#Future
23-Mar-2018

Keynote Address by Arun M Kumar, Chairman & CEO, KPMG in India as prepared for delivery

I want to congratulate the Government of Kerala and its High Power IT Committee for organizing this event. The conference has provided topnotch content and is definitely creating a new buzz about the potential of technology to transform Kerala.  As a proud Keralite who believes in the promise of the state, I am very happy to be here.

Let me start by sharing a little personal history of my engagement with Kerala’s foray into the digital realm. In 1990, Chief Minister Nayanar led a team of dignitaries to America to study the potential of high technology for the state. I had the honor of arranging their visit to Silicon Valley and the further privilege of hosting the Chief Minister in my home. In fact he wrote a very gracious, and slightly humorous, article on the latter experience in Deshabhimani weekly.

On that visit, Chief Minister Nayanar walked around the manufacturing facility of Apple in Cupertino, California. He talked to the workers and asked them probing questions. He was impressed by the pride they showed in their work and their confidence in their mission. He was visibly smitten by their excitement and said, we are going to build a similar environment in Kerala. And thus, his conviction for Technopark took root. And he heard from faculty at Stanford University on technology trends.  He also came away convinced that computers will actually create jobs rather than take them away.

I don’t think any of us on that tour of Apple or Stanford would have imagined where technology would take the world over the next quarter century. Remember, this was almost a decade before Google was founded and over two decades before Facebook. Nor at that point, could one have imagined how far Technopark would come, employing tens of thousands in one of the most salubrious work environments in the world.

I would like to think that this event this week will result in new convictions and directions, such as the one that Chief Minister Nayanar received on his visit to Silicon Valley twenty eight years ago.

This conference is aptly titled (hash) #Future.

The hashtag is a device used to find what one is looking for in the welter of social media. This conference aims to find a future for Kerala in a world of tremendous possibilities.  And indeed I would suggest, with so many distinguished leaders and key influencers, shape that future.

That future will be built on a strong present. As we heard yesterday, Kerala can claim to be the first digital state with its mobile tele-density, nation-leading internet penetration, progress in paperless government offices and the Akshaya centres delivering digital citizen services. Citizens of the state have embraced technology and have been early adopters of digital transactions for entertainment, commerce and payments.

The Kerala Government, along with various industry bodies, is investing significantly to position “God’s Own Country” as a center for digital technology. And to promote Kerala as a business and investment friendly brand.

With a population of 35 plus million, boasting 100% literacy, with its historical cultural openness to new ideas from around the world, Kerala can provide a tech-savvy ecosystem and the right ingredients for the state to be the world’s next coveted IT destination.

I would like to express my appreciation for the Kerala Government and its various departments and teams which are working to unleash inclusive growth by nurturing a knowledge powered ‘digital society’ in Kerala.

I must also note and applaud the government’s efforts to augment its capacity by drawing in industry leaders to assist in taking Kerala’s digital industry to another level. We have many success stories in Kerala, and many successful Kerala entrepreneurs who have made their mark globally, nationally and regionally, who can help lead the way – and whose energies must be tapped.

Kerala’s latest IT Policy explores a four pronged strategy — of creating world class technology infrastructure, human capital building, focus on modern marketing systems and a citizen centric digital economy – all of which are initiatives in the right direction.

And these initiatives build on prior programs that created geographical clustering of organizations and incubation centres, enabling the development of a technology ecosystem.

As a result, Kerala today accounts for 15% of the 5,000 odd technology startups in the country – with one of the most enviable start-up cultures across the breadth of the country.

Young entrepreneurs from Kerala are already working on advanced technologies such as 3D printing, Internet of Things, Robotics Process Automation, Virtual and Augmented Reality, Machine Learning and Artificial intelligence – and hold much promise.

Today, let me share a few thoughts on what Kerala can do to establish and execute on its digital ambition.  While Kerala can claim leadership in many respects in this arena, we all know that there is far more to do to achieve its potential.

My observations are partly based on KPMG’s experience as advisors to many government departments at the centre and states.

We would advocate an approach that looks at three areas that are related to one another. One, aim to be a leader in citizen centric services and governance, two, foster an ecosystem that will promote digital industry, and three, deploy technology to build on Kerala’s traditional areas of strength. These ideas are already embedded in Kerala’s IT Policy.

The mKeralam app revealed yesterday is an excellent example of information and service delivery that is citizen centric.

Kerala should adopt a proactive approach towards leveraging new age technology for transparent and effective governance. The policy framework for digital transformation must enable the state to use the latest technologies, including the cloud, to develop and deploy on government platforms.

A thorough survey must be made of the technologies which have potential to transform the economy — and appropriate ones prioritized.  Capability building initiatives should be launched in these priority areas. Candidates would include artificial intelligence, block chain and data analytics.

The Government can itself be a demand generator for frontier technologies and catalyze a market for such technologies, including AI and robotics, by increasingly deploying them in government operations.

Digital India, the Government of India’s flagship program to build India into a digitally empowered, knowledge economy has the potential to impact infrastructure across the country — from health care systems to education to online banking. The state should take full advantage of the Digital India programs.

It would be fair to say that e-Governance as a whole has not been able to make the desired impact and fulfil all its objectives in the country. Kerala can take a lead in this area.

We are seeing widespread interest in many states in promoting transparency through technology by piloting block chain in areas ranging from land registration to road transport. Kerala can follow these examples and lead in other areas.

Many states that we have worked with have implemented electronic dashboards that provide consistent data at many levels of administration, often up to the Chief Minister’s office.

