The Third Wave

Legend has it that battles and wars marked the beginning of the Indian IT. Our feet were tiny and shoes too mighty. The first wave brought the boxes and battles over their price-tags. We learnt to walk with those shoes and for many, the foreign soil became home ground. The second wave brought India on to the world software map, a dot very tiny but visible. And it brought the world to India. Today when we can wear shoes that fit our feet we don’t really need them. Not because the terrain has become less rugged, but because we have learnt to fly.

The evolution of IT industry in India began with the manufacturing era where the focus was on hardware and mainframe systems. The price wars between HCL and PCL in the late eighties took a new turn as Siva made a killing with a PC at Rs33,000. PC sales splurged and hit the one lakh mark. IBM which had packed its bags announced its plans to return to the Indian market.Â

The next phase saw software industry gain prominence. The industry witnessed further growth as DoE secretary N Vittal encouraged a target of $400 million. A software center was set up in Bangalore and software exports hit $1b. HCL made a pioneering move by setting up HCL America, the first Indian IT giant with a foreign arm. Leveraging on low-cost manpower, Indian software export houses made rapid inroads into the world market. However, they still remained at the lower end of the value chain.

Today as IT becomes all-pervasive, it is changing the way the world works. It is visible across cities, towns and everywhere. Revolutionary trends such as internet and ecommerce have created many new opportunities and a new breed of Indian entrepreneurs that is more confident than ever before. Pick any newspaper or magazine to instantly notice that it is IT that’s making news all the way. Whether it is Infosys’ entry into the Nasdaq or the more recent Indiaworld.com deal at Rs500 crore; the IT stocks guiding rules at the bourses or the upcoming estrategies of companies; IT hogs the limelight. A clear evidence of the new wave hitting Indian shores. The E-ssence of tomorrow

No one remains uninformed of IT. From training institutes, website billboards, banks, ATMs to railway ticketing and airlines all narrate the same story. Phone booths are turning into cyber cafes. Sleepy villages are getting connected. Says Andhra Pradesh Chief Minister Chandrababu Naidu, “This is my vision, that within two-three years time every village should have internet. They must have access all over the world and excellent fiber optic backbone. At the same time we want to go for egovernance.” This eforce is changing the way we learn, respond, conduct business and the way we live. Says R Ramraj, Managing Director, Satyam Infoway, “I think India is extremely well poised to take advantage of eservices. Whether people are talking of call center services, medical transcriptions, ecommerce or IT services, these are only starting and we are just scratching the surface.”Â

Already more than five lakh Indian subscribers have walked into the web. There are thousands of websites and as many as 25 Indian search engines to quench their thirst for information. ‘Netizens’ are a rapidly growing tribe. Net entrepreneurs are the new icons. The net is the school, the website the classroom and everybody a student. In all of this, there’s some colorful hype but a lot of black and white reality. According to Ashok Soota, Chairman and CEO, MindTree Consulting, “When people today value internet companies with great valuation, they are not just looking at their current earnings but are saying that this is the business of the future. The early start-ups today are the likely leaders of tomorrow’s business world. And it is the future which is being valued which is quite appropriate.”A global vision

The staggering valuations and the promise of ecommerce are changing the Indian business models leading to a paradigm shift. We are creating and rearing multinationals in our backyards. For the hundreds of start-up firms here no giant is too big to beat and no hurdle insurmountable. Even if you’re born here. “The vision is to build a competitive software product company from India. It’s not like starting out in the US and starting a subsidiary here. But starting here and becoming a multinational product,” says Vijay Prasanna, Chief Technical Officer, Pramati Technologies.Indian companies have indeed gone global. From HCL America to very many software and services companies including NIIT and Aptech whose institutes dot the globe. The Indian knowledge worker is now a world citizen. And it is this insight that will take him places. Recollecting his experience over the years, R S Pawar, Chairman, NIIT says, “In the early years people used to ask–do we do training, do we do software or are we in consulting. And we used to say we were in the knowledge business. But we were too early.” Nandan M Nilekani, CEO, Infosys is also high on his company’s growth path, “Our vision is to be a globally respected software company, providing the best of software solutions, the best in the class of people.”Promising ventures

