We have always needed the government support

Known as one of India’s first batch tech entrepreneurs and institution builders, Saurabh Srivastava is widely acknowledged in India and globally. He is considered as one of the architects of the Indian IT industry. In an acknowledgment of his illustrious career, he is awarded with Dataquest Lifetime Achievement Award for 2104.

He is the co-founder of Nasscom, the trade body which played a key role in catapulting the Indian software services as a world leader. Later, realizing the need for an ecosystem that will push products, new ideas, and the ecosystem, he co-founded the Indian Venture Capital Association and was the key driver behind TIE, the world’s largest organization devoted to entrepreneurship with 16,000 members in 54 chapters across 14 countries, in India.

After the very successful stints with global giants like IBM and Unisys, he founded several successful IT companies, and has since founded and invested in over 50 start-ups ventures and serves in a non-executive capacity on boards of both private and publicly listed companies in the UK, Singapore, and India such as YES Bank, Naukri.com, Xchanging. He serves/has served on the National Executive Committees of CII and FICCI.

At the forefront of public service, he served on several government committees and task forces such as the National Innovation Council, Indo EU Round Table, Software Technology Parks of India, Planning Commission’s Committee on ‘Creating a Vibrant Entrepreneurial Ecosystem in India’, IT Ministry’s Committee on software exports, Planning Commission and SEBI Committees on Venture Capital, National and State VC Funds, Media Lab Asia, Railway Expert Committee, CSIR Tech (set up by the Council for Scientific and Industrial Research to commercialize its technologies), Government’s Multimodal Transport Task Force and Task Forces for two of India’s largest states, UP and Bihar. He has just been appointed as a member of the committee set up by the BJP government to examine the financial structure of the MSME sector.

He founded and chaired India’s first and extremely successful Venture Capital fund in the private sector, Infinity, which created companies such as India Bulls. He also co-founded the The London Chapter which was launched by him jointly with the PM David Cameron at 10 Downing Street this year. IAN has invested in 100 start-ups.

He is on the board of America India Foundation, co-chaired by President Bill Clinton, which funds social causes in India like education and health. He is also the co-founder of Ashoka University and serves/has served on the Advisory Boards of Imperial College Business School, London and Uttarakhand and Himachal Universities in India and on the Entrepreneurship board of IIT Kanpur. He has a Masters from Harvard University and a B.Tech from the Indian Institute of Technology (IIT) Kanpur. He is honoured with awards including ‘Distinguished Alumnus’ from IITK, Honorary Doctorate in Technology from the University of Wolverhampton, UK.

The time you passed out of college, there would have been hardly anything called IT or software industry. So how did you manage to land up in this sector?

When I went to the IIT, there was nothing called computer. IIT Kanpur was the first one to get it and that too was gifted from a university in the US. I graduated in 1968 and till that time there was no discipline in computer science in IITs. We had a big computer center and the professors teaching us computer were from the US.

It was not my ambition to be in computers and not even to be in engineering. Since school I was interested in getting into IITs but it was not because of technology. I was lot more interested in other activities going on in the IITs like campus newspaper, theater, directing plays, etc, apart from academics. I also fought elections in the campus. After that, I was inclined on doing journalism and that’s how I ended up being at Harvard. After the course, I wanted to join a company having operations in India because I always had plans of coming back and that would make my return to my country easier. So, I joined IBM. And that’s how I drifted into IT.

After IBM, I had stints at Thermax, and then Tata Unisys, where I was till 1989. From there, my entrepreneur journey started with IIS Infotech and it worked very well. The very first year of my entrepreneur journey was full of so much learning and that was the time, I understood that profitability is more important than cash flow. In those days, policies were horrible and it took more than 12 months for me to get an export oriented license. We went in losses but eventually it worked pretty well.

You have also been one of the founding members of Nasscom. So how did this idea of forming an industry body come up?

There are a bunch of things which led to the formation of Nasscom. One of the driving force that I was always interested in trying my hands on different things. Doing things differently excites me and engages me much and it is very much fun as well.

