February 2, 2006

Red Hat gears up Indian operations

Author: Michael Newlands

Linux vendor Red Hat is stepping up its efforts in the potentially huge India market by buying out its joint-venture partner, earmarking an investment of $20 million in the next two to three years, doubling its Pune-based research staff, and signing a memorandum of understanding (MOU) with an official body to work jointly at modernizing the Indian educational system.

Indian businessman Javed Tapia has served as director of Red Hat India Pvt. Ltd., a subsidiary of Red Hat, Inc., since it was set up in 2000. Until the US firm made the decision to buy out its Indian partner, Red Hat had been the only remaining multinational software vendor with a joint venture in India, following Novell's buyout of its Indian partner Onward Novell last August.

In India, Red Hat has promoted the adoption of open source technology across various government and private segments, and particularly in the fields of financial services and education. The company has seven offices in India, at Mumbai, Pune, New Delhi, Bangalore, Kolkata, Chennai, and Bhopal, and one in the Sri Lankan capital of Colombo.

According to Red Hat Executive Vice President and CFO Charlie Peters, the buyout is expected to strengthen Red Hat's position in the Indian software market. He said the company plans to invest $20 million in Red Hat India over the coming two to three years. Red Hat has already released Linux in five Indian languages -- Hindi, Bengali, Gujarati, Punjabi, and Tamil -- and plans to localize it further with releases in eight more languages.

According to a report in the Hindustan Times newspaper, Tapia, who remains a director of Red Hat India, said Red Hat has registered a year-on-year growth of 100% over the last five years, although this number was starting from a low base. He did not reveal any figures.

However, Red Hat India's efforts have bagged the company a number of major contracts, and it has some important initiatives underway. In the past year, Red Hat India has doubled its staff to 140. The new investment will lead to a further rise in personnel, particularly in the Pune development center, which currently has 40 employees but is able to accommodate 150.

Red Hat has undertaken projects in partnership with the state governments of Maharashtra, Andhra Pradesh, Madhya Pradesh, and Uttar Pradesh in a variety of e-governance projects, and is working with state and national officials on developing affordable PCs with Linux as the OS.

Improving education

Its most recent signing was an MOU with the Confederation of Indian Industry's (CII) Shiksha India Trust, in which the two agreed to work together to modernize the Indian educational system. The object of the agreement is to make software and content more affordable to the Indian educational system. Under the agreement, Red Hat and Shiksha will make the latest in information technology and educational content available to educational institutions across India.

Speaking at the signing earlier this month, Professor Y.S. Rajan, principal advisor to the CII, said, "India has the second-largest educational system in the world, and there is an urgent need to modernize it using information technology. Open source can serve as a tool for modernizing India, so we are happy to work with Red Hat to deploy our content and open source software in the service of Indian education.

"We will let capable and motivated teachers creatively modify the content and give it a distinct flavor to suit the local conditions and use it for teaching in other languages. It is a living organism to be a part of the students', teachers', and parents' lives."

Tapia said, "This agreement signifies the growing acceptance of open source in India. We will work with Shiksha India to create a community of Indian educators able to create content and software that can be shared freely among educational institutions."

Modernizing the banking industry

In the private sector, Red Hat India signed its largest financial services contract to date two months ago with Canara Bank, which has selected Red Hat Enterprise Linux as its platform of choice to automate more than 1,000 branches across the country.

Canara Bank is modernizing branch automation through a Total Branch Automation (TBA) package developed in-house. Canara Bank has ported the package to the Red Hat Enterprise Linux platform in order to modernize its branch network as part of its initiative of using technology to provide affordable banking services to the vast rural population of India. Red Hat Enterprise Linux will be deployed on more than 1,000 servers and 10,000 desktops at Canara Bank to provide a robust, secure, and scalable solution for powering the bank's business-critical IT infrastructure.

Red Hat India also recently announced a partnership with Wipro Infotech, the services subsidiary of Indian software giant Wipro. Under the agreement, Wipro will offer "cost-efficient, reliable, secure, and scalable solutions built around Linux platforms." Wipro will also offer application services, migration and upgrade services, desktop services, and enterprise management services and consultancy to Red Hat Linux customers.

Speaking at the signing ceremony, Tapia said, "The growing spread of Red Hat Enterprise Linux in the Indian market has created a tremendous demand for professional consulting services. Almost every enterprise today is evaluating a Linux strategy. With this partnership, we will be able to expand our consulting and professional services capabilities required for assisting enterprises in incorporating Red Hat Enterprise Linux into their infrastructure."

Until now, India has been second only to Japan as a revenue earner for Red Hat Linux in the Asia Pacific region, but the growth in India is far more rapid. The country could well take over the number one spot during the coming years if it continues to receive support from national and state governments, as well as the private sector.

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