How Indian tech startups can fill a gap in tech stack building

While there are many companies in the application layer of the tech stack, there is a dire need for indigenous Indian tech startups to enhance the other layers. It is time to increase India’s presence in this sector that has mostly foreign expertise.

Tuesday August 06, 2019 , 6 min Read

For over two decades, India-Native Entrepreneurs and Technologists (INET) have been excelling at building startups across all strata in the technology hardware/software stack. However, if you were to try and find Indian companies who build components of digital infrastructure and platforms, there are very few. There are numerous companies in the application layer of the tech stack, especially large startups in payments and consumer retail, services and marketplace spaces such as Paytm, Flipkart, Olx, UrbanClap etc.

Yet, there are no significant players in the other layers of the tech stack. Some of the companies in this layer include Intel, nVidia, AWS and Oracle, all international companies.

This article explains the importance of the tech stack, and uncovers some ideas on how the Indian startup ecosystem can fill this gap. Since there are no notable companies in the tech layer, time is ripe for Indian companies to foray strongly into this space.

Why is this important?

Since the internet phenomenon took off in the mid-1990s, hacking has been a key concern for all stakeholders. Traditionally, hacking has been viewed as an illegal activity conducted by shady criminals looking for trouble. While that is still true, one major aspect has taken centre stage during the 2010s. Unprecedented digital mass surveillance done in collusion with commercial vendors has proven to be a major advantage for certain nation-states in dealing with geo-political and other international matters such as trade and cross-border terrorism. It has been proven that all layers of the hardware and software technology stacks, including at the microprocessor level, are susceptible to hacking. Hence, the nation-states that don’t build their own hardware, software and networking technologies are doomed to be Tier II players (or worse) in the 21^st century.

What is the tech stack?

Here’s a quick look at what we mean by the technology hardware and software stacks. All your digital devices including computers, laptops, tablets and cell phones are built by assembling hardware on which software is installed in order to bring the device to life. Hardware constitutes physical components like the microprocessor, memory, camera and microphone. Software is the programming language code that manages the hardware and allows you to interact and do productive things with your digital device.

Keys to building enduring high tech startups

Entrepreneurial and talent focus: The India startup ecosystem has given well-deserved attention to newer technology areas such as AI, AR/VR, IoT, robotics and blockchain. However, equal attention must be given to foundational technologies. Students must be made aware of these gaps in the India ecosystem and they must be inspired to build these startups for national security as well as for commercial reasons. It is critical to condition the upcoming technical workforce to solve deep technical, science, material and engineering problems indigenously since technology transfer from foreign companies may be possible only in a limited set of cases. Think semiconductor fabs as an example. Semiconductors which are used in electronic devices require advanced manufacturing equipment and process – technology that incumbents will not easily transfer to other countries.

Managing strategic startups: The ecosystem must be positioned to identify startups that have valuable IP, and to support these startups through their lifecycle. The gamut of startups should span all high value and essential components of the hardware and software stacks. The startups should always be majority-owned by Indian entities (both directly and indirectly). This ownership should be preserved regardless of acquisitions.

Industry development: While an indigenous greenfield tech stack is gradually developed, the industry should gear itself to first build companies (cloud, wireless, etc) with foreign components but then position themselves to adopt the indigenous stack seamlessly. Meanwhile, non-indigenous components should be scrutinised and sanitised for every single design and/or every single line of code.

In the news

Here are two examples of startups that can be categorised as India’s Strategic Startups.

IIT Madras’ Shakti Processor Programme has developed a series of RISC based microprocessors. This is a case where a well-established foreign company partnered with a highly impressive indigenous programme while no one from the Indian industry or ecosystem took a step forward. Shakti can easily be a part of numerous engineering college projects as well as ecosystem startups.

Mumbai-based Indus OS is a smartphone operating system startup that recently raised Series B funding from Samsung and other investors. Their app store, the Indus App Bazaar, has over 4 lakh applications and their user base is over 1 crore. Aside from the OS itself, the app store and the developer platform/SDKs are of strategic value and the goal should be for the India ecosystem to never lose control of these assets. The only way to assure this outcome is for the founders to never dilute themselves to a minority stake and to frame the board voting rights to their advantage. The support from the broader developer and customer communities are also important.

It remains to be seen if either of these efforts result in the buildout of enduring Indian high-tech giants or if they become strategic assets for foreign high-tech giants.

In conclusion

India is projected to be the fastest growing large economy for the next three decades. Also, given the rise of China as a world power, India has assumed a geo-strategic importance on the world stage. Given these developments, it is imperative for policy makers to work in concert with industry, startups and learning institutions to come up with a coherent strategy to build out India’s indigenous tech stack as well as the high-tech giants in all layers of the stack. The Indian economy, catalysed by INETs and their high tech startups, can truly thrive if there is genuine focus on establishing indigenous foundations, secure infrastructure and a robust ecosystem.

For example, let’s say an Indian equivalent of Intel is able to capture 20 percent of the market share or an Indian equivalent of AWS is able to capture 20 percent of the market share, the table below indicates how such a development is the need of the hour. (See below)