Another factor was when I was debating on weather to stay with Tata Unisys or to start my entrepreneur journey, there was also a realization that it is going to be a very big industry, but the environment was very hard, all the policies, procedures, getting licenses, everything was negative. So that was the time we had this thought that why don’t we create a body or an association. In fact I remember that it was a casual meeting at Mumbai’s Sea Rock hotel lounge, where your former Dataquest colleague Shashi Bhagnari was also there, that idea to form an industry body germinated.

And this idea was discussed very often with the industry peers. As there was no domestic market, the need for a body became much more important to represent ourselves.

You have been part and parcel of the Indian IT’s growth story. What according have been some of its defining moments of your life in Indian tech industry?

I believe that the foundation of Nasscom and getting it to become a highly collaborative and focused organization was one of my best contributions. No other industry in India or abroad has such an association to speak with one voice and where people are so collaborative. Even when I travel, a lot of countries say that they wish they also have something like Nasscom in their country. It is a big contribution as we ended up in doing so many things, ie, got the tax exemption, we worked with the Ministry of IT and created the STPI scheme which completely unlocked the potential of the industry, worked with government to educate them and got permission for acquisitions abroad way before the economy opened up. Hadn’t it been Nasscom which brought everybody together, I do think the industry would be where it is today.

Personally, building my own company was another contribution. Focusing on the UK market when every player was keen to establishing itself in the US market was another turning point. It was initiated by IIS Infotech as UK was the world’s financial hub and I wanted to focus on a particular sector and create a niche for myself in the financial domain rather than competing with my peers in the US market.

Another pride moment was when the world bank’s report came out and it was for the first time the IT industry was mentioned in numbers, the report said that the industry should be in billions when we were not even $100 mn industry. The report brought us in government’s notice and because of that we were able to fetch many of the favorable policies from the government that time.

The other defining moment was when Nasscom partnered with McKinsey which completely changed our positioning in the market today. It came out as of the best partnerships ever.

In hindsight, what according to you are some of those things which Indian IT industry goofed up?

I don’t think we have goofed up at all. Often it is said that we are all doing services and there is hardly any product building company in India. Or ‘Where is Google or Microsoft of India?’. We have been told that you are doing services for companies outside India and what has been done for India.

The answer is when the industry was evolving, there was nothing which we could do for India as there was zero domestic market. If I wanted to build a product, it takes 18-24 months from the time one actually thinks of it to get it in the market. Even the countries like the US has seen 99.9% of the product making companies fail and here in India, the chances are way higher than the US.

When we started out, none of us had any capital. For running a product-based company, you have to infuse a lot of money before you see any revenue coming in. Outside the US, there are not much product-based companies. The reason for that apart from the venture capital which is largely available in the US, they also have large domestic market. You have to be an integral part of the environment in which you can anticipate the felt need. So, the ecosystem to build a great product or technology company actually exists in the US. We didn’t have it so there was no chance of doing it.

We did what actually was feasible for that time. But today, because of this 100 bn dollar IT industry, we have a good sense about what gaps are there, and can anticipate better. And one can see that today the companies which are coming up are not services companies rather technology companies or product companies.

Do you think that there are some serious gaps or weaknesses to the Indian software services industry today which needs to be addressed?

The industry is always evolving and a lot of changes have occurred since the time we have started. We started with body shopping, then went to full life-cycle projects, services, off-shore development, we went into business process which is an integral part of how business is done. So starting with cost, we pushed it to quality with competitive cost.

Today, there are many nations which are cheaper in cost and many will slowly have the quality also but what differentiates us today is our scale, size, and global efforts. We have threats from China, Eastern Europe, Latin America but none of them have the scale. In China, they do not have the global understanding of the market and it will take time, but the underlying changes that are happening are different because the business environment is changing. So the people who are our customers, they still want their business issues to be resolved, want to work more efficiently, but they do not have 18-24 months time frame to give us the project to do it. And they don’t have the same budget.

