India is not only a key emerging market for the company, but with its large pool of talent it is a great place for research operations, especially to provide an alternate perspective, Ravi Venkatesan, chairman, Microsoft Corporation India Pvt. Ltd, a subsidiary of Microsoft Corp US, said.
He said India is exciting for multiple reasons - it is a large and fast growing market, GDP is growing at seven to eight per cent, large enterprises are doing well, smaller businesses are thriving and IT adoption in the country is extremely low.
"All that tells us is that there is a tremendous market creation and growth opportunity," he said.
"From our (Microsoft) perspective, India becomes important also because it has the second-largest pool of software developers in the world, outside the US... So it is very important that we reach out to them, they have skills on our technologies and they have access to the latest software tools," he said.
"Finally, the fact that there is this huge talent pool of developers says that we would like to take advantage of their intellect and abilities," Venkatesan, who was in Seattle for the signing of an MoU between Microsoft and Maharashtra
Government to accelerate IT literacy in the state and deliver effective e-governance services, said.
The fact many of the big system integrators, such as Infosys, TCS, and Satyam, are based in India and growing at 35-40 per cent a year with growing influence around the world, make India particularly interesting for Microsoft, Venkatesan said.
For companies such as Microsoft, much of the growth in future will come from either innovation and new products, or the emerging markets, he said, adding in order to serve the emerging markets, the products have to be different; the pricing has to be thought through differently; and, perhaps, the business model has to be different.
Microsoft, he said, recognized those problems and the sort of environment that you find in countries like India lend themselves culturally to emphasizing alternatives that you might not otherwise see from the United States.
As a result, Microsoft, which has its own developing centre in Hyderabad and tech support center in Bangalore, also opened a research lab in Bangalore early this year.
The Indian executive stressed this was not so much to leverage low cost as to fundamentally tap into the pool of innovation.
Dispelling the myth that offshoring was all about low cost, he said, in the beginning offshoring may be for money, but this cost arbitrage is a very fleeting advantage.
"What companies, including Microsoft, have found is that once you are there, they are harnessing talent to innovate in fundamentally different ways."
Venkatesan said the Microsoft research centre is not going to move the locus of research from Redmond, US, or Cambridge, UK, to India. The research agenda of Indian lab is funamentally different and complimentary to the research agenda of the Redmond labs.
In India, the focus is on things that are important to the emerging markets. For instance, language computing is hugely interesting. When you have low literacy, speech recognition and machine translation become important.
So, the Indian centre is going to focus on natural language interfaces, which will be useful for countries beyond India, he said.
Venkatesan said that relevance to a billion Indians is the key strategic priority for Microsoft, adding, "We are not going to be relevant unless we touch the lives of a billion people."
When asked about the challenges facing IT sector in India, Venkatesan said the biggest challenge was taking the technology to the masses.
"While making the product more affordable was important to bridging the digital divide, it also required vision and leadership," he said.
The second-biggest challenge, he said, was piracy. India is a high piracy country with 74 per cent piracy rates. While a company the size of Microsoft can get away with it, small ISBs developing an accounting package may never see economic returns if they get paid for one out of ten copies.
"Unless we figure out ways to combat piracy, we will never going to breakthrough in terms of driving IT adoption in the country," he said, adding the other challenges include information access and the phenomenal problem of talent.
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