State of Innovation in India: 2009
A year ago, I wrote about the State of Innovation in India, keying off an article I had written 10 years previously. Rather than wait another 10 years, ReadWriteWeb has decided to make this an annual review. This time, we have restricted ourselves to web technology. We are looking for breakout innovation, companies creating and getting traction with technology that will change and create markets.
The Big Change to the Risk vs. Reward Equation
Last year we wrote:
"The fundamental issue in India is the risk/reward equation. It is simply too easy for a young developer in India to get paid a lot by an outsourcing firm; then enjoy being headhunted every year for more money. Those of us old enough to see a cycle or two, can see the parallels between Silicon Valley 1999 and Bangalore 2007, when just being able to spell the words of a popular programming language on a resume meant fame and fortune. It is possible that when this comes back to some reality, the motivation to innovate will come to young Indian developers (yes, young; breakthrough technical innovation tends to come from people under 30)."
This has changed, thanks to the global financial crisis. The big outsourcing firms have hiring freezes, and some firms are laying off. "Big" no longer means "safe." Parents in India will need a while to accept this new reality. In America, many parents would advise their kids to go for start-ups when they are young and can afford to take a risk. In India, all the parents have to do is say "Yes" when their bright kid, who is no longer working for a big outsourcing firm, asks to live at home for a year with free food and bandwidth. Last year's article was written before the Satyam scam was exposed, and it rings even truer now that SWITCH has become WIT.
Three kids working together, living at home, with free food and bandwidth, can change the world.
This is a big change. But it is a below-the-radar change. We cannot see the impact yet. Hundreds, maybe thousands, of young developers will do this in India now. Most will not create a great start-up but will just keep their skills fresh and add to their CV. But one or two will do something totally awesome. The class of 2008/2009 maybe the best ever. Let's see.
The innovation we are already seeing in the market today has been despite these and all the other hurdles faced by entrepreneurs everywhere.
Zoho: Finally, the Indian Software Product Success Story
For a decade or more, entrepreneurs in India have dreamed of creating a software product powerhouse, moving away from the labor-for-hire services model to create products that are winners on the global stage.
I know firsthand from working with a few of these pioneers that it is not an easy ambition to fulfill.
India finally has a product success story. We have written about Zoho many times on ReadWriteWeb and included it in our list of top 10 enterprise products of 2008.
The bigger story is the impact this success will have on young developers in India. Role models matter. Kids in America want to become ski racers now that they have seen Bode Miller. It is said that Sachin Tendulkar has inspired a few Indians. In software outsourcing, Infosys was the role model. Today, that role model may be Zoho.
That Big Wide-Open SaaS Opportunity
Indian start-ups that dreamed of creating the next SAP or Oracle faced massive hurdles on the sales and marketing front. Sure, they could invest five times more in R&D with the same budget. But the reality was that R&D was a tiny portion of the budget. The big money went into sales and marketing. The R&D budget arbitrage was not enough to move the needle.
This is totally and utterly different today. We have written about the SaaS opportunity many times. This opportunity is totally location-agnostic. But it is also totally price- and cost- sensitive, and R&D is the biggest cost. Success stories such as 37 signals, Automattic, and Zoho did not win by hiring an enterprise sales force or buying advertising. They "let the software do the talking."
This is not just an opportunity for a few big winners. This is an opportunity for thousands of small companies to go after niche markets. The interesting thing about niche markets today is that they are inherently global and can be a lot bigger than people think. These small niche start-ups won't make headlines and probably won't get VC financing. But they won't need VC financing. What is fascinating about SaaS globally is how few start-ups have been VC financed. Most have gotten to profitability on tiny seed rounds or even with revenue financing from clients.
DimDim and the Cheap Decade
DimDim is another Indian company that made it onto ReadWriteWeb's list of best enterprise products of 2008. It is a classic SaaS story with an Indian twist. DimDim's proposition is as simple as the whole proposition of offshoring: it just costs less. In this case, it costs less than Webex. That's a popular story in a recession.
It is the same pitch that Zoho is making. Take a basic software service we all need -- say, CRM -- and offer something that is comparable to the market leader at a fraction of the price.
