A tech expert traces India's journey from an outsourcing hub of the 1990s to an innovation destination of today.
When I first became aware of the Indian tech sector in 1993, India would have been the least likely candidate to be named an innovation hub. Back then, and for many years, it was known more as a place where you could outsource your software development at low cost. Or in manufacturing, as the then secretary of department of electronics used to tell me, it was becoming known for 'screwdriver assembly', whereby product kits were imported and then assembled in India for either local consumption or re-export.
Well how things have evolved - two recent reports put India as one of the emerging global innovation hubs. In a KPMG global technology innovation survey, India ranks third behind the United States and China in a list of countries showing most promise for disruptive technology breakthroughs that will have global impact. And in a Capgemini Consulting report on global innovation centres, India was highlighted as leading the Asia economies - being the most favoured destination in Asia and the second most preferred destination globally, accounting for 27 per cent of Asia's new innovation centres.
Eric Turkington, director at Fahrenheit 212, which produced the report as part of the Capgemini Group, said: “We are witnessing a rapid changing of the guard for global investment in innovation centres. The US and Europe have traditionally been viewed as dominant forces in innovation and technology but Asia could soon surpass the US for number of innovation centres built and operated. Moreover it is clear that funding alone is not enough - the success or failure of any innovation centre hinges on how effectively it taps into the surrounding ecosystem, and the role it plays in driving a broader corporate innovation strategy.”
Asia's emergence as a leading hotbed of innovation is underscored by its position as a world leader in patent applications, a key indicator of technological and scientific breakthroughs. The region now accounts for over half (56 per cent) of the world's total patent grants. During the last decade (2005-15), Europe's share of global patent grants has fallen from 24 per cent to 13 per cent.
The study particularly found:
The definition of innovation centres in this report represents enterprise investments in understanding new market dynamics, acquiring new expertise and resources, and also aligning with entrepreneurs, start-ups, investors, academic institutions, and related ecosystems driving new trends. Innovation centres assume many shapes, but at their core, they are comprised of special teams of 'intrapreneurs' in house or in dedicated sites within relevant global tech hubs. They function outside of the traditional operational landscape with the goal of accelerating digital innovation, rethinking customer experience, improving operational efficiency and testing new business models.
Why does such data matter The indicators in this report show how many important shifts in cities and countries change and attract corporate investments. Keeping an eye on these dynamics helps companies identify potential locations for their innovation centres and better leverage innovation ecosystems. Different hubs around the world tend to unify specific expertise and technology trends, which align uniquely with outside industries.
So such an analysis serves as a barometer to firms that want to identify new growth opportunities, extend existing brands and leverage digital technologies to transform customer experiences, operations and business models.
Current priorities shared among innovation centres focus on digital technologies such as big data, the internet of things (IoT), social media, mobile, robotics, augmented reality and 3D printing.
India's rapid progress as an innovation destination is due in part to government and other public sector initiatives that seek to establish India as a digitally empowered society and nurture innovation. As well as India's traditional tier-1 cities, tier-2 and 3-cities are becoming attractive investment destinations. Jaipur, Pune, and Hyderabad each welcomed two new centres in this period involving partnerships with government.
A 2016 study found that the number of active incubators in India increased by 40 per cent to 140, with tier-2 and 3 cities adding 66 per cent of these new incubators. Cisco, along with Qualcomm Technologies, General Electric, and 3M India, working with the local government, established an innovation centre in Jaipur. Similarly, Hypercat, a London-based consortium of Internet of Things (IoT) companies, joined with the city of Hyderabad to launch an accelerator and incubator to drive IoT and smart cities solutions.
In the KPMG global technology innovation survey, India is placed third globally for the second year in a row. It cites India's mobile-first generation and its reliance on local business models assisting the country's progress.
It's evident that the culture of start-ups and entrepreneurship is rapidly driving this too, with some nine star- ups already valued at over $1 billion. And more and more start-ups are targeting the domestic market as businesses shift from serving global outsourcing markets.
The survey suggests India has all the ingredients to become a global driver of innovation, led by a strong market potential, a significant talent pool, and an underlying culture of frugal innovation. It adds that government initiatives such as Skill India, Digital India and Make in India have given entrepreneurs a platform to develop stronger skills, and improve information infrastructure and mobile connectivity.
In summary, the two reports point to a new India as far as its tech innovation ecosystem goes: confident and progressive. It has come a long way and is a very different tech economy from the one that emerged at the start of the government's reforms back in the 1990s.
Nitin Dahad is a journalist, entrepreneur, and advisor to the technology sector and government trade agencies, with over 30 years' experience across Europe, US, Asia and Latin America in corporates, start-ups, and media. He currently edits 'The Next Silicon Valley' and 'Go4Venture'.
