Technology has provided a foundation to connect people and communities, enable innovation and productivity increases, and improve standards of living across the country. Recent initiatives such as the Unique Identification project present an enormous opportunity to improve governance and public-service delivery. They also offer new market opportunities for various sectors, including financial services, consumer goods and healthcare. The second part in the Accenture series, “New Waves of Growth for India”, identifies technology as a major trend reshaping the economic landscape and discusses how organisations can harness its power to become more efficient.
Technology is catalysing a massive social and economic transformation in India. It is connecting people and communities, enabling innovation and productivity increases, and improving standards of living and opportunities across the country.
The interesting story is not just that technology is advancing. It has always done so. What’s different today is the extraordinary shift in how technology is being applied and used. As technology costs fall, poor and geographically remote populations are adopting technology and are willing to pay for products and services that satisfy their wants in a sustained manner. New connection points arise daily as government funding and low-cost innovations — such as a $35 touch-screen laptop developed in India — make computing hardware more affordable.
The maturation and convergence of a range of technologies is enabling a new wave of technology-driven growth. Information technologies have revolutionised the way in which people interact with companies. They have transformed customer relationships, supplier relationships and entire business models. They are reducing costs, making operations more efficient. They are bringing a new level of intimacy and partnership between firms and their stakeholders, including their customers. Technology also offers opportunities for transforming public-service delivery. Accenture analysis illustrates that, by investing in skills and widespread technology adoption to harness the technology trend, India can boost its GDP by Rs 4 trillion ($90 billion) by 2020, 2.8 percent above the current trajectory. This can help create 10.8 million new jobs by 2020.
Opportunities ahead
Technology presents a range of growth opportunities across the spectrum of industries and economic relationships:
Rising income levels and increasing levels of consumer awareness are driving demand for digital goods and services across India. Mobile phone subscriptions continue to grow rapidly, having already increased at almost a 70 per cent compound rate over the last decade to reach close to 700 million. Notebook sales have witnessed equally astounding growth over the past five years, skyrocketing by almost 15 times from about 177,000 in 2004-2005 to 2.5 million in 2009-2010. Gartner predicts that by 2012, notebook sales will outgrow desktop PC sales in India, with most of the demand coming from consumers as well as small and medium enterprises (SMEs).
Core technologies embodied in a series of scientific breakthroughs will open up significant opportunities for rapid growth. For instance, the market for cloud computing in India is expected to be worth $360 million by 2014, growing at a 40 per cent compounded rate. Pay-per-use models of software and storage infrastructure as a service based on cloud computing platforms are helping Indian businesses compete with financially stronger developed market rivals.
Springing out of these core technologies are a number of ancillary technologies and services with growth potential such as analytics based on the extensive use of data and statistical analysis to guide management decision making. India has a billion-plus consumers, and very little is known about the consumption patterns of most of them. This makes business intelligence and analytics critical for companies in sectors such as retail, healthcare, telecom and financial services. Indian banks are already analysing customer profiles to cross-sell other products, while telecom companies are examining usage patterns to market new plans and services to subscribers. The government is also seeking to build competency in business intelligence and analytics. The UID programme will make available huge volumes of consumer data that the government plans to analyse to improve efficiencies in collecting taxes, combating fraud and maximising public services. But with the availability of so much data, security and privacy will b ecome growing concerns.
Businesses are already facing increased enterprise security risks coming from social networking sites, mobile devices and cloud platforms. Security is an even bigger worry for governments as IT infrastructure supports critical national assets such as power grids, emergency communications systems, financial systems and air-traffic control networks.
The convergence of research and innovations from different fields will yield entirely new technologies, such as the application of computing to problems in biology, medicine, and even agriculture. The bio-agriculture market segment in India, estimated at $420 million, can help tackle India’s food-shortage problems. Private companies and government research agencies are genetically improving the quality of crops to create high-yielding hybrid varieties. Bt cotton is the best-known success story, and accounts for more than 80 percent of all cotton produced in India. The biopesticides and biofertilisers market, although nascent, is attracting attention because these products are economical, eco-friendly, efficient, productive and accessible to marginal and small farmers.
