AHEAD OF OTHERS'
time to build on new advantages to sharpen our edge further
Indian IT industry has now reached a stage of maturity where it
can be a very reliable and safe partner for meeting the requirement
of our global partners and also capable of doing or has the capacity
to do innovation, said Mr. Kiran Karnik,
President of NASSCOM,
India’s national platform of the IT and IT Services industry. “We
have now reached the stage where we can innovate and not just do
what customer wants us to do”, he said in an interview with Amitabha
Sen. “There are good laws but we want to strengthen
them further in the area of IP so that there is no possible loopholes
in terms of copying, pirating and so on. Apart from the law, we
are focusing on enforcement. We see strong possibilities of cooperation
and complementality with China in the field of IT, he observed.
What, according to you, would be the three most important messages
that ‘India Leadership Forum’ would try to convey to the global
The Indian IT industry has now reached a stage of maturity where
it can be a very reliable and safe partner for meeting the requirement
of our global partners. While we are yet very cost competitive,
the Indian it industry has gone beyond that and is providing unique
scenario to customers and partners in terms what they need, could
be quicker time to market, it can be the better quality, it could
be secured cyber environment in terms of protecting data and network
so I think value, the cost is a factor but I think we are moving
beyond that. We are moving to a stage where Indian IT industry is
now capable of doing or has the capacity to do innovation. We have
now reached the stage where we can innovate and not just do what
customer wants us to do. But take it beyond that and innovate and
do some thing which is far better, far superior than what the customer
anticipated. Broadly that’s the message we want to convey to the
global IT players through India Leadership Forum.
India is called as IT Superpower and there is no denying the fact
India did earn a very commanding position in the global software
market. But where we stand so far as brand building is concerned
which would help sustain our stay like Microsoft or Oracle?
In terms of the Indian IT brand, we are very strong. We
don’t draw any complacency but I must say we have done very well
in two biggest markets-US and UK, the two most important markets.
However we have to do a lot more for other big markets like continental
Europe and Japan. In both these markets Indian brands are there
but we have to do much more to make it available and promote. A
great deal has to be done. So far as special for brand promotion,
we have some thoughts on doing that kind of thing. We have some
concept but I don’t think we have reached that stage to take on
that concept or to moving ahead or taking off on that but yes some
thought are there on it and some discussion is going on.
Related to this is a very important issue which again is crucial
to Indian IT industry’s survival is the Intellectual Property Rights
issue. You being at the helm of industry body, how would like to
assess the situation today and what is to be done in this respect
to ensure a stronger, secured IPR coverage that would protect the
interest of Indian IT companies?
Intellectual Property Rights is a key area as we see from the point
of view of both investment from abroad and foreign companies coming
in, and for the Indian industry itself because as India begins to
move towards creating products and doing more innovation, we need
protection which a good intellectual property law affords. We have
made a very strong effort to work with the government to strengthen
the law. There are good laws but we want to strengthen them further
in the area of IP so that there is no possible loopholes in terms
of copying, pirating and so on. Apart from the law, we are focusing
on enforcement. In many areas there are very good laws but enforcement
is not all that strong so we want to strengthen the enforcement.
Already some good work done by the Bombay police. We have worked
with them to set up a cyber crime cell. We are doing something interesting
with them, a cyber crime laboratory which is like a forensic laboratory
to track down people on the basis of finger prints, other kinds
of evidence etc. This laboratory will do the same thing to track
down people on the basis of evidence. These are the initiatives
on the enforcement side. We hope from Bombay experience as we gain
some ground then it can be transferred to some other cities and
areas. So that is an area we are looking at both in terms of law
and the enforcement.
One of the much talked about issues-- in fact a very critical issue
for the foreign clients of Indian IT firms in particular-- is Information
Security. NASSCOM had initiated some measures in collaboration with
the US government. What is the present status of the industry? What
message you like to convey to the global clients about India as
a ‘trusted source’?
We have now moved on and the government has now set up a formal
task force, the industry-government task force. We are looking at
what amendments are required to strengthen the whole area. Again
we are looking at the legal area. From within industry we are also
looking at what we need to do by way of our internal thing- processes,
people. You make sure internally that nothing happens from insidOf
course, most of the companies are doing that. They have secured
areas, access are restricted, people are not allowed to take materials-
no pencil, papers, floppy disc to copy anything. So those kinds
of internal strengthening of processes are going on.
To curb cyber crime do you think the industry should have kind of
I do not think the industry should have any semi judicial power.
