McKinsey Global Institute December 4 1 02 India’s technology opportunity: Transforming work, empowering people McKinsey Global Institute India’s technology opportunity: Transforming work, empowering people The McKinsey Global Institute The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. 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From its offces in Delhi, Mumbai, Chennai, and Bangalore, the frm serves clients in the public and private sectors across India. For more information, please visit www.mckinsey.com/Global_Locations/Asia/India. Copyright © McKinsey & Company 2014 McKinsey Global Institute December 4 1 02 India’s technology opportunity: Transforming work, empowering people Noshir Kaka Anu Madgavkar James Manyika Jacques Bughin Pradeep Parameswaran Preface Millions of Indians hope for a better future, with well- Vikas Siddheshwar, and Francesco Zerbato. MGI senior paying jobs and a decent standard of living. To meet their editor Geoffrey Lewis provided editorial support, and aspirations, the country needs broad-based economic Marisa Carder and Samson Mathew provided graphic growth and more effective public services—delivered design support. We thank the MGI communications quickly. Technology can play an important role in raising and operations team (Tim Beacom, Deadra Henderson, productivity, effciency, and innovation. Ironically, India’s Julie Philpot, and Rebeca Robboy) and the McKinsey prowess in information technology is a defning element India External Communications team (Fatema Nulwala and of its global brand, but so far, large parts of the country Ava Sethna) for their contributions. remain untouched by its power. This report refects the knowledge and guidance of We believe that this can change and that technology can our distinguished India technology advisory group. become an important driver of both economic growth and For their extremely valuable input, we are grateful to social development. A set of “empowering” technologies Raghunath A. Mashelkar, chairman of the National can dramatically reshape value chains and proft pools, Innovation Foundation and a member of the National bringing better lives to millions of Indians. We identify Innovation Council, and R. Chandrashekhar, president 12 technologies that are likely to be widely adopted in of the National Association of Software and Services India over the next decade, with the potential to address Companies (NASSCOM) and former secretary in the India the country’s challenges and have massive impact on Department of Telecommunications and the Department consumers, workers, and businesses. In this report, we of Information Technology. We offer special thanks to describe more than 40 promising applications of these Yezdi Lashkari, senior adviser on technology, media, and technologies across seven sectors of the economy. digital transformation to McKinsey in India, for helping Collectively, these innovations can create immense shape this report with his insights on disruptive online economic value by 2025, provided supportive policies trends and innovation in the digital age. We also thank and scalable business models are in place. Our research Som Mittal, senior adviser on technology to McKinsey brings these themes together, building on two recent in India, for sharing insights from his deep experience in MGI research efforts: Disruptive technologies: Advances working with both private companies and governments on that will transform life, business, and the global economy technology issues. in 2013 and From poverty to empowerment: India’s imperative for jobs, growth, and services in 2014. For their guidance and perspectives, we are extremely grateful to Nandan Nilekani, former chairman of the This work was led by Anu Madgavkar, a senior fellow Unique Identifcation Authority of India; S. Ramadorai, of MGI, along with Noshir Kaka, managing director of adviser to the Prime Minister of India in the National McKinsey in India; Pradeep Parameswaran, a McKinsey Council on Skill Development; and Rakesh Mohan, principal in New Delhi; James Manyika, a McKinsey and executive director of the International Monetary Fund. MGI director in San Francisco; and Jacques Bughin, a McKinsey director in Brussels. Sujit Chakrabarty, a Several thought leaders from the National Innovation principal with McKinsey’s Business Technology Offce, Council were generous with their insights, and we thank and Michael Chui, an MGI partner, made valuable them sincerely: Samir Brahmachari, R. Gopalakrishnan, contributions to the team. We offer sincere thanks to Anil K. Gupta, Kiran Karnik, Arun Maira, Gordon Orr, a McKinsey director in Shanghai, for his Saurabh Srivastava, and Sam Pitroda, former chairman of insights and guidance. the National Innovation Council. The research team, led by Tarun Garg and We are grateful to members of the NASSCOM Ashwin Hasyagar, included Shambhavi A., Madhur Bansal, Executive Council for sharing their perspectives with Pranay Bhatia, Rohan Chinchwadkar, Sonali Gupta, us: Mukesh Aghi, Rajan Anandan, Srinath Batni, Parthiban Jayaprakash, Harsh Jhaveri, Mayank Kukreja, Suhas Bhide, R. Chandrasekaran, Neelam Dhawan, Rahul Mathew, Devi N., Meghana Rajeshwar, CP Gurnani, Ravi Gururaj, Aruna Jayanthi, VK Mathews, Keshav Murugesh, Bhaskar Pramanik, Rishad Premji, We thank academics who contributed very helpful Vijay Ratnaparke, BVR Mohan Reddy, Raman Roy, insights: Pankaj Jalote, director, Indraprastha Institute Shakti Sagar, Arun Seth, Arvind Thakur, Ashutosh Vaidya, of Information Technology, Delhi, and Dheeraj Sanghi, Avinash Vashistha, and Jeffrey M. White. We