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IT giants see business sense in supporting startups as clients demand better solutions

Jul 6, 2018 by The Passage Team
IT giants see business sense in supporting startups as clients demand better solutions

By Durba Ghosh

Fuelled by demand from large clients, leading IT companies in India are turning to startups to find the fitting solutions. Microsoft, Bosch, Oracle, and cloud infrastructure provider NetApp are few examples of IT giants engaging with startups as incubators and accelerators.

“It is a good way for the IT companies to inject a new DNA and skills into their existing structure. Also, entering new markets such as machine learning and artificial intelligence becomes easier if they engage with startups, as building it in-house from scratch can be a mammoth task,” Ravi Gururaj, Founder & CEO at QikPod and President at TiE says.

Hosting cohorts of emerging startups also helps these legacy companies to track disruptive ideas that hit the market, which in turn can be used to educate the top management. These companies are providing financial backing to startups, offer technical expertise, hand hold them in creating go-to-market strategy, and in turn get their hands on some of the most coveted innovations. While some, like Infosys and Wipro, have set up dedicated startup funds, others are tracking disruptive technologies in their own sectors.

Microsoft, for instance, gives a chance to the incubated startups to work closely with its partners such as Wipro and TCS. The IT giant also encourages startups to adopt their cloud platform Azure, creating a cross-selling model.

“It is a win-win proposition for us as well as the startups to work together. The clients are also demanding integration of advanced technologies available today. It’s a cross partnership and we definitely want these startups to generate revenue for us,” Ravi Narayan, Global director for Microsoft Accelerator says.

The company was also one of the earliest startup accelerators in India - Microsoft Ventures – which was established around 2012. A model now replicated globally.

Technology giant Google has also shortlisted six Indian startups for the fourth batch of its accelerator programme, to be conducted at its Developers Launchpad in San Francisco. The startups will receive equity-free support and credits for Google products. Technology major Oracle also kicked off its first startup accelerator program recently.

According to a report by Nasscom and Zinnov, India now has the third-highest number of startup incubators and accelerators in the world after China and the US. Although India still has a wide gap to fill compared to 2,400 accelerators in China and about 1,500 in the US, the report states. India has about 150.

“Working with startups definitely opens up the innovation log jam. We are looking at the most unique ideas that address specific problems. These innovations will be absorbed in the larger market that will drive adoption of new technologies,” Ajeya Motaganahalli, Director of NetApp India says.

Moreover, it is becoming increasingly difficult for the big IT companies to attract the best technology talent, which is forcing them to back startups, in order to fill the talent gap. Also, the products and services offered by such companies are becoming irrelevant at a faster pace than we can think. To keep pace with the latest advances the easiest way for big corporate is to tap startups. Reliance, for example, has partnered with Microsoft Accelerator for its GenNext Hub that will allow startups to work with the Group.

“The need for re-skilling talent is a reality that we have to address. To keep up in a fast-evolving technology environment, the IT industry must reinvent itself by re-skilling its employees in new and upcoming technologies,” R Chandrashekhar, President, NASSCOM, said.

The industry body also announced the launch of its future skills work group that is working in partnership with big IT companies on a two-pronged approach to enhance the skills ecosystem - Skills vs ‘Job-specific’ Curriculum and Tech enabled Learning Ecosystem. The initiative is aimed towards skilling/reskilling 1.5-2 million people - both aspirants and current employees - over the next 4-5 years.

With large corporations acknowledging this trend and bolstering themselves for the future by investing in innovation, startup accelerators are emerging as the most preferred engagement model.

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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