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5th June 2003
 I have long been a huge admirer of the Indian work ethic: its discipline, entrepreneurial success and networking skills. If you're one of 1bn, which is roughly the population of India, and with approximately 25% of those citizens living in abject poverty, you have to know what an opportunity is if you're faced with a way to work hard to further your life. That speaks to me. I'm a big believer in hard work as one measure of how successful someone will be in their life. Five years ago when I came to the UK, Internet ventures were getting funded by London-based venture capital groups for the first time. Everyone had an Internet strategy, and the banks had 'Internet analysts'. Today, everyone has an 'India strategy'. I first became aware of this as I persuaded my business partner, Bundeep Singh Rangar, to join me in founding Ariadne Capital in December 2000, when he was set on building a business to market Indian IT services firms in Europe. He saw the opportunity years ago, but for me it has taken the recession. We put his venture inside of Ariadne Capital as we believed that VC firms of the future would have to stay ahead of the game in terms of the relationships they extended to their portfolio firms, and we figured that offering the ability to outsource offshore would become de rigeur over time. It's interesting to see how quickly it's happened. If you were at technology forum ETRE last September you'd have heard Craig Barrett, CEO of Intel, say that you can't "save your way out of a recession; you must innovate". That view of innovation is being aggressively applied to the back office these days. What chief information officer can afford not to consider moving development work to cost-optimised locations in this extended downturn? I met recently with one of my investors, Stefan Roever, the founder of Brokat who's now running his new venture, Aplaud Technologies (a portfolio company of Ariadne). He must have been one of the earliest European entrepreneurs to test offshore outsourcing in the mid-1990s. Hearing about his trials made it clear to me how far the industry has come. Issues of security or churn and the other standard reasons given for why one wouldn't attempt it are now manageable. There are incredible success stories for firms that are outsourcing offshore in India. India strategies now include more than just software development, covering the outsourcing of call centres, research for analyst firms, finance and accounting, tax reporting - indeed, most backoffice functions. And it's moving into the front office. Knowledge Point Solutions, a portfolio company of Ariadne in Kirkland, WA, and Bangalore, has a service that works as an online sales agent using live chat to compel browsers to become purchasers. Any retailer is well aware of the number of abandoned purchases or registrations on their site by visitors and is interested in learning more about why they drop out and wants to reduce the number. Advantages still flock to the first mover. Momentum happens when you create that sense of inevitability of being the leader in your space. Growing businesses need to manage their momentum carefully. A good recession can do a lot to knock momentum; where there's no growth story, you're really only managing decline. With every business I look at, I try to imagine the entrepreneur on the other side of the planet who's going to figure out a way to do the same thing for 10% of the cost. If there's still an unfair advantage to the product or service then, you may have something to invest in. How India changes the world and itself remains to be seen. Its people, though, are smart, know how to work hard and know how to sell. That's a pretty good recipe for being a global force. Julie Meyer is CEO of Ariadne Capital; julie@ariadnecapital.com New Media Age is the UK's leading weekly
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