Chennai - Rediscovering Itself?

Neoliberalism has pervaded Chennai in a big way in the last decade and a half. There are MNCs every which way you happen to look. The twenty-somethings are sporting only Versace and Dior. You would most likely find half-a-dozen café latte shops before you come across a place that serves filter kaapi. The first thing that springs to mind, when I say “bar” is no longer a lawyer but rather a bar-tender. Sure, cultural influences had a lot to do with these things. However, people are not dreaming about such a living, they are living the dream. They have the purchasing power. So, how did we get to this point?

The Chennai economy has grown by leaps and bounds. The growth is being fueled by four industries; Semiconductor, Automotive, Information Technology and Business Process Outsourcing. Consider the list of MNCs below that will have significant presence by 2007 in the Chennai metropolitan area.

An intriguing offshoot of the major players entering the field is the suppliers that they bring with them. Dell has brought Flextronics. Ford has brought Visteon. Motorola has brought Foxconn Semiconductor. Saint Gobain supplies automotive glass equipment to Hyundai, Ford, Mitsubishi, etc. When this phenomenon reaches a critical mass, it will establish an entry barrier in other cities. You will find newer companies typically choosing Chennai too because of the strong support infrastructure in terms of supplier firms.

A late bloomer in IT, Chennai has grown faster than expected. Facing stiff competition from Bangalore and Hyderabad, Chennai has held its own. The lowest attrition rate in the country (35 - 40%) and availability of skilled human capital has pretty much catapulted Chennai into the same league as the other two cybercities.

AT Kearney’s recent survey of Indian cities ranked Chennai #1 in the list of most attractive Indian cities for business offshoring services. Combined with the fact that Price Waterhouse Coopers rated India as the #1 destination for offshore services, this is a big feather in Chennai’s cap indeed.

This is some rich fuel concoction that is powering our economic engine. It is not beyond the realm of possibility to think that Chennai could be a major player in South Asia and may be even SE Asia. “Detroit of India” is past, it is time to shoot for “Detroit of South Asia”. Chennai is a juggernaut, a rolling stone that is gathering moss, and lots of it.

“Replication” is one thing the developed nations don’t take advantage of. For example, we don’t have to spend a lot of time and money in new research on roads. We can simply take advantage of developed nations and the systems that they already have in place. Why reinvent the wheel? After all, didn’t US take the Autobahn from Germany and adapt it?

As a developing nation, we had a lot of catching up to do. I thought of an interesting indicator (see table below) of how we have progressed. The time lag has dropped significantly. The rate of development has been very good and we are at a point where we are close to being on par with the US. While this is great, the next thing we need to think about is the “law of diminishing returns”. We will encounter situations where the payoffs will not be on par with the effort. How do we bring in a quantum change then? The answer is “innovation”. Innovation will be the final straw that will tip the scales in our favor and make us a world leader, from a follower; a developed nation from a developing one. It is going to be an exciting few decades ahead for India!

Commodity	Commonplace in US (Yr)	Commonplace in India (Yr)	Time Lag (Yr)
Television	1950s	1980s	30
Telephones (landlines)	1965	1990	25
Internet	1990	1999	9
iPod	2001	2006	5