Idea Engineering

SML 710 : Creative Problem Solving

Course Coordinator : Prof. K.Momaya

DEPT OF MGMT. STUDIES Ð'- IIT DELHI

Assignment Ð'- 3

Idea Engineering

Submitted By:

Vineet Radhakrishnan 2005SMF6506

Anomitra Bhattacharya 2005SMF6582

Sushil Kumar 2005SMF6620

Idea Engineering

Problem Statement:

India's software exports to Japan have been on a rising curve over the last few years. The Land of the Rising Sun is indeed a land of dawning opportunity and India is in a unique position to break into the potential $100 billion Japanese software market. Japan is headed for a skill shortage of 300,000 people by 2005, especially in new and emerging technologies. There is an opportunity to leverage Indian talent for the software business in Japan by providing support systems in client-server and Internet technologies for the culturally distinct Japanese economy. However despite the size and expected growth rate of the Japanese IT services market, Indian companies have managed to corner only 0.4 percent of it and are finding it difficult to participate in the country's growing outsourcing market. Can a long term strategy, an understanding of Japanese culture, language, business practices and systems help India companies crack the puzzle of the singularly unique Japanese market and tap into the second largest software and services market of the world ?

Context:

Indian companies which are fairly competitive in the global market do not have a significant presence in the Japanese market. The global tech meltdown, the US economic recession and 9/11 events have all combined to dampen considerably the US outsourcing boom. Though Europe has been touted as the natural alternative, Japan can no longer be ignored just because it is a difficult market to break into and work in. The truth is that Japan, the world's second-largest software and services market, accounts for a whopping 70 percent of the Asian market and contributes more than 12 percent to the global outsourcing pie. Though both countries have tremendous potential, there is a lack of synergy between them.

Objectives:

Ð'* Culture puzzle: Indian companies need to bring together an understanding of Japanese culture, language, business practices and systems and help project the Japanese face for Indian companies.

Ð'* Identify the unique opportunities and challenges of the Japanese market : Lack of and high attrition rates of skilled manpower personnel in Japanese firms, opportunities in emerging technologies and embedded systems, etc.

Ð'* Need for a long term strategy :

A) to enter into the Japanese market

B) to sustain itself in the Japanese market

Ð'* Long term and long haul: Build up funding for long term investments and develop a patient outlook towards business and attune itself to a consensus-based decision making model longer which means longer sales cycle for Indian companies.

Ð'* Strategic positioning: Most Japanese IT services companies do not play in the high end of the market, i.e., consulting and network consulting, which is dominated by global IT consulting majors like Accenture. Indian companies, therefore have a potential opportunity to compete in the high end of the Japanese market if they build the requisite skills and offer a competitive proposition.

Ð'* Attitude shift: Japanese require the highest quality in the world and they are very meticulous in finding defects. That is why their products are higher in quality while being moderately priced. It is high time Indian companies compete with the rest of the world not just on the basis of cheap labor in India due to artificially low Dollar to Rupee exchange rate, but because of high quality and innovation.

Ð'* Focus of core strengths: The key is to be significantly competitive vis-Ð" -vis leading global competitors. Chinese can provide services at a lesser cost: at almost 50 to 60 percent of the rates provided by Indian firms. However, Indian companies can still win Japanese contracts because of the superior quality of our software code and project management skills maintained through SEI-CMM Level 5 certifications.

Ð'* Understanding weakness of competitors: Japan is more quality conscious than the US and therefore SEI-CMM with the recently introduced JQS certifications would definitely help Indian companies. The odds against China is that the Japanese have a policy to have an English version of most products, which China is not able to provide. Moreover IPRs are more organised in India, which is one of our greatest advantages.

Obstacles:

Ð'* Lack of sustained relationships: No Indian company has managed to succeed in Japan over a period as they have failed to develop long-term relationships.

Ð'* Low participation: Despite the size and expected growth rate of the Japanese IT services market, Indian companies have managed to corner only 0.4 percent of it and are finding it difficult to participate in the country's growing outsourcing market.

Ð'* Lack of presence: Although some Indian companies have been present in Japan for long, they don't have a significant presence

Ð'* East/West business operation differences: Cultural factors have also impacted the growth of business between India and Japan since in Japan companies are slow in entering a market, preferring to make a collective decision as compared to the individualistic style of Western companies.

Ð'* Language barrier: The Japanese culture is not as open as the American culture. And understanding the way business works in Japan is very important to get a toehold in the market. Besides, knowledge of Japanese languages increases your esteem within Japan's business circles and Indian companies lose out tremendously on this count.

Ð'* Tight-knit Japanese firm-customer relations: Many of the Japanese IT services companies have long-lasting relationships with their customers. They also possess