Posted at 6:39 p.m. PST Sunday, February 6, 2000

E-mania spreads to India

New generation of would-be software rajahs is emerging

BANGALORE, India -- It took them two months -- even with the bribes they spread around -- to get their first telephone installed. Electricity was so unpredictable that they wired their single aging computer to a car battery. And the toilet they shared down the alley was so foul they couldn't hire any women.

"We would go to restaurants just to use their restrooms," says Vishweshwara Kulur, 26, who a year ago helped launch a software start-up company in a moldy Bangalore basement.

Even if they couldn't see the sun from their dank little office, Kulur and his three partners were certain they could see the future, so they concocted their corporate name -- Iqura Technologies -- from the legend of Icarus, the boy who flew with wax wings to escape captivity.

"We liked the story," says Pawan K. Sivaraman, another Iqura founder, "but we don't want to fly too close to the sun and get scorched. It's very competitive here, and we've seen a lot of other start-ups go down. I'd say 49 out of 50 fail."

Those sorts of odds don't seem to faze a new generation of would-be software rajahs that is now emerging in India. Increasing numbers of bright, well-trained Indian engineers are starting their own firms instead of accepting comfortable offers from the big multinationals that have camped here on the so-called Silicon Plateau.

In downtown Bangalore, from one end of Mahatma Gandhi Road to the other, shoestring start-ups are frantically renting cubbyhole offices and paying extra bribes to get extra telephone lines -- quite a departure from the traditional Indian business model that has emphasized years of dues-paying with the promise of a modest pension at the end of an obedient career.

The four Iqura founders, for example, cleaned out an old 12-by-15-foot storage room to start their fledgling firm, and they used an old Pentium 150 clone to work their projects and print their letterheads. The company's name sounded quite grand, but their only guaranteed paying job was a $400 project for a brother-in-law. And in the surest sign of start-up poverty, the corporate e-mail address was a free Hotmail account.

"You can't very well go to a big client saying, `We're a real company -- and this is our Hotmail account,’” Kulur says.

In recent months, Iqura's fortunes -- along with its lavatory -- have improved dramatically through luck, hard work and the e-commerce mania that has swept from the Silicon Valley of Northern California to the Silicon Plateau of southern India.

Iqura builds Web sites -- "That's our lowest level of complexity," Kulur hastens to add -- and also develops sophisticated programs that manage everything from industrial inventories to cellular calls. The company is even working with a California client on a hush-hush project called ""

Rejected buyout

Iqura has 18 employees, the partners say they have eight months worth of orders in the pipeline, and they expect to have billed more than $300,000 by the end of March, when the fiscal year ends. Three-hundred grand might be a rounding error for a swashbuckling venture capitalist in Palo Alto, but in Bangalore it's real money for a year-old start-up.

The partners say they recently rejected a $1.4 million buyout offer from a large Indian company -- not bad for four guys who 14 months ago pooled their life savings of $35,000 to launch their little enterprise.

The Indian software sector, while globally respected for its low costs, high quality and superb service, also has been globally criticized for its lack of creativity and entrepreneurial pizazz. There are some notable exceptions -- Infosys, Wipro, Satyam -- but it has been generally assumed, even here in India, that the Next Big Idea was not likely to come out of South Asia.

That pattern may continue -- the emphasis on solid service instead of the occasional eureka -- but many observers here are seeing a new acceptance of big risks for big rewards.

The Iqura boys, now in their mid-20s, were still being potty-trained when computer start-ups in the United States were starting to be mythologized. The origin of the species, of course, were William Shockley's Quonset hut in Mountain View and Steve Jobs' garage in Los Altos.

A generation later, emboldened by such stories -- and by the ensuing rise of software giant Infosys from humble beginnings in a Bangalore apartment -- the Iqurans took their entrepreneurial plunge. They were so smitten by the Apple legend that they even looked for a garage to rent.

"We followed that Silicon Valley model to the dot," says Kulur, the son of rice farmers who went to a rural, one-room school and never so much as touched a computer until 1994.

Sivaraman also took an oblique career path. He was studying mechanical engineering at a city college in Bangalore when he switched to computer science "because that's what all the girls were studying."

"It was clearly a fortuitous decision," he says. "A pure stroke of luck."

Sivaraman graduated in 1996, and then, with Kulur the programmer and two other friends, spent the next two years working 90-hour weeks for a software firm that had a pile of Y2K debugging contracts.

"That's one reason we started our own company," Kulur says. "We figured, `why do all that work for somebody else?' "

They landed new contracts by word of mouth and by snagging small jobs from the clients of bigger software firms in India. They've since moved to a new office -- located above a travel agency -- and next month they hope to open a marketing office in Silicon Valley, the better to woo bigger clients.

Beyond Y2K

The Indian software industry is rapidly moving beyond the Y2K work that was its core business way back in the 20th century. Internet firms, telecoms, retailers, utility companies, financial-services behemoths -- all of them have sent major contracts to South Asia.

A Calcutta firm, for example, has developed a program that helps Irish citizens prepare their own tax returns. A company in Madras is a world leader in computer animation for Hollywood. A Bangalore start-up designed euro currency-conversion programs for the European Union. And a weavers cooperative in Darjeeling is selling Tibetan carpets from its own Web site.

Ten years ago, according to Nasscom, the Indian software trade association, the industry did $150 million in business. Last year, it was $3.9 billion. Iqura and its start-up siblings obviously want bigger bites of that growing pie.

Finding, hiring and keeping first-rate software engineers has not been a problem -- yet. The Iqura partners have reputations as good managers, and in another bow to the Silicon Valley model they're drafting a stock-option plan for their employees.

Many of the Iqura designers and engineers could be working for big Indian companies in Bangalore, or they could have hot machines and spiffy cubicles at a resident multinational like Hewlett-Packard, Siemens or Texas Instruments.

But the engineers say they like the energy, flexibility and promise of a smaller start-up, even if the salaries are twice as low and the chances of failure twice as high.

"It's just more comfortable in a smaller company," says Arvind Bhat, an Iqura project manager who is developing a Web site for a home-inspection company in San Ramon. "You get the chance to use more skills, from top to bottom."

Iqura is a Bangalore-based software services focussed on delivering turnkey internet-based solutions. Iqura has significant expertise in Internet Applications, Corporate web-sites, Intranets and Extranets, E-commerce, B2B Trade Exchanges and web-enabling of legacy business applications. Iqura also has significant vertical-market expertise in portal development, the energy sector, real estate, and financial markets.