Steria and Xansa at NASSCOM 2008

Hot Fuss - ça plane pour moi

Having left Mumbai after NASSCOM to spend a few days in Delhi with the Steria/Xansa BPO teams in various Noida offices, I am now in a cab on the way to Indira Gandhi International Airport, Delhi to fly back BA ot the UK. It's 15 minutes past midnight when I leave the Hotel for my flight which is scheduled to leave at 03.25 am. Unlike Mark Kobayashi-Hillary's journey to Mumbai airport, mine is relatively quick and uneventful. I mentioned in an earlier post the peculiarity (at least to those coming from the UK) of having to prove you are flying even to enter the terminal. I have my boarding pass already, however my way in is barred by a huge crowd with luggage trolleys. I figure it could take me close to 45 minutes to get in... that's to go about 10 yards with my 500 cosy companions. Frederick Winslow Taylor would be turning in his grave.

I recalled from previous journeys that all doors emerge in the same terminal, so wandered up to a forlornly empty Door 4 and entered within 2 or 3 minutes. (Top Tip!)

The next step in leaving India is to x-ray any check-in luggage, which you must do just through the door that you should have entered by. This done the next hour and a half's challenge is to get the bag actually loaded onto the plane by checking in. Best to avoid this step by taking hand luggage, but this is the one time of the year I always need more luggage to take back NASSCOM books and materials, so this time I queue. And boy do I queue. Every two years Delhi plays host to a major Defence Conference, and my flight back coincided with the last day. So it is heaving in there. I meet a couple of the conference organisers who take pity on me and load my (overweight) case on top of their trolly. I guess they figure the extra mass will help in the strategic push forward. I begin to think air rage will start early in the terminal, a little worrying with all these military types and arms dealers, and some less familiar with the norms of Indian airports do seem a little hot & bothered, but generally the air is one of resignation borne of tiredness.

Bag dropped and we need to join the next queue. International travel - it's just a barrel of fun. This one trails back to the x-ray machine by the door. We fill in our departure form (best not to make a mistake on this and get sent back). We wend our way in a giant snake to immigration. A rather drunk Indian from Amsterdam wants conversation from anyone who will oblige. It's now about 02.00am. I discover my fellow queue neighbour is not flying until 07.00am. That's a little too risk averse for me. After an hour we get the requisite stamps and are allowed into the terminal. My friend on the 7 o'clock says goodbye and goes to peruse Delhi airport's extensive shopping opportunities. It's so hard to convey irony in words isn't it. For me it's time to join the queue for security. It's as long as the other one, so I estimate another hour - pretty accurate.

I mentioned India as "the" place to network, and this queue I meet some interesting guys including the founder and head of new Indian airline SpiceJet. Yes even he has to queue. He's on his way to Franfurt for his other business interests, and tells me en passantthat Delhi has outsourced airport opertations to Frankfurt airport. Some German efficiency would not go amis here. I later find on the internet that terminal 2 - the international terminal has a capacity for 12.5 million passengers p.a., but the total passenger traffic in 2006/7 was over 20 million. Quite an imbalance, which is why they are upgrading the facilities. The refurb is is aimed to be complete in time for the 2010 Commonwealth Games. As a quick diversion, the 2010 Games will be held in Noida and we see the impressive site every time we travel from central Delhi to Noida. Indeed I was struck by how much Noida has improved since my last visit. Much less litter and pollution, the greenery is growing up now and the highways and metro across Delhi are creating a much improved infrastructure.

At around 03.00am I get through security to the gate. The plane, inevitably I feel, has been delayed an hour just to top our travelling experience. By 5am I am boarded. I wonder idly if an American would think they were "planed", since they have created the strange "verb" to "de-plane". ipod headphones in, set to shuffle, and Mr Brightside is playing. That's it for another year.

This is the end (2008 NASSCOM mix)

Hilary Robertson

Farewell to NASSCOM 2008

That’s it for another year. I’m back in London and NASSCOM 2008 is just a memory, though the content on this blog has ensured that it will be rather more enduring than most conferences. It was a really enjoyable trip for me as NASSCOM itself was as exciting as usual and I had been in the Philippines for a few days immediately before arriving in Mumbai.

I think the subject everyone wanted to talk about this year was the US economic slowdown as a result of the sub-prime credit crisis. This was not even on the radar last year and has gradually snowballed into a topic that every company is now worried about. However, some of the experts I spoke to were quite dismissive of how badly it will affect the technology and service sector in India. Some even just brushed it aside, saying that there are so many great opportunities it would be crazy to worry about this. Several other industry experts came up with a similar view, though with differing reasons – the general consensus view was that the growth and opportunities for India are so strong at present that even a slowdown in the US won’t disturb growth.

Several Indian tech companies have watched their share price decline dramatically in the past year, as profits have been squeezed by the unfavourable dollar / rupee exchange rate. This was also a major topic of conversation at NASSCOM this year. What if it gets worse? What will the companies do about their share price and valuation? I know myself that several Indian companies are now casting aside any extraneous expense and battening down the hatches in advance of their next quarterly earning figures.

I’m inclined to shake my head at some of this behaviour. In a growing market with new customers being acquired by all the major tech firms, it seems everyone gets the jitters because of what the market is going to do to their share price in the next 12 weeks. It will take some brave leaders to ride out the present concern over foreign exchange, but surely the industry has got to start taking a longer-term view than the investors? Or am I missing something?

The government has been generally praised for their proposed changes to the IT Act, though some of the reluctance to extend tax breaks further into the future has been criticised. Perhaps India will need to see some major investors open shop in other Asian locations such as the Philippines before they reconsider their tax policies.

