1 A STUDY ON PROBLEMS FACED BY IT INDUSTRY IN MADURAI. Submitted in partial fulfillment of requirement for the award of the degree of Master of the Business Administration of Madurai Kamaraj University By R.INFANT MYCHILINE PRIYA (Reg No.: 2K10MBA14) Under the guidance of Mrs. M. Nagarenitha, MBA, M.Phil, (PhD) DEPARTMENT OF MANAGEMENT STUDIES FATIMA COLLEGE (AUTONOMOUS) (WITH POTENTIAL FOR EXCELLENCE) RE-CREDITTED WITH ‘A’ GRADE BY NAAC MARY LAND MADURAI-625018 JAN- 2012
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A Study on Problems Faced by It Industry in Madurai
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1
A STUDY ON PROBLEMS FACED BY IT INDUSTRY IN MADURAI.
Submitted in partial fulfillment of requirement for the award of the degree of
Master of the Business Administration of Madurai Kamaraj University
By
R.INFANT MYCHILINE PRIYA
(Reg No.: 2K10MBA14)
Under the guidance of
Mrs. M. Nagarenitha, MBA, M.Phil, (PhD)
DEPARTMENT OF MANAGEMENT STUDIES
FATIMA COLLEGE (AUTONOMOUS)
(WITH POTENTIAL FOR EXCELLENCE)
RE-CREDITTED WITH ‘A’ GRADE BY NAAC
MARY LAND
MADURAI-625018
JAN- 2012
2
CERTIFICATE
This is to certify that the work entitled “A STUDY ON PROBLEMS FACED BY IT
INDUSTRY IN MADURAI.” is a bonafide record of work done by R.Infant Mychiline Priya
(2K10MBA14)
Submitted in partial fulfillment of the requirement for the degree of Master of Business
Administration of Madurai Kamaraj University.
Faculty Guide Director
Department of Management Studies
(Mrs. M. Nagarenitha, MBA, M.Phil, (PhD)) (Dr. Mrs. P. Uma, BE, MBA, PhD)
3
FATIMA COLLEGE (AUTONOMOUS)
DEPARTMENT OF MANAGEMENT STUDIES
MADURAI-625018.
DECLARATION
I hereby declare that the work done under the title “A STUDY ON PROBLEMS FACED BY IT
INDUSTRY IN MADURAI” submitted for the award of the Degree of Master of Business
Administration is my original work and that no part of this project has been submitted fully or
partly for any other recognition earlier.
Place: Madurai Signature of Student
Date: (INFANT MYCHILINE PRIYA.R)
4
ACKNOWLEDGEMENT
First and foremost I would like to thank God almighty whose blessings made me to complete the
project successfully.
It is a great pleasure to acknowledge my sincere thanks to DR.REV. Sr. Josphine Nirmala
Mary, Principal, Fatima College, Madurai for giving this great opportunity.
It is a great pleasure to acknowledge my sincere thanks to Sr. Celine Sahaya Mary, Dean,
Professional Courses, Fatima College, Madurai for giving the opportunity to get practical
knowledge about our theoretical studies.
I also thank Mrs.P.Uma, Director, Department of Management Studies for the successful
completion of this project work.
I indeed greatly thankful to my faculty guide Mrs. M. Nagarenitha I thank her for guiding me
to successfully complete my project work.
I express my sincere gratitude towards Mr. Sivarajah Ramanathan for giving me permission
and also I extend my thanks to guide me to do this project in Winways Systems Pvt Ltd,
Madurai.
I wish to express my gratitude to all the staff members in the Department of Management Studies
for their encouragement for completing this project.
Finally I thank my teachers, owner-managers, friends and parents who helped me in completing
my project successfully.
