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From India, With Lessons

A few Indian companies, including Brainvisa, are making a go of it in a market usually reserved for U.S. firms: e-learning – alarm:clock news from the land of private venture funding.

By now, it’s no secret that U.S. technology companies outsource large chunks of their software development work to programmers based in places like Bangalore, India. Even with all this acclaimed engineering talent, however, a relatively small number of India-based companies are raising venture capital money and pursuing the start-up dream – at least we haven’t encountered them.

Recently, though, we came across an exception, Brainvisa Technologies, founded in 1999 and based in Pune, India. Earlier this month, WestBridge Capital Partners, which has offices in Silicon Valley and India, announced an investment of $5.5 million in Brainvisa, which reportedly took in $4 million in revenues in 2005. While not a huge investment round by U.S. standards, it goes much farther in India, which should allow the company to expand.

Brainvisa creates learning-based products for the corporate, publishing, education, and government sectors. The company helps its clients develop training courses, including courseware, web-based training modules, and virtual classrooms, to educate employees in dispersed locations. For instance, Brainvisa developed a sales-force training program for a large U.S. electronics retailer as it introduced new products in its 600 stores.

Brainvisa has over 400 employees – graphic artists, writers, animators, and programmers – most of them based in a main development center in Pune, as well as another center in Noida.

Supam Maheshwari is the CEO and a co-founder, along with chief operating officer Nitin Agarwal and chief technology officer Vikas Kumar. Maheshwari previously worked at Vivendi and Pepsi – which likely exposed him to the challenges of educating a large work force about a product launch or new software.

What makes Brainvisa noteworthy isn’t its technology, though, but its testament to the concept that Indian outsourcing can compete outside the realms of call centers and enterprise software development. To be sure, such learning products have traditionally been “high-touch,” with well-paid expert consultants sitting shoulder-to-shoulder with clients.

The success of BrainVisa leads us to believe that almost any business function, except for direct sales, can be outsourced. Indeed, several other Indian companies are also addressing the market for custom e-learning, including conglomerate Tata Interactive, which reportedly earned $20 million in fiscal 2005, as well as Mentorware and NIIT.

Brainvisa faces fairly well-established stateside competitors as well, including SkillSoft (Nashua, NH) and San Francisco-based Digital Think, which was acquired by Convergys in March 2004. Given the legendarily low costs of software development in India, however, we suspect that Brainvisa is able to compete fiercely on price against these companies.

Does Brainvisa’s recent financing signify a new dawn for Indian start-ups? We think not. Big ideas, even if they originate in India, usually have a way of setting up shop in one of the technology hotbeds on the U.S. East Coast or in Silicon Valley, where an entrepreneurial culture is more readily encouraged.

Still, to see further examples of technology start-ups with connections to India, the Westbridge Capital website is a good place to start – it’s $140 million fund is focused exclusively on India.

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