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The Rediff Business Special: Infotech entrepreneurship

'Unless the government does its business on infotech, you can't create an infotech society.'

Rediff On The NeT has made arrangements to carry the transcript of the popular television programme Crossfire. We present the seventh of the series, which debates whether India's infotech entrepreneurship is being nurtured or killed, and features the secretary of the department of electronics, government of India, Ravindra Gupta and director of Skotch Consultancy Services Sameer Kochar. The moderator is editor of A&M (Advertising and Marketing) magazine Sreekant Khandekar.

Sreekant Khandekar (SrK): Good evening and welcome to Crossfire, a weekly programme of debate of business and economic issues. Tonight's subject is -- Can Indian infotech entrepreneurship be of truly world class standards? And will the recently unveiled government IT action plan help us get there? There has been excitement recently because Sabeer Bhatia of Hotmail and Rakesh Mathur of Junglee -- both of them in the US -- have been in the news. Let's take a look at some of the targets in the IT action plan:

India's software exports in the year 1997-98 were $ 1.75 billion. The target for the year 2008 is $ 50 billion that is, a 25-fold increase. The new policy envisages IT for all by the year 2008, which means every citizen will have access to computers. Establishment of a world class telecom infrastructure which would enable the convergence of computers, entertainment and telephone.

To discuss the subject we have with us in the studio, Ravindra Gupta, secretary, department of electronics, government of India, and Sameer Kochar of Skotch Consultancy services. First let us hear the views of Nara Chandrababu Naidu, the chief minister of Andhra Pradesh and Sabeer Bhatia, CEO of Hotmail.

Chandrababu Naidu: My only aim is to make mode of governance simple, moral, accountable, responsible, transparent. That is my aim. By using information technology I want to achieve this. For better citizen-government interaction in future, there has to be citizen information system as well as department information system. Access to information is the key for better governance.

Sabeer Bhatia: There is not enough overall infrastructure in India for an entrepreneur to develop upon. Most of the time the Indian entrepreneur has to tackle electricity, transportation, water, and licensing problems. There are so many people you have to go and away from an entrepreneur's true job which is to develop a product.

SrK: Mr Kochar there have been several enterprises which have started from scratch in infotech in both the US and in India. What are the differences and similarities in both cases?

Sameer Kochar (SmK): I think the biggest difference is that the US is a country in which the system respects the individual and innovation. Taking on from the point from where Sabeer Bhatia left, I think if a person like Sabeer would have been in India today, possibly he would have been unemployed. If you look at any single innovation in the field of information technology, whether it is Hotmail or the Pentium chip, it has always had to have thinking Indians to get out of the country to go to the USA and be successful. We don't have a single example of an innovative idea or a product coming out of India. So there is something in the system here that is killing the entrepreneurial spirit.

SrK: Would you agree with that (Mr Gupta)?

Ravindra Gupta: There is a certain cultural environment prevailing here in India which I think one has to correct.

SmK: Specifically what are the problems in the current cultural environment?

RG: I would say that after a long period of foreign rule, Indians as a people were a little on the defensive. They wanted to ensure that India becomes self-sufficient first and a lot of industrial base was created which has stood us in good stead...

SmK: We have been talking like this for several years, and nothing much has happened. Fifty years after Independence we are still talking about the British legacy. I think we have to unlearn many things from the past.

SrK: Software exports are at $ 1.8 billion, you don't think we have achieved enough?

SmK: We can do a lot of backslapping of each other and take comfort in the fact that everyone is euphoric about what the software industry is doing in India. But as a consultant I am really hardpressed to look at what India is losing out on.

SrK: Don't you think that it is entrepreneurship which has got us to $ 1.8 billion?

SmK: I think it is only the entrepreneurship that has got us $ 1.8 billion. But if these entrepreneurs were free, unfettered by government rules, then this figure would have been significantly higher.

SrK: Would you agree with that?

RG: No I like Sameer's impatience and I think we should have a lot of impatient people in the country. Fifty years in a country's life is nothing. And one could have done better. One cannot argue on that point but I think India has achieved something which really puts it on the pedestal in the community of developing nations. I think we can hold our head high.

SmK: My point is that if India is going to remain perpetually a developing nation until the year 2020, then we have a serious problem here. You know whatever great thing we talk about the software industry in this country, why is it that there is not a single software product developed in India and sold all over the world? Why is it that it has taken an Indian to design Pentium but the money is made by Intel, not India?

SrK: Mr Gupta, you are talking about Sameer being impatient. Why can't the government be also impatient?

RG: If governments are impatient then you will have world wars everyday! No, I must say that to make a certain base for infotech it takes some time. You can't just ignore what has taken place and $ 1.8 billion would not have been there had we not set up the software technology parks.

SmK: That is an interesting point. The total investments in software technology parks is so far to the tune of Rs 150 to 200 million. On the other hand, the government has itself spent about Rs 4 billion investing it in the various autonomous structures whose mandate is to computerise the government. Can you show me any citizen who is happy with the computerisation that has taken place so far, who say they have done a good job? The returns on the investment of these Rs 4 billion and the returns on the Rs 150 to 200 million on the STPs itself tells the whole story.

SrK: Mr Gupta, tell me, does the government, have any role to play in the infotech industry?

RG: You cannot ignore the fact that unless the government also does its business on infotech, I don't think you can create on infotech society. What is Rs 4 billion for such a large country? I agree that we have to move faster.

SrK: If you look at examples of the extraordinary success, we have to talk necessarily first about the US because that is where much of the innovation is taking place. What are the circumstances or the surrounding support services that have allowed these people to come up? As you said Sabeer Bhatia could not have been here.

