Preparing for the Rise of Indian Product Powerhouses
Date: Monday , December 06, 2010
The entrepreneurial scenario continues to grow rapidly. In 1996, the global software market was worth $95 billion. According to International Data Corporation (IDC), in 2000 it was estimated to be worth around $180 billion. This growth in itself has had a number of important implications both for the industry and more generally in terms of economic development. This rapid growth, however, has also created problems for the industry. The industry remains chronically short of skilled manpower. In Europe alone, it is estimated that the industry is short of about 500,000 skilled workers. Japan and the U.S. are also severely short of computer service personnel. This shortage continues to provide good opportunities for countries like India to take-up this slack and provide skilled people to fill the gap.
Even the R&D sector is becoming much more globalized and U.S. R&D in particular is being “externalized” – more and more of it taking place outside the wall of big companies within their own R&D labs. All these have provided a platform for countries like India to grow innovatively and increased the demand for leading innovation driven organizations in the country. Companies like Infosys, TCS, Wipro and others who made use of the opportunity have come a long way. There are also several organizations that are mushrooming in every corner of the country. Even though the entrepreneurs in the country have got several ideas majority of the ideas remain just as ideas due to the difficulties in their execution.
Since 1999, innovative leaders and entrepreneurs in India have dreamt of creating a software product powerhouse, moving away from the labor-for-hire services model to create own products that are winners on the global stage. Finally such a dream came true in 2008, when India headquartered Zoho, a provider of on-line business, productivity & collaboration applications, was shortlisted as one of the top 10 enterprise products of 2008. Zoho had only 10 people in America and yet they managed to achieve big enterprise accounts in head to head competition with Microsoft and Google without taking a dime of external money - having bootstrapped it from the start. Thus was the stepping stone and within 2 years of time India managed to bring a drastic change in its entrepreneurial scenario.
Talking about the crux at which innovation in Indian ecosystem stands today, Sanjay Nayak, CEO& Managing Director of Tejas Networks says, “The time has come to unleash the creative potential of our scientists and innovators at grassroot level. Only then we can make India truly self-reliant and a leader in sustainable technologies. India has huge opportunities ahead and electronics itself has got $400 billion by 2020. Even if it goes upto 2022 that doesn’t matter, what matters is the growth from $45 billion to $400 billion.”
During his visit to India, Bill Gates once said that India needs to move away from low-cost labor toward high-end research and development work. He saw that the future for the Indian IT sector lies in expanding its capability to handle high-end R&D work. And now we can see his vision come true.
Today, technology is transforming innovation at its core, allowing companies to test new ideas at speeds and prices that were unimaginable even a decade ago. The price of failure has come much lower now and in return that has become an advantage for the companies who are willing to try new things.
There is a huge shift in the global market as well. Innovation will shift to global locations where it is more efficient. The emerging markets like India & China are driving the growth today. Innovation needed to address emerging market needs, like bringing products that are affordable, should also be able to meet high-quality solutions. Multinational companies also require new “scale at speed” approaches to penetrate the developing world’s increasingly prosperous consumer markets. The rapidly growing ranks of middle-class consumers span across a dozen emerging nations, not just the fast-growing countries which include almost two billion people, spending a total of $6.9 trillion annually. Next decade this will increase onto $20 trillion. This will be about twice the current consumption in the U.S.
This offers an opportunity for early winners to gain lasting advantages. To become winners they have to be distinctive, companies need to figure out how to grow, sharpen their brand image, and at the same time improve their return on investments. “We should develop a common feeling that if someone else in the world can do why can’t we do? There may be cases where 99 percent will speak about why we should not do. But we should search for the 1 percent of possibility and explore it,” adds Nayak. This might be most challenging but there are also certain advantages to take up these challenges. As per him, there are three ‘Ms’ that are critical in this context.
Market: Among the major economies in the Asia-Pacific region, India’s private domestic consumption as share of GDP, at 57 percent in 2008, was the highest, according to an analysis by the McKinsey Global Institute. A higher private consumption-to-GDP ratio shows that domestic consumption of goods and services is a major contributor towards real GDP. In India, domestic consumption is one of the key reasons why the economy was able to register the current level of growth, a good enough attraction for both domestic and overseas investors.
Manpower: India has the best talent pool in the world, got highly talented workforce both in technical as well as managerial fields. As compared to the developed and some of the developing countries India has high proportion of people in the working age-group and effective usage of the talent pool will be another key to success.
Money: India is in dire need of a new wave of entrepreneurship that will breathe fresh life into our businesses, and breed immense wealth for its start-ups and their investors.
Globally, even though home-grown family-owned conglomerates and few companies have kept the Indian flag flying high so far, positive macro-economic environment and venture capital funding can take the country much more ahead.
It is the challenging responsibility of Leaders to find ways to leverage the unique “India Advantage” through hiring the right team, tackling the adversity, customer orientation and commitment. In fact there are much more things that we can do. We need to spot the opportunities, pool in our existing resources, both private and public, to create an environment where risk-taking breeds and flourishes. This would set the right foundation for the next wave of entrepreneurship in India.