India and the CEE: potential polarization between quantity and quality?
Andras put on an article from The Atlantic on the EEF fb page that talks about potential the end of the golden era of the Silicon Valley – making the argument that investments shifting away from classical engineering initiatives to social may have grave consequences for the technical innovation power of the Valley.
This reminded me of an article I read a long time ago on cnet, that turns attention to India as an emerging innovation hub and a potential competitor to the Silicon Valley.
The article supports the message that I’ve been also promulgating for the last 10 year or so, i.e. that India (and potentially China) will become a threat to the USA and that the CEE MAYBE turned into a counterweight for balance.
The cnet article in a nutshell:
- 250,000 engineers work in R&D in India (data from 4 years ago)
- the tendency is that expats are returning home, and new grads are staying home
- R&D outsourcing (as opposed to call centre and coding) to India is on the rise: currently it’s $9.35 B and it’s expected to reach $ 21.4 B in the next 4 years (which is exactly now)
- R&D spending in India is fueled not so much by cost savings, but by India as an emerging market: local development can more successfully target the local industry
- India will however not surpass the Valley anytime soon, since there is still more VC money invested in the Valley than in India
Up to a certain point the numbers speak for themselves. In addition to the numbers, and the obvious conclusions we may draw from them, the following should be noted:
- Engineering/ programming/ etc. is becoming a way out of poverty for people there. Also, it is as “fashionable” as law is in the States. These drivers hardly correspond to an “inner vocation” that is the prerequisite for leadership in any domain, including the technical one. This is obvious to anybody who has already dealt with a lawyer in the States. The point is not that India may not produce leading innovation (it will) but that it won’t be because they PRODUCE so many engineers.
- Innovation in particular, quality in general does not come from numbers. Quantity dilutes quality! Even though execution capacity may increase, the quality of execution will inevitably decrease. This is painfully clear to everybody who managed IT outsourcing projects with Indian companies. The reasons for early stage outsourcing were purely quantitative: cost and lack of people back home. The expectations for quality were unfounded and naïve from the start.
- True: returning expats may help India become more competitive on the innovation front (see Vinod Khosla); as long as they bring perspective that’s necessary for integration. Question is, if they do have any perspective.
- Speaking about perspective: the amount of investments provide quality returns (e.g. innovation) only, if they fit into a well founded perspective. Breeding more engineers is not a well founded perspective (India). The Valley is a different question. I believe that at the time true innovation is stagnating at best (this is supported by the Atlantic article).
The CEE situation
- Historically, the CEE is an innovation hotbed: the quality has been here. The quantity (scale) has been missing.
- The numbers are decreasing on all fronts: population, expertise, etc. This creates a very particular situation: the CEE can’t play numbers’ games
- The CEE perception about quality differs greatly from the USA’s and India’s perception about quality…for now.
- Money alone does not breed innovation. But in the CEE, where it already exists on the level of potentialities, smart money (money plus required commercialization expertise) does play a significant role.
- Current systems (government initiatives) that are meant to foster innovation, don’t work. They are based on flawed principles.
New systems, new initiatives are needed: see EEF and similar.
