BEYOND THE BOTTOM LINE
Bridging the Digital and Poverty Divides
12 August 2003
India's information technology revolution has turned the nation into a 'software superpower'. Can it help to bridge the rich-poor gap?Two mighty rivers flow through India: the spiritual and the technological. They converge in Bangalore. Here one can visit the gleaming International Technology Park, 18km outside the city, or take part in 'deep relaxation therapy' at a Swami Vivekananda Yoga Health Centre.
Yoga, increasingly popular in the West, is a Sanskrit word meaning yoking or union--with God or one's own inner well-being. N V Raghu Ram, international co-ordinator of the yoga centre, has trained staff from over 3,000 companies in stress management. 'Your peace of mind is the abode of creativity,' he told a business ethics seminar in Bangalore in February 2000.
Creativity there is in plenty. Bangalore is popularly known as India's Silicon Plateau. The IT Park, comprising three huge tower blocks named Innovator, Creator and Discoverer, and a second 'electronic city' complex represent the leading edge of India's information technology revolution. They have helped turn the nation into a 'software superpower', in the words of Bill Gates of Microsoft.
Leading software companies, such as Infosys and Wipro Technologies, are among India's wealthiest private sector concerns, overtaking traditional heavy industries. When Wipro's shares rocketed on the Nasdaq market in February 2000, the company was valued at $62 billion, and Wipro's founder, Azim Premji, suddenly found himself fÃªted as the world's third richest man. But soon after, the IT stock bubble burst and market valuations crashed. Despite his wealth, Premji continued to live in a modest apartment and drove a small Ford Escort1.
Some 250 hi-tech companies are located in Bangalore. The IT Park is owned by a consortium of Singapore businesses, Tatas and the state government of Karnataka. It was opened by Singapore's Prime Minister in January 2000, but had already been running for two years and houses some 60 of the world's leading Indian and international software companies.
'This is India's chance to lead the world,' says Udo Urbanek, Co-Director of Germany's SAP Labs, which occupies three floors of Discoverer. SAP is the world's leading developer of business software for enterprise resource planning. Its software helps major Western car companies, for instance, to coordinate everything from stock control to cash flow and customers' on-line specification for their ideal models. Among its clients SAP claims half of the Fortune 500 companies and 54 per cent of India's market share.
In Bangalore it employs 280 Indian engineers. The company chose India as a software development centre, says Dr Urbanek, because Indian IT engineers 'are the best people on Earth. People here are very focused on their careers and self-development.' This is the reason for India's world-beating success, he believes. Moreover, the incomes that young software engineers earn benefit whole families and communities--and have turned such IT wizards into eligible bachelors. SAP Labs has become a marriage bureau, quips SAP co-director Clas Neuman.
India has long held a reputation for excellence in science and mathematics. School children learn their times tables up to 30. India's Institutes of Technology are world renowned, churning out 120,000 engineering graduates a year. They are said to be less prone to mistakes than their Western counterparts in writing long and complicated software programmes. A third of Bill Gates' employees are of Indian origin and up to 50,000 Indian technicians make their way to Silicon Valley each year. In 2000 Chancellor Gerhard SchrÃ¶der appealed to India to send up to 30,000 IT engineers to bridge Germany's skills shortage.
'India's ruling Bharatiya Janata Partyâ€¦ has made information technology the cornerstone of its political agenda of generating high economic growth while surrendering little sovereignty to multinationals,' wrote Business Week. It all adds up: software exports were nearly $3 billion in 1999, and forecasts suggest they could eventually reach $50 billion, or a third of India's entire exports. In the domestic market, India's web surfers are expected to grow from two million in 2000 to some 70 million by 2003.
The information revolution has brought the two software superpowers, the USA and India, much closer together since the years of the Cold War when Pakistan was America's ally and India sided more with the Soviet Union. Since 1993, at the beginning of India's economic liberalization, the US has invested nearly $5 billion in India, particularly in energy and manufacturing. Bilateral trade in 1999 totalled $13 billion. The World Bank rates India as the world's fourth largest economy in terms of purchasing power, and advises potential investors to bypass the central government bureaucracy in favour of a direct approach to state governments. Yet India's share of world trade remains less than one per cent, and the nation still relies heavily on its vast internal market.
