The Power Of I 2020

For India to succeed, the ecosystem should rapidly scale up

The country needs to embrace digital technology to compete on the global stage 

An Indian company that had wanted to go paperless for a long time finally did so recently, amid a pandemic that has disrupted everyday life in an unprecedented manner. The reason why it succeeded in this small digital transformation effort, if you ask the company’s technology leader, was not because the technology had suddenly become available. Rather, the human barriers that existed just five months ago had disappeared. The pushback and resistance to change, from people who were used to the same way of doing things, were gone because the pandemic had forced every organization to rethink how it did business. Herein lies a lesson from this difficult situation — despite the widespread human toll and economic damage it has caused, the pandemic has forced organizations to adapt to change in a way unseen before. Many of these efforts to cope are commendable. More important, however, is the way that organizations saw the opportunity for change, to be ready for a so-called new normal. 

In India, which has been hard hit by the coronavirus like many countries around the world, now is a time to embrace digital technologies to not just overcome the difficulties at the moment but to compete on the world stage in future. There are three factors that will determine India’s success:

- The growing expertise in Software-as-a-Service (SaaS) providers in India.

- The fast adoption of cloud and other digital technologies, driven by the pandemic.

- The rapid scaling up of an ecosystem.

Over the past two decades, India has established itself as home to the world’s IT services, creating a $200-billion business ecosystem in the process. Today, the biggest companies in the world connect to India to deliver their corporate services, from IT to customer service, to staff and customers across the world. This is a testament to the capability of the country’s skilled workforce as well as its enterprises that can size up and seize an opportunity to ride a rising wave of change. For IT services of the past, it was the global outsourcing of services that helped propel many Indian enterprises to become world-beaters in the field. Can the same be done, say, for enterprises riding on the cloud today? Can India position itself as a SaaS hub for the world? Now, is certainly a great time for enterprises to look at the global stage. 

Already, there are some 700 SaaS companies in India today, servicing a number of verticals, from the retail to pharmaceuticals. Would these companies be able to grow their reach beyond India’s borders to deliver for the world, just like how IT services firms have done? Again, the potential is clear, and they are now being helped by the rapid transformation that the world is seeing at the moment. 

Going Digital for the future

Organizations around the world now know that spending on IT is key to surviving the current situation and boosting readiness for the future. A sales pitch to C-level decision makers will get a better reception today for those providing cloud services, for example. Even as we are seeing global economies being impacted by the restrictions on travel, trade and finance, the digitalization in organizations has accelerated in India and elsewhere. 

Technology budgets have often been boosted, even as the core of the business has been adversely impacted. Consider a retailer, for example. Given the restrictions with safe distancing, a brick-and-mortar shop cannot expect the same level of foot traffic as before. Not perhaps for another year or more.

Faced with such an unexpected situation, it can choose to either keep seeing a drastic fall in sales in the coming months or invest in technology solutions, such as e-commerce, to boost its revenues. Opening up a second front, so to speak, will help the retailer gain new customers not just in its native market, but also from around the world. Today, many e-commerce solutions are mature and ready to go, and it only takes a leap of faith and less demanding investment in operational expenditure for companies to go digital.

In India, there are numerous examples of such efforts driven by change. From small and medium businesses (SMBs) to the top 500 corporations in the world, from digital natives to government agencies, the growth of digital transformation efforts is unprecedented. And powering these efforts, which involve increasingly common technologies such as artificial intelligence (AI), machine learning (ML) and the Internet of Things (IoT), is the cloud. 

It is the foundation that provides the agility, scalability, reliability and security that underpins much of the digital efforts. They empower the manufacturer that seeks to analyze real-time data from its IoT sensors on the factory floor, so it can determine if a manufacturing run should be adjusted to increase yield. Then, there is the state government seeking to deliver blended training to students, who can only head to schools on certain days of a week. By utilizing the reach of the cloud, Google Classroom is enabling millions of students in India to connect to the teachers and schools to keep learning in the new, challenging situation.

