WHEN YOU first meet Ashok Jhunjhunwala, head of electrical engineering at the Indian Institute of Technology in Chennai (formerly Madras), southern India, you don’t immediately get a sense of the passion of the man. Small framed, with greying hair, he sits behind a neat desk, in a spartan office, on the seventh floor of an ordinary university building. If it weren’t for the monkeys wandering across the campus, you could be anywhere in the world.

Then Jhunjhunwala opens his mouth, and the effect is hypnotic.

A straight talker with a clear vision and infectious enthusiasm, Jhunjhunwala has a single goal: to bring the power of technology to all Indians, and so to create economic growth. And with the arrival of the second wave of the global internet boom, it’s clear he thinks the time has come.

“What we’re doing is not just necessary — we have no option,” he says. “We have to do this. It doesn’t matter whether we fail — someone else takes over.”

But if Jhunjhunwala seems a little impatient, it’s easy to see why. By way of introduction, he tells me how he returned to India from a US university in 1981 only to discover he couldn’t even get a phone installed when he wanted it. It took eight years, he says, to get a line.

These days, he says India is a country with a brighter future; a confident, outward-looking country, whose graduates are far removed from the ‘master/servant’ relationship he says they used to have with the West. Now, he says, India is the “design house for the world”.

At a lecture theatre on Jhunjhunwala’s campus, the efforts of one group of Indian entrepreneurs bears that statement out. The occasion is Proto, a Silicon Valley-style networking weekend for technology entrepreneurs. Exhibiting here are wireless and mobile technology companies, companies devoted to selling wikis, blogs and all the other paraphernalia of web 2.0 — in other words, the sorts of startups that a year or so ago you might have expected to find in Silicon Valley. But now it’s happening here.

“The mood is vibrant,” says Amit Ranjan, an entrepreneur at the Proto demo, who runs Indian technology startup blog WebYantra. “I see a lot of people chucking their jobs and getting on to the startup bandwagon.”

The reason? Attracted by the growth of India’s urban middle class, venture capitalists are pouring money into the technology industry — US$1.5 billion (64 billion rupees) in 2006, according to Ashish Gupta, partner of one the big players in Indian venture capital, Helion Venture Capital.

But there’s a catch. For the potential customers of these startups, it’s not telephones that are hard to come by any more, it’s internet connections.

Despite the venture capital money coming in, internet penetration is outpaced by the boom in mobile phone ownership — and both remain a distant dream to most of the estimated 700 million people living in rural areas.

In practice that means that, in Indian suburbs, children go to school to learn how to program in C, but don’t have access to a PC at home.

“India is growing very rapidly, but this is a by-and-large urban pheno-menon. It is not happing in rural areas,” explains Jhunjhunwala. “It’s a big challenge.”

It’s tempting to see the digital divide in India as something that doesn’t affect the middle class, flush as it is with new money from business outsourcing and other tech industries. But Jhunjhunwala doesn’t see it that way.

“There are 600, 700 million people in the country [rural India]; they can’t be left high and dry,” he says. “Every community has to be part of it.

“You can’t have growth where certain parts of community are left aside. You create conflicts, and a society that will consume itself.”

For entrepreneurs like Anurag Dod, CEO of Guruji.com, a search engine that aims to be the Google of India, the problem of how to reach all Indians, not just the urban middle classes, is a serious challenge.

I meet Dod at Club Cabana, a private beach-style club on the outskirts of Bangalore, where he has brought his staff on a Saturday for some Silicon Valley-style bonding and brainstorming.

As we drink beer by the pool, Dod tells me how he has just secured US$7 million in funding from Sequoia, one of the biggest venture capital firms in India. In a country where the average monthly income is only US$100, it’s a phenomenal amount of money, and I can’t help but think what the average Indian farmer would make of it.

Dod is by no means alone; the past year has seen a series of high-profile investments in the digital sphere.

Venture capitalists invested a combined US$42 million in two mobile services firms, OnMobile and Mobile2Win, and similar investments were made in travel websites Travelguru and MakeMyTrip.

In November, jobs website Naukri.com became the first internet company to go public in India, in a US$500 million IPO that was oversubscribed 55 times over. Shaadi.com, the Indian matrimonial website, is among the next on the IPO list.

But Ashish Gupta of Helion Venture Capital feels there might even be too much money being invested, compared to the anticipated growth over the next few years.

“When companies get out of the gate in Silicon Valley,” he says, “they’re given [US]$2 million, $3 million, to prove themselves, whereas here companies are getting $7 million, $8 million — and why?

“Giving a kid a big bazooka is a dangerous exercise. I’m not saying any entrepreneur is akin to a kid, but in the context of any startup, their business has not matured to the point of knowing exactly where the opportunity is.”

For the runners in the race for internet eyeballs, the danger is that the Indian internet market has not yet matured as quickly as it might.

