Digital technology to put India back to work
There is an enormous possibility to deploy AI, bots, augmented reality and virtual reality to take the learner to quick and specific solutions for every learning and information need
When the talk of automation and artificial intelligence impacting hundreds of thousands of jobs in manufacturing and services sector comes up in any forum, there is always one incorrigible optimist in the room who will point to the auto sector and even the computer industry where new innovations destroyed existing manual jobs but created multiple more new ones. In the current phase however, we have yet to see evidence of a massive job push in tourism, leisure and travel industries showing the ability to enable full replacement opportunities for displaced employees in traditional roles and we will have to wait and see how the scenario plays out, in India and the world in the coming years.
Whatever be the adverse impact of digital technologies, the positive push provided to a variety of sectors — manufacturing, financial services, logistics and even government citizen support services by the thoughtful deployment of digital platforms and digitally enabled services cannot be denied. This push, provided by India’s accelerated journey towards digital technology adoption with broadband and mobile connectivity finally becoming affordable and last mile connectivity happening through common service centres and smart cities is creating an expectation that technology will also be able to impact skilling and job creation at a rapid clip, through better engagement, efficiency and eco-system creation.
New models of skilling being adopted in the country by social enterprises as well as not-for-profit organisations like Global Talent Track, Quest, Pune City Connect and NES Connect have demonstrated the power of deploying digital technologies at various stages of the livelihood creation cycle providing both jobs and entrepreneurship opportunities to inspire skills recipients to capture the jobs or entrepreneurial opportunities they seek and provide them the agency to stay on and improve on their skills on the job. Engagement enhancement is possible at every stage, from showing a world of possibilities to the enquirer to enabling the person to evaluate career options and start the learning process in a non-threatening environment. This engagement can continue through the early stages of employment or entrepreneurship to ensure that the enthusiasm does not fade. The ability of digital platforms, artificial intelligence and machine learning to customise the engagement process to each participant is making learning and placement a pleasurable and continuous process which can be replicated even in colleges and schools of the future.
The role of technology in increasing efficiency has always been emphasised but in the livelihood creation domain, there is an enormous possibility to deploy AI, bots, augmented reality and virtual reality to take the learner to quick and specific solutions for every learning and information need. And the possibility of creating an ecosystem of coaches, mentors, and 24x7 querying facilities by synchronous and asynchronous response facilities is making it possible to improve both motivation and learning outcomes by many orders of magnitude.
Digital counselling, skilling and support platforms serve as true connectors for all eco-system participants with the students benefiting from a variety of inputs from counsellors, trainers, mentors, alumni and potential employers. The online community is a support network of likeminded individuals for the youth throughout their life. The skilling profile that will be created and enhanced through dynamic interactions with the platform will be a lifelong identity for each citizen, making them willing participants in personal and community learning and role effectiveness.
The ‘Skill identity profiles’ for youth by treating student’s personal context as the focal point for end to end vocational training and livelihood creation is one of the critical areas where Digital India can truly enable Skills India and Start-Up India. The profiles will form the basis for building an online community of skill seekers who can then be mapped to appropriate skilling options. Hosting all the skilling and placement opportunities available in a locality on the platform will enable the youth to visualise careers and competencies required. Utilising artificial intelligence to map the students to skills would be a significant improvement over existing system of random allocation especially for semi-formal grey collar jobs. An integrated chatbot that understands the student’s learning difficulties will reduce dependency on human intervention and make perfect matches happen between job or entrepreneurial opportunity providers and seekers.
At Social Venture Partners India, the Sustainable Livelihood Initiative enabled by a Million Jobs Mission node is identifying design partners who have the ability to contribute innovatively and help scale through innovation and collaboration. The Government through the well-conceived Atal Innovation Mission is already deploying tinkering labs in schools, incubators in academic institutions and a nation-wide network of mentors who can point the way to aspiring candidates. What is needed is a willingness and ability to launch major PPP initiatives that will connect the dots and provide a role for every participant in eco-system building for the new entrepreneurial and fully engaged India that is the expectation of all sections of the country.
While we wait for this to happen, there is a real call to action already for every employer and employee to stay focused on continuous learning. Skillsets needed to retain old jobs and find new ones will continue to evolve and the days of 10 plus two plus three or four or six years of education followed by a lifetime of entitlement are surely over. Each one of us will be responsible for our own livelihood and ongoing success.
Ganesh Natarajan-led 5F World inks joint venture with Chesapeake Group
The JV called Kalzoom Advisors will be based out of offices in New York, Bengaluru and Pune
Ganesh Natarajan-led consulting firm 5F World and New York-based boutique investment bank The Chesapeake Group announced a joint
venture (JV) to provide growth advisory and digital transformation engagement between large firms in the two countries for start-ups focused on digital solutions.
They also launched a platform for emerging digital companies called Zoom12.
The JV called Kalzoom Advisors will be based out of offices in New York, Bengaluru and Pune. It will work in areas of digital solutions like Artificial intelligence (AI) Internet of Things (IoT), digital platforms, design thinking, cyber security, cloud computing etc. Zoom12 will enable emerging companies to connect with funding sources and potential clients across the two countries.
Founder and managing director of The Chesapeake Group Douglas Land said, “We are confident our growbuy- sell approach will be a true enabler to Indian and American new age companies. We have helped young companies grow and command superior value when they raise capital or get acquired by larger firms.”Chesapeake specialises in cross-border transactions, merger and acquisition advisory and recapitalisation.
Both 5F and Chesapeake will be leveraging a strong corporate client, venture capitalist and angel investor network to create value for clients, said the spokespersons. Ganesh Natarajan said that the advisory is already in the process of evaluating and signing up companies in specific digital spaces. “We have received delightful pre-launch response to the platform and have already signed up 60 companies. For two of these companies, Kalzoom is providing growth services that will enable them to grow 30 per cent per annum in defined digital spaces.”
The advisory will focus on scaling up to 200 start-ups within the first year.
Cognitive logistics - the new frontier
Automated warehousing, IT-enabled logistics and digitally transformed supply chains hold the key to a manufacturing economy push
The need for Industry 4.0 solutions to power a renaissance in manufacturing worldwide and particularly in India is well understood by all policy planners and industry CEOs in the manufacturing sector. Ubiquitous connectivity, devices connected by the billions to the Internet and new Internet of Things (IoT) applications are all providing the cyber push to make the cyberphysical future of the manufacturing world a reality. However, smart factories and heavily automated shop floors cannot by themselves provide the push to the manufacturing economy that is so necessary for a sustained economic boom to happen in the country. Automated warehousing, IT-enabled logistics and digitally transformed supply chains hold the real key to this future.
Speaking at the Supply Chain and Logistics conference in Dubai, which is fast emerging as a global hub for transportation in our part of the world, it was interesting to find that while extensive automation has been implemented in the storage and movement of materials, the opportunities in cognitive logistics and supply chain planning is still at a nascent stage all over Asia and even in the advanced systems prevalent in the US and Europe. This may be because warehouse automation and the use of augmented reality-enabled picking systems and virtual reality-driven learning systems have become part of any state-of-the-art storage and retrieval systems, but rapid advantages in artificial intelligence, machine learning and cognitive technologies have yet to be fully utilised in reimagining and redesigning the supply chains of the future.
One of the main reasons for the lag in the adoption of cognitive transformation in supply chains and logistics has been attributed by expert Christine Taylor to the large numbers of people and firms that have to work together to make a supply chain work. The different levels of sophistication of manufacturers, brokers,transporters, retailers and customers make it difficult to have a wide sweep implementation in a supply chain the way it can and does happen in a factory or warehouse.
What has changed today to inject a new wave of optimism that cognitive logistics and supply chains are indeed going to happen in the very near future? Businesses are getting comfortable with setting up and using large data lakes and warehouses and deploying predictive and prescriptive analytics solutions. Omni-channel has become the standard for most manufacturers and retailers and with multiple companies, intermediaries and consumers interacting on an intelligent supply chain platform, the opportunity to understand the behaviour of every participant on the platform and learn with every transaction is enabling supply chain planners to cost-effectively plan and optimise delivery solutions for each category of customer on the platform. Digitally-enabled supply chains enable instant interchange of data amongst all partners and enable the learning from every transaction to be leveraged by all participants.
Companies like DHL, Walmart and Amazon are already practising anticipatory logistics where demand is being forecast and sometimes even created by intelligent suggestions to customers. They are responding to customer impatience with long delivery lead times and manufacturer eagerness to produce in intelligent anticipation of demand. Artificial intelligence (AI) has a key role to play in this anticipation process with the entire sequence of demand forecasting, manufacturing, transportation and storage planning and maintenance of transportation equipment riding on the ability to use AI well and deploy machine learning to provide adaptive knowledge through the supply chain. Self-learning logistics processes are enabled by algorithms that recognise patterns and initiate action across the logistics chain. These actions could include volume and timing of shipments, inventory and stocking suggestions and pricing to optimise product offtake and movement across the supply chain.
The ultimate solution to the ongoing demand for faster movement of people and goods worldwide is of course the “hyperloop”. But till such time that hyperloop movements become the standard, cognitive supply chains that treat a customer as a single entity across multiple channels, learn when transport or inventory disruptions could occur and ensure visibility and transparency from supplier to buyer will keep getting more sophisticated. Biased decisions will be avoided by machine management of most routine tasks, with intelligent handovers to experienced humans only when there are extreme and unforeseen circumstances including weather, unions and other “force majeure” situations.
At the recent launch by 5F World and California-based AI and analytics firm Systech Inc. of the Center for Artificial Intelligence and Advanced Analytics, one major question that came up in the corporate discussion was naturally the potential loss of jobs in traditional manpower-intensive services sectors including logistics. The reality is that as systems get more complex and provide rewarding outcomes for all participants, the opportunities for bright human intervention in the design and implementation process will always exist and indeed grow! Nowhere will this be more evident than in the area of cognitive logistics. More and more variables will have to be analysed to make decision making more accurate and as monetary savings accrue to all participants through better planning of manufacturing, stocking and distribution and customer delight peaks, the demand for customer experience designers, customer behaviour analysts and new service imagination and design experts will soar. Are our traditional education systems ready to take existing employees and career seekers into this new world? Probably not, but new interventions in the skilling process are happening to make this a reality. The cognitive world will be a truly remarkable place and cognitive supply chains and logistics systems will be no less!
Start-Up India: Can the next wave succeed?
It would be heartening if we can do an Israel and get a hundred thousand new companies to start with adequate funding and aspire to be million-dollar profitable companies in 2022
The rhetoric has been tremendous but the results of the first wave of Start-Up India have fallen short of expectations. Many companies lured by the attraction of B2C commerce have fallen by the wayside and the success stories of entrepreneurial ventures in other consumer and business sectors have been few and far between. It may have been rather romantic to believe that India can see hundreds of millions of entrepreneurs start and flourish but it would be heartening if we can “do an Israel” and get a hundred thousand new companies to start with adequate funding, scale to a crore of revenue in two years and aspire to be million-dollar
profitable companies in 2022.
The recent Budget also fell short when it came to any real proposals for easing the pain of angel investors as well as creating an environment of comfort for entrepreneurs. It was heartening to hear the Finance Minister say that venture capital funds and angel investors need an innovative, special development and regulatory regime for their growth. But the entrepreneurial community waits to see action! The reluctance of young folks looking at employment in start-ups because the compensation is largely through stock options can be addressed if the taxation of stock options is not on the difference between exercise price and fair market value but is deferred to when the employee actually sells the share and generates profits. The current window of no tax for the first three years is of little value since most well-funded start-ups do not even attempt to make profits in the first two or three years. A longer tax holiday and a rejig of the dreaded angel tax will ensure that start-ups are able to access early stage funding and grow profitably to a stage where they can attract the first serious round of funding.
Our company 5F World has been in the thick of this entrepreneurial dream, investing in companies with digital, skills and social promise and helping large firms on the one hand with their digital transformation strategies and also smaller firms with a scaling plan for digital innovation, analytics and artificial intelligence value propositions. In every case, we have found that start-ups as well as small firms which have found their place in the sun have been those that have carefully chosen their theaters of operation, invested in skills and technologies that place them ahead of the curve and developed the capability to compete on equal terms with large incumbents in global corporations. The problem, however, with the vast majority of tech start-ups has been that they have not defined one core product, platform or solution that is truly disruptive and hence quickly degenerate into “me-too”services providers. In the non-tech space too, the need for clear differentiation in product or service and the ability to create and market a superior value story has been missing in most new entrepreneurial financial services, health care, retail and logistics firms. This needs to be addressed in the short term and the new incubators planned including those by the Atal Innovation Mission have the opportunity and the imperative to do just that.
Start-ups will also greatly benefit from an easier business environment. Single window clearances, easy ways of claiming R & D and patent benefits and an environment where innovation is encouraged and rewarded will ensure that the next wave of intellectual property creation happens out of India and not by Indians setting up shop in Silicon Valley, Singapore or Dubai.
One other factor that needs to be addressed by the policy makers in the country which goes beyond budgetary sops is the recognition that there is an undeniable link between high quality academic research and successful entrepreneurship. Centres of excellence focused on cutting edge technologies, design thinking and cyber-physical interfaces including the internet of things should be funded and encouraged in all institutions of higher learning. The success of Stanford, Berkeley and Carnegie Mellon in the US in creating waves of new entrepreneurs have to be emulated in India not just by the IITs and IIMs but the large number of new liberal arts and technical private colleges and universities springing up in the country. An example to emulate is China where Artificial Intelligence and new technology education is now being incorporated even in the school curriculum. Indian kids are the brightest in the world but we need to irrigate the fertile minds of early teenagers with new ideas that create an entrepreneurial mindset even as they prepare to enter college.
Tinkering labs may help but it will need a larger concerted effort to build an ecosystem that will deliver a steady stream of entrepreneurs for the future.
The benefits of success in the next wave of entrepreneurship can be truly transformational for the country and for the entrepreneurs themselves. A hundred thousand new firms creating even a million dollars revenue each can add hundred billion dollars to the GDP and more important, create over 10 million new jobs. In the US, an Indian origin strategy consultant Sramana Mitra created a global virtual accelerator One Million by One Million in 2010 with the aim of nurturing a million entrepreneurs to reach a million dollars each in annual revenue thereby creating a trillion dollars in global GDP. Surely, we in India can aspire to build a tenth of that! Motivation enough for the government, corporate sector, incubators and accelerators and funding agencies to collaborate and make it happen.
Health care in India needs a digital transformation
Is there a technology push in the sector that can give us confidence that we will see real change in our country?
The National Health Protection Scheme, launched with much fanfare as “the world’s largest Government funded health scheme” in the Budget is a much-needed shot in the arm of nearly a billion Indian citizens who have suffered decades of healthcare deprivation and under-funding. But while the initiative itself is a ray of sunshine that can split the clouds of ill health, infant mortality and inadequate medical facilities that cast their shadow over Indian health, there needs to be a recognition that traditional methods are not adequate and that there is a significant role for technology and skilling, if the ambitious plan has to be executed to the benefit of the nation.
Let us look at some baselines to grasp the enormity of the challenge. The World Health Organisation has recommended one licensed doctor for every thousand citizens in a country. In India, the output of doctors has been short of all acceptable levels for decades with the result that we have one doctor for over 1,600 persons and a Government doctor for 10,000- plus persons, reflecting in the poor access to basic healthcare. The impact on infants and children has been particularly and predicable horrifying, with infant mortality still ten percentage points above the world average of thirty percent and both immunisation and health parameters of children being far lower than acceptable levels. A substantial portion of medical care costs are still borne by individuals despite the attempts to create free public hospitals and make health insurance available to all. Most public hospitals (I should know, my father died in one in Jharkhand) have very poor diagnostic and patient treatment and care facilities, the health care centres in districts are understaffed and in the most part incapable of providing more than a referral service and the private hospitals have been accused of placing revenue metrics above the real needs of the patients.
If that is the citizen pull, is there a technology push that is happening in the health care sector that can give us confidence that we can see real change happening in the next few years in our country? Can a truly patientcentric model be implemented that will restore confidence and true health to the nation, particularly the vast under-served segment? Some research we are doing at the 5F World collaborative venture with Systech Inc — the Center for AI and Advanced Analytics — has shown us that the best way for the planners of “Modicare” planners will have to move from the descriptive analysis comfort zone of analysing past data and drawing inferences to look at technology enabled pathways to capture citizen health data and apply statistical techniques and algorithms to derive insights that make predictive and prescriptive analytics a reality for the country. This methodical and iterative exploration of high quality data using skilled analysts and when needed, data scientists will be the hallmark of the health care environment of the future.
What are the technology innovations that can give us the push to create this new health care environment? In the US, the three tech giants who are threatening to control everything we do in life and work have already announced major moves. Google’s parent company Alphabet has three health care initiatives — DeepMind Health, Verily and Cityblock Health — and is working on AI methods to predict near term deaths in hospitals which could serve as early warnings to doctors. Apple’s new January iPhone launch includes a health records feature that allows users to manage their own health records in a much more effective manner than the Fitbit and other devices that were being used to track limited health input parameters.
And not to be left behind, Amazon has a partnership with Berkshire Hathaway and JPMC to create cheap health care solutions ostensibly for a million of its own employees but surely with an eye to extending the solution later to its rapidly expanding customer base.
While all three need to be watched and could have relevance for adoption into India’s new all-encompassing initiative, the most potent as could be expected is what is happening with Cityblock Health of Alphabet. Unlike in India where more than 80 per cent of the districts need better health care, Cityblock caters to lowincome city dwellers and plans to develop its own cadre of health care professionals who will be funded through the social insurance schemes to do home visits, interact with patients and gather as well as feed data to the most appropriate service provider. In India, the opportunity exists for entities like Social Venture Partners through its Million Livelihoods Mission to scale NGOs in every state who can take the responsibility of creating these paramedics and Home Health care workers and integrate them into the new National Health Protection Scheme by accessing the funded insurance premiums and provide early warnings on patient health which can minimise the likelihood or at least the cost of subsequent hospitalisation.
The states can also come to the healthcare party by using the state data centres to implement a centralised data management and business intelligence architecture that enables a 360-degree view of health care operations, from the primary and secondary diagnostic and counselling centres to the actual delivery of health care from both private and public for-profit and no-for-profit hospitals and other providers anywhere in the state. The new home health care squads could both use and enrich this data for the state and the country.
With today’s increasing sophistication of business analytics tools — for big data management, data visualisation, statistical analysis, business intelligence reporting and analytics through served reports or self-service, the opportunities to find answers are only limited by the questions that have traditionally been asked of from data. The more interactions we can create through health care providers and doctor-patient as well as patient-patient interactions, the better and richer will be the quality of data. Add doses of AI and machine learning to this mix and you might well find the solutions to the malaise that pervades health care in India today and make the new plan an exemplar for the whole world.
Healthcare platforms for rural India
For the National Health Protection Scheme to succeed, all stakeholders must work together on a unified platform
The rhetoric over the National Health Protection Scheme seems to be dying down and the news that the final scheme will soon be announced incorporating the best practices from some of the best state scheme is heartening. The promise of covering over 40 per cent of Indian citizens and nearly 100 million families through what is arguably one of the most ambitious health coverage schemes in the world is truly exciting. However, it would be sensible for all segments — healthcare providers, insurance payers, wellness solution providers, data and analytics firms, paramedic resource trainers, for-profit companies, social enterprises and civil society — to work together on a unified platform with the local and the central governments to pull off this gigantic mission.
Systems thinking suggests that the best way to design large transformative systems is to approach it from the customer or end beneficiary's point of view and it makes a lot of sense to define that customer as well. Let me choose my childhood friend from the village of Tatisilwai near Ranchi in Jharkhand. His name is Jamnadas Thakur and we will call him Funtoosh which was the name all his friends knew him by. Funtoosh still lives in a small rented house in Tatisilwai with his wife and two children and works as a contract workman in a nearby factory built by my father for a business family in the sixties. He gets a monthly wage of less than Rs 10,000 per month. Let us see how he could navigate through the healthcare platform by 2020 and truly benefit from it. To explain the platform constituent, we will name some real service providers, who are already doing work in rural India.
The platform itself would consist of four broad service areas — wellness and disease prevention for the family, early diagnostics and tele-medicine, secondary and tertiary healthcare with support through the insurance lifeline and post treatment physical and mental support. Collateral services on the platform would be the availability of skilled paramedics to help in the pre- and post-treatment support and sophisticated data and analytics services to assist diagnostics and treatment plans. While companies as well as social enterprises that would play the service provider roles on this platform need to be identified for every district in the country, a few such entities we have already supported or met through our national initiative — Social Venture Partners — would be used to explain the whole solution.
To embark on a hypothetical citizen journey, which might enable a design thinking solution to emerge, Funtoosh and his family are part of a collaborative health group set up by Swasti Health Catalysts near the venue of the weekly village haat, which mobilises the community and generates interest in health, sells lowcost health products, provides a channel for insurance sales and enables healthcare access to Funtoosh, his family and friends. When his daughter Rani develops symptoms that worry Funtoosh, they make the trek to the neighbouring village of Namkum where the technician at the primary healthcare center uses a comprehensive equipment called ReMeDi provided by Neuro-Synaptics Communications. ReMeDi is an integrated digital platform that enables basic medical tests and wide range of point-of-care diagnostics and connects Funtoosh's daughter to an expert in the Rajendra Medical College and Hospital in Ranchi for consultation on a recurring throat problem. Tele-medicine itself has come a long way since its early days and systems like ReMeDi on a large platform would bridge the gap completely between the patient, the health worker, the technician at the local center and of course, to the secondary or tertiary service provider. It is apparent that almost 60 per cent of potential problems can be arrested at this stage and in the unfortunate event of hospitalisation, the costs as well as the stay can be minimised.
My previous article in this paper on the role of technology in healthcare resulted in a barrage of appreciation and a few brickbats — the criticism was that India's biggest problem is not digital platforms or technology but that lack of trained healthcare workers and accurate data. An entity like Jagruti Foundation in Pune or Virohan Institute of Health and Management Sciences in Delhi, both of whom train youth and middle-aged women to become nursing assistants or paramedics helps to address this problem. Virohan trains allied health professionals (AHPs), who should form 60 per cent of the healthcare workforce. Funtoosh’s son Ganga can train to become an AHP with a choice or mix of diagnostic curative or rehabilitative support skills. With the huge demand for blood bank, dialysis, physiotherapy and medical records technicians and probably a dozen more specialisations, a mass movement of skilling in this area could generate tens of millions of new jobs as well.
