Can Indians build world-class tech companies?
Contrary to Apple co-founder Steve Wozniak’s assessment, the issue is not a lack of creativity but structural problems such as participation in global value chains
Apple co-founder Steve Wozniak’s recent comment doubting the creativity of Indians was ill-informed at best. But his criticism about the absence of companies making big advances in technology is indisputably true, sizable companies like Infosys Ltd and Tata Consultancy Services Ltd (TCS) notwithstanding. Out of the seven Indian companies that made it to 2017’s Fortune 500 list, three are private companies—Reliance Industries, Tata Motors and Rajesh Exports—and none is a tech company.
The early stories of many tech companies feature a precocious geek who identifies a need and uses technology to create the revolutionary product. Larry Page and Sergey Brin at Google and Bill Gates at Microsoft come to mind. Elon Musk at Tesla is cast in the same mould. There are also companies like Dell Computers and Apple which did not invent a new product line, but better served consumers by delivering cheaper or better-designed products.
So what gives? Was Wozniak at least partly right about Indians lacking creativity—in technical areas, at least?
The story of Simputer, a handheld computer developed by a team of seven Indian scientists in 2001, is relevant here. It was meant to bring the “information highway” to the masses using apps which provided relevant information on weather, money transfer, commodity pricing, etc. The gadget was complete with a touch-screen, an accelerometer and a stylus and The New York Times called it the most important innovation in computer technology in 2001. But early success does not necessarily translate into greatness. Simputer’s production was stopped by 2006 due to limited availability of capital, inability to market a new product, and, most importantly, poor capabilities in hardware manufacturing. The last is still relevant.
Sustaining a company requires human capital—a pool of skilled workers—who can help the product evolve and keep the company at the frontier of engineering technology. The Simputer was envisaged at the first Bengaluru IT.com conference in 1998 by a group of IT (information technology) industry professionals and professors. Due to the presence of a diverse and eclectic group of people, universities have traditionally been the anchors around which such clusters of skilled people have honed their ideas. Indian universities, however, have failed to provide these clusters because of the bifurcation of teaching and research. Higher education in India is in a state of disrepair. No Indian university features in the top 200 of the Times Higher Education (THE) World University Rankings 2018, with Indian Institute of Science (IISc), Bangalore sliding further into the 251-300 grouping. In contrast, China has two universities in the top 30 and seven in the top 200.
In fact, China’s rise in higher education has been phenomenal. On the key performance indicator of higher education—scientific articles—China has outpaced India, and has now become the world leader. In 1990, India’s gross domestic product (in purchasing power terms) was 83% that of China’s, while the number of publications was double that of China’s. By 2011, India’s GDP was 43% that of China’s but the number of publications was 30% (Devesh Kapur and Pratap Bhanu Mehta, Navigating The Labyrinth: Perspectives On India’s Higher Education). Additionally, the Chinese are the most represented international students in the US, with their numbers being more than twice those from India, and Chinese spending on research and development (R&D) surpassed that of the European Union and is now second only to the US.
But while technical progress and a good university system are necessary factors to support tech companies, they are not sufficient. China has 115 companies in the Fortune 500, featuring technology firms like Alibaba, Tencent Holding, JD.com and Huawei, among others. This success is not only a result of having skilled workers; the integration of China with the global economy has an important role to play.
China has been an important manufacturing hub for a couple of decades, and its workers have been exposed to the processes and management practices employed by major companies. As it becomes a middle-income nation and wages rise, it is trying to move up the value chain by bringing together its experience in fabrication, its new R&D edge and the latent skills its workers have acquired over the years to build tech giants.
Therefore, a talented workforce and participation in the global value chains are important if India has to build major tech companies of its own. China has shown that big companies can be built by combining the experience of participating in international supply chains with an understanding of local needs. India has the example of Flipkart, which was born after Sachin and Binny Bansal’s experience at Amazon.
The recent government proposal to create 20 “world-class” institutions is laudable, and so is the greater autonomy provided to Category I and II institutes by the University Grants Commission (UGC). But foreign universities should also be allowed in the country, and all universities should be able to hire international scholars for long-term faculty positions. Similarly, integration in global value chains should be a priority for the government, instead of the current tilt towards protectionism. If India can do these two right, Wozniak might live to see Indian tech giants too.
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