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India as a central partner for a European AI strategy?

Data is the new gold: This is the new truism of an increasingly data-driven economy. Therefore secured Google access to the health data of the second largest health system in the USA, Ascension. That is why the Telecom the platform Data Intelligence Hubwhere data can be exchanged and analyzed securely and efficiently. And given the dominance of US players like Amazon (46% of online trade in Germany in 2017), “data sharing” is required - and rightly so - so that even smaller providers (on the Amazon Marketplace) can efficiently organize their marketing campaigns. The logic of economic success is changing: It is no longer just the (German) ingenuity, but the formula for success is increasingly data, data, data.

Data is the basis for aligning processes more efficiently or automating them completely, for optimizing warehousing, optimizing customer engagement and so on. On the Data Intelligence Hub there is an illustrative example for a logistics service provider: "With the help of the Data Intelligence Hub, the service provider is able to provide a targeted and more precise forecast of the transport progress by analyzing a merged data pool from its own data, imported weather data and existing historical shipping data with current traffic data on channels give."

Do we have enough data? Or to put it another way: Do we have enough data to assert ourselves (i.e. the German economy or rather Europe) in competition with the big players from the USA and China? The Accenture-Managing Director Frank Riemensperger refers in his book "Defending Champion" to the fact that Germany has exported over 1 billion devices and machines worldwide, an excellent starting point for the collection of data and - as a result - the development of data-based business models around predictive maintenance and the like.

Anyone who has an idea of ​​the force with which China is advancing in the field of artificial intelligence and data-driven business models (cf. "AI superpowers. China, Silicon Valley and the New World Order "), who knows that Germany / Europe is still too weakly positioned here. Only last September did I get an impressive idea of ​​the advantageous starting position Chinese companies are in. Key note speech from the Chief Innovation Officer Jonathan Larsen of Ping on, a Chinese financial institution, at a congress of Finleap, one of the largest European fintech facilitators. Ping an pursues a focused strategy of AI, blockchain, data mining. The company not only has 30,000 R&D employees at its disposal, but also the data of around 500 million Internet users, 200 million customers and 400 million annual service calls. For comparison: The Deutsche Bank has around 20 million customers in Germany who Commerzbank around 18 million private and corporate customers.

The German economy (or European economy) is confronted here with considerable economies of scale on the part of the big players from the USA and China. Given the zero marginal costs, this is a huge challenge. Are an answer Cooperation between German and also between European companies. The fact that these are increasingly coming about testifies to the strategic predicament. Just think of the joint venture for the product development area Share Now between Daimler and BMW, or the cross-border cooperation between Telecom and the French counterpart orange in developing a voice assistant.

The European economy should think beyond cooperation in the European Economic Area. Suggestion: India. India is by no means as economically important as China, and the middle class here is even less affluent. But in terms of population, India plays in the same league as China, in 2025 India will even overtake neighboring China in terms of residents. India is that world's second largest mobile communications market, the technological affinity is very high. In addition, India has a powerful IT industry as an implementation partner for a data / data evaluation strategy. Why not a cooperation between the eCommerce player OTTO.de and its Indian counterpart Flipkart: Flipkart achieves a market share of approx. 44% in India with approx. 80 million products in its range and approx. 8 million shipments per month. Both eCommerce players are in the main competition with the (overpowering) Amazon, There is hardly any geographical overlap between the two players.

There are large national players with large customer bases in all sectors: in the banking sector, for example State Bank of India (SBI) with around 400 million customers, over 24,000 branches in India and a global footprint in a further 35 countries. In the telecommunications sector Reliance Jio around 400 million customers, India's largest online grocer BigBasket has over 10 million registered users, the range includes 20,000 products, around 1 million orders are shipped per month. The airline Indigo with a market share of almost 50% of domestic flights in the Indian market, a total of around 65 million passengers (around half of the Lufthansa). The largest online travel agency platform MakeMyTrip sells around 15 million bookings or travel packages annually, around 20 million users are active via desktop and another 25 million via mobile.

Of course, the European economic area and India are different in many ways, the cultural context is different, the emerging economy's weaker economic power India conditionally different demand patterns, different requirements for products and services; however, the urban middle class is increasingly approaching the western pattern in terms of lifestyle and consumer behavior. But that is by no means a show stopper: India and Europe are well comparable in terms of linguistic diversity and cultural diversity; this heterogeneity must be mapped in the data strategy and data science models anyway. This heterogeneity can therefore be a decisive advantage: the sooner these analytical models take into account other cultural contexts and other demand patterns, the more universally they can be used.

Not only companies should support the vision of such an Indo-European cooperation, the government can also make a decisive contribution here. To date, India has not yet had a data strategy or an AI strategy, let alone an ambitious program that is even remotely comparable to China's AI strategy. I had the opportunity in a close discussion group to discuss this question with one of the government spokesmen, Mr. Nalin Satyakam Kohli (Supreme Court Advocate and National Speaker of the BJP). He indicates that work is being carried out on it, in short: here there is the possibility of influencing, there is willingness to talk. It is clear that such a cooperation would create a clear win-win situation from which in India not only the cooperation partners involved, the Indian IT industry (as implementation partner) and the economic development of India would benefit. And of course the European partners.

Addendum (May 2020)

In this context, the IT startup scene in India should definitely be mentioned, which has been showing impressive dynamism for several years. There are of course challenges like high cash burn due to the Lightning scaling-Strategies (also for Silicon Valley companies such as Over, Lyft), Red tape bureaucracy or tax disputes from investors; But the start-up scene remains exciting nonetheless: There are around 80,000 start-ups, and significant investor money has flowed into the start-up scene in India in recent years (2019: approx. 10 billion US dollars). Well-known names are Flipkart (Walmart acquired a majority stake here for 16 billion US dollars, in 2018), Ola (Competitor too ABOVE), Swiggy and Zomato (Food delivery), BigBasket (Online supermarkets), Zoomcar (Car rental), Byju’s (Education) or HighRadius.

Particularly amazing: You could see the issue of The Economist From April 4th, 2020 read that there is also an Indian startup among the TOP10 global unicorns, namely the FinTech company One97 Communication. There is no European company among the TOP10, but 4 unicorns from China, 4 from the USA and one from Singapore.

Author Sebastian Zang

The author is a manager in the software industry with international expertise: Authorized officer at one of the large consulting firms - responsibility for setting up an IT development center at the offshore location Bangalore - Director M&A at a software company in Berlin

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