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October 24, 1998


An interview with Mastech CEO Sunil Wadhwani: It is not a question of where can I find the cheapest resource. More important is where can I find the best resource. Mastech Corp was one of the first companies in the US that jumped to the opportunity presented by the trend of outsourcing software talent from low-wage, English speaking nations like India.

That later opened the floodgates of success for India's vast pool of programmers.

Ashok Trivedi and Sunil Wadhwani, two Indians by their virtue of being in the US, noticed the impending dearth of software talent that was looming over the America's thriving computer industry.

In 1986 they founded Mastech and began operations from the bedroom of Wadhwani's Mount Lebanon home.

Today, Mastech is a $400 million company with over 5,500 employees working in 32 locations all over the world. It has over 900 clients through its offices in nations like Canada, United States, Singapore, Japan, India, the Netherlands, Australia, UK, South Africa and the Middle East.

Mastech has also won many quality awards including the US government's 'Award for Excellence', the IBM Supplier of the Year award and the Lockheed-Martin Supplier of the Year award.

Like most graduates of the prestigious Indian Institute of Technology, Sunil Wadhwani moved to the US. There he earned a master's degree in industrial administration from the Carnegie Mellon University.

The success of Mastech, according to Wadhawani, is "due to our ability to satisfy our clients and respond quickly to IT industry market trends".

He was back in Madras recently to open the second 100 per cent subsidiary of Mastech Corporation, Mascot Systems. The first subsidiary is in Bangalore. And the third is being planned for Pune.

Mastech has already pumped Rs 1 billion into India and plans to invest another Rs 500 million soon.

In Madras, Wadhwani took time off and granted an interview to Shobha Warrier. Excerpts:

In India, people talk a lot about brain drain. Why is it that like you, a majority of IIT graduates go to the US? Is it because the work atmosphere over there is better or is it because you can make more money?

It is a combination of many reasons. One, I think, is the opportunity. And it is not so much the opportunity for money but really it is the opportunity to work.

If you are technical, then you can work in the latest technological environment. If you are in the software field, US is where all the latest software is developed. You get a chance to work on that before anyone else.

Secondly, if you have entrepreneurial inclinations and you want to develop a business or something and if your goal is truly to develop a global business, especially in the software field, the US is the largest software market in the world.

It is 45 per cent of the global software market. In fact, if you add Western Europe, US and Japan, it has 85 per cent of the market in the world. So, if you are based over there, it makes the task a little bit easier.

Because of that many people leave India. They want to get jobs there. But you will be amazed how many people are coming back or are thinking about coming back. It is a very large number.

Is it because India has opened up that they want to come back?

I think it is partly because India has opened up. Partly it is just the emotional tie to India. Even for myself, I have been in the US for over 20 years but I love coming back. If I have to move back to India, there is absolutely no problem. I would feel great to come over here.

But here the government and the people are peeved. They feel that other countries get the fruits of the subsidised higher education India gives. The cream of the society goes out and India does not benefit. What do you have to say?

Look at it this way. Take Mastech as an example. I left India 20 years ago. We have made a Rs 1 billion investment in India and in two years we will invest another Rs 500 million. Would I have been able to do this if I had stayed in India? I doubt it.

So, many of the people who leave also contribute to this country in many other ways. And we have been able to contribute more because we have a base outside. Like I said, perhaps I am a good example of it.

Do you too see India as only a major software professional exporter?

No. More than exports, we can make use of the intellectual capital, the knowledge workers that we have.

For example, I am not just exporting software but am developing new software products, new ways of pulling together content and delivering it over the Internet. And all these can be done from India because of the global communication infrastructure. So, there is no need to have marketing officers all over the world. But the key is speed.

Yes. You need infrastructure for the people to do that and the entrepreneurs have to do it quickly. Even with the Internet. One has to be very fast although there is a huge opportunity there.

One interesting factor is that companies that get into different areas early tend to have what you call the 'first mover advantage'.

If you look at America Online in terms of an Internet provider and if you look at as a retailer of books, now it is very difficult for someone else to compete with them. My point, again, is speed.

What advantages does India have now?

The advantage that it has more than anything else is the huge amount of intellectual capital available in India in the software field.

English speaking?

That is only secondary. Basically, we have a very large educational infrastructure. We have a very large number of world-class universities that produce tens of thousands of technical graduates every year.

And these graduates happen to be English speaking, very intelligent, very hard working and very technically advanced. That's what you need. That's the raw material for the knowledge, which is now just starting. We have lots of that.

More exciting is, there are more new players, younger software companies coming into the field who really have a chance of being major global companies. But they have to move quickly.

You said you have people from all over the world working for you. How different are Indians from others in their capacity to work?

Rather than my opinion, I'll give you the opinion of our clients. The general opinion is that Indians are among the hardest working and the most intelligent workers they have of all the knowledge workers anywhere in the world. Absolutely.

Chinese and the Japanese are also hardworking and intelligent. What is the advantage Indians have over them?

Language. Language is a major problem for them. In China, English is not the medium of instruction. In Japan, English is not the medium of instruction. Yes, they have got a large technical pool but it is not English speaking. At least, the software world is an English speaking world, whether you go to Germany or anywhere else in the world.

