'India is a graveyard for B2B companies'

India has long been a laggard in producing world class product companies, especially in the IT arena. Instead, what we seem to be good at are IT Services outfits that cater to much of the world's software and back-office needs. The lack of an eco-system, venture funding and role models have all contributed to this malaise.

Except for recently, that is. In the last five years or so, a startling new and welcome change has begun taking place in the technology landscape. India has begun churning out world class technology outfits, especially cloud-based ones, that have attracted significant attention from global and bluechip local investors.

These outfits—that range from ERP and CRM solutions to data storage and developer platforms—have no doubt benefitted from a flood of IT professionals who, after studying at high caliber engineering and science universities abroad, have decided to return home and take a shot at starting something that has the potential to be relevant and exciting.

And while the venture capital eco system is nowhere near where it should be in India, say entrepreneurs, it's a whole lot better than what it was in the past, with global and local money men and women beginning to put real cash behind many of the ideas coming out of here.

So, it's disheartening to read in the Economic Times recently that most startups in the product realm have been unable to accumulate customers from their own country and are actually forced to get them from around the world. For instance, the article cites the experience of one of the stars of the Indian cloud landscape, data protection outfit Druva, who says that not only is India still a difficult market but that they realized within a year of starting out that Indian companies were not going to buy their product. Consequently, 60 percent of its 2,500 plus enterprise customers worldwide (which includes NASA) comes from the US alone.

1Click, a promising video conferencing company that has done away with the need to install software like Skype, and which I wrote about here some time ago, says that even after a year of negotiations with a few companies, they have only reached the final stages of discussion and haven't been able to lock in a sale. Consequently, the company is now going to change their focus to the US and Europe. "I would have loved for it to be an India-focused product. But there are no early adopters. What can we do?" said Hrishikesh Kulkarni, founder of 1Click who likens India to a graveyard for B2B companies today.

Ironically, the very things that made India a laggard in the product space for decades is making it a desert with a drought of vital customers necessary for young companies to grow wings and fly—namely, an unwillingness of large Indian companies to take a few small risks in new product adoptions. Moreover, this new world of cloud-based solutions helps you do that with practically no risk at all.

With the exception of a handful of corporates, such as State Bank of India, Axis Bank and Asian Paints, the article says that much of the corporate terrain is filled with bureaucratic players who focus more on process delivery than innovation and who have an unhealthy skepticism of new Indian companies and products. Apparently one common refrain is "Oh I could probably do that, so why i should i pay you to?"

It is a sad irony that Indian product stars are able to woo some of the most tech-savvy companies around the world who are located in advanced technology eco-systems but cannot get anyone to believe in them right here in their own backyard.