1. Bringing Silicon Valley to India

Bringing Silicon Valley to India

There are numerous Silicon Valley firms that have innovated in all aspects of business software, but these firms were not the ones that seemed to get any mention, let alone headlines, during PM Modi’s visit to Silicon Valley

By: | Published: October 21, 2015 12:19 AM
modi silicon valley visit

The prime minister’s recent visit to Silicon Valley focused attention on what might travel over a bridge between the world’s most significant hub of innovation, and a country that is desperate for change. (Source: ANI twitter)

Sustained high growth in India will come from saving and investing enough, and from channelling that investment into the most productive uses. Innovation, both technological and organisational, is an important part of this process, because it overcomes the problem of diminishing returns. Innovation can be with respect to the global frontier of production, or, more likely for a country like India, with respect to its own current situation. With all these types of innovation being so critical for India, Silicon Valley is a natural source of expertise, and possibly also financial resources. The Valley’s strong contingent of successful Indian-Americans provides a bridge to bring these resources to India.

The prime minister’s recent visit to Silicon Valley focused attention on what might travel over a bridge between the world’s most significant hub of innovation, and a country that is desperate for change. I was not present at the various meetings and speeches, but from what I can gather, Indian-American entrepreneurs and venture capitalists in Silicon Valley have a crucial role to play in guiding that traffic. As I have argued in previous columns, the current Digital India initiative is lopsided, and it does not mesh well with what should be its natural complement, Make-in-India. Digital India is too government-centric and too much focused on the front-end, whereas what is needed is to bring digital technology to the heart of India’s manufacturing sector, as well as all the ancillary services that support it, such as retailing and logistics.

To illustrate, Indians smart-phone owners already have access to Facebook and Twitter, not to mention games and pornography. Extending internet access to more Indians is important, but using social media, playing most existing games, and viewing pornography are not going to enhance India’s economic growth. In this context, companies like Facebook have little to offer for Digital India. If the cost of having Facebook subsidise internet access is allowing that company to collect massive amounts of data on individual Indians, then the country can do better. On the other hand, Indian manufacturing firms, especially smaller ones, are seriously deficient in the use of digital technology for managing their operations, from supply chain to production to customer relationship management. My work with several co-authors, including Shubhashis Gangopadhyay, director, School of Humanities and Social Sciences, Shiv Nadar University, has shown that increasing information technology (IT) usage by Indian manufacturing firms could potentially increase productivity and profits as well as employment.

Why do these firms not invest in IT? There are financial and organisational constraints, but they also need expertise and appropriate software products. Indian firms need software for comprehensive enterprise resource planning, or for specialised functions such as accounting, product design, supply-chain management (including procurement and logistics), sales management, and so on and so forth. This software has to be tailored and priced for the Indian context, including installation and maintenance. This will require a complex transformation that needs to be at heart of Digital India. There are numerous Silicon Valley firms that have innovated enormously in all aspects of business software, but these firms were not the ones that seemed to get any mention, let alone headlines, during the prime minister’s visit to Silicon Valley. And on top of all these business functions, there is the critical issue of cyber security, which the PM has highlighted, but barely gets recognised in Digital India documents—security remains a weak link in corporate IT systems, even in advanced countries.

Facebook, Twitter, Uber and even Google and Apple are not necessarily the sources of cutting edge expertise and tailored solutions for building a Digital India, which needs a robust infrastructure, possibly even a next-generation one, which can leapfrog some of the constraints that are beginning to make the internet creaky in early adopting countries. This is where Indian-Americans, especially ones who have started their own successful companies and now invest in new ventures, can be a key source of guidance.

Indian-Americans also illustrate another key feature of Silicon Valley, one that has only fully emerged over time. The Valley is relatively non-hierarchical, and thrives on the existence of multiple, overlapping open networks, rather than those constrained by large company boundaries. Indian-Americans have taken the lead in bringing some ethnic diversity into this mix. Again, Google, Facebook and Apple are not necessarily structured to bring that ecosystem to India. Bringing the Valley to India will need creating an ecosystem of many small firms, disciplined by knowledgeable, specialised investors. This will require ground-level changes in tax laws, company law, labour markets, and so on, to support a robust start-up culture.

Ironically, the kind of diversity of thought and behaviour that Silicon Valley has come to epitomise is somewhat at odds with what seems to be emerging within much of the political structures that now surround India’s PM. These structures are hierarchical and intolerant of differences. They instil fear and distrust. This is something that India’s current leadership will have to address more squarely if it wants to work with Silicon Valley to achieve any significant economic transformation.

