Role of boards must change with changing scenario

Day 2 @ NASSCOM 2008: INDIA LEADERSHIP FORUM

Top IT executives on Thursday called for tuning up the role of company boards that is gaining importance in the rapidly changing scenario in the information technology sector.

"When we came out of the GE model and wanted to be independent, the role of private equity players who were on our board was very supportive," said Pramod Bhasin, president and CEO, Genpact.

"They not only assisted us in setting up a structure, but also made us understand a lot of other issues."

Bhasin was participating in a discussion on "Making Corporate Boards More Effective" on the second day of Nasscom India Leadership Forum in Mumbai today.

"Having said this, since the board members are overwhelmingly burdened with governance issues, they're automatically tuned to think about risks and compliance issues more rather than focus on strategy," Bhasin said.

Among the others on the panel discussion were Salil Parekh of Capgemini, Jerry Rao of EDS and Prof Krishna Palepu, who gave interesting insights into managing board members whether private equity players or former company leaders.

Salil Parekh, CEO and managing director of Paris-based IT services company Capgemini, who is on the company board and is also acting CEO of the India operations, said: "Managing the boards is a challenge. We need to make the board members more active. One of the way to do this is to make them accountable," Parekh said.

This responsibility was even more important today in the context of the growth of companies through mergers and acquisitions.

On this issue, Francois Enaud, CEO Steria (recently-acquired Xansa) suggested that one should not put money and time into small acquisitions. "And if you decide to buy a small company, then see to it that you are able to maintain the niche aspect of the firm in the larger operations."

Sunil Joshi, president, Tata Communications (formerly VSNL) said mergers and acquisitions have to be part of a strategy. "This will allow you to define what the company wants to do, and recognise the gaps that need to be addressed," he said.

Describing the experience of his company, which had acquired two firms, Joshi said, "We had three main strategic requirements. One, enterprise data connectivity was a good growth area. Two, we could still achieve scale in voice. And finally, we needed to enter new markets to capture local opportunities."

John Hall, managing director, private sector and utilities, Vertex, said, "A few things that you need to keep in mind not to do are, losing top performers, ignoring the cultural issues, taking your eyes off the current business performance, under communication and under structure the integration effort."

Joint ventures are another option to enter new markets. But Peter Altabef, president and CEO, Perot Systems, believed that it was not the best option for entry to the Indian market.

"Using a joint venture and its success is directly proportional to the maturity of that market. I would not recommend a JV route to enter India," he said.