Why India Is A Hub Of Tech Innovation?
The digital transformation taking place in India is being fueled by rapid innovation in the technology space. Areas such as product engeineering, big data analytics, cloud and unified communications are becoming mainstream. No wonder, VCs are showing considerable interest in investing in the Indian market, states Raju Vegesna, Chief Evangelist, Zoho, in an exclusive interaction with CXOtoday.
Vegesna highlights some of the key areas in tech innovation that are of interest to the investors and why India will continue to be the hub of technology innovation in 2016.
The cloud market is flush with funds, and flourishing as of now. Going forward, we will see consolidation in the cloud market. Companies that do not have a good business model will go out of business. It’s already happening, and it’s natural, given that there is a lot of competition and limited exits, says Vegesna. “Usually, the companies either get acquired or go public. But most of the companies are over-valued which makes it hard for them to get acquired. And those who have already gone public are valued less than their initial offering price. This trend will continue in 2016 and for the years to come,” he says.
When it comes to India, however, we will see many new startups in the cloud market, particularly in the SaaS sector. More VC funds will reach India, and there will be an accelerated growth, even though the global market will be slow. He believes that India is a great place to start a company now because of the talent that is available here.
Security issues will be a lot more chaotic in 2016, believes Vegesna. “We will see many more attacks and ransom demands from hackers. For the vendors, security will be a high priority. We can also expect stricter regulations from the governments, and a push for hosting data in the same country,” he says.
Tangentially related to the issue of security is privacy. Going forward, it’s going to be a very important theme. More and more consumers are becoming aware, and are pushing to protect privacy. Nobody likes to be tracked. This would be a challenge for companies with ads-based revenue model. The movement for protecting privacy has already started, but this is a trend that will go beyond 2016, he adds stating that this is just the beginning.
Big data and analytics:
There is an influx of data now available on the cloud. The focus now is on developing business intelligence tools that will help analyze big data, and come up with actionable insights. Big data analytics will play a pivotal role in the way various departments in a business, particularly sales and marketing, function. We can already see companies investing in this area, says Vegesna.
This year, Amazon’s QuickSight and IBM Watson Analytics Service entered the business intelligence market. Some of the smaller companies were acquired, like D&B bought Indicee and Zendesk acquired BIME. “The trend will continue in 2016. We can expect great innovation in the area of big data analytics,” he says.
This area is going to see a lot of new ideas and innovation, says Vegesna. This market is going to scale up in the coming years especially in India. More and more product companies will emerge out of the country. But he sees challenges such as taxation, finding the right talent and infrastructure which the country needs to be overcome and so, it still have a long way to go.
The storage market is moving in the right direction. Commoditization of the market has led to drop in prices of per GB of storage, and this trend will continue. Google has slashed its rates, Apple and Amazon have entered the market bringing down the rates further. Vegesna explains that we have seen it happen with hardware, and with OS earlier. These sectors have become commoditized. Google is offering free OS with Android, Apple’s latest Mac OS is also free, and this has forced Microsoft to slash prices for Windows. Soon, it Will be free. Now we can see the same trend in software infrastructure, of which storage is an important part.
“Even when it comes to enterprise on-premise storage, vendors are struggling to survive. They have two trends working against them: one, storage has become cheaper, which means in order to survive, they have to cut down their margins; two, more and more companies are moving to the cloud, which makes it harder for them to find customers,” he says.
Amazon, which is a retailer and can work on lower margins, is doing a great job with Amazon Web Services. While storage is an important market, I would not recommend starting a venture in this sector as the prices will continue to drop.
Smartphone penetration has seen a significant global growth over the years. Since everyone is moving to the cloud, enterprise mobility has moved up a notch, and players like Google and Apple are partnering with companies like Zoho to provide Business solutions to enterprises, he informs.
“Cloud and mobile are the key, and Zoho R&D has invested heavily in both. Enterprises have realized the benefits of the cloud and BYOD (bring your own device), despite security and privacy governance issues. There are only a handful of vendors in mobile device management (MDM) sector right now, and we will see more vendors enter this market in the coming year. It’s a big market now and will continue to grow,” says he.
This market has seen some ups and downs. Many vendors have come and gone. Skype plays an important role in unified communications, but it is missing an important element: email. None of the vendors have a business model, and it will probably stay that way. It is an important market, but it is also getting commoditized. Around the year 2005, companies in the US started creating web applications as powerful as the installed desktop applications. The trend of cloud apps picked up momentum. This trend of moving applications from the desktop to the cloud can be called the first phase of cloud app evolution.
As businesses moved to cloud apps, they started working with multiple applications from multiple vendors, each with varied processes, user interface, billing/invoice and credentials. These disparate applications didn’t talk to each other. So, businesses are now looking to consolidate these applications. Apps that talk to each other, i.e. an integrated suite of apps, are given high priority along with single sign-on, billing, etc. There is an increasing interest in unified product suites like Google and Zoho. This is the second phase of SaaS evolution – consolidation. A lot of innovation is possible in this stream through mobile devices in the coming years,” says Vegesna.
One interesting trend that we have seen in enterprise software is that increasingly the decisions regarding which software to use are being taken by individual departments like sales and marketing or HR. Earlier, such decisions were taken by the IT dept or the CIO of a company. This trend is seen largely in the companies that are moving to the cloud. The IT budget has also increased, he says.
Internet of Things
IoT is going to be the next big thing in the year 2016 as it is going to see products integrated with technology. It will enable good products to become better products. There is an explosion in the number of smart devices that have emerged but there is definitely a need for consolidation. Google and Apple play an important role in this segment, but we are still at an early stage. Such companies are dependent on the Eco system to develop and mature, and that is yet to take place.
Why 2016 will be interesting to us?
Vegesna also listed out the priorities for Zoho, which has over 15 million users spread across 120 countries, and a broad product portfolio. Last year, we announced the launch of Zoho.in, a suite of applications for companies to run their entire business on Zoho. Zoho is offering this package free exclusively for Indian businesses. Included in the package is an offer for Indian businesses to register a free .in or .co.indomain, a flexible website creation application in Zoho Sites, Email Hosting application in Zoho Mail and Document Management and Office suite apps in Zoho Docs, as well as several mobile applications that accompany these web applications.
“We will be expanding the breadth, depth and integration of our products, ie, introducing new products, improving the existing ones, and integrating our offerings in order to give a great experience to our customers. The other important element in our business priority for next year is the outreach aspect, wherein we will continue to increase our global footprint,” says Vegesna.
From serving the world out of India, businesses are moving to making software in India. Zoho has progressed to the next step, says he. With products such as Zoho SalesIQ, Zoho Mail New, Zoho ShowTime, Zoho Motivator and Zoho Inventory, the Chennai-based IT firm is aiming at becoming a global product company soon. This means building world-class software, competing with world leaders like Google and Microsoft, and supporting global customers—all from India. “We are also looking to open a data centre in India,” informs Vegesna.
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