As far as Guruji is concerned, the plan is to create a powerful search engine, armed with India-specific knowledge and targeted at India-specific content.

“India is a diverse country,” explains Dod. “We are seeing regional content coming online — Hindi, Tamil, Telugu, Malayalam content. When the rural internet happens, language is going to be the key feature.”

Targeting the rural internet is not Dod’s only goal: Guruji is offering SMS search and location-based directory content, too. But the plan -illustrates the conundrum for the Indian web 2.0: in order to see growth at the rates some venture capitalists demand, businesses need to reach across India’s yawning digital divide.

As Jhunjhunwala puts it: “This whole thing of opening up rural areas and making sure growth takes place — it’s creating confidence there, that has to be there.”

Back at the Proto demo in Chennai, some Indian entrepreneurs are setting out to do exactly that.
One company exhibiting at Proto is Novatium, a firm rising in global popularity thanks to its much-vaunted sub-US$100 ‘thin client’ PC.

Bankrolled by Sequoia and by Rajesh Jain — the entrepreneur who -famously made up to US$120 million from selling the IndiaWorld internet portal in 1999 —Novatium is hardly small fry. But its plans — to increase the number of PC users by bringing affordable computing to the Indian market — could help bottom-up entrepreneurialism across the whole country.

Jain, the brains behind by the company, is no flashy dotcom mogul. He regularly updates his personal blog about emerging technologies, Emergic.org, and he’s famous for his frugality; one Newsweek journalist recently wrote that he lives “more like a monk” than a millionaire.

One of Jain’s complaints is that, despite the presence of large venture capital firms, there’s a shortage of angel investors and business mentors to allow smaller business to get off the ground in India, which is why he’s put his money where his mouth is, spurning the trappings of wealth in order to invest in businesses that can help create social change.

“You need to let a thousand flowers bloom,” he says. “That’s where a lot of time, a lot of capital has to go. People need to try out 200 different ideas and out of that will come innovation; out of that will come the things that will succeed.

“Money is to be used as an instrument of bringing about disruptive change.”

Jain is a born businessman who gets his kicks from the highs and lows of life as an entrepreneur. “We’re trying to build out tomorrow’s world. We’re trying to create things that don’t exist, that others are not thinking about doing,” he says.

With Novatium, Jain noticed that, in a population who for the most part cannot afford internet access except at public kiosks or at the workplace or schools, a cheap internet-enabled computing solution is an immediate need.

And making use of Jhunjhunwala’s experience in the telecoms industry — the company has been incubated at IIT Chennai — he was able to create a new ‘thin client’ PC at a price point Indians can afford.

His approach — to use ‘dumb’ computers with full connectivity such as USB ports and broadband accessibility, but whose data and applications are stored on a central server, and which use your existing TV connection, removing the need for a dedicated broadband network or even a monitor — brings down the cost of an internet-enabled home or office computer to around $10 a month.

Because the system uses existing cable TV networks, the product — the Nova NetPC — cannot reach rural areas. But for 12-year-old Selvi, a schoolgirl in the Chennai suburb of KK Nagar, it is changing her life.

At school, Selvi is taught programming languages — a sign of the strong emphasis on technology in Indian education — but doesn’t get much of a chance to use a computer to put what she has learned into effect.

But with a NetPC, she’s able to do her homework online, as well as check her email and visit the internet sites she wants. In other words, do most things children in developed nations take for granted. To the envy of her classmates, she scored 100 out of 100 in a recent test.

“I can learn how to operate it easily,” she says. “In my school they teach me only the languages like C and DBase. So it’s easy to operate it here, and you can do anything.”

“We’ve got to look at doing things right to build the foundation for tomorrow,” says Jain. “People think about the physical infrastructure — the airports, the roads. They forget there’s the equally important element, the digital infrastructure.”

Of course, in a country as vast as India there are millions of children like Selvi who could benefit from a product like the NetPC, not to mention in other developing nations.

Potentially, Novatium stands to reach a huge audience. It’s a fact not lost on US technology giants like Microsoft and Sun Microsystems, both of which have visited in the Novatium pilot scheme in Chennai.
Microsoft is interested in its ability to run proprietary software systems, while Sun Microsystems, which sells servers, has signed a deal to market the NetPC to businesses and schools.

But with rural infrastructure yet to be developed, and rates of poverty as high as 26%, the company must focus on urban areas for now.

“You have to create models which are self-sustaining,” says Jain, in defence of that policy. “The way to the bottom is through the middle. Make it work in middle-income India, where people are willing to pay, but they can’t pay what the developed market charges.”

Second-guessing the market, of course, is always an inexact game, and others are focusing on different approaches. Midas Communications, for example, is an IIT-incubated company that focuses on wireless broadband connectivity, and last year made the Red Herring Asia list of top 100 companies.

