Thursday, March 23, 2006

Yeh Desh Ki Dharti IT Ugle Ugle Tech Aur Moti but for How Long

I was just thinking yesterday(after I read a blog by Harshad Oak titled "IT Survivors"), how the economies of different countries evolve, and how each economy manages to find its niche, its USP. The Japanese had efficient manufacturing and expertise in miniature electronics, robotics and automobiles, the Chinese have over-flown world markets with low cost goods and are investing tremendously in manufacturing infrastructure across the board, the Germans have their automobile industry, Finland has Nokia, the Dutch have tulips, the Belgians have diamond, the Americans have their attitude to experiment with science and technology and R&D and so on. And I realized, that so far, the only niche Indian economy has been able to find (in a big way) is basically IT/Tech/Services. (Have some ideas on branding and will post that soon.).I feel tech is a misnomer to be applied in an Indian context, as a very miniscule part of the India is into that area.

Now there’s nothing wrong with IT or Tech industry, but just that in the long run India can’t bank on it.(This is my view.) I have felt this before, but didn’t fully understand the implications – India needs core infrastructure, engineering and manufacturing to really move forward. See the problem with IT is that its primarily a human resource based industry, rather than a core skill/infrastructure based industry. I mean, its not like Infosys, HCL, Wipro and TCS banks on hordes of brilliant hackers to write their code. That’s what Six Sigma and other such certifications are for – if you take a whole bunch of people, put them through excellent training programs, put in elaborate procedures for maintainence, some overview of architecture, code reviews and testing (basic practice of good software engineering), then you’re unlikely to mess up.The reason being that's their forte and they have been doing it time and again.I am told Infosys has classroom kind of training for 4 months after one is recruited from campus. There may be some rationale to this approach but somehow, I don't like it. I feel one learns whatever it may be not in a classroom but when one puts one's hand into the dirt and mud and plays with the same. More than that interaction with the smartest/best people and sharing ideas and trying something on your own is my approach.

However, IT does not build much in terms of core infrastructure. I mean companies surely will be laying down fibre across the country, all homes will have broadband connections, Internet access over cell phones will become easier, cheaper, faster and so on, but these are not the same as say good public health infrastructure, roads and railways, power generation and distribution, iron and steel. Of all the best of things mentioned above, the best of optical fibre cables for broadband is from Alcatel, the mobiles are from Nokia, Sony, Samsung, Motorola and so on. So my point is we don't have the infrastructure capability but of late few foreign biggies are investing in India big time in this area, I feel its too early to comment on the results.

Simple example: I came to the city of Bangalore in 2002 July and since then in a span of 3.5 years till now, the foreign export in terms of IT/Tech/Services has increased by at least double of what was 4 years back. But the civic facilities, infrastructure and roads have not developed at the same pace. I do agree to that fact that all these projects are Government driven where files pass through serpentine queues and non-adherence to official formalities is a norm. On top of all this, the lethal disease of "lethargy" and "chalta hai" is prevelant everywhere. In India this is a part of life but we have to move ahead with this. So we need some fundu engineers, city planners, and administrators to bring about this change.

One of the key differences is that knowledge transfer in software is very easy and simple. If you give me the functional specification of a software, I will most likely be able to build it after understanding the exact requirement. But if you give me the functional specification of an electro-mechanical device,a chip design or a chemical compound, its highly unlikely that I’ll be able to figure it out by myself.The other reason is the zero cost of replicating software. Software is almost trivially easy to mass-produce and distribute. More traditional (and tangible) products are less so. Setting up a "factory" to produce software (or software based services, for that matter) is significantly easier than setting up an iron and steel plant.

My father, an IIT'ian is a core mechanical engineer, who started his life as a product design engineer with HMT and later on moved to a Steel Plant, where he retired in Sept'05 as the General Manager.He understands core engineering stuff and also I sense a lot of logical reasoning in what he says, may be he doesn't understand IT but he appreciates the use of it. I have full faith and confidence that given a chance, he can also write code and program like any other software engineer. I followed his track and turned out to be a mechanical engineer but then my story ends there in terms of similarity. I am presently working for a product software firm, hmmmmm

At its core, the IT industry to me seems a lot about processes and management – how do you manage your human resources, your computing resources, what processes do you put in place, what does your quality assurance look like. And this is primarily because software and software creation have been largely commoditized. Writing beautiful (beautiful = simple (like the cute bindi wali girl and not the jeans one, my definition though) + logical + scalable) code is an art. Writing code that works and doesn’t fail is not. Traditional manufacturing on the other hand is far from being commoditized. Knowledge transfer is hard and expensive, the processes of discovery and reverse engineering is also substantially harder.

IT/Tech/Services in India is on a high tide and the Indians working in this industry are in a "It's the time to Disco" mood.

"Dil Hai Mera Deewana Kya
Kehta Hai Ab Ghabrana Kya
Taal Pe Jab Jhoome Badan
Hichkichana Sharmana Kya
Khul Ke Jhoomon Khul Ke Gaao
Aaoo Aaoo Yeh Khul Ke Kaho
It's The Time To Disco
It's The Time To Disco
Kaun Mile Hai Kisko
It's The Time To Disco

So far the ride has been good but will it sustain ????

Since I’m not an economist and don't understand the driving mechanisms in an economy in minute details, my understanding of these issues is not very deep and perhaps may be superficial. That's the reason I try to read and talk to people and learn from them on whats going in the major sectors in the Indian economy to gain better understanding of the big picture. When I have time, read and surf the Internet and want to discover the world a lot better. Nonetheless, I think its safe to say that India can and should not bank on IT to pull it through the next few decades.

(Note: These views are mine and are not intended on any individual or for that matter any firm/company/organisation.)


At 1:41 PM, Blogger Varun Singh said...

Hi Tanay,
Currently India does have an edge in the software field but others like China, South American countries etc. are coming up. India provides biggest advantage in the term of cost. I don't think Indian coders are managers are among the best in the world, but the point is they are the best in that price zone. Suppose if African countries start producing code cheaper than India, I don't think India would be able to hold the edge.

The emphasis should be on utilizing this opportunity well. India still has to do a lot in terms of Infrastructure. Agriculture involves 60% of working population but contributes only 1/4 of the GDP. Manufacturing has to strengthen (to compete with China).

We also need to encourage people to start their own firm, generate employment and utilize the upcoming Indian market.

Coming time is going to be interesting as well as critical for India. Let's hope for the best (and prepare for the worst).

At 10:58 AM, Blogger remainconnected said...


I agree to all the points raised by you.So its not just IT but the all round development in other domains that will keep the GDP clock ticking in the long run.

IT is just the catalyst in this cycle


At 4:08 PM, Blogger Rahul Negi said...

Hi Tanay,
I agree with you that IT and IT-enabled alone can not pull india from this quagmire of poverty and impoverishment.even in IT itself we need to move up the value chain before cheaper destinations engulf us.Therefore IT can only be harbinger of good times and not the real growth driver.

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