20 Leaders Walk the Survival Talk

My father, sceptic, rationalist, trying every curse and blessing, powder,

mixture, herb and hybrid. He even poured a little paraffin upon the bitten toe

and put a match to it

Nissim Ezekiel in ‘Night of the Scorpion’

Ezekiel’s poem describes how an array of solutions was

tried out after a mother was bitten by a scorpion. After 20 hours of writhing in

agony, the scorpion bite lost its sting.

The IT industry, however, will not get off as easily. A

rebound, some predict, is just a spasm away, and its been a while since we saw

the worst, they claim. Others say it’s far from over. Specialists continue to

give their prescriptions, some scrape off dead skin, others pump in oxygen while

still others, advise inaction–the classic wait-and-watch mode. 

As theories continue to fly thick and fast, Dataquest decided

to find a cure. And what better way to do that than to call on those who are

living and fighting the slowdown every single day–the CEOs of India’s top IT

firms. Consequently, DQ asked 20 CEOs what their companies were doing to stay

healthy in these times of bankruptcies and anthrax.

Their answers, in different hues and shapes and words, but

all containing one central message–clear focus, cost-cutting and

customer-orientation.

Nandan M Nilekani, president, managing director and chief

operating officer of Infosys Technologies, says: "We have traditionally

embraced the PSPD model–predictability, sustainability, profitability and

de-risking, which have all eventually helped the company maintain a sturdy

growth even in turbulent times".

For HCL Infosystems, the key is to strengthen its

relationship with existing customers and associates. "Identify areas of

strength and consolidate. Do business at lower costs. Keep the team together.

Communicate to all consistently and continuously. Focus on new business areas

with extreme caution. If uncomfortable, do not attempt. Prepare the team for the

forthcoming crest. Use the lessons of current times to build stronger businesses

for the future. And remember, Cash is King," says Ajai Chowdhury, chairman

and CEO, HCL Infosystems.

Keep those blinkers on

Sure, there was a time when almost every company with an IT

connotation to its name was licking the cream off a 1,000 pies, but there were

also a few like iFlex Solutions that decided against jumping on to the go-hot

bandwagon. The boom in IT may have kept switching, but iFlex stuck to its tried

and tested banking software (over 44% of the company’s revenues also come from

services).

iFlex India CEO and CFO Deepak Ghaisas recalls how the

company resisted the temptation to undertake Y2K projects and spread themselves

"too thin". Today, when there is a crying need for an Indian software

brand that is associated with quality, Flexcube is one of the few that instantly

jump to mind. Says Ghaisas, "Being available cheap cannot be a USP in the

long run. If you have quality built over the years, you are not in danger of

losing your position to new entrants like the Philippines".

Ganesh Natarajan, deputy chairman and MD, Zensar

Technologies, emphasises that this is a time for extreme focus and a shift from

wide tech expertise to deep domain skills.

Manoj Chugh, president (India and Saarc) of Cisco Systems,

also stresses that it is good to be innovative and experiment, but all new

investments should be based on what the customer is asking for. "It is all

about speed, talent and branding. These will come if one is focussed."

In order to strengthen one’s products and offerings in the

area of core competence, companies must have clearly identified the category

they belong to. "Once that is done, be creative in your approach towards

the market, in terms of the solutions, products and services that you

offer," advises Uday Birje, country manager (India-Saarc), Enterasys

Networks.

Suresh Vaswani, president of Wipro Infotech, reiterates the

need to build organizational core competencies and deliver value.

"Diversification and new product extensions must revolve around the

core," insists Vaswani.

Plan your adventure

Nandan M Nilekani president, MD and COO, Infosys

ROADMAP

Provide high-value solutions to clients Move away from dotcom and venture-funded business Expand in new geographical regions Staying abreast of cutting-edge technologies and research

Paradox, you say? Nope, what it actually directs you to do is

to focus on your core strength, and not lose out on other emerging

opportunities. If this means making sizable investments in uncharted

territories, go out and do it, but be sure to carry out a cost-benefit analysis

before you take the plunge.

"There should be resources earmarked for diversification

and decisions for such ventures should be backed by a proper study," says

Aptech CEO Pramod Khera.

Lakshmi Narayanan, president and COO of Cognizant Technology

Solutions, puts it more succinctly. "Companies could grab hot

opportunities, provided that they are compatible with the company’s core

skills. Companies should be resilient to change and convert each of these

opportunities into long-term customer relationships, taking the customer through

every technology or techno-business wave."