As always, topics such as innovation, partnership, and collaboration have been batted around. I don’t think I learned anything new, but there was a feeling that some companies are moving beyond just the usual lip service to these topics. The KPMG analysis of KPO for example was a welcome examination of what is really needed to enter into this area of the market – a wake up call really for those who keep repeating that they are ‘moving up the value chain’…

It has been a useful and enjoyable conference though. NASSCOM captures the mood of the industry in India and sets the agenda for the year ahead. Though there are a few concerns about global services at present, the view in Mumbai this year was that the opportunities far outweigh possibility for clouds on the horizon. See you in Mumbai next year for NASSCOM 2009!

My final thoughts: http://uk.youtube.com/watch?v=oljRZNJuSAE

Mark Kobayashi-Hillary

The outsourcing industry in India: A view from the MD of NeoIT

Gary Schneider is Managing Director of NeoIT, the US-based consulting firm. Gary heads up the firms operations in India and he has attended a few NASSCOM conferences now. We sat together and had a chat in an Italian restaurant within the Hyatt hotel in Mumbai.

Gary first told me about a couple of things that he missed this year in NASSCOM: “The two things that I have enjoyed in the past has been a close look at the US political landscape and economic view, but that’s absent this time and they also don’t seem to have too many people from the private equity and investor community this time. There was a lot of talk this year about leadership and innovation, all very strategic, whereas last year was very tactical and more about control.”

It’s interesting to hear Gary say this, as most observations on the conference have been very positive. The decrease in US-specific information might be linked to the growth in importance of Europe; certainly Europe is now a bigger market for offshore outsourcing than the US. I think he is right about the investors though, but I didn’t really notice until he said it.

Gary noticed the international flavour of the event this year though: “It is extremely international this year at NASSCOM. China, Nova Scotia, Wales, Malaysia… they are all here. It is reaching a point by accident or design that this conference is now becoming more of an international outsourcing conference, rather than just Indian. Next year will really be interesting because we will be able to see if that trend develops further. There is a very distinct flavour here especially when compared to similar conferences in china or Russia, where they are very much more focused on local business. This is a marketplace beyond just a conference.”

The team from NeoIT were also enthused by the maturity of the supplier community at NASSCOM: “Normally suppliers are selling themselves on their skills or experience at conferences like this, but this year we have found some of them really asking for healthy independent feedback on their offering. And the nice thing is that they seem to have accepted and listened to many of our views as market consultants.” It’s interesting to hear that companies are being introspective and trying to get feedback from within the conference.

I asked Gary about some of the market concerns of a potential economic slowdown in the US and he gave me some views: “People are not sure how the general slowdown might affect this industry. We know from history that the US can usually speed up again after a slowdown faster than Europe. I think the trouble on the Indian stock market won’t last for long though, they will bounce back.” I wanted to know if he felt the issues in India on the stock market and the wider economic issues are related and he told me: “The concerns about the slowdown in the US and the worries on the Indian stock market are separate but also interrelated. People are talking about what will happen with the entire industry, but at the same time, the market is maturing. There are more deals coming through, but of a smaller size, so margins are likely to be smaller, but companies are gearing up for what is to come. It is a sign of their maturity that these companies are looking a year ahead and planning.”

Gary added a final extremely positive note about the outsourcing industry in India though: “We have moved from staff augmentation to managed services, so companies are held to a higher level of accountability. It’s likely that as companies move more towards this business outcome pricing and gainsharing rather than cost plus measures – such as staff augmentation – then margins can be improved.”

So the industry is maturing in India and, if Gary is right, then that maturity will come with the answer to some of the short-term fears bubbling in the market at present.

Mark Kobayashi-Hillary

The right side of the law

Sajai Singh is a partner at law firm J Sagar Associates in Bangalore. He is one of the most recognised figures in India with an expertise in the legal aspects of outsourcing. I’ve been regularly talking to Sajai at industry conferences and by email for about five years now. His knowledge of the Indian legal system contributed extensively to my first book ‘Outsourcing to India’. So I was pleased to bump into Sajai at NASSCOM and we went for a cup of tea and chat in the media centre. Though I don’t have any specialist knowledge of the law myself, it’s good to get a perspective on what’s happening from a practitioner who can summarise the legal jargon for the layman.

Sajai was excited about some of the new concepts being discussed at NASSCOM this year: “I was really interested to hear KPMG talking about outsourcing the core of a company. You never used to outsource the core, so although I have not yet seen any deals coming through that are involved in doing this I think it’s going to be interesting when it happens.” He is right, because it goes against everything we ever learned at business school, but I had a chat to Edge from KPMG about this and his arguments were convincing.

Sajai was also interested in some of the new technologies being used for collaboration, such as blogging: “There is a lot of interest in Web 2.0 concepts here, such as the commercial use of virtual worlds like Second Life. When I hear these concepts being discussed in the conference I immediately think about how the law can be applied to these new scenarios. So it’s really fascinating, I’m layering the legal implications onto some of these new ideas.” He added some thoughts on the international implications of collaborating across borders in this way: “There is usually no problem if the information is shared on a private network, but where there is anyone other that the closed user group involved, such as if the public Internet is used for information sharing, then some issues can be raised. This is especially complex as it can cover a number of jurisdictions and different countries view different issues in different ways. For example, virtual worlds and collaboration are unlikely to work in the Middle East. Social networks are not allowed in many of those countries, so some of these issues will come up when cross border collaboration using technology tools is attempted.”

It was interesting to hear Sajai’s main focus at present: “The most time I am spending right now is on renegotiating outsourcing contracts. It’s interesting that they are not going to completion; they are being renegotiated in the middle of the contract. At the end of the tenure they would not need so much legal support, you know that you need to negotiate again when the contract expires, but in the middle of the contract you need a lot of legal support to redraft the contracts.”

