The New Indian Economy: Can Clicks Build Bricks?: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?

articleid=289)

The New Indian Economy: Can Clicks Build Bricks?

Published : December 20, 2000 in Knowledge@Wharton

The success of information technology darlings such as Infosys, WIPRO and Satyam This is a
single/personal use
Infoway has put the Indian subcontinent squarely on the technology map. Companies in copy of
Knowledge@Wharton.
the West continue to outsource their IT needs to the world’s largest democracy, and For multiple copies,
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Indian expatriates have taken Silicon Valley by storm. But in the end, all the software on e-prints, posters or
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earth can’t draw water from a village well and pave dirt roads…or can it? Speakers at this contact PARS
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were guardedly optimistic about the Indian economy’s ability to ride the IT industry’s x407.

coat-tails. They cautioned, however, that India shouldn’t let these achievements go to its
head.
"Why is a country that has such a strong knowledge advantage lagging behind others in overall economic
development?" That was the question posed by opening keynote speaker B.K. Syngal, chairman of
Reliance Telecom and former chairman and managing director of Videsh Sanchar Nigam Limited
(VSNL), India’s leading provider of international telecommunications services. Widely regarded as the
father of Internet and data services in India, Syngal acknowledged the strides taken thus far but pointedly
reminded the audience that the journey has hardly ended.
"While Indians the world over are recognized for the central role they are playing in the IT revolution,
most Indians do not even have uninterrupted power supply," he said. "I think that we are patting ourselves
on the back too soon for our contribution to the IT industry. I think our progress in IT is driven more by
its endorsement by the stock market than by the real and distributed value it has created."
Syngal deplored the lack of branding and marketing initiatives, the large debt burden and the bureaucratic
obstacles to growth in India. "We all understand reform, we all understand liberalization -- but what we
need here is discipline," he said, citing the licensing and regulatory nightmares faced by potential
international investors. Syngal likened the task of changing attitudes in India to the scaling of Mount
Everest, and urged the audience to rise to the challenge: "It is only when we reach the top that the feeling
of exhilaration is unparalleled. I think we are about there, a few hundred feet away from the summit," he
said.

Keeping Dreams Afloat

Taking its cue from Syngal’s broad-brush painting of the Indian technology landscape, a panel titled
"Challenges of Entrepreneurship" emphasized the need for a spirit of risk-taking and initiative both in
India and abroad. The panel included Surya Panditi, CEO of Avici Systems; Jagdeep Singh, co-founder
of Onfiber.com; and Vijay Thadani, CEO of NIIT Limited.
Panditi stressed the need to find the right people when building a company. He used the acronym
"MORE" (Money, Opportunity, Respect, Experience) to describe the different priorities that employees
may have, and said that he tries during the hiring process to find out which of these four is most important
to people. Panditi also said that external relationships with consultants, public relations specialists, and so
forth were equally key to a firm’s success. One of the companies Avici contracts with is Infosys, which he
mentioned as an example of a "great relationship, leveraging outside capabilities."
Entrepreneurship, said NIIT’s Thadani, is also about marrying passion and process with a good dose of
perseverance. The steps to NIIT’s success, he said, included inspiration (the concept); aspiration (people’s
goals); respiration (financing and later, process reliability); and perspiration (delivering value to the
customer). "‘What is your exit strategy?’ is a question commonly asked. I find that painful," said Thadani.

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The New Indian Economy: Can Clicks Build Bricks?: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=289)

"You need as much passion [in entrepreneurship] as you would in raising a child. Do you ask, when
raising a child, ‘What’s my exit strategy going to be?’ If you start with that, it’s not entrepreneurship – it’s
opportunism."
Jagdeep Singh echoed Thadani’s advice, but warned potential startup dreamers to pick an important
business problem right from the outset: "Technologies are not problems. It’s easy to get on the latest
bandwagon – but major fads have ended up not producing the kind of economic results you’d think they
would." Singh proceeded to advise entrepreneurs to build a world-class team of people and figure out if
there are real structural barriers to entry for the business. "It’s not enough to say ‘first-mover advantage’
or ‘patent/intellectual protection,’" he said.

Bridging the Digital Divide

If an entrepreneurial spirit – combined with the recognition that technology cannot march ahead without
bringing up the rear -- is to bring India into the New Economy, then how best can companies go about
fostering it?
Sanjay Bhatnagar, CEO of Enron South Asia, described his company’s foray into the Indian market as a
layering process. Projects such as the Dabhol power plant and other asset development work came first,
followed by a new world-class Internet data center, scheduled to be complete by next year. "Two things
hold projects back," said Bhatnagar. "One is enabling legislation; the second is administrative and
bureaucratic hurdles. The power sector is now about 80% enabled; but it’s still a problem in the telecom
industry. Foreign direct investment is still limited to 40% in some areas."
Radha Basu, CEO of Support.com, described a world where many services could be provided from India
through the Internet. Her company helps computers "heal themselves" with virtual diagnostic and
treatment tools. With the "e-support" model, it doesn’t matter where the support comes from. Basu
predicted that a quantum leap could occur for India when personal and broadband wireless access
becomes widely available in urban and rural areas.
Bhatnagar agreed in theory, but cautioned that there are big practical issues that firms face. "True, there is
no legacy infrastructure problem in India. But for the private sector to succeed, you need a market. You
have to finance the technology and be realistic: Who’s going to use what you’re building, and who’s going
to pay for it? The ability of consumers to consume all that bandwidth takes time."
Perhaps the most encouraging sign of technology’s ability to move all economic levels forward
simultaneously came at the end of the conference, in the closing keynote discussion. B. Ramalinga Raju,
chairman of Satyam Computer Services, and F.C. Kohli, vice chairman of Tata Consultancy Services,
gave conference attendees some parting thoughts about the digital divide.
"If the past ten years have been a decade of IT services from India, then I think the next ten years will be
a decade of virtual services coming here," said Raju. "The contribution of technology can be incremental
in the case of well-to-do people who have access to it, but in the case of those less fortunate, the
application of technology can bring about differences of orders of magnitude. Where a state once could
hope to eliminate literacy in 30 to 40 years, the same state is now talking about doing it in a matter of five
years, using the television cable network and innovative set-top boxes."
Kohli offered a concrete result of this technology at work: "In Andhra Pradesh, and perhaps soon in Tamil
Nadu and Madhya Pradesh, we are doing an experiment. We had 25 illiterate adults, between ages 25 and
35, learning in this way. The lessons were totally computerized. After 10 weeks, they could read the
newspaper."
"Of course we want to export, and build up hardware," he added. "And to train more students. But finally
– what matters is how we use technology to touch people."

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