NANDAN NILEKANI is one of the seven co-founders of iconic IT firm, Infosys Ltd. Currently co-chairman of the firm he has been actively involved with the Indian IT industry, and has virtually been a spokesman for the sector. Nandan is also chairperson of the Bangalore Agenda Task Force, which has been actively lobbying with politicians and bureaucrats for improving the quality of life - and the physical infrastructure - in the city.

When the history of India of the last 60 years is written, the chapter tracing the growth of the information technology sector would indeed be one of its most glorious. Do you expect the IT sector to continue contributing in such a major way to the country’s growth over the next few decades?
NILEKANI: The Indian IT sector has had a unique achievement. All western developed countries have evolved from agriculture-based economies to manufacturing. Finally, they ventured into services. However, India has leapfrogged into IT services, that too, high-end like knowledge outsourcing processes, which is a mega achievement. If we continue to improve the quality of human resources and urban infrastructure, the IT sector can achieve much more than what has been projected. At present, it contributes three per cent to the nation’s Gross Domestic Product (GDP). It is the largest employer in the private sector. In 1991, India’s IT exports were $50 million. By 2007, it crossed $30 billion. It took more than a decade for the sector to reach this stage. However, it will take just three years for it to double to $60 billion. Consequently, the sector’s contribution to the nation’s GDP will double to six per cent in three years. India and China have tremendous scope for growth in the IT sector. However, India scores over China in various aspects like our command over English and the age of the working population. Both countries had equal rate of GDP growth in the 1970s. China pegged its population growth through the one-child policy. It enjoyed the demographic dividend for a certain period of time. Since India did not initiate any such measure, it is poised to benefit immensely from the demographic dividend. Right now, India has the largest working population. We have shown to the world what we can achieve. There is a lot more scope for growth.

It took the Indian steel industry almost a century to make a mark globally - the acquisition of Corus by Tatas being the high mark. Do you expect the Indian ITindustry to make such a bold move in a shorter time frame?
NILEKANI: Mergers and acquisitions are part of the game. While the Indian software industry has made enormous progress, it still has a long way to go. In order to differentiate itself from the rest and to increase its revenue productivity, the Indian software industry needs to move up the value chain and offer higher value-added services. While Indian software companies are amongst the leaders in quality and productivity, t h e y need to concentrate on enhancing customer perception. Indian companies should clearly communicate their value proposition and build their brand equity in the global marketplace.

Do you expect the Indian IT sector to be at the forefront of innovations over the coming years?
NILEKANI: Indian IT companies have expertise in IT services and BPO. Of course, there are some i n n o v a t i v e products also. For instance, Infosys has d e v e l o p e d Finacle, a banking solution, which has been deployed in more than 100 banks all over the world. It has been rated among the top 10 banking solutions by a leading firm. We have to examine the word innovation carefully. Most of the Indian IT firms have been innovative in their services, the consequence of which they are bagging bigger deals. The innovation quotient may not just be in the product space, it could be in the services segment also. For instance, Finacle is not just a product, but a solution, which helps banks manage their businesses better. BPO offerings are not just based on voice and data. More companies are offering a platform model, which includes both IT services and BPO operations. Also, companies are offering clients innovative platforms. It is very rare for IT companies to offer the same model or platform to all clients. Each service is customised as per the r e q u i r e - ments of the client. In that way, the Indian IT sector has been innovative. Unless Indian companies are innovative, they cannot be competitive.

How do you view the problem of lack of trained manpower in the industry? Is this going to be the single biggest handicap for the industry?
NILEKANI: The IT sector has raised this issue time and again with the government. Let’s look at it in terms of graduates or people who have engineering skills. Clearly, the numbers have gone up and today we’re talking about half a million engineering graduates. That’s a pretty big number by any global standard. But then, there’s the whole issue of how good is the quality? How relevant is the education they have got? Have they been exposed to the latest technology? Has the curriculum been appropriate to today’s needs? And then you find that you have to dig into that. All IT companies are in expansion mode and their hiring has increased. Infosys, TCS, Wipro among Indian companies and IBM, Accenture and EDS among global companies in India are all fighting attrition since the opportunities for jobs are immense. The scale has changed. We need quality human resources and urban infrastructure to facilitate this kind of growth. The government is fully aware of the opportunities before the IT sector and the benefits, which can be derived from it. The government has to initiate measures to improve the quality of human resources. Every year, India produces more than 350,000 engineers. However, their quality is not up to the mark. In Infosys, for every 1.4 million applicants, we select 25,000 candidates. From the industry side, companies are engaging the government and the All India Council for Technical Education to improve the quality. The government must proactively initiate measures to improve the quality of human resources.

There has been a sea change in the Indian economy and in the world of business, since the time you entered your professional life, and today. Do you see such momentuous changes occurring over the next 25-odd years?
NILEKANI: I think India today is already in the process of establishing itself on the global map as a country synonymous with IT. India’s growth has to be widespread so that it can create about 10-14 million jobs a year. One good thing is that India is using capital better to grow - with a savings rate of 27 per cent and investment rate of 30 per cent. It is important to understand that it is not business as usual but a unique position that India currently occupies in the world. In many ways, the next five years will be critical for the IT sector. It is becoming increasingly clear that this is not just about a few back office jobs. The flat world created by the confluence of technology, globalisation, demographics and the rising economic power are making companies fundamentally alter their business assumptions. In this new environment, companies, which are able to increase productivity, use technology intelligently, globalise their talent base and practice financial discipline will derive sustainable competitive advantage. But achieving this will require us to question fundamental business assumptions and drive long-term operational changes - for in a flat world, operational excellence is a strategy. India is part of the globalisation process and has derived benefits from it. The outsourcing model has worked excellent for the country. In the last 10 years, people have found employment in the IT sector. There were days when ordinary graduates had to literally fight for a job. That is not the scenario now. People with various education backgrounds are finding employment in the IT sector. We have seen their incomes going up. Their quality of life has improved. At the same time, for every one job in the IT sector, four jobs are created indirectly in the non-IT sector like transport and logistics, catering, retail and servicing. IT sector has indirectly benefited the growth of other sectors also. Today, the cheapest mobile phones are sold in India. The country’s phones subscriber base is expanding. How is that possible? The Indian economy is growing at a healthy rate and the benefits are reaching everybody. Over the last 25 years, IT has been the prime mover in creating millions of jobs, not just in IT firms but in all the industries and services needed to support it.