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Wednesday, Jan 28, 2004

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Tenth Anniversary Special - Corporate

`India is a bigger market for IT than any other' — Mr F. C. Kohli, former Deputy Chairman, Tata Consultancy Services

Preeti Pandey

We missed the industrial revolution due to reasons over which we had no control. Today, there is a new revolution — the revolution in information technology, which requires neither mechanical bias nor mechanical temperament. Primarily, it requires the capability to think clearly. This we have in abundance. We have an opportunity to participate in this revolution on equal basis — we have the opportunity even to assume leadership.

— From a speech by Mr F. C. Kohli of Tata Consultancy Services, at the annual convention of the Computer Society of India in 1975.

TCS is the oldest and the largest software company in India. Under the leadership of Mr F. C. Kohli, TCS had spearheaded the pioneering efforts in creating a globally recognised brand for the Indian software. .

Excerpts from the interview with Mr Kohli former Deputy Chairman of TCS:

How has the growth of the software sector been?

We are moving up the growth ladder. The software industry is growing at 20-22 per cent per annum. There are two kinds of software — one is the lower-end, and the other, higher-end. We do a lot of lower-end software — BPO and all that — in this country and we need it. It generates employment and brings in foreign exchange.

But companies such as TCS are moving on to the upper-end,which is more complex — more mathematics-oriented, more business-oriented and computer science-oriented. Have we missed the busout on hardware?

Yes. IT is both software and hardware. But now some of us are talking about how we can catch up. We missed out because of government policies. I say that hardware needs the same kind of entrepreneurship that we have in software.

Has listing of software companies on the stock exchange made any difference to the sector's growth?

No. It is not because of listing of companies in the stock exchange that the business has grown. It is just that the business has been growing. Don't forget that even today India's software business is not more than 2 per cent of the world's software.

Do we need to focus on products now?

How can you focus on products when you don't have experience? If you are manufacturing based on reverse process and buying technology from outside, then how do you make a product? First you design some manufacturing software and this has to be first used in the country itself right.

We have already produced good banking (software) products.

Do you think we should have focussed on markets other than the US?

We could have. But the language skills are lacking. We have been making software for English-speaking people. How many people with Japanese language skills do you have today? When you train people in other languages you will be able to explore other markets, but not today.

What has been the impact of the backlash in the US and elsewhere on outsourcing contracts coming to India?

This has not become a big issue. Show me one instance where it has. I do not think there is a real backlash; if there was a backlash, business would go down. You saw the Infosys results. They are a public company and recorded 28 per cent growth, and this result is better than last year. Losing a client is a part of the business risk. Remember the software industry is growing at 20-22 per cent, and that is good.

Job resentment? Well, if people are going to lose jobs, won't there be resentment? This is a part of the business process where some people lose jobs and some don't. Look at your own country and don't get carried away by what happens in Indiana. Look, we have already established the India brand; we have now to market it more aggressively, and develop software in other languages and also learn how to develop products.

Does inexpensive labour give Indian software firms an edge in pricing products?

How can you call it cheap labour when no software engineer gets less than Rs 5 lakh per annum? And, internationally, a labourer who works in the automobile sector or operates a power loom also gets the same benefits, doesn't he? And nobody sells software because of the billing rates.

It is the quality and character of the software that determines the price. It all depends on how you market the product. The biggest shortcoming in India has been marketing capability.

What has driven the success of TCS?

We were very clear about our vision and I had outlined it in my address to the Computer Society of India during my presidentship in 1975. I had said then that this is the technology in which we can not only hold our own but also excel and become world leaders.

TCS was the first to come here (software services) and this helped to sort out several problems. The perception in some quarters within the country itself was not positive. It took three years for us to get our first computer for our (software) centre ready.

Many people say TCS has missed the IPO bus...

TCS will never miss the bus. I mean, it will go public sometime, but when it goes, it will get its value. After all, value has been put on what profits are made, what your business is, how many good managers you have, and so on. TCS is the leader; there is no question about that and will remain the leader.

How do you view the competition from China?

The Chinese have gone basically for hardware and they are also in software because they have five times more computers today than we do.

So, you see, what they have done is written software for their own purpose; for their agriculture, education, e-governance, health care and transport. But that is written in Mandarin and Cantonese, which cannot be sold abroad.

But they have used that for their manufacturing process and that is why over the past ten years they have become leaders in all kinds of manufacturing, including electronics. Last, year they made $30 billion through computer hardware.

We, in India, have all the time been harping on software for exports. Don't the 1 billion people here need software? And look at how we are progressing. China is adding 10-12 million computers a year and, of that, 8 million are made indigenously. And you are pumping in two million and all two million are imported.

So you mean to say software firms need to start looking at the domestic market more seriously?

We have a big market and we have to work on developing it. The Government also needs to have focus and the problems are immense, with nearly 18 languages here. China has it good with just two languages.

Finally, you export only those items that are used extensively in your country. Your own country becomes the testing ground. It is true for hardware, any hardware manufacturing, even for shoes, and the same is true for software. Also, tomorrow we will need a lot of software to push this country.

Look at the railway reservation system; you can make reservations on the Web. Earlier, it was a ticket printing system and computers were not being used effectively. The issue is, if you are serious about it, you can apply computers to get lots more benefits, and the same is true for education. What we can and need to do is use computers to improve literacy. India is a much bigger market than any other market.

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