Thank
you very much. Though it was said that this session was not
going to be on IT alone, I am not going to talk about IT but
if you kind of generalize IT to IT and telecom that’s
what my expertise is so I cannot not talk about it. However
what I will try to do is that I will talk in a very general
level and try to draw some lessons from that which I believe
is very much true for other industries. I will title my talk
leveraging India as India stands up through innovation and technologies
business models and policies. My belief is that innovation is
the key not in just technology And
in India in many different ways and I think the best way to
understand is to understand what the income levels of people
in India are and what the paying capabilities of the people
in India are. You really find that India is a large country,
a billion people and that’s why potentially a very large
market but never forget the price point at which people in
India will buy. You get the price point, you understand that
yes out of the 135 million rural people most of them earn
not more than 60 dollars per month and urban household yes
you can talk about 200 dollars per month. That’s where
the Indian market booms. If you are looking at those who are
going to earn only a thousand dollars yes the market is small,
you must understand where you are and what are you going to
land up with. I want to point this out because the story of
telecom in the last ten years is the story of understanding
the Indian market. We were barely 5-6 telephones in 1974,
in ten years we crossed 100 million and we crossed because
we understood that we will not earn from a subscriber if we
go 100 million more than 300 rupees. if we understand that
that is what the paying capability is for what we have to
offer then we work back and say can we work on technology
business organization, business models, can we work on business
policies such that capex and opex should be such that finally
at even 250-300 rupees per month we make money and I think
that was a key. The capex for telephony was almost a thousand
dollars in 94. Today it is about 100 dollars, it is almost
impossible. That time even talk in these terms were ridiculed
and yet this happened and today it is booming, this is not
the first time that something like this has happened. I don’t
know how many of you know that even in 1991 the telecom boom
took place. there are two major factors, one factor was of
course cable TV, availability at 70-80 rupees per month at
that time, today it has gone up, that is less than 2 dollars
a month, it is far lower than anywhere else in the world.
Nowhere can you get a cable TV for less than 15 dollars, 20
dollars, 30 dollars, 4 dollars and suddenly we worked out
a business model with very fragile technology, the cable TV
business model which was delivered at 2 dollars per month.
It is not a bad quality, there were weaknesses but the weaknesses
were taken care of by youngsters who will be paid very small
amount but will be running around and fix your cable if anything
goes wrong even on a Sunday at 10 pm in the night. I think
one has to really understand India leverage that. the second
very important thing that took place is that Chinese and others
at that time came up with kits where we can assemble TV black
and white for 1200 rupees, I am not saying that it will be
1200 rupees black and white television for ever, no. that
was a point that suddenly brought a very large section of
people within the purchasing capability. After that people
started buying better and better TV, second hand TV and the
price went up, today you don’t hear of those kits. But
bringing that kit was so important, I am told about 25 million
such TVs were sold in a period of 3-4-5 years so I think that’s
a kind of thing. In fact telecom itself the next 300 million
after we grow to around 200 million, the next 300-400 million
is going to come at a very different price point. We have
to look at rural areas as an average per revenue user of 100
rupees per month. And there are already telecom technologies
and business players who are working on technology and business
model for that. Anybody you talk to all over the world will
say 100 rupees per month, 2 dollars per month, how can you
actually do that. Today for a company like Bharati the cost
of acquiring a subscriber, managing a subscriber, for billing
and collecting money is 2 dollars per month. How do you really
earn money at 2 dollars per month? I think these are the challenges
that we really need to answer and telecom industry is much
geared towards doing this. A very important proposition comes
when you are started doing this in India can we go and repeat
it in the rest of the world. Infact in one of the meeting
of international telecommunication union this issue was raised
will the Indian telecom players become the players for the
world tomorrow because rest of the places is still being offered
still at 10 cents per minute or 20 cents per minute and the
south Korean ambassador was there and he said we will not
allow Indian and Chinese companies to come in and operate
our telecom network, still somebody pointed out that they
wont allow it in the products of Hyundai and LG to be sold
in their country and they immediately backed off. I think
the key reason is that we have been able to understand, mind
this market, learn in the process, improve the quality as
he was pointing out and now we are ready to go to the world.
