The Hindu Business Line : ‘Rupee appreciation here to stay’

“Yes, but this is one of the realities of globalisation and hence, while it may be a cause of concern in the short term, it is definitely not wholly unexpected,” says in answer, Rajiv C. Mody, Chairman and Chief Executive Officer of Saske n Communication Technologies Ltd, a telecommunications software services and solutions company.

“We have been enjoying the advantages of the difference till now, and eventual balancing out was natural. Rupee appreciation is here to stay and likely to appreciate further,” he adds, in a recent e-mail interaction with eWorld.

Rupee-dollar movement continues to be an issue of high criticality for Indian exporters; on the day of writing this, rupee breached the Rs 40 level to touch a nine-year high.

Mody, a graduate in electrical engineering from M.S. University, Baroda, India with a masters degree in computer science from New York, founded Sasken in 1989, in San Jose, US, along with two other co-founders. He has worked in Advanced Micro Devices, Seattle Tech Inc, and VLSI Technology Inc, in the US.

Excerpts from the interview:

How should the IT industry meet the challenges from a rising rupee?

Measures such as forex hedging are not sustainable in the longer run beyond a couple of quarters, and what is required is a change in the way we do business. The business now needs to change focus to operating the levers of enhanced productivity and a change to more consultation-oriented projects — getting in a better rate than the run of the mill T&M (time and materials) projects.

And what strategies would you be adopting in your company?

Sasken may double the number of freshers hired to bring down the average cost of compensation.

Today’s youngsters are smart and they can handle complexity, while the seniors provide the required project management experience. This is one of the most effective ways of tackling rupee appreciation. And as mentioned earlier, there needs to be more focus on high-end work and lesser dependence on any one particular region.

Given the rise in costs, can the IT (information technology) companies in India continue to offer customers 30 to 40 per cent cost savings?

This can only be achieved if we manage to bring into play the levers of productivity, efficiency and change in the nature of services provided.

It is estimated that the supply of skilled IT manpower may fall short of requirements by 2009, how do you expect to fill the gap?

We do not envisage such a scenario and feel that IT manpower supply is likely to increase in the future.

How do you face the HR challenges such as resource retention, lack of trained people, and growing attrition?

Sasken’s credo is people first. We strive to provide a good work-life balance to our employees with ample opportunity for growth and skill development. Moreover, at Sasken, everyone is required to go through a development centre and create a personal improvement plan, which helps us align organisational interest with employee development.

Do you see enough progress in India attending to its infrastructural deficiencies?

India’s infrastructure definitely shows signs of improving in the near future with various developmental projects being put into place, such as the international airport, metro rail, etc. However, the pace of these developments can be faster to meet the ever growing demand as India goes on to become the global hub for IT and communication services.

Have the concerns about service quality and security been put to rest?

I believe that the service levels and security consciousness have matured with the serious players in the market. It is no longer a concern area, with service providers adopting and following world-class security practices.

Are the Indian IT service providers continuously innovating (in developing new service lines) in order to improve their operating processes?

We are constantly innovating and this can be ascertained from the numerous patents that Indian companies and individuals are filing, and winning. This is also one of the main reasons behind the robust and steady growth seen in outsourcing over the past three-four years.

How serious is the threat from China in terms of competition for India now?

India and China today have become the two emerging centres of power and knowledge in Asia. Every country has its own advantages and disadvantages. While China is definitely ahead in manufacturing and government regulations (the speed of processing), we have the edge in pure domain knowledge and R&D. Hence, I do not see China as a threat. This is, in fact, healthy competition and never allows us to be complacent.

What are the main markets you are looking at for growth and expansion?

We have not narrowed down on any market and consider the whole world as a stage. We are actively looking at markets across the globe, which include Europe, North America, Australia, Asia, etc, for various growth and expansion opportunities. Wherever we see growth and client requirement, we will be there.

How is your company poised to meet the challenges posed by the industry and telecommunications in particular? Trends and your views?

The telecom industry is characterised by high R&D spends. The biggest markets for telecom industry are India and China and there is a need to offer cost competitive solutions for these markets. This is the key driver to lower the R&D costs while keeping the momentum high in R&D investments, which is possible only by shifting R&D work to countries like India. Being a pure play telecom R&D services company, Sasken offers solutions across the telecom value chain and is well positioned to benefit from this trend.

Are you looking at organic or inorganic growth?

We are looking at organic as well as inorganic. Sometimes, when you need to scale fast, inorganic is the chosen route. We are constantly scouting markets for inorganic growth to either win client base or acquire talent. Sasken’s growth strategy is a mix of organic and inorganic growth like most companies in India.

What are your future plans?

Sasken being a focused embedded communications solutions company will continue to help businesses across the communications value chain accelerating product development life cycles. Our growth strategy is focused on connecting all the dots in the communications value chain and creating competitively priced technology solutions that help our customers increase their revenue base.

dmurali@thehindu.co.in

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