The turn of the new decade—2020—brought with it some massive and daunting disruptions—political conflict, natural disasters, and of course, the novel Coronavirus. But January 2020 also saw a groundbreaking development in the business world—Alphabet, Google's parent company, became the fourth U.S. company to join the elite trillion-dollar-market-cap club, after Apple, Microsoft, and Amazon.
Historically, this most exclusive of clubs has been dominated by companies from the West. However, the pandemic has destabilised the established world order. It has dramatically accelerated the digital economy across the globe, bringing the network effect into play. The old battlegrounds, where competition stayed within industry walls with a dominant few, are disappearing, and a level playing field is starting to take hold. In the process, we are seeing a shift of innovation and influence to the East, accompanied by rising demand for a technology-proficient workforce.
This spells tremendous opportunity for India
India has long been of high strategic importance in the global business and technology landscape. In addition to the cost advantage, other key factors are skewing the odds increasingly in India's favor, like its large and diverse demographic, immense market potential, and more importantly, the challenge of making an impact on a massive scale! Does this mean that we could see a $1-trillion company emerging from India by 2030? What would it take to make this happen? As we see it, three industries could give India its first trillion-dollar company.
The first and perhaps most apparent is IT/ITeS services. Contributing nearly 8% to India's GDP ($194 billion in annual revenue) and employing almost 4.5 million people, India's IT industry is poised to lead the nation's next phase of economic growth. As a low-touch world takes hold, IT companies, expected to contribute $350 billion by 2025, will play a critical role in molding India's $1-trillion digital economy.
Next, the large business conglomerates, namely the two biggest companies—Reliance Industries and the Tata group—employing almost one million people, and generating close to $200 billion in revenue (2019-20), are likely to hit this mark by 2030. To stay ahead, both organisations are digitising themselves and harnessing the power of technology to capture key market transitions. For instance, Reliance Jio connects over 400 million Indians to the Internet and is focussing on bringing its gamut of digital services to millions of underserved or unserved customers, which opens up huge opportunities for the company.
The last is what I believe to be India's ace in the hole—its startups. Driven by a 300-million-strong young, tech-savvy population, India boasts the third-largest startup ecosystem in the world, with 25,000 tech startups and 21 unicorns! These startups play a vital role in innovating solutions for the biggest challenges that we face—as an economy and as a society. Solving one critical social challenge, be it healthcare, education, or services—will propel the startups to the coveted club.
While there's a long way to go before we hit that elusive 13-figure mark, we already have a few contenders. India's $100-billion club currently comprises three companies—Reliance Industries ($169 billion), Tata Consultancy Services ($139 billion), and HDFC Bank ($108 billion). However, this gap isn't as wide as it seems. Consider Amazon's journey—it took the company eight years to go from $100 billion (in April 2012) to $1 trillion (in Feb 2020). This indicates that with the right strategy, people, and technology, India could have at least one, if not many $trillion-dollar companies by the end of this decade.
What's standing in our way?
India is a country of unique challenges—scale, size, and complexity stemming from wide social gaps and purchasing power disparity; slow adoption of digital and lack of digital infrastructure (in terms of connectivity, cybersecurity, etc.); and a low-skilled population—according to the World Economic Forum, on average, an Indian worker needs about 100 days of reskilling in emerging technologies to be ready for future jobs by 2022.
The pandemic has exacerbated these challenges while bringing new ones to the fore. But the good news is that the crisis has bolstered the case for digital transformation, with businesses viewing it as a necessity for survival. Additionally, the government is driving marquee initiatives under the Digital India program, which will further accelerate our transition to a digital-led economy.
Partnerships are the lynchpin of progress
All of this indicates a promising future brimming with possibilities for India's businesses. The scale and size of the transformation taking place across the nation and for individual businesses is unprecedented. That said, the impact of digital transformation is still in its nascent stages and once its full potential is unleashed, it'll propel India and Indian businesses to heights unknown.
But, given the roadblocks that must be cleared in this journey, an ecosystem approach is critical. Startups, technology companies, industry bodies, the government, academia, etc., must work in tandem to harness the full potential of digitalisation. We recently saw a glimpse of what we achieve when we come together – enabling millions to work and learn remotely overnight, coordinating Covid-19 response efforts virtually, discovering vaccines, and scaling them for the world in less than a year!
Now, as we move from response and recovery to growth, I believe that we have the tools, intent, leadership, and the need to shape a legion of trillion-dollar companies in India in this decade.
Views are personal. Kaul is Director, Enterprise Business at Cisco India, and Nair heads Cisco’s Country Digital Acceleration program at APJC.
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