Cloud And Mobility Market In India – See It To Believe It !


As I am finishing up my visit to India, I cannot help but wonder why I chose to make a living in USA, and not here. As I stepped out the air conditioned room I was sitting in at my parents’ apartment to drive to a restaurant with my dad for lunch today afternoon – the answer became clear. It is the heat and  humidity, the pollution, lack of effective governance, inability of people to stand in a line, the terrible traffic and the lack of large number of dog shows.  It definitely is not about money any more – wherever I turn, I can see an opportunity to make a successful for-profit business.

Since I had some time on my hand, I walked around trying to gather some primary intelligence on what the potential opportunities are in India.

Any one who has been to India knows that Indians have a craze for mobile phones. I always thought that bandwidth is a big problem here.Guess I was wrong. I did not have a single dropped call here. I am typing this on a tablet using Wifi at my parents’ house in Trivandrum, while also streaming CNN on my PC . Speed is not the same as what I get in USA, but not bad at all.

My dad, who can use a computer – but usually stays away from it, has two. My mom has one. The guy who sells vegetables in the local market has three, the butcher has a belt around his waist that holds 4, plus the one he has connected to his ear via a blue tooth, the 9 year old daughter of our neighbor here has an iPhone and so on.  I am also (proudly?) convinced that my dad and his uncle can out-SMS most kids I know in USA.  All business is done on mobile – usually via SMS. My mom can book a table for dinner, call a cab, ask for home delivery, get a prescription refill –  all by SMS – and apparently so can everyone else I have met here in these last couple of weeks.

So I decided to ask a few of these vendors on how they manage this traffic of incoming calls and text messages. Apparently they are at their wit’s end on managing this. Most small vendors have paid assistants who answer the calls and text messages, and keep a tab on a piece of paper or an old diary and send back confirmation. The more advanced ones use a excel sheet.

In a given day, they lose about 20% of their orders (some as high as 50% on high volume days) due to clerical errors.  I know many of these people from the time I was a toddler, since I grew up here. And they know I do some work with computers.  Several of them asked me if I can write them something on a computer to help them do their business better. They did not press this issue since they all had a line of customers waiting behind me in most cases to do actual business. The only mobility scenario I found here that has a good degree of sophistication is mobile banking, and it is widely used.

This led me to the issue of how pervasive are computers and internet connections in this segment.  Although everyone in this “Very Small Business” category had one or more mobile phones – usually a smart phone, none of them had a computer at work.  Most of them said they have one at home that their kids use, and that they pay for broadband access. Sure enough they have no idea what their kids do with their PCs. So whatever solution these folks need – has to be done via a mobile device.

I would have died of shock if I found an Apple Store in Trivandrum – and I did not. However, I had a near shock experience when I found that there is a Samsung showroom exclusively for smartphones and tablets. I swung by the store, and it is pretty big and nice and carries everything that one would expect in similar stores in other countries.

Next up in my agenda was to move up the chain and talk to people who run bigger businesses – like builders, architects, automobile workshops, car dealerships , law firms etc. Again, most of them are folks I know from before, and/or known to my parents.

Their big problem is managing their financials, payroll and compliance without extreme trouble. On the high end, they have software – either commercially purchased, or built in-house.  They have in-house IT staff and an army of accountants to keep the business running and compliant. In the lower end – they have all bought a computer or two, and some accounting software, and an internet connection. But no one seems to use it well. Many of the smaller shops have not switched on the computer in years.

There is no POS integration to begin with, even in some of the bigger shops. And even in shops that say they use computers well – I could see the industrial strength printer working non-stop generating the big multi-column reports. None of the business owners knew with any accuracy on their working capital, or gross profit. Apparently they need to talk to their auditor’s staff periodically to see how the business is doing financially.  There is zero workflow that is automated. Workflow essentially is a bunch of people running around with print outs of emails, or shouting over cubicles.

There is apparently an e-governance initiative under way in the government. They are now keeping electronic copies of everything – but of course, they also print everything in triplicate and file the hardcopies just in case a disaster happens. It does not help that the laws have not kept up with computer advances – so some of this hard copy fascination is just a response to legal requirements.  Traffic tickets etc are still dispensed by hand, and I have not seen any officer on the street using a smart phone or something for work. Everyone has a personal phone – usually very advanced ones. May be government can save some money by encouraging BYOD here.

I had to renew my passport here, and walked into the local office. Before I left USA, I had uploaded all the required documents into their site.  The passport services is at least partially outsourced here. The lady from TCS who handled my case at first window took one look at her screen and said – ” Your file is no good. You have left many of the mandatory fields empty” . I honestly did not know what to say. I decided against asking her why her system saved my application if it had missing mandatory fields . Next up, she said “I see you have uploaded all the documents. Unfortunately, I cannot download any of them in our system. So you can just give me photocopies”. I felt smug that I had already anticipated this will happen. Eventually she handed me off from Window A to Window B. I physically took some paper work from A to B. Person at B told me I also needed to include my marriage certificate. I had it handy, but he would not take it – I have to restart at A . Ok, so I did that. Eventually I was handed over to B and then C . At C, the lady double checked everything that B did, and that was it – in 3 hrs, I was out of there.  I would love to meet the person or team that designed the process and the wonderful software, and get a copy of my paperwork autographed.

