CHAPTER 9 CUTTING-EDGE INDIA
‘In every possible way, we want to make Infosys the most desirable place for people to work.’
Nandan Nilekani, CEO Infosys
FORTY-FIVE MINUTES’ DRIVE from the centre of Bangalore along hot, dusty, pitted roads past shacks and shanties, you come across the Infosys campus. This is the headquarters of the Infosys software company and the word campus is carefully chosen, not only to convey the idea of intellectual pursuit on a higher plane, rather than mere business, but also for the genteel, calm environment in which the offices sit. Entering the gates of the campus is like entering a Disneylike magic kingdom. Away goes the dusty, ramshackle confusion of the outside world as you pass through the gates into a world of manicured lawns, state of the art technology and a highly motivated but very relaxed workforce, who glide between office buildings under the trees on gleaming bikes provided by the company. VIP visitors to the campus are asked to plant a tree, to add to the profusion of greenery already there.
Infosys campus seems the very model of enlightened modern business. Daycare, in-house supermarkets, gyms, swimming pools and laundry are all provided on site for employees. Rainbow-coloured umbrellas sit by each door ready for anyone caught in the rain. Employees are encouraged to bring their children to work every now and then, and at the weekend the place is more like a holiday camp, with films showing on the giant screen, rock concerts and much more.
It is perhaps no wonder then that Infosys is the most desirable place to work in India – especially since the pay is out of this world by Indian standards. In fact, the pay is almost out of this world even by first world standards. The first thousand people on Infosys’s payroll all became millionaires. Yet although Infosys is the pinnacle, information technology is the industry to be in right across the board.
Cities such as Bangalore, Hyderabad and Mumbai have been transformed by the success of India’s IT drive, and the impact of information technology in the country as a whole has been profound. By 2010, India’s computer software exports are expected to soar to over US$50 billion – more than the country’s entire exports in 2005 – and countless Indians have made their fortunes in the computer business, including Vinod Khosla who founded Sun Microsystems, Hemant Kanakia who sold Torrent Networks to Ericsson and Narayana Murthy of Infosys (see here). Azim Prenji ran a moderately successful hydrogenated fats company until he ventured into IT with his company Wipro, which turned him into at one time the third richest man in the world.
India has now become the computer backroom of the world. Currently, 200 of the world’s biggest 500 companies have their computer operations based in India and Indians seem to be making their mark in the IT business, not just in India but around the world. Hotmail was created by Indian Sabeer Bhatia and the Pentium chip by Vinod Dham, and four out of ten start-ups in America’s Silicon Valley are by Indians.
What makes the explosion of IT in India so surprising is that it is happening in the world’s most illiterate country. Few industries are more demanding in terms of their skill and education, yet India has more out-of-school children than any other country in the world – by a huge margin. People trying to pinpoint the reasons behind India’s IT boom identify several possible factors.
Mathematical India
First of all there is a possibility that Indians simply have natural talent for number crunching. There is an ancient tradition of excellence in maths in India dating back 4,500 years to the time of the Indus Valley civilisation. The Indus Valley people could not have built their cities without knowledge at least of simple geometry. More importantly, they used a system of weights and measures based on some kind of decimal system – and the decimal system of numbers, weights and measures that we now take for granted was almost certainly an ancient Indian creation passed on through the Arab world over a thousand years ago.
Indeed, many scholars argue that mathematics is India’s single greatest contribution to the world of science. Interestingly, the concept of zero, so fundamental to the 0s and 1s of the computer binary code, was also an Indian creation. P.V. Indiresan, former director of Chennai’s technological institute, argues that Indians have a special aptitude for identifying the interconnectedness of things. Indians, he says, ‘do not proceed the way Westerners do, step by step. Instead, they look for inspiration through inductive logic.’
The badge of knowledge
Other people think this is not quite the point, and that the truth behind India’s IT boom is more pragmatic. Indian culture and religion has long emphasised the degrading effects of manual labour, and in the country’s powerful caste system the pursuit of knowledge was a way for those without inherited wealth to earn a living earning without getting dirty hands. It took you above the common crowd. The propensity of Indians, until recently, to display every conceivable educational qualification on their cards and nameplates was not just conceit; it was an essential mark of distinction.
PROFILE: NARAYANA MURTHY
There are two hilarious concepts in India. One is called MAFA – “Mistaking Articulation For Accomplishment”. The second is that when we say, “All is said and done,” what we really mean is, “Everything is said and nothing is done”.’
Naraya Murthy, 17 July 2003
Co-founder of India’s first global IT firm Infosys, Narayana Murthy is India’s business guru as well as the leader of its electronic revolution. So central is Murthy’s role to India’s economic boom that he is often talked of not just as Asia’s Bill Gates, but also as India’s Henry Ford. Just as Ford woke up Middle America with the Model T Ford, so Murthy has empowered many young Indians with the idea of making money, and his ‘simple living, high-thinking’ philosophy has been an inspiration to a whole generation of middle-class Indians.
