India’s best bet: MyGov with My Guv

IIFL | Mumbai | February 24, 2015 12:40 IST

Raghuram Rajan has met with stiff opposition from certain quarters for asking the right questions. Hope his detractors realize, if not wholeheartedly acknowledge, that these very questions will ultimately lead the nation towards better answers.
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Even a cursory glance at Mr. Rajan’s thought process is enough to highlight the irrefutability of his wisdom. Those who find it obvious are oblivious of the multi-hued peculiarities of the Indian story and those who term it detestable are busy protecting vested interests. Before we get to the moot point, let’s summarize some of the perceptive points Rajan has been relentlessly stressing on:

That India needs to strike a fine balance between regulation and impulsion to ensure that the complexity of checks and balances are not reduced to self-defeating mechanisms that unknowingly hamper business and economic growth.

That Black money is as much an internal problem as it is an external one – calling for a disciplined culture of enforcement to demolish the very escape routes that enable people to park funds overseas in the first place, that a policy of moderate taxation coupled with austere enforcement is better than a regime of excessive taxation and its weak enforcement

That Indian government needs more domain specialists of proven credence to provide the right direction and depth to economic decision making.

That ‘Make in India’ campaign needs a complementary ‘Make for India’ mission primarily because an export-led growth model now poses new challenges for emerging economies in the wake of global slowdown and growing re-shoring initiatives of industrial economies.

That Indian must also strive to build a robust, internally-funded domestic market across sectors which merit the support of budget incentives as also a revamped supply-chain of optimal and efficient market intermediaries, not merely improved logistical arrangements.

That our banks need to recover from and guard against past blunders of design and execution for which they deserve enabling support from governmental, judicial and RBI in architecting their turn arounds by enforcing proactive, prudent and pragmatic lending terms to prevent defaults and fund misuse rather than deal with them in hindsight.

That the Urjit Patel disinflationary glide is tailored for India’s economy, and disinflation in our context need not be linked with the US scenario of late 70s and early 80s consequent to the-then Fed Reserve chair Paul Volcker’s preemptive disinflationary restraint that adversely affected construction and farming activity.

Of all his penetrating recommendations, the last two prove particularly unpalatable to some players for obvious reasons. Rajan’s proposed reform directly upsets the umpteen well-nurtured bank-to-business comfort zones replete with dubious debts and doubtful holdings. This menacing lobby has literally redefined the term ‘risk’ as cent per cent return by unabashedly enjoying its rewards and unperturbedly escaping its costs over the years.

On the inflation issue, certain quarters may have a logical point in taking objection to Rajan’s inflation-fixation, especially its impact on small businesses and given Rajan’s recent surprise rate cut (his critics see that as a flip-flop under severe governmental pressure) but they have no business to categorize Rajan as a Western-trained intellectual tailored for Wall Street’s cause. If they apply their minds, they would realize the depth and gravity of Rajan’s argument favoring sustainable growth as against growth alone.

If our expediently jingoistic sons of the soil care to introspect, they will appreciate the logic of Rajan’s argument, in urging India to take the lead in seeding new ideas and challenging the global status quo rather than be content with quota reforms. FDI, Rajan believes, is critical to India’s growth but not at the cost of comprising its own interests. He couldn’t have been more apt in this context when he says that it makes perfect sense to persist with rules for patenting a medicine in India, regardless of the contrary stance of foreign drug makers.

Very few possess his crystal clear clarity in unfolding the essence of financial regulation, as an effective means to ensure sound economic fundamentals and not as a trifling tool to boost the bourses alone. A bustling stock market, he contends, is most welcome but only as a collateral benefit, never as the prime motive of policy making. And his definition of economic inclusion goes beyond monetary confines to encompass quality education, nutrition and healthcare. He is dismissive of bellicose ideas like the inheritance tax which he feels adversely affects wealth creation in the sole focus on penalizing the well off rather than helping the deprived come up in life. How many before him have openly cautioned lenders on the need to evaluate the quality of student loans to avoid the route and fate of farm loans.

Nobody put the 2008 debt crisis in perspective like Rajan did in his incisive account ‘Fault Lines’ wherein he points out that avaricious bankers, dishonest homebuyers and reckless investment managers were only responding to three sets of fault lines: domestic political pressures, trade imbalances and incompatible financial systems. He’s been proactively vocal about the long term perils of inflated assets and misallocated capital in the global economy primarily arising from artificial liquidity injections. He has also highlighted the glaring disconnect between the Federal Reserve and central banks of other nations in that then US Fed decisions focused on domestic economy affect other dollar-governed economies in ways the fed reserve can’t either consider or anticipate.

Most interestingly, there are striking similarities between Fed Reserve chair Janet Yellen and our Raghuram Rajan, both incisive thought leaders and committed practitioners and both among the early predictors of the 2008 debt crisis. While Janet Yellen’s appointment proved to be Obama’s best-known compromise in the wake of Larry Summers’ (almost) willful resignation, Rajan is the PM Modi’s (sole) prized legacy from the earlier government. Both circumstantial choices have proved to be in the best interests of the respective nations.

Rajan’s arguments are critical to India’s growth story because they provide a functional and fruitful framework to rightsize the rhetoric of PM Modi’s Make in India campaign without hurting its wholesome fabric. Beyond doubt, MyGov needs My Guv. And India needs both.

Infy’s Panaya purchase: Testbed of Disruptive Innovation

Mumbai | February 18, 2015 11:55 IST

Much more than a smart buy of inorganic inroads into the global enterprise customer portfolio, the $200 million all-cash deal heralds a new era of compelling value proposition of Indian IT services where sheer development of heads will override mere maintenance of headcount.


