policy makes India a major IT power'
has come to stay
may face greater competition in outsourcing segment
customers a big challenge for Indian IT firms
biggest obstacle the information technology spread is a government
getting in the way and Indiaís IT industry is a prime example of
that. The unshackling of countryís barriered economy in 1991 by
Mr. Manmohan Singh, then Finance minister and now Prime Minister and
his government has made India today a major IT power, said Mr.
Harris Miller, President of the IT Association of America (ITAA)
in an interview with Amitabha Sen.
outsourcing, Mr. Miller maintained, the moot question is
ďwhere do you do it? You can do it in the country where you
are operating or you do it ten thousand miles away. Thatís the
challenge for Indian companies--to convince customers in the US,
Japan and Europe. The reality is that over time, more and more of
these functions will get outsourced. Whether they will go offshore
or not is really the interesting part, and thatís the challenge
Indian companies are going to face. More and more US companies are
there, more and more Chinese companies are there, more and more
Russian companies are there to compete for outsourcing
Commenting on Kolkata as IT destination the ITAA President
said that the Left Front government in West Bengal is offering the
prospective investors in IT ďa very stable business environment. I think it is a very credible location in trying to compete
with other major cities and regions in India, successfully. When
anybody asks me, I always mention Kolkata as a very credible
A perceptible shift is visible today Ė from developed countries to
developing ones who are keen to adapt, absorb and utilize the
Information Technology as a development tool for their countries
economy, education, healthcare etc. How as worldís largest IT
associationís President you view this change? What could be the
possible factors prompting developing nations to get closer to IT?
I have been predicting this for long time. Clearly any new
technology is first adopted by wealthy individuals in developed
economies. As its benefits are perceived by a wider audience, it
spreads to the middle class in developed economies and eventually to
less developed economies. This pattern has been repeated with
electricity, radio, television, cell phones and now information
technology. So itís not surprising to me at all that Information
Technology is currently growing much more rapidly in Asia, Latin
America and Africa. Consumers in these regions are now coming to see
the benefits and are going to take advantage of them in the same way
the developed economies have.
You are interacting with IT leaders -from time to time, at different
national and international fora like WITSA where developing nations
also have started joining in. What
are the prospects and problems you find these developing nations are
facing today in the field of IT? How they could get into the
mainstream of globalization?
The number one element of any successful IT industry is the people.
This is a technology which runs on brains and not brawn. So
countries that want to be competitive have to develop the kind of
education and training systems that will enable them to have the
skilled workforce to be able to develop a major IT capability.
they need to understand that the market place is the best way to
decide the winners and losers. This is an industry that does not
require massive capital investment (with the exception of the
telecommunications infrastructure). On the contrary, this is an
industry where two people in a garage can start a business
successfully. So you donít want the government trying to dictate
policy or try to pick marketplace winners and losers.
we need competition in the telecommunications space because all
information services ride on the back of the telecommunications
infrastructure. If you donít have telecommunications competition,
you do not get the benefits of innovative new technology, new
business models or lower prices.
US itself is an example where we have tremendous competition in
cellular and long distance service. Prices have come down
dramatically. But in local telecommunications, we do not have much
competition and prices are still high and there isnít much new
technology. I was somewhat surprised that Indiaís minister
announced recently they are not going to provide competition
locally. I would encourage the government to rethink that because
thatís not good for the spread of technology.
we must all learn to think globally. Even developing countries have
to think globally, and of course India is the best example of that.
India has not developed the IT industry just for the internal Indian
economy. But they have
developed the IT industry with the understanding from the beginning
that they are going to
pursue opportunities and create customers all over the world.
Adequate funds to build up necessary infrastructure for expansion of
IT facilities across the country appear to be one of the major
constraints for developing countries. As ITAA President what would
be your suggestion to the rich nations to help the developing
nations get out of this problem? Would you favour an international
funding institution exclusively for IT?
