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May 19, 1998

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         'If we base our strategies in high-tech on low cost of labour, things are likely to backfire': An interview with Vinod Dham, CEO, Silicon Spice

Email this story to a friend. The Manufacturers Association for Information Technology has set itself the task of making India the IT design centre of the world by 2005.

T O D A Y
Vinod Dham quizzed
TCS results
Software projects
CSC sharpens focus
It would entail taking the hardware exports from the country to $ 5 billion by 2005. That's just seven years from now to beat the masters of the game: the US itself and others like Singapore, Taiwan and Korea.

MAIT figures that India has to develop a large industry based on electronics technology because it will drive the big economies in the coming millennium.

But is this design centre wishful thinking or an achievable ambition backed by solid research and detailed strategy?

Yesterday, we brought to you the thoughts of experts from the country. Though fragmented on the finer points of the issue, they seemed to generally agree that MAIT's kite is flyable.

But today's going to be a surprise. Silicon Spice CEO Vinod Dham, the biological engine behind every Pentium across the world, explains to Rediff why MAIT needs to rethink. Let alone manufacturing, he is sceptical of even a large design operation in the country.

Harsh? He has one solid reason: "The Devil is in the details." And he can't find them...

Is the time ripe for India to go for the microprocessor revolution? Or has it already missed the bus, the way it did during the semiconductor revolution in the Seventies?
If by saying "going for the microprocessor revolution" you mean that should India start designing microprocessors, my answer is no.

You canít justify this investment simply because it is already a commodity business. If India wants to get into the semiconductor business, it has to adopt the right strategy.

It wonít hurt to study some of the successful cases such as Taiwan and Korea. It will help come up with the right strategy for India at this juncture.

Whatís your reading on MAITís ambition to make India a design centre by 2005 with a turnover of $ 5 billion? Is it realistic?
Again, I believe there needs to be a comprehensive strategy based on the domestic and foreign market, the size, the product need and the synergy.

Whether the ambition is realistic or not can only be assessed once these parameters have been identified.

I believe failure of Indiaís initial foray into semiconductors through SCL at Chandigarh was due to lack of a good business strategy. Let us not repeat that mistake. It could prove very costly.

There is some design talent in the country today. Take the case of Texas Instruments India and other companies. But it is not enough. MAIT told us that they are going to woo talent of Indian origin in the US to return home. Now, given the big shortage of talent in the US itself, do you think such a plan will work?
No. I donít think it will. Doing things for the sake of doing them is not useful and will not work. I would like to see a plan on how this design talent will be prevented from simply filling remote body shops for USA and Europe.

Experts at home brandish the low wage bill for the design team as a competitive edge. We have been told the development costs can be slashed up to 50 per cent. But then this does not seem to show up in the final price of the chip because the manufacturing and marketing efforts are done in the US. How can this be a competitive edge then? We are flummoxed. Given your point of view from the US, how do you see this?
You are right on. As long as there is a shortage of designers worldwide salaries will keep on going up like it did with software engineers.

If we base our strategies in high-tech on low cost of labour, things are likely to backfire. Our strategy has to be based on some core competence, whether it is software or in algorithms. Israel should be an interesting example on how core competence can be utilised well.

We must build steadily around our core competence and then branch into synergistic areas. That's how Taiwan started off with PCB motherboards, expanded into chipsets and other components and is now entering into full systems and fab subcontracting.

Suppose MAIT is not able to make it in chip design but manages to flower in all the other IT design segments, then would it be enough to make the $ 5 billion target by 2005?
Again I donít know why you keep on throwing this $ 5 billion number. Let's not get hung up about numbers first. Let's first develop a sensible strategy as a start and then work out a plan to grow it to our goal.

I am disappointed to see lack of specifics and only some lofty goals unsupported by robust and well thought out plan.

The fruits of Indiaís success in software never trickled down to its huge population of poor and unskilled citizens. Do you see Indiaís hardware drive benefiting the less fortunate unskilled and semiskilled labour?
Yes, it can, if executed right. In the US, the electronics Industry has surpassed the automobile and oil industry to become the largest single industry and the most significant contributor to jobs and economy.

Same is true of Taiwan and host of other countries that have embraced the electronics technology based industry as an engine for growth in this decade and for the coming millennium.

Could you do an impromptu SWOT analysis of India as a chip design centre of the world?
Done properly, I can see us becoming design talent suppliers first for others and then for our own internal consumption.

But again, the Devil is in the details. Detail of how we create an effective long-term strategy and then execute it flawlessly.

Our strategy has to be very compelling and should be based on our strengths and competitive advantage, our outstanding, well-educated work force.

Which nation is the biggest threat to India becoming an IT design centre?
India itself.

What is the one big mistake India can make to destroy this IT design centre dream?
Not learn from its mistakes. Not learn from how others have done it successfully. Get caught up more with the hype than the soundness of the plan.

Earlier:

Designer dreams

Texas is in South India

MAIT is wooing Indian designers in the US

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