Wednesday, January 25, 2006


The Rediff Interview/Lakshmi Narayanan, CEO, Cognizant

'The best minds are in India'

January 23, 2006

Lakshmi Narayanan, CEO, Cognizant Tech Solutions"Reservation in the private sector is a retrograde step. Any system that is not based on meritocracy is not a good system. Nowhere else in the world has it ever been attempted," says Lakshmi Narayanan, president and CEO, Cognizant, which is all set be a billion-dollar company this year.

By recruiting more than 8,000 engineers in 2005, Cognizant became one of the largest recruiters in India. Founded in 1994 as a division of Dun & Bradstreet Corporation, Cognizant in headquartered in New Jersey, USA, with sales offices in Atlanta, Chicago, Dallas, Minneapolis, Los Angeles, San Francisco, Toronto, London and Frankfurt, and development facilities in Chennai, Kolkata, Pune, Hyderabad and Bangalore in India.

In a freewheeling interview with Shobha Warrier, Narayanan expresses his views on infrastructure in India, elucidates how the perception of the world on India has changed over the years,and highlights the attitude of different Indian states to investment proposals.

You have offices in the United States, the United Kingdom and in Germany. In India, you have offices in Chennai, Bangalore, Pune, Hyderabad and Kolkata. How do you compare these cities?

From Cognizant's perspective, the profile of the people working in these offices is different. The overseas offices are our front-end offices working closely with customers, and they are senior people who participate in the day-to-day activities of decision-making.

But those working in India are in the development centres, so they are technology-oriented people with some business orientation. In short, the back-office functions in India and the intensity of the work are very, very high.

How will you compare the infrastructure of the Indian cities? Infosys chief Narayana Murthy had recently remarked that the infrastructure in Bangalore has almost collapsed, and if nothing was done, there may be an exodus to countries like China.

About 99% of the people working in the Indian cities are local Indians who are used to the conditions here. When you bring someone from outside and get them to work here, they may not be able to adjust. Each city in the world has its advantages and disadvantages. But if you look at specific cities within India, again, there are advantages and disadvantages.

An individual needs a good society to live in and needs time to spend with the society, which is pretty much the same in most of the cities except that Bangalore is a little divergent.

In Chennai, you can talk about a social fabric, a culture, and you see a homogeneous set of people working here although there are a number of migrants from outside. But the culture in Bangalore is very heterogeneous and there is no sense of belonging, as there is no local culture there.

When it comes to the much talked-about physical infrastructure, the roads and commuting, clearly the commuting time has increased in all the places. So, we need to reduce the commuting time so that people can be more productive.

We (Cognizant) have the largest number of people in Chennai, and clearly the condition of the people working in Chennai is better as compared to the other cities from the societal and infrastructure perspective.

Do you think that the infrastructure in cities like Bangalore is collapsing?

You really have to look at what infrastructure is. To me, the foremost infrastructure I look at are in this order: educational infrastructure, law and order infrastructure, network connectivity and bandwidth infrastructure. Only then comes the road infrastructure and, finally, the airports, ports and railways.

It doesn't really matter to me even if the airport is not the best as those who working in Chennai do not go to airport everyday. So, it is of less importance to me. Since Cognizant is not a manufacturing company, I don't need ports.

Road infrastructure impacts me because it increases the commuting time and causes inconvenience. Bandwidth clearly impacts us more. I have no complaints in this regard. Educational infrastructure has the higher order of impact, and it is very good here. I am surrounded by engineering colleges with bright people coming out of these places every year.

Law and order, and work ethic are important. They should feel safe moving around, I believe the cities are safe. Although people talk about the deteriorating road infrastructure, and traffic jams, if you look at the overall context, that is relatively lower in priority. But certainly, that is an important issue that can be improved.

Does that mean you are satisfied with the available infrastructure in India? So, there is no threat of you moving to China because you are unhappy with the infrastructure in India?

Yes, we are satisfied being here. People understand the way India is, with all its pros and cons, its dichotomy. It has the richest and poorest people. It has the best and worst hotels. It has the best and worst roads. It's accepted. I don't think suddenly, we need to create a Singapore to succeed.

What are the advantages and disadvantages of India from a business perspective?

In a service-oriented business, the people, their attitude and their talent are the positive aspects, which is the reason for our economic growth. We have hard working people with great and average intelligence, which I guess is much above the world average.

There is a criticism that 70 per cent of the engineers from Indian colleges are unemployable. As one of the largest recruiters of freshers in India, do you agree with this view? Do you have to pump in a lot of money, time and energy to make them employable?

