Software services have done well for India over the last couple of decades. It has given birth to some of India’s largest and most profitable businesses. Additionally, it has benefited hundreds of thousands of IT workers with substantial compensation packages, creating a class of young professionals with higher spending power and driving economic growth. It has also resulted in the significant growth of several Indian cities.
However, the most critical impact it has made is that it has created a brand for Indian software professionals at a global level. It has done well for brand India. Indian software professionals are now very well respected globally and have also made significant contributions to the growth of those global companies, in India and abroad. So, there is no denying that software services have done well for our nation. The question is how we can leverage that and take it to the next level.
Becoming a product-led economy
At the end of the day, services do not create any IP since IP is owned by the company that is outsourcing the work. The company that owns the IP is the one that reaps the full benefit of the products that they get developed. Given that many products fail and the investment goes down the tube, but the ones that succeed generate 100x, even 1000x returns over the life of the product. That is where the real value lies. So, the natural question is why we would not use our intellectual ability to create our own products and own the full life cycle benefits. The answer is yes and we have to become a product led economy, and we need to double down on products designed and made in India.
Let us now look at what does it take to do this. First, we need to understand that the product business is a marathon, and you must be in it for the long haul. Services business has instant gratification; you provide services, and you get paid within 2-4 weeks, irrespective of whether the product sells or not. So, entrepreneurs as well as investors need to have patience. Secondly, there is no guarantee that the product will do well, or while you develop the product, some other company does not beat you at it. Today, the risks are even higher. With huge investments being made by the global AI companies like OpenAI, Anthropic, Meta, etc., they keep adding major features and functionality to their products that can make a lot of products redundant.
Role of the deep tech industry
However, deep tech is one area that has a much higher barrier to entry, and that is where India needs to focus. Deep tech requires in depth understanding of several complex fields such as thermodynamics, kinetics, vibration, heat transfer, fluid mechanics, structural dynamics, electromagnetics, materials science, and more. India has one of the largest pool of scientists and engineers in the world, who are motivated to work hard and put their knowledge to work. India also has a large pool of software professionals who have honed their skills and gained substantial software engineering expertise, working for global companies. This combination gives India an unfair advantage over the rest of the world and allows it to take a leadership role in the deep tech product development space.
Next, let us look at what areas within deep tech are more critical for us to become atmanirbhar. The very first one that comes to mind is the industrial technology. India is witnessing a rising middle class, with an increasing appetite for consuming products, which is putting stress on our manufacturing industries. To cater to this increasing domestic demand, our factories must get more productive. While local demand is going through the roof, the world is looking at us as a viable alternative to countries like China. This adds a whole new dimension of quality, reliability, and commitment to the equation. All of this must happen within the constraints of energy availability and associated costs. Industry 4.0 addresses all of the above, and hence, we need more entrepreneurs to push R&D into this sector. This would involve development in areas such as sensor technology, edge computing, wireless networks, battery management, industrial AI, and robotics, to name a few.
Looking ahead
The upcoming years will be critical for India, especially to create ownership of core technologies through deep tech R&D. We must change our image from being a service provider to that of a technology builder. We must innovate and produce cutting edge technology that helps us become atmanirbhar by solving problems that maybe unique to us since no one else will. Deep tech is our sweet spot and what is essential for us to become self-reliant. However, it will require patient capital, disciplined processes, and sustained focus and there are no shortcuts unfortunately.
