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Three looks over India

Jorge Nascimento Rodrigues in Mumbai and Hyderabad, March 2007*

A quick week in the country under the spotlight nowadays. Between the misery and the power of soft, three quick angles concerning the emerging power discovered by the Portuguese in 1498.

*Adapted versions published in the Portuguese weekly newspaper Expresso.

I - The winds coming from India arrive at Capgemini

Capgemini (CG), which completes 40 years this year, has enthusiastically joined the wave coming from the Indian Ocean.

With the recent acquisition of Kanbay (specialised in financial services and listed in Nasdaq), after Indigo (specialist in "business process off shoring"), located in several cities in the Hindustani peninsula, the European consulting firm, born in Grenoble, has practically doubled its workforce in India, where it currently concentrates 87% of its off shoring capacity and 20% of its employees.

The magical number given by Salil Parekh, aged 43, executive president at CG in India, points to 40 thousand off shoring professionals existing in this country in less than three years. In 2008, it is already a certainty that the Indian operation will be "the largest in CG's global universe", as with Accenture by the end of the year, which will have more people in that Asian country than in its country of origin, the USA. When the target is completed in 2010, it will be "a revolution" in the 5th largest IT consulting firm in the world, as a senior official at CG told us.

Impact, without shock

The "indianisation" of productivity and of the Management itself (marked by its French origin) will be inevitable. The consequences of that large "displacement", like the Indian author Ashustosh Sheshabalaya states, nobody is commenting on them, yet. Baru Rao, 46, CG´s CEO in India, a doctorate by the Mumbai Indian Institute of Technology, underlines that there will certainly be a "cultural impact, but not a shock". The background is the one foretold by Andy Grove: by 2010, India will have the largest critical mass in IT qualified workers in the world.

The acquisition of Kanbay brought another gift: a better strategy for the United States (where the acquired company holds 90% of its clients). The American turnaround, which was defined as a priority by CG, has come true.

The European consulting firm invokes as a trump card the management capability of a network it calls "rightshore" - the right relocation of the work. That is, the advantage to be able to use for the same IT outsourcing contract, its local capabilities (near the client, in its country, with a direct knowledge and being able to act on the spot), as well as the possibility to distribute the execution of the development work through several offshore poles it has around the world (Spain, Poland, India and China).

Chronic addiction

The analysts point to two strong points in India, which are creating a sort of a chronic addiction from the global IT consulting firms in relation with the Indian technicians. The Hindustan country can ally volume and value, competence and scale, at lower costs (between those from China and Brazil, for instance), and with a talent input of around two million graduates a year. The quality of the work performed is guaranteed by the fact that this country is the one with the largest number of certified companies with a level 5 Capability Maturity Model, the highest standard in the industry (like in the CG centres). Kanbay's founder Raymond Spencer, 57, an Australian with decades in India, who has drawn in a large portion of the 1,25 billions paid by CG, underlines: "India is not just a low cost, but an excellence centre".

But the competition is not static. Due to the astronomical market capitalisation in the USA and in India of its big 3 (Infosys, Wipro and TSC), India's own IT industry has moved on to a surgical acquisitions strategy in Europe (including Portugal) and in the United States. Analysts claim that until 2010 other "surprises" may occur in the IT market, like the ones that have been happening in other sectors with mega-acquisitions by the Indians (like the Arcelor by Mittal and Corus by Tata). And if this is to happen, the IT consulting market will suffer a shock.

THREE QUESTIONS FOR SAMUEL TUATI
43, CG's Vice-President in Portugal, Outsourcing area

For a Portuguese client, what are the advantages of an IT development located in India?

A: There are two types of advantage. One in terms of quality standards, with all our centres in India having the highest certification levels - the CMML 5. Another is the lower cost, due to either a nominal difference in qualified workers, or to significant productivity gains.

Are there any projects in Portugal in which outsourcing is done in India?

A: Yes. But there will always be a problem with size. Usually, for this type of contracts, a certain work volume is required, volume which most Portuguese companies does not need yet.

Which is the main barrier found in our country?

A: There is still a habit of keeping in-house functions, which are not part of the companies' core business. But this reality is changing.

II - Knowledge among the rocks

Or the way Hyderabad is transforming into an information technology and biotechnology hub between the dust and rocks of the outskirts where new generation Indian companies' campus are being born, and multinational companies are settling. The Indian media have already named it "Cyberabad".

These are dozens of kilometres in freeways built in the middle of a dusty and rocky landscape in the outskirts of the urban region of the two twin cities, Hyderabad and Secunderabad, separated by an artificial lake created in the sixteenth century. The shock between the two worlds in India cannot be any stronger.

On the roadside, thousands of poor families are concentrated, living literally on the floor or in shacks with blue covers fading their colour, and among scattered rocks, preserved like natural sculptures, are the campuses of mirrored office buildings. These are garden like areas, even with cricket fields (like the talked about Microsoft one), where there is a coming and going of cars and buses carrying the famous "knowledge workers" which are transforming India in a soft power. Travelling around this metropolis (8 million inhabitants), we rapidly move from the pearls' and precious gems' commercial cluster in the city centre and the condominiums and luxury houses in the Jubilee and Banjara cliffs, to the semi-gutted stores and roadside misery.

