The Economist writes that there's a lot more to India than just outsourcing:

A veil of discretion is masking some of India's R&D achievements. Industry lobbyists are playing down this aspect of India's success. Some multinationals, such as IBM, are loth to discuss it at all. Others, such as Texas Instruments, boast that they “have increased design resources around the world”, but make sure to add that “this has been accomplished without transferring significant numbers of jobs to India”. Indian IT firms are stressing that, great as their contributions are, the real cutting-edge, innovative work is done in their clients' laboratories in America.

Satyam Cherukuri of Sarnoff, an American R&D firm, argues that, of the three requirements for developing an innovation-driven industry, India has two: the technical skills and access to capital. What is missing is an indigenous business model.

By the crude measure of patents earned by the Indian subsidiaries of multinational firms (see chart), a significant amount of innovation now stems from India. Last year, Intel's Indian subsidiary filed for 63 patents. Its president, Ketan Sampat, says that the 1,500 IT professionals employed by the firm in R&D in Bangalore are engaged in “engineering challenges as complex as any other project on the planet.” They use the fastest supercomputer in India (ranked as the 109th-most powerful computer in the world) and are divided into four product-design divisions covering ultra-wideband radio, enterprise processors, mobile and wireless chip-sets, and communications.

Wipro's boss, Vivek Paul, says that R&D is becoming “like the movies”. Firms, like film studios, are increasingly unwilling to keep expensive teams together between projects. For Wipro, providing firms with an alternative to doing R&D with permanent in-house teams has become a big business, accounting for one third of its $1 billion in annual revenues, and employing 6,500 people. It is probably the world's biggest R&D-services firm.

Sarnoff's Mr Cherukuri calls this “the globalisation of innovation”—continuing the erosion in the past 20 years of the old model of corporate R&D, dominated by big firms with big budgets able to erect big barriers to entry to their markets. His firm thrives as an “open-source provider of intellectual property to the world”—ie, in the outsourcing of R&D. This is part of a broader trend, prompted partly by a rising number of entrepreneurial innovators and growing amounts of venture capital to finance them, towards a more “dispersed” model of R&D. Now, the internet has removed geographic barriers to using far-flung talent, and the popping of the dotcom bubble “has spread innovation offshore”. The dispersal is becoming global.

There is little doubt that Google's ambitions in organising the information space are as gigantic as Microsoft's in the software space. The recent announcement about Gmail (offering free, ad-driven, web-based email with 1 GB of storage and integrated search built-in) sends a strong message to those who thought that there was an opportunity to be the Google of email. If we assume that software and information are pervasive in our world, the two companies which have to want to continue to dominate these two spaces are Microsoft and Google.

Of course, Google is a long way away from achieving the kind of monopoly has in key software verticals. But the ambition is there to see. Google is following the classic Microsoft strategy - embrace and extend. The fun will start in the coming months as Microsoft launches its own search engine. As it seeks to move from software to information, Google will try to move beyond search into other markets (like email and perhaps, the desktop). This will be an epic contest. The ones who will have all to lose in this - Yahoo and AOL.

Google is leveraging what Bill Gates said a few days - that hardware seeks to be free, along with bandwidth (the free hardware point is something Michael Kanellos disagrees with). For Microsoft, the value lies in software. For Google, the value lies in the services that it provides.

Some other views on this:

Writes WSJ: "Google Inc.'s announcement that it plans to launch a new Web-based e-mail service signals an aggressive step into the home turf of portal giants Yahoo Inc. and Microsoft Corp.'s MSN, threatening to plunder bedrock users from the portals and likely forcing big changes in their e-mail services...Google, no doubt, will change the economics of free e-mail. Mr. Rosing said it has no plans to turn Gmail into a paid service in the future and believes it can support it handily using the same type of targeted text ads now seen on its search-results pages...Search-page advertising companies like Google and Yahoo's Overture unit are hungry for more Web pages on which to display this increasingly popular form of online advertising. Gmail offers Google a huge new source of Web pages for these ads. The idea is something that Yahoo could conceivably try to duplicate."

NYTimes: "Google will offer consumers better access to searching their own e-mail and could well upset the industry balance by offering free access to services that previously were available only by paying a monthly subscription fee...The standard industry practice is to offer tiered e-mail services, providing only limited storage free and charging higher fees to users who want to preserve a larger number of e-mail messages for capabilities like online storage. Google, by contrast, is planning a service to be supported by advertising that will permit its users to store very large amounts of mail at no cost...One internal Google study put the operational cost of maintaining e-mail storage at less than $2 a gigabyte, enough to preserve tens of thousands of messages of typical length."

