help. Indian software awaits its Karsanbhai.

10. Quick, pick another career. For the employee: regardless of who's hiring and who's reducing salaries, there will be a bloodbath. For the millions of NIITians looking for h1 visas, sorry. The world has figured out it's cheaper to hire an Indian in India. If you have to go abroad, cruise ships are hiring cooks, and the Americans want bricklayers in Iraq.

If we don't fix things soon enough, the tiger will be left in just a few sanctuaries.