Apparently, earlier today Facebook users in India were greeted with a new message upon logging in: Facebook is now available in Hindi, Punjabi, Bengali, Telugu, Tamil and Malayalam. As of 2001, (the latest numbers available) those languages had a combined 770 million speakers. Facebook has just over 200 million users, so this could be a huge opportunity for growth if the company can pull off more than just interface translation.

We expect Facebook will make an announcement about the availability of these six Indian languages sometime very soon - we were told about it by reader Nimish Adani, of Workosaur.com. Adani's take on the news? "This move isn't necessarily going to multiply Facebook's usage as most people here would continue to use Facebook in English," he says. "Usage of regional languages (in the online space and in the professional world in India) isn't as popular as is the case with countries like Russia, China or those in Europe.

"I'd see this development as a move to woo those from the smaller towns and cities of India who are currently on Orkut. The more urban and suave English-speaking audience have already moved from Orkut to Facebook. MySpace (despite having an office in India) is a complete non-entity in India. Bebo has also come in recently but again its a non-starter."

What do you think?

Indians around the internet are condemning the ruling as a blow against freedom of speech and democracy. It certainly appears to be a dangerous misunderstanding of the nature of the internet on the part of the court and a bad precedent in the most populous democracy in the world.

We're not sure what the number of potential readers has to do with anything and we find it pretty frightening that a court that would say "you're a computer student so you know how many people use the internet" had any say at all in such matters.

According to reports the comments in question were left by anonymous users and the group's owner claimed they were legitimate exercises of free speech. The youth arm of the political party facing criticism apparently filed suit under a law pertaining to "hurting public sentiment."

There are more than 1,000 groups on Orkut that show up in a search for "Shiv Sena," some for and some very much against the party. We're writing based on relatively light local reporting, so it's possible that the group started by Ajith D was particularly heinous. On principle, though, we presume that the young man should not face legal charges for anonymous comments left by others - no matter what those comments were.

Late last year Facebook shut down a group on that site that appeared to be celebrating acts of genocide against Bosnian Muslims. People lost their Facebook accounts and the group was closed due to violation of the site's Terms of Service against advocating violence - but filing legal charges against the group's admin would have been an entirely different matter.

India's Supreme Court ruling that the Orkut group owner could be sued for anonymous comments sounds like a terrible ruling to us and the kind of thing that web users all around the world should be concerned about. India is the world's second most populous country and its largest democracy. It's a large and complicated country, though. While the recent rise of the Indian middle class and tech sectors have received substantial attention, the country still has one of the highest child malnutrition rates in the world - twice that of Sub Saharan Africa according to the World Bank.

Democracies are complicated; the United States has one of the highest rates of imprisonment of any industrialized countries in the world, holds a shockingly disproportionate number of its young black men in prison and was founded on an experiment in ethnic cleansing. Who has the moral high ground?

While big picture questions are important, this particular case is as well. Will Google intervene in defense of Ajith D's use of its website? Will the US government, now more than ever advocating the use of free-flowing information technology to advance human well being, have anything to say about this potentially terrible precedent being set? We suspect neither will occur.

It's a good idea for us as individual web users to remember that even as new internet technology sets so much information and so many voices free, even in a celebrated democracy - online freedom may be one repressive legal ruling away from being put at serious risk. No matter where you might live - do you trust that your local judiciary would understand the issues in a case like this? We don't.

The new alliance wants to guide governments, NGOs, and mobile firms on how mobile technology can be used to help save lives.

Already, mobile technology is providing and augmenting healthcare initiatives throughout the world. In a recent study released by the UN and Vodafone titled, "mHealth for Development: The Opportunity of Mobile Technology for Healthcare in the Developing World," over 50 of these types of initiatives throughout 26 countries were discussed. The biggest adopters of mobile technology were India with 11 projects and South Africa and Uganda with 6 each.

