Technology services companies across the country face what its executives call ‘a linear growth’ problem: The more they grow, the more they have to hire. Managers worry about logistical problems associated with larger teams. Also, investors and stock markets tend to give a premium to companies showing non-linear growth—the kind that does not involve bulking up staff.
Typically, companies use solution accelerators, automation and portfolio changes to achieve this. Tata Elxsi, a Bangalore-based Rs 622-crore design services firm, has taken a different route by setting up a business incubator.
The concept isn’t new—it started in the US as a way to encourage entrepreneurship. In India, incubators were mostly associated with academic institutions. In recent years, a variant of incubators called accelerators is taking off, driven by the private sector.
Tata Elxsi’s initiative, incub@TE, is different from all these, says Rajesh Kumar, VP, Strategic Initiatives. “We are more focussed about business than academic incubators, and our programmes are much longer than those of a typical accelerator [which last about three months]. The idea is to help create companies that will help us strategically.”
Tata Elxsi benefits from a 10 percent equity stake. The selected start-ups get 18 months of ready-to-use infrastructure, dedicated mentors and help from Elxsi’s marketing and business development teams.
Elxsi, which recently signed up its first startup, a telecom firm called Big V, expects to incubate 30 companies in the next three years. If it succeeds, it might just pave the way for other mid-sized companies.