Danny Sullivan (Search Engine Watch): "Mixing ads with email isn't new. Free services have long earned by inserting ads into the footers of emails that their users send. But some users might be disturbed by the concept that Google, even if only in an automated fashion, would be essentially reading their mail in order to know what ads to place...Google's not unique in offering web-based mail search functionality. Yahoo Mail has a similar feature, for example. But the ability to store so much of your mail at Google may give its service a huge advantage if search-based mail reading takes off."

Clay Shirky has a thought-provoking post on his experiences teaching a course at NYU on social software and getting the students to create software useful for their community:

I teach at NYU's Interactive Telecommunications Program (ITP), where the student population is about evenly divided between technologists who care about aesthetics and artists who aren't afraid of machines, which makes it a pretty good place to see the future.

Part of the future I believe I'm seeing is a change in the software ecosystem which, for the moment, I'm calling situated software. This is software designed in and for a particular social situation or context. This way of making software is in contrast with what I'll call the Web School (the paradigm I learned to program in), where scalability, generality, and completeness were the key virtues.

We've always had a tension between enterprise design practices and a "small pieces, loosely joined" way of making software, to use David Weinberger's felicitous phrase. The advantages to the latter are in part described in Worse is Better and The Cathedral and the Bazaar. Situated software is in the small pieces category, with the following additional characteristic -- it is designed for use by a specific social group, rather than for a generic set of "users".

The biggest difference this creates relative to classic web applications is that it becomes easy to build applications to be used by dozens of users, an absurd target population in current design practice. Making form-fit software for a small group of users has typically been the province of banks and research labs -- because of the costs involved, Web School applications have concentrated on getting large-scale audiences. And by privileging the value that comes with scale, Web School applications put other kinds of value, particularly social value, out of reach.

We've been killing conversations about software with "That won't scale" for so long we've forgotten that scaling problems aren't inherently fatal. The N-squared problem is only a problem if N is large, and in social situations, N is usually not large. A reading group works better with 5 members than 15; a seminar works better with 15 than 25, much less 50, and so on.

This in turn gives software form-fit to a particular group a number of desirable characteristics -- it's cheaper and faster to build, has fewer issues of scalability, and likelier uptake by its target users. It also has several obvious downsides, including less likelihood of use outside its original environment, greater brittleness if it is later called on to handle larger groups, and a potentially shorter lifespan.

If what I'm seeing is not transitory or limited to a narrow set of situations, then we'll see a rise in these small form-fit applications. This will carry some obvious downsides, including tying the developers of such applications to community support roles, and shortening the useful lifespan of the software made in this way.

Expectations of longevity, though, are the temporal version of scale -- we assume applications should work for long periods in part because it costs so much to create them. Once it's cheap and easy to throw together an application, though, that rationale weakens. Businesses routinely ask teams of well-paid people to put hundreds of hours of work creating a single PowerPoint deck that will be looked at in a single meeting. The idea that software should be built for many users, or last for many years, are cultural assumptions not required by the software itself.

Indeed, as a matter of effect, most software built for large numbers of users or designed to last indefinitely fails at both goals anyway. Situated software is a way of saying "Most software gets only a few users for a short period; why not take advantage of designing with that in mind?"

This, strangely, is a kind of progress, not because situated software will replace other kinds of applications, but because it mostly won't. For all the value we get out of the current software ecosystem, it doesn't include getting an application built for a handful of users to use for a few months. Now, though, I think we're starting to see a new software niche, where communities get form-fit tools for very particular needs, tools that fail most previous test of design quality or success, but which nevertheless function well, because they are so well situated in the community that uses them.

John Battelle's Searchblog has a couple of interesting posts on two innovative search-related portals - GlobalSpec's Engineering Web and Topix. First, Battelle on GlobalSpec:

GlobalSpec is a domain specific (or vertical) search engine. It got its start eight years ago as a classic IT play - take all the catalog-based information about engineering parts - sensors, transducers, etc. - and roll it into a huge, cross-referenced database, which you then distribute over the web. Make money by connecting customers to parts suppliers. Simple.

