Arvind Krishna has been appointed as the global CEO of IBM, and this has caused much celebration in India. BJP MP Tejasvi Surya called this 'Indian domination'. There are many who agree with such sentiments, and are elated at Krishna's achievement. Make no mistake, Krishna's achievement is stellar. He has not just become the CEO in waiting of IBM, the company that unleashed the power of computing upon the world, but is being asked to lead the tech behemoth at a very crucial time of its journey. To be amongst the pantheon of leaders comprising of luminaries such as Thomas Watson and Louis Gestner Jr. is no mean feat.
Krishna is currently the head of IBM's cloud business. Cloud is what made Microsoft, which had ceded its leadership position a few years ago, reclaim its numero uno status and be the first company ever to touch a market capitalisation of $1 trillion. Cloud is the key to growth and profits in today's computing world. Krishna is also the head of IBM's cognitive software division, which leads IBM's strides on new age technologies such as Artificial Intelligence and Machine Learning, which are the technologies of the future. Krishna also spearheaded IBM's acquisition of Red Hat, which is IBM's largest acquisition till date. Clearly, Krishna has proven his capability to provide direction to the elephant, as the former CEO of IBM Louis Gestner Jr., had called the company.
Notwithstanding his achievements, it will will be a big mistake if we look at the CEOs of Microsoft, Alphabet, Adobe Systems and IBM as the growth and domination of Indians. Satya Nadella, Sundar Pichai, Shantanu Narayen and Arvind Krishna are Americans of Indian origin, which is very different from being Indians. Indians are citizens of a nation that has a GDP per-capita of $2000. IBM on the other hand, with a revenue of $79.59 billion and an employee base of 3,50,000, has a revenue per-capita of $2,27,000, which is 113 times India's GDP per-capita. Alphabet, Microsoft, and Adobe have revenue per-capita at 660 times, 425 times, 210 times India's GDP per-capita respectively.
Hence, before we celebrate their achievements as one of our own, we need to think hard as to why do such talented people leave India? Nadella, Krishna and Narayen were all born in Andhra Pradesh. Pichai was born in Tamil Nadu. But soon after completing their graduation, they all left India to pursue their higher education in the United States.
If we aspire to build world class enterprises in India that do not thrive on cost arbitrage arising from cheap labour, we need to ask why is that we have only managed to create best in class education institutes that provide a launching pad for further education and not necessarily to global leadership?
Be it a Raghuram Rajan or Abhijit Banerjee, their success has been largely scripted by their academic associations in the United States. And it is certainly not enough if governments under both the major political parties think that opening more IITs with inadequate physical infrastructure and low faculty quality will prepare India for the next level of opportunities. If excellence in education could be promoted by opening more institutes, then we would have many more Oxfords, Harvards, Stanfords and MITs.
India does not even have a single university in the top 300 of the world. It's therefore not at all surprising that extraordinary talent such as Nadella, Pichai, Krishna and Narayen, among others, who hail from middle class families, exited India at their first opportunity. Indian policy makers need to seriously get their act right in preventing this, which can be accomplished in a meaningful manner, only by creating and allowing for world class universities in India.
As much as it is important to build toilets and bring more than 300 million poor people into the financial net, it is also important that we take at least one Indian university into the global top 50. Even among the elite Indian Administrative Services, there is a huge clamour to go to the US and enroll in an Ivy League University at tax payer's expense. It's perplexing how a nation that can reach to the moon and Mars, can't build one world class university?
Even more important is to ask why Indians living in India, who probably are as talented as many global CEOs of Indian origin, aren't able to transform Indian companies to global leadership standards? What is it about the business environment here that does not allow a single Indian company to enter the Fortune 100 list?
The Indian leaders in the Fortune 200-500 list are predominantly oil companies and state-owned banks. India may be within striking distance of the 50th rank in the World Bank's Ease of Doing Business Index, but the entry of first-generation Indian companies that are neither conglomerates nor state-owned enterprises, is the real metric to measure the ease with which business could be carried out in India.
The Solow growth model is a robust economic theory that explains the factors that go into facilitating the development of a nation. Nobel winning economist Robert Lucas expanded the theory and included human capital as a powerful component that contributes to the growth of a nation. Education as explained by Robert Lucas is not about merely increasing school enrollment or building more engineering colleges. While these objectives are mandatory, only quality of research and education can act as force multipliers. Building a world class research university that expands the imagination of technically trained minds is not easy to accomplish and therefore it is a national imperative.
In addition to aspects detailed in the Solow growth model, another factor that accounts for economic growth is ease of doing business. Wealth is created by business enterprises - governments only spend it. Hence the ease with which businesses can function in India is a key metric that can power India's economic growth. It's probably as important as the government's ability to tax its citizens. So far, despite India's increase in global rankings on this front, any real and lasting change seems to be evasive largely because it calls for a serious behavioral and mind-set change at so many levels and layers of the governance machinery.
Till such time we don't see Indians from Indian universities rising to great heights and till we don't see Indian companies rising to global stature, Sundar Pichai, Satya Nadella, Arvind Krishna and Shantanu Narayen are a stark reminder of the distance that India has to cover and not the distance that India has covered.
The author is a Fulbright Fellow, Clinton Global Fellow and a current student of Economic Policy Management at Columbia University. Views expressed are personal.
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Updated Date: Feb 03, 2020 08:09:35 IST