Finally, the need for data acquisition, de-duplication and serving up actionable information to all service providers in the channel to ensure that the early issues of fraud and collusion that have plagued early telemedicine and healthcare insurance schemes do not recur. An Aaadhar kind of approach to data capture and sophisticated tools to enable predictive and prescriptive analysis in a cyber secure environment will be a must to enable a mission of this scale to succeed and provide value to all participants.
What is the recommended course of action to get all these entities to work together for the benefit of Funtoosh and his family? A comprehensive digital platform that connects all the providers, can be easily developed and installed as a district-wide, state-wide or even national initiative. Empanelment and establishment of 50 Swastis, a dozen Virohans and well-equipped and staffed primary healthcare centres armed with ReMeDi like tools could be the first step. Once the enrolment of willing insurance companies and secondary and tertiary healthcare centres is done and the flow of the insurance funding is streamlined, it may be feasible for Funtoosh to truly look forward to highly affordable swasth future with new opportunities for livelihood and prosperity for his little family.
Digital, AI & data security: Guard the forts
Many forts of our thinking will crumble under the relentless assault of artificial intelligence, deep learning & analytics
A joke circulating in the WhatsApp circuit these days is that Amazon knows when a girl is expecting a baby well before her parents know, because of all the data on the products she suddenly takes an interest in. And of course, Facebook probably knows when she is likely to become pregnant almost before she thinks about it! One wonders whether this will be truly something to “like”. Nothing is private anymore and while the unseemly eyeball to eyeball confrontation that Facebook and Cambridge Analytics are having with governments in the USA, the UK, Singapore and India will die down at some point, it has raised fundamental issues of “who owns my data” that will rightly worry policy planners in the government and the entire digital society for much more time to come.
The problem in India has always been that we have set very little value on data privacy. In my own case, I had the same password, known to multiple people for all my social sites for many years and quite a few folks request advisors, assistants and family members to access their sites when they are away. The Data Security Council of India, a joint venture of Nasscom with the government, was set up over a decade ago but its focus has been more on data security and protection against malware attacks and less on educating the citizen on imperatives and methods to keep private data away from peering eyes. This blissful state of unawareness or nonchalance could well have continued for a few more years had it not been for the emergence of powerful analytics engines and predictive analytics capabilities that have taken the data we so freely provide, analysed it to death and created propositions that not only anticipate but, in many cases, even guide our behaviour. And its not just the elections, almost every activity we choose to do or someone else wants us to do in future might be under surveillance today and on its way to become a prescriptive pattern for tomorrow.
There are many forts of our thinking from yesteryears thatm will crumble under the relentless assault of artificial intelligence, deep learning and prescriptive analytics in the years to come. Speeding down the Lincoln Tunnel between New Jersey and New York with a friend last month, I was surprised he let his Tesla car take over the driving for a few minutes while he showed some features of a software product we were discussing. Robotic advisory tools have already taken the analytical pain out of investment decisions and become invaluable assets for private bankers and wealth management advisors. The expertise of medical diagnostics and even a majority of operations are being taken over by digital tools and robots and the march of cyberphysical systems as a key driver of manufacturing, shopfloor systems, warehousing and logistics have been discussed earlier in this column as some of the key pillars of Industry 4.0.
The virtuous circle of Artificial Intelligence (AI) and natural learning will continue to change the way humans acquire skills and manage their learning processes as well. Already, digital platforms are providing AI assistants that enable corporate executives to assess their career options, mine for skills that would help them to progress from one level of expertise to the next in a chosen skills path and even choose the learning style and content which suits their own cognitive styles. In a future experiment we will be trying at Pune City Connect and Social Venture Partners in the skills development lighthouses for rural and underprivileged youth, an AI “dost” will be assigned to a person during the counselling phase, play the role of companion for blended learning during the skills acquisition process and be available even after the person gets on the job to search and schedule mentors and provide remedial learning on the job. If somebody was looking for the value additions that AI bots can provide in future, this would surely be one of the most valuable.
There is much more to be gained than lost if the goal of AI deployment in society and corporations is to assist and enhance human experiences rather than destroy job creation. Jaspreet Bindra, chief digital officer of the Mahindra group, speaking at a session organised by the IMA recently opined that users of retail ecommerce today pay for experiences rather than goods and hence the retailers of tomorrow will have to think of completely different strategies to attract and retain customer eyeballs and eventually dip into their wallets. This deep research into optimal customer experiences is revealing the extent to which real and digital identities are merging, particularly for the digital natives who are fast overtaking digital immigrants in the digital world. The day is not far when every individual will have to choose what is more important — being marketed to as an individual rather than one of a crowd or keeping one’s identity totally private. With most of us expected to opt for the former, the discussions on data privacy are not going to go away in a hurry.
Wise thinking and practical approaches must be designed and deployed to make optimal use of the opportunities that will abound in a digitally transformed world.
Quarterly results have been excellent; are happy days here again?
The quarter's results have been excellent, barring one or two temporary aberrations and it is heartening to see growth across all segments - digital and IT services, BPM, products and platforms
ddressing a group of industry watchers and analysts in New York City in 2008 after the financial crisis had hit and I had just become chairman of industry association Nasscom, it was interesting to face a barrage of questions and waves of pessimism about the industry’s future. Some cynics were even expecting a three-year decline in industry revenues and were almost incredulous at my five per cent growth prediction for that year and a revival after that. Which did come to pass as a resilient industry found new mojo and surged back. In an almost inevitable repetition 2016 onwards, the wave of automation, artificial intelligence and economic slowdown across the globe had provoked forecasts of doom all over again and it’s good to be able to confidently predict today that the IT and BPM industry will get back to double digit revenue growth this year and find new avenues to grow in future.
The quarter’s results have been excellent, barring one or two temporary aberrations and it is heartening to see growth across all segments — digital and IT services, business process management (BPM), products and platforms. One theme that is playing out well for all services firms is the universal adoption of digital around the world and as predicted many times in this column, firms that are prospering are those that have addressed the challenges of customer behaviour and experience, design thinking, business process re-engineering, data and analytics and cultural transformation in addition to mastering the traditional basket of social, mobility and cloud technologies. A scan across the web sites and white papers of every firm above a hundred million dollars in revenue shows the willingness to engage customer groups beyond IT directors and messaging is more around multiple talents being brought together to engineer digital transformation. Globant calls them pods and Mindtree pumpkins, but whatever be the source the fruit will be as sweet.
Another welcome development is the integration of cognitive solutions in every company’s arsenal which is a sure indicator that the industry will embrace artificial intelligence and machine mearning and enable the next wave of predictive and prescriptive analytics solutions to emerge within client organisations.
The landmark news of the month of May in India has of course been the consummation of a deal that has been in the making for a while — Walmart acquiring controlling stake in Flipkart — that has given the much-needed shot in the arm to the entire e-commerce industry in India. The naysayers have been predicting doom for many entrepreneurs who started e-commerce businesses, scoffing that this was just a game of taking money for the pockets of investors and putting it into the pockets of customers. While that allegation may not be entirely without substance, there is great truth in what the founders of PayTM and Snapdeal have said, that this deal is a true endorsement of Indian entrepreneurship in e-commerce. It will also give heart to many start-ups who are looking at future exits and get them to redouble their efforts to scale and find a path towards higher market share first and profits later.
What this also does is create a new FAWG story for India very much like the FANG quartet (Facebook, Amazon, Netflix and Google) have done for the global tech sector and the US stock markets. The FAWG (Flipkart, Amazon, Walmart and Google) assumes that the anticipated participation of Google’s parent Alphabet in this deal is also going to happen in the not so distant future. This battle of the giants will boost not just the e-commerce market in the country with the ten thousand plus (almost 50 per cent) unserved pin codes getting the benefit of e-retail and cash on delivery innovations, it may also boost the reputation and the relative fortunes of Walmart vis-à-vis its rampaging global competitor Amazon. For ready reference, Amazon’s sales are expected to easily cross two hundred billion dollars in 2018 and its market capitalisation has surged from just over a hundred billion in 2012 to nearly eight hundred billion at present, while Amazon, in spite of larger sales of nearly five hundred billion with market capitalisation growth from just over two hundred billion to two hundred and fifty billion in the same period. This major investment in India although it sent initial shudders through Walmart investors, can make India a true theater for a “mahayuddh” battle between the two to the benefit of Indian entrepreneurs and smaller investors.
On a side note, the Indian e-commerce market itself has huge potential to grow, from an estimated thirtyeight billion US dollars in 2017 to an anticipated two hundred billion plus by 2026. Online spending is expected to increase 30 percent annually with both domestic and cross-border shopping showing significant growth. Venture capital fund raising has been on a sharp rise and existing as well as new PEs are raising new funds anywhere between twenty million and a billion to meet the capital needs of the ever-growing new internet and e-commerce segments. Truly the twin Phoenixes — IT services and e-commerce — are rising fast and will rule the waves of the capital markets in 2018 and beyond.
Data-driven competitive advantage
Organisations no longer have the luxury of calibrated knowledge management journeys that guide us on the path from data to information to knowledge and wisdom
Three years ago, the digitisation of business processes and the exploration of social media, mobility, cloud computing and business intelligence was seen as the stuff winning organisations had in their DNA. Two years ago, the leading companies in every sector had already jumped the first few hurdles and were experimenting with big data, data visualisation and predictive analytics to meet the projected demands of all stakeholders better, faster and cheaper. In the last year or so, digital has truly become mainstream with most CXOs getting very comfortable with technology, engaging in design thinking and new customer journey management and embarking on major business process reengineering programmes to truly leverage the power of both technology and data. So, what is the next frontier for the leaders?
The frontier is the data-driven organisation. In today’s highly competitive world, the success of any business is based on its ability to truly collaborate with IT to identify all possible internal and external data sources, build collaborative platforms that permit creative exploitation and exploration of all available data and content, analyse trends and patterns that emerge through this exploration to develop insights and use this intelligence across the enterprise to forecast, predict and prescribe meaningful approaches to satisfy every stakeholder.
California-based Systech, a boutique firm that specialises in advanced analytics has developed a progressive model for its Fortune 100 clients, which is also being used today by innovative firms in India and Asia. Calling it the essential transition from the traditional reactive “sense and respond” model to a much more pro-active “predict and act” approach, the firm has developed a unique iterative model with clients where the raw data from multiple sources is extracted, transactional reports and queries are facilitated and traditional descriptive analytics facilitated with dashboards and scorecards and then diagnostics provided with advanced visualisation and alerts to facilitate management decision-making.
The breakaway data-driven opportunities start at this point, where most organisations feel that they have done whatever is necessary to exploit data and analytics. Organisations need to mine deeper into the data to explore new insights and use statistical and modelling tools to predict stakeholder behaviour in different market conditions. And then the big move from “what could happen” to “what should happen” as machine learning and artificial intelligence get deployed to move into the prescriptive domain. Cognitive computing is the name of the game today and its use truly brings data to life for the benefit of the organisation.
Take the case of a well-known manufacturing organisation which is taking a leaf out of the advanced data science models of financial services and retail firms and building a totally data-driven organisation. It boasts a fully wired up shop floor, data from CNC machines interacting with a constant feed from IoT sensors populating data lakes and an enterprise data warehouse and machine learning driven automation enabling predictive maintenance, self-healing machines and IoT analytics for production and maintenance managers. Add to this the total integration with the enterprise resource planning systems of the company and customer and supply chain analytics make the entire operations of the company transparent and truly data integrated. Many organisations eyeing Industry 4.0 would do well to approach cyber-physical transformation this way.
So, what really is the competitive advantage of becoming a data-driven organisation? There can be both optimisation and transformative benefits depending on the changes the organisation is prepared to undertake and implement. At the optimisation level, having a better handle on data and precision analytics enables a 360-degree view of the customer, precision in marketing campaigns, analysis of competitor strategies and success and a better approach to all stakeholders within and outside the organisation. A case in point is an insurance firm in Africa that has now launched its own wellness center chain and is helping the customer to stay healthy by tracking diet, fitness levels and recommending health regimes. This not only anticipates insurance needs, it also builds customer loyalty and it is no wonder then that this model is being taken to other parts of the world as well.
There is no better example of transformation than Ant Financials, an offshoot of Alibaba that has very quickly become the most highly valued start-up in the world with the last $10 billion funding round pegging its value at a $150 billion! Here is a truly data-driven organisation built to monetise every possible data source about the customer. Ant has access to Alibaba's vast merchant and customer data and provides targeted solutions for financial services, insurance, wealth management, payments and credit. Apart from this, it also offers low-cost microproducts like merchandise returning insurance to Alibaba’s captive audience, yielding 37.5 per cent of its pre-tax profits to Alibaba for this data access! With over 500 million total active users and scaling rapidly, companies like Ant truly demonstrate the potential of data for building entirely new businesses.
In an increasingly competitive world, organisations no longer have the luxury of calibrated knowledge management journeys that guide us on the path from data to information to knowledge and wisdom. Capturing the power of data and using it for business advantage holds the key to competitive advantage — for firms, industries and nations!
The opportunity for smaller tech firms
For many such firms, it may be feasible to continue to focus on conventional technologies; for the more
ambitious, there is an opportunity to morph into a full-capability digital transformer
Digital acceleration is the need of the day for all medium and large corporations worldwide and the surge in demand for digital solutions and services shows no signs of abating in the near term. A full strength digital offerings set is the biggest
opportunity for digital product, platform and services providers in India and worldwide with the consequent imperative to build capabilities and offerings which can help their customers service their own customers better.
In the first flush of results declared by the IT majors at the end of the first quarter of the current fiscal, it is becoming apparent that the period of re-adjustment to different buyer groups, shorter and smaller contracts and higher levels of flexibility to execute digital contracts, is being mastered and the growth numbers are beginning to move from the zone of worry to respectability and hopefully by the fourth quarter back to the teens in terms of percentage growth.
The road ahead seems clear enough for the billion-dollar club and while a few may get dragged down by their
legacy or inability to add the design thinking, customer behaviour and user experience skills needed to compete
successfully in the changing market, Indian majors are nimble enough to follow the tracks laid by Accenture,
Globant and some of the Big Four and must transition to a new model for future success. Our experience at 5F
World and Kalzoom working with some of the leaders in management consulting and private equity and serving
both large services and cross-border mid-tier digital companies have shown that organisations need three
capabilities to succeed and scale in this new world:
●
A strategy which encompasses full-stack digital solutions capability from user experience design to SMAC to IoT and cyber-security and a marketing and sales capability to sell to the C-suite.
● Managers and consultants fully conversant with digital and armed with specialist skills in one of the core tracks of digital technology.
● Career development, learning, mentoring and community platforms to keep sales and delivery folks continually updated with new developments in the digital world.
The question that inevitably comes up is what is the future of the smaller firms that have competed in the past by being a
nimble and often a lower cost alternative to the large firms for dual shore applications and infrastructure development and support.
On last count, there were over eighty technology services firms headquartered in India with revenues between one and five billion rupees and if one adds to that firms of a similar size headquartered in the USA and English-speaking Europe, there are probably over three hundred firms competing for their share of the digital pie.
For many of these firms, it may be feasible to continue to focus on conventional technologies with a cloud orientation, develop skills in implementation of e-commerce packages and continue to be the second or third choice for digital development and support dollars. But for the more ambitious, the opportunity exists to morph into a full capabilities digital transformer firm, with name recognition in their chosen segment. Speaking with firms who have undertaken this transformation or are planning to make it happen in this year, the following approach seems to be working which could be considered by most CEOs who would like their firm to emerge as the success stories of the new world:
● Candid third party assessment of projects undertaken and intellectual property created by the firm with a
view to identifying a domain and a set of capabilities where there are distinctive capabilities.
● Assessment of organisation readiness in strategy, structure, culture, technical and marketing capabilities for the new challenge.
● Comprehensive strategy development with workshops and definition of capabilities to be enhanced or developed, ways of partnering and selling to garner new business and expand footprint in existing accounts.
● Identifying avenues for organic as well acquisition led expansion in core markets and carefully chosen new geographies.
● Conceptualisation of digital platforms to be created and products to be reengineered with multi-tenancy options and AI capabilities.
● Digital bootcamp workshops for all technical and sales people to increase the level of knowledge of digital and the applications clients are envisaging to get closer to their own customer needs.
● Allotting each member of technical staff to two or three of the nine digital tracks and providing intense training to create competence and capability.
● Identifying the career tracks for the technical team members and installing a customised learning platform for ongoing learning, mentoring and community participation.
● Taking stock of progress on a milestone basis and identifying ongoing steps to take the organisation further on the path to digital success, doubling revenues in three years and tripling in five years.
Success in the exciting word of digital is not a pipe dream for any firm, whatever be its size if it is committed to
defining and sharpening its value proposition and making a concerted effort to grab opportunity share. May the
most hungry and prepared firms win!
Industry 4.0: Digitising the shop floor
The rapid advances in Industry 4.0 technologies and the installation of fully integrated cyber-physical
systems on the shop floor have enabled smart manufacturing to become a reality
One of the most powerful visuals I have seen of a fully
automated shop floor with flexible manufacturing
systems, robots and total flow manufacturing
implemented is a dark screen with a small circle of light.
One of the most intriguing visuals is a picture of a
Japanese factory operating at full capacity in the night
shift. The rapid advances in Industry 4.0 technologies
and the installation of fully integrated cyber-physical
systems on the shop floor have enabled smart
manufacturing with minimal human intervention to
become a reality in many factories worldwide and Indian
firms are striving to catch up.
In the past six months and more, digitised shop floors
have become the focus of attention and investment in
many manufacturing firms with even boutique
consulting and IoT firms like Kalzoom and Altizon struggling to cope with the escalating demand for audits, proofof-
concept programmes and full-scale implementation. Some cases of well-managed Industry 4.0 projects will bring
the opportunities to light.
A leading manufacturer of auto-components in India has embarked on an ambitious agenda to improve throughput
of their assembly line and plant by tracking overall equipment effectiveness automatically in real time and make
measurement metrics available to shop floor planners for plant optimisation. The capture of significant shop floor
events on a cloud platform and the resultant visibility of plant utilisation enables production scheduling decisions to
be taken instantaneously. Within months, the firm has reported a 20 per cent improvement in plant utilisation and
recovered the opex as well as training costs incurred.
A construction
equipment
manufacturing
company in
North America
that has already
automated its
manufacturing
lines, deployed
PLCs
(programmable
logic controllers)
and established
predictive maintenance
protocols was
suffering unplanned downtime and low line throughput because of the inability to analyse the volumes of data emerging from
the floor and make real time decisions. A comprehensive IoT solution with individual dashboards for all production
planners and shop schedulers has enabled real time alerts and notifications with prescriptive analytics to be
deployed. The company reports a 12 per cent improvement in line throughput enabled by data insights and real-time
visibility onto assemble line performance. With IoT built on existing automation the real investment has been in
creating actionable insights!
Another data and insights success story is that of a metals forging leader with investments in multiple SCADA
(supervisory control and data acquisition) systems but the inability to connect various heterogenous machines
resulting in mountains of data silos that have not been united. The design of a central data monitoring system that
captures data flows and integrates for anytime anywhere analysis has enabled shop floor and ERP systems to be
seamlessly connected and production monitoring and corrective action to be done real time.
The realised benefits of Industry 4.0 on the shop floor have been many and companies are reporting high doubledigit
percentage improvements — reduction in machine downtime, inventory holdings, cost of quality, maintenance
costs and time to market, increases in forecasting accuracy and plant productivity and on a softer note, substantial
increase in shop floor supervisor capabilities and morale. The quick wins obtained through improvement in
operating efficiencies are now being expanded in many progressive factories through investigation of artificial
intelligence and machine learning capabilities to move from descriptive analysis to insight-based predictions and
prescriptive transformations of the manufacturing process.
In simple terms, smart manufacturing and the use of the industrial internet to transform “Make in India” can be
achieved and is being done by the early pioneers through a simple four phase implementation approach. The first
phase should be a simple assessment of where you are — in data gathering and analysis, the maturity of the supplier
eco-system and the connectedness of the machines on the shop floor and the shop floor itself with the overall
enterprise resource planning process. This will involve doing a detailed capability analysis of machine inventory
and associated hardware, and also PLCs, SCADA and all data collection devices. Having a documented process
follows with data capture points through the process and current key performance indicators with baseline data will
help in identifying shortfall areas. An understanding of the communications network with its current throughput and
the effectiveness of inventory management, ERP and manufacturing execution systems will be the end of this phase.
The second phase involves collection of production and maintenance data and action optimisation through
meaningful analytics, the third is more developing a data philosophy that uses real time data and timely analytics for
decision-making at and beyond the factory floor. Finally, investing in organisational change and recruiting
developing and retaining the right talent with a razor-sharp focus on the changing needs of B2B and B2C customers
is a must for sustained success in an Industry 4.0 environment. Approaching these phases systematically will ease
the Industry 4.0 journey.
Which brings us back to the picture at the beginning of this column and the obvious question — what was that little
circle of light in a totally dark shop floor? The lone human in the factory, a security guard taking a round with a
small battery torch, ensuring that all is well in the digital world of tomorrow. One wonders if this is what
automation can do to human employment.
Digital acceleration: Moving to fifth gear
Building data lakes and providing the fishing rods needed for users to move from descriptive analytics to
machine learning and prescriptive analytics is the most important step a company takes
Digital transformation is no longer just a dream, it’s an
idea whose time has come. Every company competing in
virtually every segment in India and abroad has
embarked on a digital journey and while some are happy
with the progress, many are still struggling to see the
true benefits after the initial glamour of social, mobile
and cloud applications fades away or becomes
mainstream. The pressure points are many but probably
the most common problem has been the fallacy of
viewing digital as a technology pursuit rather than an allencompassing
change in the value offered by the
company to its stakeholders.
At many leadership sessions on digital and its
implementations through Industry 4.0 in the
manufacturing sector, one question comes up: With a
few years of digital experimentation having been completed worldwide, is there now a gold standard methodology
to be followed that guarantees success? Our work with corporations in the US, Europe, Africa and even India shows
that there can never be a one-size-fits-all approach, but there certainly are some truisms that can be adopted to
ensure that the goal to get digital transformation right the first or second time can be realised. Let us encapsulate this
in a five-step approach.
