Is Yahoo working on its own online document creation and collaboration software? Thats the question whichimmediately comes to mind upon hearing news thatthe company has now picked up a Bangalore-based startup called Bookpad, makers of Docspad, a service aimed at developers looking to add document viewing, annotations and editing features within their own applications.

What differentiates Docspad from rivals like Google Docs, however,is that instead of being aimed at consumers looking to simply create or edit documents, spreadsheets, or slideshows fromthe web, then share those files and collaborate with others, Docspad is designed to bring a Google Docs-like ease-of-use to any other application a business may need, including things like applicant-tracking systems, conferencing solutions, learning management solutions, and more, co-founder and CEO Aditya Bandi explained in a recent blog post.

The deal is making waves throughout Indias tech community, and has been confirmedby The Economic Times, The Times of India, and others. TechCrunch has also nowheard from sources that the deal has gone through. Bandi declined to comment, but its worth pointing out he has already changed his LinkedIn profile to reflect his new position as Product Manager at Yahoo.

Terms of the deal have not been disclosed, but Yahoo has the money to continue itsstartup shopping, thanks to its stake in Alibaba, which just ranked as the worlds biggest IPO. The Economic Times says via sources, the deal is clocking in at aroundRs 50 crore ($8.3 million).

Weve asked Yahoo for an official confirmation of the Bookpad deal, and are waiting to hear back.

UPDATE: Yahoo has confirmed, saying:

We have acquired Bookpad, the company behind the Docspad product. The team will join our communications organization in Bangalore, where they will work on strengthening the Yahoo Mail experience. Were excited for the expertise and knowledge that the team brings with them, and cant wait to get to work collaborating with them.

The startup was founded by three 20-something graduates from theIndian Institute of Technology (IIT) Guwahati Aditya Bandi, Niketh Sabbineni, and Ashwik Reddy. Last year, it was backed by NASSCOMs 10,000 Startups initiative and Microsoft Ventures. (NASSCOM, we hear, is already opening talking about the deal, too.)

According to The Economic Times, the Bookpad team met with Yahoo during a trip to Silicon Valley organized by NASSCOM. The report also noted that Yahoo wasnt the only suitor showing interest Autodesk and Dropbox were taking a look at the 8-person team, too.

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Yahoo Acquires Bangalore-Based Bookpad, Makers Of Online File Editing And Collaboration Software Docspad