Why we don’t have product-making companies?

I have already written an article called, ‘Why Product-making companies?’ Before I start writing on what we need to do, I would like to talk about some of the most important reasons that curtail us from spawning product-making companies. Some of them are obvious- history, post-independent economic policies, our social structure, etc. But I don’t like to list 10+ different reasons for each problem. I like to concentrate on 2-3 top reasons. Here, I list what I think is the top reason why we don’t have product-making technology companies.

Our obsession with stars and brands

I agree stars are important. It’s the obsession with those stars where I see the problem. We (as Indians) are obsessed with stars and brands. We don’t need to look deep to realize this about us. Our Cinema (unabashedly called ‘Bollywood’) and Cricket has many examples. The whole focus is on one or two individuals while the rest are completely unknown. It applies to our technology space as well. IITs are a brand. Therefore, anything to do with technology in India is referred to IITs while hundreds of universities and other institutes get no mention at all. If an IITian starts a paan shop, the heading goes, “The IITian left his cushy job to start a paan shop right across the street…” If they start some dumb political party, the article reads, “The IITians instead of going to US have sacrificed their careers to start a political party to better India…” A mere contraption of no significance from IITian gets the attention of starving media. This media is more interested in writing ‘This IITian has done…” than writing what he has actually done. The media is only feeding into our own obsessions. They reflect our sentiments- that of ordinary people, the families, and the societies.

The same is true of our software-services companies. Why we did not look at other important industries is because these services companies were hogging the limelight for more than 20 years now. In fact, they are hogging the complete light while the rest of the industry is languishing in the dark. Bangalore, which is supposedly the ‘Silicon Valley of India’ (which I don’t agree at all), has lavish office spaces (look at Infosys and ITPL) which almost resemble a developed world. These are the same office spaces which have been glorified by the likes of Thomas Friedman (who has added more fuel to the celebration of our mediocrity). On the other hand, the same Bangalore provides extremely worse conditions to the industrial sectors where hardware and manufacturing houses are located. I have visited some of these manufacturing places- they don’t have roads, they are connected by muddy paths which have huge cracks in the middle, they don’t have water or electricity and this place looks like a remote village of India in the 16th century. The attention of whole of media, political administration, elite, institutions, investors, has been directed towards software-services companies while other industries do not get basic amenities. Software-services companies get lands at very low price; they get tax-holidays, exporting and importing is easy for them. Meanwhile, the manufacturing and other industry of India is putting with policies of old economy. Here is what I have to say to these software-services companies:

‘Thank you, you have done a good job of re-branding India. You have changed our image from being a land of snake charmers to the land of software programmers’. But my thanks stops right there. ‘You are also the culprit of taking away complete attention from other important industry. You rob us of passion of the young minds to make them Xerox machines. Your growth is welcome, but its avarice and appetite is overwhelming. We are not able to proceed to the next step. Our fear is we will get stuck right here’. There are examples galore where many countries got stuck to a label and that actually turned out to be their doom. South American countries which rode the wave of globalization have now realized that they got ‘stuck’ at being providers of raw material to the Western world. East Asian countries like Malaysia, Thailand, Philippines, etc, are faced with similar situation, where the competition from Taiwan and China has robbed them of their advantage of being the manufacturing houses. There is danger in being slotted that way. ‘We don’t want to be slotted that way.’

What our media, the analysts, the writers, etc, did in their over-enthusiasm and over-excitement is a great damage to India. They said, ‘Since we completely skipped industrial revolution, there was no need to go back to that.’ They insisted on continuing with services industry and professed it was good enough for India. They cited some examples (which are actually very rare) of product-making companies (like IBM) moving to take up services, and justified their jobs and their companies. The media lapped it up, furthered this notion, and made it a ground rule for India. Their message was: ‘If West has products and technology, China has manufacturing, we in India have services!’ The VCs furthered it, the investors furthered it, the entrepreneurs furthered it, and even the government joined hands. Thomas Friedman made millions selling the same idea back to India while making sure he and his country continued to dominate the technology markets.

Young minds of India, even those with passion and enthusiasm to create and innovate, get bogged down by the pressures- created by us- the media, the elite writers, the parents, the teachers. They end up taking up a career at Infosys and Wipro just because of its brand. Seven years of working there, he is not good for a product making company anymore. He is already institutionalized. Only few make it out of that vicious cycle only to face even bigger issues that confront them.

As a step one, we need ground breaking examples. To unshackle ourselves of this casteist mentality where in we accept our position in the hierarchy of technology businesses, where we get slotted into one type of industry by the virtue of what our ancestors did. These examples have to be the tough ones. They have to ride their boat against the strong tide. But they have to do it. I see some companies around me taking up this struggle, it’s a long way to go, but I also see that once one case gets successful, suddenly there will be new articles written and soon India will be seen differently.

The industry (even those involved in software-services) needs to consciously promote product-making companies. Is there a vested interest? Yes, there is. No nation, no industry, no man can make loads of money for himself while the rest around him are paupers. It just doesn’t work. Such disparities are not sustainable. One has to create an ecosystem. Those in the ecosystem need to be making loads of money. That money has to translate to the societies and communities that we live in. That’s when we can go the next higher level of making more monies. A society which has very few stars while the rest are all paupers is not a sustainable system. Even the software services companies will benefit if there is technology product making company ecosystem in India. Where would I want to outsource my work when we become a successful product making company? To other Indian software services companies, of course!

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3 Responses to “Why we don’t have product-making companies?”

  1. How To Make More Money at Blogbharti Says:

    […] To Make More Money Published by bhupinder April 2nd, 2007 in Announcement and Business. Avinash writes on why India does not have product making companies and makes larger point. No nation, no industry, no man can make loads of money for himself while […]

  2. Jason Says:

    Right said mate! I think product making companies will be born somewhere in the midst of a conference of budding software engineers cum rebels. The sore thumbs. As much as we are a nation that idolises the top achievers, we also are a nation that looks down on the sore thumbs who prefer challenge over security.

  3. Sridhar Says:

    You make a compelling argument. However, I beg to disagree.

    If the software services industry is such a rage, it is for a reason. I am not suggesting that the service industry is better, or more profitable, than the manufacturing/product sector. However, the fact remains: manufacturing/product is a long-term thing. You need investments in time, resources, money, training today to get paybacks, maybe 10, 20, 30 years down the line. The service industry has more instant paybacks on investments. It is the nature of the beast.
    We, Indians, who are on the verge of starvation, do not have the luxury of time.

    However, all is not going crimson. We have a few product companies here (the auto industry, for example) who are making a mark. The turnaround is slow: but atleast there has been a start.

    Having said all that, I do feel we need a more balanced education system that does not entirely focus on computer training for kids. Maybe, we need primary schools that run carpenting classes to kids to give them a taste for other skills.

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