The Indian GDP growth rate has off late been a point of focus. Indicators show India competing closely with and, maybe even surpassing, China and US in annual percentage growth rate.
While the arguments for and against the exact figures may go on, what we need to acknowledge is that –
- There has been a fundamental change in the society and economy of the country; driven by the strides made by the startup economy.
- We are also seeing a surge in the entrepreneurial spirit amongst young professionals, thanks to the new startup role models who emerged over the last couple of decades.
This entrepreneurial spirit will be the biggest change maker for India over the next few years.
Liberalisation and advent of IT sector in India
Before we look at the current scenario, let’s take a look at the key changes in the Indian economy over the last 4/5 decades.
Upto the 1980s, the key drivers of the Indian economy were public sector investments and a “socialist” and inward looking approach. It was a closed economy, with limited imports and no sensible drive to build exports.
The result was annual GDP growth rates hovering around 5% depending totally on domestic consumption.
The 1990s saw the opening up of the economy and expansion of the private sector, with local and foreign investments. We saw the expansion of the manufacturing sector; with foreign brands coming in, particularly in the automobile industry and other consumer durables and non-durables industries.
It was also a time when the IT sector got going, catering mainly to IT development requirements of foreign clients and some of the large service sectors in India such as banking & financial services.
It was the decade when the mobile phone services got launched, which was the biggest change driver for the next couple of decades.
The GDP growth rates started looking up, moving towards the 6% levels.
The new millennium brought an increased pace of investments in the startup space; with their entrepreneurial spirit focussed on innovations for the Indian market; in the B2B as well as B2C spaces.
The telecom industry grew rapidly to reach every corner of the country. It launched smartphones with voice and data services for every income segment.
This laid the foundation of a huge service industry, enabled through mobile apps.
Today, we are comfortably talking about the prospect of GDP growth rates of 7% and beyond.
All pervasive change with the new entrepreneurial spirit
Today almost every company, from medium to large size, in every sector worth mentioning, has brought in IT enablement in its major business processes.
But a bigger change happening is in the consumer space, thanks to the entrepreneurial spirit displayed by innovative startups; with India focussed Apps riding on the telecom and data services reach.
Thus, while the early IT industry businesses, started in the 1990s, introduced changes in internal business processes of client organisations in India and International markets, the new millennium’s startup industry is now driving change in the consumer space.
This change in the economy is now leading to a new kind of employment generation – on one hand in the IT skills areas; and on the other, in the facilitation space of products/services – in delivery, digital marketing etc.
It is also bringing new reach and opportunities to the small and micro level sectors of the traditional economy, such as the small retailers and traders, small farmers, skilled workers such as electricians, plumbers etc and even blue collar workers for large industries.
The changes can be seen not just on the supply side of modern consumer needs sectors like payments, transportation, groceries, education, pharma, health.
Even the old and traditional sectors like agriculture, textiles, construction etc – the roti, kapda, makaan spaces, which have existed for generations are suddenly looking different.
You name the consumer need of product or service and you will hear of an App offering it online.
New confidence in Entrepreneurship and choice of jobs
The biggest driver of this major change is the new entrepreneurial spirit amongst middle class professionals. In turn, the consumer response is encouraging entrepreneurs to go further.
Till the beginning of this millennium, the typical young, educated middle class person’s life target used to be a good job in the government or large public/ private enterprises. These jobs were considered safe for long term careers.
Entrepreneurship was meant for those whose families already had a running business, large or small. So those who came from family businesses in the retail, trading or small manufacturing industries would continue and expand their family businesses, while all others would seek jobs in government/public sector organisations/large private sector organisations.
Now, this is changing rapidly, with the emergence of successful role models in the startup sector.
- With the awareness that innovative startups are invested into by professionally managed investment firms, many professionals with reasonable work experience,(and some even fresh out of colleges) are tapping into their inherent entrepreneurial spirit and coming forward to launch their startups with new product/service offerings.
- Likewise, there is a new found confidence and excitement in the youth about taking up jobs with startups. Some of them, after gaining experience and confidence, have then moved on to starting a new startup venture on their own.
