 | Issue: | India 2009 |
| Article no.: | 1 | |
| Topic: | ICT in India – new directions for a new age | |
| Author: | S K Jain | |
| Title: | National President | |
| Organisation: | Indo-American Chamber of Commerce | |
| PDF size: | 227KB |
About author
S K Jain the National President of the Indo-American Chamber of Commerce, is also the Managing Director and CEO of LMJ International Limited, classified by the Indian Government as a ‘Four Star Export House’. Mr Jain led the acquisition of Octavius & Industries Ltd and thus four heritage Tea gardens of India. Mr Jain has also served as the Chairman of the Federation of Indian Exports Organisation, Eastern Region. He was named the ‘Indian Entrepreneur of the Century’ by several newspapers and media. Mr S K Jain is associated with a number of philanthropic institutions; he is the Vice President of Jain Mahasabha, a very powerful socio-religious body set up to promote and propagate the noble virtues. S K Jain is a first class commerce student from St. Xavier’s, Kolkata and a Cost Accountant.
Article abstract
India’s recent growth has built upon outsourcing, software and services for export markets. The world’s economic slump will certainly have a negative impact on India’s export business of all types. India has a vast, underserved, internal market. By turning its efforts inward and concentrating upon the enormous needs of its domestic market, and by putting its great pool of highly trained technical talent to work solving their own country’s problems, the impact of the global downturn can be minimised.
Full Article
There are certain attributes that differentiate a country in its march towards recognition and prosperity among the comity of nations. The industrial revolution in Britain, that catapulted the colonial country to an economic power, was triggered by developments in textiles and associated industries. The United States established its economic supremacy riding on the back of its cutting edge in technology, R&D and manufacture of defence equipment. Undoubtedly, India’s unique selling point is the ICT industry, more specifically software and services. India’s focus on software and services is going to continue and we are determined to build and consolidate on that strength. At the same time, there is no denying that we have made, and are still making, considerable breakthroughs in other industries like manufacturing, agro-processing and the like. Yet there is a symbiotic relationship between the ICT sector and the rest. The way in which we are trying to make of difference in other segments is to add value to them, mostly through increased application of ICT in all aspects of our public life, be it manufacturing, agriculture, governance or the like. There is much merit in advocating that our future growth – our efforts to become a developed economic powerhouse by 2020 – depend greatly on how well we can marshal our actions in the ICT front. How well entrenched is our ICT sector? Perceptions differ. While the world acknowledges India’s phenomenal pioneering effort to develop computer literacy and use in the last fifteen years or so, we are aware that introspection is required to fathom our strengths and weakness with a view to emerge stronger and more efficient. We are the front-runner in getting outsourcing business from other countries. A combination of factors has led to this happy situation. Let me flag mark a few: our command of written and spoken English have greatly enriched us; the rule of law, upholding equity and fair play, is quite uncommon in other developing countries including China; and the risk-taking mindset of a growing number of educated youth has also led to proliferation of entrepreneurs. It is also easy for foreign investors or business people in India to pick and choose business partners on their own terms rather than follow norms dictated by a few. This lets foreign investors pick a blue chip company as partner or a totally unknown company, which can boast brainpower as its only advantage. In the virtual ICT world, where the role of physical infrastructure is limited, the range of choices does not affect the bottom lines of the foreign investor. Rather, it works to their advantage since they can negotiate freely, to the end, to induce a first generation entrepreneur to be their business partner. Still, we have shortcomings in this part of the business segment, which many perceive as our forte. Let me explain them. We are still a low-end business processing destination. There is a disconnect between our inherent talents and our present ability to use them. Many of our best technical talent, graduates of hallowed institutions like Indian Institutes of Technology (IITs) or Indian Institutes of Information Technology (IIITs) are underutilized. Until recently, investment bankers hired many of them at exorbitant salaries. The financial meltdown has indirectly braked such activities and we still do not have a policy in place to use these talents in the most productive way. Occasionally, we hear lip service from the government about making research and development more attractive in order to ensure that these whiz kids continue their association with universities and higher schools of learning. Still, our best efforts to make research attractive to them seem to have little effect. Equally significant is the need to move up the outsourcing business value chain and focus on work that has a greater value-added component and earns more for the work done. India has a huge digital divide, which is threatening to widen with the passage of the years. So far, access to digital advantages is mostly a perquisite of the urban elite or upper middle class. The employability of these people, which number in several millions, has improved in the last year or so, but India is a country of billion plus population. India can shine only when we can bring rural areas and the disadvantaged into the mainstream. There are programs and projects to transform the mindset of the people. Yet, we have to go a long way to realise these goals in a timely manner. We need more universities and higher schools of learning that can take quality education beyond the precincts of urban conglomerates. Of course, we have plans for one thousand more universities and a string of schools of higher learning. We have set up a Knowledge Commission to enhance the quality of education, particularly technical and digital, across the spectrum. Yet, we have to make a gigantic effort to realise the goals of such initiatives. Paradigm shifts are taking place in the business models that are governing the ICT segment. That is expected in such a dynamic industrial category. Newer concepts like embedded technology, that cross hardware and software, are emerging. Undeniably, most of the software for the electronics hardware, be they software for satellites, ATMs of banks, navigational or defence software and the like are developed by Indian experts. Nevertheless, our knowledge of hardware design is very limited; as a result, we often have to depend on others to embed our systems in the electronics. Admittedly, the final integrated product can command a premium, but such benefits invariably elude India since its role is very much restricted to being a software developer. That is the flip side of our business model. We realize that we have to create a strong infrastructure to foster world-renowned hardware brands in India similar to, say, a Motorola handset, iPod, computer chip, next generation laptop or such. Innovative products command prices that could cheer us up and enhance the brand of India Inc. Our policy designers will have to gear up to address to these challenges on a sustained basis rather than entering into the usual knee jerk exercise and later losing the momentum to implement the programs. The present global meltdown has taught us many lessons. One lesson is that business cycles have not lost their relevance, even though we believed that modern economic policy tooling can greatly predict occurrence of such events well in advance to enable us to take precautionary measures for warding them off. Global trade is slowing down in parallel with the markets of the developed world. There is apprehension that the slowdown might last for more time than many expect. Our ICT sector, which is dependant on exports, may suffer rude shocks for quite awhile. We have to take measures to ease the impact of shrinking export markets. Creating domestic demand for software is an important measure to counter the slowdown in its exports. There is a huge demand for software domestically. We have to invest in e-governance to link grassroots administrative units with the central administration and connect hospitals, libraries, industrial units, cultural centres via the Internet – and the list goes on. Conservative estimates predict that just serving these ends would be sufficient to build a several trillion-dollar industry. So far, we have only scratched the surface. Our domestic industry is growing between 18 and 20 per cent, but that is from a small base. We have to accelerate the growth of this segment to help our ICT sector to hedge the uncertainty that they are facing selling their products in the international market. Indeed, India and China are on a different pedestal as far as the impact of the financial contagion is concerned. As conceived by the world at large, our two countries offer large markets that can absorb goods and services produced by developed countries and thereby compensate for the shrinking markets in other parts of the world. The profile of demand in India and China is wide ranging. It can vary from consumer goods to highly expensive high-tech gadget and capital equipment. That is why the technology leader, the United States, has to play the role of a catalyst and foster development across the world. The India, China and US trio will probably, by default, be the main choreographers of the recovery drama that all of us eagerly await – perhaps, the most likely path to recovery.