That’s an interesting comment and possibly disturbing. Why are so many contracts being renegotiated before they even expire? Sajai did tell me that there is not one reason for this, but he did say that scope is often a sticking point. If that’s the case then maybe we still need to think a lot more about how contracts can flex, so changing business circumstances can be priced, allowing service levels to change over time?

I really wanted to hear what Sajai had to say on the proposed amendments to the IT Act of 2000. This is the main piece of Indian legislation that provides a framework for the entire technology enabled industry: “It’s really good news that in 2008 the government is expected to amend the IT Act of 2000. I would never assume it is going to be passed, but I think so. There are some drastic changes and so that is really welcome.”

Sajai is excited because the law should be changed to catch up with reality, including measures such as defining various methods of cybercrime. Though Sajai mentioned that this is already rising in general awareness now: “Courts are taking cyber disputes much more seriously now. Unlike in some other countries we did not really have a body of case law in India in this area, but that body of law is now being created and it helps for the area to be taken more seriously.”

There is no way I can list the proposed changes to the law in this blog. It’s exciting to know that the government is taking the industry seriously and attempting to provide a strong legislative framework. We need that to operate, especially across borders, but I’m sure you don’t want to read the minutiae – unless you are a lawyer yourself. Sajai provided me with a very succinct summary of what is going to be worth looking out for though: “A lot of the provisions from the Indian evidence act and penal code have been brought into the IT Act, because the statute was earlier focused more about the exchange of information, subjects such as digital signatures. It is now being updated to reflect offences such as cybercrime, but what is really good is that it is being written in a broad technology-neutral way and refers to the Internet explicitly. It is going beyond how the old act was written before, which was quite dependent on specific technologies. It will cover most crimes that we are now aware of, for instance there are crimes such as phishing that the Indian consumer is still not very aware of. There really is a lot of maturity in the new proposed statute.”

It sounds really positive and you have also seen the leaders of NASSCOM praising the proposals for the new IT Act on this blog. If India can bring its IT legislation into the 21st century then it will give a great boost to confidence in the industry.

Mark Kobayashi-Hillary

Edge

Egidio (Edge) Zarrella, is the global head of IT advisory services for KPMG. He is based in Sydney, Australia, but given the global nature of his role I’m sure he has an extensive knowledge of the Qantas menu.

Edge is quite a distinctive character. He is very tall and his hair is very long. It’s styled a bit like Jerry Garcia or possibly Robert Plant around the Led Zeppelin IV era and his name reminds everyone of the guitarist in U2. One of the things that university students tend to blog about after they meet Edge on campus is how on earth a global company like KPMG can have a senior partner who looks like that. Of course, it’s probably a major factor for those same students wanting to sign up to join the company when they graduate.

Edge explained to me that KPMG takes NASSCOM really seriously: “We pick about two or three events year that KPMG really focuses on – events we really want to be associated with. We have about 40 partners here at this event and that’s a huge commitment. It’s getting more and more popular; perhaps they even need to build a convention centre in Mumbai now so it can get even bigger.”

He’s right of course. I knew KPMG was a sponsor, but just committing 40 partners to travel from all over the world to spend time at the event is a huge commitment in itself.

Edge wanted to first move on from the topic everyone has been talking about, the sub-prime credit crunch in the US and the subsequent economic uncertainty: “Last year was more of a snapshot, consolidating information on where the industry is at present. This year everyone seems to be asking me about the sub-prime credit crunch and I’m saying to them for goodness sake, that’s just one thing that might cause blip. I really think the sub-prime issue is just a natural correction for people doing something silly and then coming back and changing their processes. If everyone thought that none of this can happen then they just don’t understand business cycles, it’s just a blip. We are also looking at market concerns in India as well right now, but I prefer to look at it in terms of the global market and the domestic market. As the ITO industry is about 25 years old now, if you look at that, it’s become a commodity industry so what do you think the margins are going to be? Guess what, margins are going to become tighter as the industry gets more commoditised. This will also happen to BPO as it matures.”

KPMG has just released a new research report on the development of the KPO market and Edge has some strong views on the subject. To understand the context you have to appreciate that one of the clichés in this industry is how companies need to ‘move up the value chain’, meaning they should move away from standard, prescriptive, tightly-defined services to highly-skilled, less defined services – such as analytics or research. The assumption amongst many is that BPO firms can bolt on some new services and thus move up the value chain, which Edge strongly protests against.

Edge said: “KPO is a new segmentation of the whole sourcing business and is seriously all about quality. You need to talk about real value to the business and if you can offer value then you can charge a real premium for it. I think there is a danger in India that some players who think KPO is just a continuation of BPO will suffer. With KPO, quality absolutely comes first. It’s not a commodity. It’s not a quantity game. India’s success can sometimes be it’s worst enemy – I think about this when I hear BPO companies talking about rolling out 3,000 seat KPO offerings.” He gets even more vehement: “People talk about KPO services being worth $150 an hour, well I have a small client who is charging $200 and they confessed to me that they could easily charge more. The point is that this is just like hiring an expert accountant; people will pay any amount of money for a high quality service. That’s the KPO value and the danger in India is that we keep talking about this as business processes – good luck with it if you want to do KPO like that.”

So Edge thinks there is a huge opportunity for firms to work in the KPO space, but I think he rightly points out some of the dangers. It’s not unique to India, it’s just that India has the most mature offshore BPO industry and therefore wants to leverage that position by moving into new areas. It’s only natural for the BPO industry in India to be making forays into KPO. Edge warns of one big difference though: “If you make a mistake in BPO then that’s just a part of the process, you might get a slap on the wrist, but that’s accepted. In KPO if you make a mistake then I will never work with you ever again. You are history. If you are a BPO with 10,000 people then you can’t move up the value chain using the same business model. You can retrain those people of course, or spin off a new division of the company. A joint venture or new company has to be created so you don’t confuse the market. You can’t be a large commoditised BPO on the one hand and a high-end KPO firm on the other.”