The way to start is to make a conscious effort to re-imagine stakeholder journeys, by researching not just customers
and employees who have begun to embrace digital in their lives but also the emerging millennial and digital natives
whose comfort with technology and familiarity with multi-channel shopping experiences get them to demand the
same ease of access and digital touchpoints from traditional businesses as they do from e-commerce unicorns.
Design thinking workshops, hackathons within the organisation and behavioural scientists mapping stakeholder
aspirations and actions are all useful actions that can get the digital journey off to a good start.
Next is the
redesign and
reengineering of
business
processes around
the new journey
maps to ensure
that adequate
digital touch
points are
available to all
stakeholders.
Here digital strategists would
do well to realise
the symbiotic
relationship
between new
technologies and
new processes
and ensure that it
is stakeholder
delight that
determines the
choice of new
digitised
processes rather
than the push of
new technologies
for forcible
adoption.
Artificial
intelligence,
virtual reality,
voice bots are all
exciting for the
tech crowd but
an organisation
seeking
sustainable
change must consider the validity of each idea and ensure it finds a logical place in the new platform and process architecture for
the future.
Building data lakes and providing the fishing rods needed for users to move from descriptive analytics and
historical business intelligence to machine learning and the high opportunity space of predictive and prescriptive
analytics is arguably the most important step the company takes in its journey and is an area where every
management and technology consultant will have a point of view. It is wise here to choose experience over hype
and build a data management and analytics plan that will sustain over a long period. An important decision point
here is also the positioning of the analytics function within the company and all factors — capabilities, authority
and responsibility levels should be considered before arriving at a decision.
A key commitment area for every firm is the investment in skills and culture building. From the board of directors
to the latest entrant, involvement in the digital processes and participating in new ideas and designs ensure longterm
adoption of the new processes of the digitally accelerated firm. And this means not just general awareness
building but the development of true digital champions transcending roles and hierarchical positions that spread the
buzz of digital through the organisation. Moving learning to digital platforms, enabling experimentation with new
digital technologies and bringing high quality digital experiences to the workplace are all essential aspects of this.
Finally, it is important for every organisation as it proceeds from the early stages of the journey to cruising in fifth
gear to build an innovation ecosystem that constantly tracks new technologies and ideas that have relevance for the
firm. One of the most successful Indian companies in the financial services space has a tracker on developments not
just in Silicon Valley and Bengaluru but also other digital hotspots like Tel Aviv, Singapore and London and is
willing to offer a proof of concept opportunity to young firms who benefit from the opportunity and add value to the
thinking of the firm as it constantly seeks to gain competitive advantage.
The relative importance of the five elements mentioned here — customer journeys, process digitisation, data and
analytics, culture building and innovation ecosystem will vary according to industry but in little or large measure
must be addressed by every organisation. To use an old adage, Rome was not built in a day and the thoughtful phasing of these initiatives can truly determine the pace of the journey and the benefits that can accrue in every
stage of the transformation. May we continue to live in interesting times and see digital success.
From start-up to scale-up: It's happening
There are new innovations emerging in the Indian start-up ecosystem that will find purchase not just in this
country but globally
The start-up movement in India has gone through its ups
and downs, which is not an unusual phenomenon, given
the economic turbulence that has characterised global
economies in the last two years and more. The initial
fascination with B2C commerce that led thousands of
entrepreneurs to throw their hats into the ring has
flagged a little but, in its wake, there is a spurt of
entrepreneurial activity across almost all sectors. With
both domestic and global focus across the start-up
spectrum that augurs well for the future, the new energy
is a welcome renaissance and will generate a true
entrepreneurial ecosystem in the country that will be a
spur to get India to a sustained 10 per cent growth in the
near future.
Nothing succeeds like success and today there are
enough success stories that reflect the confidence that start-up India is well on its way to find its own place in the
sun. Disruptive companies can quickly grab market share from incumbents and also get disproportionate
opportunity share in new fields. Examples of entrepreneurial firms in the first category are ORO Wealth and Skills
Alpha. ORO is addressing the massive opportunity in the fast-growing Indian wealth management space and has
built an online platform that enables retail investors and offline intermediaries to access zero-commission products
and high-quality wealth management services. The company is attracting both retail and B2B investors at a fast clip.
Skills Alpha is another platform disruptor that has found its space in the sun between traditional human resource
management information systems, learning management systems and community platforms through a unique AIenabled
algorithm set that enables learners to map out career options, plan and access the skills needed to build and
enhance capabilities and become part of learner communities and participate in mentoring and career development.
After generating initial traction in the B2B2C corporate segment, the company has launched versions for colleges
and the social sector and is on track to have thousands of young enthusiasts on its platform from each of these
categories.
In the new opportunity category, there are quite a few leaders emerging in every segment. One such space is that of
unmanned aerial systems in India where a 10-year-old company, ideaForge, has been making waves, developing
vehicles for surveillance, reconnaissance, imagery and industrial applications. With their ability to target specific
applications, including search and rescue the company has operated at high EBIDTA and shown great ability to
attract investment. In a completely different segment, the high growth one of consumer gaming, one company
Gamezop has built a network of instantly playable games, targeting the Indian mobile gaming market that is
expected to cross a billion dollars in value by 2020. Gamezop is able to aggregate high quality HTML5 games from
top studios, optimise across devices, browsers and operating systems and distribute across apps on phone from
multiple telcos. The company is benefiting from its ability to play on the browser and minimise apps downloads and
use of phone memory and the fast-growing user adoption of more and more powerful phones.
There are also new innovations emerging in the Indian start-up ecosystem that will find purchase not just in this
country but globally. An exemplar in this area is WhatFix which is addressing the $ 3 billion market for internal
training in mid and large enterprises on popular software platforms like Salesforce, Service Now, Success Factors
and also training on large rollouts of custom-built applications for these enterprises. The innovation in their
approach is that they are able to incorporate a Google Maps kind of real time help even as the user is navigating and
using the software and will soon provide predictive support to users for navigating tricky aspects of the software
and prescriptive solutions to problems the user may encounter. This company and indeed all of the hundreds of
emerging success stories we are seeing through our research efforts at 5F World and Kalzoom Advisors demonstrate
three new characteristics of the Indian entrepreneur, the first is a passion to find a road less travelled and venture out
without fear of navigating muddy and unknown waters. The second is the willingness to learn from examples
anywhere in the world and pivot their models to attack emergent opportunities and hitherto unexplored segments.
And third and most important is the complete lack of fear of failure and the willingness to fail fast when needed and
move on to explore a different route to success. A couple of years ago, many including this author would point out
that this was a Silicon Valley and Israeli entrepreneurial trait that was missing in Indian entrepreneurs, spoilt by
relatively easy success in the services segment but now one can proudly say that Indian product and innovation
entrepreneurs are coming of age.
The ecosystem is being boosted by the opportunities in the hundred smart cities, health care and agriculture and
even in the integration of artisan networks across the country. Global research by McKinsey & Co points to several
cases of cities creating entrepreneurial momentum, which could provide a wealth of learning for smart city start-up
hub creation in creative cities like Pune, Jaipur, Bhubaneswar, Nagpur and many others in the country. Tel Aviv,
Singapore and Dubai are exemplars for supporting start-ups with single window access through friendly web sites
and government to all procedures for incorporation, getting data and facilities and incorporating firms in the start-up
zones. San Francisco provides a start-up in residence programme that directly links start-up with the government to
eliminate pain points and London goes a step further with the creation of a co-investment fund with £50 million
commitment from the mayor’s office and over a hundred million pounds from private sector to jointly create over
2500 jobs through more than a hundred companies. Berlin hosts an open-air tech festival, which is one of the
largest entrepreneurial events in the world. The encouraging sign in India is that the government has shown
clairvoyance in easing the environment for start-ups to set up, grow and succeed. There are multiple schemes in
place and every effort has been made to make it easy for entrepreneurs to succeed. The opportunity exists, the
chocks are off and this is a great time for innovation to take flight in India.
Social entrepreneurs can ease job woes
With the right mix of capital, government support and individual fervour, the sky is the limit for social
entrepreneurship
The Indian Institutes of Technology have emerged as a
paragon of engineering excellence in India and the early
colleges — IIT Bombay, Madras, Kharagpur, Delhi and
Kanpur — have provided a large proportion of the
brainpower that today runs corporate India and has even
created some of the biggest success stories in banking,
manufacturing consulting and of course technology in
the West. However, in recent times it is the forays made
by its alumni in the social sector that has created waves
and augurs well for a new renaissance of job creation
and the expansion of sustainable livelihoods in the
country, which all of us could watch and support.
An early success story of many distinguished IIT alumni
has been the creation of the Pan IIT Reach for India
(PARFI) initiative that has improvised on the somewhat
lacklustre ITI model and created centres of excellence for industry to skill and employ worthy blue-collar
workforce. The first centre at Bundu in Jharkhand has demonstrated that mindset change and discipline is as
important to provide a commitment to good work as the skills training that is imparted to local youth to make them
worthy factory employees. The model is now expanding through a joint venture with the state government and is
also being taken to other states through corporate funders such as Crompton Greaves and the assistance of the
Million Jobs Mission of Social Venture Partners India.
A more recent innovation has been the launch of IITians for Initiating India’s Transformation (IIT-IIT) that has
researched local social models across India and identified six exemplars that have the potential to scale nationally,
each with the potential to transform India in myriad different ways. Cases in point are Bangla Natak, Educate Girls
and the Skills Lighthouses initiative of Pune City Connect. Bangla Natak, with no external funds, has celebrated the
art and culture of West Bengal, brought pride and enhanced earning potential to local talent and is now spreading to
other parts of the country. Educate Girls in Rajasthan, with the support of the local district collector and
philanthropic funding, has developed a model for ensuring equal future participation of genders in the workforce.
And Pune City Connect has set up multiple lighthouses in a unique public-private partnership with the municipal
corporation and the active support of over 40 top corporate funders, employers and entrepreneurship development
agencies, which is leading thousands of young folks from the city slum communities to livelihoods, the ability to
manage their own future learning and become good members of their community and society.
One common thread that runs through many of these stories and also a majority of the 40-plus social enterprises and
non-profits such as SEWA, Mann Deshi, Vrutti and Youth4Jobs mentored by SVP India is the spirit of social
entrepreneurship demonstrated in abundance by the passionate men and women who have built these institutions
and are now rapidly expanding them. Prime Minister Modi rightly exhorted the youth of the country sometime ago
to be job creators rather than job seekers and while the heady world of artificial intelligence and e-commerce
startups may evoke dollar wealth dreams in many, the impact that social entrepreneurship can have on the future of
the country is beginning to dawn on the consciousness of many well-meaning people in the country. Other worthy
NGOs such as Digital Empowerment Foundation have stepped up too, partnering with local and global
multinationals to encourage internet and local service entrepreneurs in rural India. The opportunities to build scale
and employment potential are infinite and it is good that alumni of some of our premier institutions such as the IITs
and IIMs are not only mentoring but also funding and in many cases jumping to run social enterprises.
There is a parallel boom needed in the country to make impact investing an important and vibrant part of our scaling
vision. After an early drought of capital, good entrepreneurs eyeing wealth creation are now being chased by angels,
incubators, accelerators, pre-VC funds, VCs and private equity firms and will hopefully create the next million jobs
in the country. But the real multiplier will come if patient capital of a billion dollars or more is put to work
alongside equal amounts from philanthropists and CSR monies to build social entrepreneurs in the country.
Globally, the amount of money invested in global causes as impact funds crossed two hundred billion dollars last
year. This offers viable options for investors to advance social and environmental causes through investments that
also produce financial returns. In India, impact investing crossed a billion dollars in 2015 and clearly has a lot of
headroom to grow and enable social entrepreneurs who can create ten million livelihoods every year to have the
capital they need to flourish. Opportunities abound — in education, skills, health care, artisan work, tourism, fine
arts and governance — and with the right mix of capital, government support and entrepreneurial fervour, the sky is
the limit for the potential of social entrepreneurship in our country.
A new race for leadership
It will need a concerted effort by the government, academia, research institutions, industry associations and
industry to make India a force to reckon with in AI-led growth and enable manufacturing
There are many who believe that China, with its
burgeoning costs, is losing out in outsourced
manufacturing to more nimble and cheaper competitors
such as Vietnam and Thailand and there has been hope
that with some concerted investments in the right areas,
India too will finally find its place in the global
manufacturing sun. However, the time for projecting
India’s pool of engineering manpower and ability to do
labour-intensive manufacturing at scale and quality is
now over and the baton of leadership will pass to those
who are truly able to design and build factories of the
future, powered by cyber-physical concepts, machine
learning and artificial intelligence (AI).
Manufacturing firms of the future will use predictive
analytics to estimate demand for each product category
based on demand and environment patterns and also develop new products through generative design principles on
an ongoing basis to satisfy demand of discerning customers. Virtual agents will interface between information
systems and production processes and feed fully automated factories with planning, materials and process inputs on
a real-time basis. Materials handling, location of parts and warehouse management and utilisation optimisation with
digital aids such as augmented and virtual reality are commonplace today. The real cutting edge will be provided by
AI applied to quality defect management through image recognition, process quality prediction and large-scale
prescriptive approaches, failure predictions and predictive maintenance including support of self-healing machines.
The future is all about maximising throughput with consistent high quality and redefined role of engineering talent
in manufacturing.
Jabil, one of the world’s leading designers of digital factories with several successful implementations in Asia and
Latin America, enables real-time predictive analytics for its customers by connecting equipment, sensors and people
and claims an ever-increasing accuracy level for predicting early equipment and process failure leading to energy,
scrap and rework savings and decrease in manufacturing cycle time. Companies such as GE and Siemens, both
pioneers in digital manufacturing, have reported success with the use of AI — GE through the deployment of digital
twins, which models and tracks the state of the engine and provides continuous analytics and predictive
maintenance suggestions and Siemens through a combination of AI with neural technologies in its Gas Turbine
Autonomous Controller Optimizer which ensures that every gas turbine has over 500 sensors continuously
monitoring temperature, pressure, stress and other variables enabling the neural model to alter the distribution of
fuel in the turbine’s burners on a dynamic basis.
Recent studies
by PW and BCG
place AI and
Advanced
Analytics at the manufacturing
with recent
trends moving
beyond
traditional
inventory
optimisation,
maintenance and
data security
usage to
intelligent
factory
operations, the
application of
digital twins and
human robotics
collaborative
ecosystems.
They predict that
humans in the
future factory
will be entrusted
with the higherlevel
tasks of
programming,
maintaining and coordinating
robotic
operations. With AI driving advanced predictive and prescriptive analytics and replacing SMAC (Social Media, Mobility, Cloud and
Analytics) as the core of digital transformation, it is predicted that AI will also be a valuable tool outside the factory,
enabling continuous logistics and supply chain monitoring, providing route optimisation for inward and outward
flow of materials and finished products, tracking customer expectations and emotional states through voice analysis
at service call centres and providing personalised product recommendations for customers based on deep learning of
their previous responses and social media footprint. The use of AI and advanced analytics is limited only by human
imagination as newer customer journeys evolve and design thinking enables early anticipation of every need.
The good news is that the adoption of digital technologies in Indian manufacturing firms has been placed by recent
research at 27 per cent against a global digitisation level of 33 per cent and is expected to cross 60 per cent in the
next five years. It is also heartening that thanks to an increasing awareness of Industry 4.0, leading industry
associations such as the Confederation of Indian Industry are making smart manufacturing the core of their agenda,
and there is a proliferation of scaling start-ups in the Internet of things and robotics space even Indian SMEs are
placing digital and Industry 4.0 at the core of their agenda for the future. Small-scale solutions are being piloted and
investment in automation and analytics are beginning to bear fruit.
However, a major commitment at national policy making level and also across industry sectors towards AI is
needed to position India as a true leader in new manufacturing solutions. And the competition is already planning
this on a gargantuan scale. China has committed to add over $150 billion to its economy through AI by 2030 and
many announcements of magnitude have been made including an AI support fund of $5 billion in Tianjin and the
Beijing municipal government declaring plans for a $2.2 billion AI development park. The research coming out of
China rivals the US in quantity and quality and it will need a concerted effort by the government, academia,
research institutions, industry associations and industry to make India a force to reckon with in AI-led growth and
enable the manufacturing sector to finally stake its claim to global leadership.
Focus or pivot: A growth dilemma
Stay nimble and nurture the capability to diversify or even transform the business model to capitalise on new
opportunities in the marketplace
Conventional wisdom would suggest that any
organisation that starts in a competitive demand
environment needs to have done its homework and
chosen a product or service strategy that will stand the
test of time. Even more important, the founder and the
team need to stay focused on the vision and avoid any
distractions that can make the company and its growth
stray from the defined path. The story of Indian
entrepreneurs in the past has often been a combination of
building large corporations in an area where domestic
demand was either growing or protected and using
related and, in some cases, unrelated diversifications to
created large conglomerates. The super success story of
entrepreneurs in the eighties and nineties like Narayana
Murthy also led one to believe that in an area where
competitive advantage was defensible due to factors like
global wage asymmetry and better process adherence like IT services, the path to success was fairly easy if one
focused on serving all customer needs through astute marketing and excellent delivery.
However in the last 20 years and more, the number of entrepreneurial failures — to build a world beater product
business or scale a services business after many years of following a tried and tested model, has raised fundamental
questions in the minds of entrepreneurs as well as angel investors, venture capitalists and even business school
academics. Does success come to those who remain unwavering in their pursuit of the original strategy or is the
willingness and speed of pivoting to a new strategy the key to success in a fast changing world?
There is no better place to find answers to this question than in the history of the FANG (Facebook, Amazon,
Netflix and Google) quartet and the supremo of all success stories in this lot, Amazon. When the legendary founder
Jeff Bezos chose in the nineties to build an online book store, even he would not have imagined that a quarter
century later, Amazon would offer the widest range of product categories, maintain a third party marketplace for
external retailers, offer software and cloud storage services, its own range of hardware products, online video
streaming and Amazon Prime, a membership programme that is taking the world by a storm and helping Amazon to
compete with most of its peers, Apple, eBay, Google etc. and become one of the highest valued companies in the
world.
Indian
entrepreneurs
might scoff at
this example and
say an Amazon
happens once in
a lifetime and the
opportunities available to
Bezos in the US
or Jack Ma in
China are just
not there in
India, but the
reality is that
Amazon and
Alibaba have
become global
success stories
by choosing the
road less
travelled and
reinventing
popular wisdom
to overcome
multiple
obstacles in their
path and still
succeed. The
start of the
Amazon story
from a garage in
Seattle with 10
developers
working for a
year to launch
the platform in
1995 is no
different from
the thousands of
companies in Koramangala in Bengaluru, Baner in Pune or Gurugram, Chennai, Hyderabad or anywhere in India.
Bezos’ initial focus on making online commerce easy for traditional book buyers as well as first time online
commerce users and its natural extension to include reviewers and recommenders could have been predictable but
the story gets interesting after Amazon raised significant capital through its IPO in the summer of 1997. For the first
year, Amazon stayed focused on its initial online bookselling business but made its first move outside the category
in 1998 to online videos, electronics and toys and also opened its portals to third-party retailers and started opening
distribution centres across the US and beyond.
While Amazon received its initial impetus in the internet boom years at the turn of the century, the company’s
fortunes also turned when the internet bust occurred with the value of its equity deals with other category leaders
declining and a few analysts even predicting the demise of the company. In 2001, the formalisation of a strategy
process, the first significant layoffs and a thorough clean-up of their products enabled the company to become more
nimble and grow. With the launch of Prime, Amazon could well have decided to ride the wave of renewed growth
and mainstream adoption of online buying to stay focused on the marketplace business. But this is what
differentiates a Bezos, Ma or Musk from the ordinary entrepreneur. Ma did it with Alipay and Ant, Musk with
SpaceX and Bezos has diversified in quick succession into Amazon Web Services, Unbox, Kindle, Fire, Fire Phone
and Echo. Some of these have fallen by the wayside but the profitable growth of Amazon and AWS and some of the
products have ensured that Amazon has stayed ahead.
The lesson for many wannabe Bezoses and Mas in India in India is simple: Keep an open mind to chase large new
opportunities and even if the first hurdle has been crossed, to build a profitable and growing business, ensure that
the organisation stays nimble and is willing and capable of diversifying or even transforming its business model to
capitalise on new opportunities in the marketplace. Entrepreneurship in India is evolving and the glory days lie
ahead!
A place in the sun for digital startups
Digital transformation for many companies in India and also many sectors and companies worldwide has often stopped short of being truly
transformational. For a couple of years, the debate over cyber-security if applications, infrastructure and data moved from the corporate premises to the cloud obfuscated the real cost and flexibility advantages of cloud transitions. And digital readiness was often equated to the number and velocity of mobile apps the corporate IT teams were able to buy and build to enable the company to appear digital in its processes and services.
Mckinsey & Co, in a warning bell sounded for the IT Services industry a few years ago, had predicted that digital attackers, focused on digital solutions that challenged long held dogmas and beliefs would make the services of many incumbents irrelevant or outdates and in many client situations, particularly financial services and retail and increasingly manufacturing and healthcare, the role of start-up “attacker” solutions is increasing, skillfully integrated into the process fabric of the organisation by digital consulting firms that understand both the domain and the digital opportunity.
A couple of examples of such attackers will make the opportunity clear. One major manufacturing company in Western India has already implemented two start-up solutions, Cloud IOT to transform information gathered from devices, sensors and information systems from the shop floor and even after the capital equipment ids installed at the customer site and Cloud Beat which tracks the movement of the product through the demand chain of distributors and dealers through to the end customer. These solutions are putting predictive power in the hands of field service engineers and product marketeers and enabling opportunoiioty share to be maximized for the company and its products.
In the HR space, for organisations across sectors like Manufacturing, Banking, Insurance , Hospitality and IT Services, digital start-ups are challenging larger HR product suites by relegating them to “Systems of Record” status while creating new platforms that enable systems of insight and engagement to be created and deployed. Skills Alpha, one of the newest start-ups from the 5F World stable of digital solutions has found the perfect solution to the problem of motivating millions of millennials who are stuck in seemingly “dead-end” jobs through extensive use of artificial intelligence cognitive and adaptive learning methodologies. Skills Alpha is a platform that uses the best of engagement tools to provide a truly adaptive learning environment for the young learner who is engaged by a “bot” from the minute she gets on to the platform, which enables her to assess her own aspirations and goals, look at alternative learning and career paths and get thoroughly engaged on a journey of content discovery, opportunity exploration and learning throughout her tenure in the organisation.
