What's holding back India's digital economy?
The sheer vastness of the Indian population – 1.2 billion at the last count – means India's digital economy is thriving, but that's despite some systemic problems. A stunning 400 million people have no access to power, though companies like OMC Power are creating micro power plants across rural India. For now, in remote villages phones can be charged-up at the same kiosks that phone credit is bought.
It naturally follows that most lack access to broadband internet. "That's probably the single biggest opportunity for the country in terms of its digital growth," says Newal, who thinks that the lack of bank accounts and credit cards make traditional business models fall at the first hurdle. In India, the mass-market is elusive. However, that's changing, with bank accounts spreading, particularly among young people.
"Most Indian startups focus on the 'low-hanging fruit', either the English speaking Indian upper-middle class, or the developed markets outside of India," says Newal. "There is no economic incentive for startups to undertake the hard work of making the digital economy relevant to the lower classes, who speak hundreds of vernaculars, are not English or Hindi-literate, and who lack familiarity with the smartphone user interfaces that so many of us find intuitive."
How critical is Bangalore to the IT industry?
Bangalore in Karnataka – officially now called Bengaluru – is at the centre of India's high-tech industry. This 'Silicon Valley of India' has long been a hub of software development and outsourcing from Western companies. However, the increasing pool of talent in Bangalore, and the more viable market conditions in India generally, are driving more investment from outside. Just one example of a company flourishing because of India's growing technology industry is MetricStream, a governance, risk and compliance firm that works with TCS, Wipro, Tech Mahindra, Infosys, HCL, Cognizant, KPMG, Deloitte and PwC.
"MetricStream relies on Bangalore as one of its key hubs in the company's innovation efforts, with products and services designed, built, marketed, delivered, and supported from India," says Piyush Pant, VP of Strategic Markets at MetricStream. "India is an ideal location, due to the availability of a highly talented, skilled and technical workforce ... India serves as a critical hub." Make in India is proving instrumental in driving investment into Bangalore.
Is India ripe for digital advertising?
With a quarter of a billion net users having made the internet the easiest way of appealing to people across India, surely the country is in the grip of a digital advertising blitz? "It would seem to be a no-brainer for digital advertising firms," says Pawan Sadarangani, MD, AudienceScience India, who admits that India is the third biggest market after China and the US. "Things are never quite as straightforward as they seem – there may be 243 million internet users in India, but this represents only 19% of the population, which is the lowest penetration for the biggest 20 internet markets."
Despite that, India is already at the forefront of advertising technology and programmatic trading. "It is the centre for technology operations for a number of leading firms, such as AudienceScience, Google, Criteo, Xaxis and Pubmatic," says Sadarangani, whose AudienceScience now has about 70 staff in Pune near Mumbai, and is investing heavily in training local talent.
Indian advertisers are conservative, hugely price sensitive, and most ad tech companies simply serve global campaigns according to Sadarangani. "While India is at the forefront of technology in many areas, programmatic is still to come of age," says Sadarangani, "but India can learn from the successes and mistakes of other markets as we grow and take our rightful place as a powerhouse in this sector."
So why hasn't India produced a Microsoft or a Google? So far, there's been little incentive to. Producing necessities, not luxuries, is what has characterised India's tech sector so far, though that will change, thinks Newal: "It is very likely that countries like India will produce companies that are revolutionary in a global context."
