When we last examined the Indian IT boom on this blog we were left with a few important conclusions.  First, it became clear that the IT boom was driven by software exports and that these exports grew linearly until 1992.  In that year something happened in the industry and software exports began to take off in an exponential manner.

Knowing that the primary input into software is labor, and that the rate of employment growth didn’t change dramatically, we can be certain that this take off in software exports was caused by massive increases in labor productivity; and we have a graph to show it.  The figure below shows revenues per worker in the software industry over the course of the 1990s.

The takeoff is extraordinary. By the late 1990s software firms were hiring as many engineers as they could find, and each additional worker was leading to even higher marginal revenues.  Shockingly, despite the huge IT workforce that was a precursor to the boom in the first place, by the end of the decade the number one complaint of IT firms in business surveys was a scarcity of labor.

The boom in labor productivity could only have come from two sources: better management practices and moving up the value chain (and it in fact came from both).  India already had highly trained workers, and these workers were already working with advanced machinery. They were however engaged in simple work conducted “on-site” – mostly systems design, analysis and coding.  There were few, if any, Indian firms doing turnkey software projects.  By the early 2000s that fact had changed completely.  Whereas in 1988 90% of all software exports were “on-site” services, by 2003 that number was down to 40% and falling.

What happened to allow India to move up the software value chain and to force firms to invest heavily in improved management practices?  The logical place to start looking for clues is in the massive political change that occurred in India in 1991.  In the 1950’s Nehru had established a Soviet-style system of central planning and restrictions on the private sector that came to be known as the “License Raj.”  But in ’91, facing a currency crisis that required IMF intervention, the international community forced reforms on India that made it much easier for businesses to spring up and foreign investment to pour in.  And pour in it did: the graph below shows foreign investment into India throughout the 1990s. Its exponential shape seems to mirror that of software exports.

 

But of course the story isn’t quite that simple.  While the 1992-99 period did see 68 multinational software firms establish offices in the country, software exports have always been largely the domain of domestic firms.  By 2001 multinationals still accounted for only 15% of such exports from India.

It is also important to note that in 1990 and 1991 the government established a series of software technology parks (STPs).  The first one opened in Bangalore in August 1990 and included modern communications networks that were beyond the reach of ordinary firms.  Even after liberalization the government continued to do this, and by 2002 there were 39 parks that together accounted for 80% of the country’s software exports.

So we have a lot of different elements – some involving liberalization and some involving outright subsidization – that were woven together to create a unique growth recipe for IT in India.  The story can be told briefly somewhat like this.

In the mid-1980s, while Indian IT was almost entirely focused on on-site services, Texas Instruments came in and established a research and development center in Bangalore.  The exact reasons they were willing to go through the trouble of starting a subsidiary in India during the License Raj years are unknown, but the fact that they had an IIT-educated Indian VP may well have had something to do with it.  Many of their multinational competitors watched from afar as this business was set up, but none followed.  Bangalore at the time TI arrived was a hub of the Indian defense industry, home of an IIT, and a logical place for the government to establish a science and technology park.  They did so largely at the urging of the software exporters specializing in “on-site” software development.  They felt that with better data links to their work sites (links they couldn’t afford on their own) they would be better able to do more of their work in India.  That would save them a large amount of money in both travel and in the division of labor.  Often consultants that went out from India on site visits were top tier company employees – they had to be capable of the most complex tasks that clients would ask of them.  But these top employees spent little of their time on the ground doing complex tasks.  Often times they simply coded, a job for which software engineers in the US and Europe almost never do Pronab Sen noted that because of this phenomenon the average productivity of an Indian on-site software engineer in the US was only 30% of his American counterpart.  With reliable data links the on-site consultant could farm this work out to employees at home and spend more of his time doing complex work.

By 1993 this had begun to happen.  “Off-shoring,” the development of software in India, had jumped by a third over the previous two years.  Consequently, the labor productivity associated with the primary industry laborers, the on-site software engineers, had begun to soar.  As more and more work was done off-shore by the companies that had previously requested on-site services, they became more comfortable with it.  Gradually, more and more valuable work was allowed to be off-shored.

At the same time that “on-site” consulting firms were beginning to do more offshore work India was liberalizing.  The firms that had long watched Texas Instruments, and had seen them prove that successful R&D could be done in India, finally could make a business case to move into the country.

