India – the golden bird in crisis again

India is again in crisis mode and presents opportunities to reset actions. India is facing stagflation – stagnating GDP and persistent inflation. The government, corporate and personal debts are at a high and savings rates have reduced. Capital allocation has suffered and ROA is trending down.  Currency is at a life time low, imports are high, exports are flat and balance of trade is adverse. Stock market is lopsided at Oct 2007 levels with FMCG and IT as the significant contributors. All outputs have lagged behind plans – Electricity, Gas, Oil, Roads, Ports. Even Government Navaratna monopolies like BHEL, Coal India, Gail India and Container Corporation are bleeding. Unfortunately, the hard changes required for bringing the potential of the golden bird and I in the BRIC have not come to fruition yet.

 

More than at any time, currently Indian companies will be looking for technology to accelerate productivity and put them back on a growth path or optimize the cost structure. Collaborating with and helping target emerging and current leaders in select industry verticals will make scalable revenue and repeatable client successes. For e.g. Bharti Airtel IBM contract is coming up for renewal and likely going to be split into multiple vendors.

 

India can be a great innovation lab to launch new services in horizontals like Infrastructure Services, Mobility, Analytics, CRM and BPO. Running these innovation labs in India requires lower investment, allows for closer business/ IT collaboration and potential for long growth trajectory as mid-caps transition to super-caps. Again Bharti Airtel in 2004 would have been a great success as technology leverage led to market leadership. IBM went on to parlay expertise to Idea as well. Unlike innovation labs at TCS and Infosys, the Innovation Lab will co-innovate with clients, be client funded with initial internal seed funding. The Lab will crowd source ideas from employees, partners and clients. High potential ideas will be funded by external or internal customers. Future funding will be generated from deals won through direct contribution mining future, current and past client successes. India’s public sector with digital delivery of information and services can bring huge efficiencies and reduce corruption. Growing skills of the large young populace is another great opportunity for technology.