US President Obama has hit out at outsourcing yet again in his state of the Union address but IT czar and Wipro Chairman Azim Premji says, the Indian IT industry is not adding to America's unemployment.
Speaking to NDTV’s Shweta Rajpal Kohli at the World Economic Forum in Davos before President Obama's address, Premji said the US is over-sensitive on the loss of jobs and the issue will be hyped up even more as the elections are coming.
Premji told NDTV that the backlash against outsourcing has not impacted the business of Indian IT companies.
Below are the edited excerpts from the interview. Don’t miss the accompanying video.
Shweta: It’s been over a year since you wrote the open letter talking about the governance deficit, are you still a little disappointed with the way things have turned out in the last one year?
Premji: Let’s wait for the elections to be over and that’s two and a half months away. I think you will see a lot of action at the end of the election. Everyone is now preoccupied with the elections. We have not gone through the strongest of patches over the last nine to ten months and I think that a lot of people have realised that including the government. They have been setting back there economic agenda and decelerating growth, and I am sure they will take the bull by the horn now.
Shweta: At the same time, many really believe what happened over the last 10 months as you were saying is almost like killing an economic miracle that India had. We were talking about 9 per cent growth last year and right now we are hoping that we will be not able to achieve 7 per cent growth. What really went wrong, how much did politics play the role in India’s slowdown?
Premji: There has been a lot of uncertainty from the government’s side in terms of the ability to get bills through, the inability to get the legislation through because of the constant opposition by the opposition, sometimes to a destructive sense, not what is right and what is wrong, I think that is important to get corrected going forward because everyone is hurting themselves including the opposition because they get no credit of the waters as a result of it.
I think what went wrong is that we are over giving subsidies beyond the means and we are not stopping it. We are not ensuring that the subsidies are executed in terms of the breaching the recipient in a fair manner. So, a lot of the subsidies tend to be wasted. The overall economic situation has not been helpful globally and India has a fair dependence on exports.
Shweta: It is interesting that international confidence has been shaken because we are sitting here in Davos in the World Economic Forum, where business leaders like you sell the India growth story. How hard is it this year given the fact that we have seen that confidence been shaken?
Premji: I am seeing no alternatives for international companies to continue to invest in India. It’s the question whether you have the foot on the accelerator or you have the foot half on the accelerator, but the foot is very much there on the accelerator, because that’s where the growth comes from. If you are talking just to our customers, very few are there who are pulling back who are already in India and very few of them are really differing the plan, especially who are not in India.
Shweta: So they are concerned about the slowdown, about the way things have panned out?
Premji: They are concerned because they have not lived up to their expectations, so small sense of disappointment than a sense of huge frustration that the things are going down the grade, I don’t think people are looking at it that way.
Shweta: Moving forward and now talking about Wipro, it looks like some of the changes that you have made seem to be having an impact on the transformation and restructuring are showing some sort of an impact …
Premji: We much rather call it a transformation than a restructuring. They are showing impact, they are probably running one quarter behind what we thought and they would run behind. But if you see our results of last quarter, you see that reflecting. Before you see in the way the business analyst are anticipating, the business results are looking positive.
Shweta: Are you hopeful of the environment positive; are you hopeful that the some of the changes you have made in the top leadership will start showing more and more results?
Premji: absolutely without question! And now we are speaking with something behind of us in terms of a track record.
Shweta: But you still have a lot of catching up to do with your peers because you did sort of miss out on the growth over the last few months…
Premji: No question about it, we have a hell lot of catching up to do to overtake them.
Shweta: What’s really happening in the industry right now because we were seeing earlier, for instance that the Infosys was seen as a bench mark for the IT majors now that’s seem to be shifting towards TCS do you agree with that?
Premji: They have given results, they have given unexceptional results; Kudos to them on that. The market goes to whoever is the star performer at that time. That’s the reality of the investors and I think in TCS's case, they deserve it. We should have the humility to accept that.
Shweta: When do we see Wipro becoming the star performer?
Premji: Wait and watch!
Shweta: Being asked for always about Wipro is of course the succession story. Many believe that your son is groomed to take upon more important role in the organization he is the obvious successor.
Premji: He is not the obvious successor. He is given a more important role because he is earning it on merit, and you can quiz any one in our organization in terms of how professional it is. I mean that’s the reality of our organisation. Our whole succession planning is very much around the board of directors and we apply to the top 50 people in the organisation and these top 50 people get reviewed by the board twice a year.
Shweta: He has got the track record he has got the perfect education.
Premji: There were other people who were better than him, so eventually it becomes relative doesn’t it?
Shweta: Before we wrap up the mood here in Davos, i know you haven’t spent very much time talking to your clients or getting the mood. But after your quarterly results, you have actually said that the situation in Europe is almost like a Hindi movie; it changes every week now. How bad is the situation in Europe and how badly it is impacting the Indian companies?
Premji: It is very uncertain rather than very bad. What is really causing this tension of uncertainity is the unpredictability of it the vitality of it now. There has been some good development in terms to the approach to Greece, in terms of the new money which has been raised like in Italy and Spain has been raised at good rates; in five and six percent rates.
There have been some positive developments in the past week to 10 days now. If it builds on that then I think you will see some amount of normalcy returning but that doesn’t mean they are going to see Europe at 2 or 3 per cent growth rate. However, you could perhaps see Europe at zero per cent growth. If people believe that the European Union is holding together and that come of the chronic debt problems are resolvable, then i think it will be positive. The mood in America is surprisingly optimistic amongst the business leaders.
Shweta: It’s great that the mood is turning optimistic but at the same time, are we prepared for the worse case scenario, specially the IT majors that will be directly impacted by the global environments.
Premji: You always have a contingency plan and in a market like this, it will be foolish not to have a contingency plan; it will be foolish for not to have a backup strategy.
Shweta: At the same time, the trends that we see in an environments like, there is a lot of protectionism, which is bound to have an impact in India. The entire backlash against outsourcing, visa issues, etc - how badly these are impacting the IT companies?
Premji: The US has become over sensitive on lots of jobs. The reality is, as far as IT professionals in the US are concerned, the unemployment growth rate is below 3 per cent and the Indian IT industry has had virtually zero penetration in terms of adding to this unemployment. Given the scale of their operations, I think it’s getting hyped up since elections are coming up.
This has not seriously affected the business because the industry this year from exports, from India on the base of 60 billion dollars, will grow something like 18 per cent. The Indian multinationals will probably grow between 19 to 20 per cent, which is not bad in an environment like this containing the world is recovering from a really bad recession.
Shweta: But hiring more people locally perhaps would be the reaction of IT companies to deal with issues like this?
Premji: It’s exactly what we are doing today. Our amount of local people we have around 26 thousand people working overseas in an IT business. We have about 38 per cent of them who are locals and we have a very clear strategy of increasing that to 60 per cent in the next 2 to 3 years and hiring from young campus so that we can build a carrier of young people in India.
Shweta: Before we sum up Mr Premji, your message to Indian business leaders and policy makers at a time when we are going through an increasingly tuff global environment time when India is trying to revive some of that lost growth.
Premji: My message is get back your super self-confidence; this is a good time when things are tough. There are more opportunities and if people move forward on those opportunities, they can get one step ahead.
Shweta: And right now there is a loss of confidence much worse what we saw…
Premji: There is a loss of confidence, but I think it is not something which cannot be revived quickly …
Shweta: Well we are certainly hoping Mr Premji that the policy makers are listening and we can see some change in the sentiment and we are also hoping that the global environment improves. Thank you very much for talking to us on NDTV.