Software can impact and make India key innovation hubs of the new world

C.K. Prahalad, Professor from Ross School of Business, Univ. of Michigan reiterates that Software is chaging and can change a lot more sectors for India, if the vibrant energy is properly tapped . In his keynote speach at Software2006, Prahalad explains how the High Technology echo system like Software can combine with other sectors like Automobiles, Pharma to create a whole new platform of advantage for India to grow. Key excerpts from his key note address:

  • One key excerpt from his presentation is how Indian IT industry transformed over the last decade to differentiate with Innovation rather than pure cost advantage.

    • Cost ( 1980 - 1990)

    • Cost + Quality (1990 - 1995)

    • Cost + Quality + Technology (1995 -2000)

    • Cost + Quality + Technology + Innovation ( > 2000)

  • The world is recognising India as its key INNOVATION center with a wealth of skilled and knowledge professionals rather than just a low cost IT production center or outsourcing partners. This is very important differentiator for India, particularly interesting in the wake of the new low-cost-IT facilities being opened in the rest of the world. If you see the number of employees in India-owned IT Companies and other multinationals like IBM, INTEL, MICROSOFT, the difference is quite striking and convincing the argument. As per estimates in year 2005, MNCs employ more Indian professionals than Indian companies.

    • Indian Companies - 295,000

      • Indian IT Companies - 190,000

      • Indian BPO - 105,000

    • MNCs - 350,000

      • Tech Companies - 60,000

      • MNC IT Companies - 80,000

      • MNC BPO - 210,000

  • Indian IT is no longer confined to just the top 5-10 companies which are known more for evangelising the outsourcing, professionals-on-hire, labs-on-hire concepts. As per NASSCOM estimates, there are about 3000 Indian companies/startups who are differentiating India as a key Innovation hub, have revenues less than $25Million, hinting the surge of Entrepreneurial ventures by ambitious Indian professionals and business people alike.

The presentation also highlights a few interesting facts about Indian Auto industry and how software/IT advantage can bring innovation and capture one of the largest markets. Very interesting and striking features of Indian Auto industry have been presented; the gap between a motor cycle that costs around $1000 and a car that costs about $6000. A $3000 car is going to be a killer for India. And the same or similar car that costs $6000 in India  costs around $20000 in US. Can this huge cost barrier turn American Auto to look for innovation and electronic and embedded component manufacturing in India? Big question but a definite opportunity.

It is pretty clear that Software or IT industry not only brought so much vibrancy in the Indian markets and fuelling aspirations of Indian middle class, it has also changed and can impact literally every aspect of common Indian life.

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