India wants to ride next wave of infotech revolution

Haroon Siddiqui explains how `offshore' firms plan to expand operations

HAROON SIDDIQUI

BAHADUR PALLI, India

Just past the small shops of this dusty village is the leafy 120-acre campus of the information technology company that may be updating your Credit Debt card account or your financial portfolio and confirming your airline booking.

Satyam Computer Services Ltd., started in 1987, is already drawing annual revenues of $936 million, providing software and back-office support to 350 corporations in 45 countries, including Canada. But what it really wants is to ride the next big wave of the information technology revolution.

Satyam is planning to take over entire departments from companies in Canada, America and Europe. Not just that. It wants to make inroads into non-English-speaking Latin America, Germany, Russia, China, South Korea and Japan.

"Services make up two-thirds of the world's GDP of $36 trillion (U.S.)," says Ramalinga Raju, the founder and chairman of Satyam (truth, in Sanskrit). "Half those services can be virtualized."

Translation: Your corporation may in Toronto, New York or London but most of its work can be done from anywhere, such as here, over high-speed satellite networks.

His senior vice-president of corporate strategy, Shailesh Shah, walks me to that next frontier.

Low-end First World jobs moving to the Third World is an old story.

The current story is of companies doing a second migration to even cheaper locales. It is the next big story that Satyam wants to help India write.

Instead of doing contract work for your I.T. department, he wants to take it over. "You don't need to own all that hardware." Or have it sit idle for 16 hours a day and on weekends.

He would get into your PC when you have gone home. With a wire, he would access its computing capacity from here. He would do so without disturbing the privacy of your data because you have the technology to protect it. Shah, in fact, has even bigger plans.

Most productivity gains of the last two decades have come in the manufacturing sector, through automation or outsourcing. The next big savings will come from the service sector - and not just by trimming costs but by changing the way services are provided.

Shah is not talking of the hospitality industry or health services, such as your MRI being read overnight in Mumbai and Bangalore, as is happening now.

Take a widget-maker, he says. Beyond production, it must keep track of inventory, marketing, sales and delivery.

Similarly, corporations have research, payroll, accounting and other departments. "All such services can be provided from any location," cheaper, quicker and, in the case of India, better, given the high quality of this country's software.

Satyam is the 4th-largest Indian I.T. company, after Tata Consultancy Services, Infosys and Wipro. Worth $20 billion a year, the I.T. industry has made this country the largest provider of offshore services for global clients, most of them American.

All four companies have opened offices in America, and "near-shore" offices in Toronto. Not that they need to, technically. But such presence gives clients a backup data storage capability in North America and provides them "psychological comfort," while most of the work is done in other parts of the world, such as here.

A walk through Satyam shows dedicated sections for clients like Scotiabank, the World Bank, Nissan, Intel Corp., Emirate Airlines, etc.

Such wholesale transfer of work will increase exponentially. It will make products cheaper for consumers.

But it need not cause labour disruptions in North America, says Shah.

First World workers will go on graduating to value-added work. They will "keep moving us all to a higher platform, inventing new products, such as hybrid cars to improve the environment or the next wave of personal entertainment products."

Such is the nature of global change, says Shah, a graduate of the Wharton School of Business and a consultant in America before returning home.

"The world does not have a choice."