Q&A: BVR Mohan Reddy, NASSCOM
Later this month, a trade delegation from the Indian National Association of Software and Services Companies (NASSCOM) will be presenting at the Nordic IT Sourcing & Innovation 2014 event in Stockholm, Sweden, as part of a broader mission to the region. Ahead of this groundbreaking visit, we got together with BVR Mohan Reddy, NASSCOM’s Vice-Chairman (and the Founder and Executive Chairman of Cyient) to discuss developments in the Nordic geographies, the aims and ambitions of the delegation, and areas of specific interest in the field of Nordic-Indian cooperation.
Outsource: Why is the Nordic region of particular interest for NASSCOM right now – what’s the purpose of the delegation?
BVR Mohan Reddy: NASSCOM had done a study with McKinsey a couple of years back and the report outlined the fact that the addressable market for global sourcing will triple in size from $500 billion today to $1.5-1.6 trillion by 2020 and 80% of incremental growth for Indian IT companies will be driven by opportunities outside the current core markets of the US and UK, core verticals and customer segments.
The Nordic countries are outward-looking economies and these engineering and technology economies set the benchmarks for IT adoption and non-discriminatory and open markets. Their higher acceptance of English as a language of communication and lower resistance to offshoring make them the ideal step location for the Indian footprint in Europe.
At the same time, the new flavour of globalisation is offering Nordic businesses the opportunity to move from being “export” businesses to “global” business models and value chains. Such a move will, however, also mean additional need for integration and co-ordination. India, with its large technically qualified manpower, global expertise in project delivery and low-cost credentials, is best placed to partner with Nordic companies to mitigate these challenges and sustain their innovation-led competitiveness.
The key objective of the delegation is to provide the Indian companies with an exposure to the Nordics ICT environment and provide networking opportunities with the local companies and agencies and explore business opportunities of mutual interests.
O: What do you think are the main things which senior IT practitioners in the Nordics can learn from India? And, conversely, what do you think they can teach Indian IT?
BVRMR: There is a lot of commonality in the nature of work performed or managed by IT practitioners in the Nordics and IT professionals from India and both can share and learn a lot from each other. The Nordics can learn process excellence, frugal development and efficient workforce management. India can learn innovation, design and domain knowledge.
Indian IT professionals have an incredible aptitude to adopt and are flexible which very much works to their advantage, making the Indian IT industry very global in nature. On the other hand, what is really appreciated of the Nordic region professionals is their niche domain knowledge and their focus. The two diverse traits are actually complimentary!
O: Where are the commercial advantages which might be found in the differences between the ways Nordic and Indian companies approach IT?
BVRMR: The advantage that India offers at this moment in time in terms of IT outsourcing, is in operational excellence. There is a lot of research that has been done into how efficiently we have been in a position to run our processes. In several instances the customer defines the process initially to us, then after we can bring about a sizeable amount of process efficiency and give that back to the customer. Also there are constraints in terms of resources, and frequently Indian companies’ solutions create more value for the customers for the same amount of money.
We as a country have also been in a position to get extremely efficient workforce management. Compared with countries like Norway or Sweden which have very experienced people, our industry has not been as advanced and mature. India has a deficiency in having fewer domain experts, domain knowledge. Countries like Sweden have been very much associated with innovation and design – innovation in terms of product innovation etc. If you put these two things side by side, they compliment each other.
O: How is NASSCOM reacting to the changing economic picture in Europe and the differing rates of recovery in different countries – is this having an impact on strategy?
BVRMR: The economic recovery in Europe has been sluggish but now we are certain of recovery and the economic numbers coming out Europe are extremely positive. Having said that, low growth in Europe was more of an opportunity for our industry than a challenge because European companies and countries were pressed to outsource more to cut costs. And IT was the most logical choice for implementing this strategy and reduce deficits. Most of the established players in this market have reported better-than-expected results from European market over past many quarters. And we don’t see this trend changing. Realising the importance of the European market with economic recovery gaining momentum (Nordic countries were less effected by recession than mainland Europe), we have stepped up our efforts in this market and hence you see greater engagement from our side e.g. delegation to Nordics and another to Germany in some months’ time.
O: How closely is your organisation liaising with the EU over new data protection policies following the Snowden affair and what if any are the tangible results so far? Is this situation having an impact on your members’ bottom lines?
BVRMR: NASSCOM along with its flagship institution the Data Security Council of India (DSCI) has been at the forefront of these discussions for many years. In addition, India has a great reputation of IP protection especially in IT. Post the Snowden affair we have actually found greater acceptance of India’s principles with regards to privacy if not anything else. India and the EU have established expert groups from both sides to discuss this matter diligently. The first round of this discussion happened in February in Brussels where some broad contours were discussed and agreed that cannot be shared at this moment. The second round will provide more details and hopefully a roadmap to both parties to have sectoral relaxation for the IT sector. We remain quite hopeful that a lasting solution can be found between the two continents that will aid our growth in the European market.