Be the best. World class. ‘Beat the world’, the motto of today’s Indian entrepreneurs. Enterprise, innovation and determination propelled this new breed into cyberspace. Aided by some potent fuel–over $300 million of venture capital already pumped into business. Says Srini Koppolu, General Manager, Microsoft India Development Center, “Once venture capitalists start coming in the country and funding the people with these great ideas, it could explode totally. We are right at the moment and the millennium is going to bring about that sea of change.”Yet, there are no shortcuts to the top. It’s a slippery climb and Indian start-ups have to be at their innovative best and nurture carefully chosen niches. Prasanna of Pramati Technologies explains, “If you are a small company and you have to catch the world attention then I think we should be on an absolutely niche technology which nobody else has, or we must have an extremely superior product that everybody notices.”Niche player or mainstream, start-up or big business house, the web is rapidly leveling all hierarchy. For size does not matter so much any more. The battle-lines are drawn afresh. The competition at home is global. You have to work with your unique combat strategy. The weaponry centers on ideas. It ranges from adaptability to processes and from technology to talent pool. And it’s the speed which is the key. Says Vineet Nayyar, Executive Vice-President, HCL Technologies, “Our software delivery capabilities are time sensitive–time to market is more important now than the volume of this business. So, basically, people are talking about delivering software in days instead of months. Our strategy is towards building competence in delivering software in days in the area of internet and ecommerce.”While speed may be crucial to all of them each company is looking for that cutting edge that will make a difference. According to Lakshmi Narayan, President and CFO, Cognizant Technology Solutions, “Our customers are the ones who believe that it’s the technology that gives them the competitive advantage. We are constantly tracking technology–the ones that are current today but are also likely to be current in the next few years.” Satyam Computers, on the other hand, wants to devise strategies according to changing paradigms. Says Ramalinga Raju, Satyam Computers****, “The most important thing is doing everything ourselves and constantly looking at change with an open mind. And our ability within the organization to adapt ourselves to that change.”The talent pyramid

According to industry estimates, by the third year of the new millennium, global ecommerce is expected to generate $1.5 trillion. Even if India is able to capture 2% of every two years then IT will account for a tenth of India’s economy by 2008. All from an industry that doesn’t need giant investments. But just talent, hopes and dreams. Indians have that in plenty.After all it’s no secret that a fourth of Silicon Valley’s net brain power is Indian. And that’s only the tip of the talent pyramid. There are many, many more at home. Having realized this multinationals are heading toward Indian grounds to set up their bases. Koppulu of Microsoft says, “There are a lot of these guys, a lot of people graduating from premier institutes in the country and we are able to quickly hire these smart people and get our products in the market very quickly. So that’s the main reason why we made our development center in India.” Vikram G Shah, Managing Director, Novell also agrees, “We did look at other countries, particularly the Philippines, we looked at Northern Ireland and one in Eastern Europe. But we believed- from the talent perspective that India was right place. From the cost perspective other countries were giving better leverage but from the talent perspective I think India was rated the best.”That talent is staying back now. The brain drain that was stepped up by body shopping has taken a U-turn. ‘Westward ho’ is no longer the way to go. Native soil is equally lucrative and US settled Indians are rediscovering it. And Indian companies are testing the waters with their own products.According to Ranjan Chak, Vice-President (India Operations), Oracle, “India is offering us a very large pool of credible and demonstrated high quality talent. So if we have an edge it’s not against other development centers but just as a country as a whole.”Towering IT heights