It is a holistic business today, and you need to understand the business problem, processes and you have to understand IT. The level at which you are engaged is changing so all of us have to move in that direction. Today, you might be selling the same solution but you have to do it much faster, with less man hours, at a lower cost and should make the same or higher profit.

Though we have dominance in IT services sector, but there can be some players which can try to disrupt this model. There are start-ups which are trying to create models that would productize services, they are trying to create models where they can offer you a SAS platform for which the companies are charging a lot today. All this can disrupt our services model.

We are in a very transitional phase and there are going to be a lot of shifts. There will be stress all over the place whether it is a product company or services company.

Till now it has been said that government’s support is not very critical for the Indian IT industry to grow. What do you think about it?

This is a misunderstanding. We have always needed the government support as the policies were terrible. If the government didn’t fix the telecom rates, bandwidth, and gave the tax exemptions we got, or created the STPI scheme, we would not have been successful.

If the government had not partnered Nasscom, we would not have been successful. So we have always needed the government. It actually happened when the government became partner of Nasscom, so we must give due credit to the government.

Our challenge is now for a different reason. Today, there is an assumption among many people in the government that this is a big industry, IT is all about fat cats, but they are doing nothing for India. While on the other hand, the telcom guys are more enabling the poor, suddenly the IT people are not the flavor of the day. And the government has started thinking that we do not need any more support for protection, and that is the challenge.

Today, we have huge threat from overseas. On the one hand, our government thinks that we don’t need their support and on the other hand we have so much threat from overseas. The Accenture, IBM and other global companies and President Obama have always been working on increasing the cost of our business there, i.e, the cost of H1B visas would go up, procedures for getting in are getting more complicated, regulating the minimum salary we have to pay, and so on.

In many ways, the US MNCs are actually working with the US government and all of these barriers are being created.

They are making it very hard. The same is with Europe. The time when we have this huge problem abroad, we have the same challenge in India with our very aggressive tax authorities, raising all kinds of tax demands. So we are in a way between a rock and a hard place. For an industry that is actually a path breaker for India, there is no sufficient understanding.

Secondly, many countries like China have seen what we did, and are determined to take that space, their government is spending tens of billions of dollars on building world-class infrastructure, giving tax exemption, getting well-connected to the West. For instance, in China, the government is ready to pay salaries of the first 200 employees as long as they are Chinese and is making every possible effort to make companies grow. The government has actively assisted and created a role there. But here in India, the companies are setting up their own infrastructure.

It is for the first time in the history of modern India, we have an industry which has become a global leader, we should do everything to maintain this legacy as there are lot of things which can destroy it.

You have taken tech entrepreneurship in a big way. So, what is the big picture that you see there?

The big picture is very simple. We establish our dominance in a certain space, ie, IT services, which grew very big. That space itself is now going to erode globally as we have not established our dominance in new generation where things are going, internet, tech products, mobile, etc. We have to own that space but the ecosystem for that space is not there.

What message would you like to give to the leaders of tomorrow in the technology or IT space?

Firstly, I would say that the start-ups today are lucky enough as the entire ecosystem is there. Atleast, it is 100 times better when we started. Secondly, being in India is a great advantage as today we have a very large IT infrastructure, competencies, one can find right people and create a team, one can find capital, etc. We have also become the biggest global users in many ways like Facebook, Twitter, etc. In mobile also, we are the second favorable place to experiment with. In a nutshell, we are sitting in a great place.

The piece of advice I would like to give is nothing is impossible, and you can create as big scale, as big an organization as possible without anything. It is not all about money, you need to dream big, think big, you need to have the aspiration. Don’t get arrogant, respect competition and help in creating ecosystems as these ecosystems will also benefit you in the long-run. And be supportive in the ways that are possible. If you can create an idea and a vision and you can enthuse other people to say that it is their vision to work with you, nothing seems to be impossible.