So foreign software firms began to move into India, and previously on-site clients began to do more work off-shore, all at the same time. This led to a fierce competition for the primary resource in the IT sector, programmers and engineers.  But interestingly, as pointed out by the economist Suma Athreye, the Indian firms and the multinationals were only competing in the input market, not the product market.  The large multinational subsidiaries established in India sold their product only to their parent company.  This meant that the presence of multinational firms in India forced salaries up, forced domestic firms to adopt more efficient labor use strategies, but did not compete with (and potentially destroy) them.  These positive incentives had an impact on labor productivity.  By the late 1990’s Indian firms had earned ISO certifications that were on par with the multinationals with whom they were competing for talent.  A culture of organizational management expertise was inaugurated, and as new Indian firms were created in throughout the 1990’s they sought this expertise as well.  So it was truly a combination of moving up the value chain and improved business processes that led to the labor productivity boom, and it was brought about by a unique combination of public policies (some liberal, some not) and private sector initiative.

What lessons can we draw from this experience?  I pull out a few, but am happy to debate them.

1)   In India business parks were successful.  I can think of many places where they were not.  They worked in India because existing business had a need (connectivity) that the business park could solve.  They were not meant to create an industry out of nothing.

2)   A plan that relies on accessing export markets can work, but it works really well when you have limited competition and your citizens hold management positions with the primary overseas clients.

3)   The entry of multinationals had a catalytic effect on growth in software exports from domestic Indian firms.  This is likely because they only competed in input markets, not output markets, and because Indian firms were already well established.

I could probably go on, but a trend is emerging.  It seems that standard interventions to support ICT industries – a business park, a strategy of liberalization – can go either of two ways.  It can help your industry or hurt it, depending on conditions on the ground. This argues strongly for heterodox policies that are country specific and take account of these circumstances.

 

Two weeks ago, John Caelan of Swamppost.com created a one-and-a-half minute, time-lapse video of the major uprising and protests around the world between December 18 to March 7, 2011.

By analyzing a wide field of news sources, he argues that the map is adequately scaled, and reflects the density of reported demonstrations across a wide field of news sources. However, he does acknowledge that the video does not represent all the events of protests or uprising in the world.

The colors for the icons represent:

• Red: resulting in death
• Orange: major injuries, damage, arrests
• Yellow: minor injuries
• Green: Peaceful

The number of pickets is the size:

• 1: Under 100
• 2: 100-1000
• 3: 1000-10000
• 4. 10K – 100K
• 5. Over 100K.

By utilizing open media research of worldwide news sources, Caelan compiled 80 maps for each day with the events added as they are discovered, so the apparent “blossoming” of events is simply a reflection of data that is available early on. His general methodology was to filter through the first thousand results of a news search on any given day, record the event, and archive them on an Excel sheet. The information in Excel was organized by day, and then further categorized by the location of where the events occurred, which he extracted from the articles manually. The flag icons were chosen by the average of reporting, as 100% accuracy in reporting the actual count of people at any gathering is intrinsically difficult, regardless of slant that the involved media parties tend to apply. Each day’s sheet was turned into a .csv file, and imported into the mapper supplied by Zee Maps. Caelan said that each day would be copied into the Excel sheet, with new events added–events older than 5 days are deleted, and those events older than 2 days turn to gray. Each event remains in color for two days, to account for the crossover of time zones. As he built most of these in retrospect, the December and early January time frame has less of the more obscure demonstrations because they were more difficult to research.

In addition, the video below compliments the original Global Protests & Uprisings video, however,  this is the time-lapse series of maps focused in on North Africa and the Middle East for the period of December 18, 2010 to March 7, 2011.

Caelan, however, is aware of the unreliability of these results in showing worldwide trends. Due to the mainstream media now actively providing coverage and following the protests, he says, this map shows how the reporting on uprisings or protests have dramatically increased.  Although he does not that this does not necessarily accurately reflect the quantity of protests themselves. He comments on the website:

Before ‘protest’ came to the forefront of international lexicon, there was much less density of reporting on demonstrations, and this was the primary reason for the perceived ‘viral’ pattern of the global uprisings. Suddenly, it’s pages upon pages of search results; however, as you point out, thousands of actions go unnoticed, even more so eclipsed by the weighty mass of popular revolt than before.