5
CONTENTS
Chapter No
Particulars
Page
I
INTRODUCTION
1.1 Introduction About the Topic
1.2 Industry Profile
1.3 Company Profile
1.4 Need of the Study
1.5 Scope of the Study
1.6 Objectives
1.7 Limitations of the Study
13
14
16
22
23
24
25
II
REVIEW OF LITERATURE
26
III
RESEARCH METHODOLOGY
3.1 Research Meaning
3.2 Research Design
3.3 Method of data collection
3.4 Research Instrument or Tools
30
30
31
32
6
IV
ANALYSIS AND INTERPRETATION
35
V
FINDINGS
SUGGESTIONS
CONCLUSION
110
112
113
BIBLIOGRAPHY
114
APPENDIX
115
7
List of tables
S.NO Title of the table PG.NO
1 Gender Wise Classification of the Respondents 36
2 Reason for Choosing IT Field 38
3 Reason for Choosing Madurai for Setting IT Business 40
4 Level of Importance for Innovation 42
5 Proficiency of Project Planning and Fund Requirement Analysis 44
6 Difficulties Faced by the Concerns When Starting the Business 46
7 Type of Finance the Concerns Received from the Initial Stage 48
8 Requirement of Funds in Next 3 to 5 Years 50
9 Accessibility of Funds from External Sources 52
10 Procedure for Accessibility of Funds from External Sources 54
11 Proficiency of the Professional Marketing Concepts and Right Application of
Them to Products and Services
56
12 Positioning of Brand Name of Product or Service 58
13 Reasons for Loyalty of Customers to the Products or Services 60
14 Pre-launching Survey 62
15 Marketing Problem 64
16 Opinion Towards Exposure 66
17 Initiative to Travel 68
8
18 Preferences of Seminars that the Concerns Need to be Availed 70
19 Preference to Travel to Other Cities 72
20 Brand of Computer Systems Used by the Concerns 74
21 Speed of the Broadband Service 76
22 Provision of Same Speed 78
23 Variation of Speed Provided by the Broadband Service 80
24 Frequency of Changes in the Software used 82
25 Level of Open Source Adoption 84
26 Frequency of Servicing the Computer Systems 86
27 Concerns‟ Point of View about the CSR Activities 88
28 Concerns‟ Engaging in the CSR Activities 90
29 Concerns that Face Problems in Engaging CSR Activities 92
30 Chi Square Test- Type of Ownership of the Concern and the Type of Financial
Arrangements Made Availed
95
31 Chi Square Test- Current Phase of Marketing and Mode of Marketing
99
32 Percentage Analysis- Preference of Broadband Service Provider for its Features 102
33 Two Way ANOVA- Preference and Level of Satisfaction of Services on
Broadband Service
103
34 Weighted Average Level - Importance Towards the CSR Activities 106
35 Weighted Average Level - Proficiency Towards the Management Strategies 107
36 Weighted Average Level - Satisfaction Towards the Management Skills 108
9
List of charts
S.NO Title of the chart PG.NO
1 Gender Wise Classification of the Respondents 37
2 Reason for Choosing IT Field 39
3 Reason for Choosing Madurai for Setting IT Business 41
4 Level of Importance for Innovation 43
5 Proficiency of Project Planning and Fund Requirement Analysis 45
6 Difficulties Faced by the Concerns When Starting the Business 47
7 Type of Finance the Concerns Received from the Initial Stage 49
8 Requirement of Funds in Next 3 to 5 Years 51
9 Accessibility of Funds from External Sources 53
10 Procedure for Accessibility of Funds from External Sources 55
11 Proficiency of the Professional Marketing Concepts and Right
Application of Them to Products and Services 57
12 Positioning of Brand Name of Product or Service 59
13 Reasons for Loyalty of Customers to the Products or Services 61
14 Pre-launching Survey 63
15 Marketing Problem 65
10
16 Opinion Towards Exposure 67
17 Initiative to Travel 69
18 Preferences of Seminars that the Concerns Need to be Availed 71
19 Preference to Travel to Other Cities 73
20 Brand of Computer Systems Used by the Concerns 75
21 Speed of the Broadband Service 77
22 Provision of Same Speed 79
23 Variation of Speed Provided by the Broadband Service 81
24 Frequency of Changes in the Software used 83
25 Level of Open Source Adoption 85
26 Frequency of Servicing the Computer Systems 87
27 Concerns‟ Point of View about the CSR Activities 89
28 Concerns‟ Engaging in the CSR Activities 91
29 Concerns that Face Problems in Engaging CSR Activities 93
11
ABSTRACT
Global IT products and services market is at an estimated size of $ 1.5 trillion today. It is
estimated that the share of IT in the GDP of nations will exceed that of any other industry in the
next ten years. There is a great deal of inter-dependency even as fiercer competition emerges in a
rapidly growing market. It is increasingly a border less world, due to the interactivity provided
by the Internet and telecom infrastructure.
