On Boxing Day last year, Quartz India posted a sobering headline for anybody seeking holiday cheer in India’s tech industry: “56,000 layoffs and counting: India’s IT bloodbath may just be the start.” A drive toward automation, the article said, was leading IT giants such as Tata Consultancy to cut tens of thousands of jobs, generating an epidemic of “anxiety, depression, low self-esteem and lack of motivation”.
The grim picture at the top of India’s $150 billion IT industry, reinforcing global fears of machines replacing humans in skilled jobs, draws attention away from a more important Indian tech narrative – one driven by confidence and burning motivation. India’s start-up scene is exploding, ranking as the world’s third-largest start-up centre, according to a report by Nasscom and Zinnov, and the fastest growing start-up base worldwide – with launches projected to hit 2,100 by 2020.
India is also the world’s youngest start-up country, with almost three-quarters of start-up founders under 35. Crucially, the boom is increasingly taking place in second- and third-tier cities such as Indore, Kochi and Ahmedabad instead of the traditional mega-centres of Delhi, Mumbai and Bengaluru.
The Economist recently raised questions about India’s economic rise, citing “a hole where its middle class should be”. India’s start-ups may prove the most powerful force for levelling the playing field in a nation often held back by crony capitalism and gaping inequalities. They will also help to tilt power away from leading urban centres, where a few million people in a nation of 1.4 billion have enjoyed the lion’s share of economic success.
Tech entrepreneurs will put the entire economy on a stronger, more sustainable footing – bringing critical services to where they are needed most: “The sense of opportunity, whether it’s payments or eventually areas like health and agriculture, the engagement is very strong,” Bill Gates said a few months ago in an FT podcast sponsored by Mishcon de Reya. “What you’ll see in the next couple years is India will become more digitised that any other country, and there will be a lot of entrepreneurialism.”
Fintech is leading the charge in India’s start-up transformation. “Overall, India offers the highest expected return on investment on fintech projects at 29 per cent versus a global average of 20 per cent,” PwC said in a report on India’s fintech scene. The fintech boom moreover plays a critical role in lifting millions of Indians without access to banking out of poverty in rural areas. Mobile communication is now ubiquitous in even the remotest Indian villages, with 1 billion mobile phones and 250 million smartphones across the country.
New mobile banking and payment platforms have benefits that extend far beyond obtaining a quick loan or buying basics: “Digital finance is a powerful means to expand access beyond financial services to other sectors, including agriculture, transportation, water, health, education, and clean energy,” according to the World Bank.
Indian start-ups such as Shishka Finance, which offers schooling loans to poor families, and EasyKrishi, which connects small farmers to bulk buyers, are transforming life for India’s poorest. The increased penetration of such technologies in remote areas will stimulate digital literacy, promoting a virtuous circle of economic development. The success of India’s young entrepreneurs will provide role models for youths struggling to break out of poverty. And the entire trend is being nurtured both by government programmes such as Andhra Pradesh state’s Valley Vizag fintech hub, and the explosive growth of start-up incubators in second-tier cities.
The headlines swirling around India’s tech sector may be about robots driving growth for big tech in the biggest cities. And India has a long road ahead to overcome chronic issues of corruption, byzantine regulation and economic and gender inequalities. Yet the dreams and drive of India’s young (human) tech entrepreneurs are cause for optimism that India’s astonishing growth narrative will also be an inclusive and enhancing one.