BANGALORE: A number of large companies are turning to emerging ventures for innovative technologies to boost their prospects in a competitive marketplace. They are forging partnerships or buying products and services from smaller firms that helps them cut costs, enter new markets or create new products across areas such as clean technology, human resources and social media management tools.
"The technology (from young companies) is good; there is a big possibility it can be a game changer," said Palaniappan P, senior vice-president of Mahindra & Mahindra and business head at Mahindra Powerol, the conglomerate's genset manufacturing arm. His company teamed up with IIT Bombay-incubated Sedemac Mechatronics for technology that helps reduce diesel consumption by telecom towers.
"The Indian telecom industry is the second-largest consumer of diesel and we were scouting for technologies to reduce this," said Palaniappan, who earlier forged a partnership with NextGen, a clean technology venture that supplies biofuel to around 500 telecom towers.
Abhishek Humbad, co-founder of NextGen, said that the tieup with Mahindra helped ease working capital flow and helped his company sell their technology to tower firms.
Other large enterprises such as AirtelBSE -0.38 %, Vodafone, Jet AirwaysBSE 0.21 %, Virgin Airlines and IT services companies such as Tech MahindraBSE 0.44 % are also active buyers of technology solutions from a number of young Indian firms. For instance, data analytics venture Vizury helps consumer-facing businesses analyse digital data and create targeted marketing for customers.
"Vizury is generating great results for us through their personalised re-targeting solution," said Belson Coutinho, vice president for ecommerce and innovations at Jet Airways.
Experts said large companies are reaching out to young ventures because their own processes are so cumbersome that it is difficult for them to innovate quickly. "Legacy is their biggest problem," said S Sadagopan, founder director of the International Institute of Information Technology-Bangalore.
In areas such as human resource management, emerging firms are providing new tools to measure productivity, as in the case of Pune-based Sapience Analytics which sells technology-based tools to monitor and measure productivity of employees to Tech Mahindra and other IT services companies. Inttelix, based in Coimbatore, has developed a biometric facial recognition product being used by the Nagarjuna Oil Corporation to manage around 12,000 workers. For small firms such growing demand helps scale their businesses at a much more rapid pace. Vizury, set up in 2010, is targeting revenues of $100 million (Rs 540 crore) by 2014.
"Technology has created a level playing field for us," said Chetan Kulkarni, cofounder of the Bangalore-based firm.