Tuesday, June 14, 2011

You are staring at an industry dammit

Yet another day, yet again we have to hear "Why cannot India produce a Google or an Apple or a Facebook". There is a very simple reason for that.

The next time somebody asks you this question, ask them back. "Why has Europe or America not produced a Nano?" Get the connection?

Yes, the answer is very simple. In any country what you will build or make or sell depends on whether there is a market available for the same.

In India there is no real market for Microsoft. If Windows is prevalent in India it is because of piracy. Google happens to be in India because it makes money in the US. Ditto Apple. The few thousands who buy Apple products in India are not enough for a company to sustain itself - with newer products, RnD and so on.

In India there is a market for the Nano. If the Nano does well in India, Tata will sell the Nano in other parts of the world. Like Bajaj sells its bikes in the Far East.

That is as far as the market is concerned.

The second is the practicality. Can you sitting in India start a company that will offer Americans an amazing internet shopping experience? Or ticket booking experience? Unlikely. Firstly, you will realize (as I did) that starting a company is not a joke and many give up (I gave up even before I started). Unlike in Silicon valley, where you can walk into one office and walk out in the space of a day with your company registration certificate, here it is an obstacle race. And thats when you just begin. After that running it is an altogether different story. Importing stuff is not easy - considering you dont have hi-tech computers and servers being manufactured here - it swallows tremendous amounts of money. All in all, a lot of things need to fall in place for a company to start.

Infosys is an exception - started by first time entrepreneurs. Wipro and TCS come from reasonably established business houses. And having said that - even then - they are all exceptions and thankfully we have a system that lets such new businesses survive - even if there are a few chokepoints prior to that.

And all said and done, the ITES industry is an industry - an entire industry. An industry the likes of which do not exist anywhere in the world. Yes, anywhere in the world. Yes, neither Philipines nor China nor any other country have any ITES company worth its name - despite the so called prevalence of such industries there. That gives you the second question to ask, "Does Infosys have any competitors from Philipines or China?"

If that doesn't silence your ignoramus questioner, let me know...

1 comment:

Venks said...

You continue to rock Neel!! incredible analysis and thoughts.....