In Maharashtra, Google Cloud has partnered with the state government to enable 23 million students in 190,000 schools to benefit through online learning. Even the simple act of communicating through videoconference, once considered a challenge because of the amount of bandwidth needed, is no longer as onerous as before. These services are also affordable, not like the international phone calls that used to cost a bomb, say, a few decades ago. Google Meet, for example, is used by corporations in India and across the world to carry out meetings, conduct lessons and simply connect remotely. All this has enabled so many businesses to keep on functioning. 

Growing use of cloud in India

And, this is just the start. Cloud adoption in India will accelerate rapidly in the years ahead. Already one of the largest public cloud markets in the Asia-Pacific region, India is also among the fastest growing, according to Boston Consulting Group. It estimates that this market will grow from $2.6 billion in 2018 to $8 billion in 2023. The market here is still in an early stage in terms of public cloud and IT spending, it noted in a report last year.

The SaaS model has been key to growth, with companies adopting public cloud to make basic functions such as collaboration, accounting and human resources data analysis more efficient, according to BCG. SaaS currently accounts for just over 50% of the market, but as more companies seek to run their own systems, applications and platforms over the cloud, the use of Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) is picking up, it adds. IaaS is expected to be the fastest growing segment, with growth expected to be about 30% annually over the next five years, it predicts.

Who are the ones driving the growth? Digital natives and media companies for now, says BCG, adding that there is interest growing among retailers, financial services institutions, manufacturers and large enterprises across industries. What will accelerate the adoption is the use of application programming interfaces (APIs), which will enable more organizations to unlock silos of information to create even more value.

We are talking about new microservices that can be developed quickly to deliver new features and functionalities, instead of monolithic apps that take months, even years, to create. With this agility, Indian enterprises can expect to compete globally with rivals that are also tapping on the digital capabilities offered by the cloud. 

It is often said that Indian enterprises, especially SMBs, are price-sensitive when it comes to acquiring technology solutions, but many are also deeply appreciative of their transformative capabilities. What this pandemic has offered is a proving ground for the technologies they would not have taken up so early in their transformation journey. 

Competing on the world stage

For India to be competitive on the global stage, a major strategy has to be scaling up in terms of technology adoption and expertise. Building digital capabilities is key to making that happen. Think of the CEO who has to pick up the IT skills needed to get his work-from-home videoconferencing going every day. Consider the IT team in an enterprise that has to quickly develop cybersecurity expertise to complement the vendors that it has recently hired to boost its defences against emerging threats. Here is also where the government can play a larger role. When it comes to up and coming technologies such as AI, it can encourage their use on a massive scale.

Remember, that in India, scale is one strength we can leverage on. Already, the country is a huge user of technology, so to boost the adoption of AI or ML, the government can set up a fund to assist private enterprises as well as government agencies in taking up these technologies in their operations. This can be something that goes beyond just a pilot project on a state level. The multi-year plan can help co-fund the adoption of these technologies to get the early adopters onboard and germinate an ecosystem that is self-sustaining for the long term.

When this ecosystem adds more enterprise users and developers, it can spur new innovation, for example, in applications that are derived from AI and run from the cloud. Of course, the first order of business is to make sure that the barriers to taking up these new technologies are reduced. These barriers, as we learn from the example of the enterprise turning to a paperless solution at the start of the article, are often human in nature and harder to overcome than technological limitations. For India, the same analogy applies. The country is already deeply involved in creating value by harnessing technology, through its many IT services companies. 

Indian enterprises also are quickly adopting transformative technologies, such as AI and cloud, that will enable them to be agile digital competitors on the global stage. Now, if the country can build up enough scale to spur a new ecosystem, it can look to sustain the momentum for the long term. The momentum for change created in these past few months will then propel the country forward to a future where digitalization will be the bread and butter of everyday businesses. Truly, then, the country’s enterprises will have harnessed digital technologies to rival the most forward-looking and fastest growing enterprises from the rest of the world.