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Business News/ Companies / News/  TCS, Infosys seek to connect with start-ups
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TCS, Infosys seek to connect with start-ups

Infosys developing a model to engage with start-ups globally while TCS is looking to work in areas like IoT

For start-ups, such programmes provide much-need mentorship and help open doors. Photo: Indranil Bhoumik/MintPremium
For start-ups, such programmes provide much-need mentorship and help open doors. Photo: Indranil Bhoumik/Mint

Bengaluru/Mumbai: Indian IT services firms Infosys Ltd and Tata Consultancy Services Ltd (TCS) are tapping start-ups in an effort to get products based on new technologies faster to the market and serve the emerging needs of their customers.

TCS, the country’s largest IT services company by revenue, is looking to work with start-ups in areas such as drone software platforms, the Internet of Things (IoT), mobility, cloud computing, business analytics and social networking and, according to K. Ananth Krishnan, chief technology officer of TCS, the company will integrate these newer services with the ones it provides to customers.

Infosys is putting together a model that will let India’s second-largest IT services firm engage with start-ups globally to improve its intellectual property-led (IP-led) platforms, including the recently designed open source Infosys Intelligent Platform, in a bid to cut down the time it takes to develop new products and offer more customized services to its clients.

CEO Vishal Sikka has identified his former SAP colleague Kaustav Mitra to lead the initiative and the company is expected to announce a development accelerator for start-ups in the coming months, according to one senior company executive who is not authorized to speak to reporters.

India’s software services companies have been working at becoming more nimble and innovative as they cope with competition from fleet-footed competitors, some of whom appear to have a head-start in new technologies that are becoming relevant to customers.

TCS is an early mover.

Its COIN, or Co-Innovation Network, is in its eighth year and screens almost 800-1000 start-ups every year, mostly from Silicon Valley.

In the last 4-5 years, TCS has also set up smaller COIN hubs in the Greater Boston and Greater Toronto regions, London and Israel. But Silicon Valley remains the centre of gravity of the programme that selects around 20-25 start-ups that TCS can work with every year.

The valley will be Infosys’s playground too.

Mitra, who joined Infosys on 20 March, as “vice-president, innovation ecosystems" with a mandate to identify and build “new ecosystem opportunities to bring value to Infosys and its customers", will be based out of Bay Area, California, to tap into the start-up network there.

Infosys is soon expected to start inviting some of the start-ups in the US to present their technology at forums organized by the company, and will then shortlist some in “incubation programmes" to help develop applications based on IP-led platforms cultivated by Infosys.

Over the last 10 years, TCS has had “at least 50 successful stories", said Krishnan.

Details of Infosys’s programme, including the investments it intends to make and the cities it will be tapping, are being worked on, a second executive said, asking not to be identified.

Infosys declined to comment as it is in the silent period ahead of announcing results. An email sent to Mitra went unanswered.

“We will not be picking a stake in every start-up which comes. The fund (Infosys Innovation Fund) will continue to be run by Ritika (Suri) and only if any start-up looks promising, we will look to invest," said the second executive.

Ritika Suri is the head of mergers, acquisitions and investments at Infosys.

TCS, too, doesn’t see this as an investment play.

TCS, Krishnan said, sees and evaluates start-ups, “not to invest in these companies and make a killing in the market... it is because this is an important adjunct to our innovation capabilities. TCS has strategic intent in various platforms that I and my research team are creating, and our innovation engine is converting them into something that our business can take care of. We scout for partners who can accelerate our innovation in these areas. We call this the Open Style of Innovation".

“The future is about engaging with start-ups and helping them scale up and at the same time we too are benefiting from them because not every technology can come from within," Infosys chief operating officer U.B. Pravin Rao said in an interview last month.

For start-ups, such programmes provide much-need mentorship and help open doors.

TCS introduced a start-up it works with, ePoise Systems Pvt. Ltd, which offers a cloud-based video interviewing and screening solution, to the Canadian Technology Accelerator and the Singapore Economic Development Board, according to Krishnan.

“It’s a win-win engagement. Start-ups get to be mentored by the best in class while they in turn get access to large client base," said the second Infosys executive. “We can also help them connect with VCs (venture capitalists) and entrepreneurs and they can scale up their business."

In turn, the start-ups have the edge of technology—especially in newer, emerging areas.

