November - 1999 - issue > Cover Feature

Microsoft’s Indian operation is a Janus-faced entity: one milks money out of the Redmond giant’s current products, while the other develops future cash cows. The first face – Microsoft Corporation India Pvt. Ltd. – oversees the sales and marketing functions for Microsoft’s product range in India.
With its headquarters in New Delhi, Microsoft India focuses on market development activities, including partnerships, vertical markets, education, certification, the ISP market and the developer community. While Microsoft India has been establishing the dominance of its products in the Indian marketplace over the past decade, it is the company’s other face — the Microsoft India Development Center (MS-IDC) – that has attracted the maximum buzz in the recent past. And, why not? After all, the India Development Center at Hyderabad, Andhra Pradesh, is Microsoft’s second software development center outside of the US. (See box.)

Despite the distracting buzz around the MS-IDC, the way in which Microsoft India been steadily and methodically developing the Indian software market is an equally fascinating story. Though Microsoft does not provide financials for its subsidiary operation, the Indian arm’s revenues for the year 1998-99 are estimated at Rs. 3.3 billion – up almost 15 percent from the Rs. 2.9 billion reported for the previous year and a whopping 66 percent higher than the figure for 1996-97.

Software Explosion

How did this explosive growth take place? “It was like a spark was lit sometime in early 1997,” recalls Sanjay Parthasarathy, former regional director (India subcontinent division). “The single most key thing was a step function in the awareness and use of personal computers. All the other things — developer programs, education initiatives, Internet initiatives, price of PCs, et cetera — were necessary and key, but they were micro issues. The macro issue was simply the explosion of interest,” he says.

Parthasarathy spearheaded Microsoft’s Indian operations for two years before he returned to Redmond in December 1997 as general manager in charge of the Micrsoft.com Web site. Parthasarathy was also the trusted local guide to boss man Bill Gates during his famous visit to India in March 1997. Another Sanjay – Sanjay Mirchandani — took over where Parthasarathy left off in January 1998. As managing director of Microsoft India, Mirchandani focuses on developing the company’s business for the long term. He also works to strengthen Microsoft’s relationships with customers and partners. Prior to joining Microsoft, Mirchandani had worked with Arthur Anderson and Bell Atlantic.

Until the mid-nineties, Microsoft was known in India mainly for its desktop software – Windows and Office. It is only over the last couple of years that Microsoft India has moved to the enterprise space with Windows NT, BackOffice and SQL making inroads into the market share of Novell, UNIX and Oracle.

New Strategies

Microsoft India currently has two major modes of distribution: channel and original equipment manufacturers (OEMs). In addition, the company provides support and services to its Indian customers locally. Microsoft offices across the country help in establishing closer contact with customers. “Microsoft today has one of the largest channels in the IT industry in India, consisting of over 2,500 solution providers, value added providers and distributors. “In the next few months, this figure will cross the 3,500 mark, an indication of the opportunity for the channel and software solution developers,” says Rajiv Nair, president of Microsoft India.

Nair, who has been involved with Microsoft India’s operations ever since the company set up its offices in the country, is responsible for establishing and implementing key projects and taking a lead role in working with governments at various levels. Prior to joining Microsoft, Nair worked with Tata Unisys, a distributor for Microsoft in India, where he was responsible for licensing DOS and Microsoft compilers to Indian PC clone makers.

With the boom in the sale of home PCs over the last two years – the SOHO segment now accounts for as much as 40 percent of all PC sales in the country – Microsoft India has launched a special consumer strategy. The company has announced the appointment of 52 retailers across the country, covering all major metros and smaller cities and has planned partnerships with credit card companies for direct marketing initiatives. A Web store with retail partners to enable customers to buy its consumer product range online is also on the horizon.

Initiatives and Information

Microsoft India has also announced a new licensing option for the small and medium enterprise (SME) market under which organizations with as few as five personal computers can take advantage of volume discounts when making software purchases.

The new initiative is a modification of the Microsoft Open License Program (MOLP) launched two years ago with an entry point of 50 computers. Microsoft today has over 5,000 customers who exercise their option to purchase software through MOLP program, which is available through a 2,500-strong channel across the country.

Another initiative, Microsoft Connect, is a direct hotline to Microsoft, staffed by experts to give present and potential customers answers to queries on product availability, reseller outlets, information on Microsoft technologies, technical support and product registration. Microsoft Connect is now available for customers and partners in Delhi, Mumbai and Chennai and in Bangalore for partners only.

Microsoft India also plans to incorporate Indian languages into its Windows NT platform to support software development. Windows 2000 will support three scripts, Devnagari, Urdu and Dravidian. Although Microsoft plans to extend support for additional scripts in the future, the three scripts were chosen as they covered many languages simultaneously.

With the opening up of the ISP sector to private firms, Microsoft India has been actively promoting its platforms and e-commerce solutions to the new and potential ISP players.

Microsoft India, however, currently has no plans to bring MSN or Web TV into India. “In India, Microsoft does not plan to enter into the ISP business, but plans to provide platforms and tools and expertise to organizations that are entering into this business,” says a company spokesperson.

Microsoft India has formed a series of alliances with Indian software firms including TCS, International Computers (India) Limited (ICIL), Citicorp Information Technologies Limited (CITIL) and Kale Consultants to encourage the companies to build applications on Microsoft platforms for various vertical markets. For instance, ICIL has signed up to be Microsoft’s Premier Electronic Commerce Solutions Associate and will develop electronic commerce solutions based on Microsoft platforms and technologies.

Microsoft also has a range of specific offerings for the huge software developer community in India. Microsoft India has recently launched a series of seminars and conferences to help developers get to know the latest Microsoft products and the advantages they afford. In March this year, Microsoft launched an India specific Microsoft Developers Network (MSDN) Web site with events and registration listings and information updates.

Another focus area for Microsoft India in recent years has been that of education and certification. As a result, India has emerged with the second highest number of Microsoft Certified Professionals in the world, after the US. More than 64,000 certifications have been awarded since the company launched its Education and Certification Program in 1996. Of the 10,000 certifications awarded in the first quarter of the financial year 1999, 40 percent have been on Windows NT. NIIT, the country’s leading private IT education firm, has tied up with Microsoft India for Internet-based training and certification and as a certified training partner for Office 2000.

Microsoft India is working with several state governments to help them develop their technology blueprints for IT infrastructure. The company has already signed agreements with Punjab and Rajasthan. Company spokespersons say that a strong IT infrastructure will lead to more investments by Indian and multinational companies in the state. This in turn would provide better employment opportunities and economic growth. Microsoft views its role as India’s technology partner, working with the state governments to develop a long-term technology road map that would help support business growth, attract corporate investment, create more employment and improve education.