A sound argument exists for a new generation of start-ups focused on Business to Business solutions Cloud Beat and Cloud IOT or in the case of Skills Alpha, on Business to Business to Consumer ideas. Across a variety of horizontal functions like learning, sales productivity improvement, financial skills and vertical domain areas like loan management, actuarial services and digital community development and deployment in organisations, the discussion has moved from custom built or packages software to multi-tenant platforms and micro-services that can be incorporated in the business and technology architecture of future organisations. Starts-ups powered by mastery of new technologies and research into trends in key business and industry sectors are mastering the new space of digital platform engineering, forcing traditional vendors to ambidextrously look for new innovative platform solutions to take to market while continuing to incrementally change internal and external business processes and systems in client organisations.
On the main theme of digital transformation itself, it is time for businesses and CXOs to look beyond anecdotal evidence of social media , mobile apps and digital marketing success stories reported by their teams and demand true transformation. This will happen through completely recrafting the digital jorneys of customers, supply and demand chain partners and employees and will need, in large measure, deliberate investments in process reengineering, culture and mind shift changes to support the array of digital technologies that are available for deployment. In many large corporations, the digital imperative and the opportunities to partner extensively and thoughtfully with start-ups to deliver the transformation have become topics for board room discussion – not a month too soon for that !
Robotic Process Automation - Changing Jobs Forever
The three big challenges for all global business corporations today are protectionism, digital transformation and automation. How the forces of protectionism play out will be determined by the rigor and scope of visa restrictions that are already in play in the USA, Europe Singapore and parts of the Arab world and digital transformation is a catharsis that most companies are addressing, some with positive “winner takes all” enthusiasm and others with trepidation, wondering if they can catch up with the leaders. But what is most nerve wracking, not just for firm level strategists but also for industry associations and Governments seeking to protect and boost jobs is the rapid advance in Artificial Intelligence and automation – through robotics and shop floor automation in manufacturing and through Robotic Process Automation (RPA) in the automation of knowledge processes.
Most services organisations, ranging from Government to Financial Services to IT Services and Business Process Management have many functions where there are a large number of repetitive transactions. RPA has the power to save time and money and also minimize the cost of rework and inaccuracies by automating and enhancing the efficiency of these transactions on a large scale. It may not be an exaggeration to say that in the next three years, in India itself a possible million jobs or more are at risk and planners will have to work at redeployment to higher value adding work to avoid a potential jobs crisis.
The Institute for Robotic Process Automation and Artificial Intelligence has defined RPA as the application of technology that allows employees in a company to configure computer software or a “robot” to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems. “Just as industrial robots are remaking the manufacturing industry by creating higher production rates and improved quality, RPA “robots” are revolutionizing the way we think about and administer business processes, IT support processes, workflow processes, remote infrastructure and back-office work” says the institute.
A classic example of RPA lies in the way Robotic Advisory services will work in the near future. A scenario built by a research group at McKinsey & Co compares the present cumbersome process to what it could become. The Regional Manager of the Investment Advisory firms most of us deal with typically gets investment ideas from the CIO and defines an investment opportunity that fits the client’s appetite. After trying to call, he sends a recommendation mail or in some places further obsessed with security, sends a formal letter. The letter is ignored for a few days and after some gentle prods, the client calls or mails back with some specific tax queries. After a few more days of internal consultations at the advisory firm, the client and consultant finally confer to take a “Go-No Go” call on the investment idea. With Robotic Advisory, the artificial intelligence and deep learning systems will have the ability to automatically identify the investment opportunity and push it to the smart phone of the client. The client is provided a graphical representation of the impact this investment could have on his portfolio, which piques his interest enough to do a call with a robotic advisor to resolve tax queries. In an exceptional situation, the call could be routed through an Uber-like Expert finding protocol for a quick chat with the nearest available expert anywhere in the world and the decision could be arrived at within ten minutes of initiating the transaction compared to ten days or more in the traditional case. Imagine the efficiency benefits but also give a thought to the number of people who could be replaced!
RPA is fast beginning to find application across a variety of applications in financial services, claims processing in insurance, a whole raft of Government to Citizen interfaces and the entire area of Information Technology support and management services. Automated management of IT infrastructure enables faster process throughput and order of magnitude improvement in the efficiency of service desk operations with self-service becoming the norm rather than the exception. Automation software at the presentation layer provides an attractive user interface that mimics and enhances the rules of erstwhile human interface processes without compromising the existing IT architecture. RPA enables all functionality to be replicated and in some cases enhanced with unlimited capacity to meet variable demand. RPA will expedite back-office tasks in finance, procurement, supply chain management, accounting, customer service and human resources, including data entry, purchase order issuance and all interfaces and better user experiences that demand simultaneous access to large data lakes and multiple contiguous information systems built by the organisation.
To take a final example from the HR and learning space, the IT sector is now engaged with the agenda to re-train two million managers and new entrants in multiple skill streams needed for the new digital world. Since the scale will be beyond the capabilities of traditional training departments, RPA solutions will have to be employed to gauge aptitude, build a learning path and crawl through the multiple content sources available on the internet to stack up learning modules chosen to fit the interest area and learning style of each individual.
Robotic Process Automation is here today and expanding fast. How we leverage the benefits will determine the winners and also-rans of the new digital era for corporations and Governments.
Spreading the joy of doing good
Some years ago, one of India’s best writers and thinkers Gurcharan Das wrote his epic on the Mahabharata epic titled “The difficulty of being good.” Delving deep into the dilemmas of Yuddhisthtar, the book which is a must-read for all social and corporate thinkers brought out in many ways how doing and being good is no easy task in a world where opportunism and expediency lead most people to devious thinking and action. However, today it does appear that the impetus and the opportunities for doing good have become stronger in our country and as a society, we have the possibilities of making significant and enduring changes happen!
Three events in the last few weeks have given me this conviction that there is a true coalition for good happening in various parts of the country which can be tapped. The first was in my own karma bhoomi of Pune where the Social Venture Partners group has now crossed over fifty well-meaning individuals ranging from well-known industrialists to young social workers and college lecturers. The enthusiasm this group possesses is truly contagious and our structure embraces true venture philanthropy principles in a professional yet friendly manner. An active grants search and review committee, a partner nominations and engagement committee and engaged lead partners for each NGO we support with time, money and mentorship ensures that the good intentions all of us have is translated to a sense of purpose and action on the ground. The national board of SVP which is championing the Million Jobs Mission in the country and the global board of SDVP which is making social change happen in multiple countries area all vindications of the theme of spreading goodwill and good societal actions. The second epiphany for me was the popularity that the work of Pune City Connect now enjoys and the eagerness of well-meaning citizens within and outside the city to share in its activities and success. The Young Indians group of CII Pune had invited the Pune Municipal Commissioner and I to share our thoughts on what could be a worthwhile social agenda and have readily agreed to spearhead the engagement processes with various segments of society to ensure wide spread participation in the exciting programs of Skills Lighthouses, Municipal School Transformation, hundred percent digital literacy for Pune and City Transformation support. We can and will make it a city-wide movement.
The third exciting development has been the warm welcome extended to me and the CEO of Pune City Connect Ruchi Mathur in the lovely city of Aurangabad when we visited to explain the progress in the PCC collaboration with PMC in Pune. The Mayor, Deputy Mayor, Standing Committee Chairman, Commissioner, industry leaders and mentors, members of the academic community and civil society listened to our experiences with rapt attention and have committed to make a similar initiative successful in their city. Add to this their interest in projecting the tourism opportunities in that city and we can see an environment of good initiatives leading to great outcomes in that. city this year.
So, what really is happening here? The opportunities for spreading good work are getting created everywhere and there are many causes we can attribute this to. First and foremost is the confidence in strong political leadership that is emerging in all our minds which will provide the space and the freedom to build the inclusive India that is there in all our aspirations. GST, a better enforced tax regime and the accelerating growth of the economy will all provide the “feel good” factor that loosens the purse strings of the rich members of the corporate community and enables more money to flow through to the masses. The social consciousness that campaigns like NDTV’s Behtar India and many others are bringing to all segment of society, particularly young students in our schools and colleges will also ensure that the youth of the country is willing to step out and do good and also raise their voices in support of good movements. And this spirit of collective endeavor can quickly spread and pervade allcorners of our vast country.
I still recall my early school days in the dusty villages of Tatisilwai and Namkum in Bihar (now Jharkhand) where my father, Late Shri Ganapati Natarajan ran a company called Waxpol Industries and spent most of his spare time running a “Seva Kendra” for the underprivileged. My sister and I had the privilege of participating in this initiative throughout our school years and this instilled in us the natural aspiration to do what we could to serve the people and bring every citizen to an active participation level in the village and state. In later years, this encouraged me to start our family foundation the Natarajan Education Society to serve the same objective. Today, with NASSCOM Foundation, Social Venture Partners, Pune City Connect and NES, my social cup of joy is overflowing. Thereby stems the belief that every citizen of the country can and should have the opportunity to participate and make this country the best place for all its citizens.
What do millennials really want ?
I had the privilege in January and February to present some thought provoking research done by our company Skills Alpha on the art and science of motivating millennials in organisations. The IMA, led by Adit Jain and Radha Ahluwalia and possibly one of the most engaging forums for CEOs CFOs and CHROs in the country hosted three workshops with over a hundred heads of HR in Mumbai Delhi and Bengaluru to discuss the research and agree on methods to keep young recruits motivated and engaged in organisations. Some fascinating insights have emerged which is now finding its way into the skilling platforms we are building for key customers in India and abroad.
There are flaws in the approach that most of us over the age of forty or fifty take when we address the new needs of the millennials. The refrain is always “when I was your age” extolling the virtues of hard work with no distractions, loyalty to family and one’s first employers and respect for seniority and authority. And with a few exceptions, most parents of teenagers and new job entrants have a tendency to live out their own unfulfilled ambitions through their children. Many well-meaning and well-off parents are happy to write or at least enhance the college admission essays of their kids and willing to put them on flights to the US (Trump willing) for college and even high school to get them out of the rat race of competitive education in our country. And after doing all this, should they not, they feel, be entitled to feel aggrieved if their children want to deviate from the parental script and strike out on their own path of learning and discovery?
Our research shows that people below the age of thirty-five, the classical category we call millennials are quite happy to be just left alone and do what they really want to do rather than being cajoled, coaxed or coerced to do what somebody else in the family wants them to do. In fact, most elders today would happily praise their own millennial children, nephews and nieces and grandchildren for their bright spirit of questioning and multitude of interests but be unwilling to tolerate this in the office. We tend to forget that most millennials have been brought up in single child or small nuclear families, reasonable pampered and indulged at key points in their growing up. They have been encouraged to have a wide circle of friends, question the status quo in school and college and continually expand their interests and have a variety of experiences. All this leads them to develop a very YOLO view of life (You Only Live Once) and when they enter the work environment, to seek a strong work-life balance and continue to pursue multiple interests and possibly career options.
The experience that my wife Uma and I have had with our own millennial, our daughter Karuna bears out the value of giving the youth of today ample independence and being supportive rather than judgmental of their life and work decisions. Karuna grew up in Pondicherry, Nashik, Delhi and Pune and completed her ICSE from the Maneckji Cooper School in Mumbai. Deciding to pursue a dream to become a Physician Scientist in one of the top hospitals in the world, Karuna chose to excel in academics and extra-curricular pursuits and got into the IB program at the United World College in the US. With admissions in MIT, Yale Princeton and Cambridge, she chose to do a MB PhD at Cambridge UK, went back to the US to do a Post Doc in Harvard Medical and then did a Fellowship at Memorial Sloan Kettering Cancer Center in New York where she has recently accepted a full-time appointment to be a physician scientist. Given our own backgrounds of having studied and worked in India most of our lives and specialized in IT and Education, it would have been well-nigh impossible for us to advise Karuna on the career path she chose, but by letting her follow her heart and choose a path that would enable very little supervision by us, we have been proud to see her blossom and achieve whatever success she has in her field of chosen endeavor.
Lest any reader of this column treat this as a sermon on how to bring up children today, let me haste to add that there is no magic formula for showing young people the path to success. Each millennial is unique and her life experiences and level of ambition would be completely different from others. At Skills Alpha, we recognize this as an imperative to build sensing and adaptable learning environments to suit the aspirations and learning style of each individual. The use of Smart Bots, deep learning, analytics and adaptive and cognitive technologies to customize career management and skilling recommendations enable the unique needs to be addressed. Similarly, at home and office we must celebrate the unique characteristics of the new generation and millennial job seekers. Give them the freedom of their own time and space, provide them the tools to customize the inputs they receive in their academic and corporate environment, and the results will astound you. Give the new millennials a chance!
IT services: Time for transition
A CEO said, this year may well determine who the 'has-beens' and the 'to-bes' of the industry are
The industry that has put India on the global map— IT services — and the companies that pioneered the march towards dominant market share in offshore outsourcing of technology and process management are being put under the lens again. In the last two decades, successive waves of new developments have upset the IT apple cart. The decline of the Dot Coms in 2000, the rise of new competitors like the Philippines, Central and Eastern Europe and Latin America as alternative destinations and most recently, the diatribe against the H-1B visa programme and the threat to thousands of IT executives that their opportunity to work and live in the US may be threatened by new immigration policies that seem to target the high tech workforce employed by India software companies. Is this just another passing phase or are there real issues we need to worry about?
The reality is that the potential denial of visas or the salary increases to Indian software engineers in the US may be just the tip of an iceberg of fairly substantial problems facing the industry as it seeks to return to a double-digit growth number. Nasscom’s unwillingness to predict a growth number for FY18 is symptomatic of the clouds of uncertainty that hang over the industry and the search for silver linings will have to continue for some more time. The protectionism moves are likely to intensify as every country struggles to find healthy economic growth and jobs for its citizens. But more important is the fact that the model for consuming IT and the inexorable move towards digital — by governments, corporations and citizens — is likely to pose enormous problems on one hand and throw up new opportunities on the other. As one eminent industry CEO has mentioned in a letter to his employees, this year may well determine who are the “hasbeens” and who the “to-bes” of the IT industry!
Why should the aspirations and moves towards digital transformation of large customers come in the way of the growth of
the IT industry? In simple terms, the three significant trends — software, infrastructure, platforms and business processes moving from the premises to the cloud; rapid automation on the factory floor and of knowledge services; and increasing adoption of artificial intelligence and machine learning — are all impacting, in greater or less measure, the ability to deploy large contingents of people to solve business problems and reduce the size of the services engagement needed to deliver value and desired outcomes to clients.
New technologies are changing the way information is consumed by large and even medium clients across vertical domains and horizontal application areas and the move is away from large in-house custom-built applications towards multi-application and sometimes even multi-client digital platforms. A digital platform incorporates most of the business knowledge into a set of applications, services and infrastructure that enable access to solutions to every problem in an easy self-service mode. Such platforms today abound, whether it is for the management of multiple supply chains in manufacturing and distribution, loyalty programmes for hospitality and retail chains or even traditional application areas of the past like Human Capital Management.
To take the example of a Human Capital Management Platform, which is a challenge that every manager in every industry faces, the new millennial employee is no longer satisfied with the traditional HRMS (Human Resource Management System) or PMS (Performance Management System) which tend to be anachronisms more useful for recording behaviour of the past than be of real assistance in delivering value for the future. Even skills and learning, traditionally delivered through lectures in training centres or through an unending catalogue of online courses served up from an LMS (Learning Management System), have lost meaning with employees required to upgrade their skills “just in time” rather than “just in case”. A recent wail from the Indian CEO of a multinational that over 60 per cent of their employees were “untrainable” could be more because of skilling methods deployed rather than the inherent willingness or ability of the individual to acquire new capabilities! A good digital platform in this area would retain some semblance of the HRMS, PMS and LMS purely as systems of record but become the system of insight and engagement for the millennial, enabling her to go on a voyage of discovery to explore career options and then consume skills in “easy to digest” engaging modules that are relevant to the context rather than just a mass of content. The same approach of focusing on insights and engagement rather than just record-keeping is what good digital platforms will do to transform the journey of every stakeholder — employee, supply and demand chain partners and of course the customer.
If the development and deployment of digital platforms seems like a great opportunity, the reality check comes from the fact that digital attackers in the form of new entrants are already in the market with their solutions. And the marketing capabilities needed to sell to the CEO, COO and CMO of an organisation are substantially different from selling to an IT chief of an organisation! Indian services firms aspiring to be the leaders of the future will have to address product and platform and build new go-to-market strategies to win global deals and return to robust growth!
Digital platforms & changing engagement models
Winning organisation of future will be deploying digital tech to facilitate stakeholder journeys
Digital transformation has come a long way in most corporations from the early days of exploring the cloud and moving from CAPEX to OPEX for the use of software applications and infrastructure. Implementation of business applications has moved from long duration projects involving sequential phases of analysis, design, development, testing and implementation to agile methods of prototyping, building and enhancing applications aligned to the everchanging needs of users of information. In this journey, organisations have discovered a new way of deploying business functions and processes in a technology architecture — enter the era of digital platforms.
To understand the value and the difference a digital platform can provide to an enterprise, the easiest metaphor to use is the most obvious one — the railway platform. Created to enable various trains with passengers and materials on long journeys to stop and exchange passengers and goods, the platform itself presents a bustling multitude of salespersons, ticket checkers and signals to regulate the flow of traffic. If one were to view the business organisation of today through this lens, the enterprise of today is one where stakeholders are increasingly digital natives, prepared to shop from multiple vendors and design their own journeys towards the attainment of their goals. This is very true for customers, a little less so for employees and in some measure also valid for supply chain partners. The winning organisation of the future will be the one that deploys digital technology to facilitate stakeholder journeys and maximises wallet share and engagement time for mutual benefit.
So, what exactly is a digital platform? McKinsey & Co defines it as an integrated offering comprising applications, infrastructure and business processes that addresses specific needs of either verticals or horizontals, which can be deployed at multiple clients with minimum customisation. And continuing the analogy with the busy railway platform, the strength of the digital platform lies not only in serving the needs of different customers whose journey touches the platform but also the multiple vendors of utilities and services who can display their wares through the platform and be connected up as micro-services or APIs (application program interfaces). The micro-services enable decoupled application functionalities while the APIs are typically business services that are exposed within or outside the walls of the enterprise. This method increases flexibility and reduces the cost of deploying IT since bulky space and bandwidth hogging systems are obviated and new internal and external channels of engagement are opened up for external and internal customers.
To take the example of the Robotic Advisor for an Investment Advisory firm that was referred to in a previous column, a platform building approach would simply identify the information needs of an advisor as well as an end client who has to take decisions based on investment recommendations and the platform is developed in three phases. The first involves the creation of simple drawings or “mock-ups” built around a comprehensive eco-system of goals, for the client as well as the advisor. In the second phase, the circles of information finalised are converted into simple wire frames and user interfaces are designed in as simple and presentable a format as possible for the advisor and even simpler for the client. This results in the development of a minimum viable product (MVP) which will be the first version of the platform. The platform itself will keep evolving and the identification of micro-services and APIs, which make the information and knowledge content truly engaging and dynamic, will be an ongoing effort.
This approach, from concept to MVP is powering the development of many new vertical and horizontal digital platforms. The Kirloskar group in Pune has developed a series of platforms for tracking product through the demand and distribution chain, enabling the effectiveness of service personnel in the field and providing Internet of Things (IoT) support for shop floor manufacturing as well as lifelong field support of their oil engines. And on the human resource side, our investee company Skills Alpha has built a platform that serves as a career management, skills gap identification and skills path definition engine and then searches, stacks and serves up skilling modules using a series of micro-services. And cognitive capabilities are enhanced by interfacing with external APIs that add value to the learner.
Changing themes from user firms to service providers, this new reality of IT solution development and deployment will present huge challenges for IT services firms and software professionals to pivot to new skill sets. Agility experts and Scrum masters will be needed to deliver the three-phase approach discussed here, product and platform designers fully conversant with user experience and interface design and response time optimisation will be the new normal and dev-ops and digital architecture expertise will be an aspirational skill level for all software engineers of the future. The jury is out on whether IT firms are better served training tens of thousands of freshers or if a bunch of experienced project leaders should be pulled out for a few months and armed with the new skills needed while their roles are temporarily filled by others who in turn will go for re-skilling at some point. Whatever be the case, there are exciting times ahead!
Collaborating for a digital future
A partnering approach is key and would go beyond technology.
When Nasscom decided to announce and conduct its first ever customer summit in the US, not in Silicon Valley but in the heart of the financial sector in New York City, many naysayers would have thought it foolhardy. At a time when the conversation largely revolves around industry slowdowns, lay-offs, visa issues and protectionism, did it make sense to launch a customer-oriented campaign in the heartland of American commerce? Not to be denied, some of us practised what we preached in the era of digital transformation, did some design thinking with our customers and decided that the Nasscom summit would be the beginning of new customer journeys. The summit titled “Collaborating for a Digital Tomorrow” took place and has been a resounding success.
Featuring close to 200 senior participants from the who’s who of the corporate world and some visionary leaders on digital transformation, the summit offered six key takeaways, eloquently summarised by Nasscom President R Chandraskehar at the conclusion of the proceedings. These takeaways point the way to future industry partnerships, which can be expected to grow and flourish and enable both customers and service providers to collaborate for a better future. At the heart of it all lies the reality that digital transformation can and will have a positive impact on individuals, corporations and countries. New platforms and technologies that enable this transformation will create more opportunities than threats to jobs and corporate success. In this situation, there is no value in incremental plays and, with Fortune 500 firms falling off the charts because of their unwillingness to take a leap of faith, successful firms must have a proactive and comprehensive digital strategy that enables them to move to the next level.
The second point, which has significant implications for customer-vendor relationships in the future, is that digital transformation will need a partnering approach, with collaboration being the core value that ensures success. Since this transformation would go beyond technology to process re-engineering, culture and skills building and business model innovation, the precise role of each partner in a large collaborative framework would need to be defined based on the customer domain, the competitive landscape and the context in which the transformation is undertaken. This leads to the third point — that developing top quality digital talent is essential. This talent would need to demonstrate “learnability” as a key virtue and investments would have to be made in all geographies and also by all partners to build and deploy new thought leaders — user experience specialists, data scientists and digital storytellers — as part of the collaboration to succeed in new digital spaces.