Hi-Tec Posters

There is no comparison with the urban design at Silicon Valley, but there is a point in common: knowledge and entrepreneurism. When we step out of the plane, in the first corridor we encounter at the airport, the ads in the walls tell us which are the mandatory hot spots for the technological tourist. Under development are a Genome Valley (which already has over 50 biotechnology companies and to which a real dormitory city for employees will be attached), a Nanotechnology Park (in fact, near the airport), a "Fabcity" to settle the largest semiconductor cluster in India (a 3-billion-dollar project), where Kanbay built its 5000 employee complex and where Capgemini University is foreseen to be located.

Other posters remind us that it all began with the creation of Hitech City in the Madhapur district and that the largest film studio complex in the world - Ramoji Film City, certified as such by the Guinness World of Records - is located in the outskirts. Latest news tell us that the DuPont Knowledge Centre for advanced research into hybrid seeds will open soon, and that it is the first one belonging to this multinational outside the USA, and that the Dubai Government wants to create a "knowledge corridor". The media already call this city Cyberabad, a city that was once an independent state and a centre for Indian Islamic culture in the eighteenth century (of which there is still the Mecca Masjid mosque). The State as a whole is making IT exportation grow 51% a year!

But Hyderabad does not only wave at foreign direct investment. It is proud of its local businessmen, as Ramalinga Raju, named 'Hyderabad Prince', the founder of Satyam (one of the Indian IT big companies), who was the son of a vine grower in the region, and Anji Reddy, the pharmaceutical king, creator of Dr. Reddy's Labs.

Talent Centre

The real estate buzz in the business parks is the common ground we can find during the two or three hours that takes us to travel around the several multinational and Indian big companies' information technologies and biotechnology and pharmaceutical fixation areas, that the state of Andra Pradesh (of which Hyderabad is the capital) wants to transform into a hub in Asia. Groups of squatted women build sidewalks or carry stones while men build buildings. There are also several cloth posters informing that there are separate hotels for working men and women belonging to this migrant mass that floods the city.

Businessmen take the opportunities created by the State. "We assessed the hypothesis of several cities and states. But when we talked to the local authorities, we were impressed by the dynamics, the available spaces and some benefits, like Special Economical Areas", tells us Cyprian D'Souza, director at Kanbay, who adds: "But more important: this state is a talent centre. Over 250 engineering schools 'produce' about 80 thousand graduates. And this is essential for a quality recruitment".

III - The power of 10 rupees

"The Power of Ten" is one of the better known corporate social responsibility programmes (CSR) around these parts of Asia, a programme developed by Naandi, and that has drawn to it the support of the Indian industry and multinationals.

For ten rupees a month (seventeen cents of euro; thirty-five escudos in the old Portuguese currency), 2 euros a year, the reader can meet the minimum requirements to help sponsor a part of a CSR programme developed by the Naandi Foundation. The most "expensive" sponsoring programme will cost the reader little over 50 euros a year, including the main meal of the day (lunch with a minimum of 450 calories and 12 gr. in proteins), health care (children get an identification card and there is access to an emergency phone), school material and clothes and also study support after school for an Indian child, who otherwise would not benefit from such "trivialities".

The segmented targets are little girls from very poor families, a highly vulnerable population group. The "Girl Child Education" directly supports 150 thousand, over four states in India, and meals are served to an even larger universe, half a million, over three states, including cities like Hyderabad, where Naandi has its headquarters and where it runs the largest kitchen in world (supplying meals to 130 thousand children in the city) and which has applied to the Guinness Book of Records. Some of the companies devote 1% of their profits, after taxes and authorise the volunteer service of their employees (10 minutes of service a month).

Naandi was created nine years ago, and in Sanskrit (one of the official languages in India) means dawn or starting over. It was born with the support of large Indian groups (Dr. Reddy's, Satyam, Mahindra, to quote the ones better known in the west) and counts on multinationals (like the Bank of America, Barclays, Capgemini in the Nordic countries) and foundations (like Michael and Susan Dell, JP Morgan Stanley and the international Swedish agency for development) on their boards or on their programmes. It is run by militants against poverty which unite the passion for the cause with "the highest professionalism and management strategies", states Chitra Javanty, 47, vice-president for global partnerships, one of the voices of international marketing for this non-government organisation (ONG). Having started with a very local movement, it was transformed into a ONG with an annual budget of 15 million dollars and 250 professionals working full time acting in 7 states of India and in 3 areas: the aforementioned child programme, the support to poor peasants for connection to the market and the application of practices related with organic agriculture, and the access of villages to drinking water (half a million beneficiaries).

Chitra reminds us that 85 to 90% of the traditional help programmes in the developing countries go to waste in what she named "losses during transmission" of the money: bureaucracy, corruption and amateurism. At Naandi, she assures the process is the reverse: "90% of your 1 euro reaches the people it was intended to". Naandi applies to the letter the teachings of Peter Drucker concerning the professional management in this type of organisations, ensuring companies betting in the CRS that the money reaches its recipients. Another change in management was "going from small projects' management to the assembly of public-private partnerships for large direct intervention programmes.

Chitra's greatest satisfaction was the partnership with the Andra Pradesh government for the meal programme at Hyderabad and her most recent cause for joy was that the initiative for little girls was transformed into a flag by the government of the State of Rajasthan (near the border with Pakistan). Naandi states, ironically, that this is its way to perform State functions outsourcing and corporate social responsibility.

© Jorge Nascimento Rodrigues, editor for www.janelanaweb.com and www.gurusonline.tv. A contributor at the Portuguese weekly newspaper, Expresso.

 
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