“companies like Meta” including Meta do exist in India.
Not in NIFTY 50 (the original focus on this topic-thread).
But, since you mentioned the valid challenges of running a business in India,
i wanted to specifically call this out .
As you go on to rightly point out that
the compliance costs act as a deterrent for smaller-upstarts,
and benefit established entities like :
- MNCs operating (or looking to operate) in India.
- Indian IT companies above a certain operational scale.
- Indian companies above a certain operational scale and looking to expand into IT.
We can note that all of these aren’t non-Indian corporations like Meta.
Basically, large Indian companies enjoy the same benefits as large MNCs.
@BB789 In the interest of time,
if i had to summarize my reaction in brief, it would be -
“True, but IMHO, not the whole truth.
Also, i believe this is an increasingly smaller factor of lesser relevance nowadays.”
Basically, I believe that the above while historically significant, is a very narrow viewpoint.
Below are a few nuances i would like to highlight to justify the above assertion.
Before we begin, to avoid confusion, a brief note about the terms 'Product-based' and 'Service-based' as they are commonly used/understood in the context of IT companies in India.
Difference Between Product Based Company and Service Based Company - GeeksforGeeks
Most Service-based companies in India are engaged in B2B and not B2C. Thus, they do not enjoy the positive branding / PR benefits / consumer mindspace that B2C product companies with successful/popular products enjoy.
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Innovation in services (offered to other companies, not individuals) enable them to operate at the scale they do. This is not visible to the end-user. When talking about innovation, all popular product companies that one typically hears about, are built on top of some level of innovation in exploration and/or execution supported by Service based companies. In India, these are the famous Indian service-based IT companies and the not so well-known Indian subsidiaries of such Global MNCs.
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Innovation in the core-product is NOT always clearly segregated and attributed to the one actually doing it. Innovation in the core-product carried out by Service-based companies is always attributed to the “face” i.e. the final B2C product company that usually ends-up in the minds of the end-users as being innovative.
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The playbook adopted by India (Govt, IT-companies) in developing the IT sector over the last few decades is a well proven one.
The playbook essentially is starting at the bottom of a value-chain in an industry,
develop expertise over time, and capturing increasing larger part of the value-chain.
This is not limited to IT (even Automotive, Textiles, …)
and has been successfully followed by other countries
- some before us in time (Japan, S.Korea, …)
- some during us in time (China, Mexico, …)
- and some after us in time (Thailand, Vietnam, …)
Also, a note before anyone having read the above, begins to compare the execution by various countries.
each country is doing this
- for different industries/sectors
- during different periods / points of time
- with different constraints (demographical, geographical, political, …)
- with different external adversaries involved
- and with different economic systems
So, one cannot easily compare the execution and claim one did it better than the other just because one achieved it faster than the other.
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Finally, looking at the outcome of promoting such “innovation” that has resulted in mega-corporations, financially larger than most countries, with their offerings deeply-entrenched into our lives, that have the power to control/impact our lives, but without the responsibilities usually associated with such power; Looking at the end-result it is NOT universally accepted that such an end-result is desirable, i.e. not a given that India should attempt to emulate it.
NOTE: At first sight, this 4th factor has no relevance from a “What is purely financially better” train of thought. However, if we take into account the second/third-order effects of enabling such concentration of wealth and power into the hands of fell companies, the ill-effects for the individuals invested in such companies become apparent - “Have money, but no <insert here what you wanted to do with the money> !”
Not always. Often times a conscious choice as well by the IT company.
Think chasing risk-adjusted returns instead of absolute returns.
In the eyes of end-users, consumers, sure.
Not in the eyes of all corporations that are the customers of Indian IT firms.
Indian IT firms / Indian subisdiaries of MNCs were being outbit on cost by competitors/counterparts in South-East Asia and South-America as long back at 2010. The Indian IT firms that exist/flourish today are doing so by not solely competing on cost alone, for more than a decade now.
All this to simply highlight that “mostly” → “sometimes”.
Exists. Not attributed to them in the eyes of end-users.
Not really. Also, not 99% either.
Considering all the nuances above,
i do not believe that the above conclusion immediately follows the “With AI”.
Some of the knwon unknowns
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Deploying AI (assuming referring to LLMs here) is NOT guaranteed to be practically cheaper than individuals/labor in several countries. Especially due to preference for OpEx vs. upfront CapEx.
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What fraction of Indian IT customers are cost conscious “cheap-clients” ?
Note that major cost-conscious customers started migrating away to cheaper countries even before the pandemic. Companies that were previously reluctant to explore such opportunities due to the associated short-term cost/pains, the COVID-19 pandemic further forced everyone’s hand and enabled a co-ordinated push to hire/contract remote workers across time-zones from LCOL regions/countries.
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How much are existing established Indian IT firms (as well as upstart Indian IT firms) developing/deploying LLMs, and will capture significant parts of the value-chain of a future IT sector with widespread “AI” ?
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