• Sending mobile phone owners updates on diseases via SMS.
• Letting health workers in Uganda log data on mobile devices from the field.
• In South Africa, the SIMpill is a sensor-equipped pill bottle with a SIM card that informs doctors whether patients are taking their tuberculosis medicine.
• In Uganda, a multiple-choice quiz about HIV/AIDS was sent to 15,000 subscribers inviting them to answer questions and seek tests. Those who completed the quiz were given free airtime minutes. At the end of the quiz, a final SMS encouraged participants to go for voluntary testing. The number of people who did so increased from 1000 to 1400 over a 6-week period.
• In the Amazonas state of Brazil, health workers filled in surveys on their phones about the incidences of mosquito-borne dengue fever.
• In Mexico, a medical hotline called MedicallHome lets patients send medical questions via SMS.

The Power of Mobile Technology

But beyond just the altruistic aspects of mobile healthcare, the UN report also demonstrated to mobile operators how programs such as these could provide value to the industry. That, said UN/Vodafone Foundation Partnership head Claire Thwaites, was a crucial step since the industry, like many others today, stands at the edge of a downturn.

Because mobile technology is relatively cheap and easy to spread, it can connect the rural areas that desperately need healthcare with the large populations of doctors who live in the urban centers. For example, "in India," said Dan Warren, director of technology for the GSM Association, the umbrella organization that hosts the MWC, "there are 1m people that die each year purely because they can't get access to basic healthcare. The converse angle to that is that 80% of doctors live in cities, not serving the broader rural communities where 800 million people live."

Some Drawbacks

Using mobile technology is not a panacea for the world's health issues, though. Says Forrester analyst Elizabeth Boehm, one of the biggest issues with mobile healthcare is that "the people who are most in need of healthcare are usually more aged, so they don't use the mobile or they're not comfortable with it." This limits the use of mobile phones in public health information campaigns.

However, as the technology continues to spread throughout the world, it's easy to see how, over the course of time, phones could become a "doctor in your pocket" for the less fortunate citizens of our world.

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?

HottestStartUps.In Shows the Future of the Start-Up Launchpad

When I was researching this article, many of my contacts pointed me to a website that runs a competition to find the best start-ups in India. Browsing through it was a fascinating glimpse into an economy of over 1 billion souls in the midst of an incredible transformation.

However, more than any individual start-up, what jumped out at me was that this was a far better launchpad for start-ups than anything we have in the USA. This competition satisfies the three golden rules, FTV:

1. Free for the start-up, so that even one with no funding can play.
2. Transparent; the judging rules are open and the process is independently audited; no suspicion of back-door influence.
3. Virtual; no need to be in a specific place at a specific time in order to fully participate.

Of course this has been made possible by sponsors who have actually donated money to further the cause of innovation; it has not been driven mainly by the for-profit objectives of the event organizer.

What Segments Are Hot with VCs?

VCs miss many great market segments, and entrepreneurs who chase segments that are hot at the moment are usually a day late and a dollar short. Nevertheless, it is interesting to see what is getting funded these days in India. Here are the spaces that have already seen a lot of activity:

• Micro-financing. To some, this elicits a big yawn and a "Yet another micro-financing site?" response. But the blow-up of big banks in last few months indicates that a fundamentally new model may be needed. And India, with its huge unbanked population and technically savvy elite, is where innovation is likely to come from.
• Mobile ad networks. I am a skeptic of these. Nobody has found a way to capture attention on a tiny screen without being totally annoying. Maybe somebody will. They probably will, and it will have to have something to do with location. But it is likely to come from Asia, where mobile is more widespread than in the USA. Mkhoj is a Kleiner-funded entrant from India in this space.
• Personal outsourcing. We wrote about this in our article last year as well, and some of the companies, such as iYogi (disclosure: I have an interest in iYogi) and TutorVista, are doing quite well.
• Better, faster, cheaper SaaS clones. Zoho (which is bootstrapped) and DimDim (funded by VC) will inspire investment in many other segments.