especially professor, Department of Computer Science and thank NASSCOM offcials Anupam Khanna, chief Electronics, Indian Institute of Technology, Kanpur. economist and director general; Sangeeta Gupta, senior We deeply appreciate the expertise contributed vice president; and Rama Vedashree, vice president, by many McKinsey colleagues across sector and e-governance and domestic IT, for their perspectives functional practices. For overall technology insights, and expertise. we benefted from the experience of Driek Desmet, Several government leaders kindly contributed their Chandra Gnanasambandan, Malcolm Gomes, and extensive experience and shaped our understanding of Siddharth Gopalakrishnan. For fnancial services, we issues: J. Satyanarayana, IT adviser to the government were guided by Renny Thomas and Ananya Tripathi. of Andhra Pradesh and former secretary, Department For the education sector, we drew on the expertise of of Electronics and Information Technology, Government Hemant Joshi, Shirish Sankhe, Ramdoss Seetharaman, of India; Keshav Desiraju, secretary, Consumer Affairs and Ramya Venkataraman. Implications for the health- Ministry and former secretary, Ministry of Health and care sector were shaped by Palash Mitra, Ankur Puri, Family Welfare, Government of India; B. K. Gairola, and Mandar Vaidya. For agriculture, we were assisted by mission director, National eGovernance Plan, Government Chandrika Gopalakrishnan, Saikiran Krishnamurthy, and of India, and member secretary, National Innovation Barnik Maitrad. Our insights on the impact of technology in Council; and Rajendra Kumar, joint secretary, Department the energy sector came from Amit Khera, Suhail Sameer, of Electronics and Information Technology, Government of Kshitij Sanghi, and Vipul Tuli. For perspectives on India. We also gained valuable insights into e-governance technology in infrastructure, we called on Jim Banaszak, from three World Bank offcials: Randeep Sudan, practice Rajat Gupta, Martin Joerrs, Thomas Netzer, Vijay Sarma, manager for the ICT Sector Unit; Shashank Ojha, senior and Roland Villinger. Perspectives on e-governance e-government specialist; and Siddhartha Raja, lead ICT came from Saket Jasoria and Martin Lundqvist. policy specialist. Kanaka Pattabiram and Kara Sprague gave us valuable insights on barriers to Internet adoption, drawing on This work benefted from a host of interviews with their work for the upcoming McKinsey report Offine and technology and business innovators from various sectors. falling behind: Barriers to expanding Internet adoption. However, any references to specifc companies in this MGI senior fellow Jeongmin Seong helped us with report are from public sources. We gratefully acknowledge China-specifc insights from MGI’s July 2014 report, the contributions of Ajay Bakshi, managing director China’s digital transformation: The Internet’s impact on and CEO, Manipal Hospitals; Namita Dalmia, associate productivity and growth. director, Central Square Foundation; Anand Deshpande, founder, chairman, and managing director, Persistent This report is part of our ongoing work about the Systems; Vibhav Garg, head, health economics and impact of technology on national economies and on government affairs, Boston Scientifc; Arunabha Ghosh, Indian economic empowerment. Our goal is to provide chief executive offcer of the Council on Energy, a fact base and insights about important technological Environment, and Water; Myshkin Ingawale, founder, developments that will help business leaders and policy Biosense Technologies; Dr. Sujeet Jha, head of the makers develop appropriate strategies and responses. Department of Endocrinology, Diabetes, and Obesity, As with all of MGI’s work, this report has not been Max Healthcare; Kanav Kahlol, team leader for Affordable sponsored in any way by any business, government, or Health Technologies, Public Health Foundation of India; other institution. Rajiv Lochan, trustee, IPK Trust; R. Mukundan, managing Richard Dobbs director, Tata Chemicals; Sridhar Rajagopalan, managing Director, McKinsey Global Institute, London director, Educational Initiatives; Ramesh Ramanathan, chairman, and Santanu Mukherjee, senior vice president James Manyika and head of strategic initiatives, both of Janalakshmi Director, McKinsey Global Institute, San Francisco Financial Services; Saipriya Sarangan, vice president, The Skills Academy; Dr. Devi Shetty, chairman and founder, Jonathan Woetzel Narayana Health; and Shrikumar Suryanarayan, chairman, Director, McKinsey Global Institute, Shanghai Sea6 Energy. December 2014 India in 2025: potential impact of 12 empowering technologies $550–1,000 billion annual economic impact (20–30% of India’s incremental GDP from 2012 to 2025) 400 million additional people with access to quality health care 300 million fnancially included people 14–24 million workers could gain more years of education 15–60% yield improvement for 22 million farmers due to precision agriculture $50–95 billion savings and productivity gain from energy technologies $17–25 billion economic value from intelligent transportation (roads and ports) 10 million 19–29 million tech-enabled workers in non-farm workers who will health care, education, need new job opportunities agriculture, citizen services, and skills and fnancial services Contents Executive summary 1 1. Twelve empowering technologies for India 13 2. Financial services 43 3. Education and skills 53 4. Health care 64 5. Agriculture and food 77 6. Energy 89 7. Infrastructure 99 8. Government services 113 9. Creating conditions for technologies to fourish 121 Bibliography 129