http://www.ottawabusinessjournal.com/288838531547566.php


By Roman Zakaluzny, Ottawa Business Journal Staff
Tue, May 8, 2007 9:00 AM EST
India's economy, in particular its high tech wireless market, is growing in leaps and bounds. Just ask Raj Narula, a Canadian who does consulting work for local firms that want to break into the South Asian market.

"I'm standing in Bangalore right now, at a busy intersection," the co-founder of TaraSpan, an Ottawa company that helps Canadian firms break into the Indian market, told the OBJ. "It's chock-a-block traffic. That's an Indian phrase that means it's so busy that the cars, the bicycles, the scooters – everything – is filling up the entire street. That's an occurrence in every city in India." It could also be a metaphor for the Indian wireless market. To Mr. Narula and the companies for which he arranges meetings and partners, every one of those people outside his window equals potential growth.

"There is major growth happening in terms of jobs being created every month," he said. "It's not unusual to find companies with 30 per cent growth year after year." With a population approaching 1.1 billion, India boasts four cities with more than 20 million people, and at least three dozen metropolitan areas the size of Ottawa.

And a steadily improving quality of life in India translates into more and more Indians looking to get equipped with the technological conveniences most North Americans already have. In fact, they're set to race ahead of the west.
Take mobile phones: India sees six million new cell phone subscribers a month. That's an incredible growth rate that dwarfs Canada's, especially since a March report from the SeaBoard Group showed wireless penetration rates in Canada are second last in the OECD, a full 20 percentage points behind the United States. Even though Canadians consider their country to be one of the most wired when it comes to technology and Internet usage, India and other developing countries are already well ahead in cell phone usage.

It's no wonder some Ottawa firms are starting their international forays in India, hoping for a cut of the action in the hot, English-speaking wireless market. And they're not simply going there to find a cheap source of qualified labour for call centres and programming. "The economy is moving at a massive scale," said Mr. Narula. "The software industry in India is (worth) $50 billion in annual revenue. It'll get this up to about $100 billion in the next three years. It's going to be doubled.

"The movement, if you look at wireless, has been from 15 million subscribers four or five years ago to about 175 million subscribers, with six million-plus adds a month." TenXc Wireless first ventured to the Indian subcontinent a year ago. CEO Joe Hickey said after a year of studying the market and meeting with business people, the firm is ready to begin a trial for its Bi-Sector Array, which allows India's wireless companies to multiply the efficiency of the small amount of bandwidth available to them in the very tight market.

"India has some of the least available spectrum available," Mr. Hickey told the OBJ. "A lot is held by the government. We basically allow them to double the efficiency of their spectrum." While North America continues to be TenXc's main market, India is quickly becoming a close contender for second place. The company just recently sent over a few staffers from the 40 it has in Ottawa for the year-long trial and, if successful, will be looking to hire local staff there.

"You might think Europe would be a destination, but we picked India because we knew it was the fastest growing market in the world," Mr. Hickey said. While TenXc does do some outsourcing in Pakistan, he said, India, with its growing market and limited available spectrum, provides the "perfect storm" of opportunity for his company to sell products there as well. However, India is also experiencing many serious growing pains – salaries for some skilled IT professionals are approaching Canadian levels, and shortages of workers are resulting in turnover rates of as much as 500 staff a week at some of the largest firms.

It's enough for even Mr. Narula to call the growth "scary" at times.
"The number of cars has doubled ever few years," he said. "Fifty new retail malls (are) to be built just in and around Delhi and Mumbai.
"There was a major acquisition of three acres of land in New Delhi recently. Guess how much it cost? $20 million Canadian dollars." One outsourcing company Mr. Narula visited with some of his Canadian clients, for instance, is hiring 60 to 70 people a day, he said. "They're losing about 20 or 30 people a day ... The hiring rates are extremely high."

Salaries are rising at a rate of 15 per cent annually, he added.
For a Canadian company looking to break into this market, an "intimate" knowledge of the major players is critical, said Mr. Hickey. "You've got to know who owns who, and for ways to work around that," he said. With takeovers by foreign multinationals of Indian companies and, increasingly, Indian companies of foreign companies, ownership can change quickly.
"In India, a lot of the wireless firms are owned by Indian conglomerate companies," he explained. "The best example in Canada: Rogers. Ted owns most of it."

Many Indian wireless companies are starting to go public, he said, with demand so huge, one recent IPO was oversubscribed by a factor of 70.
What about India's notorious reputation for bureaucratic red tape?

"What you'll find is all of our clients are working in the private sector," Mr. Narula said. "The fact of the matter is, unlike China where the entrepreneurs have hooks into the government departments, the entrepreneurial community is not like that (here). It's an independent society. In India, there was $20 billion in acquisitions overseas by Indian companies in the first four months of this year alone."