The fourth point hasramifications for India and society as a whole: It is the impact of digital on jobs. Job losses in traditional areas will be a natural consequence of skills obsolescence and technology changes; developments in artificial intelligence (AI), robotic process automation and machine learning can clearly destroy incumbent roles at a rapid pace. However, as the industry grows, more jobs would be added and made available to those who have re-skilled and up-skilled themselves for the emerging opportunities. It is heartening to note that training majors such as GTT and NIIT have launched significant initiatives to help more than two million industry employees become digitally ready. This is one area where AI and deep learning can be put to use to help employees rather than dent their job prospects. Platforms such as Skills Alpha and VideoKen are showing the way to skilling in this area globally.
The fifth point, which cannot be emphasised enough, is the reality for all businesses that the bottom line of digital transformation has to be demonstrated business value, not a few mobile apps here and there with some customer-oriented interfaces better designed than in the past legacy systems. Customers should be spending more time on every possible touch point and channel and consuming more; employees should genuinely behave like digital natives through adequate sensitisation and skilling and be able to engage when required at the pace expected from digital companies. Clunky processes, high latency information systems and reluctant responsiveness are anachronisms in the digital era and have to go. Relationships with technology service providers have to change, too, with service-level agreements replaced by business outcome measures, and collaborative centres of excellence becoming the true hallmark of partnership excellence.
This leads to the final point that many thought leaders emphasised at the NASSCOM summit: Technology advancement and consequent changes in lifestyles and businesses will continue to happen at a breathtaking pace and it is collaborative creativity, which harnesses and integrates the ideas of all participants in the digital journey, that will finally bring success in digital transformation.
At the end of the collaboration summit, 30 of us — the Nasscom team, key customers and speakers — were invited to Nasdaq and the idea of digital collaboration was welcomed by the bourse. As the Nasscom team rang the closing bell with the US stock markets at record highs, the image of our team on the Nasdaq tower at the busy Times Square in New York seemed to proclaim to the world that the information technology sector and Nasscom are open for business and customer support and collaboration will be the driver for a new era of growth.
Digital platform engineering: New winners
Need of the hour is diverse technologies and domains; Industry needs to rebuild and retrain now
A $300-million information technology (IT) services company with a very substantial on-site revenue component and growing at a
compounded annual growth rate (CAGR) of over 25 per cent for the past five years. Not only that, the growth is driven by revenue from the top five clients increasing nearly three-fold to over $100- million between 2014 to 2016. Million-dollar clients have increased from 42 to 67 in the same period. Ebitda margins for the company have gone up over 50 per cent in the last two years
because of tremendous discipline in managing costs even as it acquires scale. Overall revenues have grown from $129 million in FY12 to $323 million in FY16. In addition to excellent organic growth, the company is acquiring at least one significant firm every year and is emerging as one of the recognised market leaders in the digital space. Listed on the New York Stock Exchange, the company trades at an enterprise value of 26 times Ebitda.
It would be wonderful for this columnist to proudly name this company as a breakaway Indian success story, but the company is actually Globant, a pure play digital transformation services provider, headquartered in Argentina, with 36 offices across North and South America, Europe and Asia and a recently acquired offshore company in Pune. The reason for the success of this firm and a few others like Luxoft and epam is the width and depth of digital work they have been able to do in the digital sphere. Globant proudly counts Walt Disney Parks, Southwest Airlines, Google and Electronic Arts among its top clients and is able to offer a combination of left and right brain solutions to create better customer experiences and deliver measurable business results through digital transformation.
Globant already offers the full range of digitalcapabilities, through qualitative and quantitative research into customer issues to develop deep insights, consulting in-design thinking, ethnographic surveys, empathy and experience mapping and rapid prototyping through customer-oriented pods that quickly create experiential solutions to stated and implied needs. Digital content development, user interface Design, SMAC solution deployment and niche capabilities in Internet of Things, Artificial Intelligence, Gaming and transformation and development of large enterprise applications for enterprise operations, employee collaboration and talent management — all this and more is what makes this company an exemplar in the digital space. A key differentiator for this company in comparison to traditional Indian firms who have delivered great technology solutions in the past but failed to challenge the conventional wisdom of clients is their two-pillar approach to solution delivery — “Stay Relevant” and “Build to Discover”.
Staying relevant to existing and new customers is done through creation and dissemination of research, gatherings, conferences and webinars to keep customers abreast of the latest trends in digital. And building products and prototypes quickly in the multi-skilled “agile pods” enables feedback to be received and implemented and an iterative build-and-discover methodology in partnership with the clients. The company’s investment in multiple studios, each embedding specific domain knowledge and delivering solutions focused on specific technology challenges has been quite unique and its services model of first engineering platforms and then customising them to the need of each client has proved to be a winner in a highly contested market.
The science of platform engineering is probably going to be the holy grail for most Indian firms and in this area, there is not just Globant but many known players to understand and emulate. Large corporations have already begun dismantling their legacy applications and packaged ERP software in favour of platforms connected through micro-services and applications programming interfaces and consumed on a software-asa- service “Pay per Use” basis. Resource ownership is being replaced by connections and interactions through platforms, which will enable totally integrated automation that ensures engineering efficiency for information flows from the market to the shop floor to the extended supply chains of any enterprise.
Major players in the digital platform space include clear market leaders like IBM and Accenture who have managed the transition extremely well and pure-play digital stars like Globant, Luxoft and epam and also emerging challengers like GlobalLogic and Persistent. While many of the Indian Tier One firms are also competing for their space in the digital sun, it remains to be seen if they will make the transition organically or acquire their way to success. Many niche players exist like Harman, Liquidhub, eInfochips and Born are growing well and many more have been acquired. M&A activity can be expected to be very active in the
next few quarters for Indian and global firms.
A Forrester Research report published in 2016 and widely quoted today identifies Digital Platform Engineering Services as the key to successful service providers of the future, with the ability to build complex, connected systems seamlessly integrated to back-end applications and crunching large volumes of data. Indian companies seeking to get here will also need to extend the SEI CMM Level 5 standards of quality they achieved in applications development and maintenance to this new area, where digital transformation projects which are mission critical for the customer will have to be delivered within budgets at the highest quality. Multi-skilled talent with creative mindsets and the ability to work across diverse technologies and domains will truly differentiate future winners from the also-rans. The industry needs to rebuild and retrain and time is now!
Industry 4.0: Digitising the shop floor
The rapid advances in Industry 4.0 technologies and the installation of fully integrated cyber-physical
systems on the shop floor have enabled smart manufacturing to become a reality
One of the most powerful visuals I have seen of a fully automated shop floor with flexible manufacturing systems, robots and total flow manufacturing implemented is a dark screen with a small circle of light. One of the most intriguing visuals is a picture of a Japanese factory operating at full capacity in the night shift. The rapid advances in Industry 4.0 technologies and the installation of fully integrated cyber-physical systems on the shop floor have enabled smart manufacturing with minimal human intervention to become a reality in many factories worldwide and Indian firms are striving to catch up.
In the past six months and more, digitised shop floors have become the focus of attention and investment in many manufacturing firms with even boutique consulting and IoT firms like Kalzoom and Altizon struggling to cope with the escalating demand for audits, proof-of-concept programmes and fullscale implementation. Some cases of well-managed Industry 4.0 projects will bring the opportunities to light.
A leading manufacturer of auto-components in India has embarked on an ambitious agenda to improve throughput of their assembly line and plant by tracking overall equipment effectiveness automatically in real time and make measurement metrics available to shop floor planners for plant optimisation. The capture of significant shop floor events on a cloud platform and the resultant visibility of plant utilisation enables production scheduling decisions to be taken instantaneously. Within months, the firm has reported a 20 per cent improvement in plant utilisation and recovered the opex as well as training costs incurred.
A construction equipment manufacturing company in North America that has already automated its manufacturing lines, deployed PLCs (programmable logic controllers) and established predictive maintenance protocols was suffering unplanned downtime and low line throughput because of the inability to analyse the volumes of data emerging from the floor and make real time decisions. A comprehensive IoT solution with individual dashboards for all production planners and shop schedulers has enabled real time alerts and notifications with prescriptive analytics to be deployed. The company reports a 12 per cent improvement in line throughput enabled by data insights and real-time visibility onto assemble line performance. With IoT built on existing automation the real investment has been in creating actionable insights!
Another data and insights success story is that of a metals forging leader with investments in multiple SCADA (supervisory control and data acquisition) systems but the inability to connect various heterogenous machines resulting in mountains of data silos that have not been united. The design of a central data monitoring system that captures data flows and integrates for anytime anywhere analysis has enabled shop floor and ERP systems to be seamlessly connected and production monitoring and corrective action to be
done real time.
The realised benefits of Industry 4.0 on the shop floor have been many and companies are reporting high double-digit percentage improvements — reduction in machine downtime, inventory holdings, cost of quality, maintenance costs and time to market, increases in forecasting accuracy and plant productivity and on a softer note, substantial increase in shop floor supervisor capabilities and morale. The quick wins obtained through improvement in operating efficiencies are now being expanded in many progressive factories through investigation of artificial intelligence and machine learning capabilities to move from descriptive analysis to insight-based predictions and prescriptive transformations of the manufacturing process.
In simple terms, smart manufacturing and the use of the industrial internet to transform “Make in India” can be achieved and is being done by the early pioneers through a simple four phase implementation approach. The first phase should be a simple assessment of where you are — in data gathering and analysis, the maturity of the supplier eco-system and the connectedness of the machines on the shop floor and the shop floor itself with the overall enterprise resource planning process. This will involve doing a detailed capability analysis of machine inventory and associated hardware, and also PLCs, SCADA and all data collection devices. Having a documented process follows with data capture points through the process and current key performance indicators with baseline data will help in identifying shortfall areas. An understanding of the communications network with its current throughput and the effectiveness of inventory management, ERP and manufacturing execution systems will be the end of this phase.
The second phase involves collection of production and maintenance data and action optimisation through meaningful analytics, the third is more developing a data philosophy that uses real time data and timely analytics for decision-making at and beyond the factory floor. Finally, investing in organisational change and recruiting developing and retaining the right talent with a razor-sharp focus on the changing needs of B2B and B2C customers is a must for sustained success in an Industry 4.0 environment. Approaching these phases systematically will ease the Industry 4.0 journey.
Which brings us back to the picture at the beginning of this column and the obvious question — what was that little circle of light in a totally dark shop floor? The lone human in the factory, a security guard taking a round with a small battery torch, ensuring that all is well in the digital world of tomorrow. One wonders if this is what automation can do to human employment.
Industry 4.0: Multi-layered skilling is key
The ability to think beyond sets of machines and move towards a true 'systems thinking' is essential
The need for a transformation in India’s manufacturing sector has never been stronger than today. With the goods and services tax law passed and a new phase of demand emerging across India, efficient and highly productive manufacturing enterprises will fuel the demand that a surging economy can be expected to generate. Transformation of manufacturing industry mindsets and capabilities to create factories of the future will ensure that India is able to meet its aspiration of manufacturing becoming at least a quarter of future gross domestic product (GDP) and building highquality jobs of the future as Indian firms mount an assault on global market share.
The opportunity for Industry 4.0 is emerging not just because of emerging robust demand but also due to the rapid sweep of digital technologies, customer and supply-side analytics and new tools like augmented reality, robotics, 3D printing and Internet of Things (IoT) that are enabling seamless vertical connectivity through the customer and order fulfilment processes of manufacturing enterprises and horizontal integration of value chain partners across the industry in which each firm operates. A study on the importance of 4.0 for BRICS nations by Ficci and Roland Berger has thrown light on the fact that more than 220 million people are employed in manufacturing in the BRICs countries, which is more than the entire population of the world’s fifth-largest nation, Brazil. The surge in robotics, artificial intelligence and other automation technologies could result in the movement of jobs back to the developed world and the elimination of lowly skilled jobs in emerging economies, which is yet another imperative for reskilling of the large workforce in India and other BRICS countries.
In India, the impact of Industry 4.0 on the small and medium-size enterprises sector, which drives more than 38 per cent of GDP and provides employment to 110 million people, is another dimension to be considered and any large-scale reskilling agenda needs to be as relevant for the small factories as it is for large industrial enterprises. And with small and medium companies increasingly serving as integral parts of the global supply chains of some of the country’s and the world’s leading manufacturing conglomerates, no manufacturing firm can be left behind in the country’s march towards Industry 4.0.
As a detailed study by PwC points out, products, systems and services will be increasingly redesigned and customised to fit customer needs and firms will become participants in large industrial platforms. As with all paradigm shifts, first movers will tend to corner large parts of the new opportunity share and with millennial customers beginning to dominate the demand conversations in many industries, every process and every person engaged in the entire manufacturing demand and supply chain will have to be totally customer-driven for the firm to succeed and stay relevant in the digital era.
Companies such as Siemens and GE are already putting up platforms to offer comprehensive digital offerings, with cloud-based systems for connecting machines and IoT sensors and devices and partnering and co-creating ideas with customers, collecting and analysing data at every touch point in the value chain and re-engineering operations and logistics processes to serve stated and latent customer needs better. The emerging industrial digital ecosystems will call for new mindsets, new capabilities and new skills across the board.
What are the families of skills that engineers of tomorrow will have to be armed with and manufacturing practitioners reskilled in to face the challenges of the future? The first and foremost is the ability to think beyond sets of machines or even blocks of data and move towards true “systems thinking” for customerproduct journeys and customer-led value chains. The California Manufacturing Technology Consulting group defines a term called Smart Manufacturing as the unity of data, technology, nvironment perspectives and economic growth focus and people leading manufacturing enterprises will have to understand the nuances of making this happen in real time.
Digital will be the cutting edge for all factories of the future and from a deep understanding of digital platforms that a customer can participate in or employees use for continuous learning, comfort with using such platforms enabled by artificial intelligence and machine learning will be essential for every manager and engineer in the organisation. New digital production line skills will be needed in operations planning and control, production and maintenance processes, materials planning and warehousing, with the use of 3D printing and robotics coexisting with manual operators. Virtual reality will enable higher productivity in tasks like picking parts in a warehouse and augmented reality will make the training of shop floor engineers and fault diagnostics much simpler.
Even at the workman level, capabilities to deal with extensive automation and work with robotic processes, automated manufacturing execution systems and self-healing machinery will be skills that become essential. Learning and development focus in busy factories will have to move from traditional TPM, 5S and Six Sigma to embrace newer and newer digital capabilities that will emerge every month, calling for quick assimilation and integration.
Manufacturing enterprises of the future will also have to deal with large data volumes to analyse, with sensor-generated IoT data from the shop floor coexisting with information churned out by ERP systems. It’s an exciting time for the factory of the future and the focus on skills needs to be paramount so that no individual is left behind and Indian firms are able to seize the opportunity and take the lead.
Analytics for business optimisation, growth
Those who apply statistical techniques to derive insights would be the future success stories
The challenge business leaders face in determining the level of investment to be made in analytics is that they are often unable to ask the right questions in a fast-evolving space. As a famous quote goes, “If you don’t know where you are going, any road will get you there”. In a digital world, the winners would be those who know what questions will give them sustainable competitive advantage in the future and shape the solutions they demand and get. Getting analytics right is the key to successful digital transformation of business.
The most often asked question from the leadership is “what did we do right and wrong last month?” Given the investments in computing, the assumption is that these questions do get the right answers, but to succeed in competitive environments, future questions that will have to be asked are “why did whatever happen, positive or negative, happen and what can we do to ensure the future will be what we want it to be by mitigating the risk of negative happenings and create more positives? Can we change some factors to guarantee more positive outcomes and is the data we are seeing, telling us something that can change the way we pproach the future?”
Systech, a California-based business intelligence and analytics consulting company, provides a way for CEOs and corporate strategists to look at analytics when it describes the path to success as the transformation of raw data to useful information that provides valuable actionable insights into business performance. Framed like this, it becomes obvious that the corporate success stories of the future would be those who move from the descriptive analysis comfort zone to applying statistical techniques and algorithms to derive the insights that make predictive and prescriptive analytics a reality for the organisation. This methodical and iterative exploration of high-quality data using skilled analysts and, when needed, data scientists will be the hallmark of companies, which practise decision-making driven by data.
A few examples of industry leaders will throw light on the approach being taken today. An manufacturing started a few years ago with the implementation of a centralised data management infrastructure and business intelligence architecture that enabled a 360-degree view of business operations from customer demand to shop-floor operations and logistics, including supply and demand chains. After some initial forays into building a leveraged technology stack and data stores for data exploration and mining, the company has now deployed prescriptive analytics models that proactively drive growth strategies and measure results as they happen. The data cleaning and distribution has been automated and done in real time to improve organisational responsiveness and accelerated analytics.
Another case of analytics transforming both efficiency and revenues is a leading auto insurance agency, which has transformed its entire data management ecosystem and developed the ability to trap data from sources far exceeding the traditional structured ones. In the fast changing world of digital immigrants and natives, the ability to handle structured as well as semi-structured data and provide quick insights to agents and employees of the firm could not be handled by traditional methods; the solution necessitated the design and deployment of a big data architecture that would provide low-cost data storage, use tools to parse and expose every variable within low volumes of semi-structured data and substantially reduce the time in which pre-processed data could reach analysts at near real-time speeds. The final test of success has been the effectiveness of presenting the data in a form that could be easily analysed and visualised for decision support purposes.
With today’s increasing sophistication of business analytics tools — for big data management, data visualisation, statistical analysis, business intelligence reporting and analytics through served reports or selfservice — data scientists are being called on to ask open-ended questions of data and provide insights far beyond even the reach of questions that have traditionally been asked of from data. There is also a tendency among new users to quickly move to self-service tools like Tableau and Qlik, which often give the CXO suite the perception that clever presentation of data is the purpose of analytics. However, firms that handle large amounts of data not only generated by information systems but also through sensor beacons, shop-floor machinery and Internet of Things devices should not settle too easily for convenience. Rather, they should have the right teams to explore machine learning and deep learning, integrate sentiment analysis from social listening and offer points of view to decision-makers that can provide true competitive advantage.
For the CEOs and strategy chiefs watching their digital transformation agenda unfold with optimism as well as some trepidation, there is something to think about. Digital transformation is too important an agenda to be just left to technologists. Business process optimisation and re-engineering, building a culture of digital understanding and practice across the length and breadth of the organisation and its business partners and ensuring that analytics moves from a post-mortem description of the past to a truly predictive and prescriptive driver of the business — these are three pillars that must be erected in addition to the technology stack to ensure that digital business flourishes to take the organisation to success in the future.
M&As in IT space to gather pace as more consolidation likely: experts
M&A and PE deals are likely to cross $4.5 bn in 2015
By end of 2015, more number of merger and acquisition (M&A) deals are expected to take place in the Indian information technology (IT) services sector. The optimism stems from the fact that the market has been witnessing major activities in M&A space rather than attracting fresh investments from private equity firms.
According to VCEdge, the financial research arm of VCCircle, between January and September 2015, investments and M&A deals in the IT sector (does not include e-commerce deals) in the country topped $3.5 billion. As compared to this, M&A deals worth $2.5 billion happened during the same period last year. By end of December this year, the total amount could top $4.5 billion as more consolidations are likely, according to investment bankers and industry experts.
"Depending on deal closure and timing, M&A and investments deals of an additional $1 billion in enterprise value may happen till the end of 2015," said Puneet Shivam, Executive Director and Head, US of investment bank, Avendus Capital. "There are a few fund-led deals that are underway which, if they close, make them a larger share of deal activity than the first three quarters of 2015," he added.
In past one month alone, three such deals -- Blackstone-Serco, Apax-Zensar and Infogain-Blue -- Star have taken place which totaled more than half a billion dollar in deal size. Industry officials said, the consolidation would continue for companies who are not ready with future technologies.
"I think the need for consolidation has always been there and will continue. Companies with superior business models like TCS, Infosys, and Mindtree, Zensar in the mid-cap for example, will continue to grow and flourish independently. At risk are companies who do not have a clear growth strategy particularly in areas like digital transformation," said Ganesh Natarajan, vice chairman and chief executive of Zensar Technologies.
According to Avendus Capital, 2016 is likely to remain active from deal activity perspective as Indian IT majors are keen to add digital capabilities, get front-end capabilities in major markets as well as add to their vertical depth. This is likely to drive significant acquisitions.
"India-centric companies some of which are building capabilities around emerging technologies such as analytics, automation, platform-based solutions, etc. will continue to attract investments. Also some of the mid-sized IT/ITeS companies may e acquired as consolidation plays," said Shivam of Avendus.
Added Sashi Bhusan, Senior Vice President, Research, HDFC: "Some consolidation is likely, but the overall PE deals in the IT sector is low as it is a cash-rich sector."
Cyber-physical future of manufacturing
MNCs in India and visionary Indian industrial houses are getting early success from their own implementation of Industry 4.0 practices
Industry 4.0 is evolving — in thought and action, in the world and India. From the early hype created by the industrial internet in the US, Germany and lead countries in the connected global economy, it was heartening to see in the recent conference in Delhi organised by the Department of Heavy Industry and CII, that multinational companies in India and visionary Indian industrial houses are getting early successes from their own implementation of Industry 4.0 practices and projects!
A truly compelling industry keynote at the conference delivered by Dr. Jan Mrosik CEO, digital factory division of Siemens, brought the cyber-physical imperatives for competitive manufacturing to the limelight with the concept of digital twins — in product development, production management and performance optimisation. These terms have an uncanny resemblance to the value disciplines approach proposed by celebrated authors Wiersema and Treacy decades ago where they argued that organisations should compete by choosing product superiority, process excellence or customer delight. The difference is that for visionary manufacturers, digital twins can offer the tempting prospect of being excellent at all three!
The most obvious digital twinning is in product design, where CAD/CAM systems now powered by high performance workstations make it possible for collaborative product development with customers to happen and potentially any product from an Adidas or Nike running shoe to a Maserati luxury car to be custom-built for a customer. Automating the design to engineering and production process is where most investments are going in and the transition is being made from automation on the shop floor to autonomous working of interconnected and inter-operable manufacturing execution systems. The digital twin in production simulates the performance of the line with choices of men and machine usage, layouts and throughput speeds to choose an optimum process without expensive trial and error. And finally, having a dynamic feedback loop from the product on the shop floor and in the field enables optimisation to happen during production, commissioning and use to constantly innovate on product and production process even while performance is tracked on a continuous basis.
