Bangalore: Internet firm Yahoo Inc. has made India the centre for building Internet and mobile products for emerging countries such as Vietnam and Brazil even as it prepares for competition from a local portal of US rival, AOL Inc., which has made Bangalore its hub for its international operations.
AOL is set to announce the launch of an Indian portal on 26 April, with a webmail service to attract online users and compete with global competitors such as Yahoo, Google Inc. and MSN from Microsoft Corp. and local Internet firms such as Rediff.com India Ltd and Sify Ltd.
“Bangalore will do all the product engineering for all emerging markets, such as the Philippines, Indonesia, Vietnam and Brazil. We will have people in local markets for sales and marketing, we envision lots of engineers in those markets, but also will have a lot of engineering development from India,” said David Filo, who co-founded Yahoo with Jerry Yang, his classmate at Stanford University in 1995. About a fifth of Yahoo’s engineering staff currently resides in India.
Yahoo has appointed Sharad Sharma, hired from Internet security company Symantec Corp., as its new chief executive for research in India.
He is replacing Venkat Panchapakesan, who has been moved to the Sunnyvale, California, headquarters of the Internet firm as head of audience group engineering for Yahoo.
Analysts say that Yahoo is following the trend of software companies that are increasing their workforce in India due to the availability of low-cost engineering talent.
“Most of the product development from India is for the global market. This is what all companies do,” said Subho Ray, who is president of the Internet and Mobile Association of India (IAMAI), based in Mumbai. The association tracks Internet usage pattern in the country.
Yahoo has more than 1,000 people in Bangalore deployed in engineering, product development and support services and a new centre to house about 1,600 people was inaugurated on 25 April.
AOL has close to 2,400 employees in Bangalore, including more than 1,900 in support functions.
IAMAI predicts India’s online population will cross 100 million by March 2008, up from the current active user base of 38 million. India’s online advertising business for the year ended March 2007 was Rs218 crore, growing annually at more than 50%.
India and China are witness to rapid growth in Internet usage, as more and more people access the web through computers and mobile phones.
“If you look at revenues from emerging markets, it is still a very small percentage. But from a user perspective, there are around 500 million users, as it grows to a billion, all that is... going to come out from India, China and other emerging markets,” Filo said in an interview. “When it becomes more than 50% of revenue from these markets, I really don’t know. But I do know that we will at some point of time,” Filo said.
Yahoo is investing heavily in building new services such as email, messenger and local maps for users to access them on mobile phones.
It is not revealing financial details in India, though Yahoo India’s managing director, George Zacharias, said the local unit has trebled its revenue in the last three years.