Years ago, I had met the legendary yoga guru, B.K.S. Iyengar. This was around the time another yoga teacher, Bikram Choudhury, had applied for a U.S. patent on 26 yoga postures. He had also created a yoga brand, Hot Yoga. At the time, we had little inkling of the trouble Choudhury would be in; then, it was all about the business. I asked Iyengar why he did not seem interested in branding his style of yoga. His answer was, well, yogic. The more people who do yoga, he said, the greater the benefit to all yoga systems, his included. The need was more to get people aware of yoga, and not to sell one particular aspect of it.
Over the past few years, what he said then about yoga seems to be true of the information technology industry as well. The entire move to selling software products in the cloud, thereby making them affordable to many more people, seems in keeping with what Iyengar told me.
Companies such as Google and Facebook began by making their products freely available and building huge user bases. Product companies, not so much. Remember the days when Adobe Photoshop was a tool that companies bought only after much thought? Those were the days when the software CD could set anyone back by several hundred dollars, often more. Today, you can get access to the entire suite of Adobe photo editing tools for something like Rs 700 a month. It’s the same with the Windows operating system and most Microsoft products as well.
It’s all part of the move to democratise software, to make it accessible to more and more people. And India is key to this move. The usual points about it being a large market with rising purchasing power are still valid. But as important is the fact that the country is home to a huge, tech-aware population. And government moves such as Digital India, coupled with phenomenal growth in mobile phone usage, simply add to this.
To all those facts, add this: that the people heading the largest software companies today are Indian. There’s Satya Nadella at the helm of Microsoft; Shantanu Narayen heading Adobe; Sundar Pichai at Google; and George Kurian at NetApp. Coincidence? Sure. But the Indian connection could have an impact on the way the industry functions here.
“I see a trickle-down effect of this shift in focus from marketing to technology in terms of the changes it will bring to the software industry in India,” says Kannan Ramaswamy, professor of management at Arizona State University’s Thunderbird School of Global Management. He adds that this shift could see the rise of a new breed of Indian software companies, which will host applications for companies around the world.
IT’S ALREADY HAPPENING. Indian technology companies such as Zoho and Freshdesk, and Pune-based Mojo Networks, count several U.S. companies as clients. Mojo, founded by Pravin Bhagwat and Kiran Deshpande, manages delivery of Wi-Fi services across geographies. It has several telecom operators in the U.S. as clients and it is also now deploying a nationwide network for Jio both on its 4G and fibre backbone. Says Bhagwat: “When we demonstrate that our algorithm is robust on Jio, which is touted to be the biggest Wi-Fi network in the world, there will be little else we will need to show. That is the power of deploying technology in a market like India.”
Meanwhile, what the likes of Narayen, Nadella, and Kurian have demonstrated is that India is a vital market for growth. Consider this. Soon after the Indian government mandated that all financial data of Indian customers should reside in local centres, Microsoft opened three data centres in India, making it the first U.S. cloud service provider to offer localised data centre services. Nadella, in a sense, stole a march on established competition in the country in the shape of Amazon Web Services (AWS) and Google. Today, banking behemoth State Bank of India, which claims to do over 6,000 banking transactions a second, uses Microsoft’s data centre. And more than 2,000 startups have signed up for Microsoft Azure, the cloud offering that has grown more than 50% in the last two years.
Nadella himself has spoken of how important India is to his company. Delivering the keynote address at a recent Microsoft India event in New Delhi, Nadella said that by shaping up to be a mobile first, even a “mobile-only” country, India is challenging Microsoft to create unique products. “It almost appeared that every big change Microsoft made globally was tailored for India,” says Bhaskar Pramanik, who headed Microsoft India till December 2016.
Something similar has been playing out at Adobe, under its generally low-profile CEO, Narayen. Till 2013 or so, Adobe sold expensive perpetual licences to use its products. That was around the time India was going mobile, adopting the interface way before developed markets. Technology advancements, such as the advent of HTML5, saw content creators also gravitate to mobile.
That prompted Adobe to rethink its strategy, hastening the launch of Creative Cloud, which was launched in India a scant three months after it debuted in the U.S. “Clearly Creative Cloud was a global decision, but markets like India hastened its implementation and importantly, the pricing strategy,” says Umang Bedi, who ran Adobe’s location operations then and now heads Facebook India.
COINCIDENCE AGAIN, but it’s interesting to note that Nadella and Narayen came in with the mandate of turning around their beleaguered companies. The same thing happened with the relatively less known NetApp, which brought in George Kurian as its turnaround CEO. Though NetApp sold storage, most of its hardware came from vendors such as Seagate and Samsung. NetApp’s IP was in its software that controlled and managed the storage devices.
But as players like Amazon took away emerging and SME customers in markets like India, NetApp decided to sell its software separately from hardware. The company recently moved to what it calls ‘hybrid cloud data management’. That move is something Kurian spearheaded with his acquisition of SolidFire, a flash-based storage technology company, for $870 million (Rs 5,495 crore).
