Norwest, Satyam tie up for next gen technology

Norwest Venture Partners (NVP) has allied with Satyam Computer Services for providing next generation technology to enterprises in the United States, Europe and in other parts of the world.

Addressing a press conference on Wednesday, Promod Haque, managing partner of the $1.8 billion Norwest Venture Partners, said, "We are planning to tap enterprises who are in the process of changing their business model to shun cost-cutting for competitive edge along with companies like Satyam."

Haque, who was recently named the Number 1 venture capitalist by Forbes, said that there was a lot of potential for Indian entrepreneurs to raise venture capital if they adopted the 'hybrid' model of having their front offices in the US and their back office operations in India, to leverage the availability of talent in India.

"'Hybrid investments' are more competitive, because most of the product development work could be done in India, while the marketing could be done out of an office in the US," Haque said.

Haque said that his two-week trip in India was to tap the tremendous potential that was available in the Indian information technology (IT) and business process outsourcing (BPO) sectors.

"There is a huge market in these sectors, as in the US alone seven lakh jobs would be added in the IT sector and another two million jobs in the BPO industry in the next five years," Haque said.

According to him around $12 billion was required in each of these sectors during this period for their growth.

Haque also said that established sectors like banking, insurance, and manufacturing sectors were investing heavily in technology for staying competitive.

He, however warned that investing in the next generation technologies have to be adopted by Indian IT companies to compete in the global market.

"The cost advantage that Indian companies have at the moment will not be there forever. Other Asian countries like China are fast catching up and Indian companies have to change to be competitive," he said.

NVP, he said, sees a huge potential to investing into early-stage companies engaged in developing disruptive next generation and networking technology in India. The company at present has invested around $10-15 million in 15 companies in India and is keen to increase these numbers.

He, however, did not divulge information on the specific investments made in these companies. "Our firm normally invests up to $20 million in a start-up, over a period of four years. We believe that the companies we invest in should be spending their time selling their products, instead of raising more equity," he said.

Haque also said that NVP was looking at investing in the bio-pharmaceutical sector after a gap of nearly seven years.

"It is difficult to fund the pharma sector, as the gestation periods are long and the clinical trials invite controversies. But now the outsourcing boom having demonstrated that product innovations could be done in India, we have renewed our interest," Haque said.

The venture capitalist said that he was also keen on investing into the telecom sector.

"The Indian telecom sector is at present the fifth largest in the world and would soon move up the ladder. The company intends to provide competitive advantage to the Indian telcos with regard to the equipment," he said.