That doesn't sound so innovative; more like a classic "fast-follower" strategy, a better, faster, cheaper strategy. That is easy to want, but hard to execute. When you look at a story like Zoho's, you see a simple strategy but lots of small bits of innovation in the execution that make strategy real. Not glamorous, but effective.
Back in 2003, Forbes wrote an excellent piece called "The Cheap Decade." And as we argued here, the boom we went through from 2004 to 2007 was really just flim-flam, fuelled by incredibly cheap credit and blowing up in our faces. So the cheap decade may be starting for real right now.
Zoho and DimDim are perfectly positioned for the cheap decade. There will be others.
On page 2: the future; and what segments are currently hot in India?
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Zoho, DimDim and SAAS are definitely the innovative products from India. Hottest startups has show cased several new startups which no one knew ever existed. From microfinancing and cold chain storage to clean technologies.
Whatever the world can innovate India can consume. Be it a low cost netbook or a $2500 Tata Nano car.
Speaking of innovation which is not related to your subject is Tata Nano. The car which costs just $2500. Whole India is waiting for this car.
The Indian Startup ecosystem has flourished a lot in the last 2 years. There have been many startup societies that have come up like Open Coffee Club (OCC), Startup Saturday, Mobile Monday and ofcourse TiE.
There are events happening like Proto (similar to Demo and happening coming Friday in Bangalore) and Headstart (happened last week) which are giving a solid launchpad to the startups.
Good to see the ecosystem flourishing.
Varun
"In India, all the parents have to do is say "Yes" when their bright kid, who is no longer working for a big outsourcing firm, asks to live at home for a year with free food and bandwidth."
So true!
Change is taking place in India, on a rather slow pace. But once Indian teenagers are free to be experimental, there will be a start-up boom in India. And the days of that boom is not far..
This is so true.
You missed SlideShare though.
This line "In India, all the parents have to do is say "Yes" when their bright kid, who is no longer working for a big outsourcing firm, asks to live at home for a year with free food and bandwidth" made me smile. Except that I am not a coder.
Posted by: Vijayendra Mohanty
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January 18, 2009 10:01 AM
Awesome writeup Bernard.
Zoho & Slideshare are amongst the most popular indian startups for global markets. Also, socialmedian which recently got acquired by Xing is developed out of india.
Yes, it is true that we (Indians) are slowly and gradually paving our way into Innovation and Entrepreneurship. But still, the mindset here is to play safe. Joining a reputed firm is still a major concern for graduates and to b graduates in our Universities and Colleges. There are very few who plunge into the ocean and enjoy being there.
Many of us want to go on our own, but either lack support or don't have visibility about our ideas. Also, the education system is also not supportive enough for innovation and entrepreneuring.
Check out TyFone...a Portland/Bangalore wireless banking software company. I think that we will see some success with split offices between North America and India. AboutUs also has a good number of team members in India.
Saas made it possible to innovate and spread worldwide from anywhere. The world has become bigger (than Silicon Valley).
May be you can count us in, too :)
A good read. I think the intro para in this article is very apt. Seems like you have made a very good research about the Indian tech community.
We are honored and humbled to be thought as a success story, and while we have made great progress, honestly we still have a long road ahead of us!
What we have going for us is our young and hungry team, and it has been one heck of a ride for all of us. Expect a lot more!
Thank you.
Sridhar Vembu
Zoho
RWW, being a regular reader, it gives immense pleasure that this article will further motivate Young Indian Entrepreneurs to 'give it a go'.
I think the innovation journey in India has just begun.
An experience:
Having worked for few Startups product development and worked for mega projects like BBC iPlayer, when I was venturing in 2007, it was difficult to convince my bright ex-colleagues having decades of experience and pocket full money to team up for a Start-up for building products. There is still a sense of “let’s earn quick money through outsourcing”.
However there is Young generation ready to risk !! We were surprised when young graduates opted to join in my startup, and in a year we have developed some niche products in India. Admittingly my company sees Zoho as a role model. The success of Zoho, SlideShare and others, also the economy recession has set the time for a change.
Cheers,
Santosh
Interesting article - thanks.
