By Sramana Mitra and guest author Shaloo Shalini
SM: I think this is one of the big opportunities for India right now. Indian entrepreneurs should take a hard and close look at what is happening in Software as a Service (SaaS) applications, Infrastructure as a Service (IaaS) applications, and Platform as a Service (PaaS) applications around the world, mostly in the U.S. market. If they can undercut U.S.-based vendors, sell their services to the Indian market, and bring these services to the U.S. market a bit later, it could be a good opportunity to explore.
SB: Right. There are advantages to that approach. Earlier we were stymied by the fact that infrastructure in India was costly, bandwidth was costly, electricity was costly, servers were costly, and setting up a data center was very expensive. As I was growing up during the dot-com boom, doing my first startup, our servers were hosted in the United States because it was really expensive to host a server in India back then.
SB: Therefore, we had to deal with all these latency issues, arbitrage issues, dollar risk, and all of that stuff. As a startup, we were very concerned about this. We were constantly burning our fingers on that front. Now it is a thing of the past; it has all gone away with cloud-based infrastructure and newer paradigms. The basic Amazon cloud or Microsoft cloud offers a huge benefit to Indian startups because they don’t need to worry about such infrastructure issues.
SM: Yes, I agree with that completely.
SB: For Indian startups, building a service at the time when they have constrained resources and no venture money can be done on a public cloud very cost effectively, for almost next to nothing. I was shocked at how little I paid when I started to use Amazon as my personal backup service. I pay $3 a month and I have 67GB of data, so it is good for a consumer like me.
SM: Yes, you are right there. The traditional barriers for startups in India are becoming increasingly lower. For this decade, I think there is an opportunity for India to do concept arbitrage on all these cloud applications and build a host of great companies.
SB: Also, by building applications and through concept arbitrage on the physical applications, Indian companies will skip a generation gap. Indian companies may buy services running on a cloud that companies in the United States have traditionally run on-premise.
SM: That is right. This is because Indian IT has not adopted that much technology yet. They will go straight to the cloud, the same way that India went straight to the mobile phone.
SB: I used to be at IBM India. During my first few years there, we talked only about private networks. This is because first, networks were really expensive back then. The cost of laying a network was high. You had to be very careful of what went on your network; every byte was measured and scanned in terms of what was supposed to be on it or not. Second, having your own network was a major competitive advantage over somebody who did not have one because very few people had a network at that time.
SM: Those were the times of fat pipes, direct lines, and T1 connections, which were horrendously expensive, right?
SB: Yes. The entire focus of IBM India at that time was connectivity. Our offices were connected with our own private network, which brought down prices significantly because the public network was very expensive, and having a private network gave us a huge competitive advantage. Finally, bandwidth became dirt cheap, and the notion of having a private network within a company changed. Indians have grown up in an environment where private networks are passé. Nowadays, 90% of our network is a public cloud. In terms of the network parts, we connect to a service provider, and that service provider connects to the other end of our branch. I don’t have direct lines to my own branch anymore.