India’s Future Is In Innovative Tech Products, Says Gururaj Deshpande

India’s future lies in developing tech products as automation and artificial intelligence will change the software services industry, Gururaj Deshpande, Indian-American venture capitalist and entrepreneur, said.

Desh, as he is known in the corporate circles, said the next wave of growth will be led by companies that use new technologies to create innovative products for telecom, healthcare, agriculture and education. “The amount of computing required will be more. The speed at which we communicate will be faster and so a lot of things will get digitised,” he told BloombergQuint in an interview.

One of his earliest bets, optical networking and telecom equipment maker Tejas Networks Ltd., is banking on this digital transformation. Desh has so far invested $30 million in the venture, which listed on Tuesday. Along with other investors, he routed investment through Cascade Capital Management Mauritius, 31.38 percent owner of Tejas.

The professor-turned-entrepreneur looks for the best team to back. “Always invest in an A-team and it doesn’t so much matter if it is a B-idea. I wouldn’t ever invest in an A-idea but a B-team,” he said on the sidelines of Tejas’ listing ceremony.

Desh starts looking for such teams early. His Deshpande Foundation is one of India’s biggest startup incubators. He is a mentor to more than 2,000 such ventures in the country and has trained nearly 10,000 students.

It’s not the first time he is helping build startups. Desh led an innovation centre in 1996 at the Massachusetts Institute of Technology in Boston. Three years later, he founded Sycamore Networks. The networking equipment maker listed at a price-to-sales ratio of 1,274 in October 1999. After an initial burst that sent its valuation soaring to more than $40 billion, Sycamore lost most of it over the next decade and shut shop four years ago.

Tejas too was also born around the time after Desh met another professor-turned-entrepreneur Kumar R Sivarajan during Sycamore’s listing conference. Books authored by Sivarajan, who taught at Indian Institute of Science, Bengaluru, were widely read by engineers at Sycamore.

“This struck me that a man who was teaching technology to the rest of world could not leverage his expertise in his own country, and that made me invest in Tejas Networks,” he said.

He said the opportunity is humongous and the industry will change dramatically over the next three decades, as the focus shifts from software services to digital technologies like automation, artificial intelligence, Internet of Things and cloud services.

Indian software services providers have been facing multiple challenges and the industry lobby NASSCOM cut its exports revenue growth forecast to 7-8 percent for 2017-18, the lowest in the last eight years.

As technology evolves, it will also provide an opportunity to restructure industries in many sectors to make them efficient and accessible, and that’s a big concept for shared economies, Desh said.

He believes the key to success lies in specialisation and such focussed technology companies already exist in the U.S. Indian companies too need to adapt to a similar model as the business is highly competitive. “Diversify only if it gives you a competitive advantage,” he said, citing the example of Google Inc. which based its business on server-building technologies but never got into selling software services.

Credibility will be an issue for India where technology has always been imported even though Indians have gone abroad and built products, he said. “The responsibility is on both the sides: it is on Indian entrepreneurs to build high-quality and highly functional technology products, and on the consumers to start buying these products.”