EAST INDIA COMPANY IN TODAY’S CONTEXT – PART 3

When we move to start of IT landscape in late 80s and 90s, India had a lot of hardware companies. Wipro and HCL Tech started as hardware companies in 1990s and were struggling to create PCs and printers. The government did not provide any special support to these companies.

Here comes globalization. The foreign companies called MNCs arrived to sell their PCs and printers. MNCs partnered with Indian companies to assemble products locally. Assembling  MNC products was more profitable to Indian companies rather than doing R&D and also manufacture of their own products. MNC products provided more money on short term and this was earned with less effort.

MNC hardware products took over the market. To reduce transportation cost, they manufactured hardware in South East Asian countries and shipped products to India. This caused competition for remaining Indian manufacturers and they started gradually moving away from creating their own hardware.

At this time, a new opportunity called developing software promising more money with less labour problems, less man power and less infrastructure and the Indian companies moving to software. Now all hardware market was left open for MNCs with little or no competition. The companies developing software also became customers for MNC hardware.

Indians with expertise in English Mathematics, (trained by British, as explained earlier) qualified as good clerks were suited to develop software/write code and mainly in repetitive tasks. To handle the challenge for MNCs in communication, some Indians st travelled abroad for short term assignments and Indians started to migrate for new opportunities to USA.

India has state owned telephones and communication channels was primitive. India created CDOT to start telecom revolution, leading to more phone usage in India and enabled doing business simpler across cities. The upgrades in telecom industry enabled foreign MNCs to sell more of their hardware products to telecom industry and existing business.

Like rail road transport, came the advent of internet, leveraging the telephone line. Indians with less skills of English and Mathematics were good and cheaper to perform repetitive tasks using phone and internet. Solving communication challenge gave rise to BPO industry. Again glorified clerks who earned better salaries took risk to start BPO outfits to employ clerks in large numbers. Once the company had good number of clerks, the company was sold to foreign MNCs on validation based on head count.

Indian software industry earned money to create products and solutions for MNCs. They got 100% tax exemption for export oriented software. Doing software for abroad was more lucrative than developing software for India. Some of the founders made a lot of money and became wealthy. Few companies came in to market that created products like Tally and faced a tough environment to acquire talent.  Why would Indians join Indian product company with uncertainity, rather than joining Indian software service companies, travel abroad  and make more money?

Whether products or services, companies from both order enabled purchase of PCS, phones and laptops. Clients of the software products had to purchase hardware to install software. These hardware products were primarily manufactured by foreign MNCs and helped them to earn good money from Indians. On one side, MNCs  got more software work done by Indians at lower cost compared to their country. On other hand, Indian purchased their products at higher price and made their business strong.

Thanks to English knowledge of Indians who were computer savvy, MNCs sold hardware products with only support in English. No one asked for support for Indian languages and Indians learnt spending monet to use software available only in English. Be aware, MNCs supported all European languages for hardware and software sold in European economies and had no pressure to provide similar offering to Indians, though population of some Indian states is larger than European countries.

Some Indians started to build websites and web applications for Indians and computerize the Indian government process and local processes. MNCs entered government arena and offered software close to free cost  as freebie when organization purchased their hardware. This provided a tough competition to Indians software companies and some of them decided to develop software only for the MNCs.

The software came along the hardware was also available only in English. See a divide and conquer strategy working underneath the economy. To use software, Indians with knowledge of good English and programming and became software clerks or BPO clerks. I call them software clerks (also called software engineers). These guys were trained to be expert in specific area and not to develop the entire product or solution.

The design of product or solution was done by MNCs in their own country and the execution of repetitive steps was done in India. This looks exactly like their ancestors in 1800a and 1900s. By paying these software clerks more salary, they created a habit that is difficult to change or revolt against when you realize its pitfalls and want to have your own startup.

See till now, they leverage the English and maths talent in Indians. The phone lines did not provide them the communication infrastructure to scale. Here comes the internet that introduced new business jargons of websites and web applications. These could be deployed at one place and used across globe. It gave them one command centre and power to control the globe from center.

Indians did not use the same to control the globe. They helped the MNCS to control the world and doing so helped them to influence Indians and capture Indian market. This started with advent of new MNC companies like Yahoo, Cisco and Hotmail. The services that was needed by common man in west was needed by rich man in India and people who could afford. Over time poor man was made to use the same too.

On one side, companies provided free access of their services to Indian population. On other side, they setup their own offices and developed web applications at cheaper cost. The burst of internet enabled companies like Cisco, Alcatel and Lucent to sell more hardware to India. They continued to have one challenge, most of Indians did not have access to internet.