After India opened up its economy many foreign companies are coming here. Many in the software field too. Is it because labour is cheap here?

I think that has been part of the reason why software exports have gone up. But that is changing rapidly. It is not a question of where can I find the cheapest resource. More important is where can I find the best resource.

If you have a team of five people who can understand your industry and who can develop for you an application that you need and if that's the best possible application, that's what will make you the industry leader. Not the fact that you saved a million dollars.

Why did you choose Bangalore, Madras and Pune and not Hyderabad, which is strongly coming up as the software capital of India?

Yes. I know. We might as well go to Hyderabad. It's just that two and a half years back when we made the decision to locate our facilities, we were looking at the availability of knowledge base; software engineers in various cities and at the educational institutions.

Secondly we wanted a good infrastructure. Power, water and communication. Thirdly, we wanted cities that the software engineers themselves would find attractive to be in. That was why we selected these three cities, Bangalore, Madras and Pune.

But we are also increasing our capacity in India dramatically. Now we are assessing which additional cities should be selected.

How does the software circle view Hyderabad and (Andhra Pradesh Chief Minister) Chandrababu Naidu?

I think he is doing a tremendous job in terms of selling the capabilities of Hyderabad and that is what you need today. It is not just in India, everyone around the world is competing to get knowledge workers, Ireland, Israel, China, Hungary, Poland and even within the US, different states are competing to get this.

Yes. Chandrababu Naidu is doing a tremendous job of spreading the word about Hyderabad, its infrastructure and capabilities.

And now the other state governments are also trying to catch up. But the key factor has come down not so much to the incentives given by a particular state.

For example, we are financing our companies ourselves. So, it comes down to some questions, like, where are the best software engineers available, where do they want to be and whether the general infrastructure is good.

The software engineers of today want to be in places like Bangalore, Madras, Hyderabad, Bombay and Delhi but places like Trivandrum and Calcutta are also developing. We have to follow the software engineers and their desires rather than drag them into different places.

Now that you are a $400 million company with 900 clients all over the world to look after, have you become more of a businessman than a technocrat?

No. We have to do both. We have to know business. At the same time we have to understand technology very, very deeply too. Because technology is changing so quickly that if you are not aware of how technology is changing and the impact that it has on our clients. We could be doing wonderfully today but we could be down to zero in two years from now.

You have said that when the growth rate of other big companies is 25 per cent, yours is 65 per cent. What is the secret?

Our strategies are different from others. We got global faster than most others companies. We developed services faster than many other companies. And because of that we have grown faster than other companies. We have a great team. All these 5,000 people are pulling in one direction. That is what it takes to be successful.

We follow technology very closely and we find ways on helping our clients derive competitive advantage from that. That is the key. That is what clients want from a company like Mastech.

The question is: How can you help me use technology so that I, General Electric, General Motors, IBM or Johnson & Johnson, can help myself to become more competitive? That is what we do. We provide business value to these clients.

You also talked about the companies you have acquired in the US and your plans to acquire more companies here in India. In the US, for example, many companies like Microsoft are acquiring smaller companies. Where will this trend lead to?

I think it will lead to consolidation.

Will it not lead to a capitalist society where there are only big players and they can dictate terms to people and society?

No, no. It is very much a free market. If you look at banking in the US, for example, 15 years ago, there were about 15,000 banks in the US. Today it has been cut to half. There are only 8,000 banks in the US now. Probably in the next five years, it will come down to 4,000 or 5000. Yet, the consumer is better served, the rates of banking have come down and the service levels have gone up. Anyone complaining? No.

At the same time the unemployment rates also have come down dramatically in the US. It is not like people unemployed. Basically a free market irons out a lot of these issues.

In the IT services too, there are over 3,000 IT companies in the US. My own feeling is that in the next five years, it will probably come down to about a thousand. But clients will be getting even better service than what they get now. The people who won't survive are the people who are not able to measure up to the service that they need to provide.

Why is it that there is a lot of resentment over the way Bill Gates and Microsoft is growing?

The resentment over Bill Gates is not because of his acquisitions. If there is any resentment, it is over his tactics being very aggressive. There are people who admire him for his very aggressive tactics but there are also people who resent him just for that. He is a very aggressive person. That is why he is there.

Do you have to be very aggressive to survive?

Yes. We have to. For any leader in any industry and if you are striving for leadership on a global scale, you have to be very aggressive. You have to have very ambitious goals. You have to have very well thought out strategies to achieve those goals and then you have to have a management team and a group of employees that can execute really well on those strategies. And Bill Gates is great on all those fronts.

Do you have any idols?

Many idols. Mahatma Gandhi is an idol for the way he was able to achieve his goals using very non-traditional methods on a truly global scale. But within the business world, there is someone like Bill Gates in terms of how he approaches things. There are many. We try to learn from a lot of people.


'Any government would have given us the red carpet; instead we got red tape!': Mastech Co-Chairman Ashok Trivedi shoots the breeze with Amberish K Diwanji

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