Original Article: “What’s driving India’s rise as a R&D hub” – Knowledge @ Wharton.
Vivek Paul, ex-CEO of Wipro believes that the Services industry has a negative impact on the entrepreneural eco-system of India. At first glance, this would appear to be an extreme opinion. But if you read the paragraphs below carefully, you will see that Vivek makes a strong case. Specifically, his argument implies that there is a tradeoff between risk taking abilities and attention to process detail. With reference to the workforce trend, the low entry barrier to services is causing the Indian workforce to tilt towards the latter. Overall, his point that the path down a Services model will not lead to innovation and products, is well taken.
Knowledge@Wharton: Where do you see opportunities in India, on the IT side and the life sciences side? And where do you think India’s competitive advantage might lie compared with other countries?
Paul: It goes back to the abundant supply of trained labor. That doesn’t necessarily mean just cost. It means cost, process and availability. So I don’t think that at this moment in time [the question is] “how do you build the manufacturing of a pharmaceutical” or “how do you do the clinical process.” Are there ways for you to do more of the generics side? Are there derivative drugs that you can develop? People are finding that you can create drug cocktails, and come up with a different kind of an outcome versus an individual drug you can make somewhere else. Those are very interesting areas.
Aron: Wipro, which you did so much to grow over the past five years, has been doing a lot of captive R&D for other companies. Do you see that as something that can be replicated by other companies? Is there a profitable and robust revenue stream in India for such services?
Paul: If you look at the service business, absolutely. But if you look at that service business as leading to innovation and product outcomes, the answer is absolutely not. Frankly, I feel that when people work in a service business like ours, it’s almost like we give them a lobotomy. I don’t think — and I hope I’m wrong — you will see a single successful product startup coming out of people who were working at Wipro or any other similar companies. You’ll find that innovation comes from people who worked for Intel India; they’ll go off and come up with a new chip. Or someone at Cisco India will come up with a new router. Why that is, God knows. But I truly believe that there is some sort of inadvertent lobotomy that we give people.
Aron: So you believe that some sort of self-selection is taking place? That those bright people who are risk-averse, who want to be very good at process detail, those are the folks who will come and join service businesses? And those who have an appetite for risk, who are willing to look at messy, ambiguous situations, will go off and try to do R&D?
Paul: I don’t know. I just have that observation. I have not spent any time thinking about what the root cause might be. But there it is.
Aron: Where do you see high-end R&D opportunities in general? For instance, there’s a lot of R&D being done in China, in Ireland and in Finland by American companies. Do you see those kinds of captive R&D centers coming up, or better still, ones that give R&D projects to a third party and say “I want you to come up with a new circuit board for my cell phone?” Do you think that kind of thing could happen?
Paul: It’s already happening. The stuff that’s been done in India is staggering in terms of range and depth. I don’t think that anyone can say that the work we’re doing is trivial. But the work we’re doing is under somebody else’s direction. Let me put it this way: For an engineer, there’s a big difference between discovering something, versus discovering something that you know somebody else says can be done. That difference is the difference between the service business and the products business. In the service business, what you’re doing is great stuff, but it is in some sense something that someone else told you to do.
Aron: Let’s talk about doing something under someone else’s direction, after someone says, “This can be done, do something better for me.” That mindset works in the services business, but to succeed in products you have to go off and discover the possibilities. Is that correct?
Paul: Yes, and there’s a second quality I didn’t mention: Knowing what you want, or what the market wants, versus being told what to do.
Update (2nd Feb. 2006): “Bootstrapping a Business” – Rajesh Jain, Emergic.org.
Related posts on Sukshma.net:
“Made in India for India” – Why development for Indian markets matters more than services for developed nations.
Posts under start-up on Sukshma.net for those interested in understanding how to start a start-up.