O: Do you see there being a greater prominence placed on data protection within the Nordic region specifically than in the EU generally – and is this something you are going to discuss when your delegation arrives?
BVRMR: It is not necessarily very specific to Nordic regions. There is concern over data protection in all EU countries. In terms of data protection and IT protection generally, however, our clients feel very comfortable working with us. They share with us a lot of intellectual property – for instance, in this region, in aircraft engine design – which demonstrates the faith they have in our security processes.
O: Are you concerned about EU – or individual members’ – immigration policy with regards to restrictions on incoming talent from India and if so is this something you’re seeking to address at the top level?
BVRMR: Yes, this was an issue for many years due to the lack of any harmonised structure across EU member-states. But news on this front is positive with the EU Parliament clearing the EU ICT Directive a couple of weeks ago which will take care of many irritants with respect to people mobility in the coming few quarters. NASSCOM took leadership on this issue by coming out with a whitepaper on the subject six years ago on why the EU should consider an EU-wide ICT directive. And it feels quite heartening after walking that path and having a law passed by no less than the European Parliament on the contours that were outlined by NASSCOM years ago. NASSCOM welcomes this passage of the EU’s ICT directive.
O: Do you see there being an impact on the role of NASSCOM should there be a change of government in India following the General Election?
BVRMR: We see the role for NASSCOM increasing post the General Election irrespective of which party eventually comes to power. This is because the thrust on jobs and skills, exports and the opportunity to leverage technology for transformation within India is listed in the manifesto of all the key priorities and NASSCOM would look to work with the incoming government on these key issues. In addition, NASSCOM has outlined five key priorities for the new government that include:
- Enable innovation and support entrepreneurship: foster an ecosystem and initiatives that accelerates growth of product, small and start-up companies
- Promote growth and global competitiveness of the Indian IT industry: market expansion; skill development, employment creation
- Improve the business environment in India for investment and operations
- Maximally leverage ICT and innovation to improve governance and achieve national development goals: create impact and develop the domestic market
- Support policies that catalyse emergence of the digital economy.
O: Are you are looking to expand communication to other similar associations globally, to perhaps to work closely to increase international standards, improve dialogue between different regions etc?
BVRMR: Certainly NASSCOM is working with several international organisations in terms of learning the best practices, making sure we have coherent standards and greater amounts of interaction.
O: How are your members working to address the possible impact on headcount of the advent of robotic process automation technology – there are concerns that the bigger employers might not be paying sufficient attention to the possible ramifications here…
BVRMR: Robotics and automation are emerging trends that are being actively tracked by the Indian IT Industry. Companies have created special business units that are tracking impact of these developments, build strategy on how to drive the automation, leverage robotics skills etc. Some large Indian companies have also partnered with IpSoft (a robotic process company) to drive new solutions. There are emerging start-ups in India eg Grey Orange Robotics who are building robots to address challenges of warehouse management for logistics.
As regards, the possible impact on headcount, companies are actively driving strategy that focusses on hiring employees that will drive this transformational journey.
O: What do you see as being the biggest challenges facing NASSCOM today and how are you working to overcome them?
BVRMR: The challenges – or rather I would like to call them the opportunities – for NASSCOM include:
- Building the future technology companies from India. NASSCOM has initiated the 10,000 startup program to incubate and support 10,000 startups over the next decade.
- Reposition the Indian technology and services industry as a value and innovation hub. NASSCOM is building a major initiative to showcase the transformational work being done by the industry and how this has impacted customers beyond the cost advantage.
- Leverage the diversity of services and solutions across the industry. India is probably the only country that has a vibrant and growing IT Services, BPO, Engineering and Product sector. NASSCOM has created specific industry councils in these sectors to catalyse their specific needs
- Build skills that will drive the future digital economy. NASSCOM has created the Sector Skill Council that has built occupational standards and defined unique job roles across the country. Curriculum and assessments are being built against these job roles.
- Enable different sectors in India – business and industry to leverage technology. NASSCOM has started a new initiative to partner with other associations in India and create joint initiative that will showcase the impact of technology for access, efficiency and affordability. The first initiative we have started for the healthcare sector.
For more information on the NASSCOM delegation to the Nordic region, visit Business Sweden – the Sweden Trade & Invest Council – at www.business-sweden.se/en; meanwhile for more on the Nordic IT Sourcing & Innovation 2014 event, click here.