Volume 13 Number 3
'India's Chance to Lead the World'
01 June 2000

Michael Smith reports on India's information technology revolution which has turned the nation into a 'software superpower':

Two mighty rivers flow through India: the spiritual and the technological. They converge in Bangalore. Here one can visit the gleaming International Tech 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 and one's own inner well-being. NV Raghu Ram, international coordinator 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 said at a recent business ethics seminar in Bangalore.

And creativity there is in plenty.

Bangalore is popularly known as India's Silicon Plateau. Cybercafés have sprung up all over the city--as well as over 10,000 nationwide. The IT Park, comprising three huge tower blocks named Innovator, Creator and Discoverer, and a second Electronics 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. Infosys made a profit last year of $67 million. When Wipro's shares rocketed on the Nasdaq market last February, the company was valued at $62 billion. Wipro's founder, Azim Premji, suddenly found himself fêted as the world's third richest man. But Premji still lives in a modest apartment and drives a small Ford Escort.

Some 250 hi-tech companies are located in Bangalore. The IT Park, built and owned by a consortium of Singapore businesses as well as Tatas and the state government of Karnataka, was officially opened by Singapore's Prime Minister in January. It 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 Dr Udo Urbanek, Co-Director of the German-owned SAP Labs, which occupies three floors of Discoverer. SAP is the world's leading developer of business software for enterprise resource planning, with half of the Fortune 500 companies among its clients. It claims 54 per cent of India's market share and employs 280 Indian engineers in Bangalore. The company chose India as a software development centre, says Urbanek, because Indian IT engineers 'are the best people on Earth. People here are very focussed on their careers and self-development'. This is the reason for India's world-beating success, he believes.

Another is the nation's reputation for excellence in science and mathematics. School children learn their times tables up to 30; the Indian Institutes of Technology are world renowned, churning out 120,000 engineering graduates a year; and the nation has over 3,000 computer training institutes.

India's software whiz-kids won world-wide acclaim in rectifying the millennium computer bug. They are less prone to mistakes than their Western counterparts, especially in writing long and complicated software programmes. And they take advantage of the 24 hour clock: while European and American multinationals sleep, Indian experts fix their software glitches overnight. 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. Recently, Chancellor Gerhard Schröder appealed for up to 30,000 IT engineers to come from India to bridge Germany's skills shortage.

Indian politicians are also eager to back the IT revolution. The central government gives IT companies tax breaks and February's budget slashed import duties on computer hardware and software, from motherboards to CD-ROMs. 'India's ruling Bharatiya Janata Party... 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 last year, and are heading for $5.7 billion this year. Studies suggest they could eventually reach $50 billion, or a third of India's entire exports. In the domestic market, computer sales are forecast to increase by 65 per cent this year, while India's net surfers are expected to grow from two million to some 70 million over the next three years.

The great rivalry now is 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, is known as the Chief Executive because of his businesslike approach. He returned from the World Economic Forum in Davos enthusing about his conversations with Bill Gates, designed to sell his state as India's up and coming IT centre. Naidu 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.'

This is one reason why President Clinton, on his state visit to India last March, visited Hyderabad rather than Bangalore. The information revolution has brought the two IT superpowers, the USA and India, much closer since the years of the Cold War when Pakistan was America's ally and India sided more with the Soviet Union.

Since Clinton took office in 1993, coinciding with India's economic liberalization, the US has invested nearly $5 billion in India, particularly in energy and manufacturing. Bilateral trade last year 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. It is here that the IT revolution has still to make its biggest impact. While IT has made some middle class Indians extremely wealthy, the real issue facing India is the yawning gap between rich and poor. The nation's population officially topped one billion this May, 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. James Wolfensohn, head of the World Bank, talks about the world's 'digital divide'. 'For the poor, the promise of the new information age can seem as remote as a distant star,' he warns.

Nonetheless, in remote Indian villages it comes as a surprise to see huge satellite dishes mounted on whitewashed walls, receiving international TV programmes on communal television sets. Now Naidu wants to wire up the 50,000 villages of his state to the internet and e-mail. He sees this as a tool which 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 has 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 will be around $100 billion. Bill Gates' as well as Indian software will help too: Windows 2000, launched in February, 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.'

The Chief Minister of Karnataka State, SM Krishna, wants to follow Naidu's example, and five other Indian states have also appointed IT Secretaries to attract investment. Mumbai in Maharashtra is now 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 lines. Also crucial is the mindset and motivation of the IT entrepreneurs and businessmen themselves, and how they will invest their new-found 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'.
Michael Smith