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The Indian GCC ecosystem has grown, evolved, and unlocked newer dimensions of business value over the last couple of decades. GCCs in India have definitively moved beyond the common trope of cost, to drive product, technology, process, and people excellence. This is what is making the India ecosystem a preferred destination for setting up, scaling, and driving significant value through centers of excellence. This excellence however, hasn’t been serendipitous. It is the result of a community forged from belief and persistence, a key player of which has been NASSCOM.
As the macro-economic environment gets more interconnected and complex, and a probable recession on the horizon, offshoring is increasingly becoming a key theme in business decisions. Our next conversation unravels the India Story and its fabrication into a globalization hub. In this episode, Nitika Goel, Chief Marketing Officer, Zinnov speaks to KS Viswanathan, Vice President (Industry Initiatives) at NASSCOM, about India’s evolution into a GCC hub and the influence it has begun to wield in global decision-making and engineering initiatives. Whether it’s India-initiated technology like UPI or creating ADAS systems that power Automotive companies across the world, India has become a force to reckon with.
Corporate-led innovation and conducive government decisions have gone hand in hand to grow the technology talent landscape to new levels. Today, a bulk of the conversation on technology strategy takes place either in Bangalore, or other parts of India. KS Viswanathan also talks about how leaders are becoming strategic about what operations are run out of India and how in spite of excellent talent, leadership still falls short. This rich conversation is filled with anecdotes, advice, and observations from a veteran who has watched the industry evolve over the last couple of decades. Breaking down the progression of technology services and trends, he provides detailed insights on how the GCC ecosystem has changed, and what this can mean.
Nitika: It says leaders are not born but made, and there is no one size that fits all. But with enough grit and mental makeup that can really help organizations and individuals really grapple with things that we have seen in the recent past, which may extend from a recession to a great resignation and now another recession.
So, we’ve really been through a lot as an ecosystem, and what has helmed the difference or the changes, the leaders that we have. Today I have with me a very interesting person on this podcast. K.S. Vishwanathan, or KSV as we all know him, is an industry veteran. He has over 40 years of experience within the ecosystem and has seen it right from a GCC to a service company to now an industry-building body.
So, everything is under his belt and KSV has a wealth of knowledge and I’m extremely happy and privileged to have you here today KSV.
KS Vishwanathan: Thank you so much and good speaking to you Nitika.
Nitika: The first thing I want to ask is, like I said, you’ve been here as a part of the ecosystem for four decades. I wanted to understand what are some of the watershed moments in the history of this ecosystem that you think have been very key to the outcomes that we have achieved till date.
KS Vishwanathan: It’s a very interesting question. When I trace back to the early eighties, awareness of what computers could do was less than a handful of people who were very knowledgeable. A very large set of people had absolutely no clue what could be done.
And the concept of software was alien, it was largely hardware and we all grew up in a non-PC era mainframe era, meaning the computer era, etc. As I said, the community was clear they will use computing for solving scientific and technology solutions. It took time before the business solution took up. I still fondly recollect there were many good things we did as an industry then; one, of course, is the Government of India creating a Rangarajan committee to see what should be the technology roadmap for the banking industry in the country. Fortunately, or otherwise, the Rangarajan committee had recommended it should be a Motorola 68,000 processor-based system, and a UNIX-based operating system will be the guiding principle on which it will be done.
That triggered off the entire ecosystem to move towards Unix, moving towards Java, moving towards C++. That came in much handy to us when the Y2K opportunities came in to fix programming. So, the watershed moment was, creating an opportunity for Y2K. Even before that, the presence of some of the multinational corporations like GE, companies like American Express, etc. The leaders had a vision to say what could be done from India? The consideration largely being cost Y2K was one big game-changing opportunity and before that, a handful of multinational corporations having the feeling that, perhaps, as the world is going to move towards a networking world. There could be plenty of available talent here at an affordable, lower cost, whatever may call it that time as a back office and they said, let’s attempt it. So, companies like GE, companies like American Express, companies like British Airways, they all experimented and once they started experimenting, other companies started following up.
