India is known as the land of outsourced IT departments and call centers, but the latest outsourced service raises the bar: pregnancy. Infertile couples in wealthy countries are beginning to turn to India for surrogate mothers to bear their own biological children because of the high quality of Indian medical personnel and low costs relative to commercial surrogacy programs in World 1 countries. It is entirely legal, and the industry appears to be growing rapidly, with each success story prompting dozens more inquiries.

On the surface, it seems to be a win-win situation: the aspiring parents get the baby they'd hoped for, and the surrogate mother gets generously compensated, by Indian standards. The surrogate typically receives $4,500-7,500, the equivalent of 3-15 years' salary, which enables her to buy a house or pay for her children's education. The lower cost of surrogacy ($10,000 to $30,000) allows middle-class couples in World 1 an affordable chance to have a child of their own.

Critics have raised moral issues, however. What's a "fair" price for a child? What happens if the surrogate wants to keep the baby? For the time being, the price issue is left to the clinics, and surrogates must sign a contract agreeing to give up the child at birth. Each pregnancy clinic has its own policy on meetings between parents and surrogates: Rotunda prohibits contact between the two parties, and the surrogate does not know she is working for foreigners, while others clinics allow the surrogate mother and parents to meet. These issues are compounded by the astounding inequalities, both economic and educational, between the foreign parents and Indian surrogates: the money exchanges represents a "bargain price" for the parents, and a life-changing sum for the mother. Educational disparities are also apparent: "On some contracts, the thumbprint of an illiterate surrogate stands out against the clients’ signatures."

Although (mostly) restricted to couples with proven fertility problems, there is a fear that upper-income women would choose to "rent a womb" out of convenience rather than necessity, just as they are choosing C-sections. Ultimately, Dr. John Lantos warns, "It raises the factor of baby farms in developing countries."

Image: Meena Kadri (Flickr) 

On the last day of our BRIC Expedition: India, our group visited the new (not yet opened, still under construction) airport for Hyderabad, located in Shamshabad, about 30km southwest of the city center. It proved to be a fitting capstone experience for our group!

The new airport serves both as a shining example of the promise in India’s future, as well as a warning of the many challenges ahead.

The very reason for the airport’s construction showcases the rapid change occurring in Hyderabad (and, more broadly, in India as a whole): Hyderabad’s air travel increased by an astonishing 1,000% percent between 1999 and early 2008, growing from 700,000 passengers to more than 7 million passengers per year (Hyderabad’s existing airport, built decades ago in the city center, was designed to handle a maximum of 3 million passengers per year).

The new airport was built rapidly and is on track to be operational well ahead of schedule (and more quickly than the average construction time for airports of a similar class). Its runways will be the longest in India, and will be capable of supporting large jets, up to and including the A-380 Airbus. The airport’s initial capacity will be 12 million passengers per year, with modular design options able to expand this capacity up to 40 million per year if necessary.

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On Monday, while our compatriots were experiencing the luxury market, our team learned about the realities of the other end of the Indian income spectrum.

• Executives at ITC, a conglomerate with businesses in food, hospitality, and other sectors, briefed us on the company’s innovative efforts to boost rural incomes by eliminating middlemen and getting information direct to farmers. They are equipping contacts in thousands of villages with computers and providing weather forecasts, agricultural advice, and real-time price information. The latter is particularly important, as it gives farmers more power in the marketplace.
• They also discussed their chain of Choupal Sagar stores, which are interesting as a means for formal retail to reach into rural areas. The initiative requires pricing for the bottom of the pyramid—for instance, the stores sell individual candies beginning at half a rupee, or 1.3 cents.
• The Byrraju Foundation impressed us with its rural transformation initiatives, which are underway in hundreds of villages in the state of Andhra Pradesh. Programs range from in-village call center work to reverse osmosis water plants. Their media efforts were intriguing, including community television (in which unemployed youths get cameras and training, and make documentaries about local issues) and literacy karaoke, using popular songs to teach basic reading.

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On Monday, our expedition team split up—one team investigated bottom-of-the-pyramid issues, while the other went in search of high-end, luxury retail outlets. As one of us remarked, it’s quite possible that on this particular day our two sub-teams had about the most opposite experiences possible. This dispatch will cover the forays of our luxury group into the Banjara Hills district of Hyderabad, known as the place-to-be for the city’s up-and-coming class.

Our first visit was to a designer clothing store, Le Celebre, which offered everything from tailored Italian suits to custom-created saris and hand-made dresses, many of which would not be out of place on the red carpet at celebrity events.

