Volume 18, July 2009

 

imageKoushik Radhakrishnan leads the Industrial Sector for the Global Delivery Center in IBM China. Previously, the Director of the Auto & Aero Industry Group, Global Delivery – Global Business Services, in IBM India, Koushik is skilled in the art of building strong teams instrumental in bringing about a positive contribution to business. A veteran at building and leading large teams, Koushik has been with IBM for 5 years and possesses over 17 years of experience in the industry, having worked with some leading brands including Cognos, Infosys and Ramco Systems. Koushik holds a Bachelor’s Degree in Engineering from the University of Madras and is a PMI Certified Project Manager.

In a freewheeling interview with Prayag Consulting, he talks about IBM’s global delivery model, the China story and a lot more. Read on.


Having been associated with the India Global Delivery Model (GDM) for a long time, what are some of the changes that you see?

The Global Delivery Model which is in its third decade is no longer cost-centric even though the focus is on cost during the current recession. The model has matured and the clients and prospects we speak to validate that. With competition at play, it has now shifted to the “right skills at the right price at the right value” approach.

   
   
“As long as we present the right value proposition and solve specific client problems, because of certain skills and advantages we possess and the way the model is leveraged, clients are more than willing to try that option. And that’s a big perspective shift”.
 


Take IBM for example. We have created delivery centers around the world which are either culturally close to certain geographies or have certain specific skills available. As long as we present the right value proposition and solve specific client problems, because of certain skills and advantages we possess and the way the model is leveraged, clients are more than willing to try that option. And that’s a big perspective shift.


For this to happen, we really need to have the depth of skills and management maturity. Companies like IBM have already invested a lot of money in centers across the globe, and scaled up these centers to a certain level of maturity. In short, the GDC framework has shifted from a cost-centric operational play to a larger industry model-centric play and if we are able to spread the risk and mitigate it, and offer an overall tangible solution, the model is gaining more and more acceptance, by the day.

As you said the shift is moving towards the industry-centric model, can you give some examples based on your experiences.

Global delivery-centric solutions were typically driven by Time and Material (T&M) or labor driven approaches. Over the years, we have developed more and more specialized industry based value propositions, be it for the automotive industry or the electronic industry. So, we take into consideration what our client’s competition is doing for the similar business problems, industry trends and use that knowledge to recommend an IT solution. I think that is a significant shift because it calls for a lot of domain knowledge, long-standing relationships and intimate knowledge of the client. Companies like IBM, with our well-established relationships, possess more of an advantage while adopting this industry-centric approach.

   
   
“Currently, we are looking at mature markets such as the US, Japan and Europe and are channeling the knowledge of clients, cultures and business into our different global delivery centers”.
 


Currently, we are looking at mature markets such as the US, Japan and Europe and are channeling the knowledge of clients, cultures and business knowledge into our different global delivery centers. This makes it easier for offshore centers to scale up to industry models and directly find the relationship with the market.


So, in this approach offshore centers play a lead role in suggesting industry-centric solutions. How are clients accepting this shift and what has enabled them to do so?

It is not about accepting the trend but more and more about partnerships which clients are entering into. They too are fully aware of the implications and the necessity of globalizing the whole solution spectrum.

   
   
“Now, from a skills and management perspective, India will have a lot more to offer to the world. As the rest of the world sets up GDCs, India will step up to be the big brother and bring talent and leadership skills to the table”.
 


This is not merely a regular contractual transaction so one has to consider what is in it for them.

They get a motivated set of people from the vendor who are aligned by industry and business operations to work for them. This is the primary driving factor. Second, they get access to industry standards and best practices from across the globe. The last and most important factor is that long-term business goals are comprehensively aligned with what the vendor is working on, so much that both the client and the vendor have something larger at stake over a period of time which acts as a binding factor.

