Nirmalya Kumar and Phanish Puranam are Professors at the London Business School (LBS). They are also co-directors for the Aditya V. Birla India Centre at the B-school. Working together they have just written India Inside – The Emerging Challenge to The West which has been published by the Harvard Business School Press. In this interview, they speak to CD on how India is gradually becoming the innovation hub for the West. Excerpts:

What made you write this book?

Phanish: Thomas Friedman’s The World is Flat made a number of good points about how India has become a destination for providing services to the rest of the world. But there is something in it that we did not agree with, which was the presumption that this was a steady state. India is good for services but the innovative work will continue to stay in the West and that’s what will keep the West competitive globally. So the question we are really trying to answer in this book is, ‘Can India be in innovation what it already is in services for the rest of the world?’ And the answer is yes.

So where are the Indian Googles, iPads and Viagras?

Phanish: That is a wrong question to ask. The question is heavily biased towards thinking about innovation as products which are made for end consumers around the world. As I just said, that is not the only kind of innovation. So yes, I don’t think there are any Googles, iPads or Viagras on the table today, but that has nothing to do with whether Indians are doing innovation that impacts the world.

Nirmalya: India can be the innovation hub for the world without doing any Googles, iPads and Viagras for the rest of their lives.

Can you elaborate on that?

Nirmalya: When multinational companies innovated earlier, the whole process was in R&D labs in the home country. Today what they do is that the break up that project into three or four sub-projects and do them in parallel. One may be done in Japan, one in Germany and one in the US. But one of the parts always comes to India. And that’s why 700-750 MNCs have set up R&D labs in India.

Which companies have done this?

Phanish: GE’s Jack Welch lab in Bangalore. What they are doing is a part of a very large set of projects, all of which are geared towards making, say, a new turbine jet engine. The Bangalore lab does some of the design, testing and simulation work. And the other labs around the world do other parts. All of this is integrated to make the final jet engine. That’s what gets sold to a company like Boeing. Boeing as a customer will see GE’s brand on it, but nowhere will it be said that it is made in India or there is an Indian component in there. But that doesn’t make the Indian innovation less critical.

In fact, it makes irrelevant the question of where it was designed, because it wasn’t designed in any place. The same is true for Intel. If you look at the chip development and process development teams of Intel, they are distributed around the US, Israel and increasingly, in India. In fact, the Indian centre has now overtaken the Israeli one. Again, we have the Intel Inside brand, but there is no way to tell how much of it came from Israel versus India. What we are trying to argue is that there are significant Indian contributions here which clearly are innovative and create value, but they are not seen by the end consumer.

Which are the innovations in India that you are most excited about?

Nirmalya: The GSD ( Global Software Development) model is perhaps India’s biggest innovation in recent times. All the innovation that is taking place in India would not be possible if we did not have the GSD model. Indian companies have become excellent at being able to take a geographical co-located task, separate it and then put it together again.