------------------------------------------------------- CONVENTION OF THE GOAN DIASPORA FROM GOA INTO THE WORLD Lisbon, Portugal June 15-17, 2007 Details at: http://www.goacom.org/casa-de-goa/noticias.html -------------------------------------------------------
Dating back to 2004... but interesting. --FN http://www.blonnet.com/iw/2004/11/21/stories/2004112100861300.htm 'India has made software mobile' — Mr Francisco D'Souza, COO, Cognizant Krishnan Thiagarajan Bharat Kumar At 36, Mr Francisco D'Souza is among the youngest Chief Operating Officers in the software services sector. Elevated to COO last year, this MBA from Carnegie Mellon was part of the team that founded, in 1994, the Nasdaq-listed Cognizant Technology Solutions (in its earlier avatar as a division of Dun & Bradstreet). Since then, he has been one of the key members of the management team steering the company's growth over the past decade. In a freewheeling interview with Business Line, Mr D'Souza spoke of the key trends shaping the global software services sector. Excerpts from the interview: Is the picture too perfect for the IT services companies? Where does the confidence stem from? Is emulating the onsite-offshore model that difficult for the Accentures and IBMs of the world? The fundamental confidence comes from the fact that offshore has become mainstream. When we talk to a customer now, compared to five-ten years ago, the focus is different. Earlier, our sales and business development activity was more of evangelising or educating the customer about offshore, proving the efficacy of the onsite-offshore model and proving our capabilities. Those days are over. When we walk into a client situation now, our conversation starts from a very different point. Today, clients are willing to consider a bouquet of services around the core competence. Ten years ago, it would have been impossible to sell infrastructure services in the onsite-offshore model. It is not to say that clients are any less discerning but getting the audience and a buy-in is easier now as offshore is an accepted mainstream concept. That has made the process of articulating and describing the value proposition to a client easier. One should not simplify the fact that we have a strong and compelling value proposition. The reality is that relative to the global system integrators, Indian players have a much deeper understanding of doing work in an onsite-offshore model. In India we tend to underestimate and oversimplify it. It is very difficult to build what we have built as an industry. It took the industry over 10 years of learning to build, mature and continue to improve upon the model. If you look at what we execute using the onsite-offshore model today, it is far more mature than 10 years ago, and it has taken us 10 years of collective wisdom to get to the point we are today. So, we sometimes trivialise the model and it is not easy for anyone to quickly replicate or emulate it. There are companies all over the globe in low cost locations but are far away from the capabilities we have. In many client situations, we have been on par with the global system integrators delivering solutions to clients using the onsite-offshore model. It is because our model is so finely tuned. This is not to say that our global competitors will not get there. But it is not as simple as hiring 40 people to gain the credentials of having the capability to deliver from offshore. Some studies indicate that Indian companies are not up in terms of domain expertise or relationships at the CXO level. As Indian companies move up the value chain and the multinationals move down the value chain, are the ground rules changing dramatically in the industry? It is difficult to quantify in absolute terms who has made more progress — moving up the value chain or coming down the value chain. What I can say is that whichever direction one is moving, there are inhibitors that prevent or make it difficult to move in that direction. In the case of Indian companies it is learning about being global, it is about the "cultural journey" up the value chain as much as it's about the capability of moving up the value chain. As you move up, the degree of sophistication and relationship management needs to migrate as well. When you are lower on the value chain, the work you tend to do is transactional in nature. And so the nature of the relationship with the client is also transactional. One can report against metrics and show the client that value is being delivered in an objective way. As one moves up the value chain, the objective or criteria of success becomes less quantitative and more qualitative. One delivers "value" to clients, reflected in more intense and strategic personal relationships. Indian companies are getting to build that capability. The system integrators moving down the value chain have their own set of inhibitors when they enter offshore locations and low cost centres. Their culture has, for years, been providing high value services resulting in higher billing rates, customer intimacy and deep domain knowledge. For them, the struggle is to figure out how to migrate all this to a low cost structure. Both these things are running parallel and that is what is making the industry an interesting place now. Industry analysts say that just because a company services a set of clients in a particular vertical, it does not mean that they have domain expertise. What is your opinion? It is absolutely true. The trick really is how well we extract domain knowledge and institutionalise that knowledge. By the way, that is not a challenge just for the offshore companies, but for the system integrators as well. When we talk of domain knowledge, one should remember that it does have a "shelf life". The banking industry of today