- The startup sector is therefore becoming a sought after employment space – as founders and as employees.
- With digital services becoming an accepted norm, a lot of senior, experienced professionals are also stepping out of jobs to move into self employment; offering a variety of services to individuals and businesses.
Entrepreneurial Spirit – A Mindset change towards creative thinking
Working in startups provides a great learning in terms of innovative thinking – be it about the product design or about the business processes required to achieve targets. There are limited resources and thus limited time to reach critical mass.
The survival instinct thus drives creativity.
Unlike established organisations where processes seem like they were cast in stone, working in startups pushes professionals to think on their feet and gives first hand opportunity to design each and every process.
This learning is fundamental to building the entrepreneurial spirit. It drives us to ensure survival and growth, come what may.
This big change is what helped many businesses bounce back after the Covid lock down impact. This is what will ensure the economy stays active and grows, irrespective of what happens around us.
The key drivers of this change are –
- Daily news about success stories of new startups with innovative ideas works as an inspiration.
- The massive spread of digital payment mobile apps and accepting locations makes it convenient to design services.
- The comfort with smart phones and apps across all sections of society enables market expansion.
- Mindset changes, specially after the Covid lockdown experiences, are encouraging consumers to look forward to new age products and services.
- Involvement of a large number of lower income strata in Gig work based solutions is driving employment/self employment in lower income segments and also educating them in the digital ways.
- Engineering and Management Institutions are now encouraging startup mindsets with special programs.
- Investment firms, startup incubators and accelerators likewise provide great knowledge and encouragement.
- Government leaders, from the Prime Minister downwards, are encouraging and supporting this culture by making frequent references to the startup sector’s growth and bright future.
- State governments across the country have started providing special incentives and facilities for new ventures.
- The emphasis on expanding the manufacturing sector and replacing imports with local production is giving a new growth area for entrepreneurs, beyond IT enabled services. It also offers a new opportunity to innovate manufacturing management with IT inputs.
What other changes can we expect from this?
- Youth will gradually stop seeing the US as their destination.
- Even if they go abroad for education, they could look at coming back to India sooner than later. This is slowly becoming visible as people come back from the US to settle in India and work in the startup world.
- Innovative thinking will become a habit. Processes in society, taken for granted for years together, may suddenly see a change for the better. Aadhaar’s finger print authentication is a perfect example of redoing an age old process using technology.
- Social sector changes, earlier dependent on Government and NGOs, will now happen because of the innovative services provided by the startup system.
- Change also will come in the interiors and lower economic strata because of the new nature of jobs that emerge even at the lower end.
- So what was seen just as a social work commitment is now being seen as a social impact business opportunity.
- Work location preferences will change. As tech and service delivery become a part of everyone’s life, work opportunities will emerge in the smaller towns and even in rural areas.
Some important suggestions for startups
While the future looks bright for innovative startups and their founders, it is important that the founders stay grounded in reality. Some of the points to remember are –
- 1 in 100 early stage startups could get funded. The rest must ensure they work to survive the early stage and look towards growth funding.
- Revenue and unit economics are therefore critical at early stage for survival. It is possible; it just needs some good thought.
- Customer satisfaction and repeat purchase is key.
- Many startups tend to follow western online models for customer service without human connect. Indian companies can afford to have a human connect. Ensure it is there, to provide effective support and satisfaction.
- Customer support with a human face also creates jobs for the country, while giving greater satisfaction and customer retention.
- Over engineered products and processes aren’t needed. Increase the smartness with growth and diversification.
- Ensure good management skills availability through a diverse team.
- External supports through mentors/coaches can ensure the presence of a sounding board to think through the way forward at critical junctures.
- Outsourced partners can be useful to enable some business functions effectively in the early stages.
So, the Indian Economy is actually in an exciting phase with major changes in the composition of the core drivers of growth and employment.
Being aware and planning for the way ahead can ensure a massive growth and change at the macro and micro levels of the economy.
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