Not long ago, many publicity brochures of India’s information technology firms described the country as an ‘Information Technology superpower’, an idea that even IT tsar Narayana Murthy scoffed at.  How can India live up to this clichéd expression, unless the country that produces millions of engineering graduates develops its own culture of startups and tech entrepreneurship?

Why is India not producing enough startups despite having so many IT engineers? To find answer to this question, Nirmalya Kumar and Phanish Puranam from London Business School went to Silicon Valley. They found that the oft-repeated complaint about Indian lack of creativity in the IT field is a wrong perception, as there were plenty of innovative Indians leading creative projects in Google, Microsoft and Intel, among others.  Many of them in fact had done their basic engineering degree from Indian colleges and universities. This eye-opening discovery led Prof. Kumar and Puranam to write 'India inside', a book analyzing the phenomenon of Indians excelling at creative thinking once they leave the shores of their motherland.

As far back as 1999, there were 80,000 Indian IT engineers in Silicon Valley high tech companies. Consider that even today, the total number of engineers there is around 250000.

It is also noteworthy that many Indian IT CEOs have had a stint in USA. This includes Azim Premji, who studied in Stanford, before moving back to India and turning his family business, Western India  Products, into the IT major Wipro.

Despite these factors, there seems to be an aversion among many Indian IT professionals working abroad to begin a startup in India. Given a choice, (that is, if their visa status permits them), they would prefer to attempt a startup in USA than India.

Part of the reason may be that there is no smooth transition from college/university lab discoveries into industries in India. Bureaucracy and red tape may be other factors. There also seems to be some kind of ideological opposition to industrial houses investing in innovation in universities which they can translate into viable products and services.

Probably we need to learn from Stanford University, the alma mater of the founders of many high tech giants including Google, Paypal, LinkedIn, Netflix, Instagram and Pandora, to name a few.

Some key aspects of the Stanford model of success are the following: incorporating the study of social science and arts subjects such as psychology and philosophy along with computer science courses may be giving Stanford students the required insight into consumer mindsets. Equally important is the emphasis on courses on entrepreneurship. Regular interaction with industry heavyweights in the form of computer science forums such as Symbolic Systems (Sym Sys) conference creates clear entrepreneurial goals in the mind of students. Yet another aspect is that student research is often showcased to industry leaders, enabling in-campus mentoring and recruitment. Stanford is also home to some very famous (and tough) Fellowships and startup incubators such as Mayfield Fellows Program and StartX . Students are encouraged to experiment, even if it fails. They can always discontinue studies to concentrate on their products and services and in case of failure, they can return to the campus and finish their degrees.

Sadly enough, the thousands of engineering colleges in India that graduate millions of engineering students seem to be minting mere cyber-coolies or ‘coding mercenaries’, destined to work  for American and European companies or in their outsourcing hubs in India. Many of the students at engineering colleges also seem to be aiming for a visa and a dream job in USA or Europe.

Perhaps a counter-current to this is happening in the form of research centres established by global IT giants in India, with the aim of innovation at cheaper cost.

Big campuses of Adobe and branch offices of IBM in India are examples. Both Google and Microsoft have established India Development Centers for research and development.  Intel developed its six core Xeon chip in India. Obviously, it makes economic sense for these companies to have their labs in India and design products at a fraction of the cost.

What is the way out of the innovation crisis in Indian IT industry? At least in main IT centres - Mumbai, Delhi, Kolkata, Bangalore, Chennai and Hyderabad - opportunities and incentives need to be created for creative risk-taking.

Some steps have been taken in this direction already. Some states plan to encourage student entrepreneurship by giving them grace marks and relaxation in attendance. Startup incubators in places like Technopark and Startup Village are good indicators in this direction.

Cities like Bangalore – known as ‘India’s silicon valley’ - can follow the Stanford model of minting successful projects at the college or university level, sponsored by major companies. These educational institutions can also create innovation hubs or startup incubators within their campuses.