The Three Eras Of Nasscom

Dewang Mehta

• Tenure: 10 years (Apr 1991-Apr 2001)
• Qualification: Chartered Accountant
• Prior Experience: Orissa Cement, travel writer, documentary filmmaker
• Personality traits: Charismatic, flamboyant, aggressive
• Strength: Excellent lobbyist and media manager; ability to get work done at any cost
• Key achievements at Nasscom: Promoting and building ‘India IT’ brand
• Status of Indian IT industry: Nascent and fledgling

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Kiran Karnik

• Tenure: 6 years (Sep 2001-Dec 2007)
• Qualification: BSc (Hons) Physics from Bombay University; post-graduate from IIM Ahmedabad
• Prior Experience: Discovery Networks, ISRO
• Personality traits: Soft-spoken, affable, dependable
• Strength: Consensus-building; out-of-the-box thinking
• Key achievements at Nasscom: Co-opting BPO within the Nasscom fold; engaging with the emerging community
• Status of Indian IT industry: Period of consolidation

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Som Mittal

• Tenure: 2 years (Jan 2008- Till Date)
• Qualification: B.Tech from IIT Kanpur, MBA from IIM Ahmedabad
• Prior Experience: Hewlett Packard, Digital/Compaq, Wipro
• Personality traits: People’s person, a man of high integrity and humility
• Strength: Great inter-personal and decision-making skills; vast operational experience; has a history of taking a business to new heights
• Key achievements at Nasscom: Deepening engagements with small IT firms; steering the industry towards new markets and business models
• Status of Indian IT industry: Mature

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For the first 10 or 11 years of its existence, Nasscom (National Association of Software and Services Companies) served the needs of the IT industry efficiently and faithfully. The only problem, as many in the influential industry body now admit, was how it saw and understood the industry. About 70-75% of the industry’s revenues came from the top five or six companies. And so Nasscom diligently served the needs of these large companies. Even the voting rights in the industry body were linked to membership fees, which in turn was linked to the size of the member. Not surprisingly, and for no fault of its own, Nasscom came to be perceived as a Big Boys’ Club. And that’s the way it stayed for many years. But that is beginning to change… finally.

The wheels are turning. Som Mittal, the man at the helm now, is doing a lot of the turning. So did his predecessor, Kiran Karnik. But it is under Mittal that some of these initiatives are really blossoming. Nasscom is now waking up to the reality of the over 1,000 small companies that make up its 1,300 strong membership base. It is no longer preoccupied only by ‘big boy issues’ like fighting the anti-offshore lobby in the US or tackling visa-related problems. Instead, it is engaging with smaller companies like never before.

Consider this: it has set up the Emerge Forum, a unique platform for initiatives that are targeted at smaller companies; it has rolled out a mentorship program where industry veterans spend time with smaller firms; it has put together a Rs 40 crore venture capital fund for the benefit of its smaller members; it leads global trade delegations comprising exclusively of small companies; it is also shepherding flocks of smaller firms into sales pitches with large clients. It even wants to promote the “ancillarisation” of the IT industry, not unlike the auto industry, where large vehicle manufacturers and thousands of smaller vendors co-exist in a mutually beneficial eco-system.

This is a throwback to Mittal’s early days in the auto industry (where he worked before joining the IT industry in 1989). This is the Toyota model. “All our large companies tend to do everything in-house today. But going forward, they will have to outsource some niche work to smaller companies,” says Mittal.

Large e-governance projects in the domestic market are one example. “If 500,000 villages have to be connected to deliver a service, there’s no way one company can do it on its own. It’ll have to partner with a number of companies to cover such a large canvas,” Mittal explains. To make this multi-tier structure work, Nasscom is putting together a directory of small companies focused on the domestic market. This includes members and non-members, categorised according to geographical spread and niche capabilities.

Seasoned Hand

Mittal is the best man to lead Nasscom’s transition. Prickly issues like voting rights linked to membership fees will keep the old wounds festering. But Mittal’s inter-personal and managerial skills, coupled with his vast industry experience, can come in handy. People who know Mittal say he can connect with anybody. “He knows how to handle people and get work done,” says an executive who has worked under him at Hewlett Packard. And having been a part of Indian IT for more than 20 years, Mittal shares a personal rapport with most industry leaders. With a small team of only 50 people working in the secretariat, Nasscom needs all the help it can get.

But Mittal doesn’t have to start from scratch. His predecessor, the quiet and affable Kiran Karnik, has already ploughed the ground. Mittal’s job now is to take things to the next level.

