The Curse of India
Recently Mr. Narayana Murthy, ex-CEO and co-founder of Infosys, lamented the fact that India has not produced any significant global contribution in the past 60 years. In his own words, “Is there one invention from India that has become a household name in the globe? Is there one technology that has transformed the productivity of global corporations? Is there one idea that has lead to an earth shaking invention to delight global citizens?”[1]. Though he was speaking in the context of research, the same can be said to be true of corporations and products as well. There is no Indian company in the top 100 public companies by market value[2]. This is despite the fact that time and again Indian entrepreneurs have created colossal empires from scratch, tried to go global and have taken advantage of a booming economy.
The leader among Indian companies in market cap according to the Forbes 2015 listing is Tata Consultancy Services at 80.3B $. The next technology company to feature on the list is Infosys with a 40.2B $ market cap. Globally the list goes something like: Apple, Google, Microsoft, Facebook, Alibaba, Samsung, Oracle, Amazon, IBM, Intel, Cisco, Taiwan Semiconductor, Qualcomm and so on. Both TCS and Infosys are IT consulting firms. Top US IT consulting firms and their market cap are IBM(160B $), Accenture(63.5B $) and Cognizant Technology(38.1B $). Of these three, Accenture and Cognizant are the ones most simliar to TCS and Infosys in the type of work they handle, mainly BPO. TCS actually has more market cap than Accenture and Cognizant! The one sector where Indians have really beaten the world: BPO! Now that we know this, an interesting question to ask is ‘Why have Indians won globally at the BPO wars when they have not been able to win pretty much anywhere else?’.
In one word: population. The BPO sector relies on the presence of large swathes of cheap labour of mediocre quality, which India has plenty. In fact, both Cognizant and Accenture have majority of their employees in India, 66%[3] and 52%[4] respectively. Thus winning the BPO wars is simply a result of the natural advantage of a huge population. But as in most other scenarios, the biggest strength is also the biggest weakness. And this weakness has stopped India from making any product which could be ‘world’s best’.
In India, it is so easy to take advantage of the quantity of masses that it becomes increasingly counter-intuitive to focus on quality of the product. Quality is hard. It becomes even difficult to single-minded focus on quality when there are easier alternate ways. There seems little rationale in taking great pains to make the world’s best product when there are already millions ready to buy a mediocre one if it comes cheap. Thus, the business models evolve from ground-up to create products which can be sold to as many people as cheaply as possible. The Japanese auto-industry gave the world the concept of Six Sigma Quality. The Indian auto-industry gave the world Nano, the cheapest car.
Products with just above average quality with a cheap price tag sell like hot cakes in India but there is little market for them in the developed countries where people have money to pay for the best. World’s top technology companies work extremely hard to create products of extremely high quality and then find ways to distribute them to as many people as possible. Apple wants to create the best smartphone experience in the world. Google wants to create the best search experience in the world. Facebook wants to create the best digitally social experience in the world. On the other hand, due to a large low-income consumer base, Indian creators don’t need to create the best. And so they don’t.
To create a world-class product in India, it will require huge efforts to focus on quality rather than giving in to the temptation of building for the masses. Which means that the decision of how to scale up or market the product should be deferred till the product is proven to be of extremely high quality. Sergey Brin and Larry Page made the best search engine of the time before worrying about how to market a search engine. Turned out, they never needed to worry about that.
[2] http://www.forbes.com/global2000/list/#header:marketValue_sortreverse:true
[3] https://en.wikipedia.org/wiki/Cognizant
[4] https://en.wikipedia.org/wiki/Accenture
Thanks to Samarth Bansal for reading drafts of this post.
