Bangalore vs BayArea - Part III

The genesis of the problems of most developed nations are their aging population. Japan, Western Europe led by Britain, America, are all sitting on a time bomb that is bound to hamper their economic growth. Popularly known as "Inverted Pyramid" the demographics of these developed nations clearly show that the aging population will outgrow the "income generating" youth population, more "spending hands" than "earning hands", ineffect losing the capacity to attract any potential investment, since there will be no significant ROI in the next 20 years.

Population Pyramids for United States

Population Pyramids for Japan

However, China and India are two very important economies with emerging markets, which coupled with their surging youth population, are sure bets for ROI in the next 20 - 50 years.

Population Pyramids for India

The first generation of Baby Boomers (the people who made almost everything happen in IT for the past 30-40 years for US) will start retiring starting 2008. And this trend is going to continue every year for the next 20 years until 2027.

So here is the enumeration of the issues that US has.

1. The technology group of the 70's, start this retirement cycle in another 3 years, and there are not enough "youths" to replace them, the enough "engineers" is still a secondary question.
2. The IT jobs are also moving to lower cost destinations and this trend is not going to slow down any sooner.
3. US is clearly not capable of producing enough engineers to retain its dominance in IT or to attract newer investments.
4. Since the GDP of the nation will now have to be met with fewer "working hands" it will only mean more "chronic" working hours for all working people, productivity levels are hence bound to fall.

On the other hand, Bangalore and Indian economy, led by IT have some real good opportunities to capitalize on.

1. Its been proven that "Disruptive Innovation", ultimately takes over the "niche" markets too, and Indians starting off at the lower end of the value-chain have to only start the improvement cycles to move higher up in this "Value Chain". So far, the Indian IT industry has performed and lived up to its hype, and I am sure that "innovation" and "entreprenurial" spirit is already seeded in my peers and the younger generation.

2. India can surely benefit from the promotion of "Open source" and "free software processes", because the barriers to enter and compete are torn down by such measures. The new age management philosophies have documented and corroborated the success of such cultures.

3. Perhaps the icing on the cake for India, is the timing of the adoption of "Software as a Service" by the markets, while this idea has been around for some years, only recently has the momentum shifted and is gaining critical acceptance that ultimately enables all software to be hosted, managed, and just provided as a service.
The service model of software, currently looks like the panacea for India's poor showing in producing software goods. With investments on infrastructure currently being pumped into the Indian market, India can use this and directly enter the "SAS" economic model, and not worry about building sales channels for selling products, It should be able to generate "inorganic growth" if it plays the "Utility/Grid/OnDemand Computing" card well.

4. The developed nations will fuel the investment of such initiatives further because of the "Innovation Blow Back" effect, which is bound to benefit their markets too in the next few years.

5. With all these trigger points lining up in India's favor, and with the right education system, and a highly-charged youth energy to boot, Bangalore currently looks all set to win this battle. (I am assuming the political/geo-political situtations will be handled appropriately by the people at the helm, to facilitate technology to lead the way for a booming growth phase)

6. If Bangalore and India can demonstrate steadiness for the next decade, doing whatever it takes to lead the "Software as a Service" model, I think they will also stand to reep the "Long tail" in the global and local markets.

And to quote someone "The 19th century belonged to Europe, 20th century belonged to America, and the 21st century belongs to Asia", India and Bangalore in particular. While tomorrow comes with its own set of uncertainities, the battle can only be lost by Indians and its not for others to win. If Indians stay their course, this will be their Golden Harvest !!

Tomorrow or my next blog entry : What are the important ideas Bangalore can emulate from BayArea ?. How to fuel entreprenurial hunger in the otherwise complacent Indian "Think tank", what are the tactical, strategic and demographical similarities of Bangalore and BayArea ?. And much more.....