Embers of the Bonfire
April 2001. The dotcoms had died away, leaving not just neglected web-pages and domain names, but plush offices empty and the haunted eyes of the jobless. The dotcoms that still existed were slashing budgets and people in panic, living in the constant fear that VCs would pull away subsequent rounds of funding. The media blitzkrieg of the dotcom boom had given way to absolute silence.

The dotcom boom had defied virtually every diktat that prevailed in old economy firms. The new generation of companies stood for speed, informality and high-spending, especially when it came to recruiting and retaining people and capturing mindshare. Low entry barriers had made it easy for non-serious players to make a quick killing and disappear overnight, giving the entire industry a bad name. Not surprisingly, only the fittest survived.

And it was not just the dotcoms, established IT companies were cutting flab too. The profit warnings issued by some companies a few months ago, seemed very real. Offering ‘voluntary’ pay-cuts, eliminating the bottom 5% of their burgeoning workforce, benching, sacking—the news of pink slips overshadowed all else. But, ‘After the party’—(the theme adapted by Dataquest for its Annual Top 20 survey that year), IT companies were quick to make amends. Cost-cutting suddenly and effectively became the mantra of smart CFOs and companies began talking about "using the slowdown as an opportunity to build an efficient organization." And since then, extravagance, has given way to focused and smart spending.

Companies also realized that ