Yahoo! is using India as a test-bed for new ideas in an effort to keep pace with innovation in the global online market.

The internet search engine group is also targeting fast-growing Asian economies for user and advertising sales growth in an effort to narrow the financial gap with Google.

The two-pronged approach comes as Yahoo! reassesses its strategy after a bruising encounter with investors over the summer.

A disappointing share price and a feeling that its management was losing ground to Google forced the departure of Terry Semel as chief executive.

He was succeeded by Jerry Yang, the company’s co-founder. In the subsequent soul-searching, Yahoo! has refocused on its core display advertising and search businesses.

David Filo, who co-founded Yahoo! with Mr Yang at Stanford University in 1994, said: “We all agree we were trying too many things before. We are taking a fresh look, questioning everything. It’s good to step back after 13 years and see where we want to go in the next ten.”

Part of that process involves a rethink on creativity and talent retention, two areas in which Yahoo! has lagged behind its rivals - which is why Mr Filo, the interim chief technology officer after the loss of Farzad Nazem this year, was in Bangalore at the weekend to oversee Yahoo!’s first “open hack day” in Asia.

The forum for third-party software developers to play around with Yahoo! applications reflects the California-based company’s willingness to learn from external sources.

“We do not have a corner on great ideas around the internet, so we are going out there to find interesting things happening,” Mr Filo said. “We can take a good idea and scale it up through our user network.”

Yahoo! claims about 500 million users worldwide, but nearly two thirds of its revenue comes from America. India represents a growth opportunity.

With a population of 1.1 billion, it has only 40 million internet users, most of whom access it through cybercafés, but the number is rising quickly, particularly through mobile phones, Yahoo! says that it has 24 million active users in India, its largest operation outside America.

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