The silent glow of innovation- Vivek Wadhwa

When Americans think of Indian outsourcing, they visualise call-centres doing low-level tech-support and IT companies fixing bugs in computer software. Indeed, that is where the Indian industry got its start. But while the West was literally sleeping, Indian outsourcers evolved into world-class R&D machines.

Its call-centre operators are now helping enhance patient care for American hospitals, optimise financial transactions for Australian banks and streamline parts management for European engineering companies. Its IT companies are developing mission critical avionics systems, next generation telecommunications technologies and complex medical devices.

Despite the limitations imposed by the country’s weak infrastructure and antiquated education system, India has rapidly evolved into a global knowledge and innovation hub.

Just ten years ago, Indian IT companies like Infosys, TCS and Wipro were bidding for small contracts to help western companies fix the Y2K bug in their computer systems. Their customers were desperate to fix this ticking time bomb, but didn’t have the manpower or skill to do it. So despite severe hesitations, western companies sent their mission critical systems to India for repair.

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It also explains how companies in India are able to hire bright but largely inexperienced talent to successfully engage in R&D and other innovation.

With the slowdown, Indian talent supply has been able to catch up with demand. And Western companies are more desperate than ever to cut costs.

To achieve the 30 per cent to 40 per cent cost savings that Indian outsourcers can offer, they are now outsourcing their most strategic internal systems.

Additionally, thanks to a combination of the recession in the US and that country’s flawed immigration policies, there’s a flood of highly educated and skilled talent returning home to India. These NRIs see more opportunity in India than abroad, and want to be near family and friends.

They are returning with the latest skills and an understanding of foreign markets. So the stars are lining up for Indian outsourcing, and this industry is gaining a second wind.

Within a decade, India is likely to become the world’s second largest R&D centre after the US. Its innovations will likely benefit not only India, but also the world.

(Vivek Wadhwa is executive in residence/adjunct professor at the Pratt School of Engineering at Duke University and a senior research associate with the Labor and Worklife Program at Harvard Law School)

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