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`Venture out into what you know best' backed by services'

Our Bureau

BANGALORE, April 11

EXPERIENCE is in, callow youth is out, services are in again, products are doubtful unless backed by services. The changing venture capital trends reflect the dramatic changes in the Indian IT industry.

At a seminar in IIM-B on Wednesday, venture capitalists told industry members that the future of the Indian IT industry was probably halfway between services and products _ an XSP model where the product was also sold as a service.

The experts on the panel were Mr Kiran Nadkarni, Managing Director, JumpStartup; Mr Siddharth Das, Director, Intel Capital; Mr Vinod Chandran, COO, Telesoft; Mr Abhay Havaldar, Partner, Connect Capital Partners; Mr Subhash Reddy, Vice-President, e4e Labs , with Mr Pradeep Kar, Chairman of the Microland group, as the moderator.

The focus at the moment did not seem to be on moving into the product business, but rather to build on the country's strengths in services.

The moving-up-the-value-chain mantra was valid, but now applied to moving up the services chain into bigger areas such as IT consulting.

On the individual level too, the general feeling was that entrepreneurs should stick to what they knew best.

``Very few experienced people start up companies and those who do don't always do so in their own areas of expertise,'' was a comment.

The link with the markets was also missing, which was one of the reasons that Indian product companies did not do well, said venture capitalists.

Whether it was research, filing for patents or developing products, all activities needed a close interaction with the market, they said.

There was even a suggestion from Mr Reddy that having customers on the board would help the company understand a their needs better.

The number of patents held by Indian companies was no indication of the research and innovation here, Mr Havaldar said. Indian companies refrained from patenting their technology on the perception that the process was expensive.

Those who did, did so for purely academic purposes and did not take the market implications into consideration.