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October 22, 1999
TechSpan is a ten-month-old Silicon Valley start-up founded by Arjun Malhotra, best known for establishing the HCL Group in the United States, and his four partners Curtis Terwilliger, Richard Coleman and Mark Pittman.
With financial aid from venture capitalists like Goldman Sachs & Co and Walden International Investment Group, TechSpan gives software and manpower support for what the TechSpan team calls "e-babies", in other words start-ups in the Untied States.
Neena Haridas spoke to Harsh Singh Lohit, managing director, TechSpan India, which is the offshore unit for providing solutions to US companies:
What kind of consulting service do you provide?
We want to help execute the Internet economy. We provide software solutions and also skilled manpower for start-up Web companies. You see the Internet is the sweet spot in the world economy today. Internet is changing everything. With every innovation there is a discontinuity. And the Internet is the discontinuity in the economy. A lot of people are realising this and entering the Web economy and we want to take advantage of this discontinuity of the economy and help others take advantage of the Net economy.
All our solutions are e-commerce related. And we are currently providing solutions to only start-up ventures in the United States.
How do you rate the Indian Internet scenario?
Well, there is a lot of hype about the Internet here. Everybody wants to jump on to the Internet bandwagon now. This is the new 'get rich' formula that people have hit upon. Like in the early 80s when every Tom, Dick and Harry was into leather export; every business house worth its salt is launching a portal site today in the name of e-commerce as if they have hit the jackpot or something.
But reality is very different. To begin with, e-commerce in India is very poor. There is no infrastructure to support the kind of big things that the government, the industry chambers like NASSCOM are talking about.
Hence, when I say the Internet is changing everything, I mean everything in the rest of the world. In India, for things to happen, it will take a much longer time. The problem is that everybody here wants to get into the Net only to make quick money out of business in United States.
You know what I think? I think we Indians are like those Chinamen who went to United States in 1860s to lay the railroads. The Chinamen provided the skilled labour and the US developed. We are doing the same. We are giving all our skill to build an alien economy.
That is exactly what your are doing too. TechSpan, a company started by an Indian too is making money in the United States. You are not doing anything for India. So, why say that Indian companies are into the 'quick buck' business?
Well, that is where the money is. The United States. We might have several Indians in the company but we are an American company. You see there are no start-up businesses in India that will need the kind of solutions that we provide.
See, as of now there are about 500,000 Internet users in India and according to Goldman Sachs this figure will touch 8 million by 2004. Now even this figure is not anything great in a country with over a billion in population.
We will service clients in India once the market here is ripe.
What do you think is the reason for lack of development in India. Now that the government is all too keen on infotech, don't you see any improvement?
You see, getting into the Internet business is easy - there are hardly any barriers. Anybody can start a portal and call it e-commerce. But in India, there is no legislation on cyber economy and we all know that. There is no infrastructure. One needs competition if an economy has to develop. In India there is one monopoly called MTNL and another called VSNL. Now that private ISPs have been allowed, may be there will be competition.
But for people to get into e-commerce there is need for cyber laws to be in place, and there is acute need for venture capital without which start-ups cannot happen. And there should be an environment of innovative change.
Maybe the government's IT policy and IT ministry will help give this industry a push. It will take at least another five years for India to reach where the US is today. There is one undeniable fact: the US has a technology lock on almost all inventions. And we are running on a conveyor belt, going round and round.
At the most we can only try to match its level of innovation or try to be a better economy than theirs. All this talk about swadeshi is not going to help the country any better.
Do you help start-ups in US find venture capital too?
No. We don't. In fact we try to catch the venture capitalist to find out the projects they are funding and then offer our software services to these start-ups. I think that is a smarter way of doing business.
What kind of projects do help establish?
We have quite a few projects. You see we specialise in giving middleware software. Indian companies are not even aware of it as yet. Most of our projects are business-to-business because that is where the money is and that is how an economy can be built.
Indian sites are stuck with the business-to-customer e-commerce, but tell me how many books and flowers and cassettes can one buy and sell.
Consider this: By 2003, business-to-business will account for 10 to 15 per cent all transaction on the Net and it will be worth about a trillion and a half dollars in three years.
Hence, business-to-business projects should be the focus.
Is there any particular area that you intend to concentrate on?
On the software front we are concentrating on Java and middleware. We want to do away with the complexities of front-end and backend browsers. We want to integrate the two by using middleware software for which we have tied up with BEA in the Unites States to use their software 'Tuxedo'.
What is your revenue target this year and in the next couple of years?
We intend to end 1999 with revenue of $13-14 million. We hope that we will exit 1999 with a monthly revenue target of $2.5 million. In 2000, we will be doing $45 million, and by 2001-end we will be a $100 million company.
Do you intend to expand your area of operation and go public?
In this industry we can only talk about the next 10 months because the world is changing so fast. In these 10 months, we have no intention of expanding beyond the Untied States.
Of course, we would like to go to Europe and Asia, but that will take sometime. And of course, everybody likes money, so going public too is a good idea - but an idea that will have to wait.
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