India and IT: "Like France and Wine"
By Bruce Einhorn
Kiran Karnik has a hard act to follow. The soft-spoken former head of the Discovery Channel in India is the new president of the New Delhi-based National Association of Software & Service Companies, the premier industry organization representing India's brightest hope, the information technology (IT) industry. Karnik's predecessor was the charismatic Dewang Mehta, who relentlessly promoted the interests of India's software companies and in the process became a minor celebrity, appearing regularly on television, in magazines and newspapers, and online.
Last spring, Mehta died while traveling in Australia with other Indian officials (see BW Online, 4/30/01, "India Mourns Its 'e-Genius'"). Karnik took over four months ago.
A media guy running an IT organization? It might not seem like a logical fit. But Karnik is no stranger to technology issues. He worked as an administrator at the Indian Space Research Organization for two decades before setting up the Discovery Channel's Indian operation. He says his experience building up Discovery in India will be valuable to his country's software companies.
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"I want to promote the India Inc. brand abroad," he says. "I want to make India and IT as synonymous as France and wine or Switzerland and watches." With other Asian countries looking to emulate India's software success, Karnik says the best way for India to stay ahead is to compete not on cost but on quality, service, and productivity, things he associates with a brand.
As a software executive in India, he says, "you want Indian IT to stand for something so that you don't have to worry about China or the Philippines undercutting you on cost. The only way we can compete is to move away from the dimension of cost to other areas where we have the advantage."
Thus, Indian companies need to focus on areas such as "assurance of consistent quality, adding bells and whistles, [building] the relationships, and the comfort factor," says Karnik. "Build in the attributes of a brand. In the long run, this will be crucial to us."
As an outsider, Karnik might have expected it to be difficult for him to get Indian software companies -- and Indian bureaucrats -- to pay much attention to his advice. But India's IT industry is not immune to the global recession, and some companies have been hit hard. While the big names like Wipro and Infosys are still growing, they're posting mild improvements rather than the hitting the triple-digit growth rates of the late 1990s.
The result, Karnik says, is that companies have become interested in hearing fresh views on strategy. A year or so ago, "things were going so well that they didn't need advice and would have chucked it in the dustbin," says Karnik. "Now, the industry is reexamining: Suddenly there's an awareness that we have to move around."
Even as he encourages local software execs to become more focused on customers in order to stay ahead of up-and-comers from China, Karnik is telling them how Indian companies can take advantage of opportunities from Chinese customers. In mid-January, Chinese Premier Zhu Rongji traveled to India, stopping not only in the political and financial capitals of New Delhi and Bombay but in the tech center, Bangalore.
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While visiting Infosys' sprawling corporate campus, Zhu caused a stir by approving the company's request to open a branch office in China within 15 minutes of receiving it. Infosys is playing catch-up to rival Satyam, which is scheduled to launch its Shanghai operations in late January.
These moves aren't uncontroversial in India, since some policymakers are wary about helping the country's longtime rival develop in the one industry in which India enjoys unquestioned supremacy. "There are two schools of thought: One says that they are competition, and we should stay away and not aid their progress in any way," he says. "The other school says that we have a window of two to three years in which we are ahead of them, and that we should be using China as a market and should work with them."
Karnik says such concerns about competition from China are understandable but misplaced. "We need to engage [China]," he says. One reason, of course, is that it represents a huge market. China also can serve as an entry point to neighboring countries like Japan, South Korea, and Taiwan, which would help Indian software companies reduce their overwhelming reliance on the U.S. market.
Moreover, Karnik points out that Beijing is determined to progress in developing its software sector, and Indian companies are not going to be able to stop China by themselves. "If you don't [work with them], they will do it with somebody else," he argues. By pushing companies to take advantage of opportunities in China -- and by creating an industrywide brand for India's software houses -- Karnik's new job is to make sure that India doesn't lose its edge.
Einhorn covers technology from Hong Kong for BusinessWeek. Follow his weekly Online Asia column, only on BusinessWeek Online
Edited by Beth Belton