Tuesday, April 03, 2007

Why we don’t have product-making companies?

I found this very elaborate and very thought-provoking piece:

Our obsession with stars and brands

I agree stars are important. It’s the obsession with those stars where I see the problem. We (as Indians) are obsessed with stars and brands. We don’t need to look deep to realize this about us. Our Cinema (unabashedly called ‘Bollywood’) and Cricket has many examples. The whole focus is on one or two individuals while the rest are completely unknown. It applies to our technology space as well. IITs are a brand. Therefore, anything to do with technology in India is referred to IITs while hundreds of universities and other institutes get no mention at all. If an IITian starts a paan shop, the heading goes, “The IITian left his cushy job to start a paan shop right across the street…” If they start some dumb political party, the article reads, “The IITians instead of going to US have sacrificed their careers to start a political party to better India…” A mere contraption of no significance from IITian gets the attention of starving media. This media is more interested in writing ‘This IITian has done…” than writing what he has actually done. The media is only feeding into our own obsessions. They reflect our sentiments- that of ordinary people, the families, and the societies
The same is true of our software-services companies. Why we did not look at other important industries is because these services companies were hogging the limelight for more than 20 years now. In fact, they are hogging the complete light while the rest of the industry is languishing in the dark. Bangalore, which is supposedly the ‘Silicon Valley of India’ (which I don’t agree at all), has lavish office spaces (look at Infosys and ITPL) which almost resemble a developed world. These are the same office spaces which have been glorified by the likes of Thomas Friedman (who has added more fuel to the celebration of our mediocrity). On the other hand, the same Bangalore provides extremely worse conditions to the industrial sectors where hardware and manufacturing houses are located. I have visited some of these manufacturing places- they don’t have roads, they are connected by muddy paths which have huge cracks in the middle, they don’t have water or electricity and this place looks like a remote village of India in the 16th century. The attention of whole of media, political administration, elite, institutions, investors, has been directed towards software-services companies while other industries do not get basic amenities. Software-services companies get lands at very low price; they get tax-holidays, exporting and importing is easy for them. Meanwhile, the manufacturing and other industry of India is putting with policies of old economy.
I posted a comment on that blog which I reproduce verbatim here:

You make a compelling argument. However, I beg to disagree.

If the software services industry is such a rage, it is for a reason. I am not suggesting that the service industry is better, or more profitable, than the manufacturing/product sector. However, the fact remains: manufacturing/product is a long-term thing. You need investments in time, resources, money, training today to get paybacks, maybe 10, 20, 30 years down the line. The service industry has more instant paybacks on investments. It is the nature of the beast.
We, Indians, who are on the verge of starvation, do not have the luxury of time.

However, all is not going crimson. We have a few product companies here (the auto industry, for example) who are making a mark. The turnaround is slow: but atleast there has been a start.

Having said all that, I do feel we need a more balanced education system that does not entirely focus on computer training for kids. Maybe, we need primary schools that run carpenting classes to kids to give them a taste for other skills.

What do you think ? Is the services industry a fad ? Do we need to re-look at the allocation of resources ? Are we putting all our eggs in the Services sector basket ?