26th Apr 1997
Mr. K.V. Ramani, Chairman and Managing Director of the Channai-based Future Software was recently elected President of the National Association of Software and Service Companies (Nasscom). In his first interview after assuming office, Mr. Ramani spoke to Business Line of the projects he intended to pursue this year as well as the new markets that Nasscom was looking at. Excerpts:
Apart from the several Nasscom initiatives announced for the year, are there any projects that you plan to spearhead personally?
In the past few years, several Indian software companies have entered into the top 20 list–they don’t need help from Nasscom anymore. What we need to do for this industry to grow rapidly is for the next layer of companies, to be given a push…. companies which are medium-sized with 50-200 employees, to see if we can find a way of getting new business or opportunities for them. Their reserves are limited, they cannot have an overseas office or a subsidiary, their visibility is less and anyone coming from abroad gets to look at the top 20 first. We need to have a different strategy for these companies, because when they grow this industry will more than double.
The second thing is that, I want to do something for the small companies–there are many companies that start with five people, grow to 10-20-30 people and reach saturation point. And today the software industry has become capitals-intensive–you will have to keep investing in new equipment, you have to have Internet, Web access, otherwise people don’t join you. These small companies find it difficult to grow beyond a stage because of the financing and even because of the size required to get new business.
If we have mechanism of qualifying these people and making them specialists in certain areas like Y2K or euro conversion, then we can make sure that they can operate as a second level to the large and medium companies which could help them grow.
This could go beyond Y2K, even companies getting large projects could use the small companies for outsourcing.
The third thing is that we have major problems overseas when Indian companies do product exports–the liability of products abroad has not been noticed by Indian software companies at all. If your products don’t perform, the liability you may have to pay may run into millions of dollars. We want international insurance companies to offer a product liability insurance to us.
Another thing is that significant initiatives will also take place on co-operation among members. When opportunities arise outside, we don’t see each other as a threat–we often cooperate when we have to and compete when we have to — this is a very unique trait. In addition to this I am seeing as to how I can bring in greater cooperation so that we can have a bigger presence in the international marketplace.
How would this work?
It has to be an informal forum for it to work. What we are saying is that let people start understanding that we can work with each other. Let us take for example the systems integration business and a company like EDS in the US. They get so much business there is no one company in India which can do it. But why can’t we cooperate and do something like an EDS out of India on specific projects, something like a $100-million project.
What will be Nasscom’s focus markets for the year and what do you plan to do in these markets?
Traditionally, when people have been exporting software, it has been to the US and some companies have been working in Europe. There have been stray attempts at marketing in the Asia-Pacific and so on. But the biggest markets in the Asia-Pacific region, Japan particularly, have not been addressed fully.
There have been some companies from India who have been doing business in Japan, but not in any significant fashion. And we have had at least three delegations from Japan for software sourcing from India in the past two-three years but that has not resulted in any significant business.
Why is this happening?
There seems to be a different way of doing business in Japan which we are not addressing properly. One crucial thing is the Japanese are more into building relationships and friendships first and then business follows. They don’t go by the request for proposal, finish one contract and then you are shown the door system–they cultivate the organisation and whether in good times or bad times, they continue to work with the organisation for several years. So the relationship is quite important for them.
In the US for instance, you meet a prospective client and say–how about a drink or lunch?–its a very common practice to accept. In Japan, they don’t accept until they know you well. You will have to keep meeting your client, talking to him, greet him his way and then cultivate a personal interface, a working relationship…then he starts looking at you, your family, your other interests in life–whether you play golf-and things like that. And then only is he willing to meet you socially.
It is a long-term relationship…
Yes, the courtship time is very long.
But the marriage is also for longer.
No divorces. Even if you take other sectors like automobile components, the Japanese have established very successful relationships in India. Even if the Indian companies in some cases, have gone through very bad periods of time economically, they will sustain you, they have given you business, financial support, they help you like a relative.
Whereas in the Western world, business pressures are very high–finish this, the next project, the next project, there is no guarantee there is no guarantee there is a long-term relationship. Its a permanent stage of dating whereas, in Japan, this is much more solid. It therefore takes a longer time to settle.
So, we at Nasscom have to see how we can make these relationship happen between Indian software companies and Japanese IT companies. The focus is on building a personal rapport and relationship between industry associations on both sides and then to facilitate relationships between companies.
Secondary to this, of course, is Japanese language skill. The language is taught in a few cities and in a few engineering colleges as elective courses. So what we are saying is–how can we otherwise arrange a Japanese language programme for software engineers? This means that we need a set of engineers dedicated to the Japanese market…
But that’s a risky proposition….
Yes, that’s risky. So unless there’s business coming, you can’t train them in the Japanese language. So what we are saying is that, one side makes business happen and then as it happens language programmes will be offered–after all, it is only going to be a six-month programme. We ill make sure that Japanese language skills are available which can be used by every software company in India. A pool of language trainers could offer short-term courses at different companies.
These are two main things. The third is that awareness for Indian software competence is very limited. So what we are going to do is hold a Software India conference in Japan like we did in the US eight years ago–this is a half-day or a one-day seminar, only those who are interested in knowing about Indian software competence will come there.
TA similar thing is being done in South Africa. We have not made any attempt so far but we see good opportunities for business, particularly application software. Although the volume of business will be small, we are opening a new marketplace.
Would you have any specific problem in penetrating this market–like the language problem in Japan?
No, not really, but awareness of Indian software competence is virtually unheard of because it is a country which has had no external links for several years, except the West.
One characteristic of South Africa is that a lot of organisations there have European parent companies since it was a colony earlier. So we have to see that roads are built from our European operations to those companies which have subsidiaries in South Africa.
Why are you focussing on applications?
South Africa is very rich in natural resources–so those industries which are very prominent are mining, trade and services–financial services, banking and travel services. They do not have competence like Japan in electronics or the IT sector…
And the service industry will require a large amount of software…
That’s why I said applications software.
To go back to Japan, where did the Japanese traditionally source software from?
Mainly in-house, some from China, but they’ve had problems. I think the Japanese have been outsourcing software from the US and paying a lot more. They have all set up software companies in the US and also been doing outsourcing there. Now we are saying, why not us? We are not trying to compete with the US, but why only outsource from the US?
Are you going to be looking at any companies, specifically?
There will be all those companies which are part of JISA. We also have a very unique position this year–we (Nasscom) are also chairman of Asocio–the industry association in the Asia-Pacific–and JISA (Japanese Information technology and Software Association) is the leader in Associo. They are the most powerful electronics and IT services association in the region. They have a lot of clout, So we are trying to leverage Nasscom-Asocio-JISA links. So when we arrange a seminar, it will be Nasscom-JISA. Then participation will be a lot more and you won’t even need government intervention — DoE or Government of Japan.
Will you be competing with Israel and Ireland?
I don’t think Israel and Ireland have gone into Japan yet. The countries which are probably targeting Japan are China–because of a lot of other similarities–second of course is Malaysia and Singapore. But I think we have an advantage over both. We should leverage that advantage before it is too late.