I believe very similar thing is happening in the Indian airline
industry. You have seen that, you know about this, how the
prices have fallen, we have problems with our airport infrastructure
but suddenly you are getting in our huge population onto that
guerilla. Very similar thing with auto sector, auto sector
of course slightly different , the Tata one lakh rupee car
I think is the right model in that sense but I think I want
to briefly mention that the Scorpio and the Tata cars that
came out recently completely designed in India, a huge RND
effort. I don’t know how many of you know it was 500
rupees plus RND effort run by two people, one of them was
my classmate -Goenka, another was my student Sumantran and
they lead that effort there was confidence and today we have
a product which is world class. And we know the weakness,
we still know that we need to go there but today we have the
capability to move in that direction. Similarly in auto components
we have already recognized that this is the place which will
become the leaders of the world and there are very interesting
projects coming up. There is a conference next week in Bangalore
driven by what is called CAR’s project which idea is
can telecom industry RND academia and government get together
and we should become leaders in the world. I mean this is
the kind of thing that is happening. IT, IT enabled services
you people know. There is this book written, I think most
of you may have seen the book called world is flat and I remember
meeting the author of this book and also saying well this
is fine but you haven’t really seen it yet. What will
happen if 700 rural people of India start coming into the
forefront. Today the urban people are able to provide the
service what will happen tomorrow and this is something to
be watched. These were more visible sights. Let me quickly
talk about some non visible sights. One very important thing
that we have today in India is 400000 engineering students
graduating every year, 1500 engineering colleges. This is
up form 25000 people who are graduating when I joined academia
in 1981-82. We are reluctant to privatise it, we used quality
as an issue but I agree that even quality is a big problem
and we need to overcome that. But this is a problem we couldn’t
bottle up and close things and that is not the answer, the
idea is to open it up and then fix the problems. And this
is what is going to be engined tomorrow. I don’t want
to get into details, I already hear the first bell, and very
often we think politics is our obstacle to growth and politics
is an obstacle everywhere, not just in India and yet I could’ve
given you an example in detail of how our politics responded
versus how European politics responded. With 3G technologies
there was a wireless technology, there was a problem all over
Europe and the politics just could not respond to it and the
industry went down. Whereas in India there was a serious problem
with telecom policy, 99 almost all telecom industries were
collapsing and even though there were very high, large bids
the policy makers were courageous enough driven by RND people,
driven by academia to really completely turn the tables. I
have tremendous confidence in the politics of the country.
I am like what most people kind of believe. I’ll also
briefly talk about our own group. Tele communications and
computer network group. Group which is within the university,
incubating entrepreneurs, balancing economic growth and social
development. We actually learnt somewhere in mid late 80’s
or mid 80’s that if you have dreams for the country,
entrepreneurship is the best way to drive towards it. That
was a very important lesson that many instances I’ll
pass on these slides for those who want to take a look at
it but basically in 1994 we dared to dream that India should
get 100 million telephones. We were laughed at, we sort of
said that it will happen at – of 200-300 rupees and
we not only pushed the policy, we helped all the new telecom
players but we actually also created a company called Midas
which basically introduced the wireless local loop was the
primary capex bottle neck, we sort of said convert the copper
--- into a wireless. At that time the research RND were not
good enough to sort of say that this will be a cost effective.
We kind of pursued this; the interesting thing is that while
India did cross 100 million lines, this particular product
sold 1000 crore rupees worth. I mean coming from an institute
a product like this growing to a 1000 crore and now pretty
much year after year doing about 700-800 thousand crores.
This is something that we couldn’t have even dreamt
of. Somewhere around 2001 when telecom was already starting
to make an impact we sort of said well that is happening but
rural areas are being left out and we took up a dream statement
that connect every village in India and we created a company
which works on a very innovative business model and technology
which goes and puts internet chaos in every village run by
an entrepreneur just like a STD PCO. Soon we realized the
focus for rural India is not just connectivity but used connectivity
like education, health care and micro enterprise. And we changed
our vision statement to uphold the per capita GDP by 2015.
It may look as an impossible dream but I am absolutely certain
that we will either surpass it or come to close to it. And
we have done many companies. When people say that there is
illiteracy in the rural areas we sort of say if they can’t
read and write they can do video conference and we created
a very interesting video conferencing company. We create an
Indian language office package completely from scratch, spread
sheet data base, word processing at a much lower cost. We
were already putting doctors in the town with patients in
the villages using video conferencing and doctors said only
if I could get the pulse beat of the patient and we created
a small box which now sits there in the village and it has
the remote heartbeat, you put the patient the stethoscope
and the doctor is hearing the heartbeat, remote temperature
measurement, remote blood pressure measurement, remote ECG
measurement and all at around 12000 rupees. This is the kind
of innovation that is possible. We know the doubling per capita
GDP will not happen unless we drive businesses in rural areas
and for driving businesses in the rural areas we have to drive
finance in the rural areas. We started working with banks
saying why cant banks go to the rural areas with internet
chaos. ----, ICICI Chairman told me well Ashok if you could
only get a low cost ATM, today ATM costs 7-8 lakhs rupees.