Here are some bleeding-edge segments in which investors are taking an interest and in which India may be well positioned:

• Voice recognition. Voice recognition is hard. It is even harder in multiple languages. The official census in India from 1961 recognized 1,652 languages! Voice recognition is still the killer app for the mobile phone, and it is growing at a crazy pace (with over 3 billion mobile users currently). Ubona looks interesting, with some serious IP but also a pragmatic local market-entry strategy. Mscriber looks like it has a good market strategy, too.
• Mobile payments. In India, people live on their mobile phones, and when you are talking about billions of users, the dollars add up, even if in very small increments. Obopay is one company in this space.

Best Exit: Naukri

Naukri, usually described as the Monster.com of India, may not have the innovation to make techies gasp, but VCs salivate at its return. Naukri rode the outsourcing boom perfectly, exiting via an IPO in November 2006 that was oversubscribed 55 times (ah, remember those days on NASDAQ?).

What Have We Missed?

In a nation of over 1 billion people, where technology is the best route to wealth, we are certain to have missed a ton of amazing innovation. Let us know what it is.

(Photo by Thomas Roche.)

Achuthan and Rabeedin did not have an easy route to success. Initially ridiculed by parents and schoolmates, the two struck out on their own to prove that they could achieve their goals. Unfortunately, the first banking venture from the duo, Mobeo Technologies, was not a success. With that project, the two had developed low-cost banking terminals dubbed "Personal Banking Machines" which used fingerprint readers and mobile PINs. The operation was shut down after a year due to unfavorable market conditions, regulations, and issues with hardware distribution.

Unfettered by the initial failure, the entrepreneurs chalked up Mobeo as a learning experience and moved on. Their new venture, CashNxt Technologies (web site is not fully functional), was launched in partnership with companies that already had similar low-cost banking devices for the poor.

Traditional banks don't set up ATMs in remote villages due to huge operational costs and poor connectivity. Cashnxt works around those obstacles by allowing service providers to use their network on a pay-per-use basis without any capital investment or additional infrastructure. Through a partnership with four banks out of Kannur, Cashnxt was able to deploy ten kiosks in parts of India.

Mobile Phone Transactions

As a customer, if you and a vendor are a member of the Cashnxt network, you can conduct transactions using your mobile phones. The merchant dials CashNxt's IVR number, enters their PIN and transaction amount, and then hears a high pitch sound on their mobile phone. The customer does the same - calls the IVR number, enters their PIN and hears a high pitch sound. The two phones are then brought together, held close enough for CashNxt to encrypt and decrypt the sounds. The transaction is then confirmed via SMS. (You can see how this works in this YouTube video.)

Using Cashnxt ATMs

Customers who want to make a transaction using an ATM encounter similar audio mechanisms as they do when mobile banking. The ATMs are fitted with audio systems that produce the high pitched sounds needed when transactions are made. Customers dial the IVR number, confirm their PIN and then hold their mobile phone up to the ATM. The transaction can then be completed and the customer can withdraw money. This system eliminates the need for debit and credit cards entirely.

Challenges Ahead

Using high pitch sounds to authenticate transactions could lead to high-tech hacks. As the system is relatively new, having just launched in December, it's still unknown how foolproof it may be.

Cashnxt Technologies is a 25-person self-funded venture founded byAnish Achuthan and Rameena Rabeedin. You can reach them via email at achuthan.anish AT cashnxt.net. More info about the company can be found at goergo.in.

In Part 2 of this story, we reveal some of Zoho's cookbook.

At the Web 2.0 Expo in New York last week, Jason Fried of 37 Signals, another company that has done well by defying conventional wisdom, advised entrepreneurs to "follow the chefs". He meant that great Chefs give away their recipes. That just makes you want to come to their restaurants even more. Particularly if the recipe looks complex. And Zoho's looks complex.

So I hope they won't mind me giving out the recipe they revealed when I met with Raju Vegesna, one of their founders, last week. I noted 3 major ingredients:

1. New ways of competing for talent

2. A related cash cow business

3. Pragmatic, non dogmatic approach to winning business

New Ways of Competing for Talent

If I had to select one "secret sauce" in Zoho's recipe, it would be how they recruit. Zoho (with parent company, Adventnet) has 700 developers. All the developers are in India, specifically Chennai.

