Change Leadership Is Satyams’ Best Bet : Ramalinga Raju

Interview Questions

Full Interview with Ramalinga Raju

Ramalinga Raju:

Satyam has built its business by capitalizing on global trends - from less than a million dollars in revenues when it went public in 1992 to well in excess of a billion dollars in the last financial year.

There has been a twenty-fold increase in the global GDP over the last century (from $2 trillion to $41 trillion) and this increase can be attributed primarily to inventions and innovations that have taken place within that century. IT and the virtual delivery of services, in particular, have had a dramatic effect on the manner in which 'value creation' happens in this new world order. Perhaps, only disruptive technologies such as biotechnology and nano-technology can rival this in the current century of knowledge.

The rate of change is accelerating while cycle times for delivering value are shrinking. IT is acting as a catalyst that transforms businesses. Naturally, we are applying the same technologies, tools and principles in the way we manage our own business as we do in delivering innovative solutions to our customers.

Some global trends we are observing are:

Accelerated growth in the global GDP (global GDP grew at 3.6 percent between 1990 and 2000, but grew much faster at 7 percent during 2000-2004);

The proportion of services in the global economic pie increasing at about one percentage point a year (which is now at 71 per cent of global GDP);

Global trade increasing at more than one percentage point a year ( which is now at 54 per cent of global GDP);

And, the phenomenal growth of virtual delivery of services riding on the back of IT platform. For example, IT and BPO exports from India are estimated to exceed $60 billion by 2010 starting from a base of about $100 million in 1990 (a growth of more than 600 times). This last one is the most important from our perspective.

 

Ramalinga Raju:

The global knowledge and technology base is far ahead of our current ability to leverage the same. While technologies are changing by the day, mindsets tend towards change by the generation.

Change management seems to be at the center stage of every business activity. This is the case particularly when it comes to applications in IT. It is a much larger issue than the industry generally recognizes. It took almost 20 years before established global systems integrators recognized and accepted the value of global sourcing and offshoring, but not before seeing more than half-a-dozen competitors in India grow from almost nothing to market capitalizations of $5 billion to $20 billion.

The principle challenge we face within Satyam is coping with high growth rates without compromising on delivering leading-edge solutions to our customers. The networked and distributed leadership environment that we have built thrives on IT acting as a catalyst. We are constantly encouraging our colleagues in IT to understand and respond to the ever-changing requirements of internal customers, and the competencies we offer to our external customers.

The cost of IT in most organizations is about the same. But the value we extract from it will determine how competitive we are.

 

Ramalinga Raju:

That they should measure themselves on the business outcomes they produce and not on effort or investment. They should regard every one of the internal processes and support functions as a full-fledged business. IT should provide a competitive edge to the organization by making every support function perform optimally. A lot of value has been accrued to Satyam on account of automating many processes through IT - it is the backbone on which more services are getting delivered virtually.

CIOs should encourage their managers to constantly reinvent themselves to make their deployments more business-oriented and successful.

 

Ramalinga Raju:

CXOs should view IT as an investment that the organization makes to achieve superior returns for its shareholders and increased and enhanced offerings to its customers. Most CXOs are aware that the most important strategic assets of an organization are its soft assets. IT offers a great opportunity for enterprises to integrate these soft assets and capitalize on them. In that sense, IT is the glue, which connects the disparate entities of a company. It is also important to realize that the influence of IT goes beyond a company and affects the entire value chain.

Though technology gifts us with enormous scope for innovation, we need to be sensitive to the fact that it also introduces standardization and commoditization fairly quickly. Each organization is unique with its own culture, processes and so on. CXOs ought to appreciate this fact and must play to their strengths to derive maximum business value from their IT investments.

 

Ramalinga Raju:

There is no right or wrong approach to that decision. I would like to reiterate that the analysis needs to be at the level of asking what business benefit or competitive advantage the adoption of cutting-edge technologies can offer. The business value and the risks-rewards associated with choosing to adopt or not should form the basis of that decision.

Ramalinga Raju:

The CIO is an important change agent, especially since IT is closely linked to business strategy - and this is a phenomenon which will become more accentuated in times to come. This role calls for greater intimacy between the CIO and top management. CIOs ought to be part of top management. Such a move would allow organizations to make prudent IT decisions, and hence strategy.

Ramalinga Raju:

Clearly, technology is an important component of strategy for us, like most other global corporations. The distinction between operations and strategy is getting increasingly blurred. The CTO's role definitely calls for providing a strategic perspective to our business, but 'operationalizing' strategies using technology is also a key result area for our CTO. Our CTO is also the main change management agent within the organization. The strategic and operational nature of the role will only be reinforced with the increasing share of infrastructure management services, BPO and engineering design services in our business.

Ramalinga Raju:

Competition is forcing companies to continuously ask themselves some very tough questions. Some of these include: how can they continuously improve, how can they add more value, how can they continue to delight their investors and customers alike. If it appears that the answer to these questions lies in outsourcing tasks that aren't at the heart of their business, then they should certainly do so.

Improved service level agreements - more than cost reduction - should be the driving force for outsourcing. Companies benefit because they manage what is core to their business and are able to manage risk in a smarter fashion. They also develop the competency of working with external vendors.

At Satyam, we have very effectively managed to outsource some of our support tasks to a rural BPO initiative called GramIT. This has enabled us to achieve faster and better results. It doubles as a corporate social responsibility initiative by creating employment opportunities for the rural youth.

 

Ramalinga Raju:

The rapid growth and expansion of the IT services and BPO market has enabled CIOs to choose from a larger vendor pool than ever before. However, the trend is shifting towards vendor consolidation. This emphasizes on the adoption of lasting partnership models where benefits are accrued simultaneously to either parties. CIOs now realize that outsourcing is not a zero-sum game and hence look out for synergies when they choose partners.

Ramalinga Raju:

Indian GDP has grown at a fast pace in the last 15 years and has doubled in this timeframe. The BRIC (Brazil, Russia, India and China) Report predicts that India will be one of the largest global economies in the not-too-distant future. Indian companies have started embracing IT to remain globally competitive. This has opened up a new world of opportunities for companies like Satyam. We are going after such opportunities in a very focused and aggressive manner. It is expected that our growth rate in this market will exceed the company's overall growth rate.