What makes Murthy’s story so inspirational is that he came from a modest background, the son of a low-level government official. When he was 16, Murthy qualified for the prestigious Kharagpur Technological Institute, but had to give up his place because his father couldn’t afford the accommodation costs. Instead, he went to the local engineering college. But that proved no obstacle. In 1981, he set up Infosys with six other computer engineers and it was a staggering success. Infosys was the first Indian company to be listed on the Nasdaq. By 2000, it was worth over US$40 billion, and had made over a hundred of its managers into dollar millionaires. Murthy was voted World Entrepreneur of 2003 by Ernst and Young and in November 2006 he was grouped along with figures such as Mahatma Gandhi and the Dalai Lama on Time magazine’s list of ‘Asian Heroes’.
Murthy is renowned for his drive, his clinical, exacting approach and his obsession with information. But it is his business with a conscience approach that has really struck a chord. ‘I think the real power of money is the power to give it all away,’ he says. And he has in some ways been as good as his word, living in a modest apartment despite his wealth, and repeatedly speaking out about the social responsibilities of business.
‘If we want to solve the problem of poverty in this country, then we have to encourage the gifted child [the priviliged urban elite] to make the whole family [of India] better.’
In 2006, Murthy left Infosys after 25 years, but remains as director of India’s Reserve Bank, and sits on the board of many key Indian institutions.
This cultural prejudice was reinforced by the emphasis on high-level technological education championed by India’s first prime minister, Jawaharlal Nehru. Nehru had a vision of an industrialised India, rational and scientific, and he began to set up a system of education that emphasised technology. In the first twenty years of India’s life, technical education began to take more and more of the country’s education budget, despite the fact that only a small proportion of the population benefited from it.
The seven Indian Institutes of Technology (IITs) – at Mumbai, Delhi, Kanpur, Kharagpur, Chennau, Guwahati and Roorkee – are among the world’s top centres for scientific education – and India has two thousand educational establishments offering degrees in computing. Every year, Indian colleges produce over a million graduates in engineering-related subjects. Meanwhile, 45 per cent of women and 25 per cent of men in India are completely illiterate. Every now and then the government toys with the idea of spreading literacy further and giving more emphasis to vocational education, but it never seems as if their heart is quite in it.
The advent of the information technology boom has made it seem as if the establishment of the IITs was an extraordinarily prescient act. But now it seems as if they did not go far enough. The competition for places at the IITs is intense. Coming up to a quarter of a million young Indians apply for just two thousand places at the IITs every year, so for every one that gets accepted a hundred or more are rejected. The desire to succeed in education is quite extraordinary. In 2003, 16-year-old Shatrunjay Verma came top out of two million students in the Uttar Pradesh state-school leaving exams – but to do so he had to study by kerosene lamp, since his village had no electricity, and cycle 20 kilometres (12 miles) to school and back every day. No wonder, then, that thousands of private computer-science schools are opening up across the country.
BANGALORE: INDIA’S SILICON VALLEY?
Bangalore’s reputation as India’s Silicon Valley began when a Karnataka state government agency charged with developing the electronics industry bought 335 acres (135 hectares) of land 18 kilometres (11 miles) south of Bangalore. The plan was to set up a hub for high-tech firms – a special kind of industrial estate for the software and electronics business. Called Electronics City, it has proved a spectacular success, not least because Bangalore already had a concentration of highly educated literate workers, partly because of the government’s decision to site its defence and space research centre here in the 1960s. Bangalore has now become the IT centre of India.
Big foreign IT multinationals, as well as India’s homegrown start-ups have been drawn here by the dozen – and they are still coming. In 2006, IBM, for instance, announced a plan to invest US$6 billion here in the next three years. Bangalore has swelled, with a population growing from 2.8 million in 1990 to 6.5 million in 2007 – and by 2010 it is expected to hit 8 million. Property prices are booming in Bangalore, there are six new shopping malls and rafts of luxury car showrooms.
But Bangalore’s infrastructure is still lagging far behind its economic rise. Visitors to Electronics City land at Bangalore airport to find instant chaos, as harried airport officials rush to and fro among a mob of passenger trying but failing to get attention. A new airport is being built at nearby Devanahalli. But in the meanwhile passengers will have to suffer many more years of delays and lost luggage. Once they get free of the airport and head out along the road to Silicon Valley they encounter long delays on a road clogged with potholes, bullock carts, dust and human and vehicular traffic.