The order of magnitude performance improvement that judiciously planned and meticulously executed cyber-physical systems can deliver depends on the balance achieved by any Industry 4.0 program on the four critical elements of customer focused business process reengineering, data gathering from all sources with advanced real-time analytics, deployment of technologies from the digital stack, including mixed reality, 3D printing and Internet of Things to fit the new process requirements, and a relentless focus on culture transformation to prepare the employees and value chain partners for ever-changing expectations and new opportunities for maximising value. The margin of error is narrowing with competitive pulls and technology pushes enabling every stated and implicit need of a stakeholder to be met well before it is articulated. It used to be a cliché ten years ago to say that market leaders have the next three generations of product already developed and waiting to be launched when the customer is ready, but as the FANG quartet — Facebook, Amazon, Netflix and Google — are showing and Steve Jobs at Apple Computer and Elon Musk at Tesla have shown, success is in creating products and delivering them before customers even feel the need! Quite a departure for many of us in India who grew up waiting years for a telephone or a clunky car from two factories — one in Kolkata and one in Mumbai to be rolled off an ageing assembly line and delivered to us!
There are two myths about digital transformation and Industry 4.0 that need to be laid to rest. The first is the question of the affordability of what may seem like new fads by the small and medium enterprises (SMEs), particularly the micro SMEs, who have enough on their plate with regulations and anaemic profitability and can ill afford to make capital investments in new hardware and software. One must argue here that with every nation in the developed world as well as fast transforming ones like China, Thailand, Vietnam and Mexico racing to modernise, the race cannot even be run, let alone won by ancient manufacturing firms flogging the dying horse of labour arbitrage. And with the new trend being to consume all infrastructure, platforms and software as a service, it is the judicious selection of cloud-hosted technologies that will enable large corporations as well as SME clusters to become truly world-class through Industry 4.0.
The last and biggest concern area of course is the impact of fast growing technologies for automation, robotics, artificial intelligence and machine learning on the future of jobs in the manufacturing economy. In India we have nothing to worry really in the manufacturing sector if we are able to address squarely the challenge of making manufacturing contribute 25 per cent to GDP against the current 15 or 16 per cent. The distinction between blue- and white-collar jobs will naturally blur, but a plethora of new skills will emerge to plan, operate and manage the factories and supply chains of the future. As the inimitable Amitabh Kant said in the conclave, India’s manufacturing success is heavily dependent on our ability to capture not just domestic but world markets and it will be predictable quality, productivity and innovation that will get us there. Time for all to embrace Industry 4.0!
The march of digital velocitors
Where the onslaught of automation is stealing jobs from traditional high-growth sectors, 'velocitors' or young companies with the ability to break away from the pack will spur entrepreneurship
Industry 4.0 is evolving with manufacturing and logistics firms embracing the opportunity for cyber-physical transformation, design thinking is enabling large firms to shape the creation of new holistic ecosystems for customers and supply and demand chain partners with firms, and digital technologies and platforms are touching and transforming every touch point with every stakeholder of a business enterprise. The digital economy, too, is coming of age with the government’s determination to connect all the 250,000 gram panchayats and set up common service centres and smart cities to capitalise on the power of connectivity holding out the promise of a Digital India where no citizen will be left behind. The “India Stack” could well lay claim to being the Time “Personality of the Year” if such an award were to be given in India and the speed of adoption of digital interactions in the country augurs well for a transformed nation in the not-so-distant future.
In all this hype and hoopla surrounding big company and government adoption of digital, one must not forget the capabilities of tens of thousands of start-ups and young companies which have embraced the opportunity to identify discontinuities and start companies that can solve critical business problems and also address national issues like skills and health care for all. In a recent national initiative to identify “velocitors”, or young companies which have the ability to break away from the pack and provide innovative digital solutions across an array of technologies and business processes, it has been heartening to note the capabilities that many of them have already demonstrated to be the digital stars of the future. In a country where the onslaught of automation is stealing jobs from traditional high-growth sectors such as automotive manufacturing, banking, applications support and testing in the IT sector and other repetitive areas, it is these velocitors which will provide the acceleration needed to new entrepreneurship and job creation and solve the one dilemma that persists even as the economy resumes its upward march.
Broadly, there are twelve categories where velocitors can dwell and succeed with sharp focus on product quality, customer focus and marketing and communications excellence. It all starts with design thinking, with the focus moving from product design to a new way of thinking which leverages the opportunities available through customer access and supply chain visibility to create new engagement and service models. This area is being mastered by all large consulting houses and technology firms today. The next four are the SMAC stack of social media, mobility, analytics and cloud, which has been embraced at least at a basic level by most progressive organisations and definitely by the government of India today and also exploited well enough by the large incumbent vendors, hence closing the doors on new entrepreneurs.
Where opportunities for innovation and new champions lie is clearly the next seven areas — advanced analytics using artificial intelligence (AI) and machine learning, robotics and robotic process automation, blockchain, Internet of Things, user experience, digital platforms and cybersecurity. The market leaders in these areas in any country, from the US to Israel to UK to Singapore to India, are very different from the traditional names one is used to and although the incumbent technology vendors offer solutions, it is a real window of opportunity for smaller firms to show their wares in these areas and get acceptance with key customers. Cases in point are e-Zest, which has built a quiver of arrows in the form of a chief digital officer’s tool kit to substantially improve time to market, quality of deliverables and digital service delivery costs; Skills Alpha which is transforming the process of employee engagement, career management, skills acquisition, reskilling and community engagement; and Systech which has built an enviable array of use cases in master data management, business intelligence, big data, AI and machine learning for some of the world’s best companies in retail, consumer goods, manufacturing, health care and insurance. What many of the champions in each of the twelve categories share is the unwillingness to let size deter their propositions to large companies, an attribute which can be developed and enhanced through mentoring and participation in supportive collaborative ecosystems.
Getting start-ups to scale and participate and succeed in the digital economy will need three willing stakeholders — the government which should relax criteria of revenue and past record to enable young companies to deliver their products and services to large national digital initiatives, organisations which will open their applications to niche technology providers and provide the use cases needed for success, and the companies themselves who need to ensure that they get off a pure technology high horse and reach out to build better solutions for real customers. The government through Digital India and some recent announcements made at the Global Entrepreneurship Summit seems ready and willing though the test will lie in the policy fine print when new tenders and requests for proposal are floated. Visionary companies like Bajaj Finserv have already made systematic moves to engage start-ups in India and worldwide and some of the young companies like the ones mentioned here have already set themselves on a path to success. If Digital India meets Start-Up India halfway the results can be spectacular. Let’s work to make it happen!
THE LAST WORD : Going that extra mile
It should be incumbent on every parent to show the way to children and youth to participate in the development of a society of equal opportunity where camaraderie abounds and wealth is distributed to all
Meet Ruth Tribhuvan, a member of the Pune City Connect, which is working day and night with the Pune Municipal Corporation to make a Swachh, Suvidya, Skilled and Digital Pune happen in record time, Ruth embodies the urgency of youth and her never say never attitude has enabled her to move mountains in the last few months. From enabling the creation of a vehicle that can receive CSR funds from leading Pune corporates to getting tax exemptions from the authorities to being a critical cog in the wheel that made the Prime Minister’s visit to the city a grand success, Ruth is one Punekar who has the grit and determination to give her all for her beloved city.
Meet Shishir Vaidya. From corporate executive to being a mentor to startups, he has shown the vibrancy and flexibility of approach to succeed in multiple roles. Today he has a new passion— to build a community for young expectant mothers that will enable them to have their queries and concerns addressed and even connect them to 50 and more of the best gynecologists in the city so that their wellbeing is assured during pregnancy and through maternity.
Finally, meet Shumita Mahajan, dancer turned journalist and now turned leader of one of the most significant partnerships between the corporate sector and civil society—Social Venture Partners (SVP).
SVP today has moved from being a small offshoot of the global Social Venture Partners International to the enabler of significant NGOs and social enterprises in the city, providing capacity building, funds and mentoring to some worthy livelihood creators for local youth and SVP India has embarked on a worthy mission to enable a million livelihoods in the next few years.
What is common between Shumita, Shishir and Ruth is their sense of purpose, the drive to succeed against all odds and the willingness to go the extra mile to ensure their goals for the community and the city are realised. When Ruth decided that the city needed a more streamlined approach to Swachh, she took it upon herself to work with the Corporation on a formal policy for public toilets and has moved mountains to ensure that corporate support flows for the building of these toilets in the city. And in Shumita’s case, it is her willingness to reach out and be at ease with business movers and shakers on the one hand and very worthy social entrepreneurs like Jaya Kale of Jagruti Foundation on the other that gives her the credibility to chart new paths for SVP Pune. The fact that SVP today catalyses many new movements in the city, not least of which is the ambitious Lighthouses of Pune programme underscores the power of commitment to purpose.
There are enough initiatives in our city too, including the ‘Keep Walking’ and ‘Seva Sahyog’ movements that enable collaborative work to be done oriented towards good causes
What is that differentiates these three and many more of the young people who are choosing the road less travelled and working for social and entrepreneurial causes from their brethren who settle into cushy corporate roles? The ‘sense of agency’ or inner drive to do great deeds is very strong and the prime motivation comes not from the urge to make more and more money which is the bane of modern civilisation but the need to make a difference to the lives of ordinary people. And if there is one characteristic that makes people in Pune stand out, it is the large numbers of Ruths, Shumitas and Shishirs who lead the way to a better city and also a better country.
What can one do to imbue this sense of purpose and social consciousness in young members of our society? One is tempted to suggest that all television watching should be discouraged since all that seems to do is spread a sense of negativism in the community, whether through the unseemly fracas between a do-gooder politician and the head of one of our best financial institutions that is resulting in an early departure of the latter or the unseemly fracas between politicians that is a daily feature of television dramas. But since such wishes may not easily be granted, an alternative would be to enable young people to contribute at an early age to social work in the city.
When I was growing up in the village of Tatisilwai near Ranchi in the sixties, I had the privilege of having a father who spent as much time on social initiatives as he did on his entrepreneurial chemical venture and it was not unusual for us to go straight from school to his “Seva Kendra” where the children of the village would cluster to drink milk, play together and sing patriotic songs. Participating in this would often be more fulfilling that watching a movie in the city and we would rarely miss this. There are enough initiatives in our city too, including the ‘Keep Walking’ and ‘Seva Sahyog’ movements that enable collaborative work to be done oriented towards good causes. It should be incumbent on every parent to show the way to children and youth to participate in such initiatives and in the development of a society of equal opportunity where camaraderie abounds and wealth is distributed to all! In this will lie the road to true happiness—for the community, the city and the country!
Forgotten Virtue of Gratitude
THE LAST WORD : IT companies have to do a T20
The similarities between T20 cricket and IT firms don't end here. As we all know, the course of an IPL game is predictable in its unpredictability. IT companies are no different
We are in the middle of one more exciting IPL season, which always starts with low viewership but builds up excitement as the games progress and likely winners manage to emerge. The IT Services industry follows pretty much the same course during each quarter with the excitement peaking after the first company, typically Infosys and TCS announcing its financial numbers and then moving back to "business as usual" as the top three and the next ten report their numbers and get back to business.
The similarities between T20 cricket and IT firms don't end here. As we all know, the course of an IPL game is predictable in its unpredictability. When the team batting first manages to reach fifty for the loss of two wickets in six overs or less, the supporters sense victory only to fall into a slough of despond when the star batsman gets out. Finally what happens in the game is any body's guess and the truth for India has always been that when a Kohli is batting with Dhoni still to come, the hope of victory surges constantly in our minds.
IT companies are no different. Having come off the leadership role in Zensar recently after a wonderful ride of 15 years and more, I find it amusing to think of the number of times a big deal or success in a growth area like Digital Commerce has kept industry watchers happy even when the numbers were somewhat weak in traditional areas. Today every company is talking up their "Digital Transformation" story with the full realisation that this area of our work is the 'Virat Kohli' of our team portfolio and if that continues to fire, the target of consistent ten percent annual organic growth in our revenues is very achievable.
Today every company is talking up their "Digital Transformation" story with the full realisation that this area of our work is the 'Virat Kohli' of our team portfolio and if that continues to fire, the target of consistent 10 percent annual organic growth in our revenues is very achievable
One reason why one can expect this heavy hitter called Digital Transformation to enable a turnaround in industry fortunes next year and set is back on a 12 to 14 percent growth track is quite simply, the complete alignment of customer needs in singling economies with the hunger of service providers to offer a new range of services and garner new revenues. On the demand side, companies particularly those who directly serve the end customer, are all looking for technologies and processes to get even closer to the customer. A case in point is retailers who are using Geo-positioning on mobile phones to track potential customers even when they drive within a few miles of the store and entice them to the store with offers based on their previous buying history and even their preferences discerned from their Twitter and Facebook behavior. The availability of omni-channel marketing methods coupled with deep analytics to discern spending patterns all combine to make digital capabilities in mobility. Social listening and big data truly critical in the arsenal of the chief marketing officer. Add to this the new capabilities coming through artificial intelligence, augmented reality and virtual reality, beacons and sensors n the shop floor and it is easy to realise why the world of the marketer will never be the same again.
For the IT service provider, this has meant a clear need to move from the traditional systems of record where the load on the computer was primarily around record keeping and reporting to systems of insight and systems of engagement. Increasingly, IT services firms are developing user experience and customer experience capabilities and integrating digital interactive agency skills in their value propositions. For a company like Zensar, which has seen the digital component of its revenues grow from single digit to over 25 percent in two years, this has meant a transformation of marketing, execution and even skills to meet the demands of newer and more discerning customers. The narrative of most of the companies in this month has shown that the move to digital transformation is now an inexorable trend across the industry
Coming back to our cricketing metaphor what does this mean to the team that is playing the game, namely the IT Company and the watchers, typically the industry analysts who keep peering through their binoculars to see the game closer and find the next boundary that the industry will hit? The obvious first step is for the coach or CEO to ensure that the whole team is digital ready. In the future, it will not just be a few creative designers or data scientists who will set the stadium on fire, but the entire engagement team, at the client site as well as in offshore campuses in Indian IT cities who will have to demonstrate the skills to talk and deliver digital in every stadium in every part of the world. The good news for traditional Test cricketers unused to the quick pace of IPL has been that they can always wait to play another day but for the new age IT warrior every day will be a digital day and it is essential to understand the rules of this new game and play it well !
Play while you work
In trouble times, Be Safe, Be Happy
Chala Indian, Bill Gates banne!
Balancing the budget -- the Jaitley way
All credit to the finance minister for walking the fiscal and expectation tightrope extremely well in his budget speech, says Ganesh Natarajan.
A few days ago, if you asked any thinking individual what was expected from the finance minister beyond all the hype and hoopla of expectations, three elements would be sure to figure -- a concerted skills and job creation effort, strong focus on infrastructure and rationalisation of taxes. To a large extent Finance Minister Jaitley has indeed delivered on all three.
On the skills front, the biggest concern in recent times has been the distribution of the skills effort across multiple ministries. The specific mention of centralising all these efforts under the newly minted skills and entrepreneurship ministry and the focus on a National Skills Mission will help clear some of the cobwebs. Further, the announcement of the Self Employment and Talent Utilisation initiative and the initial outlay of Rs 1000 crores should help to create young job-givers across the country.
Infrastructure has been given the biggest gainer of the budget along with education and healthcare and with a resolve to address the public-private partnership snafus that ailed investments on the ground in the past. And the tremendous progress that has been made in tax rationalisation for foreign investors and the postponement or GAAR and making it prospective rather than retrospective will surely gladden the hearts of the investor community.
All credit to the finance minister for walking the fiscal and expectation tightrope extremely well in his budget speech. While the corporate sector should be happy, with the exception of the increase in excise, service taxes and corporate taxes, the focus on the poorer sections of the country is creditable.
The universal social security system and the availability of affordable insurance and special facilities for women, the elderly and the differently abled will all enable a wider redistribution of the budget largesse.
However, there are still some areas that have not got the attention they deserve. Digital India is one of these. Apart from a commitment to the national optical fibre network and its implementation in Andhra Pradesh and Telengana and eventually in the east and north-east, there is an opportunity missed to massively fund the National Broadband Mission, the National Digital Literacy Mission and downstream initiatives like IT enabled manufacturing and smart cities to create the base for a country wide digital environment.
The mitigating factors are the Janadhan Aadhar Mobile initiative and the Electronic Trade Receivable Exchange and the e-business portal, which are all digital initiatives in the right direction and the large outlays for education, healthcare and defence will create opportunities for further digitalisation.
And of course the continuing focus on the Delhi Mumbai Industrial Corridor Development Corporation will provide opportunities for expanding data centres across the country to support the large ‘Make in India' centres of excellence.
The IT industry itself, in spite of the generous mention of its global prowess by the finance minister, will see the Budget as mixed bag. There were three major expectations -- rationalisation of the tax on SEZs and the elimination or at least reduction of the minimum alternate tax, easing out the multiple knots in e-procurement by the government, and a comprehensive welcoming and enabling environment for global IT majors and start-ups to ensure that India emerged as the preferred destination for all IT investments.
The promise of easing out e-procurement by the government and the commencement of the Self-Employment and Talent Utilisation initiative with an initial allocation for the start-up community are all good steps in the right direction.
However, the much awaited elimination or reduction of MAT on SEZs has not happened and while foreign funds have found some much-needed relief, the financial environment remains sub-optimal for angel investors and domestic VCs.
On the vision side, there is much to be appreciated. We will all be proud to be part of the fastest growing economy in the world if 8.5 per cent growth is registered in the coming fiscal, and the plan to attain double digit growth is inspiring.
The 2022 India@75 vision with every Indian having a roof over the head and a clean and education oriented environment with jobs and entrepreneurial opportunities available for all is something every Indian should be happy about, irrespective of social or economic strata.
And if there is a balanced approach and focus on all the sectors -- manufacturing, services and agriculture -- and a concerted attempt to create the physical, digital and social infrastructure in every part of the country that could attract and retain the best of domestic and global talent and management, we can truly see the country of our dreams emerge in eight years.
And we can then look back and say -- Jaitley's 2015 budget was the beginning!
IT in FY 16 - New needs, new opportunities !
This article is being written at a time when much is expected from the 2015 Union Budget and will be read after the Finance Minister would have made his budget recommendations. For the IT industry in India, basking in the success of a decent double digit growth year, with one more expected to follow, one can safely assume that some good would have been done in the budget but our aspirations for policies and programs from the Government that will pave the way for order of magnitude growth will still be a "work-in-progress".
To take stock of where the industry has reached and where it wants to go, an analysis of the numbers the National Association of Software & Services Companies (NASSCOM) announced in February can set up the base. The industry at the end of fiscal 2015 would have the largest share in total services exports from India - 38%, become the largest magnet for Private Equity and Venture Capital investments in technology and e-commerce - over six billion dollars and established dominant share for India in the global sourcing stakes - 55 %. Industry revenues excluding e-commerce transactions are expected to be around 132 billion USD, with exports nearing a hundred billion dollars. With IT Services, Business Process Management and Engineering R&D all registering double digit growth and both exports and domestic segments showing promise, the next year which is projected to track growth rates of between 12 -14% can continue the growth story. If the Government comes to the party, this can be definitely sustained and indeed accelerated in the years to come, with huge impact on skilling, job creation and entrepreneurship!
NASSCOM in the budget recommendations made to the Government had clearly articulated the need for an eco-system of innovation in the country, enabling young technology entrepreneurs and small and medium enterprises in the hardware and software side of the industry to become a powerful complement to the large established players in IT and Business Process Services. The factors that have hindered the younger entrants and even driven some to move to Silicon Valley or Singapore can be summarised in three buckets.
The first imperative is a nurturing environment for start-ups and small firms where access to angel and venture capital is as easy as in competing countries. Incentives for product companies and Tier 3 and4 locations are needed to ensure that industry growth is broadbased and entrepreneurs come up all over the country. Ease of e-procurement and facilitation of participation of smaller firms in large Government initiatives would be essential to fostering the growth of the sector. And finally, the fastest growing segment of the start-up eco-system - the Internet and e-Commerce sector, needs to be encouraged through rationalization of taxation on digital transactions and facilitation of adoption of technology enabled platforms.
NASSCOM and the industry players have been doing their bit to spur start-up and product innovation. The Ten K start-up program has been a great success with over three thousand start-ups and eight hundred more every year, having accessed over two billion dollars of capital from five hundred angel investors and seventy VC/PE firms since 2010. The exciting aspect has been the spread of focus areas of these start-us, ranging from Internet of Things to HealthTech to Augmented Reality in addition to the more traditional Social Media Mobility, Cloud and Big Data & Analytics. The creation of over eighty incubators and more and more academic institutions adopting new skills oriented programs to bring just in time talent to the industry has also provide the much needed boost to expansion of the industry into new areas.
The large enterprises in this industry, whether Indian, multinational or global in-house centres of large corporations abroad have needs too, which have to be met if the target of a three hundred billion dollar industry in 2020 has to be realised. Regulatory and tax challenges, particularly stability of taxation policies have to be addressed to avoid flight of large firms to more predictable locales abroad.
Finally the flagships programs of the Modi Government - Make in India, Digital India and the National Digital Literacy Mission, all have tremendous scope for IT industry participation on a large scale, which will enhance industry prospects and also accelerate the attainment of the lofty goals set for these missions. As a case in point, the participation of millions of SMEs in the Make in India movement can only happen if information services are available on tap, on a Pay per Use basis from public data centres. This calls for a significant PPP investment, where hosting services, cloud based software as a service solutions and large scale connectivity through the National Optical Fibre Network reaches the last mile of the country. Similarly Digital India will happen only if every gram panchayat and village in the country is touched by a better connectivity and access environment for Citizen to Government interfaces as well as general information access and dissemination that can make life and work truly transparent and simple.
This is a Government that has shown, through policy and action that it means business. Many of us who have built the IT industry to a stature that every Indian can be proud of, believe and hope that with robust partnerships with Government and academic institutions, the best is yet to come - for the country and for our industry!
The Value of an Open Mind
Today the world is changing at an even faster pace and to be successful, do keep that mind open, let all kinds of new ideas and inspiration flood in and be the best leader you can learn to be !
