|Three looks over India
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
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
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|
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
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.
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
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.
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
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).
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
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.