India is a ridiculously competitive market for developer talent currently. I see parallels with Silicon Valley in 1999, when average developers got inflated expectations and inflated paychecks. Attrition is problem # 1.

Developers see their career path as managing other developers. Your mojo is based on how many people you manage. Managing 1,000 makes you ten times better than managing 100 and so on. This is the reverse of America where a developer will drop custom service work as soon as it is possible to work on a product.

This is a terrible environment for a product company to compete for talent. How does Zoho compete for talent in this market?

1. Hire from school. Yes, school, not college. So they don't compete to hire from final year of College or in the even more hot market of developers with a few years experience. Great code is typically written by young people - which explains a lot of the "college drop out makes $ billions" stories in America.

2. Pay one year of college fees. This is a salary, not a loan, with no strings attached. According to Raju, 90% join Zoho at the end of that year, but there is no obligation. This gives Zoho an edge with the brightest at school as they have an unusual offer.

Zoho's philosophy is that 4 years college when you are young is not right for many people. Better to have life-long learning but get real world experience early and get some cash while you are at it. This gets a big "yes" from parents paying college fees!

Zoho have their own Zoho University. This is not uncommon for big employers in India. It is a necessary complement to hiring early.

Related cash cow

Zoho has a related cash cow business that enable them to fund Zoho. This is not unlike Google. Microsoft's problem is that their cash cow - Office - is the one that both Google and Zoho are going after. That gives them one nasty Innovator's Dilemma.

Zoho's initial cash cow business is selling network management tools. This has been profitable for 12 years. Zoho itself is due to be profitable next year.

The network management tools business is doing the same as Zoho - products at least as good as the competition for a fraction of the price. This business also gives Zoho a capability for running large data centers, which is a core competency for a SaaS business.

Pragmatic, Non Dogmatic Approach to Winning Business

By all accounts, Zoho won GE's business in head to head competition with Google. GE wanted to cut cost and enable collaboration, which meant Microsoft was less of a contender. Google was the obvious "you never got fired for choosing" winner. Why did GE choose Zoho? There are two likely reasons:

1. Zoho allowed GE to run the software in their own data centers. GE has the economies of scale to run their own data centers and clearly prize the control that this enables. Zoho specified the hardware, but GE bought it and deployed it. Is a "Zoho Appliance" far behind?

2. Visual Basic Scripts in Spreadsheets. Current tech orthodoxy frowns on VB, but if you have thousands of existing Excel spreadsheets running VB that would be a show-stopper.

"Some facts:
MetaASO is the name of the Company. Mermaid is the name of the Product Suite.
We started in Oct 2002 and our Release 1 happened 1.5 years back in limited circle beta. Full public Beta Release 2 happened a few weeks back.
There are 5 founders and the engineering team is of 20 people.
We can do a belle dance in front of customers but we never say 'Give us work.' We just mention softly that besides giving away software for free we also develop custom P2P softwares for organizations. And that typically costs around $300-$400,000 per software we develop. We have 3 enterprise customers. This is besides the money we make from ads on our softwares.We are not proud that in the 6th year of operation we have 3 enterprise customers. We could have made a lot of money by providing services but that would make us a yet another services company. Which we are not and don't want to be. So just enough to sustain ourselves, but our emphasis is on product development. We plan to do away with all services very soon and concentrate purely on product development."

This is smart self-funding. I bet they learn a lot from each enterprise job as well as getting cash. This is the classic "3 custom jobs to a product, iterating and generalizing on each project" that the enterprise software business has been built on for decades.

MetaASO stumbled at the first hurdle for me, which was that you need Silverlight and that means a PC (I use a Mac). So I would be interested in any first hand experience with their product. PC is still the best shot for volume, so I don't doubt the strategic wisdom of going that route.

The other requirements:

"Mermaid softwares can be used on the LAN e.g. at office, campus etc. with out any internet connection. To use them on the internet you require a "Globally Routable IPV6 Address" for your computer. Ask your ISP for one and it should get done within 15-20 minutes. They will do whatever is required. You don't have to do anything.

Apart from that a powerful computer always helps. And even though Mermaid softwares will run on 256MB RAM systems 1GB is good and 2 GB is awesome.