In his recent media bytes at different venues and occasions, Infosys MD and CEO Vishal Sikka, as also members of his core team, had empathically stressed on the critical significance of automation in software services as also on the temporary replacement of resources as a direct consequence of the adoption of emerging technologies. The Panaya acquisition has put these company statements in perspective but going by media’s glorious obsession with potentially contentious issues, it would be more than keen to explicitly link Infy’s new-found ambition to acquire tech companies of tomorrow with likely TCS-like job cuts despite the Infosys elucidation stressing on the acute need for reskilling of resources to keep pace with the fast changing tech landscape. The Panaya deal is a key game changer for the slumbering Indian software service industry and that should be the focal point of the media story. That Sikka sees the Panaya acquisition as an enabler relieving his people of the ‘drudgery of many repetitive tasks’ spells great news for the industry and its practitioners across levels.

Before we come to how the deal changes the scene for Infosys and the software service fraternity, Panaya deserves a special mention. For long, given the inflexibility of ERP implementations, it was almost an onerous norm amongst the users of enterprise products to ‘keep’ their systems stable by turning their back against any significant upgrades, patches and releases that threatened to disrupt business in a big way. A key support provider of this compromise market was Rimini Street which assured stability at cost-effective rates provided you were okay with not having the most current version of your ERP. But given the ever changing tax, regulatory and compliance rules, changes to the ERP code become imminent and users have to depend on their own support departments for all inevitable fixes that necessitate rigorous, fool proof testing before going live.

Panaya comes with an irresistible Amazon EC cloud-run Software-as-a-service value prop. They help you stay updated at all times without the need for deploying dedicated support teams and heavy IT budgets. Beginning their enterprise tryst with SAP, they added Oracle and Salesforce to their fold in due course and literally redefined the erstwhile unglamorous update fixing job by mathematically reengineering it end-to-end. Panaya tests update chunks vis-à-vis virtual production versions and furnish intelligent reports about which of those will march ahead, which would cause glitches and which would pose serious threats. Given such substantiated support, it’s that much easier to prevent the ruckus of failed upgrades, corrupt data and system crashes. Ask an ERP user from the tech side about the sheer delight of more than half of potential upgrade bottlenecks cleared automatically and he/she will fall short of words. Panaya focused on what seems elementary in hindsight and yet was overlooked by even the best of breed Enterprise providers – that upgrades are as integral to ERP as releases are. Panaya's cloud-based engine accelerates the process of updating enterprise applications by leveraging its huge repository of past experiences. In today’s cut-throat era, you couldn’t ask for a better edge.

That Infosys will be able to readily deploy this edge to its customers is as important a win as getting 1,220 companies in 62 countries on a platter. The fascinating automation IP edge will help Infosys manage client projects better and faster than ever before to be able to stake serious claims to the strategic partner crown. Panaya will most definitely fortify the Infosys Testing stream which is under severe pressure in the wake of the growing shift in favor of Cloud and Mobility solutions. And with Panaya on its side, Israel becomes centre stage to Infosys and even India, going by Sikka’s talks with PM Modi in the context of digital India. More acquisitions and tie-ups seem ripe with the start up nation which is increasingly looking to Asia in the wake of a prominent anti-Semitism wave and likely trade sanctions. Like in most things, China will be our fierce competitor in Mission Israel too and hence every breakthrough will be significant both for the Indian service sector and India. That SAP is circuitously central to most Sikka innovations including Panaya is pretty obvious. Himself an ex-SAP, he’s got two ex-SAP comrades steering key functions in Infosys - Ritika Suri who recently took over the M & A reins and Big Data & Analytics boss Abdul Razack to whom Panaya CEO Doron Gerstel will now report. One of the Panaya investors happens to be Sikka's mentor and SAP cofounder Hasso Plattner. Most interestingly, the blurred Panaya-SAP equation (given the rather shaky existence of SAP Solution Manager) will now move from blurred enmity to marked affinity given Infy’s rock solid alliance with SAP. The Panaya deal has taken Infosys that much closer to Sikka’s radical agenda of an innovative productization of its services. The company seems to have consciously chalked out a plan towards fulfilling this mission. That explains the DreamWorks and Tableau Software alliances, the ongoing on-boarding of data analytics, cloud and consulting talent, Abdul Razack’s and Binod Hampapur’s in-house classes on data science & and AI respectively and the aggressive automation strategy for enhancing its thriving testing practice.

While a section of media is busy citing doomsday predictions of futurology experts, of mass-scale human elimination from the growing automation spree, we should in fact rejoice the new trend that seeks to make Indian IT more agile and aware about the evolving paradigms of tomorrow. Like Infosys, there are many other players (like Cognizant whose TriZetto buy will be fresh in Infosys minds) who have taken the same route to reinvent themselves. The changing scenario will undoubtedly help Indian software professionals move from being perfunctory coders to becoming prolific programmers. The popular IT word ‘resources’ would then be consciously used in the context of developers (and would not simply imply the human tag) and career planning would assume meaning and substance unlike the hackneyed and programmed voyages through the winding project-bench-project route interspersed with default onsite placements, bell curve performance appraisals and the commotion of promotions bundled with the managerial power perks (Authority and influence exercised through the grand office of Words, Excels and Power points)

The coming era of innovation-led growth demands ability and agility in the same breath and in equal measure. The reskilling that Infosys has pointed out would need to happen on the job as well as in the mind. Learning to tame disruptive technologies with authority and responsibility alone will help our IT professionals avoid the otherwise looming disruption in personal and professional lives.
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