No I donít think we need to do that. There
is sufficient private capital in the marketplace. The problem is
that private capital is not going to invest if there is no real
competition and if the investors arenít confident about the legal
and business infrastructure to enable them to earn money and do it
in a way that is legal.
In India there are 50
million new cell phone users in one year; China is adding 50 million
cell phone users a year. So there is money out there to build the
infrastructure to support that growth.
Where there is no private capital is where the government is
in control of markets, where there is no competition, where people
who earn money by investing canít take their profits out of the
They may be shy to invest initially. Rather they would be watching
the initiatives being taken by the government.
Why would investors be shy about investing? They may be shy of
investing if they do not believe in the legal or business
infrastructure or because they donít believe in competition. India
is a developing country, China is a developing country. We donít
disagree about that, and yet they have tens of billions of dollars
Ėinvested, not by government, but by the private sector, to create
Itís happening in
Brazil. Itís happening in Argentina. Wherever you have real
opportunities, it is happening. It is happening in Eastern Europe,
in Hungary. Wherever you have a real chance to earn money, investors
are there. Investors are not there if government is going to
appropriate their investment, or there is not going to be
competition, or there is corruption in the system. No one is going
to invest in that scenario.
The digital divide every day is a ďdigital opportunityĒ you said
in one of recent interaction with media. How would like to see a
digitally divided world and the prospect of global economy? To what
extent the US economy could hurt, till the world (developing and
less developing nations in particular) is not digitally united?
Itís unrealistic to expect uniformity Ö Technology spreads
differently. Not everybody in the US had a telephone on the first
day telephone service was commercially available. Not everybody in
the United States had a car when cars became commercially available.
But IT has spread faster than any other technology in the
history of human kind.
are approximately 900 million to 1 billion people in the world today
who are using the Internet. Ten years back, there were perhaps
10,000 people using the internet. Most of the growth initially took
place in the United States, Japan, and Western Europe. Most of the
growth in last three years has taken place in the developing
countries and will continue to do so. The biggest obstacle to this
technology spread is government getting in the way and Indiaís IT
industry is a prime example of that. Prior to 1991, as you know much
better than I do, your government had a policy of trying to build
barriers around your countryís economy. Your then Finance minister
and now Prime Minister Mr. Singh and his government brought down
those barriers and made India today a major IT power.
hasnít done everything right. But the government has done much
that is very positive. For
instance, government officials voluntarily reduced excise taxes and
other trade barriers. This was voluntarily done earlier this year.
Thatís a dramatic change from the old India. The old India would
have kept up barriers, trying to artificially inflate prices of
imported PCs and cell phones. . The new India says, ďNo we donít
want to do that. We want to bring in whatever is the best around the
world so our businesses, our consumers, and our governments can buy
the best technology--whether it comes from US or Europe or Japan or
it comes from, donít restrict it with artificial barriers because
that makes a country less competitive.
India is globally positioned today as a software giant. At the same
time, the country has also emerged as one of major global
destinations for BPO. Do you think that Indian IT industry is of
late leaning more towards BPO than its major primary focus as
software major. As a major India-client, the US has a very
significant role to play in this respect, hence this question.
BPO is one general subset of outsourcing. You can outsource
anything. You can outsource cleaning of your building. You can
outsource the typing of the article you write. You can outsource your IT. You can outsource human resources.
BPO is about being able
to convince the customer that you can do some non-essential
functions better and cheaper and faster than they can. Different
customers react to this and treat things differently. Someone may
say, ďI really think a call center is absolutely essential to my
business. Itís the number one thing we use to retain our
customers. I will not outsource my call center. My IT stuff is too
complicated for us to do, however, and I will send that outside.Ē
So the term ďBPOĒ
makes it sound more simplistic. Itís all about outsourcing. BPO
outsourcing, IT outsourcingÖwhatever you want to call itÖitís
all the same thing. After convincing the customer that the function
can be done better or
more professionally, the next question is where do you do it? You
can do it in the country where you are operating or you do it ten
thousand miles away. Thatís the challenge for Indian companies--to
convince customers in the US, Japan and Europe. The reality is that
over time, more and more of these functions will get outsourced.
