Monday, January 22, 2007

Chicken or Egg?

The Economic Times of India has a debate about whether or not India is ready to produce great software product companies. The arguments are interesting on both sides, though not particularly new. On the pro side, the writer brings up the development of an eco-system of VC's, the social acceptance of entrepreneurship and the emergence of a domestic market. The con argument talks about the lack of skills and product knowledge.

The basic issue is one that is not mentioned in the article but is an implicit assumption on both sides. This is the issue of demand. Supply issues such as social acceptance, available funding etc, are not the bottleneck - demand is. If India grows a large domestic IT market, Indian product companies will thrive. If not, they won't. Necessity, as they say, is the mother of invention: a demand-side argument if there ever was one!

The underlying cause of disagreement in the article is really about how large the Indian market will be. The pro side says big, the con side says, not quite yet. That's the real question that needs to be analyzed and debated.

I've been surprised to see very little emphasis in the media and the blogosphere on this question. Mobile phone adoption rates are well-known, and there is some information available on internet usage in India, although sometimes the numbers should be taken with a grain of salt. Enterprise demand in India is not even discussed at all. Time to change the debate from supply to demand!