There is an old cliché that two things work best if they are open – an open parachute and an open mind! And for people leading teams and companies in the corporate sector, keeping an open mind is probably one of the best pieces of advice they can get. And, they need to take it for sure!
As one goes through a career, there will always be unique experiences and new inputs that will confront us, and how we tackle, absorb and assimilate these experiences often determine how effectively we learn and the success we will attain in our careers . In my own career, I have been through successive experiences that taught me more than reading a million management text books would ever have.
My most profound learning has been the ways to relate to colleagues at work. When I took up my first job in the eighties in Crompton Greaves’ Switchgear manufacturing factory in Nasik, I had come into the industry after living in fairy traditional middle-class environments where respecting elders and others, was very much part of the growing up process. The early experience in the manufacturing unit was no different, respect given to very senior visitors from the Mumbai corporate office often bordering on the obsequious!
Moving to run my own entity in Mumbai, I transported the only culture I knew into the new firm in spite of having the privilege of working with very young colleagues who would have been glad to be treated as friends rather than subordinates. But the real eye-opener for me came when I joined the very high energy and strong relationship oriented computer consulting and training firm NIIT in the late eighties. Creating by professionals with a large cohort of IIM and other MBAs in the mix, the atmosphere of total camaraderie and informality first came as a cultural shock but within the short time span of three years, became a preferred mode of relating to colleagues and everyone up and down the corporate hierarchy.
In 1991, when I got headhunted at the age of thirty-four to become the CEO of APTECH, an environment of informality and friendliness was the culture I could transport from Delhi to Mumbai and in spite of having a direct subordinate group in their late forties and early fifties, I found it extremely easy to relate to the twenty-year olds who formed the marketing and technical base of the company. This air of bonhomie and the creation of span busting vision communities led to our incredible success in the next nine years of very high retention and motivation levels and incredible success in racing the top of the computer training industry in India and many global destinations.
The ability to keep an open mind and adapt my management and leadership style has continued to be one attribute that has taken Zensar from its early beginnings in 2001 to become a eight thousand people strong firm touching half a billion dollars in revenue and a track record of growth and low employee attrition that is the envy of the industry. I have seen in most of my colleagues across fourteen nationalities, the willingness to realise that generations now change every five years or so and there is much more we can learn from young colleagues than by relying on traditional styles of management. Today, the world is changing at an even faster pace and to be successful, do keep that mind open, let all kinds of new ideas and inspiration flood in and be the best leader you can learn to be!
The exciting world of Retail E-Commerce
The interesting feature of digital transformation is that unlike other technology adoptions that happen first in the corporate sector and then affect the work and life patterns of individuals, it is very different in the evolving world of retail. Here it is the early adoption of mobility and social media by the new generation of smart phone and computer users and the reluctance to go to brick outlets when one can simply click through to a purchase transaction that has created the revolution of E-Commerce and M-Commerce in the retail sector.
The surge in digital transformation with the adoption of pay-per-use software as a service in preference to CAPEX investments in Information Technology and the disappearance of "heavy iron" data centres into the infrastructure as a service model has been evident in the last couple of years worldwide. The rapid rise of start-up solutions in mobility and social media adoption by the corporate sector, supported by the development of trends and patterns trough big data analytics has also pushed retailers and many early movers in other sectors like manufacturing, banking and insurance to move their store-fronts to the internet. Globally this trend was highlighted by the fact that the famous Black Friday shopping surge that happens after Thanksgiving in the US has been eclipsed by the "Manic Monday" e-Commerce transactions. There is a growing conviction among global retailers that standard stores will soon evolve into round the year event venues for fashion shows and cooking contests, while most commerce happened from the comfort of an armchair at home.
Recent forecasts by Gartner and other analyst firms bear out this hypothesis. The e-commerce software market, which touched three billion US dollars in sales in 2012, is expected to grow at nearly fourteen percent CAGR in the next three years and over fifty percent of organisations which derive more than ten percent of their business online are expected to embrace e-commerce as a transformational initiative. This makes business analytics, e-commerce and customer experience the top three priorities for management teams for five-year technology investments.
The imperatives for a successful e-commerce foray are predictable but still important to emphasise. Discerning customers will demand a seamless multichannel user experience as they move from physical visits to the store to online browsing and purchasing through a range of devices. For the retailer or any firm which has e-Commerce as part of its strategy, the choice of technology is a non-trivial decision, since this will impact the future revenues of the brand. A recent study shows that Oracle's ATG Commerce is the top choice, already bought by twenty-five of the top hundred retailers, followed closely by IBM WebSphere which boasts twenty percent share of the same market. It is also estimated that over thirty percent of the top ten thousand e-commerce sites globally and nearly forty percent of the top thousand run on Oracle Commerce. With SAP and other lesser known boutiques jostling for opportunity share, the technology wars can expect to be very hard fought in the years to come.
A case in point is a significant US retailer which embraced Oracle's ATG Commerce last year and saw quarterly on-line sales jump nearly thirty percent. They deployed a combination of advanced search capabilities and mobile-friendly interactions, further enhanced with the implementation of a data management and business intelligence solution, Endeca to create a perfect online shopping experience for consumers. The power of these technologies enables segmentation of customers based on their browsing and shopping behavior and investments in "ship-from-store" and in-store pickups for orders placed online, increasing the satisfaction levels for customers.
The online shopping movement has still to take off fully in India, contributing less than five percent to the four hundred and twenty billion dollar overall retail market last year. However the funding moves demonstrate the interest of global investors and the ability to access the billion plus consumers in all parts of the country shows that a revolution is waiting to happen in our country as well. Recent news reports of Flipkart raising a billion dollars in predominantly foreign capital, followed closely by global giant Amazon's announcement of an additional two billion dollars investment in growing its India business. If the ban on foreign investment in on-line retailing is relaxed, the floodgates will truly open for retail e-Commerce.
It is important to note too that while E and M Commerce was once perceived as a development of importance only in Retail, customers of organisations in the manufacturing, insurance, banking and healthcare industries are also expecting similar web convenience. Organisations worldwide have begun to realise that disintermediation is the order of the day and interesting online investments could rapidly accelerate the direct interaction with and sale of products and services to their target segment.
For the IT Services industry in India, this means a rapid escalation of opportunities to move towards true solutions and create new channels of revenue generations for clients. New skills will be needed too because commerce sites are as much about aesthetics and usability as they are about technology and web development capabilities. For companies which are enabling E and M Commerce Transformation, the opportunities are huge !
Digital India - challenge and opportunity
The budget led by FM Arun Jaitley mentioned it and PM Modi's Independence Day speech articulated it loud and clear - Digital India is an agenda that differentiates this Government from its predecessor, which failed to deliver the National Optical Fibre Network to every part of India and left many of India's 600,000 villages and 250,000 Panchayats wanting in terms of broadband connectivity.
If this Government takes the agenda forward and does not leave any of the constituent parts gasping for funds, the opportunities are huge for the country in general and for willing participants in the IT sector as well! There is much to be done, from the creation of smart cities to the comprehensive availability of broadband, from connectivity in education, healthcare, agriculture and manufacturing to a National Digital Literacy Mission (NDLM) that NASSCOM Foundation has already taken up with the Department of Electronics & IT (DEITy). What is important to understand is that like any elephant, Digital India has many parts and each has to be addressed to make the big vision a reality.
Prime Minister Modi in his inimitable style touched all the right chords in his speech, which included in its ambit the opportunities for access to better healthcare , education and information for better livelihood that is at the core of the digital opportunity. A lot will be expected from the National Broadband Mission to lay the digital infrastructure on which many of these national applications can be mounted. In the last couple of years, NASSCOM Foundation with its "Follow the Fibre" approach and the active partnership of technology majors Intel Google and Microsoft has shown that village wide digital literacy is possible with successful outcomes in three villages in different parts of the country and more on the way!
There are two key enablers that make the Digital Literacy Mission an achievable one. The Common Service Centres (CSCs) set up in over 100,000 locations by the Government may have reported only partial success, but enriching them with a curriculum and methodology to give every interested citizen the skills to access and disseminate information can be the first building block. With the planned doubling of the CSCs and the opportunity to layer on skills programs in a host of sectors where qualification packs are already being created in the framework outlined by the NSDC, the same digital infrastructure can also be used to impart job skills.
The second enabler is the availability of a few hundred crores from the CSR funds that will be made available as companies scramble to meet the "2% of profits" guideline embedded in the new Companies Act. Participating in a collaborative mission in both urban and rural parts of India and setting up independent NDLM Centres or enabling schools, libraries, post offices, CSCs or village panchayats to be digitally enabled is a charter that all IT companies would be well served in taking up as part of their CSR portfolio. With companies like Cognizant, Cyient, Zensar and others already lining up to contribute and NASSCOM Foundation playing the lead, there is a lot we can do to make Digital India happen!
Skilling India - Technology can make it happen!
When one talks of a fully skilled India, the enormity of the challenge of getting job ready skills to a population of the size of our vast country can be daunting at first sight. However, a concerted effort to build on the many yeoman efforts made in the past and utilise the institutions that exist on the ground can show the way and appropriate use of Information and Communications Technologies (ICT) will enable shrinkage of time and space distances and make the challenge feasible!
There are three existing enablers that need to be effectively used in addressing this challenge. The first is the National Skills Development Corporation (NSDC) which has addressed the task of skill building in a very scientific manner, setting up Sector Skills Councils to define job roles and qualifications packs for a large number of employable areas and identifying training and assessment partners to ensure quality and reliability in the process. The second is the large number of Common Service Centres (CSCs) that have been put on the ground in all parts of the country, which are intended to play roles beyond facilitating Government to Citizen services and are already, in some states proving to be an effective way of accessing information and availing simple services. The plan to cover all of India's 600,000 villages and 250,000 plus Panchayats in the next CSC expansion and the National Broadband Mission to make connectivity available to all Panchayats will create the backbone of fibre that can be judiciously used for any large program that is now envisaged.
The third and probably the most potential multiplier force is the availability of tens of thousands of crores of deployable corporate funds that will be released under the newly promulgated two percent of profits to be deployed in CSR. While consultants and internal strategy planners are weighing options to spend these funds for maximum real and some corporate benefit, the solution lies in the speech made by Prime Minister Modi to the IT industry, when he was still "Candidate Modi". He had suggested a massive collaborative effort to keep children in school and pave the way for a skills revolution in the country. The National Digital Literacy Mission (NDLM) is the industry's response to this.
In its most elementary form, the NDLM will target to impart basic capabilities in lakhs and then millions of crores of Indians to access data and information that enables better work and life and disseminate the information and knowledge so gathered to the most active user in the shortest possible time. Digital Literacy is not to be confused with IT literacy because it will touch the life of farmers, fishermen and every other citizen in the country. The power of the mission lies in its simplicity, because every computer or smart phone can be enabled to provide this training, from corporate sponsored NDLM centres to municipal and private schools where computers and smart classrooms are already deployed, to public post office and libraries. The CSC network, enabled by a common program, methodology and curriculum and the active participation of industry and civil society, should be the right vehicle to accelerate the digital literacy movement. The allocation of funds for the first phase of the project is an encouraging precursor to the larger Public-Private Partnership that can and should emerge. The vision of digital literacy that one member of every Indian family, a target of two hundred million plus citizens, should be armed with access and dissemination skills in the next few years is massive but attainable.
Digital Literacy in the medium term should prove to be a means and not an end in itself. With the National Occupational Standards falling into place and the Vocational Education Framework providing credence to Vocational skills as a pre-requisite for jobs as well as providing entry paths to formal education and degrees, a massive skills movement can be layered on top of NDLM, attracting and enabling tens of millions of digitally literate Indians to be assessed for aptitude and trained in the NDLM centers and other special purpose skill building institutions to acquire and be certified for job roles in Manufacturing, Retail, Healthcare, Financial Services, Telecom , IT and many other areas.
Skill building campaigns in the past have not met with the success they needed because it could not be placed in the context of employment generation on a mass scale, Today, with the expectations of India having been raised to unprecedented levels and many plans afoot by Government and Private sector to invest in infrastructure, manufacturing , agriculture and services, the National Digital Literacy Mission, if embraced, adopted and implemented by all States, industry associations and all corporations as a cause worthy of support can set in motion a series of initiatives and events that will truly set this country on the path to sustainable double digit GDP growth !
Success must be measured not just by the number of start-ups that start the journey but also the number that adroitly move from proof of concept to real solutions and from early stage to venture capital funding
THE problem with excessive and premature hype is that the euphoria is often followed by disillusionment.The soaring valuations of copycat e-commerce start-ups in the last three years has been reminiscent of the dotcom spurt at the end of the last century. The dotcom bust, when it happened, was spectacular and in India, the failure of nearly 40% of the early start-ups has left a bit of a bad taste in the mouth.So is this the beginning of the end for ‘Start-Up India’? Not at all.On the contrary,it is the end of the beginning and an era of enlightened business models is starting which bodes well for the country and for entrepreneurs!
The start-up movement in the country was given a tremendous boost a year ago with the clarion call given by Prime Minister Modi to “Start-Up India Stand Up India”.The unicorns who reported valuations in excess of a billion dollars were feted and interviewed all over the country with their CEOs becoming instant celebrities. The emergence of incubators all over the country, both within academic institutions and through entrepreneurial initiatives, helped to foster the thought in young minds and even in seasoned executives that it is better to build an exciting new company that creates jobs than to hold on to predictable employment or seek a job in an organisation created by someone else.
However, recent trends have shown that the start-up opportunity is not an automatic vein of gold where everybody can become rich even if the idea they chase is the 60th online laundry service in a city! The dramatic drop in valuations, the dreaded “down rounds” for fresh capital for firms who were the original darlings of investors in the seemingly limitless business-to-consumer (B2C) space and the relative inability of incubators and accelerators to deliver success stories with any consistency has sent tremors through the market and questions are being raised about the sustainability of the entire start-up movement.
The confidence that we will see great success in the next era stems from the opportunities that an economy entering the high growth phase will surely provide.Niche opportunities abound in fintech, healthtech, edtech and,of course,the less traditional areas of Internet of Things (IoT), virtual and augmented reality and machine learning. My own consulting work in the area of digital transformation with some of the major corporations in the country show that chief digital officers are scientifically including start-up solutions in their plans for the future. The participation of central as well as state and local city governments in providing an ecosystem of support will ensure that robust business models can be developed which address a real need in the market-place and support entrepreneurs through all stages of growth.
These stages are best understood by tracing a customer journey, or the way a potential entrepreneur would be assisted through every stage of the arduous journey. The awareness creation process could be done through video and blended learning modules made available through a number of participating engineering, technology and management colleges and even some of the better equipped skills and counselling centres in each city. As part of this process,it would also be worth setting expectations among the wannabe entrepreneurial community and weed out start-ups with me-too ideas that would be doomed to fail without a differentiated value proposition.
Once a worthy cohort of potential entrepreneurs and ideas have been identified through awareness and counselling, formal accelerator programmes offered through a select group of academic institutions and centres would be needed to set the entrepreneur and the potential start-up off on a sound footing. This is the stage at which the formal incubator could come into the selection process,providing start-up capital and space and facilities to take the initial pilots forward and test out the robustness of each idea, product or service before the company has the ability to blossom on its own.
Two important aspects that a city start-up hub must provide is a network of willing corporates to mentor entrepreneurs and open their organisations to test out some of the ideas in a true business environment.And a full funding support system,from angel money to subsequent small rounds of capital all the way to a Series A venture capital round. Success must be measured not just by the number of start-ups that start the journey but also the number that adroitly move from proof of concept to real solutions and early stage to venture capital funding. With all the hype and hoopla that has surrounded the start-up movement in recent times, it is essential for a mature approach to be taken in leading cities to get entrepreneurs on the path to national and global success.
As in the case of the IT sector where seven cities—Bengaluru, Delhi-NCR, Chennai, Hyderabad, Pune, Mumbai and Kolkata created over 90% of the multi-billion-dollar export industry,it is likely that the initial wave of hundreds of success stories will emerge from a clutch of cities.We need to watch carefully, avoid the hype and make “Start Up India Stand Up India” a true success story by 2020. Watch this column for some new ideas!
Executive coaching -A panacea for leadership ills
The Business Manager Article, Ganesh Natarajan
A tale of two professionals will serve to illuminate the new coaching opportunity that executive coaching presents to the capability givers and seekers in the Indian corporate sector. The first is Pradipto Mohapatra, celebrity CEO of the nineties who was one of the pioneers of the Music Retail industries in India with his RPG group involvement. RPG will be recalled for being one of the early movers in these sectors. After stepping off RPG's Management Board a few years ago, Pradipto is busier than ever in his new avatar as Chairman of the Coaching Federation of India. Today, CFI works with senior CEOs to train them for a post line management role as coaches and has multiple members of the senior management community in the country as clients of their coaching services.
TIn a different context, look at Sanjay Chaturvedi who runs Action Coach in India. After a successful sales career in Europe and India for Zensar Technologies, Sanjay took the road less travelled and is not only a great coach in his own right but is also building a network of franchises in the country to take coaching to every corner of the county. Are both these cases just beginner's luck or have they struck a vein of gold which will soon run through the entire corporate landscape?
Coaching is not really a new concept for us because if one digs deep enough into our traditions and culture even the "Guru Shishya" process and the learning embedded in the Upanishads indicate a propensity for people to learn from elders with more experience and expertise through processes that are embedded today in the coaching process. As the Human Capital Management practices have evolved from the early days of personnel administration. Many techniques have emerged including 360-degree feedback, action learning supervisor interview peer interview, behaviour modelling appreciative inquiry and shadowing, all of which form a part of the coaching models in vogue today.
From Cooperrider (1995)'s appreciative inquiry model focused on the co-evolutionary search for the best in people and the relevant world around them to the servant leadership model (Russell and Stone, 2002) based on the increasingly popular concept of servant leadership, there have been many approaches for coaching that deals with the individual in the context of teams in the external world. In 2005, Zeus and Skiffington suggested an approach that combines appreciative inquiry, reflective coaching, observational coaching and business practice coaching to address and deliver pre-defined goals. With the plethora of approaches available, there is no wonder that surveys show that a majority of firms have started using coaching to build deeper capabilities in the leadership and next level management hierarchy.
The times are such, with dwindling economic growth, hyper competition and increasing pressure on leaders that capability in one stream is no longer a guarantee for success in a leadership role. The recent case of IT industry doyen NR Narayana Murthy being pulled out of retirement to return to the Executive Chairman's hot seat at Infosys is a clear indicator that coaching can help even the best management teams in times of crisis. Given the contradictions facing the country and the risks and challenges in front of all senior executives today, it certainly seems that coaching is here to stay as a great tool in the HR leader's tool box and there will be many more worthy professionals of the caliber of Pradipto and Sanjay who will adopt best practices to bring coaching to every executive in the years to come!
Executive coaching -A panacea for leadership ills
The Business Manager Article, Ganesh Natarajan
A tale of two professionals will serve to illuminate the new coaching opportunity that executive coaching presents to the capability givers and seekers in the Indian corporate sector. The first is Pradipto Mohapatra, celebrity CEO of the nineties who was one of the pioneers of the Music Retail industries in India with his RPG group involvement. RPG will be recalled for being one of the early movers in these sectors. After stepping off RPG's Management Board a few years ago, Pradipto is busier than ever in his new avatar as Chairman of the Coaching Federation of India. Today, CFI works with senior CEOs to train them for a post line management role as coaches and has multiple members of the senior management community in the country as clients of their coaching services.
TIn a different context, look at Sanjay Chaturvedi who runs Action Coach in India. After a successful sales career in Europe and India for Zensar Technologies, Sanjay took the road less travelled and is not only a great coach in his own right but is also building a network of franchises in the country to take coaching to every corner of the county. Are both these cases just beginner's luck or have they struck a vein of gold which will soon run through the entire corporate landscape?
Coaching is not really a new concept for us because if one digs deep enough into our traditions and culture even the "Guru Shishya" process and the learning embedded in the Upanishads indicate a propensity for people to learn from elders with more experience and expertise through processes that are embedded today in the coaching process. As the Human Capital Management practices have evolved from the early days of personnel administration. Many techniques have emerged including 360-degree feedback, action learning supervisor interview peer interview, behaviour modelling appreciative inquiry and shadowing, all of which form a part of the coaching models in vogue today.
From Cooperrider (1995)'s appreciative inquiry model focused on the co-evolutionary search for the best in people and the relevant world around them to the servant leadership model (Russell and Stone, 2002) based on the increasingly popular concept of servant leadership, there have been many approaches for coaching that deals with the individual in the context of teams in the external world. In 2005, Zeus and Skiffington suggested an approach that combines appreciative inquiry, reflective coaching, observational coaching and business practice coaching to address and deliver pre-defined goals. With the plethora of approaches available, there is no wonder that surveys show that a majority of firms have started using coaching to build deeper capabilities in the leadership and next level management hierarchy.
The times are such, with dwindling economic growth, hyper competition and increasing pressure on leaders that capability in one stream is no longer a guarantee for success in a leadership role. The recent case of IT industry doyen NR Narayana Murthy being pulled out of retirement to return to the Executive Chairman's hot seat at Infosys is a clear indicator that coaching can help even the best management teams in times of crisis. Given the contradictions facing the country and the risks and challenges in front of all senior executives today, it certainly seems that coaching is here to stay as a great tool in the HR leader's tool box and there will be many more worthy professionals of the caliber of Pradipto and Sanjay who will adopt best practices to bring coaching to every executive in the years to come!
A fillip for entrepreneurship
The Financial Express Article, March 2013, Ganesh Natarajan
After all the hype and hoopla that preceded the budget and the weak stock market response to the final presentation made by our valiant Finance Minister, one can only say that one more budget comes and goes, bringing its share of raised expectations, some satisfaction and some disillusionment in its wake. While most industry participants have welcomed the inclusiveness and development orientation this budget brings, there is justifiable concern if the fiscal deficit target will remain an optical illusion with the thirty percent increase in plan expenditure and no discernible evidence that the GDP is getting back to the growth track.