The author is professor of economics, University of California, Santa Cruz

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  1. R Thomas
    Oct 21, 2015 at 12:24 am
    Is India really doing all that well? Yes, the Indian economy maybe doing better than China % wise but that's only because the nation is 30 years behind China in absolute numbers, India is way behind. Also, when 1 looks at things like Infrastructure, India is behind Kenya too and 1 example of that would be the frequent power cuts. Then, there are other issues too which 1 can see below or even under the LINK which would show loads more. Also, India is only starting its manufacturing and so many firms are coming in. But would those foreign companies remain in India for a long time where people would get jobs and would the same happen with the local organisations? Nope as all of the foreign ones would have Automation and AI including Autonomous or Driverless vehicles. that is where things have headed and it has already started in US and Europe. India will take decades for it. So, all those jobs would go back (JUST LIKE IT HAS WITHIN THE BPO SECTOR which used to be India's strength though now it is facing loads of challenges as Indian firms have been late within the digital world - 10 years to be exact and in digital, if 1 is slow, that 1 is finished because tools and techniques used in the previous year itself becomes outdated in the following year. Things have headed towards automation and integration in the last 10 years but if 1 looks at many of India's websites, they all still stuck to the traditional ways- no integration and no real-time unlike what has happened abroad where digital systems have been integrated and automated in real time. In addition, as stated in the blog post below which shows statistics and ranking, India's eCommerce started 10 years late which is why it's not even in the top 30 eCommerce market in the world. In addition, India's Infrastructure is still 1 of the world's lousiest where even Kenya beats it. Kenya beats India even for research rankings in the world. Internet speed, India again has 1 of the world's lousiest, in fact, 2nd slowest amongst the Asian Pacific region. India still needs to get its basic of ELECTRICITY right due to frequent power cuts which is part of INDUSTRIAL REVOLUTION 2. India is only starting its Industrial Revolutions 1 to 3 on a big scale, about 200 years behind many of the nations and it has to catch up again with Industrial Revolution 4 that many nations have headed towards. Even though China was the world's 1st 1 that started the Industrial Revolution, it couldn't continue it due to change in empires then. China caught up and is now the world's best not just for MANUFACTURING, but also for ROBOTICS along with AN. an leads the world in hospitality robotics where chefs, waiters and waitresses are all replaced by robots. China has it in the Manufacturing side. Besides, these 2 areas, they also have it in the health sector as well. Both of them are closely followed by the digital leaders of North America and Europe. DIGITAL IS NO MORE IN SEARCH and SOCIAL as IT'S GONE OVER TO THE NETWORKED ECONOMY. India is playing catch up in all these areas as IT IS WAY WAY BEHIND-few spots, it maybe ok but most way behind. India's non profit organisations as well as pharmaceutical sectors themselves don't have much of the digital world going on. Australia too is about 5 years or so behind Europe and North America. THAT NETWORKED ECONOMY IS HEADED FOR THE ROBOT REVOLUTION. And if you think AI doesn't exist on a superior level, think again. Heard of The Grid? It's AI for websites and not programmed by humans. Heard of financial exchanges that do AI (not programmed by humans)? Already exists today in many parts of the world. Heard of robots beating hedge fund personnel? Already happening today. Heard of MOOCs or Mive Online Open Courses? Largest ones exist from the west. That's just the 1st stage where the 6 basic types of blended learning went towards the online world. Heard of robot teachers? Already started happening. Heard of autonomous vehicles? Rio Tinto already uses them and in India, it is used by ENFIELD though don't think for autonomous driving but for manufacturing. In UK, it already is used as cabs. Volvo, Google, Uber, Mercedes Benz, Tesla, etc already are into it. Heard of Tesla? It's owned by the next Steve Jobs who was 1 of the founders of Paypal, which by the way is into the crowdfunding world. Crowdsourcing also exists and the largest 1 happens to be from Australia. The days of working from 9 to 5 have already reduced in many countries. Even Traditional Outsourcing has shifted to Crowdsourcing and it isn't from 1 country to another but within a country itself. Tesla, SolarCity, SpaceX are all owned by Elon Musk. Tesla is the world leader for electric cars and it's not just the cars that would make Elon rich but the batteries which by the way has challenged the $1 trillion electric grid sector of USA. Heard of robot doctors? They too exists. And it goes on and on within the robot world which already exists in many parts of the world and which can beat humans at doing tasks. ROBOTS - not programmed by humans can already do analytical stuff, creative stuff, labour stuff and more. 40% of the jobs that you see today won't exist in the next 10 years and that includes India-ENFIELD is only 1 of those Indian firms involved. 