How Local is Global?

Posted: June 6, 2010 by Ananth in Business Models, Outsourcing, Strategy
Tags: , , , ,

Much has been discussed and said about having a local market to spawn innovation. Industry has also said that it is exceedingly difficult for Indian companies to think, ideate, and create a globally fitting solution (and I focus my discussion here to the IT sector). The argument that industry uses is something like – you must innovate only for a local market and in this context, all innovation must be focussed on the Indian market only. We cannot compete with global players!

If the market argument were true, and “global players” HAD adopted the same mantra, then I guess the world would only be a local space! Why is it that a Microsoft, SAP, Oracle, etc, seem to find “global” markets with such systematic impunity, whereas the Indian IT industry, touted as the world’s largest IT workforce, does not seem to find a foot hold in that very space?

The next view that is doled out by the Indian IT Industry is – we don’t have PhD’s; our education system is wanting etc etc. Larry Ellison from Oracle was a college drop out. Bill Gates was a drop out. I can checker this blog with many such examples. Spawning innovation is NOT about having a degree or many 3 letter acronyms behind your name (MBA, CPA, CFA, etc etc). It is about providing an environment to spawn creativity.

Markets today are local. The world is flat. Customers are a TV screen away. And no matter where or what, customers always WANT a good product that helps them. It does not matter where that product was born. It does not matter who designed it. All that matters is how good your product is and whether it helps a business cause. And to top it all, the Indian market itself is a huge customer base – and has been so always! So the argument that innovation can happen only when there is a local market also took a beating. It is simply a fact that the Indian IT industry was too busy making money by scaling the workforce and capitalising the multiplier effect, rather than pausing for a moment to chalk out a future strategy – a strategy to reframe its business model and its operating model. That did not happen and we are today trying to run a 100 metre race with accelerators and jet engines – in an attempt to play catch-up with those countries that did it right.

The Indian IT industry seems to be going through some kind of a fixed mind-set  – and this is NOT entirely their own creation. The west has always said – you guys are very good as low-cost substitutes; you guys help us reduce costs, and we will help you make lots of money. The West has therefore created a environment and culture that promotes creativity, innovation, and has government policy, and financing policy tuned towards this. So the west creates, we execute. The India IT industry then went about cloning this model and soon became the world’s largest low-cost technology resource base! Yes, this was an innovation by itself in services delivery. But 2 decades down the line, and we still continue to repeat the same business model – little realising that the world is now seeking newer value propositions from its vendors. I am sure the Indian IT industry is more than aware that execution capability, by its very nature, can be delegated. And the more mature the execution becomes, the more easy is it to find substitutes for execution at lower costs. Enter competition for India from Eastern Europe, South America, Philippines, China etc.

I am not propagating the fall of the IT Services sector – rather, I am looking at how is it that the Indian IT industry can re-design, re-work, and re-articulate it’s value proposition. Innovate OFFERINGS – not just products or services. Indian supremacy today is in its vast technically capable force. And learning technical capability is fairly easy when compared  to more right-brained concepts such as creativity, ideation, etc. And I simply do not subscribe to the view that the Indian mind is not creative. In the Telecom space, we would have been a world leader IF we had given Sam Pitroda the environment to innovate and flourish. But alas, that was not to happen, and we threw away the opportunity to the Chinese. (I am glad that the Indian Government has now sought the services of Sam Pitroda to explore, lead, and encourage innovation in the Indian industry).

Which end of the paradigm must India be in? Think about it and do pen your thoughts in the comments section of this blog.

  • Built to Last
  • Built to Flip
  • Built to Thrive.

The world is accelerating change, innovation is the only insurance against irrelevance…Gary Hamel

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