oldarticleonitvoyageofwestbengal

The IT voyage of West Bengal

Roopen Roy

(The author is the Managing Director of PricewaterhouseCoopers Ltd. He is also a member of the Executive Council of Nasscom. The views expressed in this article are personal).

When PwC moved to Salt Lake in 1995, one of my colleagues and I literally chased a snake out of our premises. The only other establishment of substance then was R S Software which had the distinction of setting up shop earlier than any of us.

There was no public transport, no shops even to buy computer stationery, no travel agent, no restaurant or food court- no supporting infrastructure. The roads inside the complex were appalling .There was a ready mix concrete plant polluting the area. One saw vast tracts of land where unkempt grass grew like a hippie’s hair and cattle roamed about in a leisurely pace. Selling Calcutta to the US and European customers was tough. They were all mesmerised by the “Bangalore” brand that was rightly the poster child of India’s digital revolution. Calcutta had a negative image and was not in the list of happening places.

And yet despite all this adversity, in less than a decade a vibrant IT industry has germinated in Salt Lake. The credit should go to entrepreneurs and investors who felt that their task was to light candles, not to ceaselessly whine and curse the darkness. If one asks me to isolate two critical factors that led to the development of the IT and ITES industries in the state, I would say they are the quality of talent available and the “never-say-die” spirit of the entrepreneurs and entrepreneurial managers who forged ahead despite odds.

If we want to do some crystal ball gazing about the future of West Bengal’s IT and ITES industry , we must look at the global scenario and grasp the transformation that is underway in the international marketplace. The outsourcing market alone is close to $ 80 billion dollars. Global businesses are under constant pressure to be creative and innovative. To stay competitive or to gain a competitive edge, businesses must reduce costs dramatically, enhance productivity and quality. And, of course, focus on its core competence. Offshoring is a new mantra on their road to performance improvement and improved profitability.

IT Offshoring in India began as a cost arbitrage game. It then evolved into a quality/productivity play. One of the emerging key issues now is the availability of high calibre talent. Demographic studies show that the US and Europe (and, in particular, Europe) will show a decline in the working population to total population ratio. In 2003 , India had 543 million people who were below the age of 25.In comparison, the top 4 countries( in economic terms, purchase power parity adjusted) had 661 million people (37% of the population).

What is future trend? In 2013, India will have a full 62% of its population (750 million) below the age of 25.In comparison the top 4 countries will have 33% (625 million) in that age bracket. Thus the slogan now is cheaper, faster, better and there. Thus apart from cost, quality and productivity , sheer availability will be an issue.

While I fully agree that unless we improve our agricultural productivity and become a major player in manufacturing in chosen sectors, we will not be able to lift our people from poverty, I am often struck by the lack of appreciation of the role being played by the IT services sector in the growth of the Indian economy. In 2002 itself, the IT sector had a combined turnover of $12.5 billion which is roughly 2.6% of our GDP. It also contributed to 10% of our Forex inflows and provided employment to 1.5 million people. By 2008,the industry will generate a turnover in excess of $ 80 billion, employ 4 million people and will constitute 7% of our GDP.

The largest component of the industry will be-hold your breath-the IT services sector and not BPO. It will contribute a robust 30%, BPO will contribute about 24%, products and technology services will account for 11% and much of the balance will be contributed by the domestic market.

While it may sound ridiculous, there is no doubt that in the near future the IT services industry will be resource- constrained unless aggressive steps are taken to enhance our ability to increase our talent pool. The reason why large global players like IBM, GE, Accenture, Microsoft, HP, Oracle and big Indian players like Wipro, TCS, Satyam and Infosys are setting up multiple centres in different parts of the country is precisely to enhance their access to untapped talent pools. Talent reservoirs are dwindling, staff turnover is rising and competition for resources is becoming fierce. They are in the game of locating the power plants at the pithead.

The Government of West Bengal has declared its ambition to become one of the top three players by the year 2010 when it aspires to contribute 15% to 20% of the country’s IT revenues .Even at 15% this will require a revenue of at least $8 to $10 billion which is roughly three times the current size of Infosys, TCS, Satyam and Wipro all put together. I believe in stretch goals and ambitions.I am all in favour of bold and courageous targets without which great transformations can never be achieved. But I also believe in accountability.It will be extremely important to track and report the progress every year, if not every quarter and not leave the evaluation until 2010. It must also be appreciated that the government itself cannot achieve this goal. It can play the role of an enabler and a facilitator. It is only the IT industry in the state which can achieve this aspirational goal.

All debates on the growth of the IT industry is unfortunately misframed in physical infrastructure terms and misses the key issue. Of course,West Bengal, like all other aspirant states must invest in infrastructure (both physical and IT) at double quick speed. But that is not the elusive magic lamp of Aladdin. As the Red Queen said to Alice in “Through the Looking Glass”:

“'Now, here, I see. it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!' But physical infrastructure is not the elusive magic lamp of Aladdin. :

Physical infrastructure is only a baseline attribute. It will give any state a ticket to the game in the global IT services marketplace. Without infrastructure which is world class, a state will not even have an opportunity to play on a sustained basis . The winning attribute that will differentiate a winner from a player will be the availability of a vast talent pool that is trained in the latest technologies. The other winning attribute will be the ability to produce and attract entrepreneurs, leaders and managers who are creative , innovative with vision, leadership skills, courage to take risks and a passion to create centres of excellence.

West Bengal must not only be able attract new investors and entrepreneurs but also to support, applaud and nurture those who have already invested and have success stories in the state. TCS, Cognizant, PwC, TCG, R S Software, Sclumberger-Sema and IBM are as important as the targets that the state may be pursuing –the GEs, the Satyams and the Infosys Technologies of the world.

The key to West Bengal’s long-term and sustainable success also lies in the ability to attract major investments in education -in engineering colleges, institutions of learning and in upgrading the quality of education right from the school level. Focusing on improving proficiency in the English language must be part of the key agenda.

Currently, there is a lot of storm in a coffee cup over offshoring. It is important not to be swayed by sensational media headlines and hype about offshoring backlash. Offshoring is here to stay and grow into a $80 billion industry. India and indeed West Bengal must adjust its sails for the long and adventurous voyage ahead .It will be one of the most rewarding voyages in the digital seas in search of global markets: generating employment, creating wealth and bringing economic prosperity.

I believe the harbour to which West Bengal will sail will depend on our vision and our strategy. To me the core of this strategy is simple:Invest in talent and they (investors) will come. We must have conviction that the backlash to offshoring will calm down and we must continue to invest in our future. West Bengal ,and indeed,India must have unwavering faith in the future of the IT services industry.

This sentiment is best expressed by an American poet Ella Wheeler Wilcox:

One ship sails east and another west while the

self-same breezes blow

'Tis the set of the sail and not the gale that

bids them where they go.