IT start-ups focus on specialisation

BANGALORE: Plain vanilla IT services companies are out. Start-ups in the Indian IT sector are witnessing a sea change with the new entities becoming more focused and attempting to create intellectual property (IPs).

The scale game in IT services segment which requires hiring of people in thousands becomes a very high barrier for any new entrant into this segment. Start-ups are becoming more specialised with focus on select segments, where they have deep expertise. Sudin Apte, senior analyst at Forrester, says, “Our experience in the past 12-18 months shows that start-up activity have grown and we believe the trend is more on IP... very seldom we have seen any one planning for plain offshore services.”

However, this does not mean that most of the start-ups are moving away from the IT services space, which is the main growth engine of the industry. Nasscom vice-president Ameet Nivsarkar says new companies are trying to come out with unique technologies in a particular domain where they have the expertise. Majority of the start-ups are creating solutions within the services space, as it brings in higher value in pricing.

Kannan Ramaswamy formerly with European IT major LogicaCMG recently ventured into the start-up space with launch of his own company, Ambletek Solutions and focused on specific segments of BFSI vertical. He feels that there is a ‘huge vacuum’ in the IT services segment which are not being addressed by the large companies.

Ramaswamy says it is critical for start-ups to focus on very restricted area which can provide services to large number of smaller companies who are not the focus area of larger players. Though for now, funds for start-ups are not that much of an issue as there are enough number of VC firms launching India specific funds.