Whether they will go offshore or not is really the interesting part,
and thatís the challenge Indian companies are going to face. More
and more US companies are there, more and more Chinese companies are
there, more and more Russian companies are there to compete for
What is the prospect of India and China forging an alliance to
emerge as global IT super power?
As things stand today, China can achieve success theoretically as an
outsourcing destination like India. China is the leading
manufacturing outsourcing country in the world. In terms of
services, they continue to be very slow. Lot of things have to do
with that, such as a lack of English speaking people.
Some of it may have to do with technical qualifications. A
lot of it has to do with the business environment. The Chinese
government must do a better job of protecting intellectual property,
for instance. They are far behind India in this respect. They are
now trying to catch up. International companies are establishing
small shops in China. China has to create a better legal
Recently, Indian Prime
Minister Manmhoan Singh stressed that ďoutsourcingĒ issue would
not affect Indiaís relations with the US? As ITAA President are
you in agreement with the Indian PMís assertion?
think the Indo-US cooperation will continue. I recently attended the
high technology cooperation group meeting that took place after the
Presidential election. Both the US government and Indian government
are clearly determined to look forward. There is no lessening of
interest on the part of the US government as well as the Indian
government. The new government continues its progressive attitude
toward Indo-US cooperation.
hope outsourcing issues will not strain Indo-US relations. But it
can have both positive and negative effects. The positive effect is
strengthening of the business relationship. The more we do business
with India, the more it becomes a true two-way street, and that can
be very powerful for trade.
The negative effect is
that India is seen as a partner in some international trade areas
such as IT and BPO, outsourcing, but not a very good trade partner
in breaking down other
barriers. I would like
to see the Indian government begin to act as a forward looking
country, instead of a backward looking country that is trying to
lead the opposition in the Doha round. It
should be seen as a developing country leading the way to bring down
the barriers, and I think that is your challenge.
To position India as a trusted sourcing destination is Nasscomís
major objective today, as stated by its President Kiran Karnik. What
is your advice or suggestion to the Indian IT companies in this
respect? Any tips for them?
Nasscom has its program under way. I think Nasscomís program is
very forward looking. They developed it in consultation with
people around the world. It is very focused, has very real meaning.
Nasscom and Indian industry have to continue to work globally, and
thatís the reason we had our extremely successful event in Delhi
on cyber security in October. We find an enormous amount of
understanding with Nasscom to promote more international
collaboration on issues such as data protection, privacy
regulations, IP protection, sharing sensitive information globally.
There is a need for
US and India - government and industry, to collaborate and partner
in elevating the importance of cyber security technology and
Realization of the
importance of information security is increasing, in the case of new
players in particular. Certainly the major players like Wipro, TCS,
infosys, Mphasis, HCL, understand that this issue, security, in many
cases is literally a make or break issue for them. If India is
somehow viewed as a a place where information is not secure, then
that would reverse the outsourcing trend for India. . One of the
problems of China is that it is not seen as a trusted place to deal
with. Problems relating to intellectual property are a major issue.
It is slow in emerging as a major outsourcing destination.
Lastly, you have commended the West Bengal governmentís- run by
the Left Front led by CPI(M)- initiatives in the Infotech arena. Will ITAA take initiatives to help the
Bengal government draw in more foreign investments in IT field? What
would be your message to the Bengal government to make the state IT
sector more investor-friendly?
I was there in November 2003. I met industry people and willing
government officials. I am still in touch with the people from West
Bengal IT. They are focusing on their number one issue, which is
workforce. They are
focusing on their education, their training, having a highly skilled
workforce. They are focusing on having basic telecommunications and
energy and road infrastructure. They are being very aggressive in
are offering them a very stable business environment. I
think it is a very credible location in trying to compete with other
major cities and regions in India, successfully. When anybody asks
me, I always mention Kolkata as a very credible destination.
December 4, 2004