A friendly rivalry has grown between India's two main centres of IT excellence: Bangalore, the state capital of Karnataka, and Hyderabad, the capital of Andhra Pradesh. Andhra's Chief Minister, Chandrababu Naidu, known as the Chief Executive for his businesslike approach, talks about Andhra becoming India's SMART state--'simple, moral, accountable, responsive and transparent'. 'What does Naidu have that others don't? Basically vision,' editorialized The Indian Express. 'From privatizing power, to setting up software development centres to sponsoring conferences for investors, the Andhra Chief Minister has been promoting his state with unmatched zeal.'
While IT has made some middle class Indians extremely wealthy, the real issue is the yawning gap between rich and poor. The nation's population reached one billion in May 2000, but 300 million live in absolute poverty. And while cell phones are commonplace in the cities, millions in the villages, where 80 per cent of the population live, have never used a telephone, let alone handled a computer, e-mail or the Internet.
'For the poor, the promise of the new information age can seem as remote as a distant star,' warns James Wolfensohn, head of the World Bank, while UN Secretary General Kofi Annan told the 2001 World Economic Forum in Davos that half the world's population have never made a phone call. They live on less than $2 a day, and while the world's population is expected to grow from six to eight billion in the next 20 years, poverty is 'not just a moral and social issue but really a problem of peace,' he told the 3,000 business executives and politicians gathered in Davos. The Indian author and journalist Rajmohan Gandhi, a grandson of Mahatma Gandhi, also warns that the disparities of globalization have the potential for violence. 'The violence that is possible will not be avoided by the worship of money,' he told an international business audience in Caux, Switzerland, in 2000. 'But it may perhaps be avoided by a commitment to the needs of all, a commitment that has room for creativity and innovation.'
In a world of interconnectedness, it still comes as a surprise to see huge satellite dishes mounted on whitewashed walls in remote Indian villages, receiving international TV programmes on communal television sets. Chief Minister Naidu is now wiring up the 50,000 villages of his state to the internet and e-mail. He sees this as a tool that could help to tackle illiteracy, give health, agricultural and other educational information, and market produce. 'It can be achieved only when the mindset is changed,' he says. The London-based company WorldTel signed agreements with Naidu, and several other Indian states, to set up internet community centres in every district, using fibre optic cable. The investment in Andhra Pradesh alone is around $100 billion. Bill Gates' as well as Indian software helps too: Windows 2000 supports several Indian languages. 'Even before they have adequate roads, water supplies, or schools, many remote villages in India are getting connected,' reports Business Week. 'From craftspeople to dairy farmers, rural Indians are starting to turn to the Net to sell goods and monitor prices.'
Dewang Mehta, President of India's National Association of Software and Service Companies, relates the experience of a 40-year-old designer, Manchabem, living in a village in the western state of Gujarat. She received the help of India's National Institute of Fashion Technology to put her designs on a website. An international tie store spotted them and placed an order for 5,000 ties. Now she can afford to build herself a house and has plans for a village school. 'This is an example of e-commerce penetrating into the rural community,' Mehta commented. 'This woman had never seen a tie before. It has changed her life.'
Can this be more than an isolated case? The Chief Minister of Karnataka State, S M Krishna, wants to follow Naidu's example, and five other Indian states have also appointed IT Secretaries to attract investment. Mumbai in Maharashtra is building an IT park to rival and even surpass Bangalore's, while Chennai in Tamil Nadu and Trivandrum in Kerala are opening similar complexes. It is a bold vision if India's IT revolution can be harnessed to tackle chronic poverty by empowering people at the grassroots level.
'I am optimistic about India's future,' says Dileep Padgaonkar, Executive Managing Editor of The Times of India. 'The time needed between the invention of new technologies and their application to mature is getting shorter and shorter.' But much will depend on improving the nation's infrastructure, including investment in power supplies, which too easily crash in the big cities, as well as telephone connections. Also crucial is the mindset and motivation of the IT entrepreneurs and businessmen themselves, and how they will invest their new wealth.
'Wealth is not only profit,' says Bombay journalist Russi Lala, author of a best selling book on the House of Tata. 'It comes from the old English word weal, which means well-being, happiness, prosperity.' Or as businessman Santosh Nedungadi commented at the business ethics conference in Bangalore, 'People and our dealings with them are of prime importance. The nation is our stakeholder'.
1. Azim Premji was voted India's Businessman of the Year in 2000.
Updated from an article first published in For A Change magazine, June-July 2000