When I want to talk about value to companies I sometimes ask people to look at London. It’s a very expensive place to do business, but the entire global financial services industry goes to do business in London because it is the best place to get that business done. It’s an example of something being done because it is driven by quality rather than cost and Edge cites the strong reputation of actuaries in Australia in a similar way – they can pretty much charge what they want, because their services a in strong demand.

Edge also warns that India has the scale, but in some areas may lack expertise or focus: “This is not a volume game. India will always be number one because of the volume, but don’t assume that India will always get what it wants. Look at these small countries trying to promote their expertise in particular specialist areas – like Wales and Malaysia here at NASSCOM. India might assume that they can take everything, but we are talking about intellectual arbitrage, not cost arbitrage. Guess what, you can’t price intellectual arbitrage unless you know exactly what you are doing.”

Edge gave a great example of a KPO that is exploding in importance, engineering: “India has the talent to remain in the lead in many areas though. Look at something like engineering design for example. India is producing more engineers each year than there are in the whole of Europe, so that means moving into the future every new bridge in the US is going to be designed in India.”

I think Edge has a really perspicacious vision on KPO. It’s one thing to talk about pricing by value rather than time or headcount, but it is another to actually move away from the established BPO model and to price in this new way. Hopefully there will be a lot of people in the industry who listen to him, because they will struggle to get KPO right if they don’t.

Mark Kobayashi-Hillary

Serendipity

Alok Shende heads the Telecoms and Technology Practice for market analyst Datamonitor. I know the Datamonitor call centre and BPO expert Peter Ryan (based in freezing cold Canada) and he sent me a Facebook message just before the conference saying I should chat to Alok. When I was lining up to fetch my badge at the very start of the NASSCOM conference I said hello to the guy standing next to me, and it was Alok. Given the number of delegates at this conference it can be hard to find people you have never met before so that was a serendipitous greeting.

So we worked out a time to go and catch up together over a cup of tea and to see what he was thinking of the activity at NASSCOM this year. Alok started by saying: “This is the four or fifth time that I am here at NASSCOM. It’s a great networking event. I am here because you are here and you are here to meet me and he is here because of someone else. It’s just great meeting people here. There are some great speakers as well. At most events you go ‘wow’ on the first day and it tails off towards the end, but this event has really good people well spread throughout the three days.”

I asked Alok about some of the international economic uncertainties at present, and in particular the pressure many Indian companies have suffered as the USD/INR foreign exchange rate has become considerably less favourable. It’s important as many of their costs – such as salaries – are in rupees, but they bill their customers in USD. If the dollars start becoming less valuable then they cannot just ask the customers to pay more, it erodes their profit margin.

Alok explained some of his thoughts to me: “There is a challenge for the future. Everyone wants to know what is going to happen, and particularly the mid-tier companies. They get invited to all the same deals and can’t compete for the deals the big guys go after (the companies who are about $1bn or more in revenue). NASSCOM has about 800 member companies, but that is still not every company in the sector so we are not even seeing the effect on everyone here.”

I was particularly interested in the effect on profit margins in India and Alok said to me: “If you move from 33 per cent profit margin to 27 per cent then investors start rationalising their assessment of your future earning potential. You can see this concern being expressed by a lot of people in the industry. Future expectations can easily be changed very quickly. With this in mind I think there should be a wave of consolidation in the mid-tier of this market. The only question is when.”

So, Alok believes that the smaller profits are going to make it harder for smaller companies to compete. It’s interesting to see him observe that some mergers of service companies will be inevitable in India. I was interested to ask a little more about the margin erosion though. I did an MBA myself and I had to scan through company balance sheets, but to be honest I never found that kind of analysis the most interesting part of my course. I wanted to ask Alok why it’s such a big deal. I mean we are moving from a situation where companies have enjoyed fantastic profit margins to healthy margins. It’s not as if they are being forced to survive on wafer-thin margins, or even selling services at a loss. Alok explained the situation to me: “The thing is that margins are not linearly related to the company valuation. So a 5 per cent drop in profit margin is not going to lead to a 5 per cent drop in company valuation, the value of the company might drop by 20 per cent or more - this is the sort of drop in value we have seen for some of the Indian technology suppliers recently. The second concern is how these companies can really differentiate and transform what they are offering, to pull out of this situation and show they are different. Many of the companies in the mid-tier are really struggling with this question.”

I think Alok makes some interesting points and it’s great to get some clarification on the margin issue. He also mentioned to me that his company has observed some strong activity in the market in January 2008, so business in the Indian marketplace is growing. Some of those mid-tier and smaller companies might need to think about what Alok has said though, in a busy marketplace how do you look different to everyone else?

Mark Kobayashi-Hillary

Talking NASSCOM, offshoring and CIOs with Alex Blues

Alex Blues is a partner with PA Consulting in the UK, heading up the technology and IT services practice. He is quite a veteran of the Indian offshoring industry and so when I spoke to him at the NASSCOM conference it was in a whirlwind of appointments for us both. Fortunately, we managed to get our conference diaries to coincide long enough for a chat together.

Alex was in a happy frame of mind as well as he had just got married and the trip to NASSCOM was a part of his honeymoon. That’s dedication to your work, eh? Well, it was almost anyway – just that he had been touring South Asia with his new wife (congratulations to you both as well!) and he managed to work out the timing for his journey home so that he could spend some time at NASSCOM while she enjoyed some Mumbai shopping and spa time.