For all this to happen, the vendor needs experts/SMEs who understand the industry and are able to penetrate deep into the industry and build solution frameworks, competency models, and training mechanisms. There are many examples where clients have directly trained our people on their business processes to take a relationship forward. Therefore, the collaboration has scaled up much more than what we’ve seen in the past.

That’s a great viewpoint on what has happened so far. Moving on to the future, what are some of the trends you foresee in the short to medium term?

I think India will continue to be the big brother of the Global Delivery Model. India will play a leadership role as compared to the rest of the world probably for the next 4 – 5 years. In the past few decades, people from outside India have been actively involved to help Indian leadership scale up their operations.

Now, from a skills and management perspective, India will have a lot more to offer to the world. As the rest of the world set up GDCs, India will step up to be the big brother and bring talent and leadership skills to the table.

The second dimension is that with globalization and cross collaboration coming into play - the client plays an integral role even as operations are decentralized. While most of the client operations and contracts are spread across the world, India will be an active player in the Program Management (PMO) space and will be able to drive other geographies to come together to present a unified picture.

The third and the most important value proposition which India will bring to the table is the bird’s eye view of the customer landscape which enables it to go back to the customer and point out inconsistencies in their processes across different geographies. This is possible because we work with the same client across different geographies and it is easier for us to spot these inconsistencies and consult with the client towards addressing that. Another obvious trend is the scaling up of the consulting value chain. This fosters innovation.

It will be fantastic if the customer can get such advice. And for these things to happen, do you think changes are required in the way the Indian industry functions?

From a capability perspective, I think, as a country, definitely we need to scale up as a player in the consulting space where significant opportunities exist.

The second thing is that service providers need to be equipped to service a client across different geographies. This is a strategic decision as it involves the service provider’s overall business plans and investments in different regions. In the case of IBM, we are already functioning under a Globally Integrated Delivery framework that is proving to be very beneficial for us.

We understand you are relocating to Shanghai, China to setup a scalable global delivery organization there. How do you see the China story emerging?

From an overall market perspective, everyone realizes it is a big market. From my own experience, what I’ve seen is that the fundamentals are good and they are trying to bridge gaps diligently. They are also trying to speed up on acquiring English language capabilities and have the complete support of the Chinese government. The quality of servicing businesses has increased by leaps and bounds. The next 18-24 months will most likely be crucial as the ability of China to service the local market and the Japanese market is all set to grow tremendously.

In 2002, there was a Gartner report which said that China will overtake India to be the next hot destination for global delivery by 2007. There was a rush of Indian companies trying to establish a presence in China but not many have made a significant impression. Some of the factors attributed to this are scarce and expensive middle management skills, language capabilities and so on. Given this, what are some of the changes compared to 2002?

One of the key differences between 2002 and today is that China has adopted a city-centric development approach. Specificity has come into play. The government has identified a number of cities, with each city specializing in a certain area of business. A company operating in a particular city needs to have its business plans aligned with that of the city.



You spoke about mid management being expensive; Owing to the government’s policy of localizing certain industries to certain cities, talent is available in those cities itself and that has helped.

Another concern raised sometime ago was the issue of IP protectionism. Is it still a concern and what are the things being done to prevent it?

Going by customer feedback and inputs from a recent summit we had in IBM China, it does not appear to be as much an issue as it used to be earlier. China as a country has excelled in engineering and infrastructure and has developed skills and experience to be on par with the rest of the world in a host of industries. With that maturity and skill sets in place, the dependence on IP from somewhere else will come down and IP protection risk might dissipate over a period of time. It is a natural evolution of the maturity curve.

   
   
“China as a country has excelled in engineering and infrastructure and has developed skills and experience to be on par with the rest of the world in a host of industries.”
 


China has also an aging population, it is not a very young country; how do you see that playing out?

As a growth market, the opportunities that present take higher priority to create the momentum. China has an aging population when compared to India but the available resources are still significant. So the age part doesn’t come into play at this part of the spectrum.

What are the positives and challenges you’ve seen in the China delivery model?

