Q&A: Ganesh Natarajan, ex-Nasscom chairman

Natarajan: The Satyam scandal was an isolated incident

Ganesh Natarajan was the chairman of the Indian Software and Services Association (Nasscom) until earlier this year. Natarajan talks to V3.co.uk about key issues affecting India’s outsourcing sector.

V3.co.uk: What trends are you seeing in the industry at the moment?
Ganesh Natarajan: There is an increasing need for single work permits and social security treaties so workers from India can travel more freely in Europe and do not have to pay double taxes.

Another recent trend relates to workforce development through partnerships between Indian companies and UK universities, such as the one just formed by my company Zensar and the University of Essex.

This year has also seen Indian outsourcing service providers wanting to provide more collaborative environments to their partners rather than simply lower cost services. We are also seeing less need for Indian companies to send workers to the UK as we can find these workers in the UK with the global delivery model of outsourcing.

A recent Forrester report said small and mid-sized Indian vendors are winning customers over the larger Indian outsourcing providers because of the lower prices they can offer and because they are willing to take up smaller contracts. How do you regard such research?
Smaller outsourcing providers are generally doing better while the really big companies such as TCS [Tata Consultancy Services], which companies once chose because they can afford to offer such highly scalable solutions, do not have so many £100m contracts coming in anymore.

Most companies choosing to outsource their services are concentrating on incremental projects rather than whole new infrastructures. Also, companies that were not previously considering outsourcing or offshoring are now beginning to consider the benefits because the financial crisis has taken its toll.

First-time outsourcing companies tend to look for partner companies their size for cultural reasons or because they want flexibility. Generally, outsourcing providers with between 3,000 and 10,000 employees are doing well.

What outsourcing services are doing well in India?
Infrastructure management and datacentre outsourcing services, testing services, management of networks, collaborative services, Web 2.0 and open source are in high demand. It is ERP implementation and application development work that is struggling.

Nasscom chairman Pramod Bhasin recently predicted that India’s software and services exports will attain double-digit growth in the next financial year due to a revival in US and Europe economies. Do you share his bullish outlook?
Well, there are definitely signs of green shoots but it is hard to know for sure whether they will continue sprouting. Overall, we see Indian companies still holding back from spending money on marketing. All we can do is wait and see. We have seen some chief information officers increasing their budgets for next year, which are the first signs, but this is still very incremental, it’s no big bang.

The recent Satyam fraud case raised serious questions about the way in which Indian companies are scrutinised. Many commentators argued that tighter regulation would greatly benefit the Indian outsourcing industry. What are your thoughts on this?
We tend to see the Satyam scandal as an isolated incident. It has actually had no lasting impact on the company. We have prevented it from affecting the industry.