I’ve heard it a million times now: India is a great country for IT services, but there are no great technology product companies. After all, the golden trio of Infosys, TCS and Wipro is what defines India’s technology prowess. There is a certain degree of truth in that statement because the IT services industry has provided jobs to millions of Indian graduates and has definitely played an important role in crafting the Indian brand for outsourcing.
However, in technology (especially Web and Internet), geographies rarely matter. If we put aside VC/angel investment scene for a moment (that’s because it is emerges because a market exists to be exploited), why couldn’t Google, Amazon or Microsoft come out of India? I think it’s simply a matter of market-readiness coupled with informational advantage for US-based startups. Back in the days when these great product companies emerged, US (and to a lesser degree, Europe) was the only place where market existed. Google? Well, you needed Internet to be fully happening before a company like Google made sense. India was still lacking in that during 1996. Amazon? Well, you need people wanting to buy books over the Internet. India didn’t have a proper Internet, so obviously there was no e-Commerce market for Amazon to arise from India.
There is one major counter-argument to the “market” theory of non-emergence of product companies in India. In technology space, geographical proximity doesn’t matter a lot. Theoretically, a company like Google could have made a search engine in India and served the market in US. Well, theoretically, yes. But that’s why I mentioned informational-advantage. Back in 80s and 90s (and to a large extent, even now) the only way you could have felt the needs of market in US was to be actually in the US. (Because in India, you were posting physical letters. Email? What’s that?) In early 1990s, there was simply no infrastructure for Usenet in India, so how can you expect an Indian company (equivalent of Netscape) to have produced an Internet Browser. Even when Indians were sharp enough to be able to produce a Browser, there was simply no knowledge (and hence motivation) that such a thing should even exist.
If you now argue that why didn’t this informational-advantage work against emergence of IT services industry in India, you are completely missing my point. As I said, for product companies to exist, they needed a market or at least an intimate knowledge about that market. IT services companies had both: a) they had a hungry market in US who wanted to reduce costs; b) they had intimate knowledge of that market because the market crossed oceans to came looking for it. You see, the whole basis of saving costs through outsourcing was to surpass geographic boundaries, thereby utilizing India’s lower costs to their advantage. So, Indian IT services companies didn’t need to get intimate knowledge about the market — instead the market came for it, educating what its needs really are.
Thankfully, all that is going to change in years to come. Thanks to Facebookization and MTVization, at least in Indian metros, youth will have more-or-less exposure to similar global (notice I didn’t say US) culture and thus become basis of same market. Informational-advantage will disappear. Take any product: Twitter, Quora, LinkedIn, or even Foursquare and you will see users from all over the world. If they can use a world-class product, why can’t they make one? In my opinion, it is just a matter of time when US will loose the advantage gained by first-boom of silicon and Internet (think educational and investment infrastructure). After that, you will see great product companies from all over the world. And that’s when the real promise of Internet will get delivered: non-existent global boundaries.
Say cheers to the Internet!