We started working form scratch; today we are delivering an
ATM at 50000-60000 rupees. Lots of innovation if you do and
understand things, with the print authentication I think these
kinds of breakthrough is possible and today we are trying
to do a distribution in rural areas using internet more as
a means of clearing that. We believe that IT enabled services
made so much difference to India by taking work from the west
into India, can we not go to the next step and take work from
urban areas to rural areas. And believe it or not something
like this is being done today in rural areas as a product
which has been taken, as a service which has been taken, one
village does the translation, another village does the animation,
third village does the voice-overs, fourth village does the
integration and delivers it to our client. With computer and
communication possible this is the potential of India and
this is where we really need to go. Moving to urban areas
we believe that time has come to try to put 50 million broad
band connections in India by 2010. And towards that on the
one hand we focus on connectivity, on the other hand we focus
on something called the think ------which can enable driving
something like this. We believe that India needs to create
its own billion dollar products companies; this is again something
that we are starting to drive. Why? Because telecom companies
in the west we are finding are receding, the void is being
filled by Chinese companies. We are using all kind of things
to see how you can create a million dollar product companies.
On the one hand we are driving companies like Midas which
we believe in the next 4-5 years will reach numbers like this.
Companies like Tejas which recognizes the void in a certain
product in the telecom industry in the west. In fact if we
acquire partners with Norton, Nokia to compete with -----.
Today when some the products developed by this company are
sold by Norton back to India but it is with its own brand.
It is not that the whole thing the product is developed there,
they co-brand the thing and do something like this and we
believe that things like this need to be done. We also recognise
that training is one of the major things; I don’t want
to get into the thing because while we are creating 400000
students unless we polish them we are not going to get anywhere.
And once again we believe that we need to work towards becoming
leaders in a few technology areas and wireless is one area
where 37% of all the RND people working around the world are
Indians. And this is where we say that we will become number
one, two or three in the next 7, 8 or 10 years. Let me quickly
end by 4 slides on what I believe is a learning for the industry.
I talked primarily about telecom but also things like ATM,
electronic driven things. For leadership in the world market
India is a large market with a large price point, in innovating
for products on this market and making it affordable here
you naturally become a leader. I think this is something that
we have to do. Once we are winning here it is only a little
more learning for us to become leaders of the world because
in serving this market and making it large we have to come
up with this product. One of the main issues that were given
in the brief that was given to me was how to attract talent
and one of the biggest problems especially in Bangalore technology
and innovation with the aim of doing what has not been done
elsewhere alone could capture the imagination of the young
engineering and business talent. You stray away from it; you
are not going to retain it. You focus on this the world’s
talent will come here. Today it is the Israelis and Europeans
who want to come and work here in India on these kinds of
problems because challenging problems are coming here. In
fact the good thing is that today in Silicon Valley a start
up venture in telecom and IT will not be funded unless the
primary works get done on that. This is already starting to
happen. ----, how do you retain talent? One of the key things
at least in our areas half life of knowledge today is two
years. We believe that in two years what we consider new,
two years half of it has become absolute. This is the fast
changing knowledge in the world; continuous training is the
only way to -----. And I think we don’t take care enough
in something like this. We have to find innovative models.
And I think one of the biggest thing that I learnt from the
IT and telecom industry is really something quite different
form the industry that I saw. I come from the family background,
I am a Marwari industrialist. The key thing is that you really
have to empower the individual ----, empowering is even more
important than sharing and I wont say one order. Just because
you are a managing director of a company you cant just over
rule head of marketing, head of marketing has their role,
you can fire the person when that person doesn’t perform,
and you can’t start interfering. I think we need to
build businesses which have this, without that we are not
going to get there. And India has changed immensely over he
last 15 years, IT and telecom industry has triggered the change.
I disagree that it will be one sector, we are already multiple
sectors, and we are becoming the leaders. Today India can
be leveraged and India can be leveraged by most industry in
what it ----it strength. India is a large market, the right
price point provides enough learning ground to become world
leaders and India has huge human resources, we just don’t
invest enough in sharpening them. Thank you very much. |