For example, in early 2000, Dell would be one example. Dell said, how do we leverage the technical capacity in India, perhaps on a low-cost basis to serve international customers. When Dell came in, subsequently their partner ecosystems like Intel and Microsoft started coming in, the entire thing completely changed, that gave the initial momentum. For example, company like Texas Instruments in 1985-86, deciding, saying that let me attempt doing a remote engineering watershed moment. Even in a company like HCL and Wipro, when they knew that liberalization was happening when the imports were getting easier and the hardware is getting cheaper while importing, they were converting their laboratory of R&D into a global R&D lab, showcasing capabilities to do a fault-tolerant computer system or a compiler, etc, completely transform. This is one watershed moment.
The second watershed moment I would say is saying the industry all joining together, creating NASSCOM, because just imagine back in 1987-88, we all knew there was an opportunity for software and services coming in. We didn’t know what form and shape it is going to take place and the industry leaders joined together, founders joined together about 25 of them, together we went. We create opportunities locally with policy initiatives and compete during the night-time in India for the business outside. So that was the second watershed moment. I’m not exaggerating this, but any book, anyone who wrote at it, it is one institution that made the difference would be NASSCOM as an entity.
And third is the huge role played by the government, both the central government and state government. Many changes, watershed moment, for example, the creation of STPI, the creation of software technology parks of India to enable connectivity, enable multiple smaller companies who cannot afford the visa connectivity themselves to go operate and build it up is one. Or BSNL agreeing to build a data network. Initially, the BSNL and VSNL felt the telephone network is only for voice and it took the effort of the industry to convince them to go beyond voice to data, so moving towards data.
And the third, which got enabled watershed moment, I would say fairly, I would say the year 2000 onwards, the era of growth of the internet. Era of growth of internet data, voice data conversion, STPI creation, NASSCOM creation, Y2K opportunities all those things are nice enablers, but things are making changes. Now when we look at the watershed moment, if we look at it, 2010-20 is a start-up.
The start-up innovation ecosystem and I would say even from the point of view of 2010 onwards, rapid increase into the concept of, digitization and digital accelerations and more and more multinational corporations wanting to set up their capability centre and everybody wanting to accelerate the digitization strategy, what has been created.
A similar opportunity on another scale was available to possibly 175 more countries in 1999, 2000. This country took advantage with that and reaping the benefit. Just to end this part of the conversation, today our total exports end of March 2022. Which is at 178 billion US dollars is more than the total export Saudi Arabia does for oil and these 178 billion accounts for about 59% of the total export from India which is accounted by IT. 53% of the total outsourcing market globally is given to India. So, all these things are done, because fundamentally, the leaders felt, collaboratively we win. And that spirit has happened with time. As I collaboratively move from industry to academia, academia to government, today we are one large ecosystem, difficult to break.
Nitika: That is fantastic to hear, very positive to see how different players have come together to really drive it to where it is. But you’ve brought in a very interesting point, right? You said 53% of all of the outsourcing lies in India and right now, governments have moved into a very strong protectionist regime in this case, like the likes of COVID etc. What would that mean in terms of de-risking for global organizations as well? Because I think that is going to be a fear for a lot of people.
KS Vishwanathan: COVID did bring about a huge change. Huge change in mindset. In the past, they were worried about how will a job get done 7,000 miles away without me, without being in an office, etc. In India, in the last two and half years, the work got completed, even perhaps even getting completed now from 300 odd different locations, A.
B, COVID generated the momentum for contactless systems. COVID did generate more data based decision-making. People have consumed what they could consume from IT in a traditional model, now they realize technology powered the business during the COVID time.
The reason I’m saying this is, this is accelerating momentum for digital acceleration. Further got accentuated by COVID. In the last five years people are getting their online strategy right. People are getting the web commerce strategy right. People are getting the mobile commerce strategy right. People are getting their cybersecurity strategy right. All have been getting done and this is like an aircraft flying engine is giving 40. You have no time to come down and repair down and fly again, while the aircraft is in there changing it. That is rapid. This is generating huge demand for digital talent. Huge demand for scalable talent. Huge demand for re-learning talent, which is required. Talent at various levels.
