For the first time in the history of India, we have received global acclaim. And this has been in just one field -- software exports. While what we have achieved is creditable, we are still at the very early stages of our marathon. If we have to fulfill the target of our prime minster, there are certain urgent initiatives that the country -- the political leadership, the bureaucracy, the academia and the corporate leadership -- will have to take up. Let me talk about a few of them.
a: Evolve a consensus on the usefulness of IT
To bring the benefits of information technology to the vast masses of the country, we need quick decision-making and focused implementation of policies. This requires a consensus amongst all hues of political thinking that IT will indeed help the lot of the common man. We cannot afford prolonged discussions on whether or not IT is good. In fact, our political leaders have to become evangelists for technology in general and IT in particular. They have to lead by example, by using IT themselves, and demonstrate how productive they have become by using IT.
b: Embrace competition
As my friend Mr Rahul Bajaj has said, the greatest management guru is competition. Unless Indian companies realise the importance of customer service, the use of IT will not become all-pervasive in the corporate world. This is even more true of government departments and the public sector. For these institutions to deliver faster, better and cheaper services to their customers by way of e-governance and e-commerce, they have to invest heavily in IT and reap the benefits on an urgent basis. Further, the government has to dismantle all monopolies that it has created in vital sectors like telecommunications and airlines.
c: Reduce friction to business
Today’s competitive and dynamic business environment demands that quick decisions be made right in the boardrooms, rather than after receiving approvals from New Delhi. In a country like India, the government does play a certain role in the destiny of a corporation. Further, as Indian companies move towards increased globalisation, they will have to push the envelope on rule sets -- and the government will play a significant role in creating such a new rule set. This requires quick and decentralised approvals from state capitals and proximate government offices, if at all, rather than from New Delhi. The government has to become a catalyst rather than a controlling authority. My own experience is that the government has, by and large, become extremely responsive to the needs of the corporate world. It is just a question of fine-tuning in a few areas.
d: Enhance availability of talent
The software industry has witnessed a compounded annual growth rate of over 40 per cent in the last five years. The domestic IT industry has grown at over 25 per cent over the same period. The demand for IT exists today and is likely to continue to be strong over the next five to 10 years.
Thus, the need of the day is to improve the supply side situation. The IT industry is absorbing a large number of engineering and science graduates and is, in fact, attracting a large number of professionals from other areas of engineering such as power, construction, automobiles, steel, etc.
Further, several countries have launched initiatives to attract Indian software professionals. Thus, unless we take urgent steps to start new colleges to produce IT professionals, increase the quantum of IT education in our existing curricula and enhance the intake at various existing institutions of learning, the industry will not be able to grow at the required pace to reach the US$ 50 billion target by 2008.
Further, the quality of education provided has to be improved significantly. This requires that we allow private universities to come up and also invite well-known educational institutions from abroad to establish a presence in India and thereby create a competitive scenario. Initiatives such as the Indian School of Business and the Global Institute of Science and Technology are good first steps in this direction.
There is also a great need for increased interaction between the Indian industry and the academia to push the envelope in applications and software engineering practices. This is particularly true if we want to become better at product development.
e: Improve infrastructure
It is unrealistic to expect the IT and the software industry to grow indefinitely unless we improve basic infrastructure like airports, roads, hotels, power and telecommunications. Generally, the development of a nation needs to be organic and all-round. I do not see how we can reach a US$ 50 billion target for software exports with our existing physical and technological infrastructure. If we want the Internet to be ubiquitous and benefit the common man, India’s telephone density has to increase from the current level of three per 1,000 and also has to become far less expensive. India is perhaps the only country in the world that defies the basic laws of economics by imposing higher tariffs as the volume of telephone usage goes up! Further, in a developing country like India, the pricing of these services has to be looked at in relation to the disposable income levels for various segments rather than being linked with costs of similar services abroad.
f: Embrace e-governance in a big way to bring transparency to critical decision-making processes and policy formulation
Continuing the significant progress made by the government in its liberalisation efforts, it is necessary that there be transparency in governance and policy formulation. This is mandatory if we have to have the benefit of participation by world-class companies in our nation-building process and in making our IT industry strong enough to be globally competitive. E-governance will improve transparency, reduce corruption and improve consumer comfort.