Alex initially gave me some of his thoughts on NASSCOM this year: “This is my fifth visit to NASSCOM and I have seen two key changes. The first is a broadening of the conference. This is not just about India. It’s really been a pleasure to see people from Egypt, Ireland, Wales, Costa Rica, Malaysia… and I think that really shows that NASSCOM is moving from being a conference about India to being the biggest global outsourcing conference. That’s really because there is a maturing market and all of those locations are finding a link to India in some way.” He added a further key point that reflected some of the conference speeches: “The second thing is that I am hearing a lot more now that sourcing is moving up the value chain. It’s much more agility and flexibility and sourcing for innovation rather than cost. So there are some real changes in the approach to the market. Last year people really started talking about outcome-based solutions here and this year practically everyone has talked about culture and output rather than input-based solutions.”

Alex has been doing research recently into the role of the Chief Information Officer and how many sourcing decisions are these days far more related to business pressures, rather than technology related. He outlined some of his research: “At PA we have just concluded a survey with Harvey Nash that looks at changes in the CIO community. The role of the CIO is changing. The CIO is far more linked to driving business, not IT. The average tenure of a CIO now is 24 to 36 months, so the role of the CIO is changing. Either they are coming in as an agent of change, then once they succeed they move on to a new role – or they fail to change the organisation and so they move on anyway.” Alex was keen to emphasise that this really means that a more holistic approach to corporate relationships is required: “If you take a 24-month tenure and assume it takes 6 months to get your feet under the desk and 6 months to leave then there is a very short window of time in which the job can be done. This is the difficulty for suppliers in influencing the CIO. One of the most telling statements I heard yesterday at NASSCOM was someone saying that CIOs used to ask the ‘where’ question and they now ask the ‘why’ question. Within PA we are keen to work with people at the board level on what is really happening, not just sourcing as a deal by deal process.”

Alex was keen to emphasise that he was not even prescribing the type of sourcing. In fact, he proposed a far more mature purchasing process: “You might also notice that I have not used the ‘out’ word yet. I am keen to explore sourcing in all its various forms, and not just as outsourcing. Sourcing is a boardroom tool for competitive advantage and the solutions are becoming more complex. It has been amazing in the past that people will go to suppliers with a very prescriptive RFP detailing the solution they want, rather than just outlining a business problem and getting the suppliers to figure out the best possible solution. It might be any form of sourcing, but the key is to choose the best solution.”

I asked Alex if some of the international economics pressures we see in the news at present are a cause for concern. He said: “There are some international economic concerns, but the UK market is extremely different to the US market. In the UK as far as working with India, it really is business as usual. People have already started looking beyond the hotspots of Bangalore to second or third-tier locations in India. It is important that the Indian supplier market continues to move up the value chain into areas such as KPO.  It is really important for the Indian supplier community to realise that if they are only offering highly commoditised services then it is likely they can be performed just as well elsewhere, in Vietnam for example.” Though he added that it is still quite difficult to define KPO because: “…there are still not all that many KPO case studies yet, because it is still a source of competitive advantage. People are not yet standing up and talking about it openly because they want to keep that advantage.”

Alex mentioned Xansa as an industry leader without me even prompting him for a comment, and it was complimentary too: “I think we are seeing the beginnings of some Indian companies throwing off the India tag and becoming better known as global players. I predicted a couple of years ago that Indian companies would start getting involved in TUPE transfers (the legal transfer of employees from the customer to the supplier, so the people keep a similar job, but work for the supplier) and that has happened. Xansa was probably a leader in this regard, but TCS has also shown with Diligenta that it can be done successfully. I think that once you build that bigger UK presence then you really can adopt a more global attitude.”

Of course, Xansa and now Steria, have generally been better known as European companies with teams in India, rather than Indian companies with people in Europe, but you can see the point he is making. Once companies with teams in multiple locations take on new staff via TUPE transfers then they really start to establish a global footprint, with people getting paid by the same company in many locations around the world. It’s nice to hear someone as respected as Alex mentioning Xansa as a leader without me even needing to offer him a glass of fine red wine for the quote!

Mark Kobayashi-Hillary

Interview with Steria's new CEO in India

Mukesh Aghi is the Chairman and CEO of Steria for India. I met him a few moments after I had been chatting to John Torrie on the phone, though Mukesh was in person. We were outside in a Chinese teahouse by the side of the Hyatt hotel and the Mumbai sun was extremely hot, so thankfully we managed to sit under a large shade. I was In the direct sunlight chatting to Mukesh and that was a big mistake as ten minutes in the Indian heat can feel like a couple of hours in the park in London’s excuse for summer.

Mukesh had been making the news, with various announcements splashed across the Indian newspapers on Friday so I was keen to talk to him. First, he had been officially announced in his new role, though he had actually been in place for a few months. Second, Steria had announced a major expansion plan of their operations in India including a proposed doubling of the workforce. The Indian press were thrilled so I wanted to ask him about his plans face to face.

He began by talking about his new role for Steria: “My role is really one of leadership. Dealing with the media, the government, and of course the execution of running the company, which is not purely delivery, but also building the team and the vision of India within Steria. The other task I have is to focus on building the new Steria academy for training our people.” Mukesh has also been appointed to the main executive committee of Group Steria, a position I asked him about. He said: “I have been appointed onto the Steria executive committee because 27 per cent of the workforce are based in India, so my position gives increased focus on India and allows us to influence the strategic decisions of the company.”

Mukesh said that the decision to ramp up the team size in India is really linked back to the expected growth of business in Europe: “It is a combination of trying to drive the business between Europe and the UK. We have made a commitment to double our Indian workforce in the next three years, so we need to increase business in Europe to ensure we can grow this fast.”