“Partnering with start-ups is a conscious strategy being adopted by all large IT firms today, as they have realized that innovation is very important," said Akhilesh Tuteja, partner and national head of technology and business process management sector at consulting firm KPMG.

He added that innovating in a large set-up comes with its own set of challenges. “It is better to incubate a start-up where the larger company does not hold responsibility for that organization," said Tuteja.

That’s exactly what Infosys hopes to do, said the first Infosys executive. “The purpose of having Kaustav is to get start-ups in our fold. It’s like to have something like a development accelerator for some of our own projects in areas like open source, Big Data. They will work on our own offerings."

Infosys and TCS are not the only ones doing this.

Bengaluru-based Wipro Ltd has set aside a $100 million corpus to back start-ups that it believes can better its service offering by embracing technologies, including machine-to-machine learning algorithm.

Still, a few experts, such as Indian American technology entrepreneur and academic Vivek Wadhwa, believe that Indian companies, including Infosys and Wipro, should look at their own turf as the country has dozens of potential billion dollar companies.

“I think this (Infosys and Wipro setting up corporate venture arms and development accelerators in the US) highlights the inferiority complex that Indians still have. The big opportunities over the next few years largely lie in India...the likelihood of Indian companies being part of these is close to zero (in the US). Infosys and Wipro are going to get their pick of the bottom of the crop here and be brought into deals that few others want to fund," said Wadhwa.

TCS has done that, although its focus remains the US, with around 70% of the start-ups that are part of the COIN programme being based in that country.

For instance, it has been working with Mumbai-based Seclore Technology Pvt. Ltd, a security software company and a provider of Enterprise Digital Rights Management systems, since 2013. Seclore’s information rights management solution has been deployed by TCS for an Indian customer in the insurance space, Krishnan said.

Other start-ups TCS has worked with include Perpetuuiti TechnoSoft Services, a provider of business continuity planning and disaster recovery services and solutions, Outdu Media Tech Pvt. Ltd, which offers digital signage solutions and video analytics, Jeswill Hitech Solutions Pvt. Ltd, which works in the area of handwriting input solutions, and Iken Personics, an IIT-Bombay research spin-off which specializes in Artificial Intelligence-based consumer analytics for offering highly personalized end-user experiences.

At SAP, Mitra is credited for having recruited over 1500+ start-ups into the SAP Start-up Focus programme in two years and enabled $20 million in start-up revenue in 2014, making Hasso Plattner, SAP co-founder, call it “one of the best ideas at SAP of the past 10 years". Under SAP Start-up Focus, most start-ups worked on building applications on the company’s blockbuster analytics platform SAP HANA.

Some experts, however, called Sikka’s decision to get Mitra a “fantastic move" as they believe it will help the firm project itself as a platform to its customers.

“The hiring of Mitra is an indication that Infosys is not even having ambitions to build more product themselves, but wants to become an infrastructure provider, a platform (or an ‘arms dealer’) for ISVs (Independent Software Vendors) and other interested parties," said Holger Mueller, principal analyst and vice-president at Constellation Research.

Mueller said the key question was about the “kind of ecosystem" the company could build and the kind of start-ups it manages to partner with. He added that Infosys has first-mover advantage in the system integration field and a credible product leader in Sikka.

Since Sikka took over as the boss of Infosys on 1 August, the company has been working on some IP-led technology platforms, including Infosys Information Platform, an open source platform drawn on lines of Big Data tool Hadoop.

Another of Sikka’s former SAP colleagues and now head of platforms at Infosys, Abdul Razack, has developed this open source platform, which is being used for 80-odd projects. The company wants to scale its product offering to over 900 ‎clients eventually. Infosys believes this can be done quickly if it can get some start-ups to develop applications as per its customer requirements, thereby significantly reducing cycle time.

So does TCS.

“It’s not that we could not have done these things in-house but it would have taken us a lot more time to do it," said Krishnan.

Beryl Menezes in Mumbai contributed to this story.

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ABOUT THE AUTHOR
Varun Sood
Varun Sood is a business journalist writing on corporate affairs for the last fifteen years. He also writes a weekly newsletter, TWICH+ on the largest technology services companies. He is based in Bangalore. Varun's first book, Azim Premji: The Man Beyond the Billions, was brought out by HarperCollins in October 2020.
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Published: 03 Apr 2015, 12:22 AM IST
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