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Monday, August 22, 2005

Why does India fail in product development?

We all have ended up in pessimistic discussion at one time or another about how India seems to be doing so great at execution of off-shoring work for US-based companies (even run by Indians), but whenever they try, they fail miserably in developing their own products. These discussion, depending upon the participants, ends on two notes. Either,

  • "Indians are dumb. India sucks. We can never develop anything on our own. Even the railways, one of our crowning achievement, was essentially setup in more or less its current form by the British. Or the IITs, which were successful only cause we copied the model from British and US-ian universities." or
  • "Mera Bharat Mahan, India is a great country which an amazing past, and we have not been able to develop products cause of the brain drain/poverty/short age as an independent nation/corruption/power failures/etc etc. When we solve these problems, we will develop our own products".

Here, I am not talking about truly amazing, trailblazing products like the iPod, or the AJAX set of technologies, or our own 64-bit CPU (like the chinese have recently done), or a hindi version of Microsoft Word. I am only talking about things which have already been done in other forms, just not in ways ideally suited for india: for example a computer truly suitable for indian weather/dust conditions and needs, good e-governance software, customer counter management solutions that actually work, electronic cash and payment systems for use by the poor and uneducated, etc.

There is of course the question of weather we even want to develop our own products. For many, out-sourcing is enough of a cash cow, and India as a country should not even be worrying about doing product development. This is a question for another time. For now, i will proceed with the assumption (and my desire) that we be able to develop our own products, even if just for the indian market, and hopefully for worldwide sale. I also am aware there there *are* a few success stories in the Non-IT fields, for example in the food packaging industry. I will restrict my discussion to only the IT-field, as thats what i know best. I also know that quite a few attempts have been made, but most have then have either missed their market window (our own chip fabs?) or have fallen far short of achieving market penetration due to their shortcomings ( why would anyone a Rs10,000 Simputer when a fully-featured PC with all imported components can be purchased for the same amount?)..

I will attempt to summarize my views on why we fail, and how we, as employees of companies which possibly want to develop products but dont dare to, can possibly make a difference.

I believe there are multiple causes of this phenomenon (surprise surprise!):

  1. No ambitious enough: Most indian businesses and IT workers are not ambitious enough to want to indulge in something as risky as product development. The risks associated with product developement can be ameliorated by risk management, but partnering with other companies, by following a roadmap where directions can be changed if things do not work out, and by having proper market intelligence and vision. The market intelligence, especially global market intelligence comes at a very high price in rupee terms, and most corporates (but not all) skimp on these. Also, as the return on product development is not guarenteed, very few companies even bother to enter the fray. One of the causes unfortunately, is the perception of "outsourcing" as a lucrative business.
  2. Not enough patience: This is in some sense, a contradiction of point 1 above, as Indian Companies and Developers tend to be very shortsighted in general, and cannot usually handle long-term, multi year projects (with almost guarenteed failures early on) due to their management structure, and performance measurement standards followed by CEOs, investors, and shareholders. Companies and People are too ambitious (in the short term), to attach value to any long term goals.
  3. Limited risk-taking ability: This is true for the smaller companies, as the indian stock market tends to only overvalue large, steady income companies. The smaller companies are the ones which drive innovation, and which have a much higher chance of achieving the right momentum for developing something new. Unfortunately, these are the very companies that in general are too concerned about their cash flow to be able to invest in risk product development ventures.
  4. Limited market experience: Indian IT companies generally do not have any experience dealing with the users of their products. This is essential to have a clear(er) market vision, and forms the part of a "constructive loop" which enables great product development.
  5. Failure of Indian Colleges and Schools in producing "problem solver" and "self help" attitude in students: Our educational systems, esp at the Bachelors levels remain archaic and based on rote memorization, and do not lay sufficient stress on continuous and fast revision of syllabi, upgrading of facilities and teacher skills, and challenging the students to work on something new. Even most masters thesis in India tend to be completely non-innovative and un-inspiring. Our educational system also tends to be "one-size-fits-all" and does not allow a student to customize the course to his/her liking. This selections and customization is a required small step in forcing students to think what they really want to do, instead of "what is the most popular decipline to go into this year?" kind of herd mentality.

To be updated.

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