But there is only limited number of entrepreneurs who start their IT businesses in Madurai due to
many problems that hinders their growth in Madurai. So there are less number of IT Companies
in Madurai as compared to Chennai and Bangalore.
So to remove the obstacles for the entrepreneurs the root cause of the problem should be
identified. Hence this study was conducted which would help entrepreneurs to start more IT
businesses in Madurai which will contribute to the economic condition of Madurai.
12
INTRODUCTION
13
CHAPTER-1
INTRODUCTION ABOUT THE TOPIC
The IT sector has become one of the most significant growth catalysts for the Indian economy.
The sector is estimated to have grown by 19 per cent in the FY2011, clocking revenue of almost
US$ 76 billion. But as compared to Chennai, Bangalore the growth of IT industry in Madurai is
relatively low.
This is due to various reasons. One of the reasons is low investment capital. Whether the
company is brand new or setting up an additional operation, business owners need to have a
sufficient amount of capital on hand. Using business financing, such as debt or equity, may not
be possible if the business is overextended on its external financing possibilities. Business
financing may also not be possible if the company does not have a strong financial history.
The next reason is limited economic resources or business inputs may create a difficult
environment when setting up a business or additional operation. Traditional economic resources
are land, labor and capital. In economic markets already saturated with software products or
services, setting up an additional business may create even scarcer availability of resources. Even
if resources are available in large quantities, new businesses may not have access to them
depending on the agreements in place for existing companies currently using these resources.
Another reason is a business usually requires individuals to conduct significant market analysis
to determine the potential demand for the company‟s software products or services. Attempting
to reach a small target market may not allow the company to earn the most profits on the sales of
its products. Smaller markets also may subject to substitute or inferior products, decreasing the
company‟s market share through competition.
So to identify problems and other challenges in the IT industry the study has to be conducted.
14
INDUSTRY PROFILE
Information Technology (IT) industry in India is one of the fastest growing industries. Indian IT
industry has built up valuable brand equity for itself in the global markets. IT industry in India
comprises of software industry and information technology enabled services (ITES), which also
includes business process outsourcing (BPO) industry. India is considered as a pioneer in
software development and a favorite destination for IT-enabled services.
The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer,
Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers
for installing system software for a U.S. client. The IT industry is originated under unfavorable
conditions. Local markets were absent and government policy toward private enterprise was
hostile. The industry was begun by Bombay-based conglomerates which entered the business by
supplying programmers to global IT firms located overseas.
During that time Indian economy was state-controlled and the state remained hostile to the
software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on
software) and software was not considered an "industry", so that exporters were ineligible for
bank finance. Government policy towards IT sector changed when Rajiv Gandhi became Prime
Minister in 1984. His New Computer Policy (NCP-1984) consisted of a package of reduced
import tariffs on hardware and software (reduced to 60%), recognition of software exports as a
"delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj,
permission for foreign firms to set up wholly-owned, export-dedicated units and a project to set
up a chain of software parks that would offer infrastructure at below-market costs. These
policies laid the foundation for the development of the world-class IT industry in India.
Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, and HCL
et al are renowned in the global market for their IT prowess. Some of the major factors which
played a key role in India‟s emergence as key global IT player are:
15
Indian Education System
The Indian education system places strong emphasis on mathematics and science, resulting in a
large number of science and engineering graduates. Mastery over quantitative concepts coupled
with English proficiency has resulted in a skill set that has enabled India to reap the benefits of
the current international demand for IT.
High Quality Human Resource
Indian programmers are known for their strong technical and analytical skills and their
willingness to accommodate clients. India also has one of the largest pools of English-speaking
professionals.
Competitive Costs
The cost of software development and other services in India is very competitive as compared to
the West.
Infrastructure Scenario
Indian IT industry has also gained immensely from the availability of a robust infrastructure
(telecom, power and roads) in the country.
In the last few years Indian IT industry has seen tremendous growth. Destinations such as
Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have
come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer Silicon Valley
type infrastructure. In the light of all the factors that have added to the strength of Indian IT
industry, it seems that Indian success story is all set to continue.
