India IT Club: a journey to far reaches and riches.

Fifteen years ago, in 1990, I was visiting a friend at a major foreign bank in Tokyo. On the way to his cubicle I noticed a group of Indian engineers discussing a software problem-an unsual sight back then. The Japanese government had only months before lifted restrictions on the number of foreigners who could work at one company in Japan, and you didn't see that many gaijin around. I couldn't help but be curious, so I asked my friend, "Who are those guys?" His response, and one which changed my life, was, "Oh, they're from Tata, an Indian consulting firm that we're trying out. They're probably the best software guys in the bank at the moment."

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"India?" I thought. Now that is different. As an SI company, we'd heard many of our foreign banking customers lament the huge expense of maintaining squadrons of local Japanese software people. And furthermore, since the support industry was so entrenched, there were only a few vendors for each narrow segment of the mainframe support process--so customers had to pay whatever it cost to get their systems maintained.

Thus I quickly grasped the implications of bringing in engineers from a non-Japanese source, and applying them to core development in competition to the local incumbents. Somehow Tata, now Tata Consultancy Services (TCS), had figured out how to package their teams and get around the language problem to provide a paradigm in cost reduction and skills improvement. Eventually the TCS solution became known as off-shoring, a form of international outsourcing.

I became extremely excited to learn of the bank's Tata experiment, and decided that same week to start my own search for talented network (versus software) engineers in India. What I found was an untapped fount of talent. Over the following six years, I set up an office in Mumbai and personally visited the city 15 times to hire more than 70 engineers. The timing was good, and business grew rapidly. Over the following six years, the company grew to US$18MM in sales and we eventually sold out to EDS in 1995.

Since those early days, the phenomenon of Indian IT companies operating in Japan has become commonplace, and the changes in the Japanese IT industry made by Indian contributors are plain to see. For example, initially, Indian players were only able to operate as "body shops," sending engineers to do things that the customer's Japanese SI company couldn't or wouldn't do. Now, however, many of those same companies are executing complex projects that their Japanese customers can't find equivalent skills for here in Japan. The Indian IT companies have proved themselves. They have also learned that in Japan the secret to success is to develop and implement their own Intellectual Property (IP) and expertise to the point where they become the standard in their respective industries.

In fact, the quality and ubiquity of Indian solutions is so advanced in Japan that local competitors have come up with a theory on how the Indians have forged ahead: Indians have a "math gene" and thus are naturally gifted at computing. Indian firms can only benefit by being held in such high regard by the Japanese.

Approximately 80 Indian IT companies are established and actively selling in Japan today. According to India IT Club Japan President, Mr. APS Mani, representatives of several hundred other Indian IT companies make the pilgrimage to Tokyo to see if they can get business here, but the language barrier and the competition deter all but the hardiest. Most the Club's member firms started arriving in the late 1990s, after witnessing the growth of such early starters as TCS, Infosys, Wipro, Satyam, HCL and few others. Their timing was excellent, because by the end of 1998 major Japanese companies had realized the need to radically overhaul their IT practices so as not to be left behind internationally.

Not 12 months later, a perfect example of what could be achieved by bringing in Indian partners came under the spotlight. A prestigious government-related bank, The Long Term Credit Bank of Japan (LTCB), founded in 1952, went bankrupt and was nationalized and later sold to an overseas investors consortium led by an obscure American buy-out firm called Ripplewood. Today the restructured bank is called Shinsei.

When the Ripplewood-led group acquired the bank, it quickly decided to turn the business around and back into profit by slashing costs. The IT department, struggling to maintain an ancient mainframe computer, was a fat target for cost cutting. Shinsei called on the services of Mr. Dhananjaya "Jay". Dvivedi, an Indian IT/management guru, who just happened to have been the CIO for Citibank in Japan for many years. This proved to be an inspired move, because Dvivedi wanted to show that he could not only systemize Shinsei, but could also make those systems a core contributor to the financial quality of the bank.

After just a few weeks of study, Dvivedi announced an audacious plan to move the bank off its mainframe and on to open systems. The plan had the potential to save the bank tens of millions of dollars in operating costs a year.

Dvivedi pulled in a talented team from a wide range of sources, including the Indian IT community. Among the contributors to Shinsei's turnaround were players such as iflex, Polaris, CashTech, Mphasis and Nucleus. Soon the Meguro operations center for Shinsei was being populated with Indian engineers alongside their Japanese counterparts. The process of "opening up" Shinsei had begun.

The gamble paid off handsomely. The bank was indeed taken off its mainframe systems just a little over 18 months later. When Shinsei went public in 2004, it was one of Japan's most profitable and fastest growing banks. Not only did the Dvivedi-inspired systems save money, but they were scalable and reliable as well.

The Indian IT Club's Mani says that since the Shinsei success, Indian firms are now considered the IT experts in the financial sector and accordingly the penetration of his 80 member companies into Japanese banks and other companies is growing apace. He reckons that there are about 4,000-5,000 Indian engineers in Tokyo, and probably 80 percent work for one of the major Indian IT companies, while the remainder work directly as employees of banks and other firms.

Indian software and network expertise is being applied over a wide range of sectors in Japan, including finance, insurance, manufacturing, energy, data centers and networks, and, of course IT. Look at any major Japanese SI firm doing open systems and/or mainframe applications in Japan today, and you are likely to see that they have partnered with at least one major Indian supplier.

Formed in 2002 as the face of Indian IT companies in Japan, the India IT Club is an important community gathering point and information clearing-house. It is also doing a lot of low-profile work with polite but persistent lobbying of the Japanese government about easing off-shoring and outsourcing regulations. Lastly, the Club fields enquiries from companies looking for an IT partner, and helps find a matching service provider from its membership base.

The Club meets on the last Friday of the month, and welcomes non-Indian members. Further contact information for the India IT Club can be found at http://www.indiaitclub.com/index.asp, or interested readers can contact Managing Group member Harsh Obrai at [e-mail].

India IT Club

C/O Embassy of India

2-2-11 Kudan Minami, Chiyoda-ku Tokyo 102-0074

Tel: [phone] (Economic Section)

www.indiaitclub.com

President: Mr. A.P.S. Mani

Mr. A.P.S. Mani, who has been in Japan for over 26 years, is widely respected in the Indian and Japanese communities. Mr. Mani belongs to several social and professional associations. He is also the Principal Advisor to Covansys, Japan, a US-based company. Being the founder of Indian Community Activities Tokyo (ICAT), he has a clear vision for Indians and India-related matters. He is keen on taking the India IT Club to new heights.