As far as the internet connection speed goes. We recommend a minimum of 256Kbps (for all our audio/video based applications) for the rest 128Kbps would do. But nowadays its best to get a 512Kbps or 1MBps connection if you are starting your own TV Station."

So one can see that an "enterprise first" strategy makes sense for MetaASO. I am not sure about getting "Globally Routable IPV6 Address" from your ISP. Has anybody had experience with that?

Get past those hurdles and the big message is "no servers needed." That's right, no supernodes, no nothing. Real Peer To Peer. Your very own TV station. Sounds like YouTube -- except you don't need a server farm costing gazillions.

This is the same idea that got me excited about Faroo. Two other similarities: both use Microsoft base technologies (no surprise, given the P2P focus), and both originate outside USA (Faroo from Germany, MetaASO from India). The latter maybe to do with the fact that funding is a bit tougher if you don't live in the Valley, so you tend to focus on things that are big enough to warrant the years of bootstrapping.

Go to MetaASO and check it out. Listen to their welcome message on their Pickle Player (no download). Is real serverless P2P viable for search or video?

1. A large domestic market
2. Access to intellectual capital
3. Reliable, low cost telecommunications
4. A culture that rewards innovation and risk taking
5. A well developed venture capital industry

Against these 5 Aces, India had only one good card, which was low cost labor. It is interesting to revisit these 5 Aces ten years later in 2007 (well, 2008 now!) and see what it means for the state of innovation in India. In short, India is looking a lot better:

However, despite all these advantages and despite thousands of developers in India creating value for Western companies, where is India’s killer app? Where is the Microsoft or Google from India? Or being slightly less ambitious where is the Salesforce.com or YouTube from India?

Why does this matter for India? Look at the market cap of Google ($218 billion) vs Infosys ($24 billion). This is not bubble valuation. Both have similar and reasonably valued PEG (Price Earnings Growth ratio, the only rational way I know to compare two valuations) with INFY at 0.81 and GOOG at 1.30. Google has over 9x the value and is about 15 years younger.

When you read the Google story, you won’t see anything created in a Stanford dorm room that could not have been created in an IIT dorm room. What is really wild is that the barriers have come down even further since Google came to market.

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 been the story for some time but it is changing fast right now and we maybe reaching a tipping point related to innovation in India. Three factors are rapidly narrowing the labor cost arbitrage – weaker dollar, rampant salary inflation in India and new technology that significantly reduces the amount of code that needs to be written.

At the same time, VCs are looking entrepreneurs in the eye and telling them that capital is not a constraint but that you had better find a way to get sustainable advantage and scalability that is not tied to linear growth in headcount.

Innovation is happening today in India. You won’t see a lot of it as yet as the interesting ventures are still fairly small and below the radar. But it is happening.

Today’s successful (meaning currently lucrative) innovation in India tends to be at the process and business level. These companies use technology extensively, they are technology driven and enabled, but the technology innovation is more incremental than disruptive and still uses lower cost labor as a core advantage. There are four interesting types of new ventures in India:

