Reimagining India: Unlocking the Potential of Asia’s Next Superpower (24 page)

Rapid and healthy as this growth has been, India’s technology industry could be poised for even greater expansion, with a more transformative impact on the country’s economy and society than it has to date. But that will depend on the nation’s infrastructure.

By infrastructure, we’re not using the term in its traditional old-industry sense of roads, ports, and energy grids. India’s rickety, overburdened transport and energy network has received plenty of attention, and deservedly so. The massive blackout of July 2012 drove home that point with a vengeance.

While enhancing India’s physical infrastructure is clearly necessary, it is equally if not more important to develop an upgraded national information
infrastructure—one that brings seamless digital connectivity to every town, village, and hamlet. Just as railroads and superhighways helped propel England and the United States to industrial leadership and societal development in the 1800s and 1900s, a similar outcome could result from India’s full development of the networks, on-ramps, and connectivity that form the backbone of technology-driven industries and an information-based society. Among the most crucial benefits to be reaped from such an investment is improvements in education, with children using mobile devices to get much of the instruction the traditional school system doesn’t adequately provide. This is hardly a novel idea, but its implementation has lagged for years. The time to kick it into high gear is now.

So far, India’s IT industry has benefited enormously from an educational, financial, and cultural “ecosystem” that has furnished thousands of firms with the talent, financing, and entrepreneurial spark needed for supercharged growth. The results are manifest in the attainments of the top five IT and business services firms (TCS, Cognizant, Infosys, Wipro, and HCL), which employ more than eight hundred thousand people.

However, the salutary effects of the industry’s boom have been concentrated mainly in cities with technology clusters, such as Mumbai, Bangalore, Pune, Chennai, and Hyderabad, leaving the lives of hundreds of millions of Indians relatively untouched. For the industry to extend its leadership in technology services, and flourish in a way that can serve as a much more powerful social and economic catalyst, the information infrastructure must connect every corner of India with the rest of the world.

India has made a start in building out its information infrastructure, and at least in absolute terms the numbers are impressive. More than 600 million mobile phones are in use in the country, and about 150 million customers log on regularly to the Internet. However, in today’s global economy, this is far from adequate in terms of percentage of the population. Internet connections and users need to increase by an order of magnitude, and they need to extend much farther into the hinterland. This will obviously entail government subsidization, because serving rural areas requires high capital costs, while revenues from
low-density areas with low-income residents are insufficient to provide adequate returns.

The government has shown commendable awareness of this problem, which afflicts both Internet and mobile-telephone connectivity, by establishing the Universal Service Obligation Fund (USOF). Based on similar approaches used in other countries, the USOF assesses levies on the gross revenue of companies in the industry, with the funds used to provide incentives for laying fiber-optic cable, erecting transmission towers, and creating other infrastructure, so that service providers can lease bandwidth at reasonable usage fees to provide access directly to customers.

Unfortunately, progress has been severely plagued by delays in execution. The fund, first approved by the cabinet in 1999, wasn’t fully established until 2003, and since then it has spent only about half of its nearly $8 billion in levies. A study issued in April 2013 by GSMA, the association representing mobile operators worldwide, noted that many of the fund’s initiatives “appear to be either frozen at the conceptual stage or still in a pilot trial mode.” Even in cases where projects were completed, “the completion dates seem to be long after the initial target date and, in some cases, the service coverage and completion targets have been reduced.”

We are keenly aware of the need to ensure that fair competition and transparency prevail at every step of this process—as witnessed by the scandals concerning mobile-phone spectrum allocation that erupted in recent years. But much greater urgency is in order.

At Cognizant, we have gained a deep appreciation for the benefits of ubiquitous connectivity. Our company’s network combines the powers of broadband, mobile devices, social media, and telepresence—the ability to conduct high-definition videoconferences and virtual work with our 150,000+ associates around the globe from one’s office, home, or even the road using a tablet computer. A typical workday for us at Cognizant may include two “face-to-face” morning virtual meetings in Chennai, followed by another in Hyderabad. Paris and London will follow, and later in the day it’s on to New York and California. Although travel is still
a necessity for us on the executive team, on any typical day 25 percent of our meetings are in person; the remaining 75 percent are virtual. Moreover, we use a social computing platform for handling many of our most complex client projects so that we can exploit the skills of employees spread across vast distances. That way, instead of fifteen people working in the same room at the same time to solve a problem, a project team can be distributed across geography and time while working together in a coordinated fashion.

Specialized and technically demanding as such activities are, many of the capabilities we utilize at the company level have similar applications broadly in Indian society—education being the most exciting. Addressing India’s educational needs (and its inherent chasms between the village and city, geographies, and cultures) through traditional methods alone will simply take too long and will prove too costly. By making effective use of the information infrastructure, and deploying e-learning methods whose benefits are well documented, these chasms can be crossed. Not only will students become facile with new technologies; more important, they can gain instant access to high-quality and individualized instruction. A virtual extension to India’s bricks-and-mortar educational system can provide the foundation for widening the base of India’s educational pyramid.

The gains would not be confined to education; job growth is another area ripe for improvement. Over the past two decades, talented Indians have dispersed across the globe to find employment. With proper virtual work platforms, instead of the individual going to the work, the work can come to the individual. The positive implications for social stability could also be enormous. Indians today are confronting the question of whether they must sacrifice cherished traditions to fully embrace a modern economy. A highly developed information infrastructure doesn’t force one to ignore or reject social traditions; it enables citizens to remain in their communities and with their families.

