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TECH TALK: Building An Innovation Valley in India: Building An Innovation Valley in India

November 27th, 2000 · No Comments

Venture Capital availability in India has risen dramatically in the past few months. Just in the last month, over USD 500 million of commitments have been made. And yet, one is seeing few investments, post the dot-com era earlier in the year. Many of the investments that are being made in the area of software services, where intellectual property (IP) is being created for someone else. What does it take for India to create new technologies, new platforms, set standards? What does it take for India to become an innovation hub?

Why is it important for India to create Innovation? We are seeing limits on the talent front – the demand for quality engineers far outstrips supply. Today, when an engineer works in India, he gets a salary of USD 10-20,000, whereas the company charges about USD 20-30/hour (USD 40-60,000 per annum). The same engineer posted abroad can generate USD 60-100/hour (USD 120-200,000 per annum). When the engineer is part of a team that is creating core technologies, the value of the group can be upwards of USD 1 million per engineer. (Witness some of the recent acquisitions by companies like Cisco, or the red-hot demand for fibre optics engineers). So, if we need to move up the value chain, the solution does not lie in just increasing the hourly billing rates, but also looking for opportunities to create IP.

What we need to do in India is make Innovation part of the entrepreneurial process. We need to create, like what Israel has done, a series of successful technology start-ups, which become leaders in their chosen business segments. We need to build on the engineering-in-India, marketing-outside-India formula – India is still not a market for most new technologies. We also need to build a base of research-driven innovation. This will not only better leverage India’s strengths in software, but also offer significant wealth-creation opportunities far beyond what stock options offer. In doing so, we can create many Innovation Valleys in India.

Send in your feedback to techtalk@samachar.com.

Tags: Tech Talk

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