shutterstock_53128759This is a piece I wrote at for Times of India which compares and contrasts Indian IT to Silicon Valley. Sadly, Indian IT is as sexist as the Valley is. But the tide is rising in India.

When I moved to Silicon Valley from Pakistan, I did not expect that people would be so surprised my cofounder Sabika Nazim is a woman” said Faizan Buzdar, CEO of Convo.  He was also in disbelief at the public battles I have had to fight with Silicon Valley moguls over their lack of gender diversity.

I had been researching the success of Indians in Silicon Valley and documented that this group, which constitutes 6% of the working population, started 15.5% of its companies.  This is an amazing feat, given the disadvantages that immigrants always have.

I had considered Silicon Valley to be the perfect meritocracy—until I moved there.  I was surprised to learn that there is a powerful boys’ club that provides arrogant young males with adulation, funding, and support.  This might be tolerable if, as some people say they do, women lacked aptitude for technology.  But the opposite is true.  Women are in many ways better than men; their exclusion is holding back innovation and economic growth.

Few, if any, of the executive teams of top firms have women as technology heads.  Virtually all of Silicon Valley’s investment firms are male-dominated.  The boards are even worse.  Twitter, for example, didn’t have a single woman board member went it went public last October.  When I expressed my disgust at this in The New York Times, its CEO Dick Costolo ridiculed my academic credentials.  Fortunately, there was so much outrage at his unprofessionalism and insularity that he had to back down and add a woman board member.

Companies with the highest proportions of women board directors outperform those with the lowest proportions by 53%. They have a 42% higher return on sales and a 66% higher return on invested capital.  As well, a board that reflects a company’s user base is more likely to understand the company’s market needs and to develop better strategies.  Take Twitter, the majority of whose users are women.  Being a boys’ club has been costly to its shareholders, as evidenced by its dismal post-I.P.O. performance.

Silicon Valley’s greatest strength is that it accepts failure—including its own.  It also encourages dissension and learns from its mistakes.  I have received strong support in my battles and have had more than 500 women help me “crowd-create” a book titled Innovating Women, which shares lessons and encourages women to help better the world.  This book will be released in September.

Technology companies have been reeling from the criticism about their gender gap and are working towards reducing it.  Just in the past few weeks, Google, LinkedIn, Yahoo, and Facebook have all released gender-diversity data.  The numbers are not good, with the female percentage in engineering being in the teens.  But the companies have admitted the problem and are now holding themselves accountable.

Indian boards are no better.  The majority of publicly traded Indian companies—922 of 1,462—have no women on their boards.  Women hold barely 5% of board seats in India, in comparison with 17% in the United States.  Indian industry too is needlessly holding itself back.

Indian I.T. companies have a bigger management problem. Look at the executive ranks of Infosys, Wipro, TCS, Tech Mahindra, and the others, and you will hardly find any women.  This is surely hurting Indian I.T.

But there is good news at the lower ranks.  Unlike in the U.S., where, because of the boys’ club, the proportion of women studying computer science fell from 37% in 1987 to 17% in 2012, India’s numbers of female I.T. students are increasing.  According to NASSCOM, I.T. Services  gender-diversity ranges from 24-32%; in  BPM this is 34-42%; 1 million of India’s 3.1 million I.T. workforce is female; and women now represent 38 to 40% of entry-level recruits.

This will give India a major advantage in the future.

An assortment of technologies is advancing at exponential rates and converging—in fields such as robotics, artificial intelligence (AI), computing, synthetic biology, 3D printing, medicine, and nanomaterials.  These advances are making it possible for entrepreneurs to solve humanity’s grand challenges—including energy, education, water, food, and health.

In these rapidly evolving fields, the boys—who dominated technology in the social-media era—have no advantage.  Those with experience and education—in fields as diverse as science, technology, engineering, education, health sciences, and arts and humanities—have the edge, because they can work across disciplines and see the big picture.  Women dominate many of these fields, and they match boys in mathematical achievement.  And if you combine a cross-disciplinary education with a woman’s maternal instinct, empathy, and a desire to do good, you have an unbeatable combination.  That’s why women entrepreneurs are best placed to solve humanity’s grand challenges—and to save the world.  And that’s why it’s important to teach and inspire them.

Innovating Women will be released on September 2 but you can preorder it now: I expect it will inspire thousands of women to rise to their potential, and hope it will accelerate change.

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  • sakky

    Mr. Wadhwa:

    Once again, I feel that I must implore you to please *demonstrate evidence of causality* from the hiring of more women by an organization to improved organizational performance. You continue to cite figures by Catalyst – companies with the highest proportion of female board members have a 53% higher return on equity, 42% higher return on sales, and 66% higher ROIC relative to companies with the lowest proportion – yet continue to conveniently ignore Catalyst’s clear warning clearly stated in footnote 2: “Correlation does not prove or imply causation.” Indeed, as I have said before, reverse causality is a highly plausible counterargument: perhaps firms that are *already* outperforming have the resources – and perhaps more importantly – the credibility from the financial markets with which to hire more female board members.

    I am also perplexed by your statement that: “Being a boys’ club has been costly to [Twitter’s] shareholders, as evidenced by its dismal post-I.P.O. performance.” Twitter IPO’d in September at $26 and as of yesterday closed at over $37, representing about a percentage gain that strongly exceeds either the Dow Jones or the NASDAQ composite during the same timeframe. Certainly most firms wish their stock prices had performed as ‘dismally’ as Twitter’s. Granted, Twitter’s stock price has yet to re-attain the heights of its first-day high of $44.90, but that could well be attributed to the well-known market phenomenon of IPO first-day price spiking. As a point of contrast, it took over a year for Facebook to reattain its first-day stock price high, yet you haven’t publicly accused Facebook of sexism regarding its board membership. And even to the extent that Twitter’s (or even Facebook’s) initial stock performance could indeed rightfully be characterized as ‘dismal’, it’s far from well-established that sexism is the *cause* of that dismal performance.

    Yet even if we set aside the issue of causation, if you are asserting that board gender discrimination is merely *predictively correlated* – that is, correlated with *future* performance of the company (as opposed to contemporaneous/past performance as evidenced by Catalyst), then that seems to be easily demonstrated empirically. Construct a financial portfolio consisting of firms that have a high percentage of female board members and contrast that portfolio’s returns relative to that of either a market index or – better yet – a matched portfolio of similar firms that have a low percentage of female board members. If what you are saying is true – that firms that hire more female board members truly do predictively outperform those that don’t – then you would become fabulously wealthy through investing in this portfolio. {That would then raise the intriguing question of why haven’t the financial markets already figured out this apparently quite elementary trading strategy?}

    But the upshot is that I think it is fair that you present some *hard evidence* backing your assertions. It’s not that hard to do. Empirical methodologies with which to ascertain causality are improving rapidly; methodologies to compare financial portfolio performance are already quite well established. I beseech you to implement some of them.

    To be clear, I have nothing against the notion that the hiring of more women causes (or is even predictively correlated with) improved performance. Perhaps it does. I am always open to new evidence. But if so, let’s *rigorously empirically demonstrate* that to be the case. Given your seemingly stout confidence regarding this topic, it ought to be easy to empirically demonstrate.