The IT spectacle in India that began with software and services at low cost has now given way to quality. Once upon a time cheap labor was what anyone looked at in India. That age is now over. In the third wave quality is the mantra. Today the country boasts of more than half the SEI level 5 companies in the world. According to Srini Rajam, Managing Director, Texas Instruments, “ There is a very good focus on development methodology and processes in India. That is helping us to get products on time and of high quality. That is the basis of strength.” Further he explains, “ The software development process like SEI CMM cannot be 100% mapped to an IC design process. We have to take a lot of effort to map them as much as possible.” Reflecting on the labor-cost-quality equation, Suresh Rajpal, President & CEO, eCapital Solutions remarks, “I think cheap labor is taboo now. They’ve finally realized that quality is damn good. In the past it was a question of cutting costs, people were not as productive as the guy sitting in Silicon Valley and the quality maybe questionable. Today it is no longer so. The quality is the same and the people are as productive as the person sitting in Silicon Valley or Boston or wherever and that is kind of exciting for us.” And always there’s the language edge coupled with the strong foundation of basic education that predates IT. An education that transcends textbooks or even calculators commencing from the day they step into school. Says Dr Alok Agarwal, Director, IBM India, “India being a diverse country the real medium of instruction especially in science is English, so clearly that’s one advantage which Indians have. The second advantage is that in high schools we are taught a high level of math and computer science is built on math so that is another edge.” Nilekani of Infosys believes, “I think the Indian advantage is not so much about cost, but about the skill base and the knowledge we have in India and our ability to reduce time to market and deliver solutions quickly, effectively. The advantage is moving from cost to skill and time to market.”But one attribute that we possess is quite rare and that is, commitment. And of course, learning, not just mathematics or the English language. Dr Udo Urbanek, Co-director, SAP Labs, India says, “The learning curve here in India moves up very fast, people are more open to learn than you think they can do. May be the commitment is really high here. Once they know the goal, they are very committed to achieve it within the given timeframe.”A positive approach

The changing psyche of the Indian entrepreneur is now on the forefront. But there is no room for complacency. A lot still remains to be done. “This business is about brand equity. Especially in the US, most of the Indian companies currently do not have brand equity. Indians as IT professionals have a brand equity. But Indian companies do not. And they have to somehow take this IT Indian as brand equity, take it to the next level and make it their brand equity in the US and other places,” Says Agarwal of IBM.Software is big business today and India seems to have made a place but it is still way off the mark. We contribute less than 1% to the global software business. Adds Ravi Sangal, President, IDC India, “Most software exporters are not big players as far as internet technology or ecommerce is concerned. I think skills really need to be developed in this area so that we can position ourselves strongly in this area.”The vision is big. The IT Task Force of 1998 set out a 10-year, 108-step roadmap-with a target of $50 billion in software exports along with a plan for hardware exports and grassroots IT penetration by 2008.Fortunately Indian infotech has been lucky with successive governments. They’ve either stayed away or encouraged it. From the first computer policy in 1984, the 1998 task force, to the formation of the IT ministry of 1999 the approach has been steady and positive. Says Pawar of NIIT, “The right thing that the government has done is to bring policy which enables provision of support and infrastructure like telecom. I think the sector has got solid support. What the industry is seeking from the government is not so much as reduction of constraints but a look at the infrastructure of telecom. I would say at least for the software. The government has serious intentions. It is very easy to seek protection. After all you wanted to get well-educated, well-trained minds. So the government sees responsibility. The states are seeing responsibility.”According to Rajam, “In the next five years we will see a tremendous creation and ownership of intellectual property in the Indian IT industry compared to the last five years. Not only MNCs, but Indian companies too are going to be very critical for the end-equipment of tomorrow. That kind of tradition is definitely going to take place with the infusion of capital and knowledge.” The country probably needs more visionaries like Chandrababu Naidu who can encourage the masses and create the right environment for growth. Says Naidu, “After America, India will play a very dominant role. For that we have to take total positive approach. In the recent past you must have seen that all those people who got so much money, got it from IT. This is a very good trend. One is the creation of employment and another is building the economy. This is one we have to concentrate on. I am now appealing to the central government to adopt all these things.”The turning point

In spite of the various problems that may exist Indian IT seems to have reached a maturity. Whether we attribute it to the young ambitious entrepreneur or to the opportunities thrown in by the internet the new millennium heralds a turning point of the infotech industry which is now gearing up for a take off with the spirit to compete and the desire to win. Behind the third wave is a giant ocean and a brave new world, that invites us... as if to chase our dreams.

Like a little bird waiting to fly

With many dreams in its sigh

With fluttering wings and longing eyes

Yes, one day it will soar so high

Fulfil its dreams and reach for the sky...

Shweta Verma with reports from Akila Subramaniam, Rajesh Menon, Yograj VArma, Arun ShankarÂ

from Hyderabad, Bangalore, Channa