This article was taken from the June 2015 issue of WIRED magazine. Be the first to read WIRED's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
Almost a decade ago, a senior executive of Cisco said, "I think it's fair to say that companies come to India for the cost; they stay for quality and they invest for innovation." Most western companies that made the move came to India in the 90s to establish back offices and development centres, capitalising on low costs and an English-speaking engineering workforce. They graduated to silicon design, engineering R&D and product development. Now, western investors are betting on Indian innovators and entrepreneurs in the hope that ideas developed in Indian markets can be rolled out in emerging markets globally.
India's digital landscape is changing fast, primarily driven by rising numbers of mobile-phone users. At the last count, in December 2014, the number stood at 944 million and could soon touch a billion. Internet penetration is set to expand with the national government rolling out a national broadband network. Digital connectivity figures prominently on the political agenda, along with basic necessities such as clean drinking water, uninterrupted electricity supply, health and education. This was reflected in the promise of free Wi-Fi in the national capital made by the Aam Aadmi Party (Common Man Party) which swept local elections in New Delhi in February 2015.
Yet the Indian mobile market is not the same as the west's. For millions of subscribers, a mobile is their first digital screen. Many customers can't use text services because they don't speak English or they're illiterate. Businesses and consumers won't simply deploy technology products and services being used in the west. That's why startups that understand the dynamics of the Indian market are in great demand. And if their mobile payment, e-commerce and healthcare products can tackle the Indian market, they can do so in other emerging markets. This is driving global giants to Bengaluru (formerly Bangalore), Mumbai, Hyderabad, Chennai, Noida, Gurgaon and other clusters to acquire or partner with small Indian tech firms.
Bengaluru-based mobile marketing company ZipDial -- acquired by Twitter in January 2015 -- is a good example. It is not a regular digital-marketing firm, but rather exploits how millions of Indian users may still struggle with basics such as text messaging. Among its offerings is a "missed call" marketing service, by which customers dial a company's number and hang up. The called marketer then rings the consumer with promotional offers. Similarly, taxi services such as Ola and TaxiForSure have evolved a hybrid model. Unlike Uber, these are accessible through a call centre as well as mobile apps, and payments can be made in cash. They also offer auto rickshaws, a cheap alternative to taxis in most Indian cities. Firms such as Facebook, Twitter and Google want to tap into this kind of innovation, scale it up and take it to similar markets elsewhere.
Traditional tech firms are struggling to keep pace, but the global ones are moving beyond their traditional model of hiring local engineers to staff their product development units in India and beginning to explore Indian startups. Cost advantage is slowly turning into competitive advantage.
This article was originally published by WIRED UK