With that being the driver, while the protectionism, make from India is increasing, make from their own country is increasing, there is also a conversation going on, how do we get talent mobility? right? I agree with you in a true sense, the true globalization is happening now. You could have part of your services rendered from the Philippines, part of your services rendered from Mexico, part of your services rendered from Poland, somewhere from Romania, and part of the work done from South Africa. A bulk of their data-related people here and that kind of composite capability to solve the digitization challenge is so huge perhaps we’ll have a huge tailwind for next three to five years for sure.
In the past, globalization was concerned in terms of trade and now globalization is everything. Trade plus geopolitics.
Nitika: So, I’m going to then ask you, I know you talked about a whole digital transformation wave that’s happening, and you talked about true globalization, right? You said it’s not just going to be in India, but we looked back retrospectively, and we said these are the different watershed moments. Based on what you’ve talked about a whole digital transformation wave that’s happening, and you talked about true globalization, right? You said we have a runway for the next three to five years, but what are the watershed moments in your opinion, based on historical data. What will be the next big watershed moments for this country and for globalization?
KS Vishwanathan: Fantastic question. Let me rephrase it. Thanks to many successes, what the Indian IT industry, what tech industry did, if you trace back from 2014, 2015 onwards, the entire digitization strategy in India is built around, citizen-centric, public digital platforms, citizen-centric platforms.
Whether it is Aadhaar, which got created. Leveraging Aadhaar to UPI solution system, leveraging UPI the JAM yojana, leveraging UPI Aadhar and say, creating a health mission setup, creating that, leveraging a learning system, helping that building a soil card system. Everything has been built on citizen-centric, public digital infrastructure.
That is our hallmark of success. The payment solution that we created through UPI, many countries are now attempting to replicate what could be done. Perhaps the healthcare system that we developed for giving 2 billion vaccines in 12-15 months time on a virtual platform, perhaps several other African countries and South American countries the platform is being shared. That is our hallmark of globalization. That is a hallmark of digitization and the best is yet to come. We have talked about open standards, open interfaces, and open digital commerce platforms through co-NDC. Perhaps a similar thing, which the Union IT industry said, education is another area that could be done.
We have done healthcare. We have done perhaps retail, will do education. Multiple standards, and multiple public digital infrastructures. That is going to be India’s contribution that could generate huge demand globally for globalization.
Nitika: One key component or the player of this entire globalization arc is the GCCs and we have over 1500 GCCs already in India. And as you’re aware, there are many conversations of newer GCCs setting up in India. What is the difference between GCCs that were set up 10 years ago and GCCs that are setting up shop today?
KS Vishwanathan: I think the GCCs have evolved over the period of last 30 years now. I would love to call we are in the third generation of GCC. When the GCC model did kick start, perhaps in, 2000 to 2010, if I put that phase, that driver was largely productivity. And the leaders who were running it had to spend time to create an identity for themself. Why are we here? am I a delivery guy? am I to just lift and shift what was being done at perhaps one-third the cost, one-fourth the cost. The cost was the driver. Productivity was a measurement, and that is where it could have crossed.
That generation of leaders demonstrated how it could be done, gave confidence and they earned trust. It took seven to ten years to earn trust for the GCC model to evolve, that can go beyond productivity, and they were trusted with perhaps looking at more enterprise capability. When I say enterprise capability, whether in terms of talent augmentation, whether in terms of supporting the product design capabilities put together, if you had to refer to a Zinnov report, while a large portion of people have moved into that second phase, that calls for a different kind of leadership. Now, when I look back last 10 years, the leadership that is required is a completely different kind. As a prominent GCC leader once told me, when they set up a GCC, for the first 10 years, they’re exploring what to do from India? Then when they got the story right, they accelerated in the next 10 years to add a significant, hundred times increase in their headcount. Today they say what should not be done from India. Everything can be done from India.
So, the GCC evolved to be a trusted entity. GCC evolved to be a mature entity. Except that, as I said, people today don’t give 10 years time, they don’t give five years time, perhaps in 18 to 24 months time, they’re expected to do a setup, expected to ramp up, expected to innovate, and get ready for being ready to the parented prices.
In the past, people used to experiment; let me get my first five hundred people in three years time then we think, that is all given. And the second good thing which is happening is: In the past, the success was being measured in terms of the FTE count and the people count. Those measurable metrics of a GCC have completely changed. Those are the changes. I wouldn’t say that it is different, it has evolved. They ask me how is it going to evolve? The concept of a GCC and a parent headquarters will disappear. It’ll completely disappear.
