Digital Economy

                          We were all excited when the government of India announced a program to Make in India.The purpose of this program was to attract investment in manufacturing sector and to create more jobs.But what we need to realize is that in the past few years the world had changed a lot.This is primarily due to advancement in technologies in the area of artificial intelligence,mobile computing, 3D printing and automation.Many of the jobs that were labor intensive have been automated resulting in job loses.China in the past grew by banking on its manufacturing sectors growth. India will not be able to replicate same as there is already over capacity build in by countries like China.There wont be many takers for Indian goods in the global market which are already witnessing slump in demand.I think rather that saying Make in India what will actually succeed is Make for India

                         In the coming days many companies and business will close down and people will loose jobs.I will illustrate this with an example.Last week I read a news about the future trends in the automotive industry.One of the trends was to eliminate the ORVM (Outside rear view mirror).The purpose of ORVM is to give the driver the rear view of car to safely maneuver car. ORVM development involves employing many people to design,develop,test and manufacture the parts.With advancement in digital technologies the conventional ORVM can be replaced with a camera which can give a better 360° view to the driver.Elimination of ORVM will also reduce the air drag,noise and CO2 emission from the vehicle.So digital technology will be a major disruption for the conventional ORVM supplier.

                         Some years ago the trend was to increase the work force to grow the business.But in the digital era the trend is the opposite. Today we have companies which are valued in billions of dollars but employ fewer people.I will mention few examples to illustrate the this.Kodak a conventional photo company during its peak employed 60000 people.But today Kodak has become irrelevant due to advances in digital technologies and rise of companies like Instagram and Snapchat.Facebook brought Instagram in 2012 for 1$ billion, but it has only 13 employees.All the new digital photo companies combined together employ only 1000 people, 59000 people less than what Kodak had during its peak.Another example of Digital company is Whatsapp. Face book brought it for 18$ billion in 2014.Even today with 450 million users Whatsapp employs only 55 people.So future belongs to the companies who can be agile, lean and adopt to change.