We also visited a Samsonite Black Label concept store. One of very few such stores in the city, it represents some of the highest-end retail Hyderabad has to offer. (A sales clerk informed us they had only 7-8 customers per day, on average). The store offers a variety of designer luggage, purses, and shoes—one small piece of luggage was one of only two on sale in India (out of around 600 worldwide) and was retailing for more than US $700. This is about a quarter of the median Indian annual income, even compensating for purchasing power.

In an interesting twist, even in these islands of luxury retail there was no escaping India’s infrastructure challenges: all the lights in one store were turned off when we arrived (though the store was open) and the employees turned on the lights for each floor as we reached it.

New briefs are available to subscribers to Social Technologies' Global Lifestyles project:

GL-2008-7: Indian Values
Hundreds of millions of Indians are growing up with new exposure to urban and Western cultural flows. As a result, many are shifting away from traditional values emphasizing spiritualism, austerity, and filial obedience—and looking instead to Western values of materialism, independence, and gender equality.

GL-2008-5: Bottom of the Pyramid in India
Bottom-of-the-pyramid (BOP) consumers—those with less than $3,000 in annual purchasing power—comprise 95% of India’s population. In aggregate, India’s BOP consumers control $1.2 trillion in purchasing power. The brief discusses this vast underserved market and analyzes nine sectors where BOP consumers play a major role.

GL-2008-2: Culture and Change
Two sets of forces shape every society’s relationship to change: economic growth pushes change forward, while local culture molds the society’s unique responses to change. Awareness of this dynamic can help organizations understand how consumer values around the world are likely to evolve in the coming years.

From my colleague Josh Calder, who is currently on S)T's Futures Expedition in Hyderabad, India:

Over the weekend we broke into two teams and visited six Indian homes that span the spectrum of the middle class. We came away with many provocative experiences and observations:

• At an upper-middle class house, we were interested to learn that, although they have a car, they stick largely to their two motorbikes, only using the car for weekend journeys of at least two miles. The family car is 12 years old ... and has less than 35,000 miles on it!
• In another upper-middle class family, we found a great example of the aspirational nature of car ownership: though the husband had only recently been promoted and was, as a result, starting to think about purchasing a car, he’d actually purchased a parking spot around the time he’d bought his apartment, years ago, “looking forward” to the future, as he put it.
• A Muslim household revealed just what family can mean in India: we discovered that seventy people were living under one roof, in an apartment building-sized home. After the grandmother stuffed us full of tea and snacks, we got a view of the neighborhood from the rooftop, as the call to prayer sounded from a nearby mosque, roosters crowed, and neighbors peered curiously at us from adjacent homes.
• A prosperous banker told us he wanted to send his kids to an international school, to give them a sense of wide-open possibility that Indians of prior generations did not feel.

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During day two of our expedition, our team split up into two groups and fanned out across Hyderabad, examining the changing retail environment firsthand, visiting everything from business-to-business vendor Metro to high-end retail stores City Center and Shopper's Stop.

Over the course of our retail visits, we discovered many clues to the evolution of Indian retail:

• The direct threat that the spread of modern retail presents to India’s vast informal retail sector was plain: in a Subhiksha (a large chain of small neighborhood grocery stores), price tags explicitly compared their prices to those of street markets, and a large sign proclaimed “Stop losing at the kirana,” referring to the mom-and-pop shops that dot India by the millions.
• At Big Bazaar, Hyderabad’s first shopping mall (consumer base: low-middle income segment), the “buy one get one free” promotion has been taken to a new level—with a twist. Consumers were offered many “buy one get two free” offers, for functional goods with obvious manufacturing defects.

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It has begun!

It has been less than 24 hours since we officially kicked off BRIC Expedition: India—and, already, we’ve gotten a taste of everything from Indian bureaucracy and to Hyderabad’s traffic (still going strong and bumper-to-bumper at 11pm!), to important life rituals and India’s nascent green building scene.

We started off the day with a fascinating introduction to India and Hyderabad from noted author and historian Dr. Narendra Luther, one of Hyderabad’s better-known citizens. Over the decades he has occupied every role from high-level government official to environmental activist—he noted that he has gone from seeing pollution as a hopeful sign of development efforts decades ago, to his “Save the Rocks” campaign of today—an NGO effort to preserve the massive, ancient boulders (in some cases almost 2.5 billion years old) that adorn Hyderabad, but are being demolished to clear space for Hyderabad’s breakneck development.

