India's next test: spreading prosperity

New tech companies like Wipro and Infosys, and old manufacturing giants like Tata and Birla invest heavily in private institutes of technology and management schools, in part to keep pace with the rising demand for top Indian talent at home.

A more innovative generation of companies like Satyam has begun to create outreach programs in Hyderabad's slums, as well as job centers and vocational-training programs in rural areas in the state of Andhra Pradesh, where Satyam is based.

That disparities continue to exist 15 years after the reform of India's economy by Rajiv Gandhi and his team of technocrats – including current Prime Minister Manmohan Singh – should come as no surprise. Faced with the imminent collapse of India's socialist, state-planned economy, Mr. Gandhi's team stripped away protectionist tariffs that shielded Indian manufacturers from foreign competition. They also removed the much hated "license Raj" that required a license for every single activity by private business. Perhaps most important, Gandhi's tech-savvy team encouraged a sector of the economy that could boom quickly without much government direction and that took advantage of India's talent in science and technology. The computer boom began.

Friendly critics of the Singh government, including Ganguly, Narayan, and others, say that India's leaders need to now focus on how to broaden the Indian boom, and make it sustainable.

"Money is not the issue, the question is how do you put more accountability and local control into how that money is spent," says Narayan. "The whole notion that India is just 5 percent of its population (the elite), and the rest are a problem, that is extremely dangerous. Sadly, we have an elite that doesn't understand it is in their enlightened interest to see the rest of the country prosper as well as they have."

There are some notable exceptions of course. At Satyam, 10 percent of the company's employees devote 10 percent of their work time to charitable projects. Typical is Gangadhar Pobbathi, a quality-control engineer. He says he chose Satyam partly because of the value it places on corporate responsibility.

"All people have the capability to show talents, and India has potential, but there are certain flaws – in family, in financial background – that hold people back," says Mr. Pobbathi, who donates his time to Satyam-funded charitable groups that work in Hyderabad's slums. "If you touch one person in a slum, then it will spread like fire in a jungle," he says. "If you help a young person, aged 13 to 35, to improve their life, and get education or just clean drinking water, then you can make a difference. If not, then they are lost."

K. Ramesh, a high school graduate from the village of Mahbubnagar in rural Andhra Pradesh, has also come to Hyderabad to improve his lot. He now lives in a camp of blue plastic tents, lugging sand and stone as a day laborer at a construction site for the Templeton Fund's new building in Hyderabad's HI-TEC City area.

"I'm satisfied, we're getting more work here than back home," he says. He says he can read and write and use a computer, and looking up at the glass-and-steel of Microsoft's building, which looms over his tent city, Ramesh says "I would like to do some computer work in the future. But most of the companies, they only take money from you to file a job application."

Ed Cohen, head of executive leadership training at Satyam, admits that he finds India's poverty levels exasperating. But he suggests patience. "This country is essentially 60 years old," he says. "Look at where the US was when it was 60 years old. We were about to enter the civil war over slavery. The evolution that is happening here, at its core, is a peaceful one. There's something to be said for that."

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