1. Leveraged services models. This is where most “next generation BPO” is headed and most niche software services vendors now innovate around a proprietary framework of some kind. These ventures use proprietary technology and other innovation to do transformational change for clients rather than simple offshoring of existing processes. They are being created by teams with deep domain expertise that use India for execution, as opposed to Indian services firms that look for markets that need lots of people. This is “the industrialization of office work”, wringing lots of little process efficiencies through reengineering. It is similar to what Japan did with “Kaizen” continuous improvement to manufacturing in the 1960’s. It is less glamorous than radical, disruptive innovation but it can be hugely effective, creating great value for both client and vendor.
2. Direct to consumer phone and online services. This is very new. These services use new technology, but the real innovation is in process, training and branding. It is a dramatic departure from the old services model that relied on selling through large Western firms. Three examples are GetFriday, iYogi and TutorVista. Direct to consumer services have been enabled by the Internet, specifically Google search engine marketing which is a phenomenally cost effective way for a start-up (that has the right proposition and knows how to properly leverage SEM) to reach global markets. Indian direct to consumer services fill a nice gap left by US ventures that assume that an entirely self-service online strategy will meet the need; this maybe true in some markets and demographics but there are many markets and demographics where a person on the end of the phone is still needed for at least some of the service.
3. Concept arbitrage/localization. This is popular with VCs as they globalize as the deal is simple to understand. For example, when eBay was first getting traction in the USA they were years away from looking at foreign markets, so there was plenty of time in many markets to copy the basic idea and add in a few twists to appeal to local tastes. When the originator has won in the USA they use IPO cash/equity to buy up the local players, which is a good result for all. There is less easy money in these deals now as Web 2.0 start-ups either need less localization, or they figure out those issues upfront, leaving less time for a local clone to get traction. This requires more innovation to build features that really make a difference in India and other Asian countries that could later enable a global rollout. One area for innovation is wireless as America is so far behind Asia in wireless. Most of these won’t get much visibility in the West as that is not a target. One success, riding the booming jobs market, is Naukri (India’s answer to Monster).
4. Cheap clone/selling to bottom of pyramid. Clones dramatically under-price Western products based on lower cost R&D and volume. There have been attempts to do this in software, but open source has taken the bottom out of this game in most segments. With excellent execution there is sometimes room for a “better faster cheaper” fast follower play if the software is delivered as a service and does not require corporate approval to get traction. Zoho is a good example of great execution on a crowded field. The much more interesting play is for real world products that need to be substantially cheaper for the Indian market. Pre the 1991 liberalization of the Indian economy this was derided by economists as “import substitution”, flying in the face of free trade economics. However now it has a new lease of life as “selling to the base of the pyramid”, delivering products to the 4 billion people who are not currently in the consumer market. Generic pharmaceuticals are already a success story. Another example might be a Fetal Heart Monitor, the most basic bit of medical equipment. If a robust product was offered at half the price or less of Western products more rural clinics in India could buy it; would this also later find a market in the West? The standout for me is Novatium, who are really making the sub $100 laptop a reality without any subsidies. Don’t expect to see them in the West any time soon, their market in India is plenty big enough!

Many people would not see these as innovation. They are not seen as classic “killer apps” and disruptive innovation along the lines of eBay or Google. In this view, truly great innovation should be totally independent of the cheap labor advantage or market localization.

There is no reason this type of innovation cannot come from India but also no reason that it should; the innovation spark is totally location independent today. This could come out of an IIT dorm room, or indeed any room anywhere in the world.

India needs to find work for a massive labor force that grows every year. So the Western ideal of a huge business with minimal employees is not the ideal for India. The great Indian success stories will probably still leverage the talent for organizing large numbers of people toward a common goal.

In trying to come up with a top 3 list of great entrepreneurial ventures, I found it easy to come up with two that are very much real world:

• Jet Airways. If you think it is impossible to build a truly great airline that is a pleasure to travel in whether it is Coach or Business, fly Jet. Doing that in India where infrastructure is weak is a phenomenal achievement.
• Bharti Mobile. They rewrote the rules on growth by outsourcing everything non-core and became possibly the best Private Equity return ever.

I also find it easy to think of old, large companies that are innovating like crazy – Reliance, ICICI and Tata Motors come to mind; break dancing elephants, wow!

The achievement of the SWITCH (Satyam, Wipro, Infosys, TCS, HCL) is not to be denied; great value creation for investors, clients and employees.

The best shot at a software product breakthrough looks like Zoho. (On a strict definition maybe they should be excluded as their head office is in America but I think that is nit-picking). They could give Microsoft and Google a run for their money in the web office space. The new and highly controversial Live Documents may not strike one as technology innovation but it is certainly a big ballsy move.

The one that will make the biggest difference in my opinion is Novatium; they really bring the web to millions of the poor and without any subsidy.

Conclusion, wow what a lot of change in 10 years! The momentum looks set to make the next 10 years even more dramatic.

What really great innovation have you seen from India? What do you expect to see in the future?

Image of Innovation Center of Infosys in Bangalore, by ianus via Flickr