We also had an opportunity to talk with a sector head from the business investment wing of Andhra Pradesh’s state government, who gave us an idea of the business climate in Hyderabad, as well as an overview of the state’s extensive, successful efforts to attract major multinationals to the city and region.

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Social Technologies' Futures Expedition to Hyderabad, India -- one of four expeditions over the next two years that S)T is leading to the BRIC economies -- began a couple days ago. Three of my colleagues are traveling with S)T clients and meeting with local experts, business leaders, and regular consumers as they immerse themselves in India's future.

Over the next few days they will be submitting dispatches from India updating us on their progress as time allows. Click here to see all of the posts about our expedition to Hyderabad.

A superhero Vishnu fighting bad guys on city streets? Monkey god Hanuman reincarnated as a soccer playing, evil-fighting youngster? It’s the latest craze in Indian entertainment: “mytho-cartoons,” cartoons that borrow from Hindu mythology to entertain as well as teach Indian youth about Hinduism.

There is an unusual cultural exchange present in Indian mytho-cartoons: Indian animators are borrowing from Western entertainment to tell centuries old Hindu myths in a new and innovative way. Many popular mytho-cartoons use the concept of the modern comic book superhero to portray Hindu gods to Indian kids. Mytho-cartoons are becoming so popular that production companies, such as Percept Picture Company, which produces the popular “Hanuman” films, have plans to release their films and TV shows in the US and Europe, completing a cyclical cultural exchange of ideas and beliefs.

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Recently, I've been immersed in reams of data on India, while helping to assemble S)T's field guide for our upcoming Futures Expedition to Hyderabad, India. It has been fascinating work, and some of the discoveries have been downright startling, providing stark examples of the challenges India faces as it tries to balance growth with stability and environmental concerns.

I've read about the growing problems surrounding car emissions and air pollution, such as smog so thick that it routinely forces airplanes to divert from major airports. Researching India's infrastructure, I discovered how urban areas often use their major rivers as primary drains--New Delhi alone pours almost 1 billion gallons of raw sewage water into the Yamuna River each day.

While these are major problems, they are not unmanageable: with time and investment, India can clean up its environment and build out its infrastructure.

No, what really worries me, in fact, was one statistic I came across while investigating the effects of urban pollution. According to estimates by doctors at St. John's Medical Center in Bangalore, more than 50% of urban Indian children under the age of 12 have lead poisoning. Lead poisoning can cause severe brain damage and up to a 20% loss of IQ.

India's infrastructure and environmental clean-up issues seem relatively trivial in comparison--that India's development may be literally crippling its rising generations is a much more worrisome possibility.

Image: Joooule [ Programme sensible ] (Flickr)

World 2 companies trying to stake a major claim in World 1 are facing some serious obstacles. Most recently, Tata Group--one of India's largest conglomerates--was rebuffed as it tried to make a move on two World 1 companies in just two weeks. From an article on FT.com:

After the Tata-controlled Indian Hotels, owner of Taj, increased its stake in [luxury hotel chain] Orient-Express to 11.5 per cent, Paul White, chief executive, wrote a blunt letter, saying a link with the chain was not in shareholders’ interests.

He said: “Any association of our luxury brands and properties with your brands and properties would result in a reduction in the value of our brands and of our business and would likely lead to erosion” in Orient-Express’s premium room yields.

This follows reports last week that US dealers of the ailing Jaguar had objected to Tata Motors as a potential owner of the luxury marque, which, along with Land Rover, has been put up for sale by Ford, its US owner.

Referring to “unique image issues” associated with Indian ownership, Ken Gorin, Jaguar Business Operations Council’s chairman, said the US public was not “ready for ownership out of India of a luxury car brand such as Jaguar”.

In the end, it appears that Ford will let Tata purchase its Jaguar and Land Rover luxury brands. However, the initial resistance by Jaguar dealers to the sale probably wouldn't have ever occurred had a World 1 company tried to purchase the brand. How this plays out could be telling for both the future of World 2 companies entering World 1 markets as well as for luxury branding:

• Will World 2 companies continue to be rebuffed when it comes to luxury acquisitions, requiring them to create new market share by developing their own luxury brands?
• Since luxury brands are often built on their reputations for quality and authenticity, how long will it take for World 1 consumers to accept luxury products from World 2--mostly known for cheaper, lower-quality, commoditized and/or pirated products? And, if so, how will World 2 companies shed this traditional image? 

China's economy just shrank 40%, according to the World Bank. India's did the same.

