I have spent almost all of my education life living in boarding schools and college hostels. This can be looked in two ways – It helped me become very self reliant, independent and secondely not afraid of failures and compulsive risk taker.
I started my professional career with ‘Gillette India Ltd ’.A company which taught me a lot in terms of systems, procedures and execution of plans. I joined Philips in the month of January ’01 as ‘Area sales executive’. I again worked in Rural India and also worked in Metros like Delhi handling sales for Consumer electronics products – mainly audio and color television ..Being apart of Philips GSM team I learnt how powerful a role mobile phone has played in the life of rural India. In a country as diverse(7600 dialects),majority of population still lives in villages (roughly 70%),earns less than $3 a day how do you run a business and make money too.
Let me give an example , India has the world’s cheapest telecommunication services, yet it purchases same equipment from same 5 worldwide vendors, and any one from the Telecom Industry will tell you, the operating costs are insignificant to the capital equipment, and depreciation .Yes, Indian companies are making profits. Now you can make a call across India in just Rs 1. Revenue from other services (content download etc) is less than 4 %.
Now I can safely say that they do work and money can be made serving the lower part of the pyramid too, where majority of Indian families live – roughly 150 Mln households. Only point to note is that they earn roughly $2 a day in most of the cases .They are very brand conscious and cheap quality will never be accepted. Growth of Philips in the past 2 years stands testimony to our learning and proof that money can be made and western solutions of products and business models will not work in India.
We have the largest middle class in the world and growing fast enough to overtake majority of European economies in the next 1-2 years (we may have to change the base of GDP though). Urban India which is spending more and more on consumer goods but in the end is saving enough to put country’s saving rate at over 22% (unusual for a country so poor), is connected but in the end wants value for money.
India manages to have hospitals run on shoe string budgets, charge people practically nothing but run profitably (Narayan Hridyalaya,Arvind eye hospital). In fact, US is struggling to learn this model of healthcare.
India manages to create software that is order of magnitude cheaper than its counterparts in US (like, IBM, PwC, etc) and please do not get carried away at the difference in manpower costing - it represents something like 12% of the total project cost, so even if
US is at one extreme of 12%, and India is FREE, the cost differential would be in that order of magnitude, It’s not so in reality, it’s about 100% cheaper. (Please refer to the balance sheet of Adobe - its on net - the total manpower costs is 11.76% of the gross revenue, of Infosys its just 16%)
India has lowest cost airplane flights - and that is achieved by taking planes on lease that cost the same as anywhere else in the world, and yet are running very profitably...
We have innovated interesting business models. We do not need patent protection for ingenious technologies, because our expertise lies in creating that wafer thin efficient but sustainable business model that just can not be even thought of anywhere else in the
world. We need protection for these business models may be - but that is a separate subject.
We have innovated many other aspects of life - we do not have the excessive, iron clad declaration of various legal options - thanks to our slow judiciary (sorry, cant avoid being cynical here though un-intended), we have a system that allows a doctor to cure a patient for mere Rs. 50/- (Us $1.xx) - this would be unthinkable purely due to malpractice insurance fees that a doctor has to worry about in US, or other countries. In India, we do not have strongly enforced minimum wages - so we can actually employ a domestic help
and a driver - these luxuries are unthinkable for a middle class family in most developed nations. And these drivers and maids also eke out a living. They create lesser social unrest. If you analyse this, it’s just a very interesting restricted application of commercial laws - and I tend to think, is a great innovation. We, however, manage to enforce the minimum wages on the industry sector fairly comprehensively - there is always 5-10% disobedience, but that is true anywhere in the world.
I know the post is getting a bit long, but cant resist one last example - Bombay has 1,37,000 registered shops, with only ten percent having a PC to run a complicated inventory system - and most of these are profitable - I secured figures for the S&E Act
returns. The rest 90% is running a shop very smoothly, without any bar code, any PC, any complicated satellite hooked device that uploads its inventory position directly to the supplier - In India, a phone call is enough to do that.
I think India as the future of innovative thinking in business and social applications, and I am certain that one major reason why US worries about China/India is because of the fact that we have managed to run a fairly decent social system, with its moles and warts, at a fraction of cost of the so called the advanced societies, and thus have managed to prevent from being on the brink of social collapse that US is fearing (think New Orleans), or France/Britain are going through already . We are innovative, entrepreneurial, hungry for better life, and actually happier in our cumulative existence. Yet, we remain practical; we have a balance of skepticism towards products without applications,
and we make money enough to provide an average living to a billion plus people.
In the end I understand that the growth in this country, unlike China is internal consumption driven, wherein in China’s case it is export driven .My learning of India being unique, can’t be compared with China , will require unique solutions and I am certain we are fully capable of doing that and already doing it :-)
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