A suggestion - with a view to encouraging and increasing awareness of, and interest in, innovation, could ReadWriteWeb do a periodic post on software innovation (say every 3 or 6 months) about many places where it is happening (not just India)?
- Vasudev Ram
www.dancingbison.com
sourceforge.net/projects/xtopdf
Also, I run a blog on software innovation at http://jugad2.blogspot.com - interested readers may check it out.
- Vasudev
www.dancingbison.com
jugad2.blogspot.com
We are all looking forward to what they will create. There is still tons of room out there to get market share. I.e., similarly to the Portland/Bangalore project, the market for things like make faster, cheaper, more secure banking software will continue to grow for decades to come. Financial institutions and other large global players are still adding to their digital infrastructure.
I always loved when someone write about my country. As a school student, I always wanted to know what foreigners think about India. I do expect honest reviews from bloggers, even if it is about a country.
Though I couldn't understand those business terms in the post. I could get a summary; isn't it 'India's tech industry is improving the innovative way'?. Or am I wrong?
India always walks to its own tunes. You don't need affirmation from some one. Just keep chipping away. Remember Web is not American invention it is invented by english man in Switzerland. Sun, Juniper, Brocade, Aspect, Magma and numerous networking and semiconductor companies in the valley are started by Indians. It is global world.
Very interesting write up.
You missed tringme.com.I guess with the new law, VOIP is going to big in India. I am sure new voip startups like tringme can add lot of value.
Micro finance is going to be big in India at least for next one decade. There are quite a few interesting startups like RangDe and DhanaX in that area.
Posted by: thejeshgn.com
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January 18, 2009 9:18 PM
Bernard,
Neither Zoho nor Dimdim are Indian companies - they are both US corporations whose founders happen to be of Indian origin and who have at least some of their development activities based out of India...that hardly makes them Indian companies as there are dozens of other startups who follow the same general template.
Also, can you clarify as to what criteria you are using for characterizing these companies as successes? I am sure neither of these companies is wildly profitable or hugely popular or their brands generally known/recognized outside the Silicon Valley echo chamber - for instance, I am sure there are very few people even within India who have heard of these companies...
Nice article but In India the innovation is not coming out of web its already there on the mobile with lots of mvas companies they are the ones to watch out for and they are the ones who have gotten the max funding in 2008
I would like to know your opinion on dating sites in India and to the ones catering around the world to Indians viz. laloorabri.com
Innovations in India has certainly come of an age and young entrepreneurs surely tries to create more than mere outsourcing firms. I, myself is an example of this event. With my 3 classmates I started a company called Digicorp (http://digi-corp.com) back in 2004 right after our graduation.
But we wanted to do something more than developing customized applications for clients in US and Europe. Thus we started http://signinstyle.com, a unique concept but it can not scale more right now.
After that we launched city based service called PetPooja (http://petpooja.com/client) which we suspended due to lack of funding.
And Rivals4Ever (http://rivals4ever.com) is the latest innovative web based service from our company. We got selected in final 30 companies to showcase this in LeWeb3, Paris. The only company from India.
It has been great and satisfying developing this cool products so far and we are looking to make many more cool stuff like this in future till we succeed like Zoho and Slideshare.
All the best Indians, you are going to rock!!
I think the best innovation in India in 2008 was the launch of TATA NANO car , all Auto giants across world said it is impossible to do it but we proved them wrong.
More innovation coming in the BI front. Check out InfoCaptor. An ad-hoc dashboard and reporting application.
...yes there are plenty of amazing innovative start-ups coming up in Indian online space, moreover its not from particular area but from all over the regions in India.
You might have noticed blogs reviewing such startups in similar fashion to ReadWriteWeb or TechCrunch, particularly IndianWeb2.com and Pluggd.in
A few more around
www.slideshare.net
www.paymate.com
www.kyakare.com
www.mkhoj.com
You might want to checkout the startups featured in Headstart.in an annual event that showcases the best of Indian innovation.
The companies that demoed this year are listed in
- http://headstart.in/2009/01/08/consumer-demos-session/
- http://headstart.in/2009/01/09/enterprise-demos-at-headstart-2009/
Hi,
Interesting article, love reading such stuff on India. Another SaaS company I have come across is DeskAway from India.