To find out more information about the uprisings shown in the video where you can click on the different icons and read information on the protest that was recorded at that point in his interactive map.

Across the world, governments, donors, private companies, parents and schools are establishing computer facilities and connecting them to the Internet in an effort to improve education. Although well intentioned, a common result of these efforts is the challenge schools have in keeping their computers running, covering increased costs for electricity, paying for Internet connectivity and integrating the use of computers into the curriculum.

The Computer System Sustainability Toolkit is designed to help staff, students and parents at schools gain the skills needed to develop and implement plans to establish and/or sustain their computer systems. The Toolkit is written so that members of the school and community can create and implement their plans without additional external support.

Does this Toolkit work? Can computer facilities at schools really become self-sustaining entities? Can schools really generate sufficient income from their facilities to keep their systems running, to buy new equipment, and to build the capacity of their staff to use the computers? Can schools really learn to integrate the use of their computers across their curriculum? And can they do all this on their own?

The short answer to these questions, at least according to the initial evidence, is YES!

The content from the Toolkit was first used with the staff and students at five rural schools in Southern Sumatra as part of a small project that was funded by Qualcomm Wireless Reach. Before this effort, most of the computers that had been installed at these schools a year earlier were not working, the schools were no longer connected to the Internet and the IT teachers were the only teachers at these schools who were using the computers with students. Now, three years later, all the computers at these schools are fully functioning, the labs are well maintained, most teachers at these schools now use the labs with their students and each school has a well established Student Support Technicians Club (SSTC). And all this has been done with funds generated through the use of their computer facilities.

Digital copies of the toolkit in color and grayscale, along with a variety of tools and templates can be downloaded online at: https://aed.org/Publications/computer-system-sustainability-toolkit.cfm

Earlier this month at the Palace Hotel in Old Town Dubai, the UAE held a workshop attended by General Managers, Executive Managers, IT Executives, Government Communication Executives and Webmasters from the Federal Government bodies to discuss how government departments can best use, organize and implement e-government and social media.

According to the Dubai School of Government on their Arab Social Media report, the UAE is ranked first among Arab countries with close to 50 percent its population owning Facebook accounts, which represents 10 per cent of the total number of users in the entire Arab world. In addition, UAE is now among the top 10 countries in the world in terms of Facebook penetration, raising their government’s awareness on a need to streamline their online presence.

During the workshop, H. E. Salem Khamis Al Shair Al Suwaidi, Director General, General Information Authority discussed a primary evaluation made by the UAE website by their eGovernment team.

Referencing how eGovernment evolved and the guidelines were conceived, Suwaidi added:

Our work on this field comes in line with our decision to apply the concepts of the second generation of eGovernment Gov. 2.0. In this we have been inspired by H. H. Sheikh Mohammed bin Rashid Al Maktoum Vice President and Prime Minister of the UAE and Ruler of Dubai; who long ago established accounts on both Facebook and Twitter and has been using them to communicate and interact with people

The documents presented guidelines on Multimedia, Web content, Social Media Networking, eParticipation and Open Data policies and also included an updated Web standards document.

The Updated Web Standards declared at the workshop spelt out the internationally accepted uniform practices and procedures that government bodies should follow for their website layout and design to be compliant with the recommendations laid out by World Wide Web Consortium (W3C).

In addition, the announced guidelines comply with the requirements identified by the 2010 United Nations eGovernment Survey, which are used by the United Nations to assess the readiness of eGovernment programs around the world.

The UAE evaluation team also launched guidelines for the appropriate use of social media by various government employees. This document was prepared in partnership with Dubai School of Government with contribution from Gartner Inc. and United Nations eGovernment Survey team.

The aim of this document is to leverage social media tools by employees of government entities in a responsible, effective manner to collaborate with civil society and engage them in designing/distributing government programs and service.

Due to the various applications of social media sites, the guidelines recommend: “Access to social media sites shouldn’t be banned. Employees should be held accountable for any improper use of any social media site.” However, it cautions that:

Because of the dynamic nature of social media, a list of recommended websites should be developed and updated by the Social Media Unit periodically in a collaborative, rather than top-down manner

The workshop divulged that by abiding to these guidelines, the participation in eGovernment and eServices will increasingly become more convenient, competent, and content for civil society. This holds great precedence for the UAE, who wants to raise their position in the U.N. E-Readiness Index.