Over the years GlobalSpec has evolved into a robust community of a million or so engineering types who use it to find and spec parts. That alone is pretty cool (I mean, a million engineers!). But the coolest stuff was just launched: They call it "The Engineering Web" and it's a domain-specific crawl of the web for engineering information. And not only have they crawled the web (about 100K engineering related sites, so far), they've also surfaced invisible web databases not found in mainstream search engines - patent and standards sites, for example, which are walled off by registration and business considerations. Anyone can use the service - it's not limited to registered users. In essence, GlobalSpec has built a portal that drives traffic and intent through their original database business, in the process building an intelligent island of engineering information that lives in the public sphere. Of course this means they can add AdWord-like functionality, which of course they are working on.

Here's why GlobalSpec points to some exciting developments in search. Because of its limited domain, GlobalSpec can use relatively simple keyword-based algorithms to surface lists of ideas or terms related to your search. This allows you to refine your search in ways that simply don't scale in the Googleverse. These related ideas are inferred from the results of your initial query. For example, if you search on "aerodynamics", you will get "aircraft , Flight Mechanics, Helicopter Aerodynamics, computational fluid dynamics and Theoretical Aerodynamics" as related searches.

The GlobalSpec guys outlined a useful trio of attributes shared by domain-specific search engines like GlobalSpec. First is organization. This is the basic premise of domain specific engines - through organization comes efficient search. Schneiter calls his engine "parametric" - everything in the index is organized against the standards and parameters of the engineering field, making "parametric search" a reality. Second is context. Domains engines are by definition contextual, but GlobalSpec has a drop down menu next to its search box that allows you to contextualize the search even more, across a bunch of subdomains like Products & Manufacturing, Company Name, Application Notes (engineers care about this), Suppliers, and Standards. And third is access. Vertical search products, by their exclusive nature, can provide domain-specific access to the invisible web, in fact, they can enable commercial transactions that otherwise would be impossible (as GlobalSpec does, see here - at the bottom is the option to purchase an engineering standard from a company with a deep database of standards, a database which cannot be accessed via mainstream search engines). To that end, I'd argue that a fourth attribute of vertical search engines is commerce - these engines enable serious, highly efficient closed loop markets.

Topix is an internet media play. More specifically, it’s a local advertising media play. The service takes a crawl-and-index approach to a vast array of internet news sources, then runs the resultant stew through a metadata engine which tags every news story with location and subject data. Topix then builds more than 150,000 topic- and location-specific pages, pages that live comfortably between the great gunky mass of search results, on the one hand, and the impersonal morass of most news sites on the other.

At the risk of getting mired in academic debate, one could argue that Topix is a proof point in the semantic web. Topix is not interested in every web result that might be rendered for a search “news kentfield,” for example. Instead, it searches a limited set of web pages – in this case thousands of news sites – and then annotates the content of those pages with semantic tags - latitude and longitude, for example. It then machine-generates something of an “encyclopedia page” for Kentfield, cobbling together news, weather, advertising, police blotters – a local newspaper in real time.

This is a little old (March 3) but nevertheless interesting reading. Zephoria writes:

First, i want to be able to choose to watch an entry, a topic or a person. I don't want to be forced into a person only; this unit of view is way too big.

Following a person should be like now - i see everything in their feed.

Following a topic means that i can specify things like "all entries by this person related to 'echo chamber'." As such, i can follow whatever this person has to say on something. This is particularly relevant for following bloggers who have a topic of interest to me, but whose entries are by in large, not of interest. Of course, i know that this means that all of you YASNS followers will never read my V-Day writings. But alas, i know you don't care about my politics anyhow.

Following an entry is a bit more fun. Say that i find an entry that i think is of interest - either in my feed or out there on the web. I should be able to add/mark the entry so that the entry tells me when there are new comments and all new trackbacks get inserted into my feed as single entries too.

Personally, i'd like to tap into the graph of blogs. Technorati knows the linking structure. Forget blogrolls. We can see who links to who embedded in their blog. We can determine blog topology. Why can't i have topic-based RSS requests. "Tell me anyone within 3 degrees of my network who is talking about 'rape' or 'domestic violence'." In theory, Google should help me on this but that's overload! Plus, i can't pull out just the blogs (a feature that i'm STARTLED they haven't implemented after having purchased Blogger).

Finally, every day trusted friends of mine send me URLs. When i surface for air, i have to fish through thousands of emails to find those interesting tidbits. I love getting recommendations from friends. Why can't they just drag a URL into my RSS feed? Why can't i have a feed of "every URL that Ronen thinks i should read"? Frankly, this would be so much more efficient to reading things. Plus, my friends know what is of interest to me. Another thing is that it should be possible for me to have a public dump. Anything that people in the public think that i should read.

