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World depends on India's technical skills: Nasscom chairman
Shobha Warrier | June 04, 2007
In this exclusive interview with Shobha Warrier, the new chairman of Nasscom talks about various issues like H1-B visas, the role of the heads at Nasscom and also his plans for the IT industry.
While the president of Nasscom is a full time appointment, the chairman and vice chairman are CEOs of various companies. What exactly are the roles of the president, the chairman and the vice chairman?
If you look at Nasscom as an organisation, president Kiran Karnik is the CEO of the organisation responsible for all the activities of Nasscom. He represents the industry and acts in the interests of the industry.
Then, there is an Executive Council, which has elected members of the member companies of Nasscom. That is almost like the board of directors. The Executive council chooses the chairman and the vice chairman who hold office for a period of one year. Their responsibility is essentially to look after some of the overall long term and strategic issues of Nasscom and the industry. They also provide guidance to the executive team headed by the president.
To maintain continuity in the plans, there are also other mechanisms. The past chairmen of Nasscom become a part of the past chairmen's council, which gets involved in the activities that are long term in nature.
As the chairman, what plans have you chalked out for the industry?
The main thing is there will be a continuation of what has been going on in the past. In addition, I plan to provide thrust in three areas.
One is talent development or skill development for the industry because the demand supply gap is growing. We have to find out a way to bridge the gap.
Second is encouraging innovation. The IT and the BPO industry have grown substantially thanks to the efforts of Nasscom over the past several years but this growth has to be sustained. Innovation is one of the keys to growth.
The third priority area is security of data protection. With so much of back office work going on here, it is important that we create a highly secure climate for business to thrive.
You spoke of the talent demand supply gap. The industry has been talking about this for a long time. In what way is Nasscom going to help the industry bridge the gap?
The current situation is that, in terms of availability of talent, the numbers are good. The problem lies in the suitability of people. The industry has moved forward rapidly and technology also has changed but the educational institutions and the curriculum have not changed that rapidly. So, we have to bridge the gap by providing additional training to the people who are coming out of colleges so that they are industry-ready.
The Nasscom initiative in that area is setting up finishing schools.
All over the country?
Yes, all over the country. And, it is not Nasscom, which is actually setting up the finishing schools; it has only mooted the idea of finishing schools. We have presented a model and also provided inputs to those who have taken the initiative in starting such schools. We also monitor how they are progressing.
Who will run the finishing schools; the industry or educational institutions?
It is being done by the industry, independent companies and educational institutions themselves. All those connected with the industry have found the model quite acceptable. For example, some of the colleges have asked us for material for conducting the finishing schools after college hours, and we have provided materials to them. Then, finishing school becomes almost an extension of the educational institution.
Companies have finishing schools in the form of company specific training programs.
In addition, there are independent schools too. For example, Three Edge is one such school in Chennai, which we support with material, faculty etc. They can take students from colleges, train them and make them available to the industry.
What is the model that Nasscom has suggested to these finishing schools?
Nasscom has suggested the specific areas where training has to be given.
For example, communication skills. Soft skills for students coming out of college is very important. Ability to learn on their own and work in teams are very important for those who join the industry. Then of course, some technology-specific areas demand attention too. These are the broad guidelines given to the finishing schools.
You spoke of the gap between the industry and academia. We have been hearing about the gap for a long time. Why is it that even after so many years, the gap exists? Why is it that there is no interaction between the industry and academia?
That is because the industry moves so rapidly that the educational institutions find it difficult to catch up. Two, unfortunately in our country, the education system is somewhat regulated because of which they lack the ability to move rapidly. If they want to change anything, they have to go through the permission process, which creates a lag.
Is the problem confined to India alone? Or, do other countries also face it?
The gap will be there in other countries as well, but it is accentuated in India because we are talking about very large volumes. If it's just a few hundred or few thousand people, it is possible to manage with a few finishing schools. But the scale at which India has to tackle the problem is so high that it takes a different magnitude. So, it appears like a huge problem in India and not so big a problem elsewhere. It is as if the entire world is dependent on the technical skills of India!
You spoke of encouraging innovation as another plan of yours as the chairman of Nasscom. Can you elaborate on that?
Innovation takes several forms. Innovation could be model specific. We have done this type of offshore outsourcing till now. But what's the next step? Is it possible to work and deliver solutions minimising travel? Is it possible for people to communicate effectively using video conferencing and tele- conferencing facilities and be much more efficient? We have to look at new ways of looking at improving efficiency. That's one aspect of innovation.
The second is looking at the fundamentally new areas. A few years back, we never talked about Business Process Outsourcing. Now, there are specific areas that are coming up like Knowledge Process Outsourcing, Legal outsourcing which we term as innovations of the industry.
The third is coming up with new software products that have universal applicability. For example, there is the innovation from HP using the same soft keyboard for multiple Indian languages.
These are technology specific innovations that Nasscom encourages and showcases.
But even today the thrust of most of the companies is on services. There are very few companies that are into product development. Why is it so?
Because services are more profitable! It is a high growth industry with high profitability, which requires less investment.
Product development is like innovation, is it not?
Yes, it is innovation but if it becomes as attractive in terms of size, profitability and growth opportunities, people will start investing in product development too.