The idea of riding this techno-business wave is appealing, no

doubt, but what happened during the IT party of 1999-2000 actually saw business

dangerously high on technology spirits. As technology raced ahead, companies

(many of which are in the red today) spread themselves beyond their area of

expertise, dabbling in whatever was hot at that point of time–be it Y2K,

website designing, end-to-end e-business solutions or biotechnology (the last

continues even today. Is this healthy for companies in the long run?

"Why not," questions Rajeev Srivastava, president

of Apar Infotech, stressing that an organization must be alive to changing

innovations.

Shekhar Dasgupta, country manager of Oracle India, agrees.

"A company must focus on its core objectives and see where technology can

make a significant difference in improving margins, revenue, costs or customer

satisfaction. If diversification is carried out with this end objective–sure,

it’s healthy."

Balu Doraiswamy, MD, Compaq India, advocates the validity of

the core competency theory. "If organizations can demonstrate the

flexibility in acquiring, learning and adapting new skills to improve

shareholder value as the market demands, there is nothing unhealthy in it,"

he says.

Mphasis BFL chairman and CEO Jerry Rao insists that success

lies in building domain knowledge and expertise, as well as being nimble-footed

and re-orienting oneself according to market demands, not by trying out

everything that is in vogue.

Chennai-based Cognizant Technologies is a typical example of

a company with a finger in a whole lot of pies. "Cognizant made a conscious

decision of skipping one such hot opportunity–the ERP1 wave (implementation of

ERP applications at customer locations)–as it predominantly entailed onsite

work and did not lend itself to its core onsite-offshore business model,"

says Cognizant’s Laxmi Narayanan, adding, " Companies need to make high

quality a repeatable process. They also need to evolve with technology, change

with market conditions of demand and supply, and most importantly change with

the market conditions of the customers."

Customer is still King

Balu Doraiswamy MD, Compaq

ROADMAP

Run a tight ship Stay closer to the customer Improve customer satisfaction and fulfillment processes Improve skill-sets and fine tune organization structure

This brings us to the heart of the matter–the importance of

customer service. Slowdown or otherwise, the sound of life from this end must be

loud and healthy. So what’s the spiel on this one?

Renew your focus on beating the competitor in reaching out to

the customer. Cost-cutting certainly makes business sense, but not when it comes

to the customer. If it means implementing a more effective solution, an expense

you’d rather avoid, bite your lip and take the plunge. In fact, if it means

any additional expenses that will wash away the pain points at the customer end,

do not hesitate–this investment is sure to pay off.

Suresh Vaswani talks about Wipro Infotech’s initiative in

building a customer-centric organization, "A customers’ primary

expectation from an IT organization is to help him achieve operational

efficiency by offering value-added solutions. We are consolidating our

businesses and creating propositions, which directly attack this problem."

Derisking business strategy

Enterprises across industries are re-examining IT spend,

end-users too are wondering whether any investment in IT is worth it at all. But

competition continues to hot up. This may just be the time to examine the

fundamentals of your business model. perhaps someone else in the market has

dropped prices and is now selling a solution nearly as effective as yours? Or

more important, in the prevailing conditions, how many would really buy a

solution that seemed indispensable when you started developing it?

Abraham Thomas MD and CEO, IBM

ROADMAP

Grow marketshare in a slow economy Concentrate on quality rather than quantity Tap specific opportunities in the market Focus on the bottomline rather than the topline Maintain a healthy expense to revenue ratio across departments

Abraham Thomas, MD and CEO, IBM India, advises companies to

focus on the bottomline, and not the topline. "In a slow economy, companies

tend to look at generating revenues at any cost, sometimes compromising on

quality. This often leads to lower profitability or losses," he says.

"Reducing overheads, consolidation of operations across

various branches overseas, increased thrust on selling rather than marketing

with the help of existing products, shelving concepts and dreams and business

plans for the next six months, utilizing working agents, sharing revenues,

avoiding retainer fees to clients and exploring new geographies"–that’s

the recipe from V Chandrashekhar, chairman and CEO, Pentamedia.

Jitendra Kulkarni, CEO of Redington India, outlines a

three-point survival strategy that has worked well for his company–"Since

things slowed down, we have kept away from transactions which may risk our cash

flow. We have clearly defined parameters to differentiate good business from bad

business and have focused on good business by carefully choosing our

customers." Revamping the company’s buying process has reduced redundant

stock movement and Redington has now started monitoring key business parameters

on a daily basis on-line. Earlier, these were reviewed and analyzed monthly.

The slowdown is also the time to add value, not just to

customer-offerings, but also to channel partners and other business enablers.