Kurian says that coming from a developing country helped him see opportunities more vividly and also gave him the conviction to price products lower than market rate to help improve usage. Fundamentally, he thinks Indians could bring a different perspective to the risk vs. opportunity scenarios. This is clearly not a quintessentially Indian trait, but when India-born CEOs of large companies show that it’s not taboo to take risks, there’s a certain message that goes out to compatriots wanting to make it big in the same industry. “Sometimes, it’s okay to take a swing for the fences,” advises Kurian.
That’s what Nadella did early on. In a big break from Microsoft’s worldview, where it saw itself as the core of all computing, the company began to share APIs to allow outside developers to create apps to run on Microsoft operating systems. It also offered popular software Office and OneNote free to mobile users.
The results were dramatic in India. It took Microsoft India a little over two decades to report revenue of Rs 3,000 crore a year; with Nadella at the helm, it doubled that in two years and is within touching distance of being a $1 billion company here.
It’s not just the jump in revenue. At this year’s annual conference, Microsoft India did not utter the dreaded word “piracy”, an issue that has for long been a sore point. Instead, it appears that the move to the cloud has helped sales. At the event, Nadella said that the cloud was taking technology everywhere. Speaking of small and medium-size businesses, he said: “One of the fundamental changes that cloud has brought about is around productivity, collaboration tools, which are now available to all the SMEs as well. You can truly use what the largest of enterprises in the world are using, anywhere in the world.”
THERE’S A SOCIOLOGICAL impact, too. With the ascent of the likes of Nadella and Pichai, the IT industry in India has received a much-needed boost. The popular narrative has shifted from “Indians in IT are just coders” to “Indians are heading the world’s biggest IT companies”.
Consider this. Where once entrepreneurs who wanted to enter the U.S. market would almost automatically hire an American head, they are happy to now do the job themselves, says Ramaswamy. Compare this to what happened in other industries. Before making it big in IT, Indians formed a significant part of the workforce in pharmaceuticals, automobile companies, and space research in the U.S. In fact, at one point, a third of the research workforce in U.S.-based drug companies was Indian, but none of them made it to the very top.
“It is perhaps serendipity that Indians have shot into prominence when the software industry was undergoing a gut-wrenching change, but it is clear that Indian software executives have become more ‘contextually intelligent’ than ever before,” says Ramaswamy. (Harvard Business School professor Tarun Khanna defines contextual intelligence as “the ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed”.)
Vivek Wadhwa, Silicon Valley-based tech entrepreneur, writer and a syndicated columnist for The Washington Post, agrees that the ascent of Indians in the tech space is different than in other industries. “After Indians established themselves in academia, they were able to get low-level jobs in American tech companies and prove themselves once again. It wasn’t easy; these immigrants faced racism, glass ceilings, and cultural obstacles. Through hard work, they overcame these and rose to senior management positions. They built confidence and trust and were able to rise to CEO roles when these opened up.”
Thunderbird’s Ramaswamy warns against attributing the success of these CEOs to their Indianness. But, he adds, being Indian could be an advantage in the services world as against the earlier product-driven companies. To drive home that point, he says that most of the current crop of CEOs have strong product-building experience in the services space, which could have weighed in their favour.
Kiran Deshpande, co-founder of Mojo Networks and ex-CEO of Tech Mahindra, agrees. “Clearly, every Indian who became CEO deserved to be in that position and it will be incorrect to read anything more than meritocracy in their ascent.”
ONE OF THE EARLY TECH ENTREPRENEURS IN THE U.S., before Nadella and Pichai shot into the limelight, was Dheeraj Pandey. In 2009, Pandey founded Nutanix, a hyperconvergence company which wants to make IT services and even the cloud invisible to its customers. The idea is to allow customers the freedom to focus on their business, leaving the entire IT set-up to Nutanix. The company managed to bag several customers in a short time, especially those who were overhauling their legacy setups and were considering moving to the cloud. Pandey’s aim is to provide the smoothest, easiest experience to customers, no matter how complicated the back-end. A huge fan of Apple’s design philosophy, he has adopted similar principles in his company. “Nobody cares about how complex the inside of the iPhone is when they swipe the screen,” he says.
Today, companies like Mojo, Freshdesk, and Zoho are carrying forward what Nadella, Narayen and the others began. That’s also what a joint report released in 2016 by Google and Accel Partners, says: software as a service (SaaS) companies out of India are poised for quantum growth by 2025. Releasing the report, Google’s managing director for India and Southeast Asia, Rajan Anandan, said: “Our startups are already building world class solutions for mobile first users. This strength, combined with easy access to a global customer base online, will help India become a very strong player in the global SaaS industry.”
The current whittling down of manpower in large software companies and new visa rules in the U.S. could provide instant availability of manpower to Indian startups, says Ramaswamy. The result could well be a reverse brain drain, similar to what happened in the pharmaceuticals industry in the 1990s, when U.S. drug firms began downsizing research departments. Senior Indian research professionals headed back to India to head R&D at companies such as Ranbaxy, Wockhardt, and Torrent. Something similar is already beginning to happen in IT, and if it picks up, could fuel the growth of new service-oriented cloud companies.
It’s all going pretty much as Iyengar predicted all those years ago. With yoga made easily accessible, there are hundreds of Iyengar yoga centres across the world. It looks like that philosophy has worked in the software industry as well.