I don't want automated recommendation systems. I want tools so that my friends can do what they already do - pass on information that they think is relevant. But i want to make it easy for them. And perhaps have a mechanism to say "THANK YOU!"

As more and more people blog, RSS is going to break on the social/attention level. In many ways, it already has for me. I've started interviewing bloggers and i'm fascinated by how hard it is for them to consider adding something to their RSS. Overload. Overload. If anyone wants to know why the early players get all of the attention, it's because RSS feeds focus on people, not ideas, and the early players are too overloaded with following the other early players to consider new people.

NYTimes writes:

In India, microloans are usually disbursed to poor women whose total family assets are under 20,000 rupees ($445) and whose monthly income is smaller than 350 rupees ($7.88). Yet microfinance initiatives have a phenomenal repayment rate averaging more than 95 percent, better than the best commercial banks in the world.

There are an estimated 3,000 microfinance initiatives serving the world's poor but a scarcity of money has limited their expansion. More than 70 percent of them serve fewer than 2,500 borrowers each.

Only 30 microfinance initiatives have grown to serve more than 100,000 poor borrowers. One of them, the pioneering Grameen Bank in Bangladesh, reaches more than three million borrowers currently. A total of $4 billion has been disbursed since Grameen started giving loans in 1976 with seed loans starting as small as $35.

The majority of the microfinance initiatives struggle to find grant financing and stay in business. The financing they do receive is often in small grants of $5,000 to $50,000. The ventures are often viewed as risky propositions for loans from commercial banks.

Some microfinance projects are tapping into commercial financial institutions. In India, the Grameen Foundation is starting a company called Grameen Capital India in partnership with Citigroup and India's leading ICICI Bank to help microfinance initiatives get guarantees for financing.

As I have been writing in my "As India Develops" series, microfinance needs to be complemented by other solutions, especially access to markets.

Two complementary elements can help take business process management (BPM) to the million small- and medium-sized enterprises (SMEs) across India: a standardised software platform (let’s call this Visual Biz-ic) and an organisation which combines solution aggregation and provisioning, with consulting (exactly what the IBM-PwC combo does for the large enterprises of the world).

Think of Visual Biz-ic as a Visual Basic for business processes. Through the past decade, Microsoft’s Visual Basic has helped simplify software development through its integrated development environment and pre-packaged components via software libraries. Similarly, Visual Biz-ic offers a visual development environment for business processes, along with standardised components and models for different industries.

So, an auto components manufacturer should be able to put together a complete set of software applications for its business processes by leveraging the existing process models that would exist. There may be a need to customise a few processes based on the unique characteristics of the organisation. In that event, these modifications are updated back into the central library and available for others to use.

For SMEs, this would be a dramatic improvement from today’s non-consumption scenario. Most SMEs in India use a mix of home-grown applications for some of their needs. Worse still, there are many who don’t use anything, still relying on either spreadsheets or manual processes. What Visual Biz-ic offers is a leapfrog approach to automate their business.

To make Visual Biz-ic a reality, it is necessary to create process models for various industries in India. This is not as gargantuan a task as it seems. If we take about 12-15 key industries and then take 10-12 types of businesses in each industry, what we need is about 150-200 process models to cover almost all of Indian industry.

This brings us to the second element: an IBM-like organisation to assimilate and deploy solutions for the SMEs. IBM has, over the years, built a formidable organisation which can take a mix of hardware, software and communications technologies and deploy them for large enterprises globally. Recently, it added consulting capabilities to its portfolio through its acquisition of Price Waterhouse-Coopers (PwC). SMEs need something similar to help bridge the gap that exists between their need for whole solutions and the disparate technology vendors.

Such an organisation would offer four key services for SMEs: understanding the needs and defining the technology requirements (consulting), integrating and deploying the appropriate mix of technology to create the right digital platform within the enterprise (systems integration), doing the necessary customisations on platforms like Visual Biz-ic as the SMEs may want (software services), and finally provide the necessary support and training to leverage the technology for business growth (facilities management and beyond).

This IBM-for-SMEs becomes a partner in their growth. This is the missing link that can make ICT part of the fabric of the manufacturing sector, making the million businesses the myriad points of light as part of India’s shining future.

Next Week: As India Develops (continued)