Despite an abundance of first-rate engineering and scientific minds, India’s technology sector has not got anywhere close to the sort of innovation and profitability seen in other parts of the world. While Silicon Valley-based firms have shaped the digital world of the last two decades, successful tech start-ups have also sprung up from across other parts of the world, including the UK, Israel, South Korea, Japan, China and Sweden.
However, India has developed more of a reputation for being the home of many major international companies’ call centre operations, with a lot of backend and low-paid tech jobs being outsourced to Indian firms. Unlike many Asian cities, the gleaming tech hubs and manufacturing plants that produce the latest gadgets seem absent from India. President Narendra Modi has made it one of his key targets to change this perception. As with many of India’s economic operations, Modi intends to completely reform the tech sector and shift it away from low-end industry to more leading, innovative, and high quality firms.
For many years India has had a somewhat unfair image of being the home of global call centres, and the place where disgruntled customers get their phone calls transferred to. However, while a large industry has grown in the country over the last few decades, the trend recently has been for many companies to move their call centre operations to other regions like the Philippines or to even bring them back in house. Indeed, last year it was reported that India had lost as much as 70 percent of its call centre business to the Philippines. As a result, India has needed to refocus its strategy towards higher end digital services.
Around 400 million Indians living in poorer parts of the country could have better access to healthcare, as well as more efficient diagnosis and distribution
of medicines
Keeping up with the competition
While many cities in India have been dubbed technology hubs, they have struggled to see the sort of high-end innovation and revenues of competing cities around the world. Bangalore, the capital of the state of Karnataka and third most populous city in India, has long been known as the Silicon Valley of India, with leading tech firms like ISRO, Infosys and Wipro are based there. It also houses a number of leading research institutes and universities.
As a result of the innovation in Bangalore, there have been many leading IT service and consultancy firms that have carved out core roles for themselves in the global digital market. However, the successes have not matched those of many other countries, and it is perhaps India’s notoriously complicated regulatory system that has helped stifle many of the smaller entrepreneurial services that prove so successful elsewhere. As a result of Modi’s election last year, however, it seems that he plans to overhaul much of the way the country operates.
Last August, Modi announced plans to set up a national digital initiative, dubbed ‘Digital India’, which would see around $19bn spent on providing broadband internet to around 250,000 villages, as well as providing blanket mobile network services. The government would also be dramatically improving the online capabilities of its own services, meaning a more efficient platform for people to access key government services.
Speaking in the US earlier this year, India’s Communications and Information Technology Minister Ravi Shankar Prasad encouraged international tech firms to look at India as a place to invest their money and resources. “Use of technology is an important tool to fulfil this idea of aspiration. The creative energy of India is waiting to show its accomplishments again under Narendra Modi. Indians want to realise their dreams in view of the extraordinary vision of Modi.” He added, “There is enormous scope for investment, growth and also very exciting business prospects. India today is a happening place.”
According to some observers, Modi’s push to make India ready for the digital age is vital to the country’s future, and that he should focus his attention on a number of key areas. Dr Ganesh Natarajan, CEO of Indian tech firm Zensar Technologies and Chairman of the National Association of Software and Services Companies (NASSCOM) – an Indian tech industry trade association – wrote in November of a “mood of high expectation created by the early actions and successes of the Narendra Modi government.”
Writing for the DNA India website, Dr Natarajan added: ‘If the government takes the agenda forward and does not leave any of the constituent parts gasping for funds, the opportunities are huge for the country in general and for willing participants in the IT sector as well. What is important to understand is that like any elephant, Digital India has many parts and each has to be addressed to make the big vision a reality.”
The areas Dr Natarajan believes the Modi government should focus on include spreading broadband throughout the country, therefore enabling poorer communities to enjoy the benefits of a digital economy. This will add an extension of the National Optical Fibre Network, and NASSCOM believe that should cover as many as 600,000 villages nationwide. He also believes the Digital Literacy Mission should be a priority, with computer services forming a key part of school curriculums, as well as an expansion of the government’s Common Service Centres (CSCs).
Investing in opportunity
Smart cities should also be aided through a number of public-private partnership initiatives, with large international firms like IBM and CISCO being encouraged to continue investing in parts of India. “Major multinationals like IBM and CISCO and a plethora of start-ups have developed solutions which need to be integrated, and country-wide connectivity initiatives for healthcare, education and small and medium manufacturing enterprises need to be designed and implementation commenced expeditiously so that an eco-system for employment and value creation can emerge through the smart city programme.”
It’s not just in consumer electronics where India has fallen behind its rivals. Renewable energy technologies have been heavily promoted by China, even though Asia’s biggest economy continues to consume colossal amounts of fossil fuels. By contrast, India has long banked on the coal industry for its energy needs. Last November however, Modi’s government announced plans for a massive investment in renewable energy that could transform the country’s energy market.
Over the next few years $100bn worth of investment is due to be pumped into the renewable energy market, according to India’s Minister for Coal, Power and Renewable Energy, Piyush Goyal. Telling reporters he wanted the country to become a renewable energy superpower, Goyal said last October: “Our commitment to the people of India is that we should rapidly expand this sector, reach out to every home, and make sure we can do a diesel-generator free-India in our five years.”
Wider technological innovation will also help Modi realise his plans for a modern, digital India. Falling costs and increased reliability mean that adoption of technologies like cloud computing and mobile internet can happen far quicker than would have been possible a few years ago. The impact that these new services will have on India’s wider economy could be vast. According to McKinsey Global Institute (see Fig. 1), the country could see benefits derived from improved digital services of up to $1trn annually. For example, around 400 million Indians living in poorer parts of the country could have better access to healthcare, as well as more efficient diagnosis and distribution of medicines. Elsewhere, remote teaching and improved educational services could help to empower citizens throughout the country. Modi’s digital strategy for the coming year will rely not only on domestic innovation, but also help from overseas.
Speaking in January to the Indian Science Congress, Modi talked of how the science and technology would form a key part of all trade negotiations with other countries. “There is a growing trend of international collaboration in research and development, not just among business enterprises, but equally among researchers and scholars at universities and laboratories. We should take full advantage of this. For this reason, I have place science and technology at the forefront of our diplomatic engagement. As I have travelled abroad, I have personally sought out scientists to explore collaborations in areas like clean energy, agriculture, biotechnology, medicine and healthcare.”
India is having to play catch up in the technology world, and it will not be easy to shed the image of it as a country full of low-end tech and science jobs. While all this investment from the government should be welcomed, one area in which India must do better is to retain the top scientific talent that emerges from its universities or go and study abroad. There are huge numbers of leading Silicon Valley figures that grew up in India, only to seek their fortunes abroad. Enticing these figures back to the country will go along way to helping India become one of the leading digital economies in the world.
