Why Indian startups love open source

But Nadh wanted to change things. “Sometime in 2019, we started an R&D project to build an OMS from scratch in-house, since it was clear to us that such a critical external dependency was not ideal long-term,” he recalls. The plan was to go with free and open-source software (FOSS). Proposed more than three decades ago by Richard Stallman, founder of the Free Software Foundation, FOSS is software that is freely licensed to use, copy, study, change, improve, and redistribute. Some of the best-known examples of FOSS are GNU/Linux, Mozilla Firefox, SugarCRM, ERPNext, Calibre, Chatwoot, Apache web server, and LibreOffice.

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Bengaluru-based Zerodha is now “running private betas” to test the stability of the solution, dubbed ‘Enigma’, which will replace its existing OMS. “It (building the OMS) has been an extremely complex project,” says Nadh, “but today we have a working beta that we hope to deploy at scale in the near future”.

The day Zerodha begins using Enigma, its entire software stack would have been built completely on open source software and handled by its in-house technology team, comprising just 32 members. Zerodha’s customer relationship management (CRM) and enterprise resource management (ERP) software have already been built using ERP Next—a free and open-source integrated ERP software developed by an Indian software company, Frappe Technologies.

Open source software also helped Flipkart become agile and ramp up its “speed of execution”, says Utkarsh B, chief architect of Flipkart. He should know. Utkarsh joined the online ecommerce company in 2010, “at a time when Flipkart was just about books but was planning to go really big and become the face of ecommerce in India”. To that end, while building the tech at Flipkart, Utkarsh knew it had to be “very cost effective, which is probably why a lot of the things that we started developing were homegrown—even the supply chain”. To do that, the company had to rely on open source software.

Simply put, open source software helps startup founders and governments avoid the huge upfront costs associated with buying or licensing proprietary software and maintaining it. Simultaneously, they have complete control over the code and can modify or upgrade the software whenever needed, without incurring additional expenses. There are no vendor lock-ins, and open source support is mostly free and easily accessed through online communities.

Widespread adoption

GitHub ranked India third in the world in terms of FOSS usage in 2021, with more than 7.2 million of its 73 million users from India—a close third behind China (7.6 million). The US topped with 13.5 million users. Further, over 85% of India’s Internet runs on FOSS.

The Linux kernel, with more than 23 million lines of code, is one of the largest FOSS projects in the world. Another good example is TensorFlow, which is a FOSS library for machine learning and artificial intelligence.

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In 2015, the Indian government, as part of its Digital India programme, announced a policy on the adoption of open source software. Some of India’s largest government projects have been built atop FOSS, as have most technology startups, notes a study titled ‘The State of FOSS in India’, written by the CivicData Lab and supported by Omidyar Network India.

Kerala was the first state to undertake large-scale deployment of FOSS in the education sector, and it remains the only state government in India that continues to make budget allocations to sustain the FOSS ecosystem. Other state governments that have proactively adopted FOSS include Tamil Nadu, Uttarakhand, Assam, West Bengal and Haryana, the CivicData Lab report notes. In addition, many courts in India use Ubuntu (a Linux variant).

Further, Bharat Operating System Solutions (BOSS), a GNU/Linux-based operating system (OS), comprises several open-source OS derivatives, all developed by the Centre for Development of Advanced Computing (CDAC), Chennai, to promote FOSS usage in the country. BOSS supports 18 Indian languages.

According to the ministry of electronics and information technology (Meity), “BOSS deployments have resulted in indirect savings of over ₹250 crore by not using proprietary software”. The estimated 6 million BOSS users include the Indian Navy, and the state governments of Tamil Nadu, Odisha, Chhattisgarh, Tripura, Punjab, Puducherry, Maharashtra, Andaman & Nicobar Islands and Haryana, till date.

The new normal

FOSS is the ‘new normal’ in the IT industry. Most startups that I speak to are built extensively on FOSS. At an early stage, when startups are working on unproven ideas, FOSS helps them get started quickly compared to expensive proprietary software. This helps founders stretch their seed capital, which is usually sourced from their own savings, or from funding rounds from friends and family,” says Venkatesh Hariharan, public policy director of FOSS United.

Startups are among the biggest users of open source software, given that it is largely free and enables them to direct their funding towards other priorities. For instance, business-to-business (B2B) marketplace Udaan uses “open source extensively, right from the programming languages to code version control and code quality tools”, according to Gaurav Bhalotia, who heads the startup’s technology unit. He cites the case of snorql, a.k.a SQL-Monitoring, which is an open-source, free-to-use project developed at Udaan, aimed at diagnosing and resolving common database-related problems using SQL metrics.

Bhalotia adds that some of the key software that Udaan uses include “Imaginary (for image processing), Kubernetes, Kotlin (programming language), Prometheus (for monitoring), OpenJDK (Open Java Development Kit), Debian (operating system based on Linux kernel), and Typescript (a free, open source software by Microsoft)”.

