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Evolving domestic market: Growth Driver for Indian electronics industry

Author: Azim Premji
Chairman, Wipro
Evolving domestic market: Growth Driver for Indian electronics
industry -By-Azim Premji
Electronic product evolution in India:
In the 70s and early 80s, the public sector companies such as Bharat Electronics and later private firms like Wipro, HCL and a few more filled in the gap for electronic products when the economy was controlled. Though the end consumer had limited choice, quality expectations were never lowered. Developing computing and telecom products for the local market, Indian firms learnt the nuances of product development and continued to innovate the overall product development cycle. During this time, a small workforce put together robust foundations for what was to come.

These foundations proved to be of tremendous assistance when the economy opened up in the 90s. By this time, the Indian engineer had acquired skills to develop products around the latest architectures and with a high degree of quality.

Since then, the Product Engineering industry has never looked back. Growing at an incredible pace and expanding the expertise areas beyond the telecom and computing domains to automotive, medical devices, industrial electronics, consumer electronics and of course, mobile devices. What’s more these firms in India have learnt to leverage the best practices from across the domains they operate in. Example: the learning from a high-reliability product in automotive are deployed in security applications to ensure a fail-safe environment.

Over the years, as India developed as an IT hub, the product design centers have been a crucial component of the industry. Both in terms of outsourced third party design centers and India development centers of MNCs. The Indian Development Centers of multinational firms and India based service providers have been stepping up their efforts in the recent years. We have seen the overall embedded exports growing at close to 40 percent CAGR for the past 6 years. Working across multiple domains, India’s name has now become synonymous with offshore product development.

Three key aspects of eco-system in India required for future growth
The success of the product-engineering firms is clearly visible when we see the contribution they provide to global product engineering. India already has about 100,000 engineers contributing to the global electronic engineering team of about 1 million. We are already contributing 10 percent of the global electronic engineering value from our country. While “engineering value” is 10 percent, domestic electronic product consumption is about 2.5 percent (assuming $25 billion in a trillion dollar industry). As we continue to focus on increasing “design value” to about 25 percent, the question is how can we get the domestic consumption to more than 10 percent of global spends in the next decade.

With India supplying innovative products to firms and geographies across the globe, the Indian subcontinent seems to have largely not been impacted by the product innovation cycle. Considering the highly optimized processes and having understood product architecture requirements, the Indian engineer is more than capable of delivering what’s required for the local markets here. In recent years, the pace at which semiconductor and systems companies have established their own design centers in India has accelerated. The design services industry will continue to play a role in India’s emerging semiconductor ecosystem and contributing to the growth for India’s electronics industry.
So what can be done by firms with successful products worldwide to extend their success to the Indian markets?

What can be done to succeed in the Indian Market?
I would like to describe three key aspects that firms need to address to be able to bridge the gaps between consumer needs and products being sold to them.

First, one of the main aspects to increase consumption is increased localization of products. For designing products for India, the level of involvement of firms needs to be more. The designers have a tough ask of meeting the targeted costs while ensuring the seamless integration of applications and having the right user interface, preferably localized. I understand the Indian mobile phone market is poised to touch 450 million in the next 10 years. This is incredible and primarily due to the fact that the cell phone vendors and service providers have studied the local market well. There are phones at price points and with features that cater to almost all individual requirements. From high-end, PDAs to simple phones for the technophobe. They have even introduced products and services in regional languages.

Second characteristic is the need for ‘supported adoption’ that is required by the users here. We have seen the PC industry post excellent growth numbers this year. The first half of the year (according to MAIT Manufacturers’ Association for Information Technology) registered a growth of 11 percent. The annual sales are expected to be more than 7 million units. As we see this momentum in the Personal computing industry, I would like to reflect on what made this all possible. It was the small ‘training center’ in small neighborhoods across the cities, whether big or small, that introduced the PC to the common man. This small yet significant impetus taken by firms and their franchises helped the SMEs and households see the benefits.

For years, the PC industry has worked hard to educate and enable schools, colleges, and government offices. Even though this effort is still needed, the results are starting to show.

‘Supported adoption’ goes beyond end consumers. Unlike users of mature markets, many Indian businesses need support in selecting the right products and solutions for their problems too. Many of the small office workspaces are not wired for IT. It takes time and money to install UPSs, wiring for UPS power and for network cabling. Wipro Infotech has helped many such customers save effort and costs on network and power infrastructure by using WiFi enabling the networks and using low cost laptops instead of workstations.

The question we need to ask is what is the investment we can make to enable the market? It would be naïve to expect a new technology to sell by itself.

