I’m writing this blog post while 12,000 meters above the Bay of Bengal. I’m on my way home after having spent the last week visiting New Delhi, Bangalore and Mumbai.
As an IT analyst there are few places I consider more interesting to spend time than India. It is an amazing blend of high-calibre people and unique conditions resulting from the country’s sheer size and complexity. While this wasn’t my first trip to India what really hit me this time around was how inappropriate the term “emerging economy” is in describing India’s IT environment. The comparative capability in India is at least on par with rest of the developed world (which nowadays might be better described as “submerging economies”).
There is one glaring comparative difference though. That’s the comparative affordability of package software which, by and large, is priced for developed markets. Nearly every single organization I spoke to is grappling with this challenge. Relative business input costs are much lower in India so COTS software solutions are a disproportionately higher component of the total IT budget.
Which brings me to open source.
Reducing software acquisition costs continues to be one of the biggest reasons that enterprise IT organizations consider open source. While open source software has clearly had a positive effect, the easy savings are harder to find these days – as so many different TCO studies have shown. The parts of the software stack that seem particularly impervious to open source are those where there are very high exit costs. This dampens both the enthusiasm to consider open source in those areas, and by extension, for relevant open source projects to mature rapidly enough to become appealing.
But in countries like India, vendor pricing policies make open source a far more compelling proposition across a far broader range of the software stack. I can’t help but wonder whether even the exit costs associated with ERP systems might be considered acceptable if a viable project emerges.
This situation exists because the US and European vendor community has consistently refused to consider meaningful variable pricing models (converting US-denominated software prices every couple of months based on the current exchange rate does not qualify). Yes, I’ve heard all the reasons why this is theoretically impossible. But the problem here is not the way but the will. The reality is that there has been little motivation on the part of multinational software vendors to bother.
But that is resulting in a disproportionate motivation in countries like India to utilize open source in a far bigger way than we see in developed countries. And this brings me back to my initial observation. Countries like India are not technology backwaters. It’s a country brimming with software engineers and companies that have been highly successful in exploiting their ability to work for much lower wages than developed nations. If a local open source supply and demand equilibrium can emerge than I would think we’d see an explosion of comprehensively designed and supported solutions.
If such a scenario unfolds, the ramifications are significant. The unencumbered availability of open source coupled with the global capabilities of Indian service organizations would make these projects just as viable in developed countries. These so-called emerging economies, therefore, become both the development centers and test markets for a base of open source projects that can shift the balance of power in the US-dominated software market.
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