How Indian IT companies are failing a breed of entrepreneurs

In the startup ecosystem, there are majorly 2 types of entrepreneurs. First are the ones who leave their jobs and put their career on hold to build something great. They find the best people for different roles and get down to work.

The other kind takes a different path. They hold to their jobs and hire a design, development, & marketing company (together or separately) to build their startup. They pump in money and invest whatever time they could.

It is the second kind that Indian IT companies of India are failing at a very big scale. And I’m not just talking about local entrepreneurs. Ones living in the USA, Canada, Australia and other 190 something countries lured by the cost savings are equally vulnerable.

To understand why this is happening, we first got to understand the DNA of Indian IT companies.

The typical IT company of India

Let’s firstly be clear that I’m not speaking about Indian IT behemoths like Wipro. I’m talking about companies that have smaller teams and cater to entrepreneurs as well as mid-size businesses with their digital needs.

Now, most IT companies or web service providers have people who know their job. They have a bunch of designers and developers to build what they are told. They also have marketing guys who handle SEO and paid media. And to tell the truth, a lot of them are pretty good at it.

But this is not what technology driven ventures requires. What they require is something that most Indian IT companies cannot deliver. Not because they don’t want to but because they don’t know how to.

Let me explain

Every startup is built on a unique idea. This brilliant idea belongs to the entrepreneur who thinks he completely understands what he is trying to do. The sad part is that very few do. Startups that never take off walk on the thin ice of assumptions that cracks under the weight of market realities. Realities that are related to:

  • Product market fit
  • Industry competitiveness
  • Development spend
  • Marketing and branding spend
  • Talent scarcity
  • Infrastructure related expenses

Young entrepreneurs and startup founders act as per their best knowledge. So, it would be wrong to blame them. But what about IT companies? They work for the internet and hence should know. Right?

Mostly they do but…

Usually, Indian IT companies are hired for independent jobs and they just do that. For instance, if you approach a web design agency for building a job search app, they will:

  • Ask your requirements
  • Build the app
  • Make changes as per feedback
  • Send it over

The client got whatever they asked for. The company got paid.

Sometimes, the IT company knows that they are making something that will end up as stillborn venture. Sometimes, they don’t. The service provider, be it web design, development or marketing, will lose money for being honest. And nobody wants that.

Some more angles

  • The first communication of entrepreneurs usually happens with sales people who have a target to hit every month. So, even if the ‘sales guy’ knew that it won’t work (little chance of that), he won’t tell.
  • Design or development companies don’t have any incentive to go beyond the assigned job. They are paid for a task and they do that.
  • There are very few wed design, development, and marketing companies that really understand what it takes to build and scale a startup.

Of course it is confusing

Building startups and turning them into profit making ventures is complex. So complex that around 90% of startups fail. The biggest reasons are:

  • Idea and gut worshiping
  • Misreading market and demand
  • Flawed development
  • Meek marketing

Of course I’m not the first one to dig up the reason behind dead startups. Many have done it before me, and the already popular reasons are:

  • Lacking of funding
  • Bad timing
  • Audience misinterpretation
  • Lack of innovation

While above are quite true, working in IT industry for around 6 years and running my startup consultation agency has taught me that most India based IT companies don’t have what it takes to build a startup or online business.

Maybe, context of ‘Indian IT companies’ is wrong here. This could be a global problem and something with a lot of grey area related to accountability. But we have to agree that India is what world looks at when it comes to IT.

Disagree with my observations about Indian IT industry? Post a comment and let’s hear your thoughts. I love to be proved wrong.