‘We can be the global knowledge capital’

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Som Mittal has his task cut out. He has to steer the world’s offshoring capital through clouds of uncertainty. Rising rupee, wage hikes and ending export incentives coupled with tough US economic climate and elections threaten to spoil the tech rally, as he takes over the reins from Kiran Karnik in January 2008.

This is, however, nothing new to Mittal, a former chairman of Nasscom and presently Hewlett Packard’s head of services business for the Asia-Pacific and Japan region. He is widely recognised among the industry to have transformed Digital’s Indian operations from a ‘hardware giant’ to a very profitable services company and led it through its merger journey before becoming a part of Hewlett Packard. He was directly involved in the formulation and implementation of the Karnataka government’s IT policy. He has been also on the CII National Council for several years and on chief ministers IT Task Force.

An avid traveller, he narrates his journey from auto industry to IT and spells out his agenda at Nasscom in a freewheeling conversation with Pragati Verma. Excerpts:

You will take over at Nasscom at a time when industry faces some of its biggest challenges. What worries you more—galloping rupee, end of export incentives, question marks over US economic climate or the US elections?

Industry is today showing signs of maturity. We can see challenges but fundamentals of our value proposition are very much in place. The problem with the rupee rise is that it has risen very fast in a very short period of time. It takes time to adjust to a sudden change like this.

Industry is using several levers to mitigate the impact. We have raised hedging and are targeting Europe and Asia aggressively to spread our risk.

The problem is more acute for smaller companies. BPO firms also face bigger problems as they spend mainly in India rupee and earn in dollars. However, we are preparing for an open environment and we will spring back.

So, will Nasscom step up lobbying in Indian government circles in contrast to both your predecessors, who were focussed on the US? What tops your wish list?

Rupee appreciation coupled with wage rise has taken its toll and we need support through tax benefits, especially for smaller companies. As for currency, we know that government always manages a balance and will ensure that no specific sector is impacted. We have already seen some positive steps. Extension of STPI, however, will be of great help. It will give out a positive signal.

However, these are short-term concerns. On a long-term basis, we need to build a robust resource base - an excellent supply of quantity and quality. We need to ensure that resources are industry-ready and available.

Broadly speaking, we need to focus on three things. Firstly, we have to influence our environment in India as well as abroad to make it conducive to do business. We have to work hard on maintaining our competitive edge over other countries.

Lastly, we need to be careful about the impact we make on society. So, as our business grows, we have to ensure that IT reaches masses and also take care of the issues facing the online world—data security, data privacy, cyber laws and piracy.

How ‘industry-ready’ are our engineers today? Can inadequate talent pool impact the growth?

We are already working on improving the suitability of engineers coming out of colleges. So, we have started finishing schools. We are training faculty and new IIITs are also on cards. We are working hard on improving candidates’ suitability. Our demography is our greatest strength. India has a huge opportunity and the fact that we have a much younger population gives us an edge. We can be the knowledge capital of the world. The opportunity is limitless. We have to make sure that we tap into it. It is an exciting time for us, but we can’t afford to be complacent. We have to improve education, create the right work ethos. It’s also important to ensure a geo-political position where we are seen as a safe country to work in. What we have achieved in IT, biotech and even engineering is just the beginning.

Can industry, in your opinion, continue to see the heady growth?

We might see a short-term impact on profitability and some impact in stock market. But our value proposition continues to be strong. We are on track to touch $60 billion by 2010. We will continue to add value and remain competitive. Growth might not look as big in percentage terms but we will continue to show good growth in dollar terms in the next decade too.

Kiran Karnik took over just before last US elections and now you…

I was Nasscom’s chairman in 2003-04 when we were working on anti-outsourcing sentiment during last US elections. Customers in US today realise how offshoring helps them. Now they know that it is a US economy issue and not an issue. US elections will be fought on many issues this time.

What attracted you back to Nasscom? How different is the industry today?

To begin with, industry’s size has more than doubled since my last term as chairman. Companies today are bigger and more mature. Indian majors are no more seen as offshore services companies but global service providers.

In my last term as Nasscom chairman, BPO was just starting out in the country and we called it ITeS then. Today, we divide it into several arms like KPO, analytics, engineering design and animation. Not only is the industry far bigger, different segments are at different levels of maturity and need different level of support and shareholding. It’s an exciting time. It is up to associations like Nasscom to tap into it.