By Lalitesh Katragadda & Sharad Sharma
Silicon is starting to think. Every human endeavour is now in the early stages of disruption. Whole industries —whether it is advertising or energy or farming —will be turned inside out in the next 20 years.
Software products and platforms are at the heart of this revolution. When we take a selfie, it’s the camera software that is doing the magic. Millions of businesses in India already run using software products like Tally and Zoho. Increasingly, our national security relies on software products in satellites, fighter planes and missiles.
Today India is a tiny player in the global $1-Trillion software product industry, with its software product industry estimated to be $7 billion. India has to become a significant software product power if we are to be moderately competitive on a global basis.
Software products are also central to India’s inclusion imperative. In the past, we would focus on, say, MSME lending by giving it a priority sector lending status. The new approach is radically different. It involves digital platforms like India Stack that reduce transaction costs dramatically.
Digital lenders are starting to use this infrastructure to service not just small businesses and self-employed borrowers but all the way down to small farmers who before had little access to low-cost credit. In this jugalbandi between digital platforms and digital lenders, inclusion is the result. This extended coverage comes with an improvement in credit quality.
Vast problems remain on the inclusion agenda like education and healthcare. India annually spends about 1,150 per person on public health. Countries like Singapore, UK, US spend 200-600 times more. This vast gap can only be bridged with disruptive software products augmenting all facets of healthcare.
India is rich in such societal problems. Software products in the hands of people and business can solve them with the right underlying platforms. India has been on a tear building digital public platforms. Apart from India Stack, Health Stack and Logistics Stack are in the works. The world is sitting up and taking notice. More than twenty countries have lined up to learn from India.
India’s digital public platforms will unlock new software product singularities unlocking hundreds of billions in economic value. Will these players be Indian?
Successful software products and, companies that produce such products if housed in India would become engines, nay pillars, of the economy due to their global reach. But this won’t happen unless we see a significant policy shift. Today 7 of 10 software product companies end up being domiciled in US or Singapore. This exodus continues to drain and cripple our nascent startup ecosystem.
There is ferocious global competition for our software product innovators and nascent entrepreneurs. Microsoft, Google and Amazon each have $100+ billion in annual revenues. Each spends more than $14 billion in R&D —as much as the entire Indian state. Indian software companies cannot compete in either market reach or R&D expenditure. Sadly, government procurement supports foreign players rather than our own entrepreneurs.
India needs to act urgently. At the very minimum, we need to recognise software products as a legitimate category immediately. Fortunately, there is a National Policy on Software Products in the works to do just this and more. It has been fours years in the making. If kindled right, the Indian Software Product revolution will dwarf our IT revolution. It’s time it saw the light of the day!
(Lalitesh Katragadda led the creation of Google’s Mapmaker. Sharad Sharma is cofounder of iSPIRT. Views expressed above are their own)
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