Very few foreign companies have lost money in India; success is inevitable for those looking at it as a long-term proposition, so affirms Subramaniam Ramadorai, Chairman of the National Skill Development Agency and senior figure of the Indian IT industry. Here he explains the “Indian difference,” looks at the challenges – and opportunities – ahead, and what the international community needs to realize about the country’s potential.
Given that India is growing at over 7% with a very positive outlook for the immediate future, how would you define the “Indian difference”?
There are multiple things. First of all there is the size of the country providing a potentially huge market access. Second, there is the very appealing demographic dividend with our youth representing approximately 20% of the global workforce by 2020. Third, there is a rising middle class, our next big spenders. India is expected to become the fifth largest consumer market in two decades.
Within this context, any form of consumption, entrepreneurship, startup or industry, can be viewed as a scaling opportunity. Add to this the fact that India is the world’s largest democracy, very vibrant and diverse, and the Indian difference becomes quite obvious.
The real opportunity lies not only in an India for Indians, but perhaps even more in an India for the world. India as a part of the global supply chain has become very appealing. It is thus a two-way process. Given that English is the common business language in India makes our country a very exciting proposition to the world.
How must India tackle the enormous challenge of skilling over 1 million people that enter the workforce every month?
India must work together and take this issue very seriously. Skilling these youngsters is not only the role of the government; the private sector, NGOs and state governments all need to get involved. I believe that it is important to look at this challenge as an opportunity. There are no opportunities without challenges. If we are able to address this issue and skill our people, the spillover effect will be beyond anything we have experienced before.
What about the role of the NSDA?
The whole journey started in 2007. In 2008, the National Skill Development Corporation, a public-private initiative, came into being. We then created the National Skill Development Agency, which was an overall policy body, to create standardization across vocational streams and identifying pathways between vocational and general education.
One of the roles of Skill India is to set up multiple eco-systems to develop a Labor Market Information System and a National Skills Qualification Framework that identifies the level of competency in a particular sector through assessment certification etc.
In 2009, we started the Ministry of Skill Development and Entrepreneurship. The journey of setting up institutional mechanisms to address the issue of a million people coming into the job market each month, with the creation of relevant and inter-connected institutions, has been a challenging one, but I believe that we have made enormous progress.
Would you say it is relatively new for India to infuse private-sector know-how into the public sector, and what has been the impact given that you are an example of this?
When public and private sectors are working together, they learn from each other. They have to accept their mutual competencies and capabilities to make a difference. This kind of cooperation used to exist in a smaller format. Some people that were retiring from the government were being recruited as consultants in an organization like Tata Consultancy Services. It is not as if we did not know the government at all. We also did some projects for the government, for example the passport initiative, the digitization of the Ministry of Corporate Affairs’ digitization program, such as tax filings and submissions.
When interacting with the government on a small scale, at least you get a feeling of how they work and what makes a certain project successful or not. I believe that as a result, the public and the private sector have become closer intertwined. In my case it is the other way around. I was a company executive for many years, but have now taken the reigns of a public sector autonomous body.
How has your transition from the private to the public sector been given that what you used to do for the betterment of your company you are now doing for the betterment of the wider society?
Sixty-six percent of the ownership of the Tata Group is owned by charitable Trusts. In other words, I was not only working for the betterment of the company. I was working for the betterment of what the Trust is focused on, i.e. Indian society. The more profit we generated, the higher the dividend for the Trust. What I was doing at Tata used to have a direct impact on people. Every rupee Tata is earning goes back multifold to society through its Trust that could be funding a hospital or scholarships for students going abroad for higher education. So when assuming this new role with a government body, it was not as if I was suddenly only involved with serving the Indian people. Tata Consultancy Services has created large-scale employment as well.
Could you elaborate on how your specific role at Tata Consultancy Services has helped you in your new position today?
When we started in 1968, we were pioneers in the Indian IT industry. Today the sector directly employs 3.5 million youngsters. This is not a small number. Indirect employment is almost three times higher, meaning that it reaches 10 million people. In other words, there are approximately 13.5 million young people employed in different age groups, mostly between 20 and 50 years old. What we are attempting today is not a number of three or 10 million, but of 300-400 million people. This is the real challenge and we are slowly but surely moving forward on our journey.
Ultimately the job is not done until we can provide employment for the 1 million youngsters that enter the labor market every month; we cannot rest until there is equal opportunity for all.
In order to reach these objectives however, there is the need for money, investment and more importantly collaboration between the several stakeholders. It is a task that goes beyond borders. Governments, companies, NGOs and international organizations from all across the globe take this issue seriously and start looking how best to work together and find synergies to accomplish this ambitious goal. This is why I call this a journey and not a one-time event where everything happens at once.
How can India up its game and improve its profile and image worldwide, ensuring that the associations made with the country are positive and strong?
Despite the fact that we have still a very long way to go to skill all Indians, we have an enormous amount of highly skilled people already. India is very well respected in the IT industry and slowly but surely we are seeing that this respect tickles down to the manufacturing sector as well. In certain sectors, leaders are standing up and they are on par with leaders in any other part in the world. If we want to accelerate this evolution, we will need an enormous additional amount of skill and capacity building. India needs to make sure that it can provide the prestigious and high-quality products that a middle-class aspires for. We have to improve our manufacturing base, add value within the country and be an integral part of the global value chain, paying attention to quality, process integration, digitization, etc. Whether it is Make in India, Start-up India, Digital India, Skill India, it will be the combination of all of these initiatives that will ensure India’s rise as a global player with the same capabilities and output we now see in Europe or the USA.