As we heard yesterday, data is the oil of the digital future.  To unleash the power that this presents, Kerala should consider embracing open data concepts, which will allow its citizens to review, analyze, visualize and use data. In my tenure in the U.S. Government, I saw how President Obama’s policies on open data led to a host of entrepreneurial opportunities for new businesses that grew up to use such data.  Open data policies can in turn help the Government in many ways. Building a centralized big data management system by consolidating data from various government agencies would lead to evidence-based policymaking and ensure that benefits of government polices reach those who need them most.

The second area of focus should be to promote an ecosystem that will foster digital industry and be responsive to its rapid changes.

Such an ecosystem has many elements. For instance, the physical infrastructure of technology parks, Trivandrum and Kochi, are examples. The KFON, the Kerala Fiber Optic Network is a more recent example of broad based infrastructure for connectivity.

We have evidence that a strong commitment towards such infrastructure does attract companies to come, invest and grow.  We have excellent examples in Kerala. For instance, UST Global has grown almost 30 times in just a decade.  IBS Software Services is another such success story – the company provides solutions for the seamless functioning of the aviation industry including for ten of the premier twenty airlines as well as for hotel chains, travel and logistics companies.

A critical area for business and investment is the Ease of Doing Business – where Kerala aims to be among the top 10 states by next year. The state has already made great strides by amending the acts, laws and regulations for EoDB – in fact it is first in the country to have amendments at such a scale. These changes need to be effectively and rapidly implemented so that the EoDB ranking can reflect the real changes. In this regard, an IT solution for single window clearance embedding the new rules must be a priority. Further, the Investment Promotion Facilitation cell should be activated as soon as possible.

The ecosystem should connect to clusters outside the state. For instance, developing a Kochi-Bangalore digital and technology corridor can further boost economic activity, through exchange of knowledge and talent. Promoting connectivity between the two cities and linkages between businesses will help Bangalore based businesses spill over into Kochi and boost employment here.

The social ecosystem is already being enhanced with amenities such as shopping malls, theatres and residential complexes here that are now at par with cities such as Bangalore or Chennai.  More of Kerala’s technical talent can thus live in this greenest of all states instead of seeking greener pastures elsewhere.

The academic and skills development part of the ecosystem will play a critical role. Revamping the curriculum for general, technical and vocational training is needed to create a pipeline of desired talent.  A majority of the jobs for which people are being trained today will no longer be there by the time they finish their courses.  In fact, a recent study indicated that by 2022, almost 9 percent of India’s 600 million estimated workforce will be deployed in new jobs that do not exist today.

There are encouraging capacity building efforts under way in Kerala.  For instance,  IIITMK is creating a Kerala Blockchain Academy. But we need to have many more such initiatives and at large scale.

The demand for radically different skill-sets also stems from the fact that the next generation of IT companies is likely to be in the pure digital space, social, mobile, analytics and cloud.  The market for traditional IT companies which operated on a cost arbitrage model is flattening out, and so has the intake of new engineers by large IT companies.  These companies will need new skills and capabilities as they rapidly reboot their strategies.

Collaboration of academia with tech companies can scale up the R&D ecosystem in the state. This can create faculty with industry orientation and students who are employment ready. An example of such collaboration is that of IIITMK and IBM who jointly announced the development of a real-time water quality management system – ‘Swatchpaani’ powered by IBM’s Watson Internet of Things technologies.

Programs that help startups and promote innovation, like the Maker Village that has displayed its innovations in the exhibition here, can be enormous catalysts. If you have not visited their booth, please take the time to do so.

The R&D ecosystem should be boosted by establishing institutions of excellence. In the case of Taiwan, the Industrial Technology and Research Institute (ITRI) has played a vital role in transforming its industries from labor-intensive into innovation-driven.

An important component of the ecosystem would be mentors, evangelizers and educators who connect to industry. Organizations like TiE, or successful entrepreneurs, many of them are here today. Expatriate Keralites should be engaged, especially the technology entrepreneurs. And US universities like MIT and Stanford have programs that encourage their faculty, students and alumni to deploy technologies developed there back here in India.

A third area of focus would be to deploy technology in Kerala’s traditional areas of strength. The conference has addressed the application of technology broadly in sectors like healthcare and education.

Tourism, a key revenue sector for Kerala accounts for 12% of the state GDP.  Aruba, a small country in the Caribbean with 1.2 million tourists (less than one tenth of Kerala’s tourist footfall per year including domestic visitors) has implemented a block chain based marketplace that eliminates middlemen, provides more profit to the service providers and better value to tourists. Kerala could consider a similar system to drive further growth in this sector.

There is no better market in India to pilot technology enabled healthcare services than Kerala. Glimpses of the future can be seen in the exhibits at this conference. The digital healthcare market worldwide is growing at more than 55% CAGR and will reach $21 billion by the end of this year. With Kerala housing one of the best healthcare infrastructures in India, this a powerful opportunity area for tech enabled businesses.  Kerala is the first state in the country to build Electronic Health Records for all government hospitals. This could be extended to all the citizens and also private healthcare by the introduction of block chain technology – making strides into improving the quality of life, including those from the most vulnerable sections of society.

In the art sector, the potential to build technology enabled businesses leveraging Kerala’s traditional art forms is significant. The marketability of Kerala’s cultural heritage can be powered by augmented and virtual reality technologies. Kerala’s traditional products can be marketed through online platforms.

These three areas of focus must be reflected in all the areas where government is involved or can play an enabling role. This ambition must be conveyed to potential investors, entrepreneurs and stakeholders in society through a host of powerful actions, among which this conference is one.

In closing, I believe we are at the cusp of a new wave of opportunity, similar to that which Chief Minister Nayanar and his team saw in Silicon Valley in 1990. Technologies are moving at an ever faster pace, the opportunities to build small and large enterprises and create high quality employment by serving global markets is larger than ever.

My best wishes to all those engaged in this journey. My firm and I stand ready to support this important quest for Kerala.

Thank you!