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Why the argument that India scores only on price and not on innovation does not hold water

Why the argument that India scores only on price and not on innovation does not hold water

Naysayers & Other People

Jay Mathews is one of the most respected journalists in his field and some of his work for the Washington Post has been quite ground breaking. He is someone you can safely bet on while trying to get facts straight. So imagine my surprise when I came across a CNBC telecast where Jay goes on a tirade against Indian and Chinese education systems despite being presented hard evidence to the contrary by Bob Compton, executive producer of the acclaimed documentary Two Million Minutes. Jay comes across as a naysayer on countries which he had very little firsthand experience about. But then again, Jay Mathews isn’t alone in downplaying countries like India. There is unfortunately a feeling that India’s USP lies only in the price tag; that innovation is largely absent and all that Indian Remote Staffing organizations are good for is “donkey coding”. Despite mounting proof to the contrary and the technological prowess the country has achieved, many businesses look elsewhere when it comes to outsourcing truly challenging, highly specialized and ground breaking work. Many try to hire locally, which is always a great option except that locally in the US or EU, talent comes at a premium, if at all. It often takes companies months, if not a year or two to fill a highly specialized job profile locally. Startups and smaller organizations, with lesser monetary clout often end up lowering expectations and hire less experienced people who are more within their budget. Result? Unnecessary delays, cost overruns and heartbreaks.

It must be said though that a lot of the criticism that a country like India faces in terms of innovation capability is “generated” and not “organic”. So who does this and why?

We must understand that outsourcing is a multi-billion dollar business. There are basically two serious competitors for all businesses originating in US, UK, EU and Australia- India and Philippines. For a country like India, which leads the way in IT outsourcing, the total value of outsourcing works out to be around 1% of its GDP. For Philippines though, that figure is close to 10% and increasing. So while absence of outsourcing is going to spell trouble for India and render millions jobless, for a country like Philippines, it would mean a complete collapse of the economy and plunge the country into the kind of economic crisis it faced following the 1997 global melt down of markets. The outsourcing pie is big and the competition is fierce and not always a clean one.

Necessity is the mother of innovation

India has more than 1.3 billion people! 1.3 billion! That means three times the US population is crammed into a space which is almost a third of the land area. That means a lot of things that we take for granted in developed economies like the US and Canada simply won’t work in a place like India. Western inventions, you see, often simply do not fit in India, quite literally! With the priciest land on the planet and one of the biggest populations, the city of Mumbai fails to ensure proper housing to most of its inhabitants within the city precincts. Result, huge and sprawling informal housing colonies which we know as slums. And the average household in such a slum would give a traditional Japanese household the run for its money in terms of space utilization! So obviously, a 230 liters refrigerator is pretty much out of the question in such a house. Enter the Chotukool Refrigerator visualized and manufactured by Godrej, an Indian manufacturer, which replaces the traditional bulky compressor with a computer fan for cooling the much smaller refrigerator (comes up to your knees). An elegant and a simple solution, something that could have never been achieved if the thinking had remained linear.

Frugal innovation, or disruptive innovation is basically innovation born out of ground realities. Now there are quite a few scholarly definitions of Frugal or Disruptive innovation, but in keeping with the very spirit of the endeavor, here is my own. Western ideas, which are elegant, grand and often expensive are stripped of everything but the absolute bare necessity and then are wrapped up in a cheap plastic cover. It’s not very pretty (I can paint it in some nice color if you like, but that’s about it), but does the job all right. In India, where it is a way of life, it is called jugaad!

The spirit of jugaad is in the DNA of every Indian. If you land up suddenly in rural India, you will see examples of jugaad or Frugal innovation all around you. You will have manually powered carts become light pickup trucks by adding a 100CC bike engine to it. You will see children selling corn by the side of the highway where they use a bicycle to power the tool to remove kernels from the cob. Pretty? Nopes! Does the job? Like a breeze! This very spirit has allowed modern inventions to be further innovated to make them inexpensive and accessible to the poorest of the poor. A perfect example of this is the Jaipur Leg, in which innovators have used inexpensive materials like irrigation piping to make modern prosthetics both cheaper and more durable. As a result, thousands of victims of the Afghanistan and Iraq War are today able to walk again. So successful is the Jaipur Foot as a prosthetic that even commercially it is often preferred to the fancier and more expensive variants due to the range of movement and comfort it offers. People have been known to resume dancing and acting careers after getting fitted with the Jaipur Foot. Sudha Chandran, the renowned Indian classical dancer and acclaimed Bollywood and television actor is living proof of the effectiveness of the Jaipur Leg.

Mainstreaming the fringe

Globally, organizations have woken up to the fact that most of the time, it is not about bringing out the next niche` product, but trying to bring the niche` within range of the largest possible audience. In IT, innovation is often unseen and unfelt. The average consumer won’t know or feel the difference between two versions of android, they do however feel the benefits of increased storage, screen size and improved touch. A lot of that unseen innovation happens in India, unbeknownst to many globally. Don’t believe it? Here are some numbers.

  1. India is the IT/ITeS hub for about 125 of the Fortune 500 companies (Zinov report 2013)
  2. More than 50 per cent of the Fortune 500 companies have their centers in India, with the region of India’s capital New Delhi alone accounting for more than 250. In terms of importance as an IT hub, New Delhi is not even the 1st in India. The cities of Bangalore and Hyderabad rank ahead by some distance.
  3. According to a NASSCOM report, 27% of global delivery centers were established in India in 2014.
  4. According to India Brand Equity Foundation report, India captures about a quarter of the global engineering R&D outsourcing market which makes it the largest player in this domain.
  5. 750+ multinational corporations have R & D centers in India, employing 400,000 professionals
  6. The overall addressable R&D globalization and services opportunity stood at $170 billion as of 2014, of which only $55 billion was being addressed globally. India’s share of the addressed market stood at 33% with in-house R&D centers contributing $11.3 billion worth of services to their parent companies.

One of the greatest assets Indian innovation offers to Western multinationals is by being the silent partner in their journeys. Silence though is also the biggest curse for Indian innovation. Nobody comes to know how much of a product that gets the world go “wow!” was actually developed in India, by Indian innovators, people who probably ensured that the product remained within budget through practical hacks and innovation, and hence accessible to the larger audience. Yes, no R&D center in India looks like Apple’s futuristic saucer in Cupertino. Indian innovators work in plain brick structures, unremarkable, but sufficient; ideas are painted on a distant horizon, blurred by the haze of smog, while standing on the roof of the office building, sipping masala tea, with an extra kick of sugar!

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