The Steria academy is a major commitment to the education of Steria employees and though some of the Indian majors have explored this type of idea in India, Steria is one of the first foreign firms to consider this type of investment. Explaining the reasons for the academy, Mukesh said: “When you look at how do you train and retain your talent force it becomes important that you can offer a certain development plan for them. Our Steria academy is going to feature multiple schools, including a school of sales, school of management, school of consulting, and a school of leadership. All four schools have objectives, which will help drive our business. We are also interested in getting our customers to come and use the facilities of the academy. It’s really based on some proven business principles and the type of academies created in the past by major companies such as GE and IBM. So we will see alliances with world-class universities and professors to help build a physical campus in Chennai and to offer offline training as well.”

That sounds like an exciting idea, an academic institution created just for Steria and those invited by Steria to share in the knowledge. I wanted to ask about some of the challenges ahead and Mukesh outlined where he thought they might be: “The challenges are always in the area of attracting good talent and keeping them focused on the right direction. The environment itself can be a challenge, if the economy changes direction for example, and competition is getting more aggressive and hungry, so you need to compete harder to get your own share of the pie.”

Of course, I could not finish chatting to Mukesh without asking what he had felt about the past couple of days at the NASSCOM conference. He said: “This event is where you can be seen with your peers, your brand gets recognised and you can get a sense of what is really happening in the industry. We are not a small company, so it’s important for people to see us from the perspective of branding for potential customers and for peers to see us. NASSCOM plays a key role in this positioning of the company.”

Sharing ideas, best practice, networking, and being seen. That’s what most conferences are about and, as Mukesh suggests, NASSCOM really excels in all these areas.

Mark Kobayashi-Hillary

Looking forward: John Torrie's view on Steria's global delivery model

John Torrie heads up Steria in northern Europe. I met him briefly on the Thursday morning of the NASSCOM conference and then never saw him again that day as he was taking part in a whirlwind of meetings all around the fringes of the conference. I really wanted to catch up and have a chat with him for the blog, but it was starting to look like our paths would not cross. Hilary Robertson had grabbed him on Friday morning and we sat down in the lobby of the hotel ready to talk.

However, John had a flight to catch that morning and he remembered that he did not have a copy of his ticket anywhere so it was not a good time to sit and chat. He was looking worried. He thought it might be better to get to the airport as soon as possible in case he had any difficulty getting in. Like Hilary already mentioned on this blog, you need to at least show a ticket just to get in the door of an Indian airport. Though I saw her suggesting that it might take 5 minutes to boot up a PC to demonstrate a soft copy of the ticket and I can assure her that I have done exactly this in the past, though with a Mac it takes all of 5 seconds!

So we let John jump in a car to the airport. Hilary and I walked over to a Chinese teahouse by the side of the hotel. It was baking in the hot sun, but I switched on my computer and recorded John chatting to us from his car. Once he knew that he was on the way to the airport he was a lot more relaxed.

As John heads up northern Europe I wanted to find out some more about how the Steria team back in the UK fits into the global delivery model that now includes the team in India. John explained: “The global delivery model is exactly that – global. It’s a mixture of onshore and offshore resource and the strength of the model that we have is that we have really strong customer intimacy and we have very strong local teams facing up to the client. There are still contracts where we cannot use an offshore delivery model and we have the strength and depth in the UK to be able to handle any kind of project for any customer.”

John was particularly excited about the opportunities in the UK created by the joining of Steria with Xansa. He said: “We have really strong platforms and great customer relationships so we are well placed to grow the business in the UK. Steria already has a good UK client base and we are now able to take some of the Xansa BPO expertise into those clients, as well as the Steria expertise in infrastructure management into the Xansa clients. We are doing more, but that’s just an immediate win for everyone. Steria and Xansa were really complementary and so we can realise benefits from the merger very quickly.”

John said that his team had already been talking to customers across mainland Europe about the concept of offshore delivery prior to Xansa coming on board. Clients were interested and now Steria has the Xansa expertise he is keen to get back to talk to people all over the continent. He said: “The reason we were anxious to complete this deal is because on mainland Europe the market for BPO is still quite immature, but the financial imperatives are pressing. They need to find ways to optimise their costs and we now believe that we are at the start of a period of explosive growth in this market on mainland Europe. We can really take our experience in the UK across Europe, so we already have our teams and the knowledge in place.”

Clearly there are immense benefits from the combined organisation and John was really enthusiastic about getting back to Europe to talk to people and to share his experience of India. He told me: “It’s exciting to see India especially the genuine enthusiasm. NASSCOM is a really useful and exciting event; it’s been a really good experience and it was the first time I attended the event.”

Clearly John is excited about what is happening for Steria in India as well as back in Europe. By now he may well be somewhere in Europe evangelising what the India team is doing, which is after all just one component of the global delivery model he mentioned right at the start of this conversation. One team across multiple regions ensuring the customer gets the right skills at the right time, regardless of location.

Mark Kobayashi-Hillary

NASSCOM explained: My talks with the President

Som Mittal just took over the NASSCOM presidency from Kiran Karnik, though he has been involved on the executive council of the organisation since its inception nearly two decades ago. Yes, NASSCOM is nearly twenty years old and this depth of experience at lobbying and pulling the entire industry together is something that many other countries look at with envy.

I wanted Som to explain exactly what NASSCOM does, as many of the readers of this blog will not be in India and may not have even heard of the organisation before we started blogging about it. Som started by setting the scene: “NASSCOM is a chamber of commerce or trade body representing the entire IT services industry. Most IT companies here in India are members of NASSCOM.” He then elaborated and described some of the key roles of the organisation: “I would say we have three broad roles. One is to ensure that we are influencing the environment in which our companies perform – in India or outside. The second objective is to ensure that our companies have the right enablers, such as the telecoms policy or providing inputs to our own industry in terms of what are the opportunities that are coming up in future – we do a lot of research. The third objective is to ensure that our companies are helping in the broad sweep of economic and societal development. That’s a broad definition and it always changes of course, but that’s where we are now.”

