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Indian High Tech: Somehow, It All Clicks


It's a long, hot climb up the stone path from the ferry landing on Elephanta Island to the ancient temples carved out of rock. Along the way, merchants hawk small carved elephants, Coca-Cola, and curried-chicken sandwiches. Sun-dried women swathed in turquoise, red, and orange saris offer to have their pictures taken balancing tin water cans on their heads. Begging monkeys growl like dogs when children taunt them. This is my first day of sightseeing, after three days of reporting, speechmaking, and schmoozing at a tech conference in Bombay. Now, I'm happy to be part of a crowd of pilgrims--mostly Indians, with a few foreigners--who are trudging uphill to a shrine.

At the top, there's a snag. The lack of a handy automated teller machine in Bombay has come back to haunt me. I have $6 and 220 rupees, worth just over $10 combined, but the ticket-taker tells me I can't mix currencies to pay the $10 entrance fee. It's the old, bureaucratic India getting in the way. I lay it on thick about how far I have come and how sad I would be if I couldn't see the temples. Finally he glances nervously over his shoulder at his boss, confirms that the guy is paying no attention, and gestures for me to hand the money over. I'm in.

In modern India, it seems, for every step back, there's a step forward. That's abundantly true for the high-tech subculture. A year ago, India was swept up in dot-com mania. Everybody wanted to set up a Web portal such as Yahoo! Inc., go public, and make a bazillion dollars. It didn't pan out. The handful of dot-coms that went public are now trading in the penny-stock zone. E-commerce promised much but delivered only a trickle of transactions. Now, the mood is serious. At the conference, sponsored by India's National Association of Software & Service Companies, there was a moment of silence daily for the victims of the Gujarat earthquake. With equal sobriety, Indian techies are focusing once again on what they do best--writing high-quality software. But they're hardly content. In this rich country full of poor people, the dream of becoming a high-tech leader incites near-religious fervor.

Despite the downturns, realizing that dream may now be within India's grasp. The tech boom, a work-in-progress for more than a decade, really got going in the mid-'90s, when the country began deregulating telecom and lowering taxes and trade barriers. In the meantime, India found something it could do better than any other country: write massive software programs for foreign corporations at a fraction of the usual price. Thanks to this "body shop" business, the local industry has been growing at more than 50% annually for a decade. For the year ending in March, software and services will account for $6 billion, or about 15% of India's total exports. Optimists expect that number to reach $50 billion by 2008. "The info-tech industry has the potential to wipe out the trade deficit, pay the oil bill, and fundamentally change the economy of the country," says Nandan M. Nilekani, president of Infosys Technologies Ltd. (INFY), a leading Indian software outfit.

For India's tech elite, it's a good thing the Net came along when it did. With a PC and a Web connection, they can plug into the rest of the world, where their brainpower is much in demand. At the NASSCOM conference, Norwegian Tom Isaksen, sales and marketing director at Oslo-based Etellus, works the floor, trying to recruit Indian software outfits to list their services on Etellus' Web site, which links consultants with customers in Norway. "There are plenty of skillful programmers here, and much cheaper than we've got back home," he says.

It's a far cry from years past, when Indian technologists were content to push brooms for the First World. Even after India won independence from Britain in 1947, it never seemed able to fulfill its potential. Some blame the doctrine of karma, which Hindus believe controls one's fate. Others finger British rule for fostering a passive psychology. "Indians have a conservative mentality. We don't go for the big kill. We were under the imperialist power for so long--and it's hard to come out," says Suba Raju, president for business development at Vegesna Software Solutions Ltd. But that legacy is fading at last. Thanks to successes with contract programming, Indian techies have acquired self-esteem and a new goal: beating the Yanks at the high-tech innovation game. India's kids can already look up to a handful of local heroes who made good in the U.S. Vinod Khosla, one of the stars of venture-capital firm Kleiner Perkins Caufield & Byers, is revered here. And when young Hotmail founder Sabeer Bhatia jets in from California, he is besieged by groupies.

HARD TO FIX. Considering the lure of Silicon Valley, it's not surprising that entrepreneurs I meet in Bombay often say they have opened a satellite office in Santa Clara, or are about to do so. For Indians who stay home, though, achieving American-scale success will be difficult. For one thing, India's underlying problems are hard to fix. With a gross domestic product of just $400 per capita and a 38% illiteracy rate, India has a lot of catching up to do. Power failures are still so common that Bombay's Regal Cinema warns ticketholders they'll get a refund only if an outage darkens the screen for more than 45 minutes.

Indeed, this city is a hodgepodge of Old India and New. Thousands of black-and-yellow Premier Padmina taxis, designed in the 1950s, careen around like frenzied bees. Men in traditional garb push wooden carts laden with hot meals, as they have done for untold years. At the same time, middle-class folk chat on cell phones at cricket matches, and youngsters mosey down to cybercafes to log on. The most vivid contrast I spot: turbaned workmen digging trenches for telecom lines with tools that look like holdovers from the Stone Age.

It's not just the tools that are old- fashioned; the business mentality can be, too. For example, many of the country's top venture capitalists won't commit funds till a company is established to the point that it doesn't really need their money anymore. "They just aren't risk-takers--which is what they're supposed to be," says Mahesh Murthy, who made a small fortune working for high-tech companies in the U.S. and returned to India two years ago to invest in startups. His three-person angel investing firm, passionfund.com, has handed out seed money in dollops of $300,000 or so to 11 Indian startups.

With hurdles such as the shortage of venture funding, it's lucky many Indians seem to have determination baked in at birth. Take Rohita Doshi, chairwoman of SoulKurry.com Inc., one of a handful of Indian Web sites catering to women. When her father refused to support her ambition to study engineering in the U.S., Doshi struck out on her own at 17 and ultimately made it through Case Western Reserve University on scholarships. Now, after years in U.S. tech companies, and a stint as a stay-at-home mom in India, she braved the dot-com maelstrom--and is struggling to keep SoulKurry.com afloat. I visited her at the company's cramped quarters in Nariman Point, Bombay's financial district. Although Doshi hasn't had to fire any of her 10 female employees, who work back-to-back at two rows of computers, she has had to delay plans to provide Web training on the site.

That hurts, because Doshi isn't in this for the money. "In India, women do things against the odds," she explains. "This site is about empowering women." SoulKurry.com offers a lot: community forums; places for women to sell products and services; and information about law, money, and marriage. In a country with no U.S.-style women's liberation movement, the Web offers a safe, private way for women to get in touch with each other--and themselves.

With fewer than 2 million Internet connections in the entire country, only a handful of women get a shot at online emancipation. Ditto India's 800 million poor. And that puts a cap on the potential of the country's high-tech industry. "We have to take technology to the masses, or we can't thrive," admits NASSCOM President Dewang Mehta. But in India, even in the Internet era, a monumental change like that will come only slowly. And along the way, there will likely be many baby steps--some forward, and some back. By Steve Hamm

Hamm covers technology issues from New York.

EDITED BY EDITED BY GEORGE FOY


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