Startups catch up with IT industry

Tech startups can contribute to over 10 per cent of the overall IT industry revenues in a span of 10 years from inception, according to Ganesh Natarajan, deputy managing director and global chief executive officer, Zensar Technologies, and chairman - Innovations subcommittee, Nasscom.

For instance, a negligible practice 10 years ago, offshore product development and engineering services is now seeing traction growing at 22-23 percent and is expected to report $4.9 billion in exports in the financial year (FY) 2006-07, thus accounting for over 10 per cent of the $47.8-billion IT industry revenues for FY 07, according to a Nasscom strategic review report for 2007.

Thus, over a period of 10 years, startups can redefine new services and areas as they create niches and new verticals.

"They are an important part of the innovation ecosystem having the potential to contribute to 10-15 per cent of the overall IT industry revenues in a time frame of 10 years from inception," said Natarajan.

The innovation ecosystem in India, which was stagnant since the dotcom bust, has over the last 12-18 months got a new life.

"The number of companies, who have applied for participation and recognition in 2006-07, has doubled to over 150 as compared with 2005-06," said Natarajan.

Innovation isn't only limited to the smaller companies or to product development but is also seeing participation from every global and Indian major including TCS, Wipro and BPO's like Genpact and WNS.

With the Indian economy growing at a heady 8 per cent, Bhushan Matod, manager, business and alliance, HP Labs, notes, "As the Indian market becomes significant, the opportunities to do innovative work increase dramatically. We are seeing this trend in startups as well as product companies operating out of India. There is a different kind of innovation in IT services and IT-enabled services - sometimes around the productivity tools and very often around delivery processes."

And it's not only the Indian companies but even MNCs who are innovating to cater to the demands of this market. HP Labs stated focus is technologies for the next billion customers for HP, a large majority of which are going to come from rapidly growing countries such as India.

The company has also been very successful in addressing some of key barriers to IT penetration in the country - language being the most visible one.