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| Chairman Speak |
| Keynote address by Mr. Ravi Venkatesan
at a Microsoft seminar on 'India is Innovation' |
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| The last few years have
been exhilarating for India. It seems that the unbounded
opportunities were limited only by our imagination. With
each passing day, we see even more clearly, that India
will soon become a developed country and the world’s
third largest economy. |
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| But as we speak, we are
confronted with enormous challenges and in the words of
a prominent journalist, termites are gnawing away at our
success. What are these challenges, who are these termites
and how can we profit from addressing these challenges? |
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| Some of the key issues which
need immediate attention are - |
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Focus on education |
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Creating economic
opportunities for the middle and the bottom of the
pyramid |
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Enabling the small
business to compete and succeed in the global economy |
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Improving our infrastructure
and |
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Most importantly
helping the government in its e- governance initiatives |
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| Ravi Venkatesan |
| Chairman, Microsoft India |
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| A recent study by CII & WEF ( World
Economic Forum) visualized the India of 2025. |
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| The study came out with 3 different
paths that India growth can possibly take |
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Pahale India ( Inclusive Development
for entire India ) |
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Bolly World ( Exclusive Development
for few pockets of India) |
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Atakta Bharat (Isolation from
and with the world) |
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| In light of the future balanced growth
of India, it is imperative for us to embrace a model aimed at inclusive
development. IT would play a central role in this, is a well accepted
fact. |
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| Considering that, it is quite alarming
for us to know that the IT investment is only 3.5% of total capital
investment. India still ranks 30 amongst the developing countries,
lagging behind even Thailand, Vietnam and Philippines. |
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| The flip side is, that it this under
investment represents a large economic opportunities for Indian entrepreneurs.
For centuries, it is a proven fact that the largest fortunes have
been created by expanding the market, by serving the middle if not
the bottom of the economic pyramid. |
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| Around 150 years ago, Isaac Singer of
Singer Sewing machine fame made his name immortal and created a great
fortune by allowing people to pay $5 per month rather than pay for
their sewing machine upfront. Millions of housewives could suddenly
afford to buy a singer. About 100 years ago, Henry Ford did the same
by paying his workers $5/hour enabling the middle class Americans
to own a luxury car. Bill Gates laid the foundations of his vision
30 years ago to install a computer on every desktop and in every home.
Sam Walton made every thing affordable for middle class in America
creating the world’s largest company. |
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| In India, Captain Gopinath created Deccan
Airways with a dream of making flying a reality for middle class Indians.
Fares ranged from 10%-50% .In no time, he has created an enterprise
with a market cap of almost $1 billion. Dhirubhai Ambani had a vision
of people being able to talk to each other on a cell phone for less
than the cost of a postcard. Today 6 years later Reliance Communications
Ventures is worth $8 billion. |
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| What is the lesson here? To create great
fortunes, great enterprises need to be built by serving the needs
of the middle and bottom of the pyramid which would benefit our society
and the country as a whole. This is an extraordinary window of opportunity
and those of us who are fortunate to live in these times will look
back with some regret if we don’t seize the moment to innovate
and be entrepreneurs. |
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| This is not a theoretical belief. At
Microsoft we passionately believe in realizing India’s potential
and we are investing in the right direction to make this a reality.
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| Let us take the example of Rural India.
There is a huge number of Indians who will not be able to participate
in India’s growth curve unless they have access to information..
There is empirical evidence to prove this is true. |
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| A year ago we committed ourselves to
the goal of giving every Indian access to a connected computer by
2010. We launched an initiative called Project Saksham that aims to
setup connected PC kiosks in at least 200,000 villages. Now the easiest
thing in the world is to drop a kiosk in a village. But unless one
really thinks this through it will well be that in three months time
when you come back, the PC would have stopped working and gathered
a thick layer of dust. |
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| So one really has to think through issues
of sustainability and plan very carefully. One has to think about
how to create a hand-held user interface because of high levels of
illiteracy and fear of computers. We have found women from self help
groups who make the best kiosk entrepreneurs. We had to think about
how to give these women the business training and computer skills
to become successful entrepreneurs. One has to think about issues
of power and connectivity. The inability to access technology in local
language can be a big hurdle. To address this, through our Project
Bhasha, we made Windows and Office interfaces available in 14 languages.
It is also important to identify and work with ISVs to deliver services
and content at the kiosk that can be monetized allowing the emergence
of an economically viable ecosystem. |
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| We piloted 300 kiosks across 6 states
involving about 4000 users to understand the key requirements and
sustainability of the rural kiosk model. Our key learning’s
were - |
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e-Government alone is insufficient
to sustain the rural kiosks |
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People in rural areas consider
education important. They are willing to pay money to become
Computer literate (Internet, MS Excel, Word and Power Point)
and to learn English - English and Primary (Being developed
in consultation with British Council) |
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The e-Government application
allows instant access to land records and certificates and things
like Grievance Submission, tracking and resolution system are
appreciated along with Monitoring of MP & MLA developmental
activities. |
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Local Agricultural services and
clinical information are invaluable resource of information.