SmK: I think we make too much of the infrastructural problems that are there in the country. If you look at the entrepreneurs in this country, they are beating the infrastructural problem for a long long time and they have learnt to live with that. That is not saying that infrastructure should not improve.

SrK: Many of these people who have done well in the IT industry were supported by venture capitalists who not only brought money but also got a lot of management systems which an entrepreneur would not be able to do on his own.

SmK: I don't know if you are talking about people like Sabeer Bhatia. He in fact had a tough time getting somebody to fund the Hotmail in the United States.

RG: Some problems will always be there in every society, let us not compare ourselves with the United States. I would say that venture capital in United States had done a lot of good. We are trying to create the same kind of framework here. It requires amendments in the company law, the income tax laws, the RBI guidelines and the SEBI guidelines. I have submitted a package to the government, and amendments to the company law are already in the process. I am sure that very soon we will be able to establish a framework which will give a fillip to venture capital in the country. We are also setting up a software development fund in which we will meet 50 per cent of the cost of production packages.

SrK: Coming to the IT action plan, Mr Kochar, you seem to have very strong views.

SmK: I think the government is trying to bring in a lot of controls and measures by trying to do a lot on these 108 points when the country has basically four major problems that need to be cracked.

If you look at software exports, the biggest problem that we have is qualitative and quantitative availability of manpower. If you look at your productivity level in 1996, it was seven dollars per head per hour which has gone down to five dollars and three cents in 1997, which means that an Indian professional sitting in India is earning around five dollars, which is less than the earnings of a US national. And at that productivity level if you need to do $ 50 billion in the next 10 years, you need about four million people. That is a deficit figure now. And your education system has a turnout of only 650,000. So my first point is, neither has the IT action plan identified the problem nor has it proposed a solution to it.

RG: I understand the point which Sameer has made about manpower. There are actually two issues -- one is that in software this country has to move up the value chain. We would like to move to somewhere close to 100,000 during....

SmK: How will you do that? If you look at what the action plan has done, it has broadened the definition of software to include even computer typing as software!

SrK: Why do you say that?

SmK: Software enabled services are basically data entry services -- somebody has given dictation in the US and you are typing...

RG: Sameer, what should the government do apart from trying to exploit export possibilities? This country has to create employment and gainful employment, and IT enabled services in fact can create more employment than software exports can. You should read the IT Vision 2010 document that the department of electronics has prepared. We have gone into details. I mean obviously this first report of the Task Force was not supposed to do that kind of thing, it was not supposed to do a voluminous affair, it is not. And I absolutely agree that this country has to generate a much larger number of high-end software professionals. I have several actions already underway to achieve just that.

SrK: Would you specify?

RG: You see, we are doubling the whole intake in IIT, regional engineering colleges, the Indian Institute of Sciences and other important engineering colleges. Secondly, we are establishing a sort of virtual university where these IITs, RECs and some 35 institutions will be networked. There will be two things --- one they will provide some kind of finishing training to a fresh graduate. Another thing that we are doing is that we will establish an advanced diploma programme which will generate about 50,000 professionals.

SrK: Don't you think that private sector can't generate the professionals?

RG: Not necessarily, private sector should also contribute. I am also having dialogues with NIIT, Aptech and BITS to see that they contribute to the generation of these high-end professionals.

SmK: My point here is that Mr Gupta is talking about a very meaningful document that the DOE has prepared but the centrestage today in the country is what I get to see in the IT action plan and not the 2010 document which is supposed to have this? Maybe you need to get your marketing act right?

RG: Sameer, you should not only read IT action plan but also the document?

SmK: But coming back to the point, you know there seems to be a lot of political, bureaucratic and Task Force-oriented backslapping and brouhaha about the fact that we have opened the field for typists. I don't have any opinion on that.

SrK: Do you think, Mr Gupta, that the IT action plan will help the quality of entrepreneurship in infotech within India? Or is it meant to achieve a broader kind of target?

RG: As said, this action plan does give entrepreneurs an edge; it improves the playing field. It gives certain opportunities for our infotech companies to grow, whether it is dollar stock option, opportunity to acquire companies abroad, working capital and term loans, and venture capital. This will create a much better atmosphere.

SmK: I think it is always the entrepreneur who ends up slogging anyway, because if you look at the action plan, it totally agrees with all the good things it is supposed to deliver. But it is delivering to only a handful of companies. It only helps big guys get bigger. Take the dollar option, for instance. How does an entrepreneur who doesn't even have Rs 3 million to start a business, going to go for ADRs and GDRs? It is just that the Task Force is making a noise about all these things. I don't think anything has been done for the industry.

SrK: I am afraid we are running out of time. Let me sum up. Mr Sameer Kochar seems to believe that there is too much enthusiasm about the IT action plan without the arithmetic being worked out. The target of $ 50 billion as exports may not actually work out. Mr Ravindra Gupta thinks that in the life of a country 50 years is but a moment, while he concedes that several things ought to be done. He also points out the circumstances under which several others things have already been achieved is not insubstantial. Thank you so much for being with us for this episode of Crossfire.

EARLIER CROSSFIRE TRANSCRIPTS:
• 'Industry should have its own consumer complaints cells'
• 'PSU divestment is degenerating into a fund-raising exercise'
• Opening up the insurance sector: 'Will financial infrastructure be with Indians or with MNCs?'
• Takeovers, mergers, acquisitions: 'Companies still treated as family property'
• Is the tariff structure hurting Indian industry?
• The BJP's national agenda for governance

Kind Courtesy: IN TV

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