Will Nasscom do anything to help companies or individuals to come out with new products?
Nasscom will not intervene directly apart from acting as a catalyst by encouraging innovation by talking about innovation outside the county, by getting people from outside the country to invest in the research here, by talking to education institutions to increase the number of PhDs that we produce (which is a low number) and tell them the areas where research is needed. This will lead to IP creation. So, it is that messaging that Nasscom will concentrate on.
You spoke of the increasing the security of data as a priority area of Nasscom. There was a lot of noise about the security leak that happened in some of the BPOs�
As we start processing more and more data from here, it is very important to provide a very secure environment so that the customers whose data we deal with have a sense of security. That is the broad object of Nasscom.
In most cases, the data does not physically come to India. We work on the data that is on the servers in the respective locations, in Europe or Asia Pacific region, or wherever it is; we just access it. Even the access, if it is controlled well, it gives a greater sense of comfort among the customers. The initiative is to educate companies on how important it is and what is it that they have to do.
About H1B visas, is Nasscom going to fight for more visas to be issued?
Nasscom has represented that as the quota of 65,000 got exhausted in the first 1 or 2 days itself, it clearly shows there is much more demand. The 65,000 limit is not really sufficient. So, we have asked them to increase the limit. That's the position Nasscom has taken.
There was also criticism by some US Senators about some of the companies misusing H1B visas. They have named a few major Indian companies and asked them for explanation. Will Nasscom be taking a stand on this?
Nasscom has sent a letter on behalf of the nine Indian companies to the two U.S. Senators addressing the issues raised by them about reported abuse of the H-1B visa program, and its impact on American workers. We have highlighted that H-1 B visas are beneficial to both, US and Indian companies, and also to the US economy. It also draws attention to the fact that many US industry leaders have repeatedly stressed the need to raise the H-1B visa cap, which was reduced from 195,000 to 65,000 two years ago.
On the linkage between layoffs and the H1- B visa, we believe that the two do not seem to go hand in hand as exhibited through the 2006 survey by Money Magazine. We also reiterated that while the number of H1-B visas is currently very limited, the H1-B visa is not limited to the IT sector nor to Indians alone. In fact of the H1- B visas granted in the year 2006, nearly 14,000 (more than 20%) visas were granted to American educational institutions.
Now that the Presidential elections are going to take place in the US, the issue of outsourcing has come up again, and that Indians are taking away their jobs. What is Nasscom going to do to dispel this image?
It is a mistaken belief that US-India trade is flowing primarily in one direction. As has been recognized widely, India is a major buyer of a whole host of US goods and services, including aircraft, wheat, branded garments and accessories, etc. An overwhelming majority of the computers and software used by India's IT industry as also other sectors of the economy are those produced by US companies like H-P, Dell, Microsoft, Oracle, etc.
The largest outsourcing contracts from the Indian private sector, as also from the Indian government, have gone to US companies. The rapidly growing Indian economy is importing ever-larger quantities of these goods and services.
Meanwhile, Indian students now form the biggest group of foreign nationals studying in the US universities, spending an estimated $3 billion a year. These indicators of a growing trade relationship complement the excellent political and people-to-people relationship that exists between our two countries.
The above instances indicate, very clearly that India, and its industries are strong proponents of building this further, in a mutually beneficial way.
How do you think the H1B users have contributed to the US economy?
There is a considerable body of evidence pointing to the contributions made by H-1B visa holders to innovation and entrepreneurship in the US, which has resulted in job creation on a scale that is anecdotally well-known and widely-recognized, even though it has not been properly quantified. These contributions have come from nationals of many countries, who have worked in the US under this visa program; needless to say, the Indian IT industry and Nasscom are particularly happy to note the contribution made by Indians.
H-1 B visa holders pay taxes, pay social security and make significant contributions to the local and national economy. Additionally, in the past two years, to combat potential fraud in H-1B and L-1 visas companies have paid more than $300 million in government-imposed fees to fund a State Department/DOL/DHS effort.
It was reported that Kiran Karnik wanted to resign from the post of President. Who would succeed him?
The search process to identify a successor to Kiran Karnik, President, Nasscom has been initiated. We have engaged a professional agency Korn Ferry for the search under the overall leadership of Harish Mehta, former chairman of Nasscom and chairman of Onward, with the involvement of Kiran Karnik and senior industry leaders. Currently, the process is on.
The trigger for the start of the succession process is that the retirement age is pegged at 60 years at Nasscom. We are currently in the process of institutionalizing Nasscom-through appropriate structures, systems and processes and well-defined HR policies.
What future do you see for the Indian IT industry?
Information Technology has become all pervasive and demand from various sectors will increase. Everyone knows that there is going to be a huge demand, and everyone is gearing up for that.
India took the initial lead because we were one of the very few countries that invested in technology education. Now, all the countries are doing it. It is a priority area in Sri Lanka, Malaysia, China, etc. So, we do not know in future how much of the demand will come to India, and how much will go to the other countries. So, it is very difficult to say what will happen in the long term. Still the demand is there and the Indian companies are very well positioned, and they can continue to maintain the leadership they already have.