Do you agree with the statement of the late President Kalam, when he said that Make in India is ambitious, but that there was a real risk of being labeled the low-value assembly line of the world?
I do not believe that India would be positioned as a cheap or low-cost location compromising quality and jeopardizing safety, health, and other important standards. What India can offer is affordable quality and value for money. Claiming a certain level of performance means that we will have to deliver. We must never promise what we cannot deliver.
How does India compare to other countries?
Japan, after the war, was making poor quality products. Everybody knew that if you needed that kind of quality, you had to go to Japan. In the 1950s, nobody would touch a Japanese product even if it were given for free. What is the brand of Japan today? Would anyone dare to say that it is a country that doesn’t deliver quality? The low quality has been entirely forgotten, because of performance by the workforce, global reach, the kind of brands, scale, and the training and input they have provided.
Take Maruti today, an Indian company in joint venture with Suzuki. The car that is exported out of the Maruti plant in Gurgaon is on par with any car that comes from any other location in the world. Suzuki has chosen India as a base because of the quality of its skilled workforce at relatively low cost. Scale development on the ground has become very compelling to them. Selling a million or two million cars in India also requires being in line with the specific profile of the local people, who want the right quality at the right price. A consumer is willing to pay a higher price for a Jaguar, for example, because he is aware of the supreme manufacturing, speed, type of engine, etc. If we want to build strong brands, than the manufacturer needs to be very clear about the various segments and their varying performance. Cheap and sub-standard won’t work; nobody will buy the product. Everybody requires quality, which today is being measured against global quality.
Even from the point of view of our states, they are competing against each other, but much more they are competing to gain their rightful place within the global economy. They are telling an international investor to consider their state as their investment destination, providing for a clean and business-friendly environment, with attractive labor laws and excellent infrastructure. Creating this awareness is not only crucial; it is also a prerequisite if India wants to build a strong nation brand.
Do you think that the international investment community understands this message?
Perhaps not entirely yet, but this is where all stakeholders have an important role to play and must do their part. The Prime Minster, the Union and Chief Ministers, and Corporate India have to send out a strong and consistent message that they are creating a brand. Together they are creating Brand India.
Even though India jumped 12 places in Ease of Doing Business in 2015, which is unprecedented, the country is still 130th out of 189 economies. How can you infuse confidence into a foreign investor who is eyeing India as an investment destination?
A lot of foreign investors are already in India. I call them the early adopters. They are not waiting for the perfect solution, but they know that the time is right to come to India; they know that they will get certain advantages and that they will build a competitive advantage over others who are still in a wait-and-watch mode. They know that India has embarked on a journey and that the business environment will get better; they are betting on it. There are very few foreign companies that have lost money in India. If you are here for the long run, success will be inevitable.
You displayed the same optimism in your personal life when you came back from the US after your studies.
Everybody who stayed in the US or was going abroad thought that I was crazy and making a big mistake. They told me that I was going to face problems and that in two years I was going to return to America. But I never looked back and have not regretted it.
Tell us about your decision to come back here. The IT industry then was not as developed as it is today?
It felt like a startup. I knew I was taking a risk, but I was willing to venture new things. And the Tata Group wanted to get into new business.
What would you tell the class of 2016 who graduate from UCLA?
I would tell them to take a path, which others have not yet taken, whether it is here in India, Africa or any other part of the world. Take a path that combines your heart and mind; do not engage in something because somebody is going to give you a million-dollar salary.
Do you think brain drain for India is a challenge?
This used to be a real challenge in the 70s and 80s. There were no opportunities in India. After graduating, the only logical destination for students was to go for a postgraduate education in the US or UK and to never look back. They virtually cut off their ties with their home country. Only a few came back because they felt obliged to give back. But this was a minority. There were almost no opportunities and frankly you could not really blame them to try their luck on the other side of the world.
The world today however has become such an interconnected place, that a real time innovation here or elsewhere can be applied in any part of the world. We used to talk about this way back in 1996-2000. We called it COIN – Collaborative Innovation Network. Basically it means that innovation does not happen in one corporation or one entity, but by extending the innovation ecosystem, connections are happening between universities in India and abroad. The global innovation network has become such that the collaborative model is playing to its full strength.
Given that there are over 3 million Indian-Americans living in the US, most of which highly educated, wealthy and at the helms of major companies, how can the “Indiaspora” contribute to fuel India’s growth story?
There are multiple ways. One is through the commercialization of certain platforms and technologies that these people at the helm of big companies have been able to develop. Nevertheless, I believe that looking at cooperation from a social point of view is equally important. If the Indian Americans start sharing their accumulated wealth and intellectual capacity with their home country with the aim to innovate in India, the opportunities are countless. It is about applying the mechanisms of scaling.
Several persons might know something very valuable, perhaps connecting one hundred people each. If they put their hands together however, they might be able to touch a million, or 10 million.
At Tata we call this the Tata strive, our pursuit of the creation of a not for profit skilling eco-system. If companies or entities from the US/UK or any part of the world are eager to participate, we aim to achieve scale through matching individual capabilities and try to ensure that all learning can be duplicated and shared with other regions in the world.