Financial Express - Delhi
23 col cm)
Can we get an Indian Huawei?
India needs to move towards full-fledged product development in order to be a dominant player in the ICT arena
tive companies of 2011 are in the ICT do-
main, reports a US based magazine Fast
Company. Not surprisingly, all of these
are product companies. While India Is
the largest exporter of ICT services, gen-
erating revenue of $76 billion from the
IT sector, but products contribute to less
than2%. India's contribution to technol-
ogy innovation is negligible.
The product companies witness non-
linear growth (not proportionate to the
head count)—the revenue per employee
or profit per employee of Google or Mi-
crosoft is over 20 times that of India's top
services companies. Also, these technol-
ogy giants serve as a beacon and are the
undisputed trendsetters on the world
technology road map.
Chinese companies such as Huawei
and ZTE are the world's leading telecom
equipment providers. A report states
that 45 of the world's top 50 telecom com-
panies use Huawei products. What more
recognition Is needed? These compa-
nies have full backing from the Chinese
government and the government also
supports R&D initiatives—for example,
the TD-SCDMA technology that com-
petes with the global wireless 3G stan-
dards. Is there an Indian company that
can compete with Huawei/ZTE? India
has lagged behind China and Taiwan in
the capital-intensive electronics hard-
ware manufacturing industry also. But
the recent policy push from the depart-
ment of IT to encourage semiconductor
wafer fabrication, electronics and tele-
com product manufacturing is a wel-
come move. Also, Trai recently made a
recommendation for promoting domes-
tic manufacturing of telecom products.
The loss-making PSU Indian Tele-
Thursday, 26 May 2011 Page# :8 Size : 410.55 sq.cm. (91.
phone Industries, once the flagship tele- enue models could fuel IT product adop- There are 38 incubation centres across
com switch and telephone maker in the tion in future. the country aimed at encouraging prod-
country, failed miserably during the BERD (business expenditure on uct development initiatives. India has
telecom boom due to lack of vision from R&D) and patents/IP management are seen 30% CAGR in start-ups over the
the government. But the case is different key indicatorsof acountry'stechnology past 10 years. The product market in In-
with ISRO, whose success could be at- Innovation capability An EU commis- dia is expected to touch over $15 billion
tributed to the autonomy it enjoys. An- sion report on ICT2011 Indicates that In- by 2015. The government's plan to invest
other example of a tech-sawy initiative dia lags behind China and other emerg- ^25,000 crorefor setting up semiconduc-
is the UID programme Aadhar, which, ing economies in terms of BERD/GDP torfabs willprovidean impetus for hard-
though far from flilly implemented, has While China has seen a 10-fold increase ware-oriented product development.
proved that India can implement large- in the number of patent applications The government can play a key role in
scale technological projects. over the past decade, India's contribu- helping start-ups and other companies
Although the domestic demand for IT tion is insignificant. Generating IPs and engaged in software or hardware prod-
products is increasing, most Indian protecting them is just one part of the uct development. There are many exam-
product companies are yet story. Realising value from ples of how government intervention
to penetrate the market. the IP is a different ball hasyielded good results. Taxbenefitsfor
The only exception is the game. Appropriateness of software export revolutionised IT in-
banking software industry the solution is the key. dustry in India. Israel supported compa-
where India has emerged It must be said that Indi- nies working on networking technolo-
as a leader in core banking an education system lacks gies that helped Israel take a leading
solutions offered by Infos- an environment that fos- position in security Taiwan supported
ys and Oracle-India. Yet In- ters active partnerships electronic hardware that resulted in the
fosys's products business
generates only about 5% of
the overall revenue. In gen-
k
KRISHNA
between industry and uni-
versities. In the advanced
countries, research in uni-
emergence of the original design manu-
facturer market.
India has been a 'follower' in the ICT
eral, Indian companies are
risk averse and prefer to _
KUMAR ority versities is given high pri-
and is supported by
space and its product development capa-
bility has been patchy It needs to move
enjoy the safety of services industry in the form of towards full-fledged product develop-
business, hence have not been able to grants. As per the recent Anil Kakodkar ment in order to be a dominant player in
succeed in creating product offerings. Committee report, India lags way be- the ICT arena. India's domestic market
But some Indian IT companies are hind China in terms of university re- by itself will offer sizeable opportuni-
successful in the outsourced product de- search in engineering and technology ties. However, for made-in-India to be a
velopment (OPD) model, a pseudo own- The report also emphasises the need for reality, it is imperative that the govern-
ership model, wherein the independent improvement needed in research infra- ment aggressively drives a clear read
software vendors (ISVs) are involved in structure. An OECD report indicates map for technology innovation, encour-
end-to-end product development for the that India has less than one researcher ages product initiatives, supports hard-
customer but the ISV does not 'own' the per thousand employed, much below the ware and semiconductor industry and,
product. Cloud computing can be a cost- global average. most importantly, inculcates 'product
effective and disruptive technology for Availability of risk capital is a key culture' right at the universities.
further growth in OPD and pure-play constraint for product companies to
product development companies. Nass- flourish but Nasscom sees an improving The author is director, engineering,
com indicates that delivery model inno- trend. Venture capital/angel investor Teleca Software Solutions India.
vations such as SaaS and innovative rev- ecosystem has improved significantly These are his personal views