BISKOOT

I looked at the price tag. Oracle 9i Database Enterprise Edition: US$ 40,000 (one single-cpu installation). Or about 18 Lakh Rupees.

OK, so Oracle is a high-quality software product. Not much doubt there. But… err…. umm… $40K?

I wondered. So what does it take to build a production-grade bullet-proof database system? No precious stones, hardly any classified technology that the US military controls, and no scarce, non-renewable energy sources.

It’s simply a knowledge product. It’s the outcome of the effort invested by a finite number of computer scientists and software engineers for a finite period of time.

So, what’s the deal with the 40K? When I pay cash for an Oracle licence, I am actually paying for the time and effort of some US computer scientists/engineers. (I’ll avoid the temptation to say “sponsoring their criminally high standards of living”…. oops, i said it anyway)

This is unsettling. Something’s not right. There are computer scientists and engineers in India. Quite a lot of them in fact. Why is there no Indian company yet that has a *product* that can compete with someone like Oracle? Surely, if talented and motivated professionals here in India teamed up and built a similar product, they would do it at a fraction of the cost.

Somehow this doesn’t seem to bother our supposedly star-performing IT companies like Infosys, Satyam, Wipro…

Instead, we have companies here lining up for ISO certifications, and thumping their chests in triumph while showing off their newly acquired CMM level status.

I wonder what it is these companies feel so good about. The fact is that they are wasting the potential of their people. Take a look at the following financial figures:

(figures in rupees, for Sep 02 – Sep 03. Source: yahoo finance)

All of the above companies need the same input – human intellectual capital. And they produce the same kind of output: software. Yet, we see stark differences in the way a product company (like Oracle or Microsoft) is able to generate wealth, as opposed to a software “services” company (like Infosys or Satyam).

It is clear that there is a definite strategic advantage and wealth generation opportunity in the product approach. Yet we have more companies opening service shops. IT services, Call centers, BPO, support/maintenance contracts…

Why? Lack of financial capital? Unsupportive investment climate? Hot and humid climate?

Or is it a post-colonial Macaulayan educational system that stifles innovation, rewards blind conformance, and generally kills risk appetite?

- Ketan

www.indusvalue.com