Date:07/04/2003 URL: http://www.thehindu.com/2003/04/07/stories/2003040700110200.htm

Business

Jolt to global ambitions

AFTER A fairly unhindered ride on the global roads, the Indian IT industry appears to be hitting speed-breakers at regular intervals. How else could one view the series of mishaps that have struck the industry in recent months? Polaris chief Arun Jain's `Indonesian Safari,' the Malaysian police muddle with Indian software professionals, the protective New Jersey Bill to ban outsourcing of business processing and the latest treatment of i-flex staff in the Netherlands and its London-based boss have all put an unexpected brake on the Indian industry at a time when it was cruising on a `fast growth lane.'

Is there a pattern emerging from all these happenings? It is difficult to answeer a clear `yes.' At the same time, one cannot firmly rule out a `no'. The fact of the matter, however, is that recent events have exposed the industry to the perils of a `close encounter with competition of the ugly kind'. The woes of the Indian IT industry can be classified into two catagories — the micro and the macro. At the micro level, unbridled competition within the industry has led to aggressive client-procurement strategies sans proper screening of work as well as customers. Many a time, software firms have ventured into markets of which they have little or no knowledge. Consequently, delivery schedules are often missed and cost calculations go for a toss.

The Chief Executive Officer of Polaris, Arun Jain, found this out at great cost in Jakarata when the Indonesian police detained him and his official reportedly on a complaint from a local bank, a client of the Chennai-based software company. It was, of course, a different matter that New Delhi brought to bear all its diplomatic pressures to secure their release. The Jain episode surely has twin lessons for Indian IT players. For one, they have realised that a `job for the sake of job' from anywhere and of any kind can never be a prudent business strategy. Secondly, they have discovered that they cannot just wish away the Government's role in purely private business dealings in the international arena.

Macro aspect

The Malaysian muddle, the New Jersey Bill and the latest i-flex issue need to be reviewed from a larger macro perspective. The strides made by Indian IT professionals may have pitchforked the country into a prominent place in the global map. But there is a downside to it. The increasing visibility of Indian IT services appears to have turned other nation states jittery — perhaps due to pressures from within. In a competitive environment, the tendency will be to source goods/services from cost efficient quarters across the global village. Any artificial barriers to block efficient sourcing of services like software and IT enabled services will only hurt the local industry and jobs in the longer term, instead of protecting them. Efficient production is a sine qua non for survival. IT plays no mean role in achieving this. Given the fact that Indians are highly talented in this area, their services cannot be just wished away. Countries that seek to stop the Indian IT industry on its tracks by raising non-tariff barriers, may well ponder this irrefutable fact.

A passing phase?

The sheer size of its population, which is growing by the day, has made India a favourite hunting ground for multinationals of all kinds — be it automobile companies or soft drink outfits or retail ventures. Further, the pre-eminence of its software service talent presupposes that India is a major market for computer hardware and software systems and peripherals. Given these realities, countries that seek to pursue protectionism of the veiled kind may well be advised to consider the impact this will have on their own economies.

The latest events may well pass off as the overzealous reaction of policy-makers, law-enforcing authorities and the like to bring some comfort to the locals that they will not let their jobs be robbed by others. The western markets did see something like this happen a few decades earlier when the Japanese car-makers made inroads. There was a temporary unrest then, which subsided soon thereafter. It has now been admitted that jobs, willy-nilly, will go to places where they are most cost-effective.

All said and done, however, the Indian IT industry needs to demonstrate its maturity, lest it is perceived as a villain by the global community. Visa-related problems are not something new for the Indian industry. The i-flex episode has only brought the issue into the public glare. Perhaps, the events of the past few months have more to do with it. There is general concern at different levels about the adverse treatment meted out to Indian IT professionals and companies. But it is premature to jump to a conclusion that the Indian IT industry has been singled out for negative treatment.

Industry's responsibility

With India emerging as a super power in information technology, a greater responsibility is apparently cast on it. It is not enough that it respects the rules of the game. It should also be seen to be respecting them.

No one in the industry is willing to go on record on these issues. Yet, they all informally agree that there should be a `proper appreciation of visa and other local rules' of the host country by the Indian industry. A few black sheep have no doubt brought disrepute to the industry.

The way forward, however, is to discover a mechanism in tandem with assorted entities — like the Government, industry associations, diplomatic channels and the like — that will allow free provision of Indian IT and related services without prejudice to local jobs and by strictly conforming to the letter and spirit of rules relevant to the service-seeking countries.

The noted industrialist of Chennai Suresh Krishna has always dreamt of an Indian multinational company. If the Indian software industry has to emerge an unshakable powerhouse in the international sphere, it must turn multinational soon. This will not only help the industry work with a reasonable level of comfort in various countries but also bring a lot more legitimacy to its initiative and intentions.