Outsourcing: LN Balaji, President of ITC Infotech (Part 4)

Sramana Mitra: I have a specific interest in understanding your Calcutta strategy. Why has Calcutta been so far behind the rest of India in terms of development in IT?

LN Balaji: I’m not so sure it is true. [But] it’s a combination of two or three things. The first thing is talent. Calcutta is terrific if you want to do very high-end analytics. It’s probably the best place in India to get that kind of talent. If you look at predictor analytics for anti-money laundering, for example, you won’t get a better set of people in India than in Calcutta. Having said that, the rest of it is more a perception. It’s difficult for people to put money in when they are not certain of how well they’ll be allowed to operate environmentally. Fresh investment I’m not so sure is going, but I can tell you one thing. We are looking to expand in Calcutta also, and when we were looking for real estate in that area, the nearest one that we bought was so far away I think you can peek into Bangladesh. Something must be happening over there. I do think that companies will set up maybe their second, maybe their third, maybe their fourth development centers somewhere in that area. Employable talent, as you know, in India is scarce.

SM: No question about it. But the truth is Calcutta – and the eastern zone in general — has a huge amount of university and infrastructure.

LNB: Employability is the issue. My children studied in Calcutta, too, and had we continued in Calcutta, I’m not so sure they would have studied beyond high school.

SM: Why? The ethics of the region is highly focused on education. So, I’m not sure where the notion of people not interested in pursuing degrees beyond high school comes from.

LNB: That’s true. If you wanted to study engineering or any of the sciences, students tend to step out of Calcutta. Mostly, you’ll find that given a choice, the brighter ones would have left Calcutta.

SM: You’re saying that the highest levels of the talent have gone somewhere else to study?

LNB: No. There is this notion, which is reasonably significant, that means that the kind of education that you get over there is probably not aligned with what the market wants. That could be one reason. Employable talent is what our industry wants, and any other industry for that matter. They must be of a certain caliber that with little training input can hit the ground running.

SM: Today, in India, the demand for employable talent is so high, most of the large IT services companies are running universities in their companies.

LNB: I know.  They don’t have a choice.

SM: Whether you train these people in Calcutta or Lucknow or wherever, I think the IT services companies will need to do more of that in areas other than Bangalore and Pune and Chennai.

LNB: It does happen in Calcutta, but the question is how much? You can’t run a three-year course in an IT company.

SM: You can’t run a three-year course. You could get it going in about six months.

LNB: Absolutely … a maximum of six months. So, when I say employable, it means what is the end product? What is the quality of the end product? At the end of six months – typically, it’s four months – four to six months after joining, what is the quality of the human resource? That is the test of employability. For that, they have to have a reasonable test that our institutions are passing out. In Calcutta, with the environment there, if one were to look at risk management and all of that …

SM: It’s highly risky because of the political situation.

LNB: Yes, they get scared.

SM: Interesting perspective.

LNB: I’ll tell you something. You’ve heard of ConocoPhillips, the top petrol giant?

SM: Yes.

LNB: Now, for all of their retail outlets, there is a dynamic pricing that goes on – gasoline pricing. The application that actually sends this pricing out to all these gas stations was developed by us. ConocoPhillips chose to get out of retail in the United States, but they’ve still got retail in some of the markets in Europe. But the entire application continues to be supported and maintained out of Calcutta.

This segment is part 4 in the series : Outsourcing: LN Balaji, President of ITC Infotech
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