Tech Mahindra, a $4-billion (£2.8 billion) IT services firm in India, is aiming to invest $200 million (£141 million) in what its boss calls “garage startups.”
CEO CP Gurnani told Business Insider he has a remit from his board to find some of the world’s most exciting startups in artificial intelligence, automation and computing to invest in.
“The board has said I can spend up to $200 million in startups from across the world. In tandem, the board has also appointed an investment committee to go through each proposal,” said Gurnani, who is also the Vice Chairman of the Indian IT Trade body Nasscom.
“What do those startups look like? Well, for example we invested $30 million in a California startup that is looking into virtual reality while, in India, we committed $5 million to a startup that looks into automation of data centres. Some startups will get $2 million, some $20 million. Regardless the board evaluates the merit.”
He made the comments on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland. His group counts telecoms giant BT, aviation titan Bombardier and automaker Volvo as clients.
So why is such a huge company in India looking to almost start from scratch with these new companies? Gurnani said that these “garage startups” are the new generation of thinkers that, in the long-run, will be key to making sure incumbent companies like Tech Mahindra evolve with the digital revolution — or as the theme of the WEF meeting puts it — “The Fourth Industrial Revolution.”
“The number one reason is because this is what our customers want and what are customers’ customers want. They want more productivity, efficiency and better value for their budgets,” he said.
“Our customers are constantly looking at new areas of growth and are expanding into new geographies and whatever you want to call it, whether digital disruption or the ‘fourth industrial revolution,’ we need to be part of that eco system and good ideas come out of of the garages. You have to establish a good relationship with them and listen as they could all potentially help my customers and my customers’ customers.”
The areas that Tech Mahindra is super-keen in investing in are across artificial intelligence — although the group is key to call this automation — mobility, a software defined network and “the internet of things.”
The “internet of things” has become shorthand for an electronic and software network that binds together physical objects, devices, vehicles, and buildings, which also enables these objects to collect and exchange data. Essentially a “smart city.“
But this week in Davos, many of the 2,500 delegates from more than 100 countries are keen to point out that there are great risks to the global and company and country infrastructure.
UBS highlighted in its white paper, entitled “Extreme automation and connectivity: The global, regional, and investment implications of the Fourth Industrial Revolution,” that as connectivity between industries and countries increases, so the system becomes more fragile.
The world is open to catastrophic risks that can fell energy grids, companies and even country infrastructure.
However, Gurnani is not as worried as some of his counterparts at the WEF meeting.
“Every opportunity comes with challenges. With horse drawn carriages there were automobiles, with airports, machines checking you in. There are always risks with any technology. But the good news is, is that we are talking about it and can tackle it,” said Gurnani.
“For example, if you are an architect, if you are building a house in New Dehli or Johannesburg, you make damn well sure that you make sure that building has good security and high walls. You also have a risk mitigation plan.”
So with all this cash for investment and Tech Mahindra’s mega-support in cutting edge technology, WEF is the perfect place to do business.
The conference is used as a platform for world leaders, business and industry executives, and representatives from academia, civil society, media, and arts to help shape global agendas when it comes to global economics, security, public health, education, gender parity, and climate change.
It’s an opportunity for the power brokers of the world to set the agenda.
However, Gurnani said that he sees it as more of a place to develop ideas rather than landing deals.
“WEF is a brain spa for me. People always say when I come here that WEF is like speed dating for business and sleepless nights, but I don’t view it that way,” he insisted.
“I have mindful interactions with some of the most influential people in the world.”