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November 17, 1998


Intel presents the future of business computing

'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 The significance of being Ashok Trivedi can be understood by analysing just one truth:

Outsourcing is the source of India's software riches.

Here is a reality that is too good to be false: Dearth of software talent and consequent wage bill inflation drove Americans to dip into India's large pool of code-writing and English-speaking workforce.

Email this story to a friend. But this is Wisdom 1.0. Since its release a little over a decade ago, every dog in the streets of Bangalore has learnt it backwards.

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However, there really was a time when 'outsourcing' was not being uttered in strategy meetings. It was just an awkward word that newspaper editors were supposed to worry about.

At that point of time two fortune hunters from India, Trivedi and Sunil Wadhwani, gained a perspective by their virtue of being in the US. They saw that the production of software talent would soon cease to meet the demand for it. The raw material for the software industry is expensive brain muscle and our adventurous duo knew where to find it. Cheap.

The rest is a bedroom-to-boardroom story.

To leverage the imminent famine of software talent Trivedi and Wadhwani launched Mastech Corp in 1986. It all began in the bedroom of Wadhwani's Mount Lebanon home. Last year Mastech posted revenues of $ 195.97 million and employed 3,271professionals all over the world.

When history writes of India's software serendipity, let us hope Trivedi and his Mastech are not forgotten. Mastech was among the first to exploit the 'outsourcing' wisdom that is now followed by hundreds of success stories all over Bangalore and India.

Though Trivedi's story fits the stereotype of Indian success in Silicon Valley, there is one thing wrong about it. Mastech is in Pittsburgh. "It's not a bad place, you know," Trivedi laughs.

But his story began at Delhi University where he studied physics and then took off to the Land of Opportunity for a doctorate programme.

Last week, he was in New Delhi once again. He spoke at the Global Indian Entrepreneurs Conference and advocated a leading role for India in the coming Digital Age.

"India," he declared, "is the best placed country to take advantage of the world's paradigm shift from a manufacturing economy to a knowledge economy."

That may sound trite but it does not mean people were not listening. Even as he was speaking with Rediff, a message arrived that Prime Minister Atal Bihari Vajpayee has invited Trivedi for tea.

To a quizzically raised eyebrow, the response was "I'll go. It will be good opportunity to share my views. The Bharatiya Janata Party government is really concerned and keen about information technology. I just hope that they can get all their ideas working."

"It is my personal view. I think Indians are at an advantageous position today. Without even trying or doing anything a great chance has fallen into our laps and we must exploit it."

"I have heard that a third of all IT deals that venture capitalists look into are either owned or dominated by Indians!" he gushes.

"Why? Just in the last two months, three Indian-owned companies were sold for about $ 200 million to $ 300 million each. All these are companies that are just two to three years old and owned by guys who are barely into their thirties! Guys are getting into deals like there is no tomorrow."

Though Trivedi agrees such success stories are good emulation models, he warns that in India the IT guys are barking up the wrong tree.

"We must follow the example of the Israelis. The mistake we have made is that we want to provide front-end products. First, the market in India for front-end products is too small. The market is really in the USA. India must concentrate on the backend market."

"India has had excellent development. We have an English speaking workforce and C++ programmers that come cheap. What we need to do is make the products here and sell it in the US. And for this, India-based firms must have someone in the US to understand what Americans want."

The only thing that really worries Trivedi is government interference. "The software sector in India grew simply because it was not regulated. And this was because the government did not understand the subject and therefore did not interfere. Now the government understands it and is interfering by way of rules and regulations. With the exception of the BJP, the government might just mess it up."

Mastech itself conducts backend operations in India in Madras, Bangalore and Pune. And that means Trivedi has his share of complaints about investing in India.

"We wanted to invest $ 20 million in India. Our venture would have created 2,000 jobs and it was all for exporting, earning precious foreign exchange. Any government would have given us the red carpet; instead we got red tape! We needed an amazing 50 no-objection certificates and today we actually employ a person only to procure these no-objection certificates."

Trivedi believes the entire system is rotten and implementation is lacking. But he sees a silver lining.

"The best thing happening today is the sense of competition among states for investment. So you have Hyderabad versus Bangalore versus Pune. Even Uttar Pradesh has got into the act. Persons like (Andhra Pradesh Chief Minster) N Chandrababu Naidu are doing a great job."

Trivedi recalls his early days in India. "I went to the US in 1973, two years after I finished my masters, to do a PhD in Physics. One year later I opted for an MBA after getting a full scholarship for it at Ohio University. In those days there were few options for students like me. It was either the civil services or going abroad."

After his MBA, Trivedi worked for 11 years with Unisys Corporation in a variety of areas. It was a time when the growth of IT beckoned.

"My friend Sunil Wadhwani and I saw a trend emerging and decided to go into business," he explains. "In 1988 Sunil and I decided to give it all we had," recalls Trivedi. "We worked 18 hours a day for seven days a week, doing everything from accounting to prospecting to operations. In fact we were so tightly budgeted that we could hire our first overhead employee (a secretary) only after there were already 70 employees!"

Some Silicon Valley clichés are so strong that even innovators like Trivedi can't resist them: "If 10 years ago someone had given us just $ 1 million for Mastech we would have gladly sold it. It was just that no one wanted it, leaving Sunil and I as 50 per cent partners in a firm whose market capitalisation today is $ 1.3 billion!" Revenues for this year are expected to be $ 400 million.

Tom Canfield, president and CEO of The Enterprise Corp of Pittsburgh, helps understanding the miracle. To a question as to how Mastech came so far, so quickly, he has been quoted as saying in a news report that it was "Sheer idiocy and persistence. They have obviously figured out a way to deliver an extraordinary value to their customers."

Perhaps it is this secret that Trivedi attempted to share back home in New Delhi when he said "NRIs (non-resident Indians) have worked abroad and can help India integrate with the global economy. And deep inside all of us, we want to really help our country. But NRIs need to understand that the system in India will not change soon or easily. We must be prepared for a long grind."

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