It is educational to compare and contrast the two tech. booms that this world is witnessing right now. Silicon Valley is going thru a mini deja-vu of sorts, what with the spurt of so called web 2.0 companies mushrooming all over the place. The buzz word this time around is “build to flip” – build something cool and innovative and hope it catches the eyes of one of the big three – Google, Microsoft or Yahoo (affectionately termed as GYM). The VC community can’t hide its excitement as well and funds have come up to focus exclusively on emerging technologies like RSS. Earlier this year, during my visit to the Valley, I happened to go to the Canvas cafe with Marc. We were able to spot half a dozen leading thinkers there deep in conversation and bainstorming ideas. In short, a boom in Silicon Valley means lots of new startups, exciting ideas, coolio conferences and most importantly small companies giving big companies a run for their money. Exciting times indeed!
Now, let us turn our attention to our own..ahem… IT boom. What we term as a boom is actually creation of behemoth billion dollar companies with tens of thousands of employees. This has led to rising salaries and growing concerns about attrition and employee retention. Don’t get me wrong – it is great that the software sector has been able to generate such wealth and employment. But, unfortunately, our boom has so far not been about technology or innovation. Our tech. industry has its head buried so deep down in servicing offshore clients, that we are taking no notice of the other boom on that side of atlantic. Everyday I still run into tech. savvy engineers who don’t know the silicon valley has already moved onto web 2.0. We are running way behind the curve and not making much of an effort to catch up. The outsourcing business is so huge and lucrative, that it has almost become an albatross around our neck. The big 3 – Infy, Wipro and TCS should be investing in creating more awareness and spurring innovation – but they are not. Why do we see no or few technology conferences? Why is this IT boom just about outsourcing? Where are the startups, I ask!
I think our VC community can play a big role in changing things. They need to make some big bets. Fund a risky idea. Bet a few million on something that is untested and never done before (of course easy to say for me coz it ain’t my money!) Encourage technology development for local market. Convince Indian engineers and entrepreneurs abroad to return back and do statups. Even during the dotcom boom we saw much more buzz and excitement in India (India World, Naukri, Jobsahead etc all started before or around that time). But since Y2K, its been all downhill.
This outsourcing thing killed the startup culture!
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There was a fledgling startup culture emerging in mid-late 90s when startups like India World, Naukri, Bazee, Jobsahead, Indya.com and dozens of others were created. Yes, some of them were ahead of their time and some of them were just not good ideas. But they were all focussed on the Indian market, creating products or pure consumer plays. I agree there were very few pure technology companies selling technology even back then. Post Y2k, outsourcing has been the overwhelmingly dominant business model.
Here is my 2 cents on this:
As rightly pointed out by Gurave Indian IT boom so far has not been about technology at all , it was basically about simple arbitrage of low cost labour. Outsourcing essentially was an externality of the internet.
I think one of the reason why technology/innovation has not been big here in India ( unlike as in US) is because we as a country are not pre/mass adopters of technology. Lack of strong local market for technology is a significant reason IMO about the low number of tech startups in India. But things are changing especially now with accelarting PC/broadband/Mobile penetration rate.
IMHO VC’s won’t do anything about this, because as somone pointed they are only worried about their risks/returns. Look at it this way, ” How can you expect VC’s to understand it when you say that even techies themselves are blinded to cool innovation/technology that is happening in the rest of the world. ”
I don’t agree with you last statement though, “This outsourcing thing killed the startup culture!”
There was no startup culture ( the one focussed on innovating which is what you mean I suppose ) to begin with. Outsourcing is just not letting to allow creation of a startup culture.
Rajan
Sandeep – thats a very pertinent point. Similarly there are a lot of VCs focussed on startups like these – with markets and sales primarily in the US and most of the engineering/R&D done out of India/Bangalore.
The spurt might happen when enough people start working on ideas for local consumption – with a US/EU/APAC story to augment it later if that makes sense, AND if VCs focus on the India story – including focussing primarily on the Indian market/sales/operations. Entrepreneurship neccesiates a sense of where the market is, where it might go – and doing pure engineering plays here will not be too radically different (for someone considering the idea) from doing an awesome project, from product requirements to rollouts at some larger product company (MNC’s India Dev Centre). Trying to truly understand the market/customer brings in fresh excitement, challenges and rewards which may actually provide the glitz to ‘being an entrepreneur’ and such startups need to grow/be grown (Its a bit of a chicken and egg there)