Will local product development catch on at large tech firms?: MNCs set up offices in India to reduce costs, but even if people h

After testing a new mobile audio-video content delivery technology in the Indian market for more than six months, the research arm of Alcatel-Lucent, Bell Labs Research India, which initially hoped its internal business units would commercialize the technology, finally incubated it in Bangalore recently, but only when a complementary technology was brought in from the US lab.

At one level, the technology--mobile audio, video on the go, or "Mango"--marks the first incubation of Alcatel-Lucent Ventures in India, the venture capital division of the telecom equipment maker. At another, it is indicative of an issue that now preoccupies heads of the Indian units of technology multinationals (MNCs).

Developing innovative technologies by itself is not a trivial task; to get an internal buy-in for their entry into the global product pipelines is proving to be no less daunting. To overcome this, a group of top Indian executives of MNCs held an informal meeting last month in Bangalore, setting the stage for a "strategic council".

"There's a challenge in getting ideas (vetted) for emerging markets. Business decision makers are not based in India; many of them have not worked with Indian customers," says Viswanath Poosala, head of Bell Labs India, who attended the meeting, along with executives from other companies, including Intel Corp. and Siemens India.

In developed markets, MNCs are often guaranteed bigger returns. So when new ideas come, business heads look at revenue potential in India and/or other emerging markets, said Poosala. "We need a slightly more agile local business model."

In the case of Mango, the content access point which connects to networks over broadband and to the mobile phones over Bluetooth or Wi-Fi, the idea was to serve acertain class of market in India. With the additional technology from the US, says "Mango" developer Sharad Jaiswal, who will now be the chief technology officer for the yet-to-be-named venture, the technology will appeal to a broader market. He, however, declined to reveal what that complementary technology was.

This might, in many instances, mean the parent company looking at completely new business models. Incidentally, Alcatel-Lucent's chief executive announced last month that he was considering making India its services headquarters.

In Philips Venturing Board (PVB), the new business creation division at the Dutch electronics company, new technologies are increasingly assessed along with their revenue models.

"For an imaging equipment maker (such as Philips), it's rather new to look at pay-per-image and store-the-image-in-the-cloud models--moving from capex to opex," says Naveen Kulkarni, director, business development, Philips Research Asia.

Engaging with headquarters can be difficult for Indian executives, says Kulkarni. Sometimes it's hard to explain why Indian gynaecologists, apprehensive of the complicated compliance with the Pre-Natal Diagnostic Techniques Act, choose not to use ultrasound at all, he says.

"So, if we were to propose a new ultrasound technology that would hide sex detection, certainly not an easy innovation, it would be difficult to make the management understand," he noted.

Trying to put a number on business potential makes the task even more difficult. "In some cases, we talk to peersin other emerging markets, combine forces as some problems are common," added Kulkarni.

Certain sectors, such as semiconductors, are somewhat better placed. Texas Instruments India Pvt. Ltd (TI), with 40,000 products in its portfolio, says it co-innovates with local customers and keeps its engineers creatively engaged. The semiconductor chips used range from ones that are already available in TI's broad product portfolio, to those that need some modification to existing ones, says Biswadip Mitra, president and managing director, TI India. "Then there are chips that are applicable to the global market but for which the India electronics market needs an important driver."

For firms such as Microsoft Corp., the imperatives may be different--they have enough and more reasons to innovate around existing products.

At Microsoft's India development centre (IDC), the fact that it has developed the office suite for its upcoming mobile operating system, Windows Phone 7, is a good example of how integrated IDC is in the overall product development.

Talking of new technology proposed by IDC that was taken up for product development, Srini Koppolu, vice-president and managing director, recalls a four-year-old success story where radio-frequency identification support was suggested for improving production workflow. It took IDC six months to convince Redmond, but it finally got integrated into some of Microsoft's server products. "It's much easier to create new features rather than create a new pipeline," noted Koppolu.

Many companies have begun a range of programmes that encourage innovation, but keep employees creatively engaged as well. One such category at Microsoft is called the "garage initiative", an all-volunteer group. Out of 2,200 employees worldwide, 180 engineers belong to Garage Hyderabad.

At a recent conference in Bangalore, Intel's Innovative Products Group head Kishore Ramisetty said his division has some "initial successes" and some "spectacular failures". Intel later declined to provide details or comment for this article.

Globally, there are stunning success stories of companies supporting employee ideas, many leading to "intrapreneurship"--from Microsoft's Xbox to Sony Corp.'s PlayStation, 3M Co.'s Post-it notes to the programming language Java by Sun Microsystems Ltd. However, Indian centres of large technology firms are yet to talk of any such breakthroughs.

"Technology development is an evolutionary process and Indian centres can't short-cricuit it," says Ashish Gupta, co-founder of venture capital firm Helion Advisors Pvt. Ltd. Most MNCs set up India offices for cost reduction and access to back office work; even if people here have good ideas, it takes long to be heardowing to the old roles that they have played.

Gupta, who founded two technology firms and worked with large corporations such as Oracle Corp. and IBM Research, before turning a venture capitalist, says: "As a country we've not had product management.If Indian centres are innovating, they will have to do itconsistently and systematically, geniuses or fluke innovations don't get accommodated."

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