80% of the jobs that exist today won't exist in the next 20 or so years- . The jobs that would go 1st are the repeive ones or ones like analytical stuff like Accounting, etc as well as labour work which can be automated easily - can see from here - npr/sections/money/2015/05/21/408234543/will-your-job-be-done-by-a-machine .The ones to go in the end are jobs related to relationship building or multiple tasks like nurses, some managers and executives, etc. Even some of the IT jobs would go before the multiple task ones as they can be automated. It's like your ATMs that already have replaced the financial and accounting side. Many parts of the world, cashiers have already been replaced by self service machines just like at the airports. Many nations also don't have bus conductors though they do have drivers as they have been replaced too by payment systems and so on. Networked economy-a lot more stuff has been happening in the western world as well as other Asian countries like Singapore, HK, etc; India has it a bit and is playing catch up). Do you think the growth is with smartphones? It isn't for now as it is with tablets. Apps world is nothing when it is all about Platforms that consists of not only apps developed on them but also 3rd party apps and platforms integrated to them. Do you think SAP and Oracle are still the ERP leaders? No they aren't. It's MS Dynamics as shown by G2Crowd. Cloud Computing shifted everything and 1 of the pioneers for it was sforce. CRM used to be connected to s but it has now gone to Marketing, Finance and Accounting, Project Management, Business Intelligence and Data Analysis, HR, etc. All those tools are now open source and open access where 1 thing is integrated to the other. Taking your music platform for example, Saavn, Gaana, etc are still apps while Spotify, Deezer, etc are platforms as they not only have apps developed on them but have also integrated to 3rd party music apps and podcast apps (Scher Radio is owned by 1 of them - find out if like). sforce is the world's best CRM tool that is also amongst the leaders for Marketing Automation. THINGS HAVE GONE TOWARDS AUTOMATION and INTEGRATION (where is INDIA-still way behind as THAT BLOG WOULD SHOW where FLIPKART and SNAPDEAL TOO are recruiting FOREIGNERS FOR THE JOB, NOT INDIANS WITHIN THE COUNTRY as THEY DON'T HAVE THE SKILLS). Marketing Automation is the next stage where the automation is at a higher level compared to the CRM world and the present leader for that is Hubspot even though sforce is a leader too. Hubspot is also a leader within the CRM world and in fact, Hubspot and sforce can be integrated. Heard of Internet of Things? Where is India? Still way behind. Even if you look at startupranking, most would be from US, not India. US also has more unicorns than India (Unicorn isn't about the mythology though it is connected to it). India is still way behind even for education. Not 1 university in the world within the top 150 which is why NOT just the rich Indians but also the middle cl Indians head abroad - NOT just to US but also to Singapore, Australia, UK, etc as Singapore, HK, mainland China, Taiwan, South Korea, an have universities in the world top 150 (which helps kids too). Also, People would say India has made contributions a lot. Reality is it is nothing compared to China too including where China had 450 years of Golden Age compared to India's 200 years-can read all these points and more mentioned here under the BELOW LINK-statistics provided not just by world authorities but also by INDIAN ones-India is a leader for corruption (ranked 85th in the world), the leader in the world for pollution, AIDS since 1996, suicides, poverty and so on. It is 1 of the worst in the world when it comes to Infrastructure, Internet speed which includes the mobile broadband and so on. It also is way behind China when it comes to both Science and Innovations (Kuwait, Jordan and some of the African nations beats India for innovations and Innovations isn't same as Inventions, Discoveries and Creativity). India is also way behind when it comes to Education and Research also (Kenya beats India for research and Infrastructure too)(And don't group Non Residential Indians in same category for education and work experience INCLUDING leaders of top firms today as many have educational qualifications, professional certifications and work experience from abroad where people FOLLOW RULES too unlike India). India maybe ahead of China % wise but in absolute numbers, it is way behind; in fact India is about 3 decades behind China. Lastly, productsofgreatindia.blogspot/2015/10/indian-products-infrastructure-telecom would show the blog post which has some of the statistics that India would need to improve on including the health, environment, safety, educational and other sides which are all given at the bottom of the site while top side of the site would provide India's flaws in Infrastructure, Internet and others too (poverty and low income statistics also provided).

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