That’s not a good ground to get to. We would want the industry to
concentrate on quality aspect and not the kind of semi-judicial
power you are talking about. We would rather emphasize more on quality,
standards etc. Indian industry has worked hard and today it is recognized
that Indian industry has quality which is the world’s best. Many
of multinational companies have their Indian operations at a higher
level of quality certification than even their home country. Same
thing I would say about Information Security. Create the kind of
thing internally without semi-judicial authority, just create cerate
certain areas and standard. For example, you keep your precious
thing not at home but in safe deposit vault so that it is not lost.
We want India mentally, conceptually to be regarded as safe deposit
vault for the IT industry. Secured data in fact is safer in India
than it is back home. We would like to do that by strengthening
the legal process and second is internally setting by standard and
not by any kind of force. By setting some standards to follow. I
would spur it really through market forces, rather than gentleman’s
agreement, as you say, There some standards existing already so
far as information security is concerned. We propagate among the
companies to meet those standards if you have to be in business
as things are largely decided by market forces and your business
Very often, "low-cost" is cited as Indian IT industry’s
USP (unique selling proposition)? To what extent it is sustainable?
Do you think that’s the only edge that helps Indian firms cut in
the global IT market?
No. this was a very old scenario, may be five or six years ago,
just before Y2K when certainly India’s USP was low cost. Today it
is no longer that, it has gone much beyond that. It has moved on
other dimensions. Today it is more value than low cost. It is the
value depending on what business you are in, may be customer service
which is far more important than just cost. Cost is very important
but there is something more to it. Other sides like talent that
are available, the customer service, experienced customer service,
the quality you give , these are important dimensions. The people
come for cost but they stay and grow for quality, productivity,
talent and other factors. Initially impetus to come to India was
the cost advantage, cost arbitrage but today it is not that only.
There are some other factors but having said that we are aware that
if cost goes completely out of the line you will have problem. You
have to maintain the cost judiciously. People cost have been going
up but others costs like telecom, etc are coming down due to efficient
management. Today one of the concerns has been that the indirect
cost driver of our operation is infrastructure. Diesel driven power
adds to your cost by 1-2 percent. Then you have to transport people.
In many cities like Bangalore or even in Delhi you have to take
people from their home and take them back unlike Bombay where people
travel on their own. In such a situation your transport cost adds
up another 1 or 2 percent to your overall cost of operation. You
will have to have mangers to take of these 100 or 200 cars and take
people up and down. Our policies are to bring down those costs so
that we increase our efficiency.
About two years back you talked about adopting a strategy of "complementality
and collaboration" with countries that have appropriate facilities
and skills. What is the scenario today?
We see strong possibilities of cooperation and complementality with
China and ultimately there will be some competition also. But we
see strong prospect of complementality, particularly in the areas
of embedded software. We see a great possibility. In Chinese IT
industry, they are very strong in hardware side. In consumer electronics
they are the biggest manufacturer of almost every consumer thing
in the world . They manufacture almost every kind of consumer electronic
goods, TV sets, refrigerators micro oven etc. All these today have
the chips built into them for variety of function like multiple
chips. If we can work with them, so the Indian software where we
have expertise, special talents and ability to do sophisticated
things, can be added to the Chinese hardware in these things we
will both gain because their products would be able to offer products
which would offer variety of functions- you can have more intelligent
TV sets, or a micro oven or a washing machine that can offer more
consumer-friendly services with lot more functions. For the Chinese,
it adds greater value to their products. Both sides we gain. That’s
the kind of thing where you can complement and work jointly. But
ultimately there will be some competition also. There will be certain
areas we can go for complementality and in certain areas we will
are other kind of complementality. . For example, Philippines. They
have some special advantages in regard to call centers, particularly
for the US because the English language they are strong, the left-behind
American culture and so on. So the kind of thing possible for the
Indian companies which have expertise and running call centers ,
they know what to do, they know quality, they know how to maintain
internal processes and project management, So Indian companies are
setting up in Philippines. So this is a different kind of complementality.
Philippines is happy, investment is coming, some employment is generated
there. And for Indian companies it is complementary because they
are able to supplement what they do from here which is something
more which is specifically geared to specific kind of American market.
That’s the kind of thing we see happening. So two thins are happening:
one is Indian companies going to other countries, setting up facilities
there and secondly Indian companies partnering with the local companies
in countries like China to do something more. I think both these
are good possibilities we should look at.
Lots have been talked about India as a leading destination
for “Outsourcing”. At the same time there is no denying the fact
also that many a country are also emerging as India’s potent competitors
in this field. What message you would like to convey to the existing
and prospective global customers who might be considering other
countries as alternative BPO destinations? What India can offer
that probably her competitors cannot?
