The share of Indian companies in the global software product market can rise from about 0.5% at present to 18% by 2020, a new report by KPMG and Nasscom said.

Indian IT companies need to adapt their business models to incorporate more and more revenue from products, platforms and other intellectual property, KPMG said, adding that if they fail to do so, their growth rates will start suffering in the medium to long term.

KPMG said India currently has a 5.3% share of IT and BPO outsourcing, but its share of the global products market is woefully low.

Indian IT companies such as TCS and Infosys need to increase the amount of revenue from products substantially if they are continue to grow in the new age of digital technologies, KPMG said.

“IT BPM industry in India contributes about 6% of the total GDP. However, this is likely to reduce to 4% by 2020 unless the industry embarks on innovation led growth to become relevant,” the Nasscom-KPMG report said.

KPMG said companies need to encourage employees to come up with product ideas.

Wipro CEO TK Kurien said India was lagging behind in software products because Indians are typically risk averse.

“We don’t have the risk appetite,” Kurien said, pointing out that all great product companies have been created by a strong founder who risked almost everything they had in the product.

In India, Kurien, who was speaking at the Nasscom Leadership Summit in Mumbai, people are generally averse to taking big risk.

“In India, we have a huge fear of failure. This fear of failure keeps us from taking the same kind of risks,” he said.

“However, I am sure there will be some kids who will decide to go out and take that risk.”

KPMG also highlighted efforts by companies like Infosys, TCS and Cognizant to encourage employees to come up with product ideas and reward them based on the success of these ideas.

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