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6/08/2007

16:00

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CASE STUDY

Ekomate Systems and the Indian software industry: leveraging network relationships for international growth Shameen Prashantham

The case study looks at the importance of developing and maintaining a network of relationships in international markets and in the local milieu as a critically important capability for smaller firms seeking international growth. It also illustrates how the indirect benefit of acquiring new knowledge (learning) through network relationships is likely to be more sustainable than the direct benefits of gaining new business opportunities. ● ● ●

Origins of Ekomate
Ekomate Systems was founded in 1996 by Tom Thomas upon his return to his hometown of Bangalore after obtaining an MS in computer engineering at the University of Texas in Austin. The son of an entrepreneur, Thomas felt that starting a business would be considerably more remunerative in comparison with employment. Moreover, he had gained some work experience at Intel, while in the USA, and was acutely aware of the great potential of the Internet. He was therefore keen to start a company that would ‘enable client companies to get on the Web’. According to him, when utilising Internet technology, companies ‘not only have the public side [that is, a website] that any visitor would come in and see but also a private side where their customers, suppliers and vendors also interact through the Web’. His company, Ekomate, works in this area as a software services company. The Ekomate website describes its offering as follows: Ekomate uses the offshore development model to help its clients get their IT work done, maintaining international quality at reasonable costs, thereby resulting in tremendous cost advantages to its clients. Ekomate follows ISO compliant processes for software development.

The Bangalore software industry1
In founding Ekomate, Thomas was riding on the crest of what would prove to be a substantial wave, the ripples of which have since been felt throughout the world – the development of the Indian software industry. With Bangalore as its focal point, the Indian software industry has attracted several international companies from high-cost advanced economies to outsource, at least partially, their software development needs. The outsourcing of software development has been especially pronounced in the USA, although latterly European countries such as Germany and the UK have followed suit. Regional shares of Indian exports are approximately two-thirds to North America, a quarter to Europe and the rest to other markets including Asia–Pacific. It has been suggested that Bangalore’s software industry emerged quite by accident, facilitated by historical factors. In the years following independence (1947), a strategic decision was taken by the Indian government to locate certain key defence laboratories away from

1

For a more detailed discussion see S. Prashantham, ‘Local network relationships and the internationalization of small knowledge-intensive firms’, Copenhagen Journal of Asian Studies, vol. 19 (2004), pp. 5–26.

This case was prepared by Shameen Prashantham, lecturer in management at the University of Glasgow. It is intended as a basis of class discussion and not as an illustration of good or bad practice. © Shameen Prashantham 2007. Not to be reproduced or quoted without permission.

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the nation’s capital of New Delhi owing to its proximity to potentially hostile neighbours. Thus Bangalore, a city located in the South Indian peninsula and with an established military presence from the days of British rule, was chosen as the location of such vital public sector undertakings as Hindustan Aeronautical Limited. These organisations attracted technical personnel from around the country and from the prestigious Bangalore-based Indian Institute of...
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