The last area I tried to understand was how sales force of these companies use IT, if at all. Field sales for these medium size companies have company issued phones, and in some cases smart phones. Some of them also have laptops. They file field reports either on paper, or in a word document that is emailed. Some one in back office then files it in appropriate folders etc. For things like price and availability , they use the company phone to check with their friends or with back office. T&E is all done with paper, and needs manual signatures for approvals.

In each of the above cases, there are existing solutions – usually in cloud as SaaS, and most of them have a mobile interface of some sort. Yet, I saw very little awareness – instead the smart people who run these businesses have just adapted their business model to overcome the lack of technical advances. I asked them if this was due to a limitation on their part to spend money. The answer was eye opening. Every one including the butcher with the belt full of mobile phones to the builder of big high rises is willing to spend money on getting a solution that will help their business. They are only too aware of what they are losing out.

I asked them if the local IT companies have ever approached them offering solutions. Overwhelmingly, the answer has been an emphatic NO.  Additionally, the perception I got was that the local companies – even smaller ones –  only care about winning work from abroad and executing in India, as opposed to winning work locally. I don’t know if this is because of their cost structures or for some other reason.

At least with these people I spoke with – there is some awareness of social media  but near zero awareness for social business. Some of them use Facebook to keep in touch with their children who live abroad. Only one person knew what twitter was. On the bright side, I showed some of them what to do with FB and twitter and some of these folks seemed to like it.

Finally, I did a gut check with some colleagues in Bangalore, and some old classmates from Trivandrum – apparently the IT companies in India do play heavily in domestic market, but focus almost solely on large enterprises in India.  From a couple of weeks of asking around, I am firmly convinced that cloud and mobility are both potentially big plays in India for the very small to medium sized firms.  At a minimum, I would urge my friends at software vendors all over the world to check out the market first hand . Seeing is believing.

Slightly off topic – I had to spend some time at a hospital here in Trivandrum this week, where my aunt was admitted. Absolutely the best doctors were in charge of the treatment for sure – and the staff followed absolutely the worst process ever engineered. Plenty of administrative “paper based” mistakes were made in the few hours I was there, and I almost had to pinch myself to check if I was in 2012 or 1712. This does not really need mobility or cloud to solve – just good old client server will do. Or even a better paper based approach – I just cannot imagine life and death issues being handled through the current pathetic process.

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11 thoughts on “Cloud And Mobility Market In India – See It To Believe It !

  1. Vijay,
    My observations below are out of being an independent IT consultant in India:
    1. People know the enormous potential of IT. But labor is still cheap in India. So instead of spending on installations, configurations, updates etc, it is easier to keep a low-cost manpower to handle with minimum IT investment.
    2. Indian economic & bureaucratic system is not conducive to doing business. So Indian businessmen are used to jugaad ways of doing everything. When this ‘jugaad’ way is deeply engrained into the culture, they see IT solutions as hard-to-bypass and hence will impede their business operations (I’m not saying any illegal activity here; just adaptability to ever changing situations)
    3. Can you believe there are only 9 lakhs registered companies in India? Most businesses are not registered. There are many reasons for it – to fly below the umpteen governmental regulations, quickness to shutdown etc. Combining with above point, businesses don’t want traces left here and there which they can’t see.
    4. Take any software system – a pirated copy is available cheaper and support is available even cheaper. So why should they buy an expensive enterprise accounting system when someone is ready to install Tally for Rs 500?

    In general, B2B in India sucks (be it SMB or high-worth). Even successful startups in India target US B2Bs (a case in point interviewstreet – they were just getting by and not making any money as long as they were targeting Indian B2B. Once they crossed over to the US, its booming time for them).

    Its a systemic issue, I don’t see it changing quickly.

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    • Thanks for chiming in, and I readily agree with your observations

      Labor is cheap for sure – but that just means any solution that is proposed needs to be on massive scale so that cost is still competitive for value. As I mentioned in my reply to Mrinal – Indian IT should also get proficient in quantifying business cases in INR value.

      2. I think economic system is not as terrible as the bureaucratic system. But there in lies the opportunity too – it is a lot easier for Indian IT companies to navigate the system compared to an MNC – if only they put their heart and soul into it.
      3. Honestly I did not know that number – but I do know that many do not register and evade taxes and government procedures Good governance is an absolute must.
      4. that kind of piracy is a non-issue if software is only available as SaaS.

      As much as I think there is a great market – I fully agree with you that it is not an easy one to conquer.

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  2. Vijay, your observations are quite insightful and thought provoking as well. It seems Indian market’s appetite for value added services has come a long way from the time I was involved hands on, trying to convince them on the value of IT and efficiency induced by process improvement / management.