They have some cool features
http://www.deskaway.com
Thanks to all who responded. Blogging is a wonderful conversation where you learn lots of great stuff.
I was particularly interested to see Slideshare mentioned a couple of times. I use it often and had no idea it was from India.
Slideshare looks like an American company that does its development in India. I can see that Zoho could be classified the same way - as one commenter pointed out. Both show their official HQ in America. In Zoho's case, it seems different taking into account both the ratio of employees in both locations and the location of the owners/investors.
But I reconize that in our global age, this is a gray area and not binary.
To those who pointed out the Tata Nano, yes I totally agree. I limited the post to web tech as that is the RWW audience but the Nano is serious world-changing innovation (which I did cover in the earlier post a year ago). Now all we need is the Electric Nano, that would really knock the socks off.
There were many other interesting innovation leads to follow. Enough in fact that I am hoping we can start more regular coverage, quarterly or more frequent.
Good writeup.
I recently moved to India from Cupertino to take care of our small development team in Bangalore and take 8 hour naps for a change (Hopefully, Jitendra & Tedd are not reading this :p). Coming back after 9 years, I can sense that the mood is totally different now -- entrepreneurs are taking risk, leaving their fat paying jobs to do something different.
Recently, I met the Founder of a company who along with his other cohorts left their jobs and are incubating themselves in an apartment for past 6-7 months -- Sounds like a valley startup? But, it's in Bangalore!
There is money (40-odd active funds), talent and good amount of enthusiasm (and recession) -- the necessary ingredients, whats lacking is a breed of successful entrepreneurs and investors to mentor their biz plan forward. India has not seen many exits, yet.
Indus Khaitan
CTO, SezWho
Bangalore
Great observation and writeup. After moving back from the US in 2005 we started a service business and ran it for 2 years. Though, there were just too many of them and the excitement level was going down. Building a product that is scalable and global seemed more exciting and challenging. Hence, we designed and developed DeskAway (a SaaS social project collaboration service) and launched it in late 2007. It was one of the first few SaaS initiatives from India then. Currently, most of our customers are in the US/UK. Last month we were shortlisted as one of the top 30 hottest startups in India.
I am hoping to see more innovation backed by great customer service come from India so we can dispel the myth that most people have - low cost service destination.
The time for startups to rise is now.
Cheers,
Sahil Parikh
Founder & CEO, DeskAway.com
Thanks Bernard for this informative article on India IT.
I think log-term and bigger growth is also catching up in agriculture technology in India , this is very important as world is going to have more mouths to be fed. There is huge interest in clean water technology too. These are the two areas some big winners will emerge outside pure IT in India.
By the way, this part is a BIG one... and so true.
"In India, all the parents have to do is say "Yes" when their bright kid, who is no longer working for a big outsourcing firm, asks to live at home for a year with free food and bandwidth."
Another example of a promising Indian startup: JobsCafe (www.jobscafe.com). Its still evolving and I hear its going to go the SaaS way!
I would like to add ibibo as they are one of the biggest Indian social networking with tons of innovative ideas and 100 times better than any social networking site ..
Definitely the ex Google India owner (who owns Ibibo) knows how to create a solid product ;)
There is a good post related to this by Alok Mittal, a leading VC in India (Canaan Partners):
http://www.venturewoods.org/index.php/2009/01/21/state-of-innovation-perspectives/
Great thread, Bernard. Have you tried out WOLF Platform as a service, the India based OnDemand SaaS designing platform - www.wolfframeworks.com
Totally a technical code environment for designing business applications. They are begining to generate some gr8 customer traction & user generated comments about the service. See the Nasscom blog: http://blog.nasscom.in/emerge/2009/01/23/made-in-india-featuring-wolf-platform-as-a-service/
Not only SaaS, even platform vendors are begining to enter from India. Serious stuff, huh...
This blogpost has echoed the sentiments of a lot of individuals - techies and non- techies alike, specially from INDIA...
By the way Shats, I bumped into Wolf Platform as a Service at Headstart in Bangalore... and they're a totally technical code free environment. Not even scripts. Probably the first code free PaaS platform in the world from India.