The Global Tech Arbitrage

In the ever-evolving landscape of technology, we're witnessing a peculiar arbitrage. It's not about currencies or commodities, but about talent, markets, and the very DNA of companies. This arbitrage is playing out as companies, particularly from places like India, attempt to scale globally.

Ashish Gupta , a veteran of the Indian tech scene, recently shared some insights that got me thinking. There's a prevailing notion that expanding from a place like India to the US is just a matter of "selling" what you've built. But it's not. It's about rediscovering product-market fit entirely.

This is counterintuitive. Shouldn't a product that works in one market work in another, especially if we're talking about something as universal as software? The answer, it turns out, is a resounding no.

Consider this: You've built a security product that works well in India. You've got customers, traction, maybe even some buzz. So you decide to sell in the US. But here's the kicker – it's not a sales exercise. It's rediscovering product-market fit. Everything from the language you use in your materials (color vs. colour) to the integrations you offer needs to be rethought.

This is where the concept of a "founder-type" person becomes crucial. It's not enough to send a salesperson. You need someone who can make decisions, someone who has the trust of the organization back home. Because when this person says, "We need to change the product," headquarters shouldn't be asking for more data points. They should be asking, "How fast can we do it?"

But here's where it gets really interesting. The very qualities that make India (or similar markets) a great place to build a startup – cost advantages, a large talent pool – can become irrelevant or even disadvantageous when scaling globally. The cost advantage shrinks as you hire more senior talent. The abundant junior talent becomes less relevant when you need specialized skills.

Yet, there's a new arbitrage emerging. With the rise of generative AI, we're seeing a resurgence of what Gupta calls "outcome as a service" businesses. These are essentially turbo-charged KPO/BPO operations, where AI augments human capabilities to deliver outcomes more efficiently.

This is fascinating because it plays to the strengths of markets like India – a large, educated workforce combined with technical capabilities. But it's not without challenges. How do you price these services? How do you manage the expectations of customers who might want the software but not the service?

The most intriguing part of this new paradigm is how it blurs the lines between software and services. We're seeing the emergence of what some are calling "software with a service" companies. These aren't pure SaaS plays, nor are they traditional services companies. They're a hybrid, leveraging technology to deliver outcomes, not just tools.

This model could be particularly powerful for entering new markets. Instead of trying to sell software to customers who might not have the capability to use it effectively, you're selling outcomes. You're saying, "We'll solve this problem for you," not "Here's a tool to solve your problem."

But building such companies requires a different DNA. You need people who can build software and deliver services. You need different HR practices, different metrics. It's like trying to run a restaurant and a packaged food company simultaneously.

The companies that figure this out could have a significant advantage. They'll be able to enter new markets more easily, deliver value more quickly, and build deeper relationships with their customers.

The global tech landscape is shifting. The arbitrage isn't just about cost anymore. It's about who can best combine technology and human skills to deliver outcomes. And that's a game anyone can play, regardless of where they're based.

As always, the founders who see these shifts early and adapt quickly will be the ones who win. The question is: Are you ready to play this new game?

Note: This is article #2 in a series based on my recent participation in the Amazon Web Services (AWS) and TiE Silicon Valley APJ-US SaaS Delegation. The series shares key insights for SaaS companies expanding from Asia-Pacific-Japan (APJ) to the US market.