The New Economy of Prosperity

The IT industry in the US is reviving. No one could sense this more than the entrepreneurs of Silicon Valley. Devastated by the downward spiral that devalued the stock market, wracked by the scandals of WorldCom and Enron, the glimmer of recovery seems like a floodlamp of new beginnings. In the damp tunnel darkened by recession, IT companies were forced to retool their strategies for development, production, and deployment. The task at hand in the software industry has been to improve quality and maintain demand, yet produce on much tighter margins.

Enter Open Source software. Just as Europe has had to reinvent itself into an economy based on cooperation and collaboration, Open Source software offers a global collaborative model of development, testing and maintenance with some of the best engineers in the world sharing the burden, from Silicon Valley to Silicon India. Costs are usually absorbed in a passion of voluntarism or more significantly by the efforts of individuals and groups employed in direct or related industries. Success is measured not in financial quarters but over a much longer time period as the larger projects evolve and spin off practical technologies and benefits.

And therein lies the next wave of innovation and the stirrings of new IPOs raising confidence in the stock markets to invest in this new wave and turn it into a tsunami.

Google, with its great Linux server farm, will go IPO in February. Sun is retooling its reseller channels to embrace its Java Desktop System (JDS) and Star Office. The wave of embedded Linux toolchains is transforming the next generation of consumer appliances and electronic devices. Red Hat just raised $600 million through a bond offering, bringing its cash reserves to $1 billion. The money will be used for acquisitions and international expansion.

The largest segment of new wealth creation, however, is Open Source Software integration and services. Key in the near term is the migration of legacy infrastructure and systems to Linux and Open Source. Important examples include Amazon, Verisign, Merril Lynch and the Dresdner Bank. Verisign, adding generously to Red Hat’s bottom line, is converting 2000 servers that power the Internet domain name system to enterprise Linux.

The tsunami of large-scale migrations to Linux and Open Source has already reached the shores of India. Like the Y2K bonanza, this same wave is being felt in all the outsourcing hot spots in India, from Chennai to Bangalore, Hyderabad to Mumbai, Noida to Gurgaon. What is surprising, however, is that the migration encompasses not just the conversion of old Unix into Linux, there is a gathering chorus of requests from all the Fortune 100 companies for migrations from the proprietary MS Windows to Open Source.

Today, India is poised to ride the tsunami of this new, yet familiar, economic paradigm. Open Source Software can empower India to create knowledge, prosperity and enterprise. Practical Open Source tools can form a foundation from which to produce integrated solutions. It is the integration requirements inherent in the Open Source services model that plays to India’s classic strengths since the need for integrated solutions fuels the services backbone of traditional Indian outsourcing. Outsourcing is usually structured to prevent the acquisition of intellectual property by those performing the work. This down-side of traditional outsourcing is defeated by joint contribution and ownership on collaborative projects. So not only will Open Source projects lead to immediate income but, more importantly, will promote the long term ownership of sustainable intellectual property and development of core expertise. An economy based on the collaborative model of Open Source can transform traditional outsourcing services to the next level-global sustainable services. The true way to surf the tsunami of the new economy.