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Muthu, the Tamil film featuring superstar Rajnikanth, was a blockbuster...

...in Japan!

If Indian software is to do equally well, it will have to build on what Indians are already good at: Entertainment.

This is what management guru C K Prahlad's ideas about core competencies say.

Sure, e-business and e-commerce are going to be big. But that is because they are also going to be a lot about entertainment.

And therein lies the opportunity for India: A clever play on the combination of its core competencies in software and entertainment.

This strategy thrust has not been realised and needs to be discussed.

Of course, the government has spoken of its grand vision to make India a software superpower. And it has backed the vision statement with policy initiatives that have immediately contributed to the extraordinary growth in software exports.

But this growth is also a product of several happy circumstances. One, the ability of Indian programmers to use English fluently; two, the relatively lower wages in the subcontinent; and three, the rare situation where the government and the industry have struck a strategic alliance to chart a business policy.

The advantage that India has seized in the global software market may not last for long. Others countries will catch up on India's lead soon.

This is because India's edge comes from low-cost high-quality technical manpower. The combination leads to a business position that is typically lower down on the value chain. As of now India only has a lead in areas like back office maintenance, rewriting of code and transcription!

Discussions on moving India up usually end with a debate on how the country can become successful in the business of making software products. I have seen software industry figures that estimate India's software products contribute only 24 per cent. The rest comes from services.

Obviously, India will have to first build on its strength in services.

In this article I have chosen to focus on software services and entertainment not because these just happen to be core competencies of India.

Even global technology trends suggest a big industry opportunity emerging out of the confluence of software and entertainment.

This is most evident when you look at 'convergence' and the explosive growth of the Internet.

Buzzword 'convergence' is, of course, about the coming together of audio and video technologies that go into evolving multimedia applications, which embrace, voice, data and pictures.

To make convergence move, you need a huge network: The Internet, the giant global network of networks, which is growing faster than you can count. Every nation speaks of building a national information infrastructure.

One can build an information highway but who will provide the traffic on the highway? Of course, multimedia content, arising out of the convergence of communication technologies.

Content creation is the most important. And within the area of content, education and entertainment will be the most profitable.

That is why when we talk of e-business and e-commerce, we should think of a couple of other Es like education and entertainment.

When it comes to entertainment, India has a natural advantage. For instance, India produces more films than Hollywood. This is significant because the skills required to make movies are skills that call for convergence. These skills are a combination of not only art and technology but also methods of managing both together.

One software company that seems to have realised this convergent competency in India is Pentafour. Here is what it has to say in its 1998-99 annual report:

Our success in this realm has a kind of ethereal quality. A rapid rise from being a starter six years ago to being top of the charts. This year, we were ranked No 5 among the major global animation production companies by industry guru Robi Roncarelli of Pixel Animation Directory.

Pentafour Software has today made its mark in Hollywood by executing projects for major production houses in the US.

The high-end of the multimedia market, namely films and broadcasting, alone accounts for over $16 billion today. This is expected to rise to over $40 billion in another three years.

The trend in the industry today is that cost of animation and effects are being added to production budgets and related risks.

The market is flush with local players and with large operating costs and low margins, which have in turn, restricted competition and kept prices high.

There are two major hurdles for entry into the higher end of the business. The first is the long time it takes to be recognised and accepted in the exclusively small world of entertainment.

The second is the need for development of skills, which in this case means people who not only know programming but are also enormously creative.

Pentafour Software worked in a focused fashion to become a large player, besides offering the unique advantages of reduced costs, high and proven quality of production and a production facility in Hollywood apart from one in India, and both connected through a high-power satellite link.

Science fiction now seems more real than at any time in the past because soon technology can create wholly computer generated human beings in films and have them enacting sequences anywhere in the world without the viewer knowing the difference.

Cost savings for such projects would be enormous. The 'computer as a camera' strategy has already started paying dividends for us. Sindbad: Beyond the Veil of mist has been produced in a third of the time (using optical motion capture) that it normally takes to produce animated films.

Pentafour seems to have realised that multimedia and Internet are going to be the main drivers of the international software business. All industries will embrace e-business because the enabling technologies are gradually becoming affordable for all and simply cannot be ignored.

What Pentafour has done is in sync with the practice of management concepts that gurus like C K Prahlad and Peter Drucker have been preaching.

Prahlad popularised the concept of core competence. India has a core competence in the entertainment business. This derives largely from the country's diversity of languages and cultures.

Of course there are digressing concerns like India's culture is under threat from exposure to Western culture via global satellite communications technologies.

But it is very interesting that culture is not a one-way street. It is a two-way street. If Hollywood is impacting Indian life, so is Rajnikanth impacting Japanese.

Furthermore the same communication channels allow Indian programmers to work on Western products... or Indian animators to work on Hollywood films!

Generally, the hands of freelancers do animation in the United States and Europe. Pentafour has given the West and alternative by creating a phalanx of 300 animators!

How did it do this?

Pentafour is a training organisation besides being a software company. It takes on regular software work that has provided a base for diversifying into animation. That is why it could build up a core of 300-plus software experts who could do animation too.

Such a massive presence of experts in one area of animation provides an advantage that at the moment appears to be unbeatable.

The ideal position is that once a strong base of technical experts who are good at animation is established, the entry barrier for others becomes difficult.

This enhances the competitive strength of the company globally. In other words, Peter Drucker's concept o building on strength is in operation.

For example, take microchips. The United States came up with the initial breakthrough in the technology. Then there was a period when Japan and South Korea seemed to have established dominance, at least in certain types of chips like those for memory. But the continuous capacity for innovation and engineering seems to have virtually made the entire industry depend primarily on the United States today.

I wonder that when it comes to animation in entertainment, can India establish such an unassailable position.

The experience of companies like Pentafour shows that perhaps this may be possible.

Peter Drucker spoke about building on strengths. If entertainment is our strength, we can build on it. We can build content for entertainment, especially in the area of electronic software. This, combined with the strength of cost effective animation expertise can make India unbeatable.

Once this is achieved, the two-way culture street will reveal itself again. And more Rajnikanths will surprise us in places more unexpected than Japan.

Indian fare, like Tamil cinema, is outright escapist entertainment. To enjoy it you have to wilfully and momentarily suspend disbelief. But this true of enjoying poetry too! Such appreciation is universal.

Rajnikanth's Muthu was a hit among the teens of Japan, a generation that doubts itself as it grows into an economically slower society.

When the Indian software industry plans for its next growth stage it cannot ignore multimedia technologies and content creation for entertainment and education.

N Vittal is the chief vigilance commissioner of India. Prior to this he was the chairman of the Public Enterprises Selection Board. But he is best known as the biggest evangelist for deployment of information technology in government. In an earlier tenure as the secretary of the Telecom Commission he won his credentials by introducing many revolutionary policies.

Previous columns: Critical mass | T.R.a.I | Santa Clause 11(2) | The Broadcasting Bill | The death of distance | S.O.S, getting the message out of the bottle | Force 7 from FICCI | Of railroads and info highways | Techno Politics | Cheating death: Ways to resurrect ITI | The HAM-handed miracle | Electronic governance | Which came first? | The four-engine design | Learning to learn | Heads 'n hands | Post-mortem | Where's the cash | Mr T S Eliot's digital wisdom | Banking on IT | R, R & R | Pots & Pans | The Changing Change | Reality check | Spectrum analysis | Global Slum | Rebooting democracy | Catalysts of change | Educational emergency | A card for all seasons | Moore, Metcalf & Gelder | Heads I win, tails you lose! | Loosen those tongues | The globe is a square | Eat cake

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