Losing the edge in tech competitiveness

Improved ranking in Ease of Doing Business is welcome, but it doesn't improve ability to compete externally. It helps investors in India but doesn't help talent to become better in a competitive world

To compete in the new world infused by technology, countries will require a new set of skills. Competitiveness will be determined by quality of human capital and not just the quantity of financial heft.

Two recent rankings have again flagged India's struggle to remain competitive. India is at the bottom of the pile in the IMD World Talent Ranking 2019. India has tumbled to 59th rank in a study covering 63 countries by European business school IMD. "This is largely due to India's low quality of life, negative impact of brain drain, and the low priority of its economy on attracting and retaining talents. Other factors include the expenditure on education (per student) and the quality of education (62nd in the three related indicators)," says IMD. 

The countries that have done the best have "strong levels of investment in education". Unfortunately, the focus on high quality, agile and tech-infused education is yet to find adequate attention and effort in India.

In a world where artificial intelligence and Internet of Things will determine most organisational functions, a futuristic education policy is essential.

The leading business schools of the world are now introducing coding for their management graduates. Similarly, computer science students are being encouraged to understand subjects like finance and marketing. The idea is to make technology creators work closely with functional experts. The walls between roles are reducing and job profiles seek blended expertise. The Indian education system is still rooted in inviolable categories of science, tech and business functions. In an era where fintech and advertising tech are categories by themselves, technology and business management can't be isolated.

Myopic approach to talent also impacts overall ranking in competitiveness. The recent Global Competitiveness Report by the World Economic Forum has seen India fall by 10 places to 68 out of 141 countries.

Part of the change in ranking is because other countries pulled up their socks and improved. But a large part is because of poor effort on several fronts where being adept in technology usage is critical. Within the overall ranking India is 101st on skills base and 120th on adoption of ICT. “Technology governance has not kept pace with innovation in most countries, including some of the largest and most innovative. Further, countries must improve talent adaptability; that is, enable the ability of their workforces to contribute to the creative destruction process and cope with its disruptions. Talent adaptability also requires a well-functioning labour market that protects workers rather than jobs," the WEF Report says.

"Emerging economies with growing innovation capacity such as China, India and Brazil must also better balance technological integration and human capital investments."

However, Indian policy making on this front has not kept pace with rapid change in the competitive eco-system. While an improved ranking in Ease of Doing Business (EODB) is welcome, it doesn't improve India's ability to compete externally. EODB helps investors in India but doesn't help domestic talent and entrepreneurs to become better in a competitive world. EODB would also be undermined by poorly skilled talent, which is not relevant to rapidly changing needs of businesses.

It is time for India to consider several factors in its quest to become a stronger economy. Reduced bureaucratic rules are important, but so is creating an army of skilled professionals. Education and skilling reform can't be neglected further. India's ability to compete and grow will depend on tech-oriented, flexible and innovative talent enhancement policies.