Can entrepreneurship meet the job-creation challenge?
According to the ministry of corporate affairs, about 1 lakh new companies were registered in India in 2014. So, entrepreneurship is growing.but the outcome of this positive trend will be tested by the number and quality if jobs created
Culturally, Indians have been moulded to conform to norms and being risk-averse. Entrepreneurship of the modern times—which requires large measures of independent thinking and decision-making combined with the ability to innovate and hit the curved ball—has therefore never been a part of our DNA. But this is changing rapidly. The country’s top educational institutions such as the IITs, IIMs and BITS Pilani (as also many others) are spawning a breed of top-notch entrepreneurs, who look upon failure as a badge of success—Sachin Bansal and Binny Bansal of Flipkart and Ankit Bhati of Ola are from IITs; Amiya Pathak of ZipDial and Niranjan KM who has set up a manufacturing unit for low-cost sanitary pads for rural India are from IIMs; Phanindra Sama, co-founder, redBus, is from BITS Pilani.
This is a growing list which confirms the trend that entrepreneurship is fast becoming the first choice of many graduates in premier institutions with startups in wide-ranging fields such as decision sciences, food catering, book rentals, better cricket bats, wedding management, mobile payments, global delivery of prasad from famous temples and reselling pre-owned branded garments online.
As recently as 2013, when Eric Schmidt, Google’s executive chairman, was in India, he observed that, “As many as 40% of the startups in Silicon Valley are headed by India-based entrepreneurs. Without prejudice, the IITs might be a great hub for startup talent.” If anything, Schmidt was prescient. Now, the trend which started some years ago is in full spate. Many of these institutes have extensive support systems and accelerators for entrepreneurs. IIT Bombay, for example, has a highly successful Entrepreneurship Cell while IIM Bangalore has the NS Raghavan Centre for Entrepreneurial Learning (NSRCEL).
There is good reason why young Indians are able to step out and create success faster, better and with greater confidence than ever before. This is because we have learnt to combine self-belief with intelligent risk-taking. It is necessary to examine this facet of free enterprise—entrepreneurship is not as much about risk-taking as it is about intelligent and data-based risk-management. It may appear counter-intuitive, but when risk is managed intelligently, the ability of the entrepreneur to cross-pollinate ideas, innovate and foster creativity is improved several fold. This, in turn, creates a powerful magnet for venture capital and top talent—both of which are critical drivers for success.
Indian entrepreneurs are also picking up lessons from their Silicon Valley peers. The mantras, “Fail fast, succeed soon” and “done is better than perfect” are becoming more acceptable. Silicon Valley-based chairman and CEO of Symphony Technology Group, and founder and chairman of Wadhwani Foundation, Romesh Wadhwani, says that, “Entrepreneurship is sensible risk-taking and about risk-management.” Indian entrepreneurs have come to accept that success is built on the back of several failures and that there is deeper wisdom in iterative, independent and bold decision-making. They are now embracing what Facebook CEO Mark Zuckerberg once observed: “The biggest risk is not taking any risk.”
Youngsters in the country who were once weaned on the ideals of financial safety and family commitments are discovering a new freedom—bold ideas are liberating them and the desire to deliver performance first is changing mindsets.
Not surprisingly, there is ample evidence that these deep set changes are taking firm root. A clear reflection of this is in the number of new companies being set up in the country. According to the ministry of corporate affairs, close to 1 lakh (98,473) new companies were registered in India in 2014, pointing to the fact that entrepreneurship is fast growing. However, the eventual outcome of this positive trend will be tested by the number and quality of jobs created.
The question is: “Are 1 lakh new businesses that create employment for an estimated 10 lakh people enough for India?” When you consider that India is adding 10 lakh people to the workforce each month—or 25 crore people looking for jobs in the next 10 years—the urgency to address the problem is immense. If there is one obvious conclusion from these simple facts, it is this: There is a need for bring more risk capital to entrepreneurial activity.
But before that can happen, the budding ecosystem of skills development, entrepreneurship-led education and mentorship must scale.
One example we have is that of Vijay Shekhar Sharma, founder of One97 Communications. Sharma began more than 15 years ago when the cultural aversion to entrepreneurship still existed. He began by borrowing small amounts from family members and friends. As his company drew success, he began investing in startups, offering entrepreneurs a chance to learn from his own experience. Today, Sharma is a poster boy as the founder of Paytm, a sister company to One97 Communications, dealing in mobile payments, in which Jack Ma’s Alibaba has agreed to invest $575 million.
The ideas, policies, infrastructure, skills, mentorship and education to ignite entrepreneurship are slowly falling in place. But the on-ground reality is that we need to further accelerate the growth of entrepreneurship in order to address the looming challenge of job creation.
About author: Atul Raja is Executive – Vice President, Wadhwani Foundations