Increased IT penetration is imperative

After their success in the IT software exports marketplace, Indian IT companies have to join hands with local players, including users, to increase IT penetration, says S Ramakrishnan

S Ramakrishnan says there is also a need to move towards an open source environment, and break out of the proprietary era, in order to make PC more affordable

During the early 1980s, when the PC first entered the Indian computing scene, it was welcomed as the panacea that would solve all possible user requirements, from automation to communications. But, despite all the hype built around this all-purpose machine during its two decade-old journey here, the PC is still struggling to attain meaningful volumes.

In a country of one billion people, which also claims to be an IT superpower, less than one person in every 100 people owns a computer. In other words, the installed PC base is even less than 10 million.

Though many attempts have been made to know the reasons for this low rate of PC penetration, the fact of the matter is that growth has been extremely slow, albeit steady. But in the fast-paced IT industry, the dictum, ‘slow and steady wins the race’ does not really work. Exponential growth provides critical mass as well as network effects.

However, it is extremely important to first diagnose the cause of low acceptance levels, before making any remedial prescriptions. Penetration is low due to non-affordability, which is like giving a motherhood statement. It is also low due to several other mitigating factors, like the language barrier, no serious benefits perceived by users due to lack of applications addressing day-to-day problems, and finally a developing country syndrome, which gets in the inertia of satisfaction with the current pace of progress.

Knowing the price-sensitive nature of the Indian market, affordability has been, and still is a major issue. This needs to be addressed by the industry by introducing innovative products like thin-clients or application- specific PCs, that also do volume sales to be a viable business proposition.

PC manufacturers need to get into a participatory mode for making sectoral plans, leading to pre-defined benefit realisation. This then makes a compelling case for the government to review some benefits to the hardware industry, like restructuring the excise duty.

There is a need for the government and industry to join hands to achieve the common goal of increasing IT penetration in India. For this, a greater amount of awareness is needed about the benefits of computer applications among corporate users, as well as its relevance in the day-to-day lives of common people. The industry can probably achieve this goal by backing their marketing spend with sensible application development. Besides, national-level flagship applications drive demand, as demonstrated from worldwide experience. In India too, it is happening in some sectors.

With a view to bringing down costs, and hence prices, the government on its part could then look at either decreasing the excise duty on computers, or through innovative methods like allowing 100 percent depreciation benefit on computers to buyers.

This could also have a positive impact on curbing sales in the grey market. For buyers would then insist on excise paid bills, thus bringing the grey market under the tax net. Similarly, with a view towards bringing down costs, low-cost, no-frills PCs, with a price tag of less than Rs 10,000 could be introduced. As a result, PC usage can increase. A note of caution here would be that this is not the first time it is being attempted. Earlier attempts did not have the desired results as there was no holistic go-to- market strategy, nor did the applications make them a compelling case to buy.

The industry must realise that IT usage is not PC usage in isolation. There have to be enough applications and IT infrastructure to make PC usage a necessity. Every user segment, be it financial institutions, telecom, education, e-governance etc. needs to be addressed by offering customised solutions, including both hardware and software.

There is a high latent demand in non-metro cities of India, which could be explored to increase IT penetration. A focused application development and service delivery can help achieve this target.

Now there is also a need to move towards the open source environment, and break out of the proprietary era. This is the inflection point. There has to be a national methodology to ensure consistency in development based on open standards.

Open source does not mean that developers starve while the hardware vendors make money. Developers must benefit from commercial deployments as well, while contributing at low or no cost to non-commercial areas.

Academia also has to come forward to join hands with the industry and government, with a view to spread IT education mainly through formal channels. Keeping an eye on the future, R&D activity in the country needs to gain momentum. While doing all this, user requirements should be at the top of the priority list.

With a view to excel in a harshly competitive environment, vendors should have a Unique Selling Proposition (USP)—this could either be in the manufacturing process, product utility or design. Along with this, you need to have a comprehensive marketing strategy to first create demand and then sell the wares.

As Indian IT companies have shown their might in the global software market, they can repeat their success in the domestic market as well. For now the goal is to increase the IT penetration back home.

S Ramakrishnan is the senior director, Department of IT, Government of India. He can be contacted on ramki@mit.gov.in .... The views expressed in this article are the personal views of the author and not necessarily those of the Indian government