Monday, June 20, 2005

Why Indians Aren’t Software Innovators?

In the current software industry, there is little ongoing innovation. The core of the industry relies on the outsourcing of projects from international (mainly American) firms. Based on the experiences of many of my relatives who work for such companies as Infosys, Wipro, Tata Consultancy Services (TCS) and Motorola India Electronics Limited (MIEL), I have observed they are usually given well-defined projects that have little room for creativity. But I believe that this is not an issue for most developers in India since most have been trained to engineer based on solid and well-defined specifications. This mindset is may be due in large part to the style of education in Indian schools and colleges.

Most Indians have been trained to be good engineers but not good innovators. For example, a few years ago, my cousin in India and I were both studying electricity and magnetism as a part of our high school physics curriculums. I was shocked to see how she would solve a problem regarding electric fields and flux using Gaussian surfaces. Her professor had taught the class the standard Gaussian surfaces: sphere, pillbox, etc. The class would then memorize the necessary integrations and formulas to answer any questions on the standard state government exam. However, in my high school we had approached these problems by evaluating them from scratch instead of plugging in numbers into memorized formula. When I asked my cousin a question regarding some of the more general concepts of electricity and magnetism, she could not answer them. Though this is a small example, the Indian education system fails to teach underlying concepts and understanding. Therefore I believe that the Indian software industry is missing “out of the box” thinking which is necessary for software innovation.

If the Indian education system does not actively foster innovative thinking, one may ask why there are so many successful Indian entrepreneurs in the software industry in the United States. In fact, states:

“.3,000 of the technology firms created in the Silicon Valley since 1980 are run by Indian and Chinese entrepreneurs. Accounting for over thirty per cent of the total number of technological start-ups, reaching $19 billion in sales, and creating 70,000 new jobs, these businesses have made significant contributions to the local economy. …Today, there are more than 20,000 Indian millionaires in the Silicon Valley.[1]

One reason may be that many of these successful ventures were started by graduates of the Indian Institutes of Technology (IIT). In order to be one of the 2% of applicants admitted into IIT, students must be able to pass a notoriously difficult entrance exam.[2] Therefore unlike government issued entrance tests for all other Indian universities, where memorizing will work, the IIT entrance test requires students to master the underlying concepts rather than just memorize and drill problem solving techniques.

One many then ask about the success of non-IIT Indian software entrepreneurs in the United States. Most of the remaining Indian entrepreneurs are likely completed graduate studies in the United States have developed innovative thinking through these institutions. Many of my friends who completed an undergraduate engineering degree in India and are now graduate students in the United States, have expressed much appreciation for the American style of higher-level education. For example, when they took a course on operating systems in India, they simply had to memorize the architecture of several major operating systems from a book. However, when they retook the course after immigrating to the US, they actually had to build an operating system which brought a whole new level of understanding.

Secondly, there are no successful software entrepreneurs in India outside the outsourcing arena because there is no direct interaction with potential software consumers. Domestically, there is no significant demand for software because home ownership of a personal computer is limited to a few individuals in the upper-middle class. It is also difficult for an Indian software product company to develop products for international clients because it is hard to determine the customer’s needs from the other side of the world. Therefore the only model for an Indian products company is to establish sales and marketing offices in foreign countries and conduct development efforts at home. However in such a company, market assessment and innovation would essentially be occurring abroad and coding would be done in India – basically what is already occurring in India already.

The third reason we have not seen any product companies from India is because there currently is no need for them. Given the current boom times in India, an entrepreneur is likely to follow a proven formula by founding a small outsourcing company rather than take undue risks to start a products company. Over time, the profitability and attractiveness of outsourcing firms in India will decrease and only then will Indian entrepreneurs be forced to look at other business models.

Therefore, the Indian software industry will inevitably either perish or will have to become innovative as the payoffs for outsourcing decrease. Furthermore, as the domestic demand for software grows, Indian companies will not only have an upper hand in a larger market, but they will also have direct exposure to customer needs. However, in order to expedite this industry transformation, the Indian government should look toward reforming engineering curriculums to cultivate a generation who not just backend engineers but true innovators.



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