Digital tech firms need gig employment rules, incubation support

There is a lot to be done in terms of incubation of startups, deeper government engagement with the startup ecosystem and differentiated services for rural India, among other issues. As the country faces a sharp slowdown, here are my expectations that I hope the government will address:

The penetration of the mobile internet has put a lot of power in the hands of the people. However, the application ecosystem that leverages this access has not been evenly developed across India. The rural consumer deserves to be treated as a specialized segment. Hence, it is important to recognize the differences between global technology giants, such as Google and Facebook, who have the resources and capital to expand their services, and local startups that are putting in their best efforts to bridge the “digital divide”. Startup India and other initiatives should explicitly focus on firms that serve rural India and provide them with special status, including mentoring and incubation support.
The ecosystem around incubation and mentoring of startups in India is patchy. An aspiring startup would typically require support in four dimensions: Access to seed capital, technology products and services, intellectual advice on business models and market linkages. There are three kinds of incubators in the Indian startup ecosystem that come with their own strengths and limitations. Those housed in educational institutions may have vast intellectual resources, but limited financial resources. Those that are part of firms, such as Microsoft or Google, may have financial resources and infrastructure, but may not provide innovative ideas around business models. Investor-driven incubators will ensure the firm scales up fast enough to make appropriate returns and, therefore, may also be less amenable to experimentation around business models. The government would do well to articulate a specific policy around incubators and accelerators.
Most of these digital platforms operate in the gig economy, and “employ” temporary workers. While it is important to safeguard the rights and privileges of these workers, it is imperative that firms have the flexibility to engage with these workers. It is high time we define the norms of gig employment—not so rigid as full-time guaranteed employment, but not completely left to the employers to define their terms of engagement.
Digital platforms collect and use a wide range of consumer demographic and transaction data. In some cases, the very basis of their business model hinges around insights generated out of these analyses. For instance, a collateral-free financing firm, which makes credit decisions based on a consumer’s personal phone/SMS data. While it is imperative that we regulate access to consumer data to ensure privacy, we should be careful to not kill these innovative analytics and insights.
To ensure adoption of emerging technologies, such as artificial intelligence, machine learning and Internet of Things, in the business models of the future, it is imperative that our education system internalizes them. Vocational training institutes such as ITIs should have specific courses on these technologies, as well as more commonplace skills, such as app development.
R. Srinivasan is professor of strategy at the Indian Institute of Management-Bangalore.

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