India has become a global hub for software development and offshoring of back office services, over the last two decades. According to Thomas Friedman, it is innovation that will keep the West ahead of the developing world – with the more sophisticated, innovative tasks being done in the developed world, and the drudge work being done in the developing world.

With respect to the increasing flight of white-collar jobs to India from the developed world, the important question is, will India go from being a favoured destination for software services and back office services to a destination for innovation?
When this question was asked to several executives, their response was negative, as they believed Indians could not be creative. But some people said that there is nothing to do with Indians, it’s really the rule-based, regimented education system in India that is responsible for killing all creativity. Not only this, they believe that if one want to see real creativity, they have to go to Silicon Valley, and look at companies like Google, Microsoft and Intel.

On examining the level of corporate innovation in various cities, it was observed that the heads of a majority of R&D centres or innovation labs of various multinational companies were Indians, who were educated in India itself. So, the right question to ask would be, can Indians based out of India do innovative work?

Professors Nirmalya Kumar and Phanish Puranam of the London Business School explore this question in their book “India Inside”. The book says that India is well represented in innovation, but the innovation that is being done in India is in a form one did not anticipate, and the authors called it “invisible innovation.” And specifically, as per the authors, there are four types of invisible innovations that are coming out of India.

Innovation for Business Customers: The R&D and innovation of a new product or service is done in India but is branded under the name of the MNC which is not Indian. Thus, what is visible to the end user is not where it is developed but the name under which it is sold.

Outsourcing Innovation: Foreign companies contract Indian companies to do a major part of their product development work for their global products which are going to be sold to the entire world. For example, XCL Technologies developed two of the mission critical systems for the new Boeing 787 Dreamliner; one to avoid collisions in the sky, and the other to allow landing in zero visibility. But the ultimate users of Boeing 787 will never know the actual developers of this invisible innovation.

Process Innovation : This deals with the “process” to create or develop or manufacture a new product and not the new product itself. New products are generated with this new innovative process. For example, the advent of call centres in India. It’s only in India that youth have opted to work in call centres as a choice rather than a last resort. These educated enthusiasts then attach their creativity and expand this sector through innovative processes such as predictive modelling. Thus, it is the injection of intelligence to a process, which has revived the sector. But this process was considered to be dead in the west for a long time.

Management Innovation :  This is about new and novel ways to organise work. The most significant innovation to come out of India has been the global delivery model which allows you to take the geographically core-located tasks and break them up into parts, send them around the world where the expertise and the cost structure exists, and then specify the means for reintegrating them. Without this, there would not have been any of the other invisible innovations today.

As Indians spend time working in these facilities, the country will inevitably begin to notice the benefits of a ‘sinking skill ladder’. What does this mean?

Initially, MNCs were comfortable outsourcing only the most basic of research. But after a few years, they reached a point where they either moved the higher end work to India or take it to their higher cost home country. Most inevitably they moved work to India helping Indians climb up the skill ladder. Kumar and Puranam accept that for now, it is bottom end work that is coming to India but is confident that in time this will change.
Other examples abound. Take the much-touted global delivery model that IT companies pioneered in the wake of the Y2K scare. Companies like TCS, Wipro and Infosys used this opportunity to build their reputations and have since taken on more tasks that are integral to the business process of their clients. As India gets more noticed by global companies, there will inevitably be more Indians reaching the top of global corporations that would lead to more work being sent to India.
However, studies shows that a much larger and wider scope for innovation in India still remains untapped. If improved, India can become a global hub for innovation just like it has become a global hub for back office services and software development because India has the youngest growing population in the world. Sadly, Indian institutes and the education system are incapable of producing students in the quantity and quality needed to keep this innovation engine going. Hence, the need of the hour is to improve the education system of the country to be able to utilise the innovative minds of the budding youth population and expand their creative thinking. Further, once the right potential is tapped efficiently, the time will come when innovation will become a norm in the Indian society rather than remaining an exception.