5.2 Case narrative

Communication Software Ltd (ComSoft for short, a pseudonym), a relatively small Indian software firm, focuses on high technology, including engineering software and telecommunications. Their strategy is different from that of the traditional Indian software firms that have typically focused on business software services. The ComSoft business divisions include: wireless, switching, networking and R&D. ComSoft reflects an unusual mix of high-technology capability coupled with self-confidence and deep pride in its national and cultural roots. This combination is unusual since the culture of firms in developing countries is generally associated with difficulties in adopting new technologies. The case narrative is presented in two broad phases of inception and transition . ˜Inception relates to ComSoft s initial phase of start-up and growth that took place under the mentoring of GlobTel. ˜Transition relates to the phase in which ComSoft tried to break free from the GlobTel umbilical cord and to grow, drawing upon a redefined sense of their identity and image.

Inception (1991 “1996)

ComSoft s inception in India was largely supported by the link it had with GlobTel and the mentoring and support provided by Paul and Ghosh described in chapter 3. These mentors saw in ComSoft a prototype of the vision they had for the Indian technology sector “ creative, professional, high-tech and Indian. As a policy, GlobTel did not engage in ˜body-shopping -type projects and encouraged only those that could be sustained over time in India itself. This policy was greatly appreciated by Raj Moitra, the ComSoft founder and CEO, who was striving to emphasize the ˜Indianness of his high-tech and creative company. Like GlobTel s other Indian partners ComSoft, too, in the initial stages of the relationship, was trying to understand GlobTel s technology. At first, ComSoft was engaged in projects that were relatively routine software bug-fixing and feature- development-type activities on older telephone exchanges. Slowly, with time, ComSoft was assigned tasks in the more challenging areas of wireless communication. These tasks provided a better scope for the technological innovation that they were striving for. To enhance their capabilities in new technology domains, Moitra approached two faculty members , Dr Sandip and Dr Vikas, in the computer science department of the Indian Institute of Technology (IIT), a globally recognized leader in technology education. Both Sandip and Vikas were acclaimed in their subject area, and had decided to stay in the country rather than migrate to prestigious universities in the West. They appeared to be driven by an ideology similar to ComSoft s, that of wanting to contribute to technology development from ˜within rather than ˜out of India. These common interests helped to seed an interesting and growing relationship between ComSoft and IIT that was described by the HR manager of ComSoft, Ms Deepa:

We have a very close relationship with IIT because when the company started out, the founders had gone to IIT and had requested a few people for consultancy assignments, and two of the professors “ Dr Vikas and Dr Sandip “ helped us. We had a link with IIT because they were partly working with us and continuing to work till they completely moved out to our organization. Despite our being a low- profile company in the market, we are able to attract high-calibre professionals from the universities. We have eleven PhDs with us.

ComSoft, after its initial confidence-building tasks with GlobTel, was bolstered by the involvement of the two IIT faculties , first as consultants and then as full-time employees . The company became increasingly proactive by developing ideas and designing solutions, trying to elevate the GSA from a vendor-contract mode to a ˜true partnership .

A senior VP said:

We have been working with GlobTel in that relationship essentially because of the nature of the job. Butnow we start becoming proactive and go with our own ideas and design entire sub-systems. Then the kind of relationship will be different. We could still be a vendor in some sense, but then we will be adding more value and earning more money. And the business model will not necessarily be one of just getting cost, but it will also mean getting royalty. It will not be per man-days but in terms of the business.

Key to this process of evolution of the relationship to a partnership mode was ComSoft s vision of technological excellence and self- reliance .The top management in ComSoft consciously tried to develop an organizational identity centred on ˜technological excellence .

