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BW Businessworld

The Interest Group

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A live advertisement for the success of India's economic liberalisation is the growth of its IT and business process outsourcing industry. No other industry has grown so fast without obvious government support and led by first generation entrepreneurs. The enlightened manner in which the young industry created its representative body, the National Association of Software and Services Companies, or Nasscom, is worth writing about. And that is exactly what Kiran Karnik, its former president, has attempted to do. And, largely, he succeeds.

That said, it is interesting that a business history is not what Karnik set out to write. Karnik sees it more as an exploration of competition and co-operation or, to use the ugly word, co-optetition. The author rightly recognises the role of the government in encouraging this industry. The setting up of institutions such as National Informatics Centre, National Centre for Software Technology, Centre for Development of Advanced Computing and Centre for Development of Telematics would not have been possible without government funding and engagement.

Nor would trained manpower including entrepreneurs be available without the excellent and subsidised education provided by the IITs, IIMs and the RECs. The subsidies provided in the form of tax waivers and software technology parks were unparalleled. The book acknowledges individual contributions of politicians such as Rajiv Gandhi, industrialists and scientists such as Vikram Sarabhai, Sam Pitroda, P.P. Gupta and F.C. Kohli; and bureaucrats such as N. Vittal and N. Seshagiri. And where would have this industry been without GE and Texas Instruments, who were encouraged to source from India by the government?

The real growth of the industry could be traced to a millennial event, the ‘Y2K' problem, where a large amount of software had to be modified to accommodate the change in the first two digits of the year — from 1999 to 2000. Once the industry had the confidence to take responsibility for its execution, it changed from a low-responsibility, body-shop model to a high-responsibility, project-delivery model. This also led to an explosion in requirements for trained manpower, an issue the industry faces even today.

Karnik describes Nasscom's role in promoting quality standards such as the capability maturity model and in funding research in business areas. He also claims, with lesser justification, that Nasscom has promoted the telecom industry as well. He presents the National Institute of Smart Governance and the Nasscom Foundation as the industry's contribution to nation building.

Nasscom, like any industry body, represents the interest of its members, and presents this to the government. No doubt, Nasscom influenced policy-making in India. Some may wonder why. On a lighter note, Karnik traces this to the middle-class roots of its members — after all they were talking to bureaucrats who came from the same stock and there was no lack of trust. But it takes great courage to make this representation directly to governments of other countries, especially the highly sensitive US. That Nasscom managed to do this successfully is an interesting tale in itself. That it was at all able to do this is in itself a tribute to the industry's self-confidence.

The book is ultimately a study of how enlightened self-interest can result in good things, even competitors collaborating. But all said and done, Nasscom is a trade body, representing the interest of its members, and not necessarily all stakeholders. Some of its projects such as National Skills Registry have been criticised for being a hindrance to free movement of labour. And so has been the ‘informal' no-poaching agreement.

The book could have done with solid editing; there is a lot of repetition and some turgid prose. It is not an easy read: since it tries to tell a tale, philosophise and pontificate in the same volume. For a complete history, we have to wait.

Jajodia is chief technology officer at NCDEX

(This story was published in Businessworld Issue Dated 02-07-2012)


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