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India's tech muscle has the world's attention

BANGALORE -- As I enter the office of Mu Sigma, I spot complex mathematical formulas decorating the ceiling and support columns. Already, it's clear to me that this company does things a little differently.

     I am led to a large office with a window commanding a panoramic view of the southern city of Bangalore, a fast-growing IT hub with a population of over 9 million. Inside, I am greeted by Dhiraj Rajaram, CEO of Mu Sigma, a company that is quickly expanding thanks to its ability to turn big data into strategic gold for its corporate clients.

     Rajaram fixes me with his no-nonsense gaze and gets straight to the point. "First, let me know four or five things you want to hear from me in this interview," he says. He nods as I rattle off a few from my list: What led you to start this business? What sets your company apart from other big-data analysis companies?

     "Those are questions I'm frequently asked, so I've made videos of my answers to save energy," he tells me. "After you finish watching them, I'll answer any additional questions you may have."

     This efficiency strikes me as fitting for the head of a company that analyzes huge volumes of data. While I watch several videos in which Rajaram talks about Mu Sigma's business and strategy, he thumbs his smartphone, writing and responding to emails.

Meet the "decision scientists"

Rajaram left a consultancy to set up Mu Sigma in 2004. He was convinced that big data would soon become a key tool in corporate decision-making.

     Mu Sigma sifts through data provided by clients, searching for clues to improving their businesses. After analyzing the information, the company advises them on everything from sales to marketing to risk management. It helped one client, a retail giant, slash its distribution costs by 30% by pinpointing the most efficient transport routes. In another instance, it helped a food manufacturer increase sales by 2% by improving the accuracy of sales-volume projections.

Dhiraj C. Rajaram, CEO of Mu Sigma

     Mu Sigma refers to its 3,500 data crunchers as "decision scientists." Each one of them has graduated from the company's in-house "university," where they honed their chops in data analysis, statistics and business administration. Mu Sigma counts among its clients over 140 Fortune 500 companies, including U.S. majors Wal-Mart Stores and Microsoft. Though its head office is in the U.S., closer to many of its clients, the company's beating heart is in Bangalore, where the bulk of its decision scientists ply their trade.

     According to local media reports, Mu Sigma targets sales of $250 million in 2015. Though it reportedly charges far less than its rivals, the company is enjoying solid profits. Tellingly, one of its investors is Sequoia Capital, the high-flying Silicon Valley venture-capital companies that has pumped funds into such big U.S. names as Apple and Google.

     In Rajaram's office hang portraits of three renowned American entrepreneurs: Microsoft founder Bill Gates, Apple founder Steve Jobs and founder Jeff Bezos. Why this trio?

     "They respectively symbolize science, art and scale," the CEO says. "My companies has all three properties."

     Rajaram is the picture of confidence as he explains how his company will expand by making full and sophisticated use of information technology. "The world is full of small problems, all interconnected," he explains.

     He is passionate about developing new ways of collecting and analyzing data. This passion is on display in the company lab, where technicians are constantly tinkering with new ideas. Drones buzz around the room while I'm shown a system that calculates the heart rate in 30 seconds using a camera that captures the blood flow in the face.

     "We do everything -- software, services and hardware," Rajaram tells me.

Smarts to spare

The numbers say a lot about the strength and potential of India's IT industry. According to Nasscom, a local trade association of software companies, some 3.14 million people work in the sector domestically. Meanwhile, the costs in the industry are roughly one-sixth those in Japan, and a million science and engineering majors graduate from Indian universities every year.

     "In 2020, there will be 2 million IT workers in Bangalore alone, outnumbering those in Silicon Valley," says a senior official of Karnataka State, of which Bangalore is the capital.

     The combination of India's ample human resources and technology's never-ending evolution is inevitably leading to the emergence of new services.

     Representative of this equation is Indegene Lifesystems, which describes itself as a "global provider of clinical, commercial and marketing solutions to global life-science and health care organizations." Its clients include some of the world's leading drugmakers.

     Indegene's Bangalore offices are a study in cross-discipline cooperation, with medical and pharmaceutical specialists, computer programmers and designers all working together. They focus on creating digital materials that provide drug-related information in easy-to-understand ways. Currently, they are developing a system to facilitate online dialogue between physicians and employees at pharmaceutical companies.