There are many positives with the first being very strong fundamentals. Second, the people are hungry for success and want to make an impact in the world. Third, government support and the environment are conducive to business.

IBM, being a global organization is sensitive both to the local market as well as to the export market and we have created an infrastructure which supports that.

   
   
“IBM, being a global organization is sensitive both to the local market as well as to the export market and we have created an infrastructure which supports that.”
 


As regards challenges, one big challenge I see is from a cultural perspective. Traditionally, the Chinese society operates in a top down manner and there needs to be a huge change in mindset in order to encourage more independent thinking. Professionally, they are well trained and possess great skill sets, but change will be heralded by how best they scale up to becoming leaders.

Compared to India, China is a more controlled society but has tremendous government support whereas in some sense it is the opposite in the case of India. So how does IBM as a company handle it?

I think IBM has an advantage in all the geographies we operate in because of our strong relationships with the respective governments and societies. This is in fact something we have upheld throughout our existence. Although we are headquartered in Armonk, USA, we are an integral part of the domestic industry in terms of brand identity. For example, IBM in India is involved in many social activities and provides support for government and public-private initiatives.

   
   
“Although we are headquartered in Armonk, USA, we are an integral part of the domestic industry in terms of brand identity.”
 


Culturally, what are the differences you’ve seen between the Indian software engineers and their Chinese counterparts?

Let’s talk about the similarities first - both come with a strong sense of family bonding and culture, both sets of people sense the opportunity to move from rural to urban backgrounds and make it big in life by participating in the growth of an economy. There is a newfound aggression to pursue their dreams.

From an IT perspective, India is primarily a services economy, and is a lot more mature due to economic changes that occurred much earlier on. In China, owing to the top down approach, point of views are not easily articulated, expressed or taken forward.

So while things are quite identical on the technical side, the difference between Indian and Chinese engineers is the ability to present a well-rounded professional outlook as a consultant which emerges as the real differentiating factor at least in the present scenario.

But these might even out over a period of time with maturity and opportunities that come into play.

   
   
“So while things are quite identical on the technical side, the difference between Indian and Chinese engineers is the ability to present a well-rounded professional outlook as a consultant which emerges as the real differentiating factor at least in the present scenario”.
 


Some years ago it was India v/s China but now people are slowly realizing it has to be India and China. So how do you see the different locations working together, will they complement each other?

In a study we conducted on the automotive market a couple of years ago, it was established that it had to be India and China, not India or China - they have to co-exist. On a much larger scale, we (IBM) have the globally integrated construct under which we follow a matrix structure. This well-established delivery model helps us operate in multiple geographies and service a wide range of organizations. The same processes, technology and tools are used across the company and this is a very beneficial governance model.

Standardization, therefore, is the key for a globally integrated delivery framework and that is the heart of the maturity framework. The key aspect here is that you are talking the same language to the customer and the internal world. IBM has done many things in the past few years to get where we are – we have learnt a lot, invested a lot to create this standardization. We are well aligned and on the same page irrespective of geography or culture.

   
   
“Standardization, therefore, is the key for a globally integrated delivery framework and that is the heart of the maturity framework. The key aspect here is that you are talking the same language to the customer and the internal world”.
 


What are IBM’s plans and strategies for China?

I would not really call it strategy as we have been present in China for a long time now. The focus is definitely on Globally Integrated Delivery (GID) and this offers the following:
  • It integrates the interests of the client by spreading work across delivery centers and effectively addressing their problems
  • Second, it helps de-risking from a geo-political standpoint
Within China, focus has to be given to the domestic and the Japanese market to a large extent. To do that, we need to create talent at the middle management level as there already is a good technical population within IBM. Good leadership is essential to make a success out of this and that is something we have aplenty.

At the outset, there are two parts to this. Firstly, the GID which is the central framework, in which we are operating, the integral component we believe is the key to our success and secondly, bringing in talent from elsewhere and obtain the depth of experience that comes along with it, thereby, creating expertise in the local market.

 

 


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