The IT and IT Enabled Services boom in India over the past two decades was possible, in large part, because of the general proficiency of our engineers with the English language. In this time India’s IT exports grew from $130 Mn in 1990 to $70 Bn in 2012, giving hope and opportunity to the educated middle classes and partly fuelling a dramatic turnaround in our country’s fortunes in that time period.
But English – that wonderful gift of our colonial masters – also has an interesting negative influence on the domestic IT product ecosystem. Humour me here for a bit.
In other developing countries there are immensely successful product companies that have made their fortunes by copying blockbuster ideas from Silicon Valley. The most mature of these copied ideas is Search – the first killer app for the World Wide Web. Companies like Yandex in Russia, Seznam in the Czech Republic, Naver in South Korea, and Baidu in China have a dominant a market share in their home countries. Founded in the late 90s along the lines of Search pioneers like Yahoo!, Ask, and Alta Vista, these companies started by capturing their domestic audience looking for local language content. While Google and friends took time to turn their attention to foreign languages and to understand the nuances of non-english syntax, these companies were able to claim a dominant market position that established their brands, and provided solid platform for further growth and innovation. It is to be noted that all of these companies – with the exception of Baidu, where there were regulatory factors at play – have done extremely well to hang on to their lead for nearly 15 years by investing in R&D and expanding their portfolio to stay relevant and a few moves ahead of American rivals.
It is important to note that these are not typical e-commerce companies. These are software product companies that did not need a robust logistics support system to thrive. In theory India could have had a Yandex come about around the same time. So why did India not see a product giant emerge?
At the turn of the century the ITES revolution was still taking shape and a lot of the value was rightly being created there. At the same time the domestic internet penetration was nothing to write home about. But most importantly – the vast majority of the online population could already read and write English, and were looking for English content. So the key opportunity Yandex and Baidu pounced on in Russia and China was a non-starter here in India. In the late 1990s online Indian vernacular content was as much of a niche market for Indian entrepreneurs as it would have been for Google. While Naver and Seznam were getting a foot in the door of Web Products with Search, the finest young Indian IT brains of that generation were busy getting their foot into the services space tackling the Y2K opportunity. As a result while the Russians and Chinese got a robust springboard into products, Indian companies catapulted into services and left the product opportunity to the Americans. So today the Google of India is Google; the Facebook of India is Facebook.
If India’s online population and our geeks were not English speaking, we could have had a homegrown product market similar to the Russians. Based on an average of the market caps of the four search companies noted above and current figures of India’s online population, we can estimate that a dominant Search company could have been worth almost $25 billion. Interestingly enough that would have made the company the 3rd largest by market capitalization, behind only TCS ($70 bn) and Infosys ($34 bn) !