Technology: Life Beyond The Software Sweathouse (Pg 1)

TECHNOLOGY
Life Beyond The Software Sweathouse

As the new economy matures, a host of emerging technologies and market niches begins to crystallise, firing the imagination of India's software bottom-feeders.

By Aushutosh Sinha and Venkatesha Babu

If Pentiums were Mercs, the chips built by MOSCHIP would be Maruti 800s--and the demand would be as big.
VIVEK GUPTA
Vice-President

This is it, the heart of the gateway,'' says T.S. Satish, peering through his bottle lenses at a chip sitting in the midst of others on a circuit board. Above the chip, a tiny fan the size of a human thumb-nail whirs away, keeping it cool from its hectic job of shuttling gazillions of electrons back and forth just below the speed of light.

This trial version of the chip has been built in the US office of Ishoni Networks, a company that Satish cofounded in July 1998, with his partner Vijay Maheshwari, a chip- and system-design expert. Today, there are 80 people adding on specialised software and tweaking the chip's systems in their swank, restricted-access Bangalore office called ''Broadband Hub''. Straddled by coconut trees, the impeccably maintained glass-and-marble building sits in the old conservative residential area of Basavangudi where old rain trees still form magnificent tunnels of shade.

Ishoni is one of three companies that occupy ''Broadband Hub''; the others are Alopa Networks and Amber Networks. Ishoni is one of many it companies that are no longer content to be categorised as India's software sweatshops. You know them as the frontline of India's software explosion, those production lines of engineers who make their money doing the janitorial work of keeping Western computer systems ship-shape from their faceless Indian cubicles. They are finding there is an infinite variety of niches as technology evolves, modernises-and prepares for the future.

IN THE VALLEY, THE DIASPORA SEES THE LIGHT

I'm going to spend more time with my family, visit India and improve my golf game,'' says Sam Mathan, 56. No, Mathan isn't flotsam from the tech tsunami. A native of Hyderabad, he's the CEO of Amber Networks, spread across Fremont, California, and Bangalore, which has just been gobbled up by Nokia for $421 million.

''In this time (of the downturn), it was irresistible,'' Mathan told BT from Fremont. Amber's main product, a device called an edge router, which makes networks simpler and more robust, won't actually make it to the market until end 2001. But the market for it is projected to be around $22 billion in 2003, from $3.6 billion in 2000.

Amber's windfall indicates the opportunities available as technology continues down what experts believe is year five in a 25-year cycle to built the next-gen networks. Like Amber, a clutch of companies started or run by the Diaspora announced a lucrative August.

Cradle Technologies raised $20 million. CEO Satish Gupta, a 23-year IBM VET, is designing a single-chip-with the capabilities of a traditional microprocessor, microcontroller and digital signal processor-around which future devices will be built.

Serial entrepreneur Jagdeep Singh took his company OnFiber Communications out stealth mode, announcing a $136 million funding and the launch of its a new fibreoptic network architecture.

Zepton Networks-funded partially by super VC Vinod Khosla-announced it had received $60 million in funding less than eight months after it was conceived to build a new optical network. Its CEO and founder: Jagdeep Singh.

In April, Red Herring magazine named Amber as one of 100 companies that represent the future, which ''despite the downturn are either disrupting existing markets or creating new ones altogether''.

''We've started to stabilise," says Mathan, an alumus of Osmania, Hyderabad. ''I think the world is just starting to crack the net.''

Samar Halarnkar

Ishoni also employs 120 people at its office in Santa Clara, California, mostly doing business development, marketing and sales, and the crucial silicon team designing the home-gateway chip. The chip itself will be built in Taiwan.

Existing network boxes typically cost about $1,000, with separate chips to control voice, data transfer, encryption and the task of talking to other devices. Ishoni's product does the work of all these chips, which is why they call it gateway-on-a-chip. Plus it comes with some software embedded with the box. More software can be ordered a la carte. The Ishoni chip's other selling point is that it works with many technologies floating around-digital subscriber lines, cable, wireless-and doesn't require a special, often costly connection that's always on. This could be very attractive for companies taking broadband home because combining their voice and data traffic on a single connection might slash their connection costs by half-at least.