In terms of competition, we are very aware, we need to be on our
toes without a dot because there we in some sense have shown them
the path which was easier for others to follow than it was for us.
But frankly speaking, in regard to our competitors we are three
or four years ahead over all in terms of industry. In specific segments
there may be competition. For example, as I mentioned earlier, in
call centers Philippines is a competition for individual companies
but not as a whole because they do not have scalabilities, they
don’t have the numbers. At least for next three or four years we
are ahead of others we make sure that we are prepared, we build
on new advantages to create a new, move on to new things. So you
need to sustain that.
Do you think that publicity hype being built over the US market
is overarching other potential BPO markets?
With regard to the US, large part of our exports are very much heading
towards US. In fact this year it will be about 68-69 percent. But
US is the biggest IT market in the world. The US alone accounts
for over 50 percent of the global IT market in any case. So it is
not very disproportionate. We are very active in pushing to expand
in other markets, particularly continental Europe and Japan. These
are two large markets where our penetration is yet comparatively
small. In countries like France, Germany, Italy we will have to
do a more lot in next four/five years.
good news is that the US market continues to be pretty much the
same for last two/three years. While we have had 30 percent growth
overall, it means that Japanese and European markets also continued
that kind of growth because they sustained the share. They did not
gain share but they did not lost share as well. The fact is that
we continued to grow in the Japanese and European markets . The
fact is that we are growing across everywhere. But the challenge
to us is how to further accelerate our growth in Japan and Europe.
We are working on that. Number of things we are trying to do. Indications
are that that Europeans are bit slow in outsourcing, optimizing
global sourcing kind of thing. But they have to compete globally
and to ensure that they will have to reduce cost , provide service
and so on. They are beginning to realize. We are optimistic that
few years from now we will see the share of non-US sector is increased
What is the prospect of West Bengal as IT destination? What is your
view on Bengal Govt.’s initiative to develop Siliguri as IT gateway
to South East Asia?
I am very optimistic. We are very pleased with the way the
West Bengal government has moved in the last couple of years. There
is tremendous energy behind it. Both at the political and also I
want to acknowledge, at the bureaucratic level. They are today very
charged and dynamic body. The govt. has taken good step. The policy
has been positive and immediately you see the response. Industries
are setting up more and more there. The prospect is very good not
only just because of govt. policies which are very necessary but
there is another requirement and that is talent and in that Calcutta
and West Bengal is tremendous. It was neglected so far because of
other reasons relating to policies. Once that policy corrective
has come, the people realized that the talent pool is there. Which
is very good. I see very good prospects of West Bengal. What the
West Bengal govt. needs to do is to continue to give the thrust
and dynamism they have done in last two years. Secondly, to continue
to move ahead, even more vigorously, on improving infrastructure
because that continues to be a constraint in many places. Besides,
govt. has to work with industry to further build on the talent advantage
that West Bengal, Calcutta in particular, has. This is like raw
diamond which is very precious but you have process and polish to
add value to that. There may be very bright, talented persons but
may be lacking something in some particular area. If that thing
is taken care of, he may turn out to be a big asset for a company.
Siliguri I am great enthusiastic. I am not going to say that Siliguri
is going to get business next year. But looking ahead for next two
or three years now. For two or three reasons the prospects of Siliguri
is very bright. That is a great place to tap into all the talent
exist in the north east region today. To expect an IT company to
go to Aizol or Kohima is not realistic, frankly speaking. There
is a talent pool in that region. They speak good English, they are
hard working, industrious.
the opening of Nathula Pass as the China trade develops, that would
be the staging point for Siliguri because that is going to be the
central hub where things would be coming and then distributed all
across the country. Siliguri itself will develop as a city and town.
Otherwise, very nice weather and ambience is very good. It will
attract outsiders if you make it a nice place to live in. Even as
a tourist destination it is the staging point to travel into Sikkim,
Bhutan, Darjeeling, for that matter the entire north east.
the West Bengal government can somehow combine all these and make
the kind of hub for the north east then automatically IT industry
will also come and it will be self reinforcing because in IT industry
you get more people, because more people come, a city develops.
You will be able to attract more IT people. The kind of phenomenon
we have seen in Bangalore, it could begin the take-off in Siliguri
in three four years from now.
suggestion to West Bengal govt. has been to look ahead. You know
what’s going to happen. Don’t start in some small way. You think
in terms of that long term perspective. You have to invest. You
plan it a way that it shapes up as an international hub. Don’t think
small, think big and start now. That would be my suggestion to the
West Bengal government.
February 7, 2005