The close association with IIT and the involvement of its professors provided the platform on which such a high-tech image could be built. ComSoft channelled a significant 15 “17 per cent of their funds into research and promoted an environment where the engineers were encouraged to compare their work with the best in the world. ComSoft s vision of technological excellence reflected the ethos of Silicon Valley start-ups, including a flat, matrix kind of organization structure where creativity was valued and junior programmers were encouraged to voice their opinions in team meetings. ComSoft adopted a similar open -door policy favouring merit, in sharp contrast to typical family-owned businesses in India where relationships to the owning family are significant. Moitra described ComSoft s ˜flat structure:

Treating people in the right manner costs money. If I travel, I want our people to stay the same way as I do. Those things cost money. So there is a pressure and simultaneously there is pressure on the competition front. There are a lot of companies coming up, and still cost is, I believe, driving a lot of the corporations to set up shop in India. So, the challenge is that we see that we move out, we move up the value chain and truly become partners rather than just sub-contractors.

The idea of technological excellence was closely and intimately tied up with the notion of self-reliance, and ComSoft proactively tried to shape an identity of self-reliance and ˜made in India . They developed a mission statement of unleashing Indian creativity in the global arena, reflecting the attempt to appeal to the sense of passion of young Indians who desired to see their country as a leading site for cutting-edge technologies. The ˜made in India was a desired state of identity that the ComSoft management deliberately tried to cultivate. As Ms Deepa, the HR manager, described it:

Our company has many people who are very passionate about India, extremely passionate . And they have a larger purpose, a vision of making India a stronger place, making India a centre of excellence in the world. This is a very, very intense feeling that people have over here and they feel that if we can change lifestyles over here then people will not run to the US. So can we become a model of excellence, can we become so profitable that we can change lifestyles over here so that [with] the same things that US can provide, excellent work and excellent money, we can keep people here. And that is what we can do given the larger purpose of making India a centre for excellence for technology.

The company consciously tried to appeal to the ˜Indianness of the organization by taking pains to emphasize the ˜Indian way of celebrating festivals like Diwali involving traditional attire and food. The company also strongly emphasizes the importance of family and family relationships to create a sense of togetherness. This is in contrast to the Sierra case in chapter 7, where the Indians family orientation was seen to impede professional commitments. The values of Indianness, high technology and self-reliance were consciously cultivated to help articulate the vision of unleashing Indian creativity. The CEO and the senior executives like Dr Vikas and Dr Sandip were proactively involved through workshops and seminars in creating an organizational buy-in for the vision statement. Interestingly, the consultant who proposed this vision was an Indian living half the year in Silicon Valley and the other half in India. This was reflective of the hybridized nature of the vision combining Silicon Valley creativity and drive with Indian ethos and values. ComSoft hoped to achieve this vision by building independent products and technologies that in turn would take the GSA from the current vendor-contract situation to the status of a true partnership. Moitra described his firm s ambitions:

We have to catapult ourselves into providing complete solutions that GlobTel s customers are looking for. I am talking to their direct Project Line Managers to support the customization of their products and make it a success in India and in this region. I am just not restricted to India alone. In this region we can play a major role in supporting and customizing the products. So, I believe those two are the major challenges that we are working with. And educating our people, especially the young ones who are joining just out of college, that learning about a product is equally important as trying to crack an algorithm or something like that.

The conscious cultivation of an Indian high-tech organization served another instrumental role of contributing to control attrition. First, the firm tried to recruit those developers who indicated a strong identification and desire to work primarily from India. This identification was further reinforced through various mechanisms that emphasized the value and enthusiasm of ˜being in India . A project manager reflected on why the attrition rate in ComSoft was lower than the industry average:

People do come and go, but I will say that it is very low-key in ComSoft. ComSoft is stable. The industry standard (of attrition) is 25 percent, right. I don t see that happening here. This is because it is a small company, so basically it is the small company culture that attracts people. You are close knit and you have fewer problems, and salaries are good, and the work that they are doing is pretty much on the frontier level, all these things are there. Most of the people who are leaving are not leaving to join other companies, but are leaving to go abroad. The high-tech profile is one of the things that attract a lot of people.

In summary, the inception of ComSoft was greatly supported by GlobTel, with the conscious aim within both ComSoft and GlobTel that the identity would be that of a high-tech, creative, university research kind of set-up . This identity was pursued strongly by the CEO Moitra, together with some high-profile faculty members from IIT, first as consultants and then as full-time employees. As confidence and expertise in ComSoft grew, they began to strain at the umbilical cord which some felt was tying them to GlobTel. Feeling the strain in many areas of the relationship “ ranging from the kind of projects they were being given to the budget constraints “ ComSoft consciously started to develop strategies to make a transition to a new independent identity.