I’ll give an example, very interesting. I was recently with one of the GCC. He says I was very busy attending a conference. I said, “What conference? He said, in the past, in a technology conference, a semiconductor company, cloud company, etc, they will all meet in the US. The leader from India will go attend that and find out how to dovetail what is required. Interestingly, all the leaders of this company talked about, companies like NVIDIA, companies like NetApp, companies like VMware, etc. They all have a conference in Bangalore. And all the leaders from abroad come and say, how do we collaborate with that? “
Another example where the things, future larger collaboration taking place is, I heard about two years back in one of the Zinnov conferences, Wells Fargo has got their centre in India. Wells Fargo’s partner is Broadridge. Broadridge has got a partner in India. Broadridge utilizes Oracle as a technology. Oracle has got part of India, perhaps the five square mile distance of Bangalore in one location. So, every time Wells Fargo has a problem they relayed it here, when they relay back, they relay it to Broadridge, Broadridge relays it here, Broadridge points to Oracle gets relayed here.
So why can’t we create a cycle time reduction by local collaboration itself here? That’s the way I’m saying the ecosystem for various GCCs are getting built in India for local collaboration, the ability to manage a naturally evolved ecosystem and an external ecosystem is the biggest, biggest challenge, and the service providers, the start-up, and the academia, the way all collaborated will be an expected leadership trade expected for the new GCC.
Nitika: So that’s a very interesting point. So, partnerships, collaborations, alliances, is that going to be a fundamental differentiator for a GCC leader that has a higher majority versus a GCC leader that is not so high on the maturity curve as on date?
KS Vishwanathan: Absolutely yes. The leaders, GCCs are learning. They are not visualizing a five-year cycle and 10-year cycle to get, I’ve got my learning done now. In five years they’re experimenting. The need for digitization is yesterday. Perhaps in 18, or 24 months time, they have to get it done.
They also know, everything cannot be done by the center alone in India. They require a local ecosystem, distributed ecosystem. For me, that leadership that you talk about; is a hallmark for successful metrics, what is tech, what we know is announced data about Mercedes-Benz creating the NBOS as a platform, various navigation systems, entertainment systems, and an ecosystem that is required. The start-up ecosystem required is completely different, but connected ecosystem on the automobile as driver assisted system the automobile.
In automobiles, for example. They already delayed the launch of a software-driven vehicle by five years. Everybody is now saying, cramming up a talent building, done. That is all happening here.
Nitika: So, I’m going to ask you a very controversial question now. We’ve talked about things that are very positive for the ecosystem. What is built on illusions in this ecosystem?
KS Vishwanathan: We are talent-rich, leadership deficient. By nature, we come from a complex hierarchical kind of culture, kind of society we come from, we have largely become an American way of working. So perhaps there is a cultural integration of the Asian way of working, and the European way of integration. So, to expect that everything is like a go magic van, we go, it just turns it around, it’ll take time.
The reason I’m saying this is, for the next level of GCC leaders who are coming to invest, while we are ready to serve you, please have the cushion of 18 months, 24 months time to stabilize. The illusion that I start today in 24 months time thinks, we have is one. And secondly, the illusion is while we are also learning, globally everybody’s learning, globalization is a two-way process. The leaders in India have to demonstrate trust and maturity. The leaders there also should have that capability that that center, that person can do it. Those two, if we can beat those illusion points, things will be much more accelerated than what I’m saying.
Nitika: So KSV, you talked about two different constructs. You talked about one construct where you said there are obviously new companies that are setting up shop in India. So, if there was a piece of advice, and obviously leaders being a key component and being able to drive that outcome if there was some piece of advice or the top three pieces of advice you had to give to a company. Setting up shop in India and looking to find the right leader to scale their centre. What are the three sets of things in terms of what you would give them?
KS Vishwanathan: No, before identifying the leader, one piece of advice I’ll give to the GCC who want to set up here, is have at least three to five years of clarity on what your vision for an identity for your centre in India is going to be. If you are still looking for productivity or talent etc., then you get a kind of leadership which is available in terms of several delivery managers, project managers, program management capabilities, you’ll get. If your vision for the center is to build innovation capabilities, digital transformation capabilities in my goal for the next three to five years. You require a different kind of leader.