New technologies are bringing not just new sources of demand but also whole new business and service models. The rapid spread of mobile phones to help farmers and fishermen become more efficient and improve their livelihoods is just one example. Indian businesses are increasingly using technologies to bridge the gap to the country’s massive rural markets, which have stood outside companies’ reach because of poor infrastructure and lack of connectivity. Technology is bringing to life entirely new business models that previously would not have been profitable — or even possible.
Making it happen
As technologies mature and are brought to market, they present opportunities for business growth through a variety of means. However, organisations need to seriously think about how they can harness the power of technology to become more efficient and grow at the same time. Some questions worth pondering — how can you use technology to tap into niche markets that are not being served? How can you use new modes of consumption to reach new customers? Is your organisation trained to cope in a technology-driven world? Do you have a strategy for preventing and dealing with cyber-crime? How can you develop better relationships with research clusters?
To help find answers to some of these pertinent questions, Accenture recommends five strategic actions:
* Embrace the cloud: Purchasing IT solutions as a service enables companies to enter new markets rapidly, minimise sunk costs and benefit from cutting-edge software. Offering all these advantages, cloud computing will help Indian entrepreneurs and SMEs compete with larger organisations. As more of India’s low-income consumers demand pay-per-use services, companies will have little choice but to shift to clouds.
* Use technology to pursue polycentric innovation: Multinational companies are pursuing “polycentric innovation”— choosing locations for innovation based on the markets served; for example, a different innovation hub for a different type of innovation for a different type of market. They are increasingly shifting idea incubation to locations like India to create relevant products for their emerging-market consumers. “Reverse innovation” is also on the rise, whereby ideas originate in emerging markets before being sold into the developed world.
* Harness technology to serve customers’ needs: Indian companies recognise the importance of putting the customer at the centre of their technology agendas. They are analysing customer needs before deciding what technology to deploy, which helps them justify technology investments to the shareholders.
Tata Docomo, the telecom service provider, is a case in point. The company recently launched a web-based live chat feature, the first in its industry. The feature allows new and existing users to ask questions and provide feedback in real time, and to share files during the sessions.
* Share digital literacy: Widespread digital literacy is critical for amplifying technology’s impact on productivity and innovation across the wider economy. Full integration of new technology requires a variety of skills in the workforce at a range of levels, from basic digital literacy to more advanced technical skills. Knowledge-sharing schemes such as mentoring, social networks and enterprise wikis can spread the necessary expertise cheaply and effectively as well as bridge generational gaps in working practices. However, India needs many more formal training institutions.
Although India has a strong IT talent pool, a wide gap exists in terms of other technical skills. The government and corporate sector is trying to bridge that gap through skills-development programmes. Consider Hole-in-the-Wall Education, a joint venture between Indian education major NIIT and the International Finance Corporation (a part of the World Bank Group). The venture set up 23 outdoor computer kiosks in some of the poorest slums in India, where children never had access to a computer. Monitors protruded through holes in the kiosk walls. Instead of a mouse and keyboard, there were specially designed joysticks and buttons, and the computers were connected to the internet. Within hours of installation, and without instruction, children began browsing the internet.
* Create open innovation networks: Open innovation — whereby companies involve stakeholders such as suppliers, vendors and customers in their innovation process — is attracting significant interest in India. Automobile companies in India provide exceptional examples. They have nurtured capabilities in local auto-parts companies and OEMs and, in return, have benefited from these stakeholders’ ideas — strengthening technological capabilities across the industry’s value chain.
To sum up, unleashing the full potential of these new technologies will require a number of supply-side initiatives. The workforce of tomorrow needs the skills and connectivity to fully embrace the digital world. The adoption of new technologies relies on regulation to provide stability for businesses and public services along with assurances of data privacy for consumers. Continued innovation will flow from strong links between research and business, to give budding entrepreneurs the funding and other support they need to bring technologies to market. Companies would often no longer have a choice about whether to take up the new technologies or not, the only way to stay ahead is to look for the opportunity and take it.
The author is chairman and country managing director, Accenture India. In the concluding part of the series next week read how the quest for resource efficiency can become an important source of economic growth and job creation
