Over the past 30 years, India has established itself as a leader in Services. According to this report from Goldman Sachs, India’s share in the world services market has increased from about 2% in 2005 to 5% in 2023. This is a growth rate matching that of Singapore and Ireland in the services exports sector. The lion’s share of these exported services have been computer services (including software as a service) at about 47% followed by professional consulting. Of late, the professional consulting services have been growing at a compounded rate of 17%. At the same time, India’s share of world’s merchandise exports increased only from 1% to less than 2% in these two decades.

A quick look at this research report indicates that the growth rate of the services industry in the country was similar to or lower than industrial growth until 1990s. In 1990s, a mix of favourable policies, availability of manpower skilled in IT (India was amongst the first few countries to skill people in the software sector), and Y2K bug helped jumpstart the services revolution in the country. Over the past many decades, services sector growth rate has far exceeded growth rate of industry and agriculture. In 2024, services contributed to 50-60% of our national GDP but it employed only about 30% of our population. Other countries, where services sector dominates national GDP, also employ a dominant part of their workforce in it.

In the past 3-4 decades, when India focussed its energies on developing the services sector, the industry sector has grown slowly. As evident in this report from the government of India, industry sector contributes only about 28% of India’s GDP (with about 17% being manufacturing) and employs about 17% of India’s workforce. The government of India targets to increase the share of manufacturing to about 25% of India’s GDP over the next decades. 

At this juncture, it is important to reflect on the famous smiling curve by Stan Shih, founder of Acer. Through the curve, he elucidates the value addition in the product through its lifecycle. A study of the curve reveals that in a manufactured product, minimum value is added in the manufacturing step, and much higher value is added in the stages of Concept Development/ R&D; Branding; and Sales/ After Service.

Since value addition in manufacturing is low, India doesn’t only want a larger share of the manufacturing pie, India aspires to turn into a product nation. As is pointed out in this and this report, it is pertinent to note that product development is not just an engineering exercise and involves transitioning to a product mindset and establishing a strong product lifecycle management ecosystem. This is going to be an immensely cross-disciplinary effort. Bringing experts from different domains involved in product development together is the first step towards creating such an ecosystem. IIIT Delhi recognises this and has established the Centre for Intelligent Product Development (CiPD) in November 2023 with mentorship and under guidance of Late Sh. Mahendra Pratap (one of the co-founder of HCL).

CiPD has identified 3 key pillars to help India march in that direction. These focus on capacity building, product development, and nurturing the product development ecosystem. For capacity building, CiPD plans to conduct training programs mentored and facilitated by experts in the industry. This will help to forge industry-academia relationships. CiPD proposes to build platforms of intelligent products to facilitate product development and nurture an ecosystem to speed up product development.

These are exciting times for those of us who want to develop products. Start-ups and entrepreneurs should focus on products and not just services. Momentum is building up and it is good to be ready to ride this wave. Stay tuned for more…