Innovation is on the rise in the country of more than 1.3 billion people, with companies trying to capitalise on the surge in the internet use
A budding tech sector attracts technology titans to India
Aptly-named Ajay Data, a regional languages web solutions pioneer in Jaipur, says it is an exciting time to be part of the technology sector in India.
His company in Rajasthan has developed email addresses in languages including Hindi, Gujarati and Tamil, an initiative that is bringing people to internet who cannot read and write in English - a major market in India given the wide variety of different languages spoken in the country.
“India is buzzing right now,” says Mr Data, the founder and chief executive of Data Xgen Technologies. “We are getting many start-ups, many innovators, creating world class solutions. I think this is a very important area right now and India is at a very good state where innovation is being accepted and being appreciated.”
Given the rapid advancement of India’s technology sector, it comes as little surprise that global investors are keen to get a foothold in the market.
A few days ago, it emerged that Warren Buffett's Berkshire Hathaway had snapped up a stake in Indian digital wallet company Paytm. The companies confirmed the investment, but did not reveal the size of the stake or financial details. The business newspaper Mint, citing anonymous sources, pegged the deal at between $300 million (Dh1.1 billion) and $400m for a 3 to 4 per cent stake.
India, the world's sixth biggest economy, has long been known for serving the IT back office needs of companies globally. The country’s tech industry has rapidly evolved and innovation is on the rise, with companies trying to capitalise on the surge in internet use and the role that technology can play in a country of more than 1.3 billion people.
Solutions around technologies including social media, analytics, artificial intelligence, and cloud, in areas ranging from finance to healthcare, have gathered pace in India and are contributing to an IT sector worth more than $150bn last year compared to $74bn in 2010, according to the India Brand Equity Foundation.
“We've always been the software development hub of the world but I think we're also now becoming an innovation hub,” says Hrushikesh Mehta, the India general manager for UK-based fintech startup ClearScore. “There are opportunities in India where the only way you can serve hundreds of millions of people is solving problems through technology.”
He points to the Indian government's drive under its Digital India scheme, aimed at bringing more of the country online and making more government services available digitally, as playing a major part in boosting the technology sector. A mass digital initiative such as Aadhaar, for example, which is a unique identity number based on people's biometric data, now held by most of the country's citizens, is helping them to carry out more processes online.
“We've seen it with Paytm that we're developing things that nobody else in the world has, so I think people are now beginning to see us as a place where things that never have been done, can be done,” says Mr Mehta.
The expansion of the technology sector is also being driven by the surge in the number of internet users in India, largely boosted by the availability of cheaper smartphones and cut-price data costs amid fierce competition between the country's telecom operators. India has about 500 million internet users, according to the Internet and Mobile Association of India and Kantar IMRB.
Fintech has become a major focus of attention in India, as companies and entrepreneurs capitalise on opportunities in the Indian market, particularly following the government's demonetisation move. In 2016 Prime Minister Narendra Modi announced the ban on India's two highest value bank notes in an effort to reduce black money flows and bring more Indians into the formal economy in a country, which is still very heavily dependent on cash.
Mobile wallet service Paytm, India’s largest digital financial services company - which can be used in India from buying a cup of tea to paying for an Uber ride or the utility bills - has very much been at the forefront of the move towards digital payments.
Following Berkshire Hathaway's investment in the company, Todd Combs the investment manage at the US based corporation, said in a statement that he has “been impressed by Paytm and am excited about being a part of its growth story, as it looks to transform payments and financial services in India”.
Paytm founder and chief executive Vijay Shekhar Sharma says “Berkshire’s experience in financial services, and long-term investment horizon, is going to be a huge advantage in Paytm’s journey of bringing 500 million Indians to the mainstream economy through financial inclusion”.
Paytm, which is headquartered in Noida in north India and started out in 2010 as a mobile recharge service, also counts China's Alibaba and Japan's Softbank among its investors.
Another company in the Indian fintech space is Zeta, which focuses on digital payments solutions for corporations and employees, including ways of managing employee benefits and expenses digitally. Launched in 2015, it now has a user base of 1.4 million.
“There's certainly a huge amount of opportunities, but I think true innovation is yet to come,” says Bhavin Turakhia, the co-founder of Zeta. “India has one of the largest English speaking populations and it's an open market, and because of that [it] represents an opportunity."
The last couple of years have also seen a number of developments in the fintech and regulatory spaces, which are conducive to innovation, he added.
India is the third largest startup ecosystem in the world with more than 1,000 tech startups added last year alone, according to India IT trade association Nasscom. A total of 360 of these were in the fintech space, while 320 were in the healthcare technology sector.
“We see a trend where the millennials are enthusiastic about developing [technology] in India, for the world and this is the reason India is producing a lot of skilled professionals,” says Virender Jeet, the senior vice president, sales and marketing, Newgen Software, a New Delhi headquartered firm. “The number of indigenous start-ups mushrooming in the country is [also] encouraging.”
Such opportunities mean that more talent is returning to India or remaining in the country. This comes at a time when India's IT sector faces challenges in the United States given US president Donald Trump's efforts to keep more jobs within the country by threatening to clamp down on the H1B visas that many Indian IT professionals depend on to work in the US.
Seasoned technology leader Unni Nambiar, worked in the US before returning to India.
“There are many people like me who have gone through the same route and people who have travelled abroad and come back are definitely bringing ideas in,” says Mr Nambiar, the chief technology evangelist at CASHe, a loan app for professionals based in Mumbai.
“But a lot of the startups out there are run by young engineers who are not necessarily looking for secure jobs and they just want to do something cool,” Mr Nambiar who is also the chief technology officer for Aeries Technology Group, a technology consulting and services firm, says.
A decade ago, the aspirations for tech graduates was to go abroad to work, but that seems to be changing.
“People are tending to make a beeline for India,” says Mr Mehta. “People want their children to stay in India because there are more opportunities.”
Experts point out that India's education system needs to keep up with the rapidly evolving sector.
There are other challenges which remain, including raising funding, but industry insiders say that that India's tech sector is only going to strengthen over the coming years.