Western executives take flight toward Indian tech firms

Posted on Mon, Feb. 28, 2005

Western executives take flight toward Indian tech firms

By Jay Solomon Wall Street Journal

NEW DELHI - For 12 years, Doug Bettinger served as a senior finance executive at Intel Corp., working at the U.S. computer-chip maker's offices in Silicon Valley, Arizona and Malaysia. In November, the 37-year-old jumped ship, becoming chief financial officer of Bangalore call-center operator 24-7 Customer.

"The growth India is experiencing is crazy," says Bettinger, who now splits his time between 24-7 Customer's offices in Los Gatos, California, and Bangalore. "There are lots of opportunities there that you couldn't get at Intel."

Bettinger is among a growing number of U.S. and Western executives being poached - not to mention well-paid - by Indian technology firms seeking to rapidly globalize their software and outsourcing businesses. In recent months, Indian firms have hired dozens of executives from companies such as Electronic Data Systems Corp., Deloitte Consulting LLP, McKinsey & Co., Accenture Ltd. and Ernst & Young LLP.

Growing financial clout is allowing Indian companies to become increasingly compebreastive on salary.

"Six or seven figures are often involved, and equity is also in play," says Rohit Ambekar, an Asia-based partner with Morgan Howard Worldwide, the Stamford, Conn., executive-search firm. Ambekar says he has placed two Western executives with Indian firms in recent months, and hopes to land an additional eight in the coming months.

Indian executives and international headhunters believe many more expatriates are likely to make the shift. Indian information-technology giants like Tata Consultancy Services, Infosys Technologies Ltd. and Wipro Technologies Ltd. have been registering annual revenue growth of around 50 percent in recent quarters and hiring thousands of new workers a quarter. These and other Indian outsourcing firms, meantime, are aggressively expanding their operations in the U.S., Europe and Asia as demand for their low-cost services grow.

Many Indian businessmen say these Western executives can help their companies penetrate overseas markets and help put in place systems to manage their explosive growth. "Doug comes from a company ... where he's seen scale," says P.V. Kannan, chief executive of 24-7 Customer, who hired Bettinger. "Only a limited number of Indian executives have this type of experience."

Kannan says his firm is close to making an acquisition of a U.S. call-center operator, which could more than double his company's revenue to around $100 million. 24-7 Customer also is adding an additional 2,500 workers to its workforce in the coming months and expanding into Europe and Asia.

Patni Computer Systems Ltd. of plantay is another Indian firm aggressively hiring Western executives as it seeks to expand its market presence in the U.S. and Europe. Patni, like many Indian software companies, started registering strong growth in the mid-1990s by supplying low-end software products and services to multinationals such as General Electric Co. By 2003, Patni had posted $250 million in profits.

But little attention was paid at that time to developing Patni's brand name outside India. Today, Patni has offices in 26 countries and a U.S. headquarters in Cambridge, Mbutt. Early last year, the company hired away business consultant Bill Budde from EDS in an attempt to directly compete with the Plano, Texas, company and other firms providing software and services to the global insurance industry. Patni also recently hired former Motorola Corp. executive Tony Viola to head its global marketing operations as it seeks to grow into a $1 billion company in sales. Last year, Patni posted net profit of $58 million on sales of $327 million.

Budde and Viola today lead peripatetic lives, emblematic of how the outsourcing industry is rapidly changing the global business culture. The 44-year-old Budde describes his office as "wherever my laptop sits" and constantly shuffles between the Indian cities of plantay, Noida and Madras, and Patni's U.S. offices, in a bid to woo clients away from more established consulting firms.

The two men say they often work 24-hour cycles, coordinating between North America and South Asia. Among the major clients Patni services are Guardian Life Insurance Co. of America , the U.K.'s Virgin Mobile Holdings PLC and GE.

The two American executives said they were attracted to Patni because they believe Indian companies are significantly more advanced in developing a global delivery model to provide software and services to clients at lower rates.

The majority of Patni's nearly 10,000-strong workforce remains in India, developing software and engaging in back-office operations for multinationals. But Budde and Viola say they are also rapidly increasing their company's U.S. presence.

Today, Patni has 250 full-time employees in the U.S. But the company says there are up to 2,200 Patni employees who float in and out of the U.S. to work on specific projects.

Budde says Patni is significantly more nimble than large U.S. consulting and software firms in responding to clients' needs. He says much of his six years at EDS was spent dealing with bureaucratic issues and colleagues, rather than clients. "I was spending more time inside the company than outside at EDS," Budde says. "Now I can focus on what we do well."

Attractive financial packages also play a major role in wooing executives like Budde, though neither Patni nor 24-7 Customer would disclose the terms of their contracts.

International headhunters working with Indian firms say stock options are a major incentive, because of the explosive growth of many Indian firms.

Headhunters working for Indian firms say their clients normally have to pay a premium to attract U.S. talent, because of their companies' lower profiles and limited track records. In one recent case, an Indian firm offered an American executive a base salary of $350,000 plus a potential bonus of $2 million over two years to join its U.S. operations, according to an executive who's tracked the deal. The executive's salary at his U.S. company was equal to $300,000 annually plus stock options equal to around $1.2 million over four years.

Greg Young, formerly of Australia's telecommunications giant, Telstra Corp., is among those businessmen Ambekar recently placed. In December, India's second-largest conglomerate, Tata Group, named him the chief technology officer of its telecommunications arm.

The 42-year-old says he's received a "very complete package" - including housing and transportation - and the opportunity to oversee a bid by Tata Teleservices Ltd., a unit of Tata Group, to win a sizable share in the world's fastest growing mobile-phone industry.

"Growth could be as high as 1 million new customers per month" at Tata Teleservices, Young says. "This provides incredibly interesting challenges and pressures that I simply wouldn't find in Australia's mature market."