is totally different from what it was 10 years ago. So the fact that a system integrator was serving the banking industry 10-15 years ago is irrelevant. It is only the knowledge that you gained in the banking industry in the last five-ten years that is relevant. If we have served a strategic set of clients who define the standards and the best practices for the industry, and have an institutional way of capturing that knowledge, then we are seen as being good at it. We have invested in domain experts, practice leaders and subject matter experts in the US and Europe. If the slump in 2003 were to happen now, what will companies have to do? What is the difference between the dot-com boom and this one? Is this sustainable? It is hard for me to comment on other companies. Cognizant has consistently delivered profitable growth for several years now. We built deep client relationships even during difficult times and continued to, in a way, over-invest in our SG&A for successful growth. A deep client relationship is part of moving up the value chain. That is an asset that has seen us through both good and bad times because we are able to have an open dialogue with our clients. But when companies are more transactional — as some of the Indian companies were and may be some of them still are — they are more vulnerable to the ups and downs in the industry or the economy. We could call the buoyancy we see today as a boom, but it is a different kind of a boom compared to the dot-com days. As opposed to newer business models and the resultant opportunities that were created during the dot-com boom, today, the bulk of the work coming to India is the business-as-usual stuff. What is happening is that India is gaining market share from other parts of the world. Unlike the dot-com days, it is not entirely new work that is created. Some of it is new, but it is the new work that would have been done in other parts of the world. Clearly the pie is not expanding at the rate at which the offshore IT services industry is growing, but we are gaining market share. That is the key difference and that is why we believe that the opportunities that present themselves today are sustainable. There is typical pricing pressure when a client reaches $40-$50 million in annualised revenues per customer. With more customers getting into that band, do you think this can happen much earlier? Cognizant has about 45 strategic customers, of which less than 20 per cent are in the mature phase and the remaining 80 per cent in various phases of evolution in our relationship. Most see pricing as merely a function of supply and demand. It is true. But more importantly and fundamentally, we tend to make things simplistic and think of our business as a cost arbitrage business. The reality is that it is not that simple. It is a challenging business that people have invested in, and there is a business model here. There are very few companies in the world that have the maturity with this business model. The top tier offshore players are the only ones that know to do this well. That is a unique asset and customers are paying for the value of this asset. As a proxy, look at the former Soviet Union or Eastern Europe that also have the onsite-offshore capability in a limited way. You have a number of companies that are trying to be offshore companies. They have a good talent pool but have not been able to scale. I am not aware of a company in these locations with over 500 professionals. This model is hard to emulate and it is not that easy to figure out. So if we have the asset that only four companies in the world have, there is real value and a price for it. But just as software development shifted in the last 10 years to India, it could also go out of India. GE has had the patience to train people and the entire industry could go to, say, South America. Is that likely to happen? One of the outcomes of what India has done to the world — and it can take legitimate credit for it — is to make software mobile. Even 10 years ago, software was inherently tied to the physical location where it was developed. People thought of software as an art, as a craft that needs to be perfected sitting next to business users. But we have made software mobile. As India goes mainstream and moves up the value chain, we would be making more and more slices in the stack mobile. We started with Y2K, then rode the maintenance wave and today we are talking about complex application development and business technology consulting leveraging the offshore model. The implication of that is that it is easy to pick it up now and move it around the world. And that is the future. I do not know when it will gain momentum, but we are already seeing it beginning to happen. We are talking about China as the next possible destination. There will be structural changes, but it will eventually happen. The logical locations though for software will be where the talent is. Software will chase talent. Earlier, in the body-shopping days, talent used to chase software, but today it is quite the reverse. We have software-chasing talent. -- FN M: 0091 9822122436 P: +91-832-240-9490 (after 1300IST) Skype: fredericknoronha Yahoochat: fredericknoronha http://fn.goa-india.org http://fredericknoronha.wordpress.com Email fred at bytesforall.org Res: 784 Saligao 403511 Goa India ------------------------------------------------------- Goanet recommends, and is proud to be associated with, 'Domnic's Goa' - A nostalgic romp through a bygone era. This book is the perfect gift for any Goan, or anyone wanting to understand Goa. Distributed locally by Broadway, near Caculo Island, Panjim & internationally by OtherIndiaBookStore.Com. For trade enquiries contact [EMAIL PROTECTED] -------------------------------------------------------