As a step in this direction we are partnering with ICRISAT. |
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Micro credit is extremely critical
to get the rural economy going. So we worked with TCS and IIIT
Bangalore to develop a Rural Credit Delivery Services (RCDS)
application which is being piloted in Karnataka, along with
SBI. We are engaging with ICICI to provide banking, insurance
and other services through kiosks. ICICI shares our dream of
lifting rural India out of poverty through innovative and sustainable
business models. Their vision is to sell life insurance at $2
per year which will payout $2200 in case of death and $1000
in case of injury. They are selling insurance against a bad
monsoon. They are selling mutual funds where the cost of entry
is $2 and the per month payment is perhaps 50 cents. They have
a vision where grocery stores & rural kiosks take the place
of the branch and collect and disburse cash. The key to enable
such ultra small transaction is a technology platform &
that is what we are creating together. |
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| Some of the lessons that we have learned
from our initiatives are as follows - |
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You have to start with the customer.
Who are you trying to serve? |
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We learned that you have to be
crystal clear about the problem you are trying to solve? What
does value mean to the customer? |
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We learned that affordability
is a crucial issue in India and in emerging markets, pay per
use or EMIs is the best way to make anything affordable for
the masses. |
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We learned that you have to bring
in partners to build the full solutions and that you have to
work seamlessly way with each other. Taking the rural project
as an example; who all are part of the ecosystem? Government,
Telecom companies, Hardware manufacturing companies, Intel,
banks like ICICI, ILFS and SBI; Companies like TCS.; many small
ISVs.; NGOs like Drishtee, nLogue, SEWA, Tarahaat; Academic
institutions, Commercial players such as HLL and ITC eChoupal
and training organizations like NIIT. |
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We learned that it is critical
at every stage to understand how the initiative is going to
scale the business. India is known as a graveyard for innovative
pilots and we don’t need yet another pilot in 10 villages. |
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And most of all we learned that
the caliber of talent, of IQ applied to these problems is a
crucial determinant of success… |
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| Now why is Microsoft investing so much
in this? We think as more people move up the economic ladder, as more
people learn to use computers, in the long run, its good for the socio-economic
development of India and its good for us. We believe that learning
to serve poor rural communities profitably will give us insights into
the next 5 billion of the world’s consumers and help us in innovating
new business models. |
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| We see some other big opportunities
as well, which would help us to realize India’s potential. For
instance, how do you leverage IT to overcome deficiencies in the educational
system? We spend 4 % of GDP on education. That’s just the government
spend. Middle class families spend hundreds and millions of dollars
on education and tuitions. There is a large opportunity for entrepreneurs
who crack the code on how to get a small share of this spend. Likewise
there are 8 million SMEs in our country ….only 25% of whom have
a computer. Many of these will not survive globalization of our economy.
Some will become global companies. We think technology is going to
be one of the determinants for who prospers and who doesn’t.
We believe that IT will be critical both for productivity and to integrate
with the global supply chains of Toyota and Walmart. |
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| The way we are all going about selling
to SMEs’ today is unlikely to help their cause. What SMEs need
is affordability, ease of deployment and easy to manage out of the
box solutions. The solutions must be vertical. The affordability factor
must encompass the ability to pay for hardware, software and connectivity
on a usage or on a monthly basis. In addition, the IT skills training
will be a big driver of success. This will require a combined effort
of hardware players, ISVs, services companies. This is exactly what
we are attempting to do under Project Vikas which Bill Gates announced
last December. And we hope to have successful pilots in 5 clusters
by the end of this year. |
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| There is no doubt that the Indian IT
industry has successfully placed India on the world map. It has created
wealth & jobs on a scale we couldn’t imagine a decade ago.
It has given us the self confidence to dream of India as a developed
nation and to see ourselves as a knowledge society and to see our
population as an asset not a liability. |
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| But Indian IT 1.0 is reaching its limits.
Its time to start thinking about Indian IT 2.0? This is where we have
to make some significant transitions. The transition from renting
IQ to creating our own IP. The transition from serving wealthy clients
overseas to also thinking about how to solve large scale societal
problems by leveraging technology. The transition from labour arbitrage
to applying problem solving skills to market insights. The transition
from simply innovating from India to innovating for India. We are
convinced that there are huge economic opportunities here over the
next decade and with the added benefit of knowing that we are contributing
to the building of our country in the process. However the ecosystem
of our complementors or partners to make each of these opportunities
viable and scalable is broken. Moreover the way we are going about
our businesses today–with every company working tactically and
in relative isolation if not at actual odds with each other- is not
promising. |
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| As I conclude, I would like to point
out that, what it is going to take is a few people and a few organizations
with vision and courage to step up and try to pull together the ecosystem.
What its going to take in the minds of these leaders is the recognition
that a single organization, NGO or the government, cannot do it alone…it’s
going to take a committed partnership of all stakeholders. What larger
players have to do is to create a platform for smaller players and
entrepreneurs to come in with ideas and energy and simply plug in.
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| Microsoft is committed to create a similar
platform. Today’s Innovation Day is an attempt to once again
bring together a set of key stakeholders and have a constructive dialogue
that will influence the IT innovation agenda for our country. It’s
a great beginning but perhaps in future we should have separate tracks
for education, Rural India, SMEs, e-Governance etc to develop more
actionable plans. |
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| Well, Thank you for joining us today
and I hope we have some high spirited discussions and a really worthwhile
day. |
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