Services lobotomizes would-be Entrepreneurs and Research Scientists

Original Article: “What’s driving India’s rise as a R&D hub” – Knowledge @ Wharton.

Vivek Paul, ex-CEO of Wipro believes that the Services industry has a negative impact on the entrepreneural eco-system of India. At first glance, this would appear to be an extreme opinion. But if you read the paragraphs below carefully, you will see that Vivek makes a strong case. Specifically, his argument implies that there is a tradeoff between risk taking abilities and attention to process detail. With reference to the workforce trend, the low entry barrier to services is causing the Indian workforce to tilt towards the latter. Overall, his point that the path down a Services model will not lead to innovation and products, is well taken.

Knowledge@Wharton: Where do you see opportunities in India, on the IT side and the life sciences side? And where do you think India’s competitive advantage might lie compared with other countries?

Paul: It goes back to the abundant supply of trained labor. That doesn’t necessarily mean just cost. It means cost, process and availability. So I don’t think that at this moment in time [the question is] “how do you build the manufacturing of a pharmaceutical” or “how do you do the clinical process.” Are there ways for you to do more of the generics side? Are there derivative drugs that you can develop? People are finding that you can create drug cocktails, and come up with a different kind of an outcome versus an individual drug you can make somewhere else. Those are very interesting areas.

Aron: Wipro, which you did so much to grow over the past five years, has been doing a lot of captive R&D for other companies. Do you see that as something that can be replicated by other companies? Is there a profitable and robust revenue stream in India for such services?
Paul: If you look at the service business, absolutely. But if you look at that service business as leading to innovation and product outcomes, the answer is absolutely not. Frankly, I feel that when people work in a service business like ours, it’s almost like we give them a lobotomy. I don’t think — and I hope I’m wrong — you will see a single successful product startup coming out of people who were working at Wipro or any other similar companies. You’ll find that innovation comes from people who worked for Intel India; they’ll go off and come up with a new chip. Or someone at Cisco India will come up with a new router. Why that is, God knows. But I truly believe that there is some sort of inadvertent lobotomy that we give people.

Aron: So you believe that some sort of self-selection is taking place? That those bright people who are risk-averse, who want to be very good at process detail, those are the folks who will come and join service businesses? And those who have an appetite for risk, who are willing to look at messy, ambiguous situations, will go off and try to do R&D?

Paul: I don’t know. I just have that observation. I have not spent any time thinking about what the root cause might be. But there it is.

Aron: Where do you see high-end R&D opportunities in general? For instance, there’s a lot of R&D being done in China, in Ireland and in Finland by American companies. Do you see those kinds of captive R&D centers coming up, or better still, ones that give R&D projects to a third party and say “I want you to come up with a new circuit board for my cell phone?” Do you think that kind of thing could happen?

Paul: It’s already happening. The stuff that’s been done in India is staggering in terms of range and depth. I don’t think that anyone can say that the work we’re doing is trivial. But the work we’re doing is under somebody else’s direction. Let me put it this way: For an engineer, there’s a big difference between discovering something, versus discovering something that you know somebody else says can be done. That difference is the difference between the service business and the products business. In the service business, what you’re doing is great stuff, but it is in some sense something that someone else told you to do.
Aron: Let’s talk about doing something under someone else’s direction, after someone says, “This can be done, do something better for me.” That mindset works in the services business, but to succeed in products you have to go off and discover the possibilities. Is that correct?

Paul: Yes, and there’s a second quality I didn’t mention: Knowing what you want, or what the market wants, versus being told what to do.

Update (2nd Feb. 2006): “Bootstrapping a Business” – Rajesh Jain, Emergic.org.

Related posts on Sukshma.net:

Made in India for India” – Why development for Indian markets matters more than services for developed nations.

Posts under start-up on Sukshma.net for those interested in understanding how to start a start-up.

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10 Comments on “Services lobotomizes would-be Entrepreneurs and Research Scientists”

  1. Shalin Jain says:

    Paul is right. As a young entrepreneur of a product development company myself, we do little amount of services for cash flow and are making very honest efforts to take away services from our business model. It really curbs originality and innovation. Product business is HUGE and I would really like to Indian companies to be technology leaders and not work for a leading tech companies of the west.

