Managing / Leading in Difficult Times by Krishnakumar N, CEO, MindTree – NASSCOM Noida CEO forum
Loading ...This initiative of NASSCOM is under the aegis of the NASSCOM CEO Forum – Noida series of the NRC-Noida, chaired by Mr Harsh Lohit of HeadStrong and hosted by Mr Vishnu Dusad of Nucleus Software in his sprawling office complex. Incidentally, this session was eighth in the series but certainly the first one in many ways. Not often, do we get to rub shoulders with 40 CEOs from the NCR region who had all taken time out from their busy schedule to hear the iconic CEO of MindTree, Mr N Krishnakumar, on a topic which has impacted just about everyone. He is an old friend of NASSCOM, and truly a global leader, who has actually experienced “scaling up” by leveraging on the global delivery model. When there is intellectual stimulation, can a gastronomical extravaganza be very far away? We think not, and all credit must go to Mr Vishnu Dusad and his office for organizing a sumptuous breakfast, fit for kings (read CEOs). Without further delay, let us see what little pearls there were for keeps and how Mr Harsh Lohit welcomed the group and set the house in motion.
In times of difficulties, one man’s voice never fails to elicit strong response and that is Wingston Churchill. The way he kept the morale high for his countrymen even as Britain was facing difficulties, is really exemplary. Notably enough, the presentation was kick started by one such gem: “the voice of freedom never faltered, even though it stuttered”. No matter what, the human spirit will always conquer adversity by staring it right down in the face. During the current meltdown, there has been several rejoinders, most commonly being repeated, “ will India lose its place in its fight to attain global supremacy in the IT space”? To quell this doubt in the minds of many, it is worthwhile to examine some facts in the right perspective.
Indian IT Services from 1998 – 2008
- We have contributed 8% of incremental growth of GDP in this time period
- An average of 18% incremental growth in software exports
- Total Software Exports, to the tune of 40.58 Bn USD in the last financial with a current growth projection of 15 – 18%
- Created 2 million direct employment opportunities
So, it is evident, there is still headroom for continual growth, albeit, the daggers are out! Moreover by 2020, in about a decade or so, this industry currently a staggering 500 Bn USD would take the shape of a leviathan, tipping the scales at 1.2 Trillion USD. However, what is expected, is a paradigm shift, from our existing thought process and the very way we do business.
Headroom for growth
We are already witnessing entirely new emerging markets, business models and segments, in the likes of IMTS, Infrastructural Management, with a special focus on RIM amongst a host of others. At this juncture, what Indian IT companies need to do is really leverage on these emerging opportunities and create a distinct USP, which will distinguish it from the rest.
To Plan or Not to Plan
In the very own words of Jamie Damson, the CEO of JP Morgan, and to quote him “I am shocked at the number of people who still worry about their strategic plan for 2009. We cancelled all that stuff – all of it”. Interestingly enough, he said this from the perspective of the size of his operations but for most of us, we must use this as an opportunity to plan ahead, but not too much ahead, lest we fall into the “paralysis by analysis” trap.
Overview of the crisis
The current markets are experiencing what is known as a “credit squeeze”, which is choking the overall cash flow of most business houses. Cash is king, seems to be the mantra and people are willing to sacrifice margins for shorter credit span and faster turnaround time (TAT). There are various theories also doing rounds, as to the what the IT budgets of Global companies would be in the next few quarters or so and often varies between flat, to cuts of 5-10 % or more, with a few even opining that an increase of even 10% or so would be greatly welcomed. Pure music, in times of adversity, one may add.
Whichever side of the fence you are on, what is clear is that there will be no transition overnight and the current pall of gloom would linger for anything between 12 – 18 months. Revival, if any, is expected only in the latter half of the year.
Offshoring Business
There seems to be an anticipated cut of 5-10 % in the global offshoring business that comes to India but it is also a widely held belief that there will be no dramatic shocks ahead and decrement, if any, would be only minimal. The time is ripe for companies to partner and collaborate.
Strategic Implications & Key Levers
Now is the time to focus only on markets / operations / segments / customers, which are scalable and strategic to the business. We must relook at the existing practices / industry verticals / products / customer profile and consciously “give up” on what is not scalable and inherently strategic in nature. This industry was never known for managing costs well but now it has become imperative to deliver global value at Asian cost levels. We may have to re engineer our costs to remain competitive. Some may choose to grow at a higher growth rate than the market itself, thereby capturing valuable market share.
- Customer focus and deepen engagement levels. CUSTOMER
- To focus on managing receivables and reduce outstanding. The rate at which businesses are going bankrupt, it makes sense to collect payments while the sun shines. CASH.
- To strive for Delivery Excellence and create value addition beyond “just delivery”. VALUE ADD
- Aim at “cost removal” altogether rather than simply “controlling cost”. COST REMOVAL
New Market Segments
- Energy & Utilities / Govt / Healthcare
- Defence
- Engineering Services
- SMB
The way forward as most see it, is investment in Frameworks and reusable components. At all times, optimism must be balanced with realism.
People
Time to reevaluate competencies and compensation structures, to do justice. In times of recession, communication with employees is imperative, to keep the crowd motivated. Re skilling and investment in training to combat job uncertainties is also required. Finally, we must all remember that relentless optimism is a force multiplier, tough times don’t last but tough people do.
Brainstorming Session, by the Group – Industry Speaks
Mr Harsh Lohit of Headstrong, is of the opinion that acquisition of assets during recession can be a survival strategy for companies who are “cash rich”. After all, pricing is most competitive during depression. It is important to PLAN, and plan ahead. He talked about how increments were frozen in his organization but impressed upon the need to stay connected with the workforce through communication, training and showing each individual a possible career plan.
Others opined, that the Retail sector in the US was badly hit, which was effecting India and the need to explore new markets such as Middle East and South Africa, was ever increasing. There were enthusiastic responses from CEOs of Artech, QA Infotech and Grape city which could be summarized as:
- The importance of staying connected with the customer and constantly deliver value.
- Embracing the Private-Public Partnership model
- Reusability of components in various projects, so as to drive down cost
- Explore opportunities of writing software for “other than English speaking” users, who provided a huge market really.
- Pricing to be made competitive
- Emotional connect with existing business lines should be done way with and activities be undertaken, only if it makes sound business sense. It was imperative to develop competencies by being focused and not try to do everything for everyone.
- This industry was never focused on cost as a business driver but now it was slowly dawning on everyone that controlling facilities and cost thereof was becoming a reality which lead to belt tightening measures.
- However, just about everyone agreed that we should not end up as control freaks and kill the distinct spirit of the organization. Each to his own and in difficult times, managing morale was really everything.
The meeting was then adjourned for the day and a round of applause greeted the vote of thanks, made by Vishnu Dusad, who left us with the most important thought of the day. We should all be responsible in exercising our voting rights and should never elect leaders whom we do not want.
Post contributed by Soumitra Dasgupta, NASSCOM
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Very interesting, thanks for this