India’s Hi-Tech Dominance: How Did It Happen?

As so many of us are aware, India has become a technological powerhouse, and this has all happened in a relatively short span of time. How does a country go from being a developing and economically challenged nation to a formidable technological competitor? What alchemy was at work here?

Converging Forces

Actually, I can think of four key events that drove India forward into the 21st century of high technology. The first event was the foresighted decision by key Indian leaders to establish extraordinarily elite and intellectually challenging Indian Institutes of Technology (IITs).

These schools of higher education can proudly compete with the best technological colleges and universities that the West has to offer. They are producing computer scientists and engineers who can get top jobs and top salaries anywhere in the world.

I found out first hand how proudly regarded the IITs are by Indian citizens. I was in an Indian restaurant recently and, with tongue-in-cheek, asked the waiter if my son could enter an IIT if I were the Prime Minister of India, and he was a mediocre student.

The waiter, who heretofore was extremely polite and deferential, became very animated and said “No, no, no! There would be no way that your son, even if you were the Indian Prime Minister, could enter an IIT. He would have to be strictly top drawer, academically.” I was also strongly told, even if he somehow was able to matriculate, he’d be out in a week because of the rigorous testing every two days!

Wow! What I had previously learned had been personally confirmed, and with gusto.

Flattening the World

The second major event that propelled India into worldwide high-tech status was the serendipitous laying of thousands of miles of fiber optic cable that has effectively flattened the world. This phenomenon is aptly described in Thomas Friedman’s book, The World is Flat.

India no longer was a “foreign outpost.” It now was in a strategic position to collaborate and compete with companies all over the world. With fiber optic cable, India now had a technological infrastructure. The boundaries of time and space were essentially eliminated.

Indian tech workers were now in a position to work “side by side” with their Western counterparts. International collaboration became not only a possibility, but also a striking reality. India was no longer isolated.

Preventing Disaster

The third major event was the Y2K phenomenon. I’m sure that you recall all of the dire warnings and forebodings about what would happen on January 1, 2000. All of the world’s computers would recognize that date as January 1, 1900. Consequently, planes would fall out of the sky and power grids would fail leaving much of the world in darkness. Additionally, water systems would cease to function because the computers that ran them would all become confused and obsolete.

I remember government officials warning U.S. citizens to stock up on extra food, water and supplies. I also recall reminders to get extra cash out of your ATMs because they probably wouldn’t work after January 1, 2000.

What happened? Nothing! Why, because world leaders realized ahead of time that they needed thousands of highly qualified computer engineers and programmers who could reprogram the world’s computer systems so that when Y2K came around, the computers would realize that we were talking about January 1, 2000, not January 1, 1900. As we all know, everything went beautifully.

Where did so many of these computer brains and geniuses come from? India! India was prepared with a plentiful stock of highly competent and fully qualified people. There would be no widespread disaster on January 1, 2000. Computers would not fail en masse.

The Outsourcing Effect

Finally, the tech bubble and ultimate burst happened. When tech stocks tanked, tech companies realized that if they were going to survive, they would have to drastically cut the costs of running their IT programs and tech back offices.

How did they do this? They outsourced much of their tech work to India.

These four converging factors, the establishment of IITs, the laying of international fiber-optic cables, the Y2K phenomenon, and the tech bubble that ultimately burst were extremely instrumental in propelling India into worldwide tech dominance.

What does the future of high-tech dominance look like? Well, China is churning out thousands of PhDs in math and science every year. Granted, the Chinese institutions of higher education don’t yet adequately compare to those in the West and those in India. But, keep an eye on China — they have become a force to contend with, outlined in my previous article “Made in China.”

Where does the United States stand in this equation? We must redirect our attention to rigorous, top-quality higher education that stresses math and science. So many of our top math and science graduate schools are populated with foreigners who will earn top academic skills and will likely return to their countries to use them.

We have to produce more of our own high-level math and science graduates who will contribute innovation and technological expertise to our society. That is the only way that we can stay ahead of the vigorous, international competition.

India has rightfully earned its place in the sun. Its leaders had the foresight to focus on creating exceptionally competitive institutes of higher education that stressed math and science. It is now reaping the benefits of this foresight and hard work.

Good luck!

Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which deals in bringing small-cap companies public. He also is a frequent speaker on the subject of financial advice for small businesses as well as the IPO process. He can be contacted at [email protected].

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