Third opportunity I see is the need for evolved business models. We are also seeing a ‘managed services’ model emerging here, where the design services partner goes beyond just co-engineering the product The partner is also responsible for overlooking the manufacture of the product. Thus, his success is dependant on the products success. The value that the partner brings to the table is his knowledge of the local, market, his presence in the ecosystem and his experience in global product
engineering.

Innovation as the underlying theme:
We need to realize approaches outlined above were not brought about instantly by industries that have been successful. Most of these practices were realized by firms with deep understanding of the end consumer with feet on the ground. Practices that worked in other markets did not always yield the same results here. They listened to their consumers moreover they observed their functions and then moved the ideas back to the drawing board. In other words, they went beyond the usual to bring in innovation to their daily business practices.

We know that innovation is not always big, transformational or revolutionary. It’s the incremental changes made to better a product or process or business that finally adds up to success. Innovation is a key pillar for any organisation’s success. Innovation is applied creativity. In today’s context, it’s not unanticipated that innovation plays an extremely important role. However, we need to understand the following basic essential guidelines.

First, we must ensure that technological and managerial innovation go hand in hand. When technology innovations outstrip management innovations, the benefits fall through the crack. It is like a car with a powerful engine but a wobbly chassis. It cannot get far. It is therefore important for companies to have the managerial depth and sound understanding of customer’s product requirements.

Second, work on creating an entrepreneurial spirit within the organization (within business units and project teams) that allows natural innovators the space to grow. Organizations need to build a culture that rewards risk, encourages entrepreneurship, celebrates success and upholds the rule of law more than any other. Only this will enable the teams to come forward and innovate

Third, collaborate and co-innovate in the evolving ecosystem. Just like the day of the isolated innovator in a forgotten laboratory is over. The ecosystem is absolutely necessary to take a brilliant idea off the ground. Remember, businesses are good at getting better but poor at getting different. It is very difficult for successful organizations to develop disruptive innovations that would threaten the basis of their success.

The market for electronic products in India is huge in almost all domains that the firms here are specializing in. In this context it’s important to show the world that we have the infrastructure and the capability for sustaining the complete electronic product lifecycle i.e. from design, develop, test and manufacture.

It is time that the firms today take up the mantle, collaborate within this ecosystem and apply innovation to design products for the Indian subcontinent.
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Reader's comments(24)
1: From: Mrs. Mary David

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Mrs. Mary David.
Posted by: mary lovely david - Monday 26th, September 2011
2: Mindblowing artical to inculcate the suitable path but please focus over the o|M because its the base for each and every things as per my thought so please concentrate and provide me the guide-line waiting for your revert
Posted by: Rajeev Kumar Tiwary - Saturday 15th, May 2010
3: tataosah@yahoo.com
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Posted by: tata tatababy os - Friday 30th, October 2009
4: Sir,
I fully agree with your innovative thoughts.I would like to put my following views:
The growth of electronic may be interlinked with the demographic distribution.The purchasing power of the common man is such that he/she always look for cost cutting to save something.The product designing should not only look for design innovations but also provide a product at an effordable cont to the bottomline of society.

The PC purchases are constantly growing.Still there is gap as far as the software cost is concerned.In case a PC is available with all inputs like operating system,MS Office/other packages as a package at an affordable low cost it will revolutionarise the market.As An electronic goods manufacturing gaint WIPRO may look into this aspect.

We have very talented Engineering and Management Professionals with good innovative thinking capabilities.However sometimes these innovations go to cold storages in the Hierarchy. The Hyrachial problems,if any, play a very big hinderence.I don't mean to say that this happens every where.However The Corporates may evolve a sort of machanism to pull out the talent from amongst their employees and also from public as MSEs can not afford the costs of R|D
Posted by: ARK RAO - Saturday 11th, July 2009
5: Sir,
Innovation in India must mean CUSTOMER SATISFACTION and listening to his needs.
Has any mobile in India cater to senior citizens like me? No
Why a flat panel in the lower sizes with Full HD characteristics?Because LG,Sony,Samsung only cater to highend markets.
I am also suprised at the comments here by technocrats, almost all supporting your views.Why no contradiction to your views sir?
Posted by: captainjohann samuhanand - Monday 04th, May 2009
6: Informative article.
His art of Management has become a part and parcel of everyday life, be it at home, in the office or factory and in Government. In all organizations, where a group of human beings assemble for a common purpose irrespective of caste, creed, and religion, management principles come into play through the management of resources, finance and planning, priorities, policies and practice. Management is a systematic way of carrying out activities in any field of human effort. Management need to focus more on leadership skills, e.g., establishing vision and goals, communicating the vision and goals, and guiding others to accomplish them. It also assert that leadership must be more facilitative, participative and empowering in how visions and goals are established and carried out. Some people assert that this really isn't a change in the management functions, rather it's re-emphasizing certain aspects of management.
Posted by: mulavana parameswaran bhattathiri - Friday 17th, April 2009
7: Dear premji,
the article is cool and crisp about indian electronic design and its market value. Is wipro involving R|D for next generation product development or any collaboration with elite institutions.

bye,
dhakshina moorthy.T
Phd (continuing ) - university of toledo, ohio.
Posted by: dhakshinamoorthy thavamani - Friday 20th, March 2009
8: A wonderful article, the same can be applied to any product or services.