"Ultimately, the support you provide them in these times will help you

differentiate from the competition," says Uday Birje.

Many eggs, different baskets

As the scene in the US worsened, IT exporters, vendors and

service companies made a beeline for Europe, and some to the APAC region. The US

debacle only reiterated the folly of depending on a single market for revenues,

however lucrative it may be.

"Companies must spread out in different territories

within the globe, instead on focusing on one or two countries," says D

Kannan, director and CEO, Pentasoft Technologies.

iFlex, for one, has operations in 60 countries. While the

cream of Indian IT talent galloped towards the US with blinkers in place, iFlex

was busy convincing its techies to explore more exotic locations. "I used

to tell our software engineers that they could get a chance to work in the US

any time. But which other company could offer them assignments in Iceland,

Malta, Seychelles, South Africa and Capetown?" iFlex also services a Dutch

and a Singaporean bank in China. Even then, over 35% of revenues come from the

US.

Ready-to-implement solutions

Laxmi Narayanan president and COO, Cognizant

ROADMAP

Ensure that high-quality is a repeatable process Evolve with technology Change with market conditions of demand and supply Be sensitive to customer needs

Is India just a training ground for bright young software

professionals who will go on to form development teams in other countries? Why

are there just a handful of ready-to-implement software solutions from India

that are implemented overseas? Is it time for homegrown software to shake off

its "customizable" image and move in for big-time branding? Or is the

domestic market still not prepared to try on these "readymades" with

attached designer labels?

Wipro’s Vaswani says no two organizations are similar in

terms of customer requirements, and hence, their IT requirements. "However,

with ready-to-implement solutions, we can meet 80% of our customers’

requirements through standard components and customize the balance. This ensures

shorter implementation schedules and sharing best practices."

Vivek Agarwal, the COO at CommerceOne India, believes that in

the current environment, clients are not prepared to spend extra energies on

implementing various IT solutions. "It is important that the implementation

cycle be short and this should be developed as a key USP for Indian IT firms to

build up in future," he says.

Mastek CMD Ashank Desai says there is still a lot that Indian

companies can do in the areas of application development, maintenance and

support. Cisco’s Chugh has a word of caution–"Enterprises first need to

accept issues relating to building reliable SCM systems, strong sales management

processes or efficient employee applications."

Compaq’s Doraiswamy advocates the implementation of a dual

strategy–"Ready-to-implement software solutions means both moving into

product software and retaining the flexibility of customization of product

software. While product software strategy requires a high level of

brand-building, strong software engineering architecture skills, deeper domain

knowledge and other marketing initiatives, the customization strategy will

continue to be people- and technology-intensive. In times like these, companies

that maintain dual strategy and competencies to execute such strategies

consistently are most likely to be successful."

Do what you are best at

Suresh Vaswani president, Wipro Infotech

ROADMAP

Build a customer-centric organization Build process efficiencies Tighten receivables and inventories Building quality processes Innovate to increase customer satisfaction

Most CEOs would opt for a move towards ready-to-implement

software solutions, but there are some who believe that it is better for

companies to excel in what they have traditionally been good at–services.

"I think Indian IT companies should play to their

strength in services where we have already established a reputation for

delivering good quality at cheaper rates, and not move towards providing

ready-to-implement software solutions at this point," says Mphasis’ Rao.

Uday Birje also prefers to play safe, and advises IT

companies to concentrate on core strengths like software solutions, integration,

development and deployment.

Rein in the expenses…

An anecdote about a US-based former senior executive in a

former dot-com seems apt to illustrate what CEOs today have to say about

cost-cutting. Sitting pretty on millions of dollars worth in ESOPs, the lady

confesses to have not visited the supermarket for over three months during her

stint at the dot-com. "An action-packed work-day followed by an equally

exciting drinks’n dinner binge at the most expensive hot-spots around the

office" is how she and her colleagues described their routine in those

dreamy months. One evening, the dot-com crashed, and she had a little pink slip

in her hand... Since then, the shopping’s been done in the supermarket.

Admittedly, everyone’s not had as rough a ride, but yes,

most IT companies that have lost their pristine positions are now lamenting all

the money that was blown away so easily, and so fast. Every bit of indulgence

now reflects in the cost-cutting measures that the companies have had to adopt.

"Our philosophy today is built around six ‘F’s–five

are fast forward, focussed, flexible, friendly and fun. The sixth is

FRUGAL!". That’s Zensar’s Natarajan for you.

