Leading startup thinks Kerala will be top digital hub in a decade, here is whyhttps://indianexpress.com/article/business/companies/startup-ust-global-digital-hub-kerala-investment-fortune-500-5242877/

Leading startup thinks Kerala will be top digital hub in a decade, here is why

The massive investment from Temasek through a minority stake has now heralded UST Global as Kerala’s first homegrown unicorn with a $1 billion valuation.

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“The startups are going to play a very big role. They will have a niche capability in providing solutions and we have already started using a lot of startups from Kerala.”

Few IT companies, which have taken root in Kerala, have enjoyed the scale of success as UST Global. For the digital and technology services firm, last week was a jubilant time as it announced raising $250 million from Singapore-based Temasek Holdings, its first institutional investor in its 19-year journey. UST Global, which began operations in California and Thiruvananthapuram simultaneously in 1999, provides computing and digital solutions for Fortune 500 companies through an array of services from analytics, cloud and cyber-security to information management and legacy modernisation. The massive investment from Temasek through a minority stake has now heralded UST Global as Kerala’s first homegrown unicorn with a $1 billion valuation. The firm’s Thiruvananthapuram and Kochi operation centres contribute a large share of its 12000 employees in India.

This week, indianexpress.com caught up with Alexander Varghese, the chief administrative officer of UST Global to know more about the funding from Temasek, its plans for Kerala and what elected governments need to do to motivate young entrepreneurs in the state.

How does it feel to be a part of a ‘unicorn’ firm which has its roots in Kerala?

It’s a great feeling. We started in 1999 with 14 people at a time when not many people were venturing into Kerala…and I think probably, a lot of things that are happening now also sends a strong message to the community that this is the right ecosystem for those kinds of companies to grow and nurture. I have been personally involved in getting some of the larger players to come to Trivandrum and Kerala so personally, it’s very gratifying.

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How do you plan to use this massive funding you have received from Temasek?

Look at all the IT services companies that are going through a transformation, moving from a traditional service provider to a digital service provider. (Like them) we will be utilising these funds primarily to build digital assets in terms of products and platforms, solutions for our customers and also from a geographical expansion perspective either in terms of organic and inorganic ecosystem.

Alexander Varghese, the chief administrative officer of UST Global.

How do you see the startup ecosystem in Kerala?

My experience with the startup companies in Kerala has been phenomenal. I understand that 20 per cent of the startup companies in India is from Kerala, so this is going to be very, very good news especially when most of the companies are taking the digital transformation journey. The startups are going to play a very big role. They will have a niche capability in providing solutions and we have already started using a lot of startups from Kerala. I would say in the next 5-10 years, Kerala will probably become one of the top digital hubs providing world-class digital solutions. If you look at the number of companies that are coming up in that space, the government initiative on the five centres of excellence including the blockchain academy will fuel that growth and probably global companies will look towards Kerala for providing world-class digital assets and solutions.

We have a lot of startups and firms looking at the software side of things. Don’t you think we need more hardware-based technologies taking root in Kerala and rest of India?

It’s mostly opportunity driven. The IT today is a combination of hardware and software. The future is also going to be that. Since the demand is going in that direction, supply will also go. We have already started seeing hardware component manufacturing industry growing here. We ourselves are taking a lead in getting Intel to have a hardware manufacturing centre in Kerala.

What does the government need to do more to motivate young entrepreneurs?

A couple of suggestions. It is very important for the government to invest in terms of skill upgradation which is going to cater as a feeder organisation for all the larger companies. When I talk about skills, they need to make sure that industry-academia of participation needs to be further strengthened. Today if you look at wherever the industry has grown, there has been a strong academic partnership behind the scene, like Stanford in Silicon Valley has contributed. It is very important for the government to understand that they strengthen the academic side and have a stronger partnership with international academic houses so that there’s no lag in terms of the technology that’s coming here and the environment in which our students can go through.

What kind of talent pool in Kerala are you looking to exploit for the services your company provides?

Today, I would say the talent pool availability at the entry level is very, very less. What we do is we hire and train them on relevant technologies and then utilise them, which is a slightly longer cycle. What we have started now in terms of having a partnership with academia wherein we will have a digital innovation lab in our centres. We take interns, give them an opportunity to work on relevant technologies as part of the internship so that in less than three months, they will be able to create a digital asset which is relevant to our customers. That is the ecosystem we are utilising as contrary to hiring a large number of people and training them.

What has been your experience working with the current administration in Kerala?

Historically, in the last 19 years, irrespective of the governments that have come, they have been very supportive to the IT industry. Times have changed, as we proceed, the competition is higher from the rest of the states, This government has been proactive and very quick in taking pro-industry decisions to make sure that they can build on it.

What should India do to retain our smart, young minds? How do we stop the brain drain?

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Number one is opportunity creation. With all the immigration issues happening in the US, a lot of people are coming back. Secondly, in terms of going up the value chain of what we have been traditionally doing, from an IT perspective, we have been looked upon as a centre for low-end work, but most of them have gone up the value chain. We have enough talent coming back. Most of the product companies like Microsoft and Oracle are moving increasing amounts of their product development design work back to India. As long as we keep focusing on the value chain, India will be one of the top destinations. At one point we used to think of the population as a curse, but it’s a blessing for us right now as a demographic dividend.