Thanks a lot sir,
Posted by: Rizwan Khan - Tuesday 17th, February 2009
9: I aggre with you sir.
Posted by: Vikash Kumar Pandey - Tuesday 10th, February 2009
10: Well It's Nice Media , connecting Like Indian Biggies .....
Posted by: EC OUTSOURCING Solution Solution - Monday 22nd, December 2008
11: Sir,
I totally agreed with you and your the man of India which you had brought to lighted to the world.Keep it Up!!!
Rgds,
Chandra
CEO
RECKON SYSTEMS (M) SDN BHD
www.reckon.com.my
Posted by: Chandra SG - Monday 22nd, December 2008
12: sir its cool...........kuchh karoge aap jindgi mein
Posted by: sameer amgaonkar - Thursday 11th, December 2008
13: Hi
It is wery useful to develop myself.

Thanks
Posted by: samir kanjibhai akbary - Tuesday 09th, December 2008
14: Wherever we can contribute to Quality and Service - it will be a win win situation.

What I like to see is all FAKE items disapper from the World
Posted by: Koshy Samuel Samuel - Monday 01st, December 2008
15: Yes, I agree with Sri Premji. Almost a decage ago I when I addressed CEOs of software companies in a breakfast meet, I insisted upon Indian software engineers not to be used as the weaving experts of India in the first industrial revolution.They will face the same fate. I was challenged to do something and show. So the Anti-collision device was my forst knowledge embedded device working in a mobile networking environment, to prevent collisions of trains without human intervention- world granted patents. The more difficult part in our country is the cess pool mentality of our own bureaucracy and administrators who believe that nothing good can be done by Indian engineers in India! The apartheid followed by our administration in treating Indian and foreign innovation has to be experienced to know the depth and pervasiveness. I am sure WIPRO also must have felt it. Similar is the case of Skybus another invention of mine, which is also a higly knowledge embedded transport system but different from the run of the mill which suffers from our administrators. Now the latest development is gravity power towers which I will work it out from USA now with the experience , bitter, I had in India.
Posted by: Rajaram Bojji - Saturday 04th, October 2008
16: Hi Sir,
While reading your article one question was hovering in my mind,all the experts were always knowing that exploring electronic industry will make us strong on our economy.But don't you think it outsourcing for financial companies of US was just the easy way of earning ,we were actually never becoming strong on our own but becoming more dependent on US.
Hopefully, all major Indian MNC now understand that and make themselves strong so they are only dependent on their economy.
Posted by: Noor Nawaz - Saturday 20th, September 2008
17: see my profile please sir,
I am good person for your company.
www.linkedin.com/in/0128it051023
Posted by: manoj kumar soni - Sunday 31st, August 2008
18: Dear Sir,

From the wars during the days of Alexander to the modern wars, Victory goals to.
The one who has speed, Technology and preparation? Every recruitment
Assignment is like a battle. We are geared and ready for the raid.

Regards
Smruti Ranjan Swain
Microsoft certified system engineer
09861805363
Posted by: Smruti Swain - Sunday 31st, August 2008
19: hai mr.azim premji vary good in atractive you
Posted by: basava raju - Friday 22nd, August 2008
20: thanks for writing such a nice article.
R.K.DUBEY
Posted by: rajkumar dubey - Thursday 07th, August 2008
21: Hi Mr.Azim Premji!!!!

Its very educative article on Indian Electronic evolution & Revolution!!!
Thank You
Posted by: Roja Reddy - Thursday 07th, August 2008
22: Hi,

Very knowledge able too good
Truly,
rohini
Posted by: rohini Gina - Wednesday 06th, August 2008
23: Hi,
I worked with Wipro for almost 3 years. I had never seen such a wonderful place to work. I stilll respect and love Wipro from the core of my heart.
Thanking you for giving us such a wonderful Place to work !!!
Posted by: Amuda C - Tuesday 05th, August 2008
24: Comparing with the electronic product production in China, Malaysia, Singapore, Vietnam our production is very low and the number of products are also very few: The very big giants like WIPRO should support in technical,financial ways and utilise many tiny units in India for manufacturing this kind of electronic products in their name and market them for the domestic market with competitive price with latest technology and design:
Posted by: Ramasamy Arthanari - Monday 30th, June 2008
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