Fifty CIOs from multinationals including Procter & Gamble, Citi Global, and Crate and Barrel are in Bangalore, India this week for two days of "matchmaking" sessions with 50 promising Indian product software startups. The event called InTech50, held April 9 - 10, 2014, was conceived by the Indian product think tank, iSPIRT, to showcase early-stage innovators in areas such as data analytics, digital security, and customer support.
In mid-May, 25 startups backed by IT industry trade body Nasscom will make the journey in reverse, attending startup conferences and pitching to venture capitalists and companies in Silicon Valley.
Some weeks ago, Facebook acquired Bangalore-based Little Eye Labs, a company that builds performance analytics products for mobile app developers.
The sudden surge of activity around product startups and innovation is an unusual development in a country whose niche has been software services.
The recent muted performance of top IT outsourcing firms and flattening growth in the sector appears to have provided an unexpected boost to product innovation. "The picture in IT services has not been rosy and the go-go growth years are truly over," said Sharad Sharma, co-founder and governing council member of iSPIRT, who said focus has shifted to building products. "Software products are going to put India back on the global stage."
The lineup for InTech50 illustrates that startups are working on a wide gamut of innovative solutions to tackle business problems. The 50 startups include Flutura, a big data analytics startup, 99tests, a crowdsourced testing marketplace, i7 Networks ,whose product helps a 100% agent-less detection of all personal devices, and MindTickle, a cloud-based training company that enables businesses to create, deliver, and manage online courses.
The CIOs arriving for the event have called it "Indian-style arranged marriage meets speed dating" since the teams had only interacted remotely until the Bangalore meeting. At the event, each of the 50 product companies will have five minutes to pitch to the CIOs.
India has the potential to build a $100 billion software product industry by 2025, says an industry report by iSPIRT. The think tank forecasts that the country would have five software product companies valued at a billion dollars each in the next few years.
Not many American CIOs are aware that India is emerging as a hotbed of entrepreneurship in software products says Piyush Singh, SVP & CIO of Great American Insurance and who is leading the group of 50 CIOs.
Large IT services firms have not demonstrated an appetite for the risk associated with developing products, as they are under constant pressure to deliver 15-20% growth rates every year. That has prompted domain experts in these companies to take their deep know-how and become product entrepreneurs. The idea of building products is finding increasing support at different levels, including from entry-level engineers who are spurning jobs at large IT firms.
The development in India has coincided with multinational CIOs facing pressure to advance their business model by harnessing analytics and back office streamlining. "All innovation cannot come from within companies, and they are constantly looking outward and buying up smaller companies," said Singh. The event could lead to a network of relationships and yield investments and acquisitions, he said.
Going by the numbers, India is at an initial stage of the software product innovation cycle. Singh estimated that about 25,000 startups were born in the United States in 2012 but only 1,200 in India in the same year, compared to 800 in Germany and 400 in Israel.
"It is the early days of a great story," described Vishal Gupta, CEO of Seclore, an information security firm for BYOD, cloud, and borderless collaboration.
Indian startups lack experience in building scale and doing sales, marketing, and product management, all of which could benefit from such global interactions. "There is a need to get India recognized as an innovation hub," said Sanjay Deshpande, CEO of Uniken, a company that has built a unique secure digital platform designed for enterprises.
Events such as InTech50 could help overcome credibility barriers for India's startups, Deshpande said.
Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.