It is all a process of elimination. Two lakh (200,000) students appear for an examination and the top 2,000 get to the best colleges. And, they are directly employable. But if you go to the next 2,000, they are also employable although they require certain additional inputs before they can be ready for the industry.

The next 2,000 may require some more inputs. So, it depends on the number of people you require. If you can take from the top bracket, it is easy.

Do your feel that 70-80 per cent is an exaggerated figure?

Clearly, the number is exaggerated. Even if 70 per cent is not employable, it doesn't bother me because even if they are employable, we won't be able to employ all of them.

How does the US and the rest of the world perceive India? Is it as an IT superpower in the making? Or, is India just a place where cheap labour is available?

India was considered as a destination for cheap labour till a few years ago. Now, there is a clear transformation. They think India has the capability to go far beyond mere programming, they can do higher order of things in technology.

They would like to collaborate with India in the area of space technology. It could be in the area of space research, agriculture and stem cell research. The potency of human mind in India has been realised. IT was the forerunner in terms of creating that visibility much more than any other area.

As far as IT is concerned, where does India stand, when compared to China or countries like the US or Germany?

You have to look at it in two areas. When it comes to technology innovation, the United States tops the charts. They continue to innovate and introduce new products. When it comes to applications, India is a topper.

India's 8 per cent GDP growth is driven mainly by the IT sector. Do you feel our growth is lopsided?

I don't think so. The service sector is growing very rapidly. It contributes more than 15 per cent of the GDP, but it employs only about 20 per cent of the people. To that extent, the employment generation from the service sector perspective is less. The manufacturing sector may be contributing 20-25 per cent and employs about 30-35 per cent of the people.

Agriculture, which employs 70 per cent of the people contributes only about 20-25 per cent in terms of the overall GDP. So, if you make agriculture a little more efficient, the same 70 per cent of the people in the rural sector can contribute more and the overall growth will go up.

Once the Chinese master the English language, do you think India will lose many outsourcing projects to them. Do you feel China will be a big threat to India's BPO industry?

You cannot compare the way India and China are growing. I always say China is ahead of us already in terms of overall growth rate, in terms of social infrastructure and in physical infrastructure. We are only trying to catch up with them!

The demand on the service side is so high that I don't think we need to worry about things going from here to China.

From all over the world, manufacturing is shifting to China. Are we worried about all the manufacturing from India going away? We still continue to manufacture here.

What kind of bureaucratic hassles have you faced ever since you came here to set up Cognizant? Has it come down over the years?

It has certainly reduced. When we came here first, we had to deal with many people to get work done, and it was not that they didn't want to help. Everything was very procedure oriented, and there was no precedence.

Now, the bureaucracy is more aggressive and ready to take risks. Their attitude is a little more positive.

Is the attitude different in different states?

Yes, a state like West Bengal, in an effort to catch up with the rest of the states, is far more aggressive than any other state in the country today. They open up and lay no conditions.

There are some states like Karnataka that have reached a point of saturation that they are indifferent to any more new companies coming there, which is reflected in the bureaucracy.

Tamil Nadu has always been very, very balanced. They never swung from one extreme to the other. Their attitude is, 'We want you here but we will not roll out a red carpet for you. We will be helpful to you. You come and establish yourself.' I think this balanced approach is very nice.

Andhra Pradesh is also proactive but it is not as big as these two states in terms of size.

What are your views on reservation in the private sector?

It is not a good move. It is a retrograde step. Any system that is not based on meritocracy is not a good system. For us to remain the best, we need the best and the brightest people, no matter what their social status is, no matter what any other parameter is. We can come up only through merit, and sustain this growth.

The government's mandate is different and the corporate mandate is different. In our case, whatever we produce, has to be the best in the world.

If the government enforces reservation, how will a private player like Cognizant deal with it?

From the customer's perspective, he will back off a little bit. He may say, I thought I was getting the best capability in India. The reason why I came to India is because the best minds are in India. This is going to impact not just the company but the country as a whole.

From our perspective, if we have to live with that, we have to make extra investments, extra caution to take these challenges. We will have to settle for something that can be done by a broad mix of people. This is not going to help job creation in the country.

This will not help individuals working in the industry who thrive on challenges. They are not going to be excited anymore.

If you want to help the under-privileged, provide them with education and other opportunities so that they become as capable as the others and compete with them.

So, from a company perspective, it is not a good move. From a country perspective too, we will be sending the wrong messages.

Will India's private sector be able to send this message across to the government?

The private sector can reason it out (with the government) and I think the government will listen. Nowhere else in the world, such a thing has ever been attempted.

Photo: Sreeram Selvaraj


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