Amber, Ishoni, and Alopa build different parts of the infrastructure that will go into the high-bandwidth, next-gen internet. Ishoni and Alopa grew out of Bangalore, while Amber, which sprang up in the Valley, was sold in August for $421 million to Nokia. This windfall (See In The Valley, The Diaspora Sees The Light) won't contribute to India's coffers, but in a time of the great tech dry, it indicates the potential of innovation. ''The days of Indian it companies plucking low-hanging fruits are over,'' says Vivek Man Singh, managing director of Ishoni's India operations. ''Indian companies cannot win the war for global it needs on pricing alone.''

Is This The Great Leap Forward?

''Recession or no recession, there is no slowdown in the development of technology.'' When Intel CEO Craig Barrett made this pronouncement during his visit to Bangalore in early August, he was reaffirming the faith of a new breed of Indian companies-and new thinking in old ones that are using the slowdown to move up the ladder of opportunity.

Research by Merrill Lynch analysts suggests that Indian companies in 2000-01 earned nearly $1 billion-or nearly 15 per cent of India's software exports-from technology services outsourced to them. That figure is expected to grow to $4 billion in 2004. The pressure on US corporations to cut costs because of the slowdown is coinciding with evidence that India's it industry is readying for the next big leap.

The multipurpose chips and software of ISHONI NETWORKS will find their way into broadband homes.
VIVEK MAN SINGH
Managing Director

Nearly 20 companies specialising in embedded software have sprung up in the past year in Hyderabad alone. Bangalore, notorious for its mind-numbing software grunt work, has more than 30 companies designing chips for a variety of purposes. The number of Indian centres for specialised development set up by multinationals is increasing by the day. Many Indian heavyweights too are specialising in a host of hugely profitable niche applications (See The Road Ahead): designing chips, protocol software, application specific integrated circuits, voice over internet protocol, to name a few. Price is still an issue: Indian tech services are between 60 and 70 per cent cheaper than in the US. With multibillion dollar stakes, secrecy and intellectual property are others. Not surprisingly, the tech services companies are chary of technical details and clients.

It's a harder market to crack, but the rewards are worth it. Typically, the growth of an Indian it services company is tied to its billing rate, which is about $35-40 per hour for offshore maintenance work. Like a housekeeper in a hotel, their job is to keep the databases and systems of their clients ship-shape. By that analogy, a tech services company would design a part of the hotel, say the gym-or it might offer a readymade ac plant and integrate it into the hotel. ''If you are in the chip-design market, and with that you have domain expertise, you could get three times the billing rate compared to it services companies,'' says S.D. Sherlekar, Chief Technology Officer of Sasken Communications, a Bangalore tech subcontractor.

Their skills honed by years of software grunt work and ties with some of the world's best companies, this slew of tech start-ups is targeting the next level. ''We might not be able to develop a car of our own yet, like a proprietary microprocessor,'' explains T.J. Yatheendranath, managing director of Bangalore's Adamya Technologies. ''But what we can do is develop the engine and gear box and then hawk it to the manufacturers.'' Adamya has licenced Bluetooth protocol stack and a bluetooth base band, both software layers that go into the evolving short-range wireless technology, to two unidentified US telecom giants who will use its tech in building next-gen communication products.

It is a path foreseen by another Bangalore company, Celstream, whose ceo Brijesh Wahi decided to do product engineering instead of software services when he launched the company 18 months ago. ''During last year's go-go period, the easiest thing was to scout for some software development and application maintenance projects, hire a few hundred engineers,'' says Wahi. Instead, Wahi stuck it out and today Celstream does ground-breaking digital work for a cross-section of US companies, including Xerox and Tektronix.

Even old-world it companies are learning to work the niches and flaunt impressive clients lists. DCM (remember it still stands for Delhi Cloth Mills) Systems got nowhere either with software or hardware (it was called DCM Data Products in its first avatar). So now a hived-off entity called DCM Technologies has become a tech troubleshooter for clients like Intel, AMD, Compaq and NEC, Japan. Citibank has picked up 51 per cent stake in the new company and CEO Hemant Bharat Ram believes DCM's new economy efforts are finally working.

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