Collaborating with Competitors, and Dominating an Industry

Experts assess what helped, and hindered, rise of India's IT sector

Subir Gokarn, Kiran Karnik, Ashok Advani and Patrick Foulis

MUMBAI, May 28, 2012 — The success of the Indian IT industry may largely be attributed to Nasscom, its representative body, and the collaboration that Nasscom facilitated among competitors holds lessons for organizations across regions and industries.

These were the premises at Asia Society India Centre's event Collaborating with Competitors: Driving Industry and Managing Dominance, featuring panelists Kiran Karnik, former President of Nasscom and author of The Coalition of Competitors: The Story of Nasscom and the IT Industry; Ashok Advani, Founder Publisher of Business India Group of Publications; and Subir Gokarn, Deputy Governor of the Reserve Bank of India; and moderator Patrick Foulis, India Business Editor of The Economist.

Karnik elaborated on the positive impacts of the IT industry, including social change brought about by employing large numbers of women and employing many from the high school level. IT transformed the lives of people from rural to urban areas, and fostered meritocracy by hiring qualified professionals without turning to family connections and wealth. The industry, he said, also elevated the profile of India as a rising technological power, and increased confidence in the quality of India's other exports as well.

Gokarn commented that the Indian government played a positive role in facilitating the rise of the IT industry, highlighting the importance of "effective and constructive policy in furthering the growth and development of a sector." Karnik suggested that the government does not need to take an active, developmental role in the growth of an industry, though it should try and remove obstacles in the way of industry's progress. Advani disagreed, saying that government regulations restricted the ability of businesses in areas such as moving products across borders, and drove some to other countries to further their business plans.

Karnik explained that a major factor in Nasscom's success was its selection of "ecosystem issues" that affected the entire Indian IT industry. This included strategies to deal with growing concerns in the U.S. about outsourcing jobs to India, particularly during American presidential elections, when the Indian industry worked with clients in the U.S. to push for continued business ties so that the movement would be recognized as one from the U.S., and as benefiting the U.S. as much as it does India.

Karnik stressed that the biggest impediment to growth in the industry was the Indian education system. The prevailing setup, he said, was based on rote learning and not geared towards innovation, which he feels is crucial for the industry. He observed that students were trained to give expected answers within certain confines, or that the system only selected students who thought this way.

Gokarn also shared views on the advantages that the IT industry enjoys over the more intensive manufacturing. He said that the telecom industry gave the IT industry "zero transport costs," which is not possible in manufacturing, though transportation systems and infrastructure need to improve to lend manufacturing a similar advantage. Moreover, the IT industry has more flexibility with respect to its human capital regulations, allowing it to lay off and re-hire workers while keeping operations running.

Watch the video, above left, for highlights of the discussion.

This programme was presented in partnership with Harper Collins.