Back Blazing a trail in India
Bharat Kumar
| Japanese firm NTT Communications talks of why it tied up with SlashSupport, and what doing business here means to it. |
Machifumi Kashiwagi
Kashiwagi surprises you with his claim: that the average Japanese is not comfortable with the average Indian's aggression and that this lack of cultural fit could still contribute to a sluggish nature of the outsourcing transactions between the two countries.
Sure, there are aggressive and successful Indian entrepreneurs out there. But after years of listening to Westerners say that Indians are not aggressive enough and to then to hear this opinion comes as a surprise. That was one thing learnt during a session with Kashiwagi. But more on that later.
Machifumi Kashiwagi, vice-president, business strategy department, NTT Communications Corporation, is eyeing an opportunity that Japanese gentleman in future could want to grab, once he manages to blaze a trail. Kashiwagi has decided to use Indian expertise in outsourcing and offshoring to be able to offer competitive solutions to Japanese businesses in this area.
NTT Communications recently tied up with SlashSupport, a Chennai-based technology support company, to not only use Slash's expertise for itself but to also offer the expertise jointly to Japanese customers.
He says that offshoring itself is not yet big in Japan compared to the US or the Europe. But, he feels, without partnership with Indian companies, Japanese firms are still struggling to streamline operations and would continue to have a high cost structure. Given this, being the early bird could get him the worm. But, doesn't he already work with the big guns of IT software services in India? Sure, he says. "But I wanted to be able to work with a handful of smaller vendors - as a derisking strategy. I found Slash to be good among those I evaluated."
Excerpts from his conversation with eWorld:
What are the barriers to outsourcing in Japan?
There are two main barriers — Language (English) and the cultural issue. Japanese and Indian companies are different. Japanese are conservative while Indians are actually aggressive, especially in the business space. If language barrier had not been there, the chances of outsourcing to India would have been higher even earlier
What kind of work is being outsourced? We understand from small players trying to tap the Japanese market that mainframe or legacy migration is a big opportunity there.
Japanese companies typically outsource work relating to back office operations and Technology operations, in the IT space
Typically, how much time would you spend evaluating an offshoring partner?
In our deal with Slash, which was actually referred to us by another Japanese company, it took us six months to decide on the deal. This included a three-month pilot with them. The fact that the founders have had a lot of exposure to the US market helped. We, (as a nation) are more comfortable with the US style of working.
How many others did you evaluate before finalising on Slash?
We met with five other - similarly small - companies in India and we chose this partner in the Infrastructure Management Space.
How long have you been contemplating India? What drives your decision to look out here?
We started looking at India about two years ago. We have also been doing work in China, but we felt it was risky just focusing on China. Hence, we looked at India as a de-risking strategy. We realised last year that India could be a good partner and that's when we started scouting for a partner here. This is the first time we are outsourcing to India in the Infrastructure Management space.
What are corporate IT budgets in Japan typically like? Give us your own experience...
Currently, what we offshore would be less than 5 per cent (of revenues). We do outsource quite a lot of IT work (ball park would be around 20-30 per cent of revenues) within Japan itself. We still have not taken the quantum leap to offshoring, but I believe there is very strong potential to do business with Indian partners.
As a decision-maker on offshoring, how important are research reports that come from organisations specialising in market research and consultancy? How accurate are they with their estimates?
It really depends on the management and the personnel who decide. For me, it does not affect my decision. I need to have my feet on the ground before I decide on a deal. However, we do have a relationship with research companies.
When you were considering India, did you consider Brazil or Russia?
Brazil is too far. Russia can be a partner but this is not likely in the near future. The Philippines is good from the talent pool point of view but scalability is an issue. India is best positioned from both talent pool and scalability point of view
What exactly is the nature of the current deal?
It is a multi-year agreement with SlashSupport. First, we used the vendor for our own offshoring work. Now we will jointly offer remote infrastructure (i.e., desktop for now) management to Japanese clients. We expect this relationship to generate a total of $10 million in two years.
As a user, what are the cost benefits to NTT?
We expect a 30-35 per cent cost savings to NTT because of our outsourcing engagement.
Would you focus only on telecom clients, given NTT's parentage in telecom?
We will go to market, both to our own customers as well as other companies, with SlashSupport's Infrastructure Management offering
NTT is into telecom. Is this deal a sign of diversification?
NTT Com was in the communication services business and it used to be lucrative in the past but now it has become commoditised. The IT segment has got potential and that was the reason for our diversification. Our sister concerns are looking at domestic companies, while we, at NTT Com, are looking at India for offshoring.
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