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TECH TALK: The Indian Software Factory: The Bottom of the Pyramid

July 3rd, 2001 · No Comments

In a paper written about a year ago entitled “Raising the Bottom of the Pyramid: Strategies for Sustainable Growth”, CK Prahalad and Stuart Hart state:

It is tragic that as a society we have implicitly assumed that the rich will be served by the corporate sector (MNCs) and governments or NGOs will protect the poor and the environment. This implicit divide is stronger than most realize. Managers in MNCs, public policy makers, and NGO activists all suffer from this historical division of roles. A huge opportunity lies in breaking this code – linking the poor and the rich across the world in a seamless market organized around the concept of sustainable growth and development.

Raising the 4 billion poor at the “bottom of the pyramid,” however, will require radical innovations in technologies and business models. It will require a reexamination of the “price-performance” relationships for products and services. It will demand a new level of capital efficiency. It will create a new logic for measuring financial success. It will quicken the penetration of disruptive new, environmentally sustainable technologies. Companies will be forced to transform their understanding of scale, from “bigger is better” to the capability to marry highly distributed small-scale operations and world scale capabilities.
In short, the bottom of the pyramid presents a new managerial challenge one potentially as powerful as the challenge posed by the Internet and e-business.

The emergence of the 4 billion people whom we have called the Tier 4 market is a great opportunity for MNCsThe Tier 4 opportunity is not restricted to businesses serving “basic needs” such as food, textiles, and housing. On the contrary, the bottom of the pyramid represents a massive opportunity for “high-tech” businesses such as financial services, cellular phones, and low-end computers. In fact, for many emerging, disruptive technologies (e.g. fuel cells, wind energy, photovoltaics, satellite-based telecommunications), the bottom of the pyramid may prove to be the most attractive early market.

(The full-text of the paper is at:
http://www.digitaldividend.org/pdf/0203ar02.pdf).

There is a similar pyramid when it comes to the world’s enterprises. At the bottom of this pyramid are over 20 million small and medium enterprises in developing markets like India. How can technology, and especially software, fulfill their needs and aspirations? At the heart of the discussion is the question asked by Prahalad and Hart: How can low cost, good quality, sustainability, and profitability be combined?

Tags: Tech Talk

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