g: Create suitable conditions for increased entrepreneurial activity
India has done a good job in creating a suitable rule set for attracting venture capital to the country. The results are already perceptible. The Indian rules on the employee stock option plans are probably among the best in the world. However, in certain areas, we just have to reduce the hassle of dealing with the complex rules sets of myriad state and central government institutions, if we wish to fully reap the benefits from the above progressive measures.
h: Liberalise rules for Internet, data and voice communication
The Internet will be a key vehicle of growth for the Indian economy. Restrictions in India on voice-over-IP and on connectivity between the PSTN and private networks for voice and data should go. Tariffs for voice and satellite bandwidth should be reduced to globally competitive levels. Without these, it is unlikely that the vast majority of Indians will receive the benefits of the Internet. Also, given that world-class communication infrastructure is a key factor condition for software exports, such barriers may hamper the long-term growth prospects for this sector.
i: Rationalise the duty structure for manufacturing
Unless our hardware industry grows in a big way, we will not be able to leverage the power of IT for the common man. Hardware costs will have to come down, which can happen only by increasing volumes. This requires a rationalised duty structure that supports value addition through manufacturing.
j: Facilitate listing on stock exchanges abroad
Indian companies have built a credible level of awareness in the US and it is now possible for them to list on US stock exchanges. But, the conditions for a public company in India going in for a listing in the US are not very favorable, particularly with regard to the liquidity of the listed securities. Therefore, rules for overseas listings need to be liberalised further.
k: Create a regulatory framework that enables Indian companies to become world-class
Attracting global customers and investors requires that we enhance their comfort levels by instituting global standards in corporate governance. Similarly, bureaucratic procedures in setting up trading offices need to be minimised. We have to change our mindset from one of thinking that we are doing the international investor a favor to one of making them feel wanted.
l: Help reduce the prices of imported software and hardware
The government and the industry have to work together on this matter. The government has done a great job in reducing the import duty on software from a punishing 150 per cent at one time to zero per cent today. However, duties on imported hardware will have to be reduced to facilitate large-scale computerisation across the country. Vendors will have to talk to their principals and establish special pricing schemes for India keeping in view the vast market potential.
m: Companies to focus operations to move up the value chain
By and large, Indian hardware companies have had some focus in their operations. However, this can hardly be said of Indian software companies. In fact, the most common complaint of clients abroad is that most Indian software companies claim every area under the sun as their area of expertise! While there may be many reasons for this, including low volumes in specific areas, such unfocused operations lead to erosion of credibility and low quality of service to clients. A stronger focus will also help software companies obtain domain knowledge and thereby move up the value chain.
n: Develop better appreciation for IT
It is universally agreed that a key reason for the failure of IT projects is the inability of the end-users to appreciate the value that IT can bring to the table. An offshoot of this is the unwillingness of the end-users to pay a fair price for software. Often, users do not show adequate interest in allocating quality time to project personnel from their IT vendors. Usually, this results in inordinate delays and cost overruns. Coupled with the fact that the opportunity cost of taking up an Indian project is very high for an Indian software company, this explains why most Indian software companies are loath to take up domestic projects.
o: Create better brand equity abroad
High growth and high per-capita revenue productivity requires attracting the best customers in the marketplace and the best employees from the local talent pool. This can be done by establishing strong brand equity on a global scale. India has not been able to create a single global brand so far. The software industry offers an opportunity to break this jinx. But, this initiative requires visionary thinking, considerable spending and excellent execution.
p: Better collaboration between industry and academia
Our desire to move up in the value chain and to become innovators in IT requires that we leverage the enormous capabilities of our academic institutions. Our brethren in academia also need to enhance their focus on problem solving orientation rather than on the traditional Indian mindset of research for research’s sake.
Conclusion
Introduction
Do we need hi-tech enterprises in India?
Product exports or services exports?
The market opportunity
The Rediff Specials
Do tell us what you think of this speech