In the mean time, many of the people who actually live here – and do not have jobs in IT – are beginning to wonder what’s in it for them. Some of the more conservative elements find the wild party life of some of the young ITers a bit much to take – which is why police recently enforced a curfew on dancing in bars after 11 p.m. Others are worried by the loss of local culture, as the ubiquitous Hindi and English edge out the local Karnataka language. And in April 2006, Microsoft’s headquarters were actually attacked by a mob when the IT companies carried on working instead of observing an unofficial day of mourning for the most famous local film star, Rajmukar, the ‘John Wayne of India’.
So, despite its runaway success as an IT boomtown, Bangalore’s future still holds some clouds.
The pot of gold
Beyond status, though, the biggest incentive for Indians to join the IT business, and perhaps the main driving force behind their success, is the money to be made. When young Indians hear about the success of this IT company and that, what they want to hear is just how much money they’ve made. India’s IT moguls are fascinating not just because they’re supremely successful businessmen, but because they’re fabulously rich. The first thing they want to know if you say you’re working for an IT company is often how much you are earning, and Indians are not embarrassed to talk about it. However, many never talk in cash terms. Their salary is measured in terms of EMIs or equal monthly instalments. These are monthly deductions from your bank account that enable you to buy your car, your deep freeze and even your flat before you actually have the money. The number of EMIs you have depends on your salary.
The magical thing about IT is that this kind of wealth seems achievable to the ordinary Indian. That’s why the rags-to-riches stories, of which there are many, are so inspiring. In his book Being Indian Pavan Varma describes just how important this inspiration was to the little village of Patwatoli in Bihar, the home of a poor ‘Backward’ weaving community. In 1991, a boy from the village, Jeetendra Prasad, made it to IIT and then in 1997 left India to join PricewaterhouseCoopers in New York. Jeetendra’s success was such an inspiration to the poor weaver children of Patwatoli that in 2002 no fewer than 22 boys from this tiny village got places at IITs – an astonishing achievement for such a remote place. It was not simply that the boys were so driven they worked like mad to get their places, working to earn money for books during the day and studying all night, but that the whole village got behind them by creating ‘home centres’ for the boys to study in. The father of one of the boys explained exactly why they were doing it: ‘Munna [his son] will get to America after qualifying in the examinations and earn a lot of money.’
One thing the boys of Patwatoli did not have on their side was good English. They had to struggle to learn English alongside their computer studies. But it is often Indians’ command of English that has played a key part in their success with IT. Since they speak in the language of the major market – the USA – they are much better placed to provide back-up than China, or even Japan.
Bangalored
Some people have wondered if India is condemned to stay at the bottom end of the IT chain, as ‘software coolies’, while all the genuinely creative work is done in places like the USA and Europe. In other words, are Indians simply well-trained, obedient, English-speaking cogs in the wheel? But Indian firms like Infosys are moving well beyond software maintenance into consultancy, providing clients with bespoke software. As Infosys CEO Nandan Nilekani says, customers ‘want their problems solved by someone who is intimately capable of understanding their unique challenges’.
Nonetheless, it is true that one of India’s great success stories has been outsourcing. The range and scope of outsourcing to India is growing by the minute. It’s easy to think of outsourcing as just setting up call centres to answer customer queries on anything from gas bills to hire-purchase payments, but there is a great deal more sophisticated outsourcing going on, not just in IT but also in investment banking, aircraft engineering, pharmaceutical research and especially knowledge processing. More and more academic journals, for instance, are sending their articles to India for copy-editing. Companies such as TNQ in Chennai typeset, format, stylise and copy-edit a whole range of top-flight journals, knowing they have a wealth of top-class postgraduates to call upon to ensure accuracy – at very low cost compared to the USA and the UK. People in offices in the USA talk of being ‘Bangalored’, which means your job has just moved to India without you, and it is happening more and more. A 2007 report by McKinsey & Co. forecast that India’s outsourcing industry would grow by almost a third in the year 2006–7 and go on growing at over 25 per cent annually until it is bringing in over US$60 billion in exports by 2010.
There are two things that might stop India reaching this target, though. The first is a shortage of qualified staff. Despite India’s vast pool of graduates, most of those qualified have already got jobs, and less than a third of the four hundred thousand Indians who graduate each year from the country’s technical colleges have the right skills. The well of talent is being drained dry, and some people reckon that India will need to train an extra half a million skilled graduates if it is to maintain its expansion in the outsourcing business. Indeed, the pressure is such that the second obstacle to India’s progress is that it might itself be Bangalored. Infosys, Wipro and TCS have all built outsourcing campuses in China and are actively recruiting Chinese to work for them in northern Asia. Infosys is recruiting hundreds of graduates in the USA, while Wipro is setting up a campus in Vietnam and outsourcing some of its work to Romania.
These, though, seem comparatively minor blips on the radar of an astonishingly successful business. In just fifteen years, the IT business has done more to put India on the map, and bring in not just much needed wealth but also a real sense of purpose and drive than anyone could have imagined. It looks like there are even better things to come.