The different kind of leaders is a bit entrepreneurial, who is confident, self-confident. If you can get that kind of leadership, things will get accelerated very quickly for you.
And third, which is important, is one beyond identity. In terms of what we would love to do. Right from the beginning, have a collaborative, successful metrics driven. Give as much as ownership to the local leadership to execute, yet based on service parameters, success parameters defined, that works well. So that will work with the three things we’ll say for a successful GCC perspective.
From a leadership perspective, again, as I said, demonstrate leadership maturity. We are a leadership-deficient nation, right? We can perhaps count around 100-200 leaders out of the thousand five hundred GCCs who have exhibited the capability to have the right conversation at the corner seat. Right? Beyond that, the challenges are bound to be there.
How do we go beyond that to mature trust leadership? The leadership that can take the change management well, the leadership can take the team well, perhaps is suited to work very strongly in matrix organizations. That’s the four things I would say.
Nitika: So, KSV, you talked about new companies that are looking to set up shop, but there are a lot of people who are already well entrenched in the ecosystem and have been doing things a certain way. What are the top three things that you would recommend to leaders who are here in the lowest stages of maturity and who need to leapfrog into higher-order value?
KS Vishwanathan: Again, a great question Nitika. Many of the companies that were set up perhaps 10 years, or 15 years back, are waking up to a new reality. In the past, they’ve been largely confined to themselves that we can do it ourselves. Now, slowly realizing the power of collaborating with the external ecosystem is one. Whether it’s in start-up adaptation or getting their entire cloud strategy ready, information security strategy ready, what could be done, is one. So, one way to look at it is extensively collaborating with an external ecosystem is one thing I’ll do. B) Share and consume and contribute the thought leadership on how the new ones are building successful enterprises and how you can contribute to their success and learn from the model to it.
Lots of forums are available in the country run by NASSCOM, run by you, Zinnov, etc. Leverage all these platforms, take part, and see that there is an investment of time to make it available, the second thing in which you’ll succeed. And the third thing is, which we talked about earlier, build on a platform of collaborative leadership for all of us. I would say that things are improving. Accelerate, the current leaders can accelerate thinking. Everybody looks to them for a solution. They have a voice maker; they can bring the change.
Nitika: So, I’m going to then ask you a harder question here because a big thing that we hear as we speak to all the leaders in the ecosystem is that the power always resides close to the market. And while we have the engineering centres here, we don’t necessarily have the market in India. That is a constant deterrent we hear on leadership. What should leaders here do to change that mindset?
KS Vishwanathan: I’ll put it the other way around. I tend to disagree. I agree with you for a large portion of it. As you would notice in the last five years, especially got accelerated in the last two years. Even in the manufacturing product engineering space. The product is getting more and more intelligent, the product is getting more and more embedded, and the product is getting more and more security. In short, the market is moving towards softwarization, right? Even in some of the places where the market could be elsewhere, the product manufacturing could be elsewhere, the softwarization, the centre of gravity is clearly here, the leadership role what they can do is enlarge, leverage, support, and bring forth the softwarization competent capabilities, what we have, ready to do it, and collaborate and co-create with your market facing role. Together, they can succeed.
I can give you an example. Especially in the manufacturing space. In the past, people used to keep their softwarization component also close to where the manufacturing was there. The manufacturing was set where the market was. Right? Now, with geopolitical change, which is happening. People are now saying, at least protect my software, the product be there together again.
I’ll give an example. Mercedes Benz India is not the market for a large value-based car, but a large portion of the software is completely made in India. And perhaps they’ve not seen the super luxury car. But proudly, the CEO announces every luxury car in the world has been touched by an Indian. So those are the ways the leadership profile from India has built a message that we can do it. They can work collaboratively to make a difference.
Nitika: So, thank you KSV for this extremely interesting conversation. I think we have a bunch of things we discussed. But the thing that came on top was, collaboration being able to create strategic alliances. We’ve done this very well historically, but as an ecosystem, if we do it with the leadership component, it is something that will be a game changer. Not just for us as an ecosystem, but the implication that we have to be a truly globalized setup. So, thank you all for listening to this very interesting podcast episode.