  2. Santosh says:

    Shalin, Could you send me a link to your company page?

    I would not fret about services distracting you from your primary goal. It is commendable that you have decided to bootstrap your startup. The faster you make the transition, the better the results :-).

    Wish you luck with your future.

  3. Shalin Jain says:

    hi Santosh,

    I founded Tenmiles over 5 years ago. Here is the url: http://www.tenmiles.com

    This is year is likely to be the biggest year for us. Lot’s of new products in the making!

  4. Interesting thoughts on Entreprenerrship in IT

    I read up on some wonderful blog entries on Santosh Dawara’s blog. The one that really seconded my thoughts was the interview excerpts from Wipro’s ex-CEO Vivek Paul. IT Services vs Product development business model….

  5. […] Encouraging Entrepreneurs in India. While the IT Exports sector has been singled out for benefits, the local IT sector receives no such encouragement from the Government. Promod Haque wants to invest in Indian startups. Norwest Ventures find fresh interests in India to invest in. Services lobotimizes would-be Entrepreneurs… The story highlights the negative effect of the services industry on innovation in the Indian workforce. […]

  6. Sandy says:

    While I agree, service industry does lobotomize and curb innovation, however there are far too many advantages in terms of providing opportunity and economic growth for a large country like India, by the Services business model.
    I completely agree with the statement -“In the service business, what you’re doing is great stuff, but it is in some sense something that someone else told you to do.”
    Come to think of it… how many people actually fall into the entrepreneur category and the likes of R&D types. Its very few. But for the rest of the folks, the service industry does provide a lot of scope to earn a decent livelihood. I am sure even in a product based company there are only few who come up with ideas and innovation and the rest are busy actually doing the implementation (doing something someone else told you to do). Also the service industry does provide a lot of oppotunities and exposure for the bright people to turn into entrepreneurs. This I think is very important if you consider the facts such as:
    – from where we (India) are coming, our past
    – the huge population and economic condition

    If we do a good job in Service Industry then I think,R&D, Innovation and Products will anyways be the next logical step and we will see a lot more growth in these areas in the years to come.

    Sandy

  7. Santosh says:

    Sandy, Thank you for stopping by.

    You certainly do have valid arguments. I agree, a balanced approach is needed to grow both services and product development. Also, not all folks become entrepreneurs. In fact, I agree with you on that, even in a product shop, not everyone is innovating. Perhaps only 10% really are. The rest is all ‘Engineering’. (But let me not discount the experience of working with innovators)

    However, the point of the article is that by focusing on the Services industry, we are not maintaining our hold on our ability to research, build, innovate, and market. In fact, we are losing that hold.

    Even if Paul’s point – that the psychology of services is harmful to product development – were to be left out, we are still left with another deeper issue. The Services industry has begun to draw on talent that could be applied to product development.

    Overall, the situation isn’t probably as grim as I portray it. I have been discovering interesting product work in India e.g Shalin’s company.

    I just want this to be a warning post for would be entrepreneurs who are thinking of bootstrapping their startup with services first.

  8. Tushar says:

    I agree with Sandy. Very valid point.

  9. Prem says:

    Sandy makes an interesting point. In a rapidly growing economy like India , the service sector offers the best opportunity for scores of new graduates. India really does need this base to even think further down. Moreover those that have the ability and zest to invent, innovate and create a successful business model will eventually do so. It is a personal trait and is very hard in my opinion to beat that out of a person. Another issue that Vivek Paul makes is about doing work ‘under somebody else’s direction.’. This again ties in with the mentality of a research entrepreneur. Having said that it is important to realise that one of the biggest advantages a product developer in India has is the cost difference. Hence , the direction of his development will still be constrained by the demands out in the developed world simply because it still is his most profitable market.

  10. Santosh says:

    Prem, Thank you for stopping by and for your feedback.

    I agree – it is hard to beat innovation out of someones character. Vivek Paul probably stretched that point to an extreme.

    On the perception that “the most profitable market” is overseas. It is with this point that I disagree. Call it (blind?) faith, but my time in India is dedicated to demonstrating that we can begin solving our own problems through the application of technology and be v.profitable.