Business-to-business (B2B) manufacturing services marketplace Zetwerk, too, uses “various JavaScript-based open source technologies as well as database technology towards developing applications such as 3D viewing and pricing automation, real time tracking of projects, payments, etc,” according to Amrit Acharya, co-founder & CEO, Zetwerk Manufacturing Businesses Pvt Ltd. He adds that “these (softwares) help us to achieve business objectives of maximizing quality of products delivered, on-time deliveries and reduce cost of manufacturing and logistics, resulting in various efficiency improvements for both our customers and suppliers.”

FOSS provides startups with a lot of flexibility, says Hariharan, adding, “when the startup finds a product-market fit and scales up, it can opt for paid support from FOSS services companies like Red Hat, EnterpriseDB and others.”

The bread and butter for any ecommerce firm is how to manage all its functional data, which runs into terabytes and petabytes, explains Flipkart’s Utkarsh. The company’s datasets, according to him, “run on open source technologies like MySQL (an open-source relational database management system that stores data in tables made up of rows and columns) and Apache HBase (when large quantities of complex and diverse data need to be organised)”.

Flipkart also uses Apache Kafka — an open source, distributed streaming platform—that helps developers build applications that continuously consume and process streams of events, such as a customer placing an order, choosing a flight seat, or submitting a registration form, at extremely high speeds. The ecommerce firm is also a heavy user of Java — an open source programming language used to develop mobile apps, web apps, desktop apps, games, etc. — and Kubernetes, which is an open source system used to deploy, scale, and manage containerized applications anywhere (container here refers to a ready-to-run software package comprising everything needed to run an application).

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Most of all, open source software has a big impact on the top and bottom line of a startup. Nadh attributes a good part of Zerodha’s profitability to the use of open source software. The startup posted a profit of ₹2,094.4 crore for the financial year 2022-23, at a time when most Indian startups are struggling to reach profitability. The profit grew 87% over the previous year, according to filings with the Registrar of Companies (RoC). “If we had not built a stack using open source software, we would not have been so profitable,” Nadh insists. And therein hangs a tale.

The Zerodha way

When Zerodha was founded in 2010 as a small discount broking firm in Bengaluru by brothers Nithin and Nikhil Kamath (both were traders), there was no technology roadmap. And Nadh, who joined the company three years later, had “zero interest in the capital markets”.

“The last decade was the Goldilocks zone (read as: conditions were perfect) for building a tech brokerage—we were at the right place, at the right time. And we made the right choices,” says Kamath. He added that it helped that Zerodha is “bootstrapped (it never had to raise money from external investors), so there was no pressure on anyone to make profits, and we could make the choices we wanted. When you raise funds, you have obligations”.

Nadh acknowledges that Zerodha’s move to build an open source-based trading platform “was a big gamble…because it was just so different from whatever else was out there”. But the gamble paid off and “…today, our trading platform ‘Kite’ is probably one of the biggest trading platforms in the world. During the covid outbreak, we went from two million trades to 10 million trades in just 30 days. So, the system scaled. At the peak, we did around 16 million trades in a single day,” says Nadh. He adds that Kite itself was “written in Go”, an open source programming language developed at Google.

The Zerodha CTO asserts that there is also a security and cost advantage to building open source tech in-house. All operating systems at Zerodha are Linux-based, the open-source operating system. Even the non-technical teams run Linux on their laptops. “It hasn’t been easy, because you know, people are so familiar with Windows,” says Nadh.

Zerodha has also trained its employees to use the free LibreOffice instead of Microsoft Office suite, and LibreOffice Calc as a “credible Excel alternative”. “We have also installed a Matrix server, since it is the new emerging global standard for federated encrypted open communication. This compensates for Slack (a collaboration suite),” says Nadh.

The unicorn does use one proprietary software, Google Suite email. “We evaluated self-hosting our own email. But that wouldn’t have been worth the effort and the risk would have been immense. Google Suite comes with all the security bells and whistles loaded,” Nadh explains.

Nadh and his team continuously scout for alternatives to proprietary software. For instance, Zerodha uses a “system called osTicket (an open source ticketing tool that a tech team can use to track IT service requests, alerts, etc.) on AWS (Amazon Web Services) that costs us $300-$400 a month. It requires zero maintenance, and we log in and archive millions of tickets. If we were to use proprietary software, we estimate it would cost us about $100,000 a month. Further, if we use proprietary software for CRM, it would be insanely expensive for us,” he says. Zerodha also has to send millions of emails every month for which Nadh has developed an in-house system called “listmonk”, which “costs us just $100-$200 a month”.

Another advantage of using open source software, says Nadh, is that Zerodha can quickly tweak its software to accommodate India’s markets regulator Sebi’s periodic changes “because we self-host everything — this is one of our biggest secret sauces”.

That is an invaluable lesson for any startup because, in competitive segments like fintech, speed matters.