Future of Indian Technology

The Indian technology industry got its start running call centers and doing low-level IT work for western firms. Then, in the 2000s, it started taking on higher-level IT tasks, offering management consulting services, and performing sophisticated R&D. Now there is another transition happening, one far more significant: a transition to development of innovative technology products.  Instead of providing IT services as the big outsourcing companies do, a new breed of startups is developing high-value products based on intellectual property. The Indian industry groupNASSCOM estimates that in 2008, the country’s software product revenues totaled $1.64 billion. It forecasts that this will grow to $11 billion per year by 2015.

I attended the NASSCOM Product Enclave in Bangalore, this week, and gave several talks to the 1000+ entrepreneurs in attendance. I was surprised at the changes that are powering the new transition: its tech workers are leaving high-paying jobs in IT services, and kids out of school are ignoring social taboos against failure and defying marriage customs to become entrepreneurs.  A few Americans are also joining the fray, starting their ventures in India rather than in Silicon Valley. Though in China, returnees from the U.S. are fuelling the entrepreneurship boom, they aren’t as important in India. Sadly for my Indian friends in Silicon Valley who are looking to return home, returnees—formerly in high demand and treated like rock stars—are out of vogue and now treated like rocks.

Why are highly paid workers in an industry that does lucrative contract work for multinationals jumping ship? It’s the same dynamic as you observe in the United States.  Entrepreneurs start their companies when they are, on average, 39 years of age. They have 10 to 15 years of work experience and ideas for products that solve real customer problems; they get tired of working forjerk bosses; and they want to build wealth before they retire.  So they defy their fear of failure and take the plunge into entrepreneurship.

India’s outsourcing industry is about 20 years old and has hundreds of thousands of workers with 10 to 15 years of experience and ideas for innovative products.

At the NASSCOM event, I met dozens of tech-service industry workers who had become entrepreneurs. A surprisingly high proportion weren’t developing products for their former customers, but were instead looking inward to solve India’s problems