Wipro Academic Thought Spot: A Discussion on Clean Technology with Rafiq Dossani, Senior Research Scholar at the Asia-Pacific Research Center, Stanford University. A Wipro Council for Industry Research Initiative
Are there opportunities for outsourcing service providers to create new offerings in clean technology? Rafiq Dossani’s research answers that question.
The Senior Research Scholar at the Asia-Pacific Research Center at Stanford University defines clean technology as any technology that impacts climate changes. Two examples are cutting greenhouse gasses and controlling energy consumption using smart metering.
What drives clean technology as a business? Outsourcing opportunities? Government policy? Venture capital interest? Dossani says his work revealed three major findings:
- Governments view clean technology as part of a nation’s energy security needs. Dossani says policy makers are selecting clean technologies to diversify their sources of energy. It is similar, in that sense, to nuclear energy. Nuclear energy can’t compete economically with other forms of energy like oil. But nuclear power does reduce a country’s dependence on foreign oil. Therefore, it assumes a greater priority in the bigger picture.
- Many entities now premise initiatives on the assumption that clean technology does not need government subsidies because of venture capital investments. The Stanford professor cites solar panel production as an example. He says costs “are coming down rapidly because of venture capital investment.” Eighteen months ago, solar energy cost $2 per watt to produce. Today, it’s $1 per watt. Dossani predicts the cost will be 50 cents per watt in two years. “At that production price, you don’t need subsidies,” he notes.
- A government’s approach to clean energy depends on whether the country is developed or developing. The United States and Japan, for instance, view clean technology as a substitute for energy they already produce. It represents a new cost because they have already paid for their current energy production systems. This original investment makes it “much more difficult for a developed country to install clean technology,” Dossani says.
The situation is different in developing countries. There, governments are more willing to invest in new technologies because they bear fewer replacement costs.
Outsourcing opportunities
Dossani sees many opportunities for outsourcing service providers in these scenarios. The biggest opportunity “is in the measurement of emissions,” he says. Corporations will have to document their improvement, he explains. Service providers can make this an outsourcing offering by embedding the requisite IT in the work processes.
As for energy security, Dossani says this, too, is a consulting opportunity for outsourcers. “Governments will need advice from the local level to the national grid,” he says. Wipro is currently building an advisory capability to help governments incorporate clean technology, the professor reports.
Venture capitalists who are investing in clean technology need sophisticated skills to support their investments. “Service providers can produce that talent, from prototyping solar cells to designing an energy grid,” he says. “Much of this work is outsourceable,” he says.
Finally, service providers should focus on developing countries because, in his opinion, that’s where the opportunities are. Many Indian service providers are “used to looking at the developed countries as their clients. In this arena, there will be more growth opportunities in developing countries,” he says. Good prospects include Brazil, China, India, the Middle East, and South America, he adds.
Dossani notes that developing countries can’t pay the same rates as the developed nations can. But he posits outsourcing service providers still should focus on these lands “because of the scale of the opportunity.”
Lessons from the Outsourcing Journal:
- The developing countries offer a greater opportunity for outsourcing service providers in the clean technology arena than developed countries because they carry fewer replacement costs. This is true even though the fees will be lower.
- Outsourcing service providers can provide requisite skilled labor to venture capital firms investing in clean technology.
- Service providers have consulting opportunities to help governments with their energy security decisions.
- Measuring emissions is another opportunity for service providers.
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