So, although it is a trade body representing the hi-tech services industry in India, their remit extends far beyond just commercial pressures. I asked Som about some past activities, such as creating an international trust in Indian IT and he agreed that this was a former role, though is less required now India has built a stable reputation for quality. He said: “Our role keeps changing. At one time we were focused on branding India. There was a time when India was not known for high quality in anything and we had to build the India Inc brand, but that’s behind us now.” He adds: “What is important now is that the world has to get the right perception. There are things happening that might raise concerns about recession, currency, data security, competitiveness, and similarly in our own environment we need to keep on working on trying to ensure that IT is a preferred employer.”

And of course, talent surfaced once more as the most important concern for the industry in India: “The most significant thing we are working on at present is to ensure that there is a continuous supply of people. This industry is all about high quality resource and the industry has experienced such huge growth, something like a continuous 30 per cent growth rate each year, so we actually need to change the paradigm to cope with non-linear growth. We are investing so much in training and development at our end in the industry so the question is can some of this training be pushed back to the colleges? What we need is to move from trainable people to employable people when they leave the colleges.”

Som acknowledged that there are some issues with the education system churning out people who cannot enter the workforce, and are not even good enough to be trained by the private sector: “In the short term we have no shortage of graduates, but we only ever address about 30 per cent of them as 70 per cent are not even trainable. So we are focusing on determining what are the issues that make it difficult to train these people, so we can improve the numbers we address.”

Of course, everyone at Steria is interested in the development of business across Europe and why most business relationships from India seem to be with UK or USA based customers. Som explained: “As the Indian IT market started developing, the US was obviously the biggest target because it was large, there was the financial services market, it was English-speaking and there was plenty of low-hanging fruit as well as a good exchange of information about the market through students from India going to the US. It’s true that the companies in Europe really do have the same needs as the US. It’s not really about outsourcing though; it’s about the changing demographics in the world. For whatever reason, populations are aging, working life is getting longer, and the world in general is looking for resource. It’s true that India’s large population was once considered to be a burden and it is now becoming a huge source of resource. Human resource is going to be as important as any natural resource in future.” Som believes that in IT services, language only plays a part in certain parts of the value chain: “When it comes to Europe, the first issue is that they [Indian companies] have not been used to it. Language was also a barrier, but if you take anything in IT and then take the top two layers out then it is English. It doesn’t matter. Technology does not have a language barrier. The language issues all come in the business layer. We are really pleased to see about ten per cent of revenue in this industry in India coming from continental Europe. There are many areas in Europe where shortages of particular skills means that companies can work with India, such as in various areas of design capabilities.”

I asked Som about some of the challenges ahead in his new role and he immediately recalled some of the difficulties of the recent past: “It’s been an interesting move. I was the chairman in 2003/2004 and we had huge issues at that time because of the anti-offshoring sentiment in the US, due to the presidential election that year. I have been a member of the executive council all these years as well so I have always been a part of the governing body, but I decided I wanted to do something more with my life and on a larger canvas. So I quit my job with Hewlett Packard to come to NASSCOM.” Som adds a great summary of the organisation: “NASSCOM is an amazing organisation. We are a small group of people but we unite the entire industry. The challenges are varied and huge, so we have to pick the ones where we can have the most influence. I am looking forward to this term. It is similar to the role of a senior executive, where you spend time influencing, except I am doing it with a country and many companies.”

NASSCOM is clearly in safe hands with someone who could not be more enthusiastic about his new role. Kiran Karnik casts a large shadow, but Som has been involved with the organisation since the beginning and knows the industry inside out. This blog wishes him every success in his new role.

Mark Kobayashi-Hillary

I bet you look good on the dance floor…

The event closed with a Bollywood Dreams spectacular held outdoors at Mumbai racecourse. Some of the delegates were co-opted to get on stage – no-one from Steria so no embarrassing pictures. This was the chance for final networking and relaxation.

I’ve just received an overview of our press coverage, and thus far we’ve made news lines in 24 press/media publications. Being active members of NASSCOM helps us have an influence in this important and exciting growth area of our industry and gives us a voice in its direction. This conference showcases the efforts of the industry including Steria, in facing up to local and global challenges.

Hard work, sleepless nights for months beforehand, but all in all a highly successful event for Steria.

Hilary Robertson

Girl power…

At the end of NASSCOM we had a plenary session with Jerry Rao, Chairman of EDS AP Advisor Board and former Chairman of NASSCOM, Leo Puri MD of Warburg Pincus, Subroto Bagchi, Co-founder and COO of Mindtree and the Chair: Ganesh Natarajan, Vice Chairman of NASSCOM an Deputy Chairman and MD of Zensar.

This included a Q&A session. With 2,000 industry leaders this throws up a huge range of topics and interests. I’ll pull out only one. The question was, why there were no female leaders of Indian Companies, and indeed non-Indian leaders of Indian majors. The female question raised considerable debate amongst the panel and stimulated further Q&A. I believe this is a theme with legs and expect to see it on the table in future years.

Hilary Robertson

Human League…

I’m going to listen to the talent session, or to give its full title: The Workforce Conclave: Creating Sustainable Change through Organizational Alignment and Managing an Increasingly Diverse Workforce. (Snappy!)

The speakers are: Bernard O’Driscoll, Fellow of the Chartered Institute of Personnel Directors, and formerly Group HR Services Director for Lloyds-TSB, Peter Cheese, Consultant with Accenture and Edward Franco, Global HR specialist with Hewitt. The Chairperson is Bala Mahadeva, CSC President and MD. It’s an excellent session, very well chaired and with three erudite and entertaining speakers.  In summary it highlights that talent management is critical to success in our business, so you’ll see lots of book references here. 