Transition (1997 “2000)

We use the term ˜transition to describe events and processes that relate to ComSoft s attempts to break free of GlobTel s ˜umbilical cord and grow independently in different markets and technological domains.

The goals of technological excellence and self-reliance consciously inculcated by ComSoft helped it to develop a sense of purpose and identity. However, in making a transition to a new identity, the limits of its relationship with GlobTel gradually became apparent. GlobTel was reluctant to adopt the new technologies and patents developed by ComSoft; GlobTel preferred the earlier system of paying ComSoft on a ˜time and material basis. Further, changes in the industry because of the Internet were forcing GlobTel to redefine their technology focus and to make a ˜right-angle turn from a ˜voice company to a ˜data and voice over data company. ComSoft, despite the interest of a few sponsors in its abilities with new technologies, found the typical attitude in North America towards changing from payment based on ˜time and material to one based on royalty or patents to be negative in general and lukewarm at best. A senior VP described their efforts to change the pricing basis:

We have to renegotiate relationships where necessary. We have already started this process with GlobTel informally, but it will be formalized soon. Till now it has not been an issue because we were not generating intellectual property during the course of the projects. But now we will, and therefore, we have to negotiate the rights.

There were changes in GlobTel around this time of transition catalysed by the ˜right- angle turn . As discussed in chapters 3 and 4, the ˜right-angle turn referred to GlobTel s attempts to reconfigure itself from a ˜voice company that primarily manufactured telecommunication equipment to a ˜data and voice over data company that emphasized communications, both data and voice. The uncertainty and turbulence that existed in the industry meant that managers, even the new set of senior managers of Indian origin, were incapable of enlisting and supporting Indian capabilities in their worldwide business, especially new technology development. The Indian software industry had received increasing worldwide attention, and there were several new clients who contributed to a substantial rise in earnings for Indian companies. GlobTel, at one time, paid one of the highest rates for software work in India. These rates had, however, not kept pace with the times and over seven or eight years GlobTel became one of the less attractive paymasters in the industry. GlobTel s new strategy was to acquire small companies, a faster way to obtain new technology than to develop its own R&D. New GlobTel managers were driven by opportunities for marketing their telecom equipment in India: it was felt that this opportunity had not been adequately exploited in the past. A senior ComSoft manager described this changing focus within GlobTel:

They have a new head here “ Ravi. So any change that is not formal, not valued on either side, is pretty opaque . We have some changes in the key people. Paul leaving has had its impact and with Ravi taking over, obviously it will create upheaval . Ravi has got a different charter, a different interest. He is more interested in developing the Indian market; he has got responsibility for both development and marketing in India. John is well plugged into action in GlobTel. His interest is in developing the Indian market. He is not worried about other departments ( concerned with software development). He is looking at development partners from the point of view of what value they add to the goal of doing business in India (and not only do software work).

Frustrated largely by the GlobTel situation within this phase of dynamic change, ComSoft strengthened their efforts to become independent of the redefined business and technological focus of GlobTel. This process was reinforced by the ˜Japanese factor that helped ComSoft further to explore and also reinforce their identity of self-reliance. They displayed a sense of clarity and purpose, as reflected in this comment of a senior ComSoft VP:

We are not so bothered because for us in the long run this model [time and material] itself is dying. For us, we know our goal is to have a risk and profit sharing model, and by the end of this year we will get out of the time and material mode. We want to change this model. The issue of rate changes to the new model is secondary.

Interestingly, in pursuing this new model, ComSoft were not limiting their growth and expansion strategies to GlobTel and North America. In their search for markets for ideas and products, ComSoft discovered a different set of attitudes in Japan, which they felt was more compatible with their philosophy of technology development. With the initial experimentation in Japan being a success, ComSoft expected an exponential growth in their Japanese business in the future. A senior ComSoft VP speculated:

Right now GlobTel is about 30-odd percent of our business. In the future, the percentage might remain the same. It might even drop because other customers will be added. Japanese customers have just started picking up. We are at the threshold where it is just taking off and then it will take off like crazy. [The Japanese] take a long time to start working, but once they have decided, then they pull all stops. It has happened in one company already.