Nasscom has one sense of purpose and this has helped it become the single voice of the software industry in India.Pramod Bhasin, President & CEO, Genpact; Chairman, Nasscom

This strength in numbers is making the emerging community more vocal. This wasn’t the case in Nasscom’s early days. “I remember having frequent arguments with (late Nasscom chief) Dewang Mehta on why Nasscom only catered to the interests of the big boys when 95% of its members had a turnover of less than $3-5 million,” says Anil Bakht, Chairman & Managing Director of Eastern Software, which offers ERP solutions for the mid-market segment.

These discourses had little effect on Nasscom. In fact, things came to such a pass that by 2002-03 mass mailers questioning the relevance of Nasscom for the emerging community began doing the rounds.

Nasscom’s focus shifted at the turn of the century, but unfortunately for the smaller guys, many of whom are innovation-led or IP-driven companies, it wasn’t in their direction. After IT services, Nasscom’s next focus was business process outsourcing or BPO. While this move drew sarcastic comments like Nasscom “moving from the ground floor to the basement instead of the first floor”, many now admit it was the need of the hour.

“There was a very real danger of Nasscom splintering and, therefore, it was essential that the association start actively engaging with BPO companies. And it is to Karnik’s credit that the association was able to co-opt the BPO community,” says an old industry hand. In fact, a separate group was created under the Nasscom banner—the ITeS-BPO forum—to address these specific needs.

There’s great camaraderie in our industry. We compete fiercely but are still eager to share insights with each other.Pratik Kumar, Corporate V-P (HR), Wipro; Member, Nasscom Executive Council

By 2004-05, however, it was becoming increasingly clear that the next wave in Indian IT’s growth would come not from the IT services or BPO space, but through innovation. “The IT industry in India has been built on the pillars of cost and quality, but it needs to move to another level and this is where we come in,” says Sameer Jain, CEO, Net Solutions. “While IT services and BPO firms may provide large employment opportunities, most of the innovation is happening in smaller firms, and this needs to be showcased,” he argues. Net Solutions makes web applications for some of the leading portals in the world.

Karnik understood this. So when Bakht, along with a few others, approached him to reorient Nasscom into an association that valued innovation, he was quick to embrace the idea. And realising Nasscom’s staffing and bandwidth constraints, the emerging community offered to help.

“These guys had a full-time job running their individual companies and yet were willing to take on the additional responsibility,” says Karnik. Soon, in 2005, the first programme aimed exclusively for smaller companies was born. This was an award for the most innovative firms. Over 300 companies, roughly a third of its members, sent in entries.

“A Nasscom award for being the most innovative company gives you tremendous credibility in the marketplace and helps on the hiring front,” says Sunil Maheshwari, Co-founder & CEO, Mango Technologies, winner of the innovation award in 2007. “These awards become the talk of the industry and help us in indirect marketing—in the ordinary course, this would entail significant resources,” adds Manav Garg, founder & CEO of Eka Software, another award recipient.

But it was only in 2007 that a separate umbrella, Emerge Forum, was created for smaller companies. “If the industry has to succeed and thrive, it will need an eco-system of companies—both small and big companies need to grow,” says N Krishnakumar, CEO of MindTree & Chairman of the Nasscom Emerge Forum. “And as the big boys were largely self-reliant, our objective was to support the smaller companies.”

The Emerge Forum was born under Karnik’s watch. But Mittal went a step further. Explains Krishnakumar: “All groups and forums within Nasscom have a budget and they’re expected to function within that. But the brief I got from Mittal was that money is no constraint for the Emerge Forum because we need to make these people feel wanted and valued.” In fact, the first ‘Emerge-Out Conclave’ (a conference of the emerging community) held in Delhi two years ago was entirely funded by Nasscom. Several programmes have since been rolled out under the Emerge Forum.

If the industry has to thrive, it will need an eco-system of companies—both small and big companies need to grow.Krishna Kumar, CEO, MindTree; Chairman, Nasscom Emerge Forum

The mentorship programme is one example. It’s an intense engagement, lasting 12-18 months, where industry veterans set aside some time each month to interact with small companies shortlisted by Nasscom. The objective is to analyse their problems and guide them on issues ranging from operational challenges to strategic vision. Another example is Friday 2.0, a forum where experts share their experiences on specific subjects, which can range from tax issues and mergers & acquisitions to HR best practices and cloud computing.

A recent initiative is the India Innovation Fund. The objective, according to Nasscom Vice-President Rajdeep Sahrawat, is to build a robust innovation ecosystem, where IP creation is the norm rather than the exception. “Through this venture capital fund we are seeking to address the gap in early-stage funding and promoting IP creation in the technology sector,” he adds. The fund has raised Rs 40 crore from the industry and is sifting through potential investment candidates.

