'Product development culture yet to evolve in India'

Q&A Krishna Yarlagadda

president and chief executive officer of HelloSoft, is slightly peeved that the culture of product development has not yet evolved in India. He is, nonetheless, optimistic. "Things will change in the next few years," he foresees.

Yarlagadda heads a company that supplies signal processing technology and software defined radio solutions for VoIP (Voice over Internet Protocol), Wi-Fi, cellular and converged markets.

The company has its R&D centre in Hyderabad where around 150 engineers are working on next-generation technologies that could be used in mobile phones, personal digital assistants (PDAs), set-top boxes, game consoles or even WLAN (wireless local area network) access points.

While the company has received its due recognition abroad (it was recently chosen as one of the top five most promising emerging companies at the Semiconductor Venture Fair in Millbrae, CA), on the domestic front it's still a lesser known entity. In an interview with Business Standard, Yarlagadda tells us why.

HelloSoft has been doing a lot of work on emerging technologies. As a matter of fact, it is one of the few companies in India involved in product development. Is the Indian market's bias towards companies operating in the software services space a cause for concern?

In India, the culture of product development has not yet evolved. It is more service-oriented. There is a need for more research-oriented companies in India.

Besides, we need to stop clubbing product development companies with IT services companies. There are multiple differences in the way the two operate. An IT services company needs to operate with a huge talent pool running into thousands. Product development companies can manage with a few hundreds. This apart, the margins are high in product development as well.

Has this lack of awareness led to non-availability of talent for the company because potential candidates would typically like to work with big names in the IT services space?

Potential candidates were attracted by big names earlier. That's why around 10 per cent of our employee base is from the US. This is not because there is a dearth of talent in India but because they do not have the experience that is required for working on such products.

But now people have realised that working for a product development company is a different ball-game altogether. There is more satisfaction in knowing that what you are developing may be used by others in their mobile phones or PDAs tomorrow.

How is the market for the technologies that HelloSoft is working on, evolving?

Today there are around 1.6 billion cell phones and 1.2 billion wired phones. But among them, less than one per cent have VoIP facility. It is expected that in the next 5-10 years, all such terminals will be VoIP-enabled.

Based on our technology, we expect 10-15 phones to show up in the market this year. The Indian consumer, I believe, will see VoIP happening in a minor way by the end of this year. Cell phones with dual mode technology could make a dent in the Indian market, probably by 2008-09.

The Semiconductor Venture Fair held in the US recently was a confluence of a number of venture capitalists and investors apart from technology professionals. Did the company make use of this opportunity to raise more funds?

We still have to use 90 per cent of the $18 million Series-B funding that we raised recently. We are, therefore, not looking at raising any more funds.

Is the company looking at new locations for setting up operations and does any other company interest you for acquisition purposes?

We are considering Bangalore and Pune as potential cities for expanding our operations. With regard to inorganic growth, we are in talks with a few companies but have not finalised on any as yet. The primary concern is with regard to the DNA. The target company's DNA needs to match with ours.