    With lower cost of entry, riding on the Social – Mobile- Cloud wave, nimbler players can now do wonders for the hitherto insignificant market segment of very small and medium businesses(VSMB). The mindset and attitude shift of the masses from “chalta hai” and indifference to IP ownership (read software piracy) to “Jugaad” based innovation and realization that time is money is important for this VSMB market to be successful. I know a few entrepreneurs and VCs are focussed on the India domestic software market but may not have targetted VSMBs. This post may be an eye opener for them as well as encourage others to join the frey.

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    • Great to hear from you, Piyush – haven’t seen you in a few years now. I also know some VC friends who are investing in some small way in India – and plan to talk to them later this week on why they are staying away from the VSMB market. Also looking fwd to catching up over lunch or dinner with you

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  3. Hi Vijay,

    An excellent read, as always. You have an astute sense of observation and described the chaos that exists here, rather well 🙂

    Let me add some observations on *who* is buying technology for these businesses.

    I’m not sure if I’ve mentioned to you before, but we (me and a small team) have been working on a platform to help small and medium businesses make data driven decisions and we’re quite curious about the local market as well.

    In January, this year, we reached out to friends, friends of friends and managed to survey roughly 50 small businesses across India. The mix included small manufacturers, distributors, retailers, small hospitals/clinics, small hotels, service providers like accountants, lawyers etc. and the results were quite amazing, many of them in line with some of what you noted above.

    One key observation was that — most businesses we talked to, had someone in the mid 20s to mid 30s age group in a key decision making role. This could be a symptom of the fact that we reached out to these people through our friends, who are mostly from that age group, but I’m tempted to believe otherwise. If our observations are correct, then this age group drives almost all technology choices at small businesses in India, they are the de facto CIOs.

    Most of these people first interacted with a PC in their teenage, probably at school, most of them have been using the Internet—to various degrees—for 10+ years and almost all of them have had a mobile phone (typically a high end nokia) for at least 10 years. Now weather their business is buying a new mobile phone or new software, these are the people whose choice seems to matter and contrary to popular belief, they are savvy and understand what technology their business needs, surprisingly well.

    I was astonished when a medicine distributor from Delhi, whose company is made of 5 people, explained to me how he wanted to use Govt. of India’s disease outbreak data to plan his inventory. He clearly understood how this foresight will give him a competitive edge when a disease outbreak reaches its peak, demand will be high and supply will be low. What he didn’t have were the skills and the tools to process this data actually pull it off. During our mini survey we came across multiple such examples of savvy and interest in exploring new tools and even willingness to spend.

    The reason, most software companies sight for not targeting the Indian market, is that local businesses are not willing to spend on software and don’t really understand how and how much new technology can accelerate their business. I believe this is changing rapidly.

    With regards,
    Mrinal

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    • Thanks Mrinal !
      Glad my conclusions are somehow in line with what you arrived at.

      Interestingly – almost everyone I spoke with here was at least in their mid-40s, if not older.
      If our observations match – then maybe age of the decision maker might not be a big factor.
      Or it could be that our findings are not statistically significant due to small number of people we talked to.

      I loved the story of the distributor who wanted information from govt upfront – even more sophisticated large companies don’t always do that for their BI.

      I have an “unproven” theory on why businesses in India don’t spend on IT – I think it is because IT companies here do not articulate a hard business case in rupees to them. If you show the impact on revenue, GP and cash flow (especially cash flow, since most SMB s in India seem to be more worried about cash flow than anything else) – I have a feeling that they will invest. It might also help to have financial institutions tag along with IT companies to make IT spend somewhat more palatable. This last comment needs to be taken with a pound of salt – not a pinch – since I am yet to come out of the shock of what a home loan costs in India 🙂

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      • Your theory is probably right. In the past, software was way more expensive, for these businesses, than hiring people to do things manually. Cloud and mobile together can change that situation dramatically, not only by reducing costs but also by providing more value. We could argue that it is much easier to articulate a business case now, than it was in the past. But, of course, cloud and mobile come with their own set of new challenges.

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      • I agree – I once worked for 4 weeks trying to convince a tire company in India to implement R/3 4.0B version.
        Finally we had to sit with head of accounting for an all nighter to convince him with numbers that it is a good thing to do.
        Hopefully it won’t take that long with cloud and mobile.

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  4. Again buddy what u said is correct , bt I follow a different path , even though my business is small I have fully computerised and follow accounting in tally and inventorys in a local software, many business people I know small or medium v computers but their accounting is outsourced it is their auditing staff who files it so they are not aware of the daily or monthly transactions , mobile revolution has happened in a big way bt as u said u cannot find a apple store here and try repairing Nokia smartphone in their service centre , it will be like a hospital where u have to wait for ur turn and then the guy will tell parts has to come from blr or Delhi and it will take weeks and ask u take a bak up , weeks becomes months , last yr I wanted to buy a vio and visited the Sony outlet bt he dsnt v the display of the model I was asking and finally I bought it from chennai where I could experience the model and make a decision , every thing works in a mediocre way , tvm has not changed a bit except for various high rise buildings and jewellery and textile outlets it is the same , , at least vijay u understand good buddy , sorry for deviating from topic

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