     "We create innovation through IT-medical integration," says CEO Manish Gupta.

     Gupta travels the world to explore and uncover IT opportunities in the medical field. When I spoke with him, he had just returned from a trip to China.

     "The world medical industry will change substantially," he says. "Pharmaceutical makers are under pressure to improve efficiency and comply with regulations." Gupta is expansion-minded, saying he is always on the lookout for takeover opportunities.

     Indegene announced in November a partnership with CareNet, a Japanese information-services company catering to physicians. The company, which is listed on the Tokyo Stock Exchange's Mothers market for startups, sees the alliance as a way to provide "speedy, low-cost offerings of high-quality medical content that is attractive to physicians," according to a CareNet official.

     Indegene is growing so quickly that its workforce of 1,200 is expected to top 2,000 in two years. While it has offices in the U.S., the U.K. and China, Bangalore is the engine that drives the business. Gupta says the city is "ideal for gathering attractive human resources" and possesses "an IT ecosystem."

Talent pool

Since the 1990s, India has blossomed into a leading outsourcer, developing and operating systems for U.S. and European companies, building up its IT resources along the way. The country's IT service market has grown to roughly $120 billion, changing rapidly in both size and quality.

     When talking about India and outsourcing, a name that often comes up is Accenture, a Dublin-based multinational that handles financial, purchasing and other operations on behalf of corporate clients. The Fortune 500 company has 24,000 employees working in business process outsourcing jobs in India, and Bangalore is one of the hubs for this field.

     Manish Sharma, a senior managing director at Accenture, says the business process outsourcing industry is vastly different than it was just five years ago. Gone, he says, are the days of farming out simple tasks to other companies.

     "Customer needs are more complex than ever, from cutting costs to organizational reforms and revenue growth," he says.

     Sharma says Accenture is constantly striving to enhance its portfolio of advanced cutting-edge IT services, including in such fields as robotics, automation and cloud services.

     Bangalore is home to the offices of such U.S. powerhouses as Cisco Systems and Intel, highlighting a growing trend among globally active companies to establish a physical presence in the markets where they operate. And tech companies are not the only ones doing it; businesses in industries ranging from automobiles to retail are also on the move.

     A prime example is U.S. retail chain operator Target. Its Bangalore conference room has two clocks, one showing the local time and the other giving the time at the Minneapolis head office. Though it does not have any stores in India yet, the company regards the Bangalore office as "an extension of the head office and part of the global team," according to a Target official.

     The retailer's Indian unit employs 3,000 people. Their main task is analyzing big data, such as customer opinions culled from social media, and developing technologies for online sales and supply-chain management.

     "Retail has become an IT-driven business," says Navneet Kapoor, president of Target India. The company has launched a program to help tech ventures explore technologies it thinks will help its core business, such as those related to mobile communications and search engines.

     Retailers are not the only overseas companies being drawn to India's IT muscle.

     U.S. microblogging giant Twitter announced in January it would acquire ZipDial, a Bangalore-based "missed-call" marketing platform. ZipDial assigns companies a phone number, which people can call on their mobile phones to receive promotional and other information. Users hang up before they are connected, so they are not charged for the call.

     This format is attracting attention as a dependable means of delivering information to consumers in emerging countries, where Internet connectivity can be spotty.

     Chinese companies are also on the lookout for Indian technology. Telecommunications equipment maker Huawei Technologies launched a research and development center in Bangalore in February. And on Feb. 5, Chinese e-commerce king Alibaba Group Holdings announced it will take a 25% stake in One97 Communications, an Indian mobile payment services provider, through an affiliate. Alibaba reportedly wants a strong presence in India's online business, which is expected to grow rapidly in the coming years.

     For all their tech prowess, Japanese companies have a conspicuously small presence in India. They are estimated to have fewer than 20 R&D offices there, compared with 570 for U.S. companies and 157 for European ones.

     Spooked about being left behind, Japanese companies formed a council within Nasscom in 2014 with the aim of being on the front lines of India's IT evolution. Council chair Yukio Takeyari, who is also Managing Director of Sony India Software Centre, is clear about his mission: "Japanese companies have to deepen their understanding of India."

     The government of Indian Prime Minister Narendra Modi is working to build up the nation's IT infrastructure under its Digital India campaign. If that push continues to gather steam, the country's international clout as a tech powerhouse will only grow.

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