Yet many of the issues that have constrained India’s physical infrastructure don’t apply when it comes to information infrastructure. Many Indians regard the superhighways, strip malls, and concrete jungles of developed nations with great ambivalence. An information infrastructure, by contrast, is inherently “green” in many respects, not least of which is the substantial reduction in the need for daily work commutes. All the more reason, then, to give its implementation much higher priority than it is getting today.

India’s technology and business services industry has captured the public’s imagination, motivating today’s managers to protect what has been built and inspiring tomorrow’s leaders to think big. If an information infrastructure becomes a truly national reality, not only will our industry reach new heights but so shall the nation as a whole.

Vinod Khosla

Vinod Khosla is founding partner of Khosla Ventures.

There’s a general tendency in life to want to do what others have done. It’s an understandable impulse but shortsighted. One of the great things about being a relatively poor, trailing, but rising power like India is that you have the opportunity to see what you want to imitate—and, more important, what you want to skip.

Here’s an example. In 2000, I chaired a three-day telecommunications seminar for McKinsey & Company in New Delhi. I talked to everybody about skipping the landline. I said, “If I were India, I wouldn’t worry about adding ten million more copper lines. I would go straight to voice over Internet and mobile.” I didn’t have it exactly right; I missed how big mobile could become and how quickly. But my argument was that the giant traditional telecom equipment and system providers were offering the wrong system for the twenty-first century. Happily for India, despite its plans to the contrary and its focus on “traditional technology” landlines, the right thing (mobile) has happened. And India is not alone in this path—Africa has taken a similar evolution toward mobile telephony.

Was this a one-time phenomenon? No. There are many areas where a developing country can apply this kind of “leapfrog” mentality and find a different path to a better future: education, health care, energy, even infrastructure. But the key, which leapfrog advocates often miss, is
how
you go about creating this alternative path.

It’s not enough to say, “Let’s look beyond today and plan for 2025.”
Most emerging market countries do that. Such plans are usually far too prescriptive: Let’s build forty new universities by a certain date, add eighty thousand doctors, build eight thousand kilometers of new highway, or install ten million solar panels. Usually they are based on a regressed estimate of today’s baseline. Rushing to do specific things is a big mistake. Technology advances in ways that are quirky and unpredictable. It’s unwise to rely on plans that presume to see the future too clearly; strategic planning and consultant forecasts almost invariably mislead.

So rather than trying to predict the future, India’s leaders should be trying to fit into the future as it happens. Instead of setting out ten concrete goals, they should encourage one broad direction and adopt an evolutionary mind-set. That way, as the world changes, as the price of oil shifts or a breakthrough technology comes along, India can adapt.

Take transportation, a pressing future need for India. In a linear model, you might presume that if there are eighty cars per one hundred people in the United States, then that’s where India will end up and begin to plan for that. But if I were building the system, I would look for ways to anticipate and skip what exists today (my rule #1), while trying to lean in the right direction (rule #2). I would consider the possibility that, for the world in 2025, self-driving cars, like the ones Google is well on the way to successfully developing, will be widespread. And then I would ask: What are some of the implications of that assumption?

The first implication is we’ll need a different type of transportation infrastructure. With a system of self-driving cars at scale in the United States, you might end up with one-fifth the current number of cars sold annually. Instead of owning cars individually, perhaps drivers of the future will think of cars more the way we do taxis and limos now, or like fractional jet ownership of the sort that NetJets pioneered—as fleets you could tap into for different occasions and with a lower total cost of ownership. With the fleet approach, the quality of service could improve because customers wouldn’t be tied to the cars they bought. For a
night on the town, you might get a BMW; for everyday use, a Prius; for hauling stuff over the weekend, a Suburban. And all ordered on your smartphone.

A second implication of the spread of self-driving cars and adoption of a fleet approach to car ownership is that cities can set aside less space for parking. Think what phone companies do in dense urban spaces. They don’t add a phone line for every person in a building. They multiplex: If there are one hundred people in a building, they run twenty-five to thirty lines. With self-driving vehicles, we could multiplex cars the same way.

A shift toward a multiplexed fleet of auto-navigating vehicles would enable India to cut resource usage in a major way, lessening the need for capital investment, reducing expenditure for steel. Electric cars would become more affordable; the usage factor would be much higher, so the payback time would be much shorter. Even with today’s batteries, you could justify paying a higher price for electric cars. Instead of being driven 6,500 kilometers a year, electric cars would be driven 160,000 kilometers a year, like a taxi. That, in turn, would lower oil consumption.

Such a distributed system would be much more adaptive than making a massive investment in a new electric rail network. Loads would dynamically balance to fit demand. A distributed approach to transportation doesn’t require betting on a single $10 billion project. In effect, the transportation network can be built out one $20,000 car at a time.

If these assumptions are correct, the future of India’s transportation system will look very different from the one the government is planning for. That’s what happened to India accidentally in communications. Why not learn from the telecommunications experience and apply the lesson to cars? The precise outcome doesn’t matter (my assumption may be wrong). The main thing is to create a regulatory and investment climate to support the right broad policy goals (access to transportation) rather than lock everyone into specific technologies. In a nutshell, we don’t know what the future winners
are—and it would be foolish of government to attempt to determine it. But we can try to set the groundwork.

This isn’t just about waiting for technology to advance. Governments with an evolutionary mind-set—those that seek to encourage rather than prescribe—can use incentives, taxes, and standards to push in broad directions without trying to force specific solutions. With self-driving cars, I’d offer a huge tax advantage to the first million cars deployed. I’d also lay out standards—whether for refrigerator efficiency, lighting efficiency, or car and truck efficiency. The right way to do that is to make those standards self-modifying and dynamic, so that they change in step with technology.