Industry: Software products, including web applicationsIT, ITES, BPO, KPOGlobal Networks is a software company to be launched by my friends and myself and our goal is to provide our customers with an “unfair” competitive advantage by helping them get their products to the market quickly and cost effectively through custom built software enabling them to differentiate their products from their competition. Global Networks offering includes (i) IT Solutions (ii) Project Consulting and Services(iii) Software Training. Global Networks offer product development and testing services. Brief business descriptionOur Business is developing software products domestically, going by the report of NASSCOM, the domestic market is worth $103.6 billion.
The split up is given belowIn this total market, our focus is on developing software for Communications and Media (17% i. e. 17.6 billion) and Education sector (14% i. e 14.5 billion). This market size is covered exclusively in the marketing aspect of the plan. (U. S. Bureau of Labor Statistics, 2004-05 Career Guide to Industries and 2004-05 Occupational Outlook Handbook)Our customersWe target the following sectors for our business: Textile CompaniesThe problem addressed in this sector is resolving order tracking related delays. Clinical LabsThe problem addressed is maintaining digital records, automation software. EducationThe problem addressed here is creating awareness and the products developed in this area include: Touch Screen, Student Log entry system. Other EnterprisesIn this domain, we create alternates for already established software packages like Tally and customize the software pertaining to the needs of the customer.
Industry AnalysisMichael Porters Five Force Analysis – IT IndustryThreat of New entrants: The Entry barriers includeCapitalThe capital outlay needed for starting up the operation in IT industry is minimal. In India it will cost about $7500 to begin a start up.
The leasing expenses and the taxes are considerably low compared to other industries. The capital includes land and building, infrastructure, employees etc. Labor: In this industry the retention rate is low when compared to the others because of the demand for the experienced programmers in the industry. Finding and retaining skilled labor is a major issue for a new entrant. Labor is highly expensive in this industry and hiring talented persons and retaining them remains a big challenge. A start up cannot afford to pay huge sums of money to hire and retain talent in this industry.
This obviously will result in selecting freshers and in turn will affect the quality of the software. Most of the start ups fail only because of labor in this field. Tax Structure: IT Industry has to bear huge taxes levied on them by the government for property, water, electricity etc. Recently, the fringe benefit tax levied by the government is having huge impact and erodes the profit potential of IT industry slowly. IT industry is relevantly a new industry and the tax structure that is applicable to other industries will not suit this industry.
The recent rapid growth in exports and the huge revenue potential of the industry have lead to the introduction of new taxes and the corporate tax is being levied higher than ever before.