Midas now employs more than 600 people, and has a presence in more than 25 countries. And no wonder: given the lack of copper-wire infrastructure, wireless connectivity solutions such as Wi-Max are seen as a potential solution in the developing world. CEO Shirish Purohit is confident his company will touch the US$1 billion revenue mark by 2008.

Gopal Krishnan, CEO of Mobile2Win, which also made the list, thinks the real technological revolution in India will happen not via the PC, but via the mobile phone. His company, based in an old printing press building on the Todi estate in Mumbai, provides platforms for mobile content to Indian companies. It also provided the SMS services for the TV show Indian Idol.

“Devices are becoming multimedia internet devices,” he says. “I would say for the vast majority of people in India, their first internet experience is going to be on their mobile phones, not on their PCs,” he says.

Given the penetration of mobile phones into the Indian market, agrees Ranjan, products and services based on mobile devices are likely to be targeted at rural areas. “Cellphones have become ubiquitous in the rural areas due to large scale adoption; the same is not true for computers,” he says.

If Krishnan seems confident, that’s because the company has already sold its Chinese arm to Disney China, and Krishnan says he sees the same shift happening in India.

Of course, there is more to growth than simple connectivity; it’s about how you apply that connectivity to change lives.

One IIT-incubated startup exhibiting at Proto is DesiCrew Solutions, an innovative company headed by the quiet and dedicated figure of Saloni Malhotra, who, after hearing Jhunjhunwala speak about his vision, left a highly paid job in a software company in Pune to set up a firm that could bring employment to rural India.

“I was working with Webchutney Studio, India’s leading interactive agency,” she says. “I had some ideas on starting a company and was interested in ICTs for development when I heard Prof Jhunjhunwala at a large conference in Delhi with over 4,000 participants. I was inspired by his work and wrote an email to him the same evening. Within one month I shifted base to Chennai to begin DesiCrew.”

DesiCrew has developed an IT system that allows people with basic English and basic IT training to log into their computers and get paid by the job for simple business tasks — including audio transcription, data entry from handwritten forms to a database, and converting files from PDFs into word-processing documents and spreadsheets — which are sold to companies in the West.

The workers, mostly unemployed graduates, log on to a multimedia PC at an internet-enabled village kiosk, usually equipped with battery backup, a printer, and local-language software that also gives access to information on education, e-governance and health.

Malhotra says while the company hopes to turn over only around 2.5 million rupees this year (NZ$86,000), the number of centres in rural areas will increase with rising connectivity, and businesses can take advantage of that.

“Jobs are moving from different countries to India, and within India from bigger cities to smaller cities. And given that you have computers, connectivity and skilled people, how far can you take the jobs?” she asks. “Can you take them to a small rural area where people are trained on whatever process you want them to work on?

“We thought the opportunity was across India. Around 15,000 internet centres have been set up in rural areas, in the name of bridging the digital divide.”

The idea could help empower women in rural communities, especially as in some rural areas girls often only get a single chance to sit their school exams, whereas boys are encouraged to do retakes.

Workers, says Malhotra, will often be housewives, often educated young women who don’t have an option but to stay in their village to work.

“Statistics say that about 70% of people who come out of colleges in India are unemployed for the first three years of their career,” she adds. “We are utilising those three years and pushing their skills a little further.”

Jhunjhunwala sees no reason why business outsourcing cannot be taken to rural communities.
“Can we take production work that doesn’t require too much energy, that uses a lot of human skills and labours, to the rural areas?” he asks. “Why not?

“Incomes are very small, but then we use computers and communications, and we take care of transport and do remote management. Eventually that will drive wages up,” he says.

“Our aim is to make sure the per-capita rural GDP doubles. This simple thing will create confidence. It will make rural India a huge market.”

Using the internet as a means to enable basic essentials of human life, such as health and education, is another challenge for Jhunjhunwala. In pilots, simple technologies such as webcams have already had an effect in rural communities. Eye specialists from Aravind Eye Hospital, at Theni in Tamil Nadu, now use healthcare videoconferencing as a diagnostic tool. A villager with a cataract, for example, would typically travel repeatedly to an urban hospital in order to have the problem -diagnosed and treated at the right time; but with the videoconferencing they only need to travel for surgery.

Farmers can benefit as well. Webcams are also used to diagnose problems with crops; and farmers can access information on weather and local market price movements, so they can more effectively plan their crops and negotiate a fairer price for their produce.

But without ways of bringing finance to village communities, says Jhunjhunwala, there will be little incentive for innovation on a rural scale — cementing the divide between the haves and the have-nots.
“You try to get a loan of $1,000,” he says, “the cost of servicing that loan is $1,000.

“We talk a lot about microfinance, but what is the interest rate — 24% to 30%? It is not a solution, it will not result in serious production. You need to give loans at 8%, 10%,” he says.

But despite the problems — and the potential risks — Jhunjhunwala is adamant using the IT revolution to create prosperity in rural India is an essential goal.

“Going back to when I was younger, there was no confidence that we can do it in India. That confidence has come.”