A new opp for Indian outsourcers--if they take it

I had breakfast yesterday with Zach Nelson, CEO of NetSuite, one of the up-and-coming on-demand software outfits. NetSuite, which sells run-the-business software delivered over the Net as a service for small to medium-sized companies, has 7,000 customers and is growing at about 60% a year. As Nelson contemplates the company's next wave of growth and maturity, he has begun talking to Indian tech services outfits about getting into the business of offering configuration services for NetSuite clients. This would help NetSuite expand faster. While the several weeks that it takes to set up a business on NetSuite is nothing compared to the months or years it takes in install big traditional software packages from SAP and Oracle, there is some complexity in the job.

So far, Nelson isn't getting a lot of traction. The Indian firms are still focused on large enterprise and implementing those traditional applications. And no wonder. Their sales forces and marketing are all built around addressing large companies, and they have plenty of growth potential there. But I think the Indians would be smart to put their toes into these on-demand waters. They could set up configuration factories and handle a steady stream of customers that NetSuite sends their way--and do things with the scale and efficiency that are their strengths. Plus, over time, as the on-demand model continues to gain popularity with corporations, even big ones, they'll have the skills and capabilities to take on what could be a rapidly growing business.