On 20.0 South, 57.5 East, east of Madagascar and less than a 1,000 miles south-east of the African coast lies the sun-drenched tourist paradise of Mauritius. Another azure seas-bound island group are the Cayman in the Caribbean. Even as holidayers mill around the glorious beaches or explore some of the exotic flora and fauna of these islands, lawyers, bankers, and businessmen are quietly shaking hands on deals made behind glass doors in the downtown offices. The remarkable point here is that many of the businessmen today are Indians, and in the center of it all, is Raj Judge, partner at one of the most revered tech law firms in the world, Wilson Sonsini Goodrich & Rosati. Less than a decade ago, the compass was firmly pointed towards the United States, as startups and corporates alike from India rushed to set up offices in the Silicon Valley, even as the Internet economy went into high gear. Then the communications infrastructure in India opened up more secure and reliable cross-continent interaction online and in realtime, and many of the companies began leveraging the power of offshore development. The inevitable crash came, and cost-leveraging became even more critical. “Today's evolving business models are very different from what technology companies have traditionally followed,” says Judge, the head of the U.S.- India practice for his firm. There is a new found awareness of the advantages of being a global company at a younger stage in the lifecycle of a company. As communication costs continue to decline and the need for talent increases, companies are increasing their global presence. Judge says, “The new technology company is no longer just based in the Silicon Valley with subsidiary operations in India, it is global, with a footprint in the Cayman or Mauritius as well the U.S., Europe and India or China.”

What has changed is the very reason for setting up an India office. “From pure back-office support reasons, companies are now setting up offices in India for full operations. You have people like Rajesh Reddy and Bob Kondamoori-people who have worked in the valley-going back to set up a full-fledged company out of India, which develop total solutions for world markets,” notes Judge. VCs are also increasing their investments in India based companies, though the Indian laws have not yet completely allowed for traditional preferred stock financings. Judge sits on the board of the US-India Venture Capital Association and serves as a close advisor to some of the most active cross-boarder VCs today, including Westbridge Capital.

Unlike pure product companies, services companies out of India generate increasing income earlier in their lifespan. The emerging trend today is to take advantage of tax-beneficial countries like Bermuda, the Cayman Islands or Mauritius to reduce some of the tax burdens. India has a long standing tax treaty with Mauritius, and services companies are taking advantage of this. Some product companies are also seeing the benefits of tax planning.

As a company with principally all of its operations in India, it can set up as a Cayman or other offshore company, with subsidiaries in the U.S., Europe, India or anywhere else, and its income tax as well capital gains tax can sometimes be reduced. “Leveraging the offshore advantage takes careful planning and structuring early in the process,” says Judge.

When Ajit Prabhu and Arvind Melligeri set up their India office, it took a while to get the team up to speed. But now, Quest relies heavily on the Indian team to deliver engineering design services for turbines and power generation equipment—from design to product—for some of the largest manufacturing companies in the world. Raj Judge is helping them restructure globally and take advantage of some of the tax advantages in the Cayman and Mauritius. The move, he says, is a strategic one for expansion.

The other interesting trend is that VC firms are also becoming very comfortable with the tax-beneficial incorporations and are scaling up their investment levels. Now there are growing instances of well known firms, such as Warburg Pincus, General Atlantic, Intel and NEA that are investing in Indian centric business plans As the focus shifts more towards India, the trend will only grow.

For product companies, mainly the customer market still remains in the U.S., but here again, there is a new trend in the structure and business model of the company itself. There are companies like July Systems and Xalted Networks, which have taken the entire development and operations to India, leaving only a marketing office in the U.S. Even their CEOs have moved from the Silicon Valley to India.

“We will see an increasing trend where executive management relocates to India to leverage the offshore opportunity,” notes Judge. Given the meltdown in the U.S., companies are hard put to reduce costs, and seek out better solutions. July has gone a step better, and is building out of India from scratch, and still caters to the U.S. market very effectively.

This apart, there is a new market emerging in India, which opens up potential for U.S. other global companies. “Led by Reliance, the telecom market is expanding in India,” points out Judge, “and some of the big U.S. based companies like Qualcom are now selling to Indian companies as a customer.” The big build out—firmly committed to by the Indian government—is now attracting large U.S. companies to seek this market. Not telecom alone, adds Ravin Datar of Gartner in Mumbai. The hardware market is now on a steep upward climb in India. IDC reports that in 2002, sales of tech hardware there totaled $2.9 billion, 61% of which was spent on PCs. By 2006, Indian hardware sales will top $7.5 billion, with 65%, or $4.2 billion, going toward PCs. These companies face little competition from local hardware suppliers, which by and large focus on the assembly of low-end products. Packaged software will grow from $402 million to $794 million in sales over the next four years, IDC predicts, while spending by Indian companies on IT services will almost triple, to $3.2 billion.

Judge plays a crucial role, tying up deals in such diverse markets. “The important component here is to understand both need and supply, and generate the right environment for a deal,” says the U.S. -India practice head of WSGR, possibly one of the first person of Indian origin to have risen to be a corporate partner in one of the largest law firms in the U.S.

Judge has also been instrumental in some unique IPOs and acquisitions. He led the U.S. IPOs for India's IT giants, Infosys and Wipro, and continues to make acquisitions for them in the U.S. He also advised on Solectron's acquisition of a Canadian company C-MAC, which in fact had a listed Indian subsidiary. “We are seeing an increasing number of U.S. companies acquiring Indian companies for their business or presence,” comments Judge.

Till last year, the acquisitions were mostly for the services, but the current year has seen some deals for the product and the client business. “I am also seeing several instances where acquisition interest is for a product developed for the Indian market. The issue here is that many times the local product is dated,” says Judge. Typically, these are not cutting edge technology products, but the trend in technology products is increasing. The most interesting feature in the acquisition environment is the mindset. In the U.S., the typical technology start-up has a relatively small lifespan; management leaves in a few years or gives up roles in acquisitions. In the India-centric company, the expectations are measured in decades, and the hesitancy to sell is higher.

These new trends in the business of technology have opened another can of worms. “What happens to the IP rights? Is it governed by the U.S. law where the stipulations are clear and regulations are strict, or is it governed by the other country's laws, which may not be as tough and clear?” asks Judge.

Sumir Chadha of Westbridge Capital echoes Judge's concern. “The laws in India are generally good, but the enforcement is weak,” says Chadha. “Startups in India aren't too concerned about protecting the most important element of their enterprise-the IP. This could lead to serious trouble soon, as the borders fall and global competition heats up.”

Judge plays a non-traditional attorney's role. “At WSGR, we have always strived to be strategic partners with our clients,” says the partner. “We like to make deals happen—and it goes one notch up when we do cross-border deals. I have even helped a client find a real estate agent in Bangalore, advised another on the recruiting and salaries in Pune...the issues are many and varied.”

The deals are now happening not just for cost reductions as in the past. “Talent in India is playing a larger influence in the decision making process,” Judge says. Global footprint is gaining momentum, especially for the technology companies with Indian operations and it is becoming increasingly important for them to cater to this need. “Most deals are driven by the ambition to be a global company, and therein lies the excitement,” says the ace dealmaker Judge.