It's not a catastrophic pan-Asian depression, however. The Bank has recalculated the size of the world's economies based on new and evidently more accurate estimate of the effects of purchasing power, or how much people can actually buy. (Measured by exchange rates, economies in the developing world are typically much smaller, sometimes by a factor of three.)

By the older method, the world looked like this in 2005. China is rapidly closing in on the US, with the rest of the world relegated to secondary orbits around the two giants:

This is how the world looked in 2005 using the new methodology, after the Chinese economy has "lost" about $3.4 trillion (nearly the size of Japan, the world's third-largest economy), and India has been shorn of $1.4 trillion (the whole Brazilian economy):

The US is far more dominant, and Japan and Germany remain near-rivals to China in the size of their economies.

We can take two preliminary conclusions from this:

• The day when China will surpass the United States in economic power -- and the things that flow from it, such as military might -- may just have been pushed back by some years.
• It always pays to remember that models are not reality. They may help to explain it, but are often more about a way of seeing the world than about hard facts.

(Graphics generated with IBM's Many Eyes)

India's growth. Image: Social TechnologiesBy now, we’re all familiar with the 2003 Goldman Sachs report "Dreaming with BRICs: The Path to 2050," which laid out their view on the growth potential of Brazil, Russia, India, and China. An interesting new report from Ernst & Young found that there continues to be enormous enthusiasm among investment firms around the world for initiatives and investments in the BRIC markets, “but that only about 29% of deals are completed because executives are not visiting the countries and learning about the local cultures,” according to a recent article in the New Yorker.

We urge our clients to educate themselves about and immerse themselves in the markets they are trying to understand. To help with this, Social Technologies will host a series of Futures Expeditions to Brazil, Russia, India, and China over the next two years. We will give participants a firsthand view of how changes in demographics, consumer life, values, and technology use are shaping the future of these critical markets. If you’d like more information on what we’ll cover on these BRIC Expeditions, see this (PDF).

As in the past, a big part of the BRIC Expeditions will be immersing ourselves in the daily life of these markets so we get a better sense of how important issues like urbanization, environmental concerns, rising income and changing consumption patterns are actually playing out for consumers and businesses. This means in-depth interaction (e.g., home visits, shadow shopping, focus groups), and engaging with experts who truly understand where these countries are headed. For a sense of what I mean, check out this excerpt from our May 2007 Futures Expedition to Shanghai and consider joining us on these fascinating and unique futures experiences in 2008 and 2009.

Futures Expedition schedule:

• India (Hyderabad) from Thursday, February 28 to Tuesday, March 4, 2008
• Russia (Moscow) from Thursday, September 24 to Tuesday, September 30, 2008
• Brazil (Curitiba) from Thursday, March 5 to Tuesday, March 10, 2009
• China (Shanghai) from Thursday, October 15 to Tuesday, October 20, 2009

Image: Social TechnologiesAs futurists we track ongoing trends, but we also look for those things that run counter to our expectations or previously noted trends. These countertrends help challenge our assumptions, highlight subtle distinctions in the emerging landscape, and allow us to start building a more nuanced view of possible futures.

A recent post on the user experience blog Putting People First brought an interesting countertrend to light: the declining(!) number of total landline Internet connections in India. What? Declining? Yes…India’s ISPs are reporting that the number of Internet connections declined slightly, as people dumped their dial-up access. India’s Economic Times reports:

The year 2007 belongs to broadband, but for the first time in recent memory, the number of Internet connections in the country has fallen. The total Internet connections in the country declined to 9.22 million in April-June from 9.27 million in the previous quarter, according to telecom regulator TRAI's performance indicator report for the quarter. India is possibly the only country in the world where internet connections are falling.

This runs against the grain of what one might assume and think—that more and more people in India and other parts of the developing world are buying computers and going online just like people in World 1. The interesting nuance, though, is that the number of people connecting to the Web via mobile phones is booming, helping to boost India's overall online population. The idea that users in the developing world wouldn't follow our World 1 model of accessing the Web via PCs is something we've been suggesting for years. How this is playing out today in India is explained nicely here by the Economic Times:

Even as net connections are falling, the number of people accessing the web on their cellphones increased by a whopping 7 million to cross the 38 million mark. This emphasizes how the cellphone is fast becoming the primary medium for Indians to connect to the net as the number of people using their mobile handsets to access the web is now over four times those using a PC.

So keep looking for trends in your own exploration of the future, but don’t forget to tease them apart, look for nuances, and explore potential countertrends as you seek to decipher possible futures.

(via Putting People First , via dev.mobi )