What European start-ups can learn from the Indian tech ecosystem

Dr Nayan Kalnad & Neeraj Apte, co-founder of Avegen Health, reveal the reasons for India's tech boom
Dr Nayan Kalnad & Neeraj Apte
Portrait Of Young Indian Woman With Colored Face Dancing During Holi
Portrait Of Young Indian Woman With Colored Face Dancing During Holi (@maodesign)

Indian tech is a force to be reckoned with. Home to 107 unicorns, India is the third largest ecosystem for startups in the world (after the US and China) and boasts influential tech hubs like Bengaluru, Chennai and Hyderabad. This ecosystem has experienced exponential growth across the past few years: between 2015 and 2022, total startup funding in India increased 15-fold.

However, this rapid growth and success is often overlooked, eclipsed by the narrative of India as a source of cheap tech talent and logical destination for outsourcing. According to 2020 data, Europe accounts for about 30% of India’s $150 billion outsourcing industry.

While it’s true that many international companies benefit from the lower costs associated with Indian tech specialists, other countries - particularly those in the West - should realise that there’s crucial knowledge to be gained too. There are a number of Indian startup behaviours that others would do well to emulate and the Indian tech ecosystem has lessons for the world.

As Indian entrepreneurs (one of us living in London and one in Pune, India) who lead a healthtech company with teams in both the UK and India, we’ve seen the benefits and challenges of the respective nation’s approaches to building technology success stories. Here’s what we believe UK and European tech companies can learn from their Indian counterparts.

Embrace the concept of ‘jugaad’

Many key players in the Indian tech ecosystem come from relatively humble backgrounds. As a result, the ability to work frugally and with minimal resources is part of India’s tech DNA. Vijay Shekhar Sharma, is a prime example. The son of a school teacher and a homemaker, he went on to found mobile wallet company Paytm which IPO’d in 2021 at a $16bn valuation. Another is PC Musthafa; the son of a labourer who is now at the helm of the rapidly scaling iD Fresh Food, which has raised $100m to date. 

Thanks to this reality colouring the backgrounds of so many of the country’s entrepreneurs and tech leaders, resource constraints that could easily stump startups in other countries are taken in our stride, and we often come up with very creative solutions to the problems we face. 

We call this hack-finding approach ‘jugaad’. This mentality has spawned everything from innovative rickshaws to ceiling mounts that let you watch your laptop in bed. It also makes itself felt in the tech world; where, in our experience, Indian developers are constantly exploring ways of making products faster, smarter and more efficient. This approach means Indian startups are better equipped to weather downturns and navigate the challenges of bootstrapped growth phases; it’s part of our cultural DNA. 

However, successful Indian startups are those which remain mindful that embracing jugaad too heartily can sometimes become a pitfall as a company scales. What was a creative solution yesterday can become cutting a corner tomorrow, which hurts, rather than helps a business, and can mean that even well-funded startups end up operating at a lower level of efficiency. 

Championing STEM careers

India has one of the world's youngest populations - with an average age of 29. And, for many decades, its education system has increasingly championed the STEM subjects which help foster the tech leaders of tomorrow (a good example of this is the Government's 'Swayan' initiative). Thanks to this burgeoning population of bright young minds, and an increasingly strengthened educational infrastructure to support them, Indian companies are able to benefit from a deep pool of bright minds hungry for careers in tech. 

In addition to the depth of the generational talent offering, companies in India are also more willing to take bets on inexperienced candidates with potential. This is partly motivated by future cost arbitrage opportunities, but it means companies can tap into the ideas and skills of the upcoming generation and young workers get opportunities and exposure they would otherwise struggle to access. Some of the brightest stars we’ve hired into Avegen have had no experience, but demonstrated a passion to build great products and had the raw skills needed to do it. 

Success on a global scale

You only need to look outside of India to see the impact that this education and hiring mindset is having on the wider world of tech. India has produced the second-highest number of CEOs globally, including some of the current tech ecosystem’s most recognisable names. 

Sundar Pichai, born in Madurai, is CEO of Google parent company Alphabet. Satya Nadella, CEO of Microsoft, hails from Hyderabad. And IBM CEO, Arvind Krishna, was born in Andhra Pradesh. The value India has long placed on tech and creating opportunities to get young people engaged in technology careers has evidently reached a stage of maturity in recent years. 

The UK and Europe are increasingly pushing the value of STEM studies and encouraging more students to pursue careers in those fields; with the impact likely to be felt in the coming decades. According to UK Government figures, 2010-20 saw the number of women on STEM undergraduate courses increase by 49% and the number of UK 18-year-olds from disadvantaged backgrounds taking STEM degrees shot up by 79%.

Likewise, the European education system is much better at encouraging students across the board to gain industry experience: for instance, by building a year in industry into the curriculum of many degrees - something which sets up Europe’s youngest talent up for success in lots of STEM spheres. Although some private universities in India are beginning to copy this tactic, it’s far from the norm.

Unconventional funding models

Most of India's globally visible, successful companies are funded by VCs and conventional funding sources, much like in the West. However, in the last decade or so there are several very successful Indian tech companies which have grown patiently through a bootstrapped model, some all the way to being unicorns. For example, India's biggest online discount broker, zerodha, was built this way. To put things in perspective, their last reported revenue was over $600m with a profit of about $253m. This alternative approach to funding affects not just the financials or organisational structure of the company, but also fundamental tenets of its ethos and culture. Zerodha famously maintains a 13 year runway (yes, you read it right, 13 years!). 

Another such example is Zoho, which has deliberately expanded through the creation of rural employment in a way that is almost unheard of in the western world. It is an example of what companies can do for the community if they don't blindly subscribe to the "proven" funding and scaling models.

When you take a moment to peel back the layers, India is so much more than a tech outsourcing partner. Countries and companies that dismiss it as such risk missing out on valuable lessons that could benefit their own ecosystems. As the economic climate becomes increasingly stormy, UK startups should look to embrace creative, atypical solutions, appreciate the value and ideas of young talent, and champion the opportunities offered by STEM. It’s high time we stopped ignoring Indian inspiration.

Written by
Dr Nayan Kalnad & Neeraj Apte
Written by
February 20, 2023