The IT sector’s gains in the next few years could reach to a proportion which was unimaginable a few years back. At the moment, India ranks fourth for the number of start-ups—after the US, the UK and Israel. But by 2017, India could be home to the second-largest number of start-ups. Given how large IT firms, due to the poor agility inherent to their size, often lag on the innovation factor, the projected start-up boom should make India a hotspot for innovation shopping—large IT firms could look to buy start-ups with a revolutionary product or a concept (remember Facebook’s acquisition of Bangalore-based Little Eye Labs?). Often, in such acquisitions, the start-up team is hired by the acquirer to sustain the innovation momentum. Additionally, the start-up leverages its acquirer’s scale to achieve a viable market. Thus, both the big IT firm and the start-up find themselves in a win-win situation.
Government support for IT start-ups—Budget FY16 announced a R1,000 crore fund for seed capital—is already there, as is the talent needed.
According to Nasscom chairman R Chandrasekaran, 50-60 partnerships between start-ups and large IT firms have already been formalised—thus, there are definite signs of market need. This creates conditions where innovators would need to get more sure-footed about extracting the best value from the biggies. Thus, a pressing need—as much as funding—of start-up incubation is to have the required support in terms of training for M&As, maximising intellectual property gains and pitching to the markets.