The potential in Japan made the ComSoft managers positive about the future. They believed success in Japan could lead to changed relationships in North America, including an increased market base with a wider set of clients. Another executive speculated on the nature of these changing relationships:

We want to look to other customers in North America. So far we do not have other customers in North America because you have to go and prove yourself. Unlike Japan, in America there is still the mindset that we want to work with Indian companies to cut cost. That is the first reaction mindset at least. Deeper it could be different. But the customers need more convincing. So, now that we have reasonable success with a new kind of arrangement in Japan, we are more confident of convincing people in North America. And once we launch these products, automatically our credibility will increase. And for services also, we will get more customers in North America.

These changing relationships were expected to lead to ComSoft developing a greater technological competence in telecommunications, which could contribute to significantly redefining the nature of the ComSoft “GlobTel relationship. Another ComSoft manager discussed this possibility:

There are a lot of similarities, but there are differences also. Because by the time we started working with the other companies, our technological maturity was much higher than what it was when we started working with GlobTel. And also we had already started taking in a lot of technological initiatives and so on. When we started with GlobTel we really didn t know any telecom at all. Now that is the reason why we are trying to change this relationship with GlobTel, because now it is possible.

Nearly three years after the initial experimentations with Japan, ComSoft has realized that it has not been able to make inroads into the Japanese market as rapidly as it had initially expected (and hoped). Japan comes with its unique and complex set of problems with respect to operating software-outsourcing relationships, some of which we discuss in chapter 9. Also at the level of some programmers and developers in India, there appears to be less enthusiasm about software skills in Japan and the USA is seen as the major source of learning for software technologies. ComSoft managers also spoke in complimentary terms about Israel, admired for its technological skills and approach to US markets.

ComSoft s Japan office manager, Japanese by origin, had strong opinions about ComSoft s strategy in Japan. He felt it should be different from the North American approach. He was of the view that ˜unleashing Indian creativity , while successful in the USA, needed to be redefined for the Japanese market, as the managers there preferred technology that had been approved in the USA. This feedback to ComSoft India came through different channels, including our research reports . ComSoft consciously took the decision not to advocate the mission statement so expressly and instrumentally and instead keep it more subtle and in the background. In the meanwhile, the organization had also grown tremendously and they moved from offices in a residential neighbourhood into a ˜university-like campus structure that could house 3,000 employees. Also, shaping the changing context was GlobTel s ˜right-angle turn strategy. ComSoft, together with three other partners, were given the maintenance of selected legacy systems. Although such work was against the general ethos and values of ComSoft, they accepted it; they rationalized that the sheer volume of this legacy work would provide them with a ˜bread and butter operation while allowing them to continue exploring Japan and also new markets like China and Israel.

The telecommunications expertise developed through the GlobTel relationship gave ComSoft the confidence to explore these new markets in Japan. With growth over time, the relatively small and high-tech culture of ComSoft was also redefined with an organizational structure based on divisions to help coordinate their global operations. ComSoft management took the success on the NASDAQ of Infosys, a large Indian firm, as a model to emulate for the future. Following this model implied that ComSoft would have to focus more on the commercial aspect of the business as contrasted with the earlier focus, at times even obsessive, on high technology. In the meanwhile, inspired by the rapid growth of the telecommunications marketplace , ComSoft took the brave and futuristic strategic path of tapering off their existing areas of work (in Electronic Data Automation) and focusing exclusively on telecommunications. This redefinition of strategy was reflected in the change in the company name to ˜ComSen and the redefinition of the mission statement from ˜unleashing Indian creativity to ˜making connections . This transformation also reflects Castells (2001) argument that identity is created and redefined by what people do in situated circumstances and globalization is enacted within an instrumental information network.

Global IT outsourcing
Global IT Outsourcing: Software Development across Borders
ISBN: 0521039487
EAN: 2147483647
Year: 2003
Pages: 91
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