Pramod Bhasin leads Nasscom at a time when it is passing through the most challenging phase in its history. Hence his priorities are critical. Topmost is “working with governments here as well as overseas to make sure that free trade is protected as much as possible.” Not just governments but people too, what they think “about our industry in the US, the UK and the developed world” when it comes to H1B visas.
Underlying this is the need to “demonstrate that our industry can be part of the solution by making companies more efficient. That’s really what we are all about as an industry. In fact, if you look at analysis, data and statistics on how many job losses have really been caused by our industry, the number is very small.”
His second priority is internal, helping companies working out of India “grow in different areas, territories, globalise more.” This means strengthening connections with countries which either want to run similar businesses or are inviting Indian companies to come there, like Egypt, China and the Philippines. “There are many new markets which are opening up for our industry. Asia is a big growth area for many companies that have invested there. Many of the global companies have in fact made good strides and good growth in Asia. I think our companies can also do that.” Then there are areas like the Middle East, China and Japan and further growth in Europe which have to be addressed.
To lead an industry facing a global crisis requires a particular mettle and Bhasin who leads the billion dollar plus Genpact (he is president and CEO), the foremost BPO company in India and one of the leading in the world, has been up at the front for years. Twenty-five years in GE and RCA and then transforming what was GECIS into Genpact has been a long haul.
The new NASSCOM chief’s task has been made particularly difficult because some feel that the global slowdown, which is not Indian IT and BPO’s doing, has nevertheless revealed some fault lines in the Indian industry — it needs to derisk itself, getting out of its excessive dependence on one country, the US, one business segment (banking, financial services and insurance or BFSI) and neglect of home-base India.
Bhasin can’t let such a broadside pass. “I wouldn’t call them as being excessively dependent on the US. Most big global companies always have a large portion of their revenue coming from the US. We are no different from many other industries, many other companies. The US is the world’s largest economy and is going to be that for a long time.” But of course “there are other markets which we should explore, because those markets exist and it is good business.”
As for BFSI, they are “the biggest spenders in IT and business processes, they always will be by virtue of their businesses. They have the biggest investments in technology.” Certainly there are “new areas which we are all focusing on. The Indian market is looking very interesting. Working with the government, government agencies and government-related bodies is a big opportunity. Helping government improve its governance, its transparency, is a major role that we can play.”
The change, focusing on the domestic market, “has happened already and not because of the recession.” Look at what major firms like TCS, Wipro and Infosys have done over the last two or three years; they have very strong local domestic businesses. “Wipro has had one for a long time, companies like Genpact are focusing on it. So the India story will happen. It’s profitable business and as Indian firms expand, they are looking for support of the IT and BPO businesses from India to help them.”
On the challenge faced by Indian IT leaders from global incumbents, I point to the argument that over the last few years the latter have acquired an India story which has reduced their costs, whereas the Indian leaders have been rather slow in acquiring consulting and domain skills. Bhasin doesn’t think so. “I think it is a little bit of a myth that people have not acquired domain expertise. You can’t grow at this pace and be of the size of this industry without any of these skills. The global players, we must remember, are much larger in total size and have been doing this for thirty, forty, fifty years. You can’t catch up with them in four years.”
But Indian leaders have lost their valuation advantage over global incumbents and there is the forecast for the current year that the former will grow their topline negligibly or remain flat, but latter will grow by 8.5 per cent. “Frankly, the capital markets today are somewhat panicked and, if I may use the word, often irrational. Therefore they are going to wait and see how this plays out, is my suspicion.” As for growth prospects, “I suspect the market is volatile enough so that probably we have to wait for a while to understand where everyone’s topline is going to be. You must remember that currency movements are playing a lot of role in growth rate or revenue.”
The rupee is depreciating and companies reporting in rupees should be reaping a windfall. But in fact what happens is that when you are converting back into dollars, and most of these global comparisons are done in dollars, you get hurt when you are working in all the other currencies like the pound, the renminbi and other Asian currencies.
Bhasin refuses to do much crystal ball gazing. If he could do that “I would be an extremely wealthy man.” The good news is that the recent G20 meet exceeded expectations. Plus the concerted effort of fiscal stimulus around the world is bound to have an impact. “Whether that will lead to total recovery we do not know.”
The market, sentiment and economies had gone down so far that there is bound to be a shorter term pickup of some kind because people will go back and buy necessities and do the things that they need to do, “because frankly everything had been put on hold for a while. So at least there will be some level of flattening out of this so that people can understand where they are and companies can understand the scale of the challenge.”
That’s the time when the Indian IT industry will become a greater part of the solution. “Companies will look to become more and more efficient and I am not sure many people offer as effective a solution for enhancing productivity and efficiency as we do. At that point in time we should be able to see… Now where is that, is it the fourth quarter of this year or first quarter of next year, I do not know. For longer term recovery we should be much more patient. There are many aspects that impact growth today and one of them is clearly companies not taking decisions, or postponing decisions. I think that cycle will change, I hope, within this year.”
In spite of the RBI's rate cut and the Centre's reforms, any recovery will only be half-hearted