An Indian becoming the CEO of Twitter has once again raised questions around Indian economy, opportunities for Indians in India and the IT industry. In the last few days, many irrelevant statements have been made on social media. As free citizens of a free country, we have the right to go to any country of our choice and settle there. If people have gone abroad in the last 15-20 years, they have done it to better their economic prospects, to indulge in their passions, and they are well within their rights to do so—nobody can question that. And if many of them are doing well, we should sit back and applaud them, and let it be. There is no need to moan and groan about their leaving.
We must remember India is essentially a poor country. Thirty years ago, India’s GDP was nearly $275 billion, there were no opportunities for the highly educated. A majority of Indians who got degrees from IITs and did not find opportunities went overseas—some for higher education and some for jobs. They went to an America which was maybe 25-30 times the size of the Indian economy then.
India’s GDP today is around $3 trillion, in comparison, the US GDP is an estimated $22 trillion. You can’t compare the opportunities that a $22-trillion economy with 330 million people and a per capita GDP of around $66,000 will provide with a $3-trillion economy with 1.38 billion people and a per capita GDP of around $2200. These are not comparable. Therefore, the opportunities available in the US are not available in India and will not be available in the foreseeable future.
You can’t compare the opportunities that a $22-trillion economy with 330 million people and a per capita GDP of around $66,000 will provide with a $3-trillion economy with 1.38 billion people and a per capita GDP of around $2200.
But this does not mean that people have not done well in India. India has among the largest number of billionaires after the US and China. We have seen so many Indian industrialists do extremely well in this smaller economy. India has got 81 unicorns in technology, of which 41 have become unicorns in the last 11 months.
By abusing the Indian IT industry—calling it a cyber coolie and a body shopper—and saying that we have been unable to create a company of the size of a Google or a Facebook, the so-called malcontent critics are only displaying their ignorance and inability to understand business and the situation on the ground.
Companies like Apple, Microsoft, Facebook and Google are more than 25-30 years old, and all of them originated in the US, not in Europe or Japan, which are large economies too. Why? Because the US, as a $22-trillion economy has surplus capital, where yearly spending on technology is an estimated $2 trillion and technology adoption is rapid. In contrast, the spending on technology in India is about $30-35 billion. Can the smartest techie set up a Google in India? No, because the size of the market and capital are very limited. These are challenges that India faces and will continue to face in the near future.
Let’s look at the achievements of the Indian IT service industry. This year, the Indian IT service industry could export software worth estimated $170 billion. We are the largest exporter of software services in the world; 60 per cent of global IT/ITES outsourcing comes to India. The IT services industry employs 50 lakh people, of which 5 lakh would be hired this year. The industry is among the better paymasters in India. Also, 450 of the Fortune 500 companies in the world get their software done in India. All this took over 30 years to achieve. When we started we were a small economy riven with scarcity. We suffered many disadvantages but succeeded.
The IT services industry employs 50 lakh people, of which 5 lakh would be hired this year. Also, 450 of the Fortune 500 companies in the world get their software done in India.
Today, if India has a large foreign exchange reserve, a big chunk of it is due to the net foreign exchange earned by the Indian software industry and the remittances from Indians in global blue collar jobs. Our surplus human capital is providing us the kind of resources required to grow this country and we should be legitimately proud of this.
Of the top 10 software service companies by market value, five are Indian. And among the top 5, three are Indian. Of the 2.8 million employees in the top 10 companies, 2 million are Indians. Of the 6 million IT software professionals in the US, 1 million are Indians. Of the 5 million working here, 2.5 million work for US companies. Of the 9 million professionals in the US companies globally, 3.5 million are Indians. Indians dominate the software services field like nobody does in any other industry. Should we not be proud of this industry, which has created so many high-quality jobs, and an educated middle class in the country? Should we only abuse and pull it down? This huge brain power is Indian and it continues to grow!
If you look at Google, Microsoft or Facebook, majority of their users and revenues came from the home market. It was only when they had grown at home did they venture outside with the profits earned from the home market. Not to forget, the access to unlimited amount of capital.
This year, India’s startup industry raised an estimated $30 billion; hardly 10 per cent came from the Indian market. We are short of capital; our capitalists do not invest enough in innovation, we have high costs besides other impediments. In spite of all this, Indians have a built a world-class industry which dominates the world. The India Stack is the biggest global fintech innovation over the last 20 years. UPI is a global leader.
It is important that those of us who helped build this IT industry stand up and counter such loose talk. There is great anger amongst IT professionals at such continuous abuse of their achievements. Today, the Indian passport is respected in most countries of the world, and it is due to the Indian IT industry, to a large extent.
I still remember when I travelled abroad 20-25 years ago, people looked down upon us, they had only heard about poverty, death and starvation in India. As the IT services industry prospered, the West heard about brilliant engineers who can change the world.
With so many Indian immigrants becoming CEOs of American companies—having risen to the rank in the last few decades—there is a greater respect for Indians as a global community who can settle down in any country and do extremely well. At such moments, we should sit back and applaud the achievements of Indians and not berate ourselves.
We must understand that our economy is not of a size which can offer everybody the kind of opportunity that one can expect in a large economy like the US.
India spends less than $1 billion in research in universities. In the US, several universities spend more than this on research every year. With such low spending on research, how can innovation thrive? Yet, we have a startup industry with 81 unicorns, and an IT industry which is exporting software services worth nearly $170 billion. This proves India can succeed in technology based on her human capital. Does it mean that our growth is stunted because our ‘best and brightest’ leave us? This is laughable. We have great talent here and so many of us have stayed back, built our businesses and our country. If we have the market size and capital the US has, there is no limit to what we can do. Despite the handicap, we have grown and succeeded.
India spends less than $1 billion in research in universities. In the US, several universities spend more than this on research every year. With such low spending on research, how can innovation thrive?
When India grows into a $10-$15 trillion economy, over the next 15-20 years, that’s when economic opportunities will also increase and we will see the rise of a new generation of companies which will lead the world.
Indians in India will certainly help the country grow. We will conquer the world. But we don’t need abuses from critics who do not appreciate the hard work that we have done and who themselves have nothing to show. We respect critics who have achieved much and are a role model but not these failed malcontents.
The author is Chairman, Aarin Capital Partners. The views expressed in this article are those of the author and do not represent the stand of this publication.