4th February, 2000
What does it take to create wealth in the digital economy? A strong technology focus, a sound business plan and loads of VC funding might be some ingredients, but they are not enough. The issue is much more complex than that.
A panel chaired by NR Narayana Murthy, chairman of Infosys Technologies, grappled with the issue at Nasscom 2000@India and threw up points to ponder. The panel was made up of Ashank Desai, chairman, Mastek, K.V. Ramani, chairman Future Software, Montek Singh Ahluwalia, member planning commission and Sudheendra Kulkarni, director Prime Minister’s Office.
Mr. Ahluwalia: The IT industry has a great feel-good factor about it. It is one of the few industries, which is admired by all but envied by few. So much so that everyone feels proud about it (including us) without contributing to it. The question is, why does the IT industry evoke such kind of an enthusiasm. The primary reason is that the software industry has grown rapidly because of exports and also successfully reflects successful globalization. But what I would really like to see is India succeeding rather than just a few Indians succeeding. The reasons why Indians are successful here are because it fits well with our culture. It is about making money in a knowledge-based industry and seen as a young persons’ industry.
About creating wealth in the digital economy, as an economist, I have never been happy with the term “creating wealth’. It’s a phrase borrowed from the stock markets. Also, the hub of this industry is in the US where stock markets play a huge role. It is a common perception that when a programmer is writing code he is creating wealth. He is creating a product or a service, which will be used by customers who create wealth. I believe it is important to have a two-pronged strategy. The government has a supportive role to play to support something that’s successful. The government is willing to recognize that the industry needs some issues to be addressed for it to remain successful. We need a world-class telecom infrastructure. We also need a will to creatively destroy policies and replace with modern ones. Earlier a policy was relevant for 10 years, but in the IT age a policy holds only for 2 to 3 years.
Ashank Desai: I think, it should be redefined to just creating wealth. I have some points to make here. We need to figure out what are you creating the wealth for, what is the definition of wealth… But the objective also has to go beyond that. For me, the company and the society at large with a conducive environment are the primary cogs in the wheel. For a company it is imperative to work out if it is in the right business. It is all about strategy, about doing things right in an efficient manner. A Company should question what is its source of wealth. Is it share price? I believe that wealth is created by a company’s customers. Also, this has to be seen in an environment’ where creating wealth is not looked upon as a sin. In the digital economy there are three important points to ponder: there are new rules to play by; the game is changing and also the way it is changing too is changing. Lastly, we’re not creating wealth as individuals. We are co-creating wealth. There is no place for barons in the future, as wealth creation is soon in association with employees, venture capitalists, alliances, customers, joint venture and the like.
Sudheendra Kulkarni: I am not going to talk about how to create wealth, as I am not a practitioner of it. Whatever the industry has achieved in the past two years deserves applause but I believe that the real challenge is whether India is succeeding. I agree with what Montek said earlier. India has a population of 1 billion and have the changes affected most of the population? We talk about the next century belonging to India. A lot of people put across a need for reforms, but it is restricted to a small layer. What we don’t look at is how will the whole country participate. A whole lot of people are not feeling the benefits of reforms. We have not paid any attention to issues such as increasing employment in areas such as agriculture, services and the small and medium enterprises. If the masses can experience the benefits of reforms and wealth creation, there won’t be much resistance to reforms. And only then can the century belong to India.
K.V. Ramani: We have come a long way since creating wealth was considered a sin. We also have the government thinking similarly. But to create wealth, we have to concentrate on what we think is good. We also have a social responsibility to fulfil, but we have to first create wealth for our stakeholders–the people who work, invest, the government and the society at large.
I strongly believe that entrepreneurs are the real creators of wealth, and the government to be a consumer of the wealth. The government should ensure that it collects and redistributes wealth.
As an industry, we are here to succeed, provide jobs, create revenue streams and to ensure we are creating something news. The only way to ensure we are successful entrepreneurs is by ensuring to create wealth for self first. You need to have a good idea at the right time. Remember, the money is good if you succeed, but if you fail, you are all alone.