In a marked departure from its earlier days, Nasscom has, over the last few years, started taking smaller companies as part of its trade delegations to other countries. While this helped increase visibility for these companies beyond domestic shores, a common complaint was that the big boys often dominated the agenda. “To address this issue, we now take clusters of smaller companies where the agenda is to showcase their capabilities and nothing else,” says Nasscom Vice-President Ameet Nivsarkar.

Nasscom is industry facing. This helps it address issues that are bigger than problems faced by individual members.Sharad Sharma, Entrepreneur-in-Residence, Canaan Partners; Member, Nasscom Exec. Council

Mittal also wants to address one of the biggest challenges that smaller companies face—that of connecting with prospective customers. “While initiatives like the innovation awards help increase visibility, we need to make customers (large corporates) aware of the exciting work our emerging companies are doing,” he says. Nasscom is doing this by creating a platform where these companies can interface with customers. This sales-focused approach is a definite step up from Nasscom’s earlier avatar.

The first such event was organised at the ‘Product Conclave’ held in Bangalore last year when some start-ups were given an opportunity to showcase their solutions to six CIOs of large Indian corporates. “This provided an excellent opportunity for a two-way communication—hearing what CIOs want from their technology vendors. And giving the small guys an opportunity to pow-wow with people who would, under normal circumstances, not have had the time or bandwidth to interact with them,” says Sharad Sharma, Entrepreneur-in-Residence at Canaan Partners & member of Nasscom’s Executive Council.

More recently, 12 emerging companies were given a chance to directly pitch their banking solutions to the technology leadership team of Standard Chartered Bank in Chennai. “Each of these 12 companies got to spend 30 minutes with the bank’s senior technology guys,” says Mittal. “It was a dream come true for these companies. Going forward, we want to facilitate more such direct sales pitches.”

Another initiative, currently under progress, involves updating profiles of emerging companies on Nasscom’s website in ways that play up their niche capabilities and offerings. This focused information is expected to help customers locate vendors easily. Next on Mittal’s agenda is to encourage the emerging companies to form a cluster. “If you are operating in a niche area and your customer wants something that you don’t have in your portfolio, you can easily cross-refer him to somebody in your cluster. Together, you will be able to offer a much better value proposition to your customer and, at the same time, keep your selling costs low,” he explains.

Common Benefits

Big IT companies and their smaller counterparts have operated in silos for a very long time—partly because of water-tight customer agreements that restricted third-party outsourcing. But Mittal remains undeterred. “Customers are more open to such outsourcing,” he argues.

Mittal has a simple game-plan to make this transition work. Even as Nasscom woos the smaller companies, it will spend 60% of its time and efforts on initiatives that are common to both small and large companies. It’s a tightrope walk, but one that he wants to attempt.

Tackling concerns over data protection and security by setting up the Data Security Council of India (DSCI) is one example. “From putting in place the best practices framework to providing certifications and finally creating a rating system, we will do whatever it takes to make India a secure destination for outsourcing,” says Kamlesh Bajaj, Chief Executive Officer of DSCI.

Another area of common interest is bridging the skill gap in the country. To increase PhD numbers, Nasscom recently tied up with the Department of Science & Technology to offer fellowships for overseas research. This is in addition to Nasscom’s existing initiatives in the field of education, which include working with academia on faculty training and honing IT skills by setting up finishing schools.

Accelerating the pace of India’s e-governance initiatives—something expected to open up a whole new revenue stream for the IT industry—is one more area keeping Nasscom busy. This is being done under the aegis of the National Institute of Smart Government (NISG), where Nasscom is an equity investor. “Our mandate is to help government departments and agencies move towards a more citizen-centric way of working,” says NISG Chief Executive Officer Sanjiv Mittal.

Pramod Bhasin, President & CEO of Genpact and the current Chairman of Nasscom, insists the trade body is relevant to all its members because it focuses on issues that are industry specific and not aimed at any individual member. “This has been, and will continue to be, our biggest strength,” he adds.

Despite Mittal’s best efforts, one big bone of contention still remains. The smaller companies are quick to point to the membership-fee linked voting rights in the national executive council (which sets the agenda and strategic vision) as proof of the continued domination of Nasscom by their bigger brethren. “It’s the same set of companies that keep getting re-elected,” alleges Bakht.

The big boys say they have earned that place. “I don’t see any reason we have to be apologetic about it, but that doesn’t imply we hijack Nasscom’s agenda,” shoots back Pratik Kumar, Corporate Vice-President (Human Resources) of Wipro and member of Nasscom’s executive council. The debate goes on. But Mittal would like to resolve it before his five-year term comes to an end in 2012.