Bala opens with the question of how you can create commonness of purpose when organisations are increasingly diverse, reflecting back on an earlier session the day before with guru James Champy. 

I’ll briefly digress in order to highlight a couple of book references. Champy is one of the founders behind business process reengineering, with Mike Hammer writing the classic “Re-engineering the Corporation”. His most recent book is called “X-Engineering the Corporation, Reinventing Your Business in the Digital Age” and looks at cross organisational process design and collaboration.

Bala developed his argument, commenting that economic power is becoming more globally diffuse while world demographics are creating new stresses in labour supply and demand. Talent Management is increasing as a strategic priority.

This theme is developed further by Peter, talking about types of diversity: generational, educational, social, ethnic, cultural, geographical… and how few employees understand strategic priorities of their organisation. Peter is the co-author of “The Talent Powered Organisation”.

Edward, who is a singularly diverse individual in his own right, provides further illustration to the point.  He uses a framework to show that individuals learn their values in childhood, rooted in the family… these values rarely change and are reverted back to in a crisis or stress situation. Overlaid above these are practices, coming from national and organisational culture. Organisational change is based on changing practices, not values. People can mask their values with practices, but Edward argued that it is the understanding of people’s values, and of the cultural differences in values between people that is key to effective talent management – especially in M&A. 

Edward then asked, “how do you create a common performance management value system round the world, in a world where different cultures can have radically different values.” He brought this point to life talking about some the west/east cultural differences e.g. in one case understanding right from wrong in the other understanding the honour system - saving face or feeling shame. In some cultures “position”, “face”, “performance scores” will be critically important to an individual, in others money will be a far bigger motivator to attract and retain.

Something that is interesting to us all in Steria was a framework which Edward used to look at Mergers and Acquisitions, looking at how people engage – from early euphoria at the outset of the deal, through a period of uncertainty and as understanding grows the engagement moves to a set of possible outcomes:  from the individual’s departure, or withdrawal or commitment. He used the Bill Bridges Framework: The Human Dynamic in Change - and took us through these different stages.  The idea is to understand the levers that can be used to identify undesired outcomes to both increase and accelerate the people who move through to be committed to the new, wider organisation.

Peter had delved down in his talk to discuss some of the more detailed points, especially relating to offshoring and India – and Indian demographics. He discussed how Accenture had grown in India from hundreds to 40,000 employees in a matter of a few years. Looking at the classic slide that identifies generational characteristics (Baby Boomers, X-Generation, Y-generation, Net Gens etc), he also noted that this current generation is bigger than the baby boom.

Bernard’s talk complemented Peter’s carrying on the Indian theme by taking a personal view of how major organisations can leverage offshoring to create transformational change in HR. He gave some real insight into the forward thinking within LTSB’s HR operation over many years – winning awards for their shared services centre. What really struck home for me was that when LTSB considered offshoring, the various non-UK players they were reviewing had limited understanding of UK HR – how it worked, policy, terminology etc. So Xansa’s onshore team used their local HR knowledge and expertise to create that high-level credibility. Second, Bernard described that while the work offshored to Xansa has been in the area of HR administration, the result of the process has been transformational. It has allowed the HR Professionals to focus on how HR adds value to the core business of the Bank. And his view was that HR Offshoring can absolutely add strategic value to HR.

The session engendered a huge number of questions and positively overran.

Hilary Robertson

Altogether now…

I’ve often felt India’s key strength is that it achieves 6 degrees of separation in less than 3 steps. I was invited onto linked-in, the business networking site by an Indian colleague and many of my connections there are with Indian friends and colleagues. A real pleasure of attending NASSCOM is catching up with friends and former colleagues, as well as making those all-important new acquaintances. Our stand is a good focal point and this morning a number of us from Xansa/ IIS Infotech/OSI/FI Group/ past and present gather for a photo.  It includes Binoo Wadwha, Roma Nawani, Padmaja Krishnan, Gayathri Mohan and I. 

Gayathri has just arrived via Pune from Chennai to attend the sessions on Corporate Social Responsibility, which she heads up. We sponsor many good causes including schools, orphanages and a medical burns unit across our centres in Chennai, Pune and Noida. Gayathri manages the overall programme and we are delighted when our clients including CFS and Lloyds-TSB join us in our efforts to put something back into our communities and make a difference. Gayathri has recently produced a new CSR video. We’ve been running an edited version for an earlier film she made on our stand, but you can watch the full video here.

Download the CSR video.wmv

Hilary Robertson

Ticket to ride…

It’s the last morning of NASSCOM, although connectivity permitting you will not be reading this until Tuesday.

I’ve used a mix of near real-time and time-shifted blog posts to capture both the moment and then more of the background and detail at leisure. One of the near real-time posts I’m keen to get online today is the interview between John Torrie and Mark Kobayashi-Hillary. With an early plane to catch and no printed e-ticket, John has a mind to get to the airport early. His concerns are not without foundation. To get through the door to the airport terminal in India, you must show some proof of flying to the security guards. This leads to a melee of people urgently trying to squeeze past the small gap wheeling impossible amounts of luggage. Not the best place to have to boot up your laptop, wait five minutes to load, find and display your mail and hope the guard’s strict instructions have been updated for the e-age. I’m quite sure John could get past most security guards, but given the time he (rightly) insists we do the interview by phone. Mark and I relocate to a quite spot outside. It’s good to get some fresh air and feel the sun, rather than being hermetically sealed into the ubiquitous hotel environment, cut off from the reality a few metres outside from the marble steps. This done we move on to find Mukesh and repeat the process. The interviews are going well and we have one with Som and Kiran arranged for later.

Hilary Robertson