‘Everybody wants to know India’s magic formula’

has been discussion and concern outside India as to why Indian companies have
been so successful in software. Other countries, especially China, want a piece
of the software and services markets, worth $600 billion. They want to know
India’s magic formula. Everyone is intrigued, because no one expected India to
succeed in a hi-tech field”

Fourteen of 24 software development organizations in the world assessed at
Level 5 of the Capability Maturity Model (CMM ) are in India. Many others are
aspiring to be at that level. Dr Pankaj Jalote, who was vice-president, quality,
Infosys Technologies from 1996 to 1998, tells DATAQUEST what it means to be a
‘true Level 5’ company. Dr Jalote spearheaded Infosys’ transition from ISO
to CMM, and presently heads the computer science and engineering department at
IIT, Kanpur. Excerpts from an interview:

CMM Level 5 has been seen as the peak of software development maturity.
What lies beyond?

In India, you have more than half the Level 5 companies in the world, and
there are many others aspiring to reach Level 4 or 5. Sure, there is a need for
them to know where they are headed. However, a framework like CMM does not
provide guidelines on what to do after reaching the top rung. Companies,
therefore, have to get into a continuous improvement cycle and stick to that.
You don’t need any external framework. Having reached the mark of Level 5, you
drive your own quality levels and improvements.

A view is that it might be time to dismantle the ratings process to get the
rigidity out, get flexibility in. Instead, check some measurements here, some at
the next checkpoint, and in between you can do something differently. This way,
you can unleash a certain creative energy to lead to new directions in software

You say half of the Level 5 companies are in India. Why have they been so

A lot of debate has gone into this and companies outside India are actually
concerned over why it is mostly Indian companies that have been successful. I
see a few reasons–most Indian companies have been driven to achieve a certain
objective, they have been very entrepreneurial. Then again, India having a bevy
of youngsters in the software industry is a big factor. The industry is very
receptive to suggestions, changes and a lot of these come from those in their
twenties or thirties.

If youth and openness to change be the primary factors leading to growth,
then shouldn’t companies in the US and other developed countries lead the
Level 5 thrust?

I would imagine that most of the other companies donning Level 5 colors would
be US-based. Someone put the number of 14 companies out of 24, i.e. about 55%,
being Indian. The rest are likely to be in the US for the simple reason that
Europe has still not accepted CMM as the framework, and they are still driven by
the ISO model.

In India, Motorola’s Roger Fordham (responsible for advanced software
development for the company’s communications businesses), who literally kicked
off operations at Level 5, started it. That was in the mid-90s. For some time,
Indian companies didn’t accept this model, preferring to follow the ISO route.
But between 1996 and 1998, many moved to the CMM mode, concluding that ISO had
outlived its usefulness. Once you move to CMM, software companies progress
rapidly. Right now, pretty much all top companies are at Level 5 of CMM.

Don’t issues such as discipline and framework prove contradictory to
software creation, especially when seen from the human perspective and
creativity angle?

We had a long discussion with Leon (Prof Leon Osterweill of the Department of
Computer Science, University of Massachusetts, also co-director of the
Laboratory for Advanced Software Engineering Research) on this and found a
little difference in approach. Building anything, including software, is a very
creative activity. But there are certain ways of managing this creativity and
disciplines that you still need. Processes need to be in place in the field of
software development not for the creative task, but for other aspects such as
project planning, ensuring estimates are correct and quality goals. What you are
saying is put the processes on the side and focus your energy on creativity.
Some people disagree, they think that even the creative part can be part of a
process–I have always believed otherwise.

How China Is a Threat

  • The controlled state plans to set up 100 institutions of IIT-caliber for IT training in a fixed time-frame
  • English language training is being aggressively pushed, using hired expatriates, distance education and the Internet for time-bound results
  • The target market in the long run is the United States and Europe, traditionally considered an Indian preserve
  • India is falling behind in the supply-demand match, making costs high for software companies
  • Chinese software engineers expected to be 15-20% cheaper than Indian counterparts
  • As part of de-risking strategy, MNCs are moving to China for software business, using it as an alternative location
  • Political and domestic stability are also factors in China’s favor

How is India placed vis-a-vis China in the software scene?

I was in China recently. Most Asian, developing and Latin American countries
want a piece of the software market. They want to know how India has been able
to do it–the magic formula. Outside India, it is intriguing because no one
expected India to succeed in hi-tech areas. If you look at Indian companies–I
interact with them regularly–in the last year or so, everyone is talking about
the threat from China. Two years ago, no one talked about this competition. The
reason is that China, as a controlled state, is going about things in a planned
manner. It plans to start 100 IIT-caliber institutions in a fixed time-frame. We
have five or six and can’t do very much more than that as of now.

Another reason is that China is aggressively pushing English language
training. They have hired people, are using distance education and the Internet.
They have realized that language is a barrier and treat it just like any other
problem in their controlled state.

A third reason is not what China is doing but what India is not doing. We are
not producing enough people of the caliber needed. There is a huge gap between
demand and supply and this has seen salaries go up by 25%. Our inability to
produce people in sufficiently large numbers is making our software companies
face high costs. And yes, Indian software engineers start off at much the same
salary as their Chinese counterparts. But five years down the line, the Indian
is making considerably more than the Chinese. Therefore, it is expected that the
Chinese software industry will be 15-20% cheaper than that in India. That’s
another reason why companies will go to China.

A de-risking strategy will also come into play. When you get very big and all
your eggs are in the Indian basket, it is dangerous. Tomorrow, sanctions or
something else may break all your eggs. These companies are so big that they
cannot afford these risks. It’s a de-risking strategy, therefore, to go to the
Philippines or China, and if something happens in the Indian context, they can
still continue to operate and compete.

Suprabuddha Sanyal in New Delhi

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