Leadership crisis in India Inc

The tectonic shift in Infosys leading to the return of the native, Narayana Muthy, about which I wrote in my previous column (‘Infosys needs a strategic shake-up’, Business Line, June 5), has far deeper connotations for corporate India than are immediately apparent.

The first, of course, is that India’s IT giants face the risk of falling by the wayside if they cling to borrowed Western models, which merely subsist on the linear extrapolation of services, products and applications that are already being discarded elsewhere. Try as one might, one cannot readily recall a single original, path-breaking, high-end technology with which India’s IT outfits can be credited. Not one IT firm has any patent of its own.

Infosys’ Executive Co-Chairman, Kris Gopalakrishnan, has admitted that the rough proportion of routine and technological parts of an IT firm was 70-30 and that there is no hope in the foreseeable future of products and services such as those of Google and Cloud originating from Indian soil since they involved spending enormous amounts not currently within the reach of most IT firms.

The result is that they are essentially content with making the most of the lower reaches of the value chain, banking on software services rather than software products, and capitalising on the fortuitous advantages of low-cost labour, large number of professionals, knowledge of English and familiarity with Western institutions. Indeed, in some forums, the harsh description of ‘tech coolies’ has been applied to the industry.

BILL GATES’ WARNING

Its leaders continue to be trapped in a copy-cat frame of mind induced by the earnings ascribable in large measure to the volume of transactions in foreign currencies.

We are at the waterfall end of performing maintenance tasks, business process outsourcing, improvising imported systems, developing small applications which are also an extension of existing systems, and what is called ‘porting’, or re-engineering.

This was what must have prompted Bill Gates to warn the Indian IT industry during his visit to India in 2009 that it should move away from low-cost labour towards high-end research and development if it is not to be overtaken by a fall in demand and eventual collapse.

Merely playing with top slot changes will no longer do, even if charismatic first generation visionaries are recycled.

The Indian IT industry will slowly be edged out unless it sets an aggressive pace by coming up with its own high-end branded products.

It should hammer out a business model which would reverse the proportion between run-of-the-mill and technological components of the firms from 70-30 to 30-70, and go all out for whatever it takes in terms of investment, innovation and human resource development.

On a general plane, private sector companies in India have ceased to be paragons of efficiency and excellence. Disturbingly, many of them are already showing signs of being infected by the incubus of complacency and lure of the fast buck, judged by their indifference to the corporate canons of customer sovereignty, quality of service and good governance.

BASIC REASON

The feeling is widespread that government service providers are getting to be much more responsive in attending to customer complaints and much more dependable in maintaining performance standards than private firms.

The basic reason, in my opinion, is a leadership crisis in India Inc in terms of both competence and shortage of talent. This is supported by an article, ‘ India’s Leadership Challenge’ published in the strategy+business website on May 28.

It quotes a number of studies showing that qualified candidates for senior positions are hard to come by and that by 2017, 15 to 18 per cent of leadership positions in India’s top 500 companies will be unfilled – or will be filled by people under-prepared for the jobs. There has also been lack of leadership in another sense.

During British Rule and the early years of Independence, persons in senior positions, whether in government or private companies, conducted themselves as role models for young, new recruits in adherence to standards and values.

The elders took particular interest in grooming their juniors for high responsibilities and getting the best out of them. The young, new appointees are nowadays left to fend for themselves, with the senior executives unable or unwilling to spare the time needed to infuse them with a sense of belonging.

There is hardly a CEO one comes across in Indian companies who takes close personal interest in human resources development.

Further, today’s business leaders are not seen as broad-band personalities, with the intellect, vision and versatility that command respect.

Here is a task – forging a new leadership paradigm — that India Inc will ignore only at its own peril.