Governments from all around the world are recognizing the power of social media in effectively communicating with their citizens. They are also developing initiatives to create similar guidelines for the web content on government portals so interoperability can enhance their online capabilities.

In Europe, the European Commission Information Society aims to support with its eGovernment Action Plan 2011-2015. The Action Plan identifies provisions for a new generation of eGovernment services for businesses and citizens, where four political priorities are based on the Malmö Declaration agreed on in 2009 in Sweden. The four priorities are to empower citizens and businesses; reinforce mobility in the single market; enable efficiency and effectiveness; and create the key enablers and pre-conditions to make things happen.

Additionally, in Latin America and the Caribbean, the Plan of Action for the Information and Knowledge Society in Latin America published in November 2010 outlines the region’s objectives for e-governance. These include treating e-government as an obligation of all countries for its citizens and to achieve transactional and participatory e-government.

You can research other countries principles and procedures on e-governance by viewing the U.N. E-Government Survey for 2010 here in our document library.

One of the important considerations in extending connectivity, be it voice or data services, into small and rural communities, is the need to address scale into more remote locations.  This includes the elements of local support, sustainability, as well as replication.  While the technology elements have for the most part be successfully addressed, the business elements are often lacking–with the result being that once the donor funding comes to an end, all-to-often the initiatives come to an end.

In the summer of 2006, the Sri Lanka LMI project was initiated with the issuance of a Request for Proposal by USAID’s Mission in Colombo.  The RFP sought proposals for establishing at a minimum of 20 telecenters in rural communities across Sri Lanka.  The requirement was that these centers be fully installed and operational within one year of the contract award.  The RFP also required that partners be bought into the proposal on a 2:1 match.

The winning award to granted to SSG-Advisors who put forward a comprehensive approach for establishing an EasySeva franchise that would rollout the required 20 telecenters.  These EasySeva centers were to be individually owned and operated by local in-community entrepreneurs.  This initial rollout would subsequently be expanded beyond the USAID contract requirements.

To meet the partnership requirement, SSG-Advisors partnered with several firms, including Dialog Telekom, Sri Lanka’s largest mobile operator and who provided broadband access to the centers, and Qualcomm, who provided broadband access through their GSM-HSDPA technologies.  Other partners included Microsoft, the National Development Bank (NDB), Lanka Orix Leasing Company (LOLC), and InfoShare.

The EasySeva franchise built several innovative approaches into its business model.  These innovations included:

Scale—the EasySeva franchise was designed to scale well beyond the original 20 centers as reflected in the contract.

Replicable “Center in a Box”—a replicable configuration was adopted such that a new center with a full set of value-added services could be set up rapidly, with services immediately available to customers.

Locally Owned and Operated—each center is locally owned & operated by an entrepreneur vetted to ensure they are capable of managing the venture.

MicroLeasing—the NDB provided capital funding, with LOLC using these funds to buy PCs that were leased to the franchisees.

MicroLoans—LOLC also made MicroLoans available to the entrepreneurs where there was the need for start up capital and to cover initial operating costs.

Multiple Services & Revenue Streams—the EasySeva centers were constructed to derive revenue from access to content developed and placed on each PC, from local calling via community phones, from international calling via VoIP, from Internet access, copying, faxing, etc.  The centers were also positioned such that they could provide local support to microLending and microLoans services into the communities.

Management & Technical Support—the EasySeva franchise operation also provides management training and technical support to the center owners.

The EasySeva franchise ultimately rolled 55 centers, well beyond the initial target. These centers are typically reaching profitability within 3-4 months after opening their doors to the local community.  The model clearly proved successful in achieving scale, sustainability, and replicability.  For Dialog, the telecom carrier providing the connectivity, these EasySeva centers provided community access for services not otherwise extended to those living in these more remote communities.

The EasySeva example reaches beyond Sri Lanka by providing a proof-of-concept for a scalable and replicable business, financial, and technical approach for extending connectivity and value-added services into smaller rural communities world wide.