For the IT sector, not much was expected and it is a matter of some relief that the Rangachary committee recommendations were mentioned by the FM and the safe harbor announcements may soon be made ending the uncertainty that always hangs like a Damocles sword over our multi-country industry. With the current account deficit clearly the biggest concern for the industry there seems to have been an opportunity lost to boost exports by providing incentives to operations in Tier 2 and Tier 3 cities and many more clarifications on taxes and royalties are still awaited. If there is one thing we could not have expected this budget to do, it is providing a panacea for all the ills that plague the economy today. There have been many interesting phrases used to describe the situation the US faces every month, with the eighty-five billion dollar "meat cleaver" cuts problem in Feb and the spectre of another economic shutdown looming in March if the political adversaries continue to merely "kick the can down the road". However the focus on women and the special incentives for technology entrepreneurship are strong positives in this budget.
Entrepreneurship is vital for job creation and job sustenance at any time and specially now when there is overall sluggishness and weak labour reforms that are coming in the way of aggressive job creation in the organized sector. The best opportunity for the Government to create jobs and drive development goals for education, healthcare and financial inclusion is to encourage entrepreneurship. A wonderful case in point is a start-up called NextDrop created in the little town of Hubli in Karnataka by a young Berkeley graduate Anu Sridharan. NextDrop started as a University competition prize winner and began with 375,000 USD from the Knight News Challenge, a competition that "aims to advance the future by funding new ways to digitally inform communities." A classic example of technology applied to a real day to day "aam aadmi" problem, NextDrop uses crowdsourcing and the power of mobile sms to keep consumers aware of water availability in the community. NextDrop plans to cover the entire population of Hubli in 2013 and then offer the service to consumers and utilities in other Indian cities with help from local investors and the Government before scaling worldwide.
NextDrop is just one example of many, of young Indian entrepreneurs from India and overseas creating digitally inspired solutions to serve their home communities better. IT entrepreneurs have the potential to create millions of jobs and find real solutions to many problems that exist in India and abroad. However, IT entrepreneurship and in a larger context, all entrepreneurship needs enabling policies and a vibrant eco-system to spread and grow. The expectations are many and only some of these are directly related to what the Government can do. The current budget through its focus on innovations for rural India and the inclusion of technology incubators under the CSR provision has started to provide this push to technology entrepreneurship and as the year unfolds we need to see a strong focus on start-ups which have the potential to build a new sigmoid of growth, for the IT industry and the country.
A National Entrepreneurship Mission that offers a basket of facilities to new entrepreneurs, from seed capital to incubation to market access and a "Made in India" promotion fund would be some expected Government actions. Other welcome moves would be special incentives to create and support entrepreneurial activities in smaller towns and the launch of special programs in colleges and universities to train young entrepreneurs for successful entry into the world of product creation for traditional businesses as well as new and less explored areas like gaming, mobile internet and electronic commerce.
There continues to be a lot of skepticism about what the Government through tis budget can really do to kick start the economy given its problems with inflation, the deficit and the compulsions to continue the subsidies and hand-outs as the country moves towards the next general election. However one good news that was pointed out to us at a recent industry meeting was that the Government actually managed to reach ninety-three percent of its investment targets in the eleventh five-year plan and there is optimism that if the trillion dollar infrastructure budget in the twelfth plan might actually give the much needed fillip to overall growth in the economy. Pragmatism is the need of the hour and it needs all of us to join the party!
Building an Entrepreneurial Eco-system
The Data Quest Article, March 2013, Ganesh Natarajan
If there is one thing we could not have expected the Finance Minister's budget to do, it is to provide a panacea for all the ills that plague the economy today. His attempt to deliver a budget that does not displease anybody too much while providing the much needed impetus to development and economic inclusion has been reasonably well received by the business community and industry associations but has come in for fire from some think tanks in India and abroad, who believe that the targeted sub five percent fiscal deficit will be well-nigh impossible to achieve with the plan expenditure substantially going up and no signs of revival in the manufacturing sectors of the economy.
One clear signal that the Government has sent out even as it walks the tight rope between the expectations of the vote banks on one hand and the fears of the business community on the other is to provide a string fillip to entrepreneurship in the country. The focus on technology incubators, inclusive innovation start-ups, angel investing and skills development are all steps in the right direction that should boost technology start-ups in the country. The announcement of safe harbor provisions and rationalization of dividend tax from overseas subsidiaries should balance the additional tax most of us will have to pay and one is confident that that few percentage points of additional growth that we expect to see next year will be delivered by the products and services segments of our industry.
Interestingly enough, the major controversy of February for the IT sector was not the NASSCOM growth projections or the budget impact, it was the rather amusing announcement by young and new Yahoo CEO Marissa that she was banning all "work from home" practices. In an industry where work flexibility gas enabled many bright professionals to stay engaged or re-enter the work force, such retrograde steps raise questions about the intent and approach of large firms as they put shareholder priorities ahead of other constituents.
At a panel discussion organized by the National HRD summit in Mumbai recently, an interesting response came from Mukundan, the articulate young CEO of Tata Chemicals in response to a query on dealing with shareholder expectations. Focus on your customer and your employee, he said and shareholder satisfaction will follow. Are some of our bigger IT companies listening? We had a similar discussion at Harvard Business School earlier this year when the case study of Zensar motivating our associates through vision communities and personal excellence initiatives came up. A well-motivated and anchored bunch of talent will do more to improved top and bottom lines than any financial steroid. So let the Finance Minister do his job and do the tough balancing act between industry and people expectations. We should forge ahead and grow our companies by anticipating customer demand and being flexible in our approach to all our stakeholders in times of stress for the Indian and global economies !
New frontiers for Innovation
The Financial Express Article, February 2013, Ganesh Natarajan
A case study presentation and discussion at the Mecca of Management Education the Harvard Business School is always an exciting occasion and when the case being premiered is the Innovation story of Zensar, it makes the excitement truly palpable. Created by Innovation Professor Michael Tushman when he had done a keynote and workshop at NASSCOM's Leadership Forum, this case captures the compulsion, the process and joys of successful innovation, not just at a firm level but for the entire Indian Tech sector.
Innovation in our industry is not new and for over a decade, we have taken the innovation initiative to new heights at NASSCOM, starting with a simple search for innovation in new products and services by small and medium enterprises and then widening the search to process and business model innovation and enlarging the scope to large enterprises as well as multinationals in their work in India. It is to the credit of successive generations of NASSCOM leadership that the enthusiasm for new ideas and new ways of achieving business transformation for our clients has always been at the forefront and it is this unflagging enthusiasm for innovation that has enabled the industry to battle all odds and always emerge triumphant.
The Tushman case itself presents extremely well how one organization that started in the software services business at the worst possible time, the year 2001 after the decline in the Dotcom wave and the Year 2000 opportunity chose a "different point of view" to stand out from the clutter and make itself a valuable partner for even Fortune 500 and FTSE 100 customers. In a market where programming skills were the key differentiator for Indian companies, the service innovation offered was the ability to develop solution blueprints from the study of business processes and create computer systems without the traditional manual programming and testing efforts. The case also recounts how a service innovation morphed into a business model innovation through the ability to deploy people simultaneously in different locations on a common client problem, a true implementation of a global delivery model. And finally how the organization first tends to reject the new idea and then wholeheartedly embraces it as the "holy grail" of differentiation and innovation.
Innovation has been embraced in many firms in the industry, depending upon the scale and scope of the innovation agenda. While many firms have been content to innovate in small doses across the spectrum of products and services, a few have dared to embark on what consulting firm Erehwon calls "Orbit shifting Innovation" and choose the road less traveled in their journey to success. Even amongst Professors at HBS, the approach to fostering innovation have been varied with Christiansen advocating complete spin-outs of breakthrough innovation ideas while the Tushman model of ambidexterity advocates a study of the operating leverage to be derived through simultaneous exploitation and exploration, often keeping an innovative idea within the larger organization to derive its full benefits. And with the new community and open source way of spreading innovation, the Michael Porter research on innovation clusters could point to new models of eco-system development for any set of firms in an industry.
The search for innovation and new ideas to grow and succeed can never go out of vogue in any country or industry. A recent lead article in The Economist pointed out that after the invention of the toilet, there have been few truly breakthrough innovations even in the United States although diehard fans of Apple may find much to disagree with that hypothesis. Be that as it may, there is no doubt that the pace of innovation has perceptibly slowed down, even in the West and the onus is on the new economies of India China and parts of Africa and Latin America to pick up the innovation gauntlet and discover new solutions for the world. Information Technology presents new opportunities everyday whether it is the ability for three dimensional printing to bring manufacturing back to the West or even the power of Big Data to transform election outcomes, as the Obama team so effectively demonstrated in the recent US Presidential election. A strong focus on innovation not just in IT but in other industry sectors will enable India to take the lead and bring many new ideas to the forefront for the country's economic benefit.
For the IT industry itself, the better than expected results reported in the third quarter and the robust order books and pipelines enjoyed by most of the top twenty software exporters has enabled industry watchers to breathe a collective sigh of relief. There will be many challenges in 2013 as the US, having thwarted the fiscal cliff now contends with the debt ceiling issue and the European countries continue to struggle for sustainable growth. But the Indian industry has always been innovative in its ability to garner wallet share from its clients and there is no doubt that we are heading for a much better year. Innovation will continue to be the lighthouse that guides the Indian IT ship in these choppy waters!
Zero Dark Thirty - a call to focus!
The Data Quest Article, February 2013, Ganesh Natarajan
Possibly two of the most significant movies released by Hollywood in recent times have been Lincoln and Zero Dark Thirty. For entirely different reasons of course - Lincoln depicts the traumas and compulsions of a divided polity in the USA at a time when giving the black community liberty was seen as a precursor to giving them and eventually women the right to vote ! And Zero Dark Thirty traces the sequence of events that led to the detection and elimination of the dreaded Osama bin Laden in Abbottabad Pakistan and provides many ideas worth emulating.
The significance of both movies on our industry should not be lost. While Lincoln has timeless value for an industry which has taken a lead in its Diversity and Inclusion initiatives, the extraordinary focus shown by the protagonist in the Osama movie is probably the need of the hour for the three million plus young people who are building their careers in our industry. Recently I had the opportunity to interact with a bunch of Executive Program participants at Harvard Business School and could not resist the temptation to compare their goals and thinking with a similar group at one of the IIMs a few months ago. While the HBS group were full of fire and the desire to go places in their chosen profession, most of the folks at the IIM were from the IT industry, weary of three or four years of programming and seeking to change their career direction altogether.
The dilemma that young people seem to face after a few years seems to be one of some disillusionment, a recurring feature that our HR leaders need to be aware of. At Zensar we have tried two initiatives to engage these young people in activities beyond their day to day tasks with substantial success. Our Innovation and Vision Community initiatives are both subjects of HBS case studies and at least for us, have shown that it is possible to develop and implement engagement initiatives that enable people at all levels in the firm to come together for common causes. There may not be any burning platforms of the magnitude of Osama elimination, but many smaller goals can be set and pursued with the same zeal that the US Seals displayed in the closing stages of the campaign and unleash new energy through the organization !
At an industry level, it is time for a new focus as well. As the global economies begin to show signs of revival, it is important for all us working with global customers to predict the direction in which their industry sectors will progress and configure domain solutions that address their needs. The rise of new opportunities for the engineering services, gaming and product sectors of the industry also needs sharp focus, from NASSCOM as well as industry strategists. Planned investments in these sunrise areas as well as emerging opportunities in the Business Process Management area can yield rich results in the years to come. Even as the successful IT services industry seeks new sigmoids of growth through Mobility, Cloud and Big Data, new growth curves can be created in adjacent areas if we recognize the opportunities that lie ahead. Zero Dark Thirty time maybe for the Indian industry!
Beyond Davos - a warm spring ahead?
The Data Quest Article, February 2013, Ganesh Natarajan
The World Economic Forum's annual meeting at Davos seems to have decided to take the safe path of reiterating the economic challenges of the day and stayed away from any strong predictions - positive or negative about the immediate future. And even as parts of the US suffer an unprecedented Arctic chill and India comes out of its own winter, there is no telling what this spring is going to hold - for the economy, for the people and indeed for the IT industry!
Some realities that have been underlined at Davos are the fact that the economic recovery in the US and some other parts of the world is still tentative at best and the war over currencies is still to be fought which could have a debilitating effect on many export economies. There is no clarity yet on the recovery of jobs in the West and the resultant impact on immigration policies is still to be seen. All in all, not a very clear canvas on which to paint a growth story for the software exports sector in our country but then success amidst adversity has always been our watchword.
The quarter that has just been concluded has demonstrated for most companies that demand continues to be robust and it can be expected that the industry will enter FY 2014 with good order books and reasonable prospects of middle to high double digit growth. The interesting part of the software exports success story in 2013 is going to be the shift in orbit that most successful companies will see, from vanilla applications management to an interesting mix of applications, infrastructure management and business process management. A decade ago, moving up the value chain and being more domain and consulting led was seen as the Holy Grail for the Indian industry. This is the year when the tryst with that destiny will be truly realised and industry will mature as a true transformation partner to our global customers.
The domestic market too, after many hiccups during the previous year, is showing signs of maturing. Government spending, particularly in mission critical projects like Adhaar is beginning to have an impact and it has to be hoped that with the elections approaching, there will be no slowdown in e-Government project spending. The private sector, emboldened by the stock market rampage and the slow but sure return of the feel good factor in the economy will surely hasten investments in better technology and processes and embrace new mobility cloud and big data solutions. This will open up opportunities for small and medium firms with both products and services capabilities who have been through a mini drought in the uncertain year that 2012 has been for all IT players.
In the new dawn that beckons, there will surely be a substantial revival in opportunities for new job creation, both for technical and general graduates and other skilled persons seeking careers in the IT industry. With the new companies bill putting pressure on increased CSR spends, there is an opportunity to provide skills to a wider cross-section of the population. The IT industry has many opportunities in the year ahead!
An inclusive and development oriented budget
February 2013, Ganesh Natarajan
Sometimes the best budgets are those which do not promise the moon and yet have the potential to correct the wrongs of the past and put the country on a new track of progress and growth. Given the tight rope walk that the FM had to do between populist demands in an election season and the growth needs for the business and investor community, this budget is a step in the right direction.
The strongest feature of the budget has been its focus on education and skills and the development of an entrepreneurship climate in the country. The imperative to invest in the skilling of 50 million of our countrymen has resulted in string additional outlays for Education and skills and relief from service tax for vocational education providers. This coupled with the admissibility of contributions to University Technology Incubators as CSR, the support by the National Innovation funds to entrepreneurship ideas focused on inclusive India and the "pass through" support provided to angel investors by SEBI can all enable a new wave of tech entrepreneurs to succeed in the country.
For the IT sector, much has been expected to ensure that India's leadership position in global sourcing is retained. With global economies continuing to be slow and competitors like China, Philippines, Latin America and Eastern Europe nipping at the heels of all software exporters, clear continuation of the SEZ benefits and providing incentives for Tier 2 and Tier 3 cities and product entrepreneurs would help in accelerating exports. The budget has been silent on this although benefits were announced for insurance companies investing in smaller locations. The second expectation was the Government would announce confidence building measures to ensure that customers continue to give India the lion's share of their offshore allocations whether it is through their own Global In-House Centres or enhanced work with third party solution providers from this country. Transfer pricing clarifications and the implementation of the Safe Harbour provisions enacted in 2009 would ensure that both the Indian industry and multi-nationals operating in India grow their operations in this country! Deliberations have already begun in the Rangachary committee on this topic and the FM's promise that this would be completed and Safe Harbour completed in this year is some encouragement for the industry.
There are some other minor advantages from the budget as well including the tax on dividends from subsidiaries and the special encouragement provided to women through various initiatives. Overall the budget does not move the needle much for the IT sector or for that matter for any other industry segment in the country, but if a clear path to fiscal consolidation emerges and the various departments of the Government show the will to implement on time and put in the necessary Governance mechanisms, we can all be relieved that the Finance Minister has put us on the path to renewed confidence and a return to higher growth numbers! During the coming months it is hoped that the focus on reducing the Current Account Deficit will result in further boosts for the exports sector.
The industry looks forward to more e-Government initiatives and the development of a collaborative eco-system between Government, Associations, Financing institutions, Universities and companies to set the Software industry on a high growth track in the years to come.
Nothing to cheer about but a lot of promise!
February 2013, Ganesh Natarajan
The interesting feature of this year's budget was the lack of hype and hoopla that preceded it. The Railway budget earlier in the week and the rather grim economic survey had foretold that there was no chance of some miracle being pulled out of the hat. And there wasn't! This is a budget that did little to benefit most sections of the industry, but then it didn't harm anyone much either!
If there is one thing we could not have expected this budget or any budget to do, it is to provide a panacea for all the ills that plague the economy today. However in an environment where the widening fiscal and current account deficit is causing genuine fears of a downgrade, one clear signal that the investor community expected from the Government even as it walks the tight rope between the expectations of the vote banks on one hand and the fears of the business community on the other has been that there will be a path of prudence followed not just this year but for some time to come. This has been done in the budget and for that we should be thankful.
For the IT sector, there were three expectations, from the budget and beyond. With global economies continuing to be slow and competitors like China, Philippines, Latin America and Eastern Europe nipping at the heels of all software exporters, clear continuation of the SEZ benefits and providing incentives for Tier 2 and Tier 3 cities and product entrepreneurs would help in accelerating exports. The budget has been silent on this and we hope that future policy announcements will ensure this happens and provides a fillip to new entrepreneurs and new destinations.
The second expectation was the Government would announce confidence building measures to ensure that customers continue to give India the lion's share of their offshore allocations whether it is through their own Global In-House Centres or enhanced work with third party solution providers from this country. Transfer pricing clarifications and the implementation of the Safe Harbour provisions enacted in 2009 would ensure that both the Indian industry and multi-nationals operating in India grow their operations in this country! Deliberations have already begun in the Rangachary committee on this topic and the FM's promise that this would be completed and Safe Harbour completed in this year is some encouragement for the industry.
The third and possible the most future focused announcement expected was a boost for young entrepreneurs not just in IT but in every sector of the economy. Entrepreneurship is vital for job creation and job sustenance at any time and specially now when there is overall sluggishness and weak labour reforms that are coming in the way of aggressive job creation in the organized sector. Entrepreneurship needs enabling policies and a vibrant eco-system to spread and grow. This budget has done a lot in this area from the admissibility of contributions to University Technology Incubators as CSR to the support by the National Innovation funds to entrepreneurship ideas focused on inclusive India to the "pass through" support provided to angel investors by SEBI. Add to this the additional outlays and incentives provided for skills and education and, it can be hoped that this will create an environment for strong entrepreneurship in the country.
"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic." — Peter Drucker
These words have been heeded by the FM in his new budget. Overall the budget does not move the needle much, but at least there seems to be a new resolve to right the wrongs of the past and take the country forward. At a time when a new path forward was necessary, the FM seems resolved to find it. It will now have to be seen whether the implementation and governance mechanisms will be put in place to deliver on the numbers that the budget promises!
IT industry is at crossroads
The Financial Express Article, February 2013, Ganesh Natarajan
An oft repeated refrain from other industry players about the IT sector is that the sector has been the blue-eyed boy of the government for many years and now there is no need to do anything for the IT guys—let them fend for themselves! And as a new set of budget announcements is just around the corner, it may be a good time to assess how government policy has facilitated the growth of our industry to its hundred billion dollar level and what more needs to be done now.
There is no doubt that the visionary Software Technology Parks of India (STPI) scheme formulated by the erstwhile department of electronics provided the initial fillip to the industry and encouraged early investors to chase the pot of gold at the end of the software exports rainbow—a pot that many enterprising entrepreneurs did find and continue to fill even today! There are also many excellent initiatives the industry can thank successive IT ministers and the bureaucrats in the ministry of IT for—the IT SEZs, the collaborations to create the Data Security Council of India and the National Institute of Smart Governance and the mission mode e-government projects announced with much fanfare and slowly seeing implementation.
However all this has not just resulted in success for the industry but also provided substantial collateral benefits for the country. Over ten million direct and indirect employment opportunities created, enhanced balance of payments position through exports earnings and foreign exchange repatriations and the ability to say that at least in one industry segment, India is the undisputed number one are just three of the many advantages that a robust software exports sector has given India. Surely a case of symbiotic government-industry relationships that have helped the country a great deal!
The industry is today at a cross-road and will need among other things, some visionary government policy support to continue its leadership and widen the gap with competitors. Today we have competitors like the Philippines, Vietnam, Mexico and of course China nipping at our heels, all aided by government incentives and subsidies for the sector. The IT services industry has matured and is proudly paying its share of taxes all over the world and through initiatives like Nasscom Foundation and company specific CSR and employability initiatives, doing more than its share to work for the cause of national progress. So what do we expect from the Budget? Nothing much, just an effort to pave the way for faster growth and initiatives to help some of the newer entrants to the industry to join the success story!
On the policy front, extension of the good work already initiated by the Rangachar committee with clear interpretations of transfer pricing and safe harbor clauses would be welcome. Continuation of the SEZ schemes to enable large investment decisions to be made and enabling large scale training and manpower development expenses to get tax relief would ensure that the industry growth path is smooth.
To meet the growth and development goals for the country special schemes need to be announced for Tier 3 cities to enable industry to create employment in these locations and special incentives for new entrepreneurs, particularly in high potential segments like software products, embedded systems, engineering services and gaming. A government-industry joint mission on entrepreneurship supported by state governments like MP, Bihar, Rajasthan and many others who would like to claim their place in the IT sun would be welcome. New entrants to the industry would also be motivated by opening up more domestic spending, easing the compliance burden and elimination of dual levies like VAT and service tax that tend to make product development uncompetitive.
A strong movement towards intellectual property creation and promotion for the country would be an initiative that needs to be started this year but would probably need a longer runway than the coming fiscal year. The government and industry, supported by well-meaning entities like Nasscom and the National IT and Knowledge Committees of the CII need to partner to demonstrate that the future course of the industry will be built on solutions rather than just services and IPR sensitivity should be established through extensive training and incentives for creation like the very noble Multiplier Grants Scheme that facilitated industry academia partnerships for the creation of new products. Most important, the government can allocate significant budgets for promotion of the "Made in India" brand and enable thousands of young companies to reach the next level of stability by providing customer opportunities in and outside the country for their products.
A special closing word for the software product fraternity. Companies like Tally have made us proud by holding their own in a market cluttered with multinational product offerings and successful start-ups like Zoho have shown there is value in the India product initiative. The outstanding product conferences held every year in Bengaluru show that there is no lack of enthusiasm. The industry needs to close ranks and work to make this a ten billion dollar segment in the very near future!
