India Today: Back End to Front Row
My first experience with Indian it was in 1993, when I was looking for an alternative to Russia for my software company’s outsourcing needs. We invested more than $500,000 in teaching our 45 Indian employees the basics of software testing and project management. But most of the workers didn\’t have the education or discipline to perform basic software tasks, and those that did left us soon after they gained these skills. We reluctantly moved our operations back to Russia.
In the early 1990s, India had few mainframe computers, lagged in the personal computer and Internet revolution, had (and still has) an education system that is mired in India\’s socialist past. How could the country possibly advance?
Yet, it did. India’s call centre operators are today helping enhance patient care for American hospitals, optimise financial transactions for Australian banks and streamline parts management for European engineering companies. Its IT companies are developing mission-critical avionics systems and next generation telecommunications technologies. India has rapidly evolved into a global knowledge and innovation hub.
Just 15 years ago, Indian IT companies like Infosys, tcs and Wipro were bidding for small contracts to help western companies fix the Y2K bug. Indian outsourcers used this opportunity to expand operations, build new skills and get to know customers. The catastrophe was averted, and both sides benefited. Indian companies used this as a launching pad for forays into more strategic ventures.
Indian industry faced a severe problem, however. It needed to hire hundreds of thousands of engineers, yet the output of its engineering colleges was severely limited. In 1999, India graduated only 76,000 engineers. This resulted in fierce competition for talent and huge increases in attrition rates. It looked like outsourcing industry would implode.
Move forward to 2007. India’s top five IT companies-tcs, hcl, Wipro, Infosys and Satyam-hired 1,20,000 engineers. There were thousands of smaller companies which were growing and hiring. Most education experts agree that at best, only half of the engineers who graduate from Indian colleges are employable. This is where Indian ingenuity kicked in. Just as India’s companies install their own power generators to deal with supply problems and purification plants to provide clean water for employees, they built their own surrogate education system. India’s leading companies developed the ability to take the output of a weak education system and turn these workers into r&d specialists who can compete in the global arena.
Now Indian IT is taking its next leap-into the development of innovative technology products. A new breed of entrepreneurs are developing high-value products based on intellectual property. India now has hundreds of thousands of r&d workers who have the experience and knowledge. Many are taking the risk of starting companies. Most of these start-ups are in their infancy, and are going to face the same hurdles that Indian IT did in the 1990s. What is needed is mentorship and seed financing-which come from first-generation entrepreneurs giving back to the next generation. When this happens, Silicon Valley better watch out. It will face the same competition that US services companies faced from Indian outsourcers. And India will innovate its way into the ranks of developed nations.