November 11, 2013

Using a Bandook to Lure entrepreneurs to Roti, Bijli and Makaan !

Many young and energetic graduates from our premier institutes of learning have of late decided to opt-out of the placement services that these institutes provide to become entrepreneurs and set up new businesses. A recent slideshow-report by the Economic Times, features 10 such cases where students of IITs, IIMs and BITS Pilani have created a string of successful businesses. Prima facie this is an excellent development and we wish that many more students create many such enterprises but a closer look reveals some disquieting trends that may be worth a little more discussion.

Seven of the ten businesses featured -- and these include well known names like Flipkart and Redbus, were about a service delivered out of a website. This includes monitoring school kids, booking of taxis, buses and trips, selling of goods and services over the web. Two were focused on building a software that facilitate phone calls over the web and the tenth was about building a robot. In all of these businesses, except perhaps the robotics venture, there was hardly any new technology or any kind of breakthrough or innovation that is seen in the entrepreneurship that comes out of, say, Israel -- another country that is perhaps as obsessed as we are with knowledge. While innovation, or a lack of the same, in India is a topic that I have tried to address in another blog post, here we look at another angle of this student driven entrepreneurship, which is perhaps a part of a larger story of what interests our students.

The core issues that affect the happiness and well being of human beings are food, energy and shelter : roti, bijli and makaan. Without these in place, things like tourism and e-commerce become irrelevant, but none of our student-entrepreneurs seem to have any interest in these basic matters. In a sense, this is true even for students who go through the traditional placement route and look for jobs. Everybody wants jobs in the software and "technology" sector but this so called technology is all about software technology and that too for clients located in other countries.

But outside India, this software "technology" goes towards the enhancement and development of the core sector. For good or for worse, genetically modified food, is possibly adding more calories that is available for us to share, new developments are happening in the extraction of shale gas, and, as in China, lots of houses and townships are being built. There may be issues regarding the degradation of the environment but the fact remains that entrepreneurs are investing thought and money into areas that attempt to address our core concerns. They may be right or wrong, they may succeed or fail but there is no doubt that the focus is there.

In India on the other hand our entrepreneurs seem to be fixated on software and that too on software for the service industry. We all know that services are important and perhaps a measure of development of a country is the percentage of GDP that is generated by the services sector, but still as a nation we cannot survive by selling samosas to each other. Someone has to till the soil, grow the wheat -- grow lots of wheat if possible, so that the samosas can be made and more importantly bought by someone who has the money to do so.

There is no doubt that software is important and I have argued as much in my earlier post where I have argued that software skills are possibly a pre-requisite for success in other sectors, but the biggest heartburn in India is that our software skills are used for the development of the core sector in other countries but nothing much is happening here in India.

Is this sustainable ? Unless we address these core issues, India will remain a backward backwater in the global economy with a few islands that are aglow with the riches generated by the software services industry. On the other hand, if our entrepreneurs can devise solutions that improve the efficiency or productivity in these core areas, then the impact would be far higher not just on the national economy but also on personal finances.

But who will bell the cat ? and why ? It is so much more comfortable,  lucrative and more importantly much much easier, to write Java ( or Hadoop ??) code at TCS for an American company, than to build a pilfer-proof electricity distribution system or a more efficient solar panel for an Indian customer. It is also easier to advise others on what is to be done than to actually do the same yourself.

Even as we agree to the above, yet we as a nation and as individuals need to explore how our investment in education, in knowledge, can be used to address the core issues of roti, bijli and makaan. In this context, here is one approach that may work. Consider the following ...
image from

Every year, India spends nearly US$ 35 billion for defence and of this, nearly 50% is capital expenditure that is almost entirely paid out to foreign companies. If this money could be diverted to private Indian companies who could either work alone or have a foreign partner then this could stimulate a lot of engineering innovation in this country and make it lucrative for our students to start focusing on this sector. It may be argued that defence is not the same roti, bijli and makaan but then defence spending can, and has been, a stimulant and catalyst for creating an ecosystem of technological innovation that is financially rewarding. No student would want to work in the mine, the coalfield or in the farm but if there is big technology happening in a missile factory and there is good money to be made -- then many of our students will start flocking towards these sectors.

Net-net, let us not beat our chest about why our youngsters work as cyber-coolies in TCS. Let us prime the pump of the engineering economy by diverting our defence expenditure into Indian engineering companies so that they can pay more than what our software factories do.