16
COMPANY PROFILE
Winways Systems Pvt Ltd is a socio-commercial organization, working based on the ideology of
knowledge freedom. Winways Group is engaged in well-defined knowledge based business
concepts having adherence to open knowledge principles. They strongly believe in freedom of
knowledge. They support sharing of intellectual resources. They are actively involved in
research, execution, sharing and collective enhancement of knowledge systems such as software
development, education, publishing and other knowledge based services.
They work for justified commercial opportunities. Like any world-class service organization,
they do have all systems and structures to extend dependable solutions and services to their
clients.
Winways is operating in the areas of Open Source/Linux Solutions, Web Solutions, Training,
Human Resource and Publishing. Their divisions are strategically positioned as independent,
domain focused business units with clearly defined brand identity.
Vision Statement
To become a highly valued and ethically dependable, Intellectual Resources Management
company, recognizable by the highly placed global organizations.
Explanation for the Vision Statement
Highly valued represents higher brand reputation.
Ethically dependable represents quality, integrity, honesty and customer centric.
Recognizable represents penetration through marketing excellence.
Highly placed represents top ranking.
IT enabled Intellectual Resources Management represents Winways will always focus on
business concepts based on the brainpower enriched by Information Technology.
17
Mission Statement
Offering solutions by converging the thoughtfully derived Intellectual Resources with the
available technological resources in order to produce synergic results for the clients, at ethically
justified investments and working with them continuously as intellectual partners, in progress.
Explanation for the Mission Statement
Converging represents the right blend of ideas and technology.
Synergic Results represents, producing outputs that are excellent in nature with high
productivity orientation.
Ethically Justified represents, maintaining ethical standards in pricing, quality, support
any other relationship terms.
Continuously in progress represents, l continuously working with clients to make sure
that the investment made by them is justified and ensuring productivity.
Their Commitment
Every member of Winways will constantly work for emotional and rational satisfaction of their
clients, team members, share holders, business associates, facilitators and any other form of
relationship with the true thought of sincerity.
Management Philosophy
The greatest asset for the organization is people. Empathy is the key thought process in personal
relationships. Enrichment of human relations with positive attitudes would take care of all other
aspects of the organization.
18
Quality Policy
They are committed to deliver quality products and services, on time and within
justified investments of the clients.
They shall always give topmost priority to the expectations and rights of the client in
every business transaction.
They shall put committed efforts to offer not just service but overwhelming service in
terms of quality, performance, delivery schedule and value for money.
Their satisfaction is to make the client feel proud in ownership of Winways products and
services and Winways becomes their undisputed Choice for repeat business.
They shall continuously concentrate on improving their quality standards and
productivity.
They shall achieve the reputation for quality by means of integrity, honesty, self-respect,
courtesy, transparency and empathy towards customers, suppliers, employees, investors
competitors and any others concerned.
Message of Logo
The name Winways suggests that the entire organizational system is thinking, acting and
living with Positive Attitude in all aspects. Positive Attitude is nothing but Winning
Ways.
The Sun Flower represents the Flexibility Nature of the management system to adopt to
the changing trends and conditions.
The Blossoming Position of the Sun Flower represents the Ever fresh Visionary
Thoughts for an upwards growth.
The two Upper Petals represent the Quality and Innovation, the core ingredients in all
their solutions.
The two Lower Petals represent Customer Confidence and Investor confidence, which
are the lifelines of the organization.
19
The Red Head on the alphabet “I” represents the Positively Synergic and Ethically
Principled mindset of every individual who builds the organization.
Software Industries Development Association [SIDA] Profile
It is obvious that in the IT success story of Tamilnadu, Madurai and the southern districts have
missed the opportunities in the past while other cities like Chennai and Coimbatore enjoyed the
maximum benefits. Now, the current trend indicates a slow recovery from a global recession,
which is a natural phenomenon as far as any economy, is concerned. But, IT still remains a
highly potential industry, which can fuel the economy and we feel that Madurai should have its
share of benefits at least now. SIDA with a vision of making this a reality would strive to create
an appropriate ecosystem and convivial climate to enhance the growth of the IT sector in
Madurai and the southern parts of Tamil Nadu.
