In the US and Europe, people worry that their well-paying, high-skill jobs will be, in a word, “Bangalored” — shipped off to India.
People here are also worried about the future. They fret that Bangalore, and India more broadly, will remain a low-cost satellite office of the West for the foreseeable future — more Scranton, Pennsylvania, in the TV series The Office than Silicon Valley.
Even as the rest of the world has come to admire, envy and fear India’s outsourcing business and its technological prowess, many Indians are disappointed that the country has not quickly moved up to more ambitious and lucrative work from answering phones or writing software. Why, they worry, hasn’t India produced a Google or an Apple?
While innovation is hard to measure, academics who study it say India has the potential to create great products but is not doing so. Indians are granted about half as many US patents for inventions as people and firms in Israel and China. The country’s corporate and government spending on research and development significantly lags behind that of other nations. And venture capitalists finance far fewer companies here than they do elsewhere.
“The same idea, if it’s born in Silicon Valley it goes the distance,” said Nadathur Raghavan, an investor in startups and a founder of Infosys, one of India’s most successful technology companies. “If it’s born in India it does not go the distance.”
Raghavan and others say India is held back by a financial system that is reluctant to invest in unproven ideas, an education system that emphasizes rote learning over problem solving, and a culture that looks down on failure and unconventional career choices.
Sujai Karampuri is an Indian entrepreneur who has struggled against many of these constraints.
His Bangalore-based company, Sloka Telecom, has developed award-winning radio systems that are more flexible, smaller and less expensive than equipment used by phone companies today. Mobile phone companies and larger telecommunications equipment suppliers are buying and testing his products, but he has not been able to interest Indian venture capitalists. For the last five years he has run his firm on US$1 million that he raised from acquaintances.
“I can only afford to trial with one customer at a time and that takes three months to materialize,” said Karampuri, who has considered moving the company to the US to be closer to venture capitalists who specialize in telecommunications. “You are always worried about paying next month’s salary to people. Should you keep the money for this trial or next month’s salary?”
NEXT WAVE
Companies like Sloka Telecom are important, analysts say, because they are more likely to create the next wave of jobs than large, established Indian technology companies, many of which are experiencing slower growth. These companies could also help offset some of the outsourcing jobs the country will likely lose because of greater automation and competition from countries where costs are even lower.
There are historical reasons why starting a business in India is difficult. During British rule, imperial interests dictated economic activity; after independence in 1947, central planning stifled entrepreneurship through burdensome licensing and direct state ownership of companies and banks.
Businesses found that currying favor with policymakers was more important than innovating. And import restrictions made it hard to acquire machinery, parts or technology. Inventors came up with ingenious ways to overcome obstacles and scarcity — a talent that Indians used the Hindi word jugaad to describe. But the products that resulted from such improvisation were often inferior to those available outside India.
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