"One must differentiate between leakage and

capability-building investments. We must be passionate about using a slowdown as

an opportunity to build an efficient organization. Organizations must spend

prudently and judiciously. They also need to continue to make strategic

long-term investments in terms of brand-building, and creating customer capital

and intimacy," says Vaswani.

Uday Birje says the slowdown has actually taught IT companies

how to be efficient and more competitive.

While most companies have been cost-cutting, Ghaisas says

iFlex has done nothing of the sort. "That’s because there never was any

overspending in the first place," he says. Since its inception in 1993,

iFlex grew by 50% year on year, but the costs have spiralled down.

Stay lean for the road ahead

Deepak Ghaisas CEO and CFO, iFlex Solutions

ROADMAP

Do not digress from the company’s key competencies Inculcate cost discipline among employees Be sound on HR practises Keep the organization lean Do not compromise on ethics

The boom saw a number of development centres and employees

added–a sure sign of growth of IT companies. "They are hiring, so they

can’t be in trouble" was the common conjecture... until those hired

barely a month back realized that they could be next to receive the dreaded pink

slips. One school of thought blames this "hiring in anticipation of

projects" as one of the key factors that led to the manpower carnage that

the slowdown caused. At the peak of the IT boom, companies had huge manpower

reserves that could swing into action as soon as projects cropped up. Sustaining

the benched made business sense at that time as it would only be a fraction of

the revenues generated by new projects. And hiring was far more expensive than

retaining... then. Today, this simply does not work.

Not surprisingly then, CEOs are unanimous in saying it is

easier to paddle on if you are slimmer. "Hiring and firing is not a good

thing to do for any organization. It destroys intrinsic company values.

Outsourcing of non-focussed areas will emerge as a key management

practice," says CommerceOne’s Agarwal.

Nilekani maintains that Infosys is hiring steadily to meet

the company’s business requirements. "Despite the slowdown, we have had a

net addition of 607 employees as well as 92 lateral employees in the previous

quarter," he says. Nothing lean about this company, it would seem!

Try outsourcing

"The five-year projections of most companies projected

two years ago had to be re-visited. Companies will start building up human

resources based on market conditions after three to six months. Also companies

have opted for the model of creating a core group as the permanent staff within

the organization and going for contract staff to execute projects as and when

the need arises," says Kannan.

And for those outsourcing, Vaswani says the times of blindly

billing resources to customers are gone. "The only constraint was your

ability to get people. Today, customers demand efficiency and quality. It is

imperative that IT companies focus on building quality human capital and do what

it takes to build such capital."

Take care of your people

To begin with, be honest with employees and explain exactly

how bad or how good the company’s situation is. If the situation is under

control, emphasize the need for curtailing expenditure without creating layoff

panic.

"One cannot blame the hiring spree undertaken by IT

companies in the last few years. There was a need and that had to be fulfilled.

The important thing now is to strike the right balance between freshers and

experienced guys, technical and people skills, campus and lateral recruitments,

incentives and compensation. If we take care of all of this, a majority of our

HR problems will disappear," says Jerry Rao.

"Unlike the West, where layoffs are common (and not the

social stigma they are in India), largescale sackings in India affect both the

company and those being laid off. Layoffs should be the last resort, especially

if the need to reduce headcount is a purely short-term requirement. Most of the

time, the negative effects may cost companies more than the savings achieved if

the process is not managed properly," says Kulkarni.

Pentasoft’s Kannan gives his mantra for motivating people

and enhancing productivity. "Business development and domain knowledge

people are part of the organization for long periods and understand ups and

downs. We ensure loyalty by frequent interaction and taking inputs."

Against this, there is bound to be a certain degree of

insecurity and productivity loss among the unskilled resources–that’s Kannan’s

explanation. "This is minimized by identifying the non-productive personnel

and easing them out of the organization.

This sends a kind of warning signal to those who are

non-productive within the group," says Kannan.

Rajendra Pawar, chairman and managing director of NIIT,

points out that slowdowns are times of consolidation and strengthening as they

bring in discipline and seriousness. "Our approach in this period is to go

aggressively for increasing marketshare by initiatives that include technology

enhancement through product introductions and brand building," he says.

These mantras for survival apart, there is a curious list of

situations people across the IT industry would give anything to wish away–the

dot-com bust, the slowdown in the US economy, cancelled projects, bench periods…

and more recently, the September 11 attacks, and the retaliation in

Afghanistan... It’s a long list.

But as Manoj Chugh says, "We are dealing with the world

the way it is, not the way we wish it were." Sound logic, and back to the

mantras.

Manjiri Kalghatgi in

New Delhi