Vital information and growth oriented support is required for the development of IT companies
in this part. A paradigm shift in the overall thought process is a must for the overall development
of the industries operating in this part. SIDA would function as the resource center for the benefit
of IT companies and other businesses interested to venture in IT.
Presence of mega corporate establishments and major government projects are very vital for the
overall development in this region. SIDA will also strive to attract big investments and also rope
in IT related government initiatives to this region.
As far as the student outputs are concerned, it is well known that a majority of the outstanding
employees in leading IT firms in Chennai and Bangalore are products of higher educational
institutions in southern Tamil Nadu. The so called, `creamy layer‟ of students aim at finding jobs
in bigger cities, where the opportunities are more. Another category of students have sound
technical knowledge but lacking in their attitudinal skills to fit into a dynamic environment.
SIDA will aim at bridging the gap between these categories of students. Efforts will be taken for
creating suitable career opportunities for the brilliant students and at the same time we also work
towards creating career development opportunities for the other category.
20
In recent times, the concepts of information Technology are often misused by criminals.
Criminals are cheating entrepreneurs through many schemes and plans mainly in the small BPO
segment. Investors are losing their hard earned money and also peace of mind. SIDA will
provide right kind of expert advice on the technological ventures, investment opportunities and
legal aspects to safeguard the interest of entrepreneurs and general public.
SIDA will build bridge between Industry, Academy and Users to enhance the utility of IT and
develop new opportunities for the benefit of all concerned. SIDA will organize conferences and
exhibitions for upgrading the IT resource base of this region.
SIDA will coordinate with government departments to promote the e-governance practices,
which would help the general public to enable speedy and corruption free transparent
transactions with government organizations.
21
NEED
SCOPE
OBJECTIVES
&
LIMITATIONS
22
NEED FOR THE STUDY
The IT sector has become one of the most significant growth catalysts for the Indian economy.
But as compared to Chennai, Bangalore the growth of IT industry in Madurai is relatively low.
So the study has to be conducted to identify the problems that hinder the growth of IT industry in
Madurai and suggest solution to the problems.
23
SCOPE OF THE STUDY
This study helps to identify the problems in the Finance, marketing, infrastructure &
connectivity, exposure, corporate social activities and management strategies faced by IT
industry in Madurai
This study helps in enhancing the growth of IT industry in Madurai by giving suitable
suggestions to solve the existing problems in IT Industry of Madurai.
24
OBJECTIVES OF THE STUDY
1. To study the problems that hinders the growth of the IT industry in Madurai.
2. To analyze the reasons behind the problems
3. To offer suggestions to the policy makers
25
LIMITATIONS OF THE STUDY
1. The study has not considered all the functional areas
2. The study is limited to Madurai city.
3. Getting response from the respondents was time consuming.
26
REVIEW OF
LITERATURE
27
CHAPTER-2
REVIEW OF LITERATURE
1Prof. A.K. Sengupta, Director, Institute of development studies university of Lucknow
has stated that Small and Medium Enterprises face problems relating to project
implementation, production, marketing, finance, administration etc.
2Ashish Arora opines that obtaining finance is, however, a major concern for firms
developing software products. In contrast to services, a substantial investment is required
to develop the product, and even more to market the product. Firms that are trying to
develop software products have faced problems in getting finance, in part because the
inexperience and conservatism of Indian venture capital funds. And good communication
infrastructure is considered vital for the continued growth of the industry. This is most
obviously the case in software service exports, and especially for offshore software
development. Overall, the data communication infrastructure in India is expensive and in
limited supply.
3Jon Birger Skjærseth states that large revenues from extractive industries may
undermine economic, political and social development in developing countries; a
problem coined as the `paradox of plenty‟. The problem calls for innovative rather than
proactive corporate responses.
4Awino Zachary Bolo states that differentiation is a business strategy where firms attempt
to gain competitive advantage by increasing the perceived value of their products or
services relative to the perceived value of other firm‟s products or services (Genessa M.
Fratto et al, 2006).
28
REFERENCES:
1. Prof. A.K. Sengupta, Director, Institute of development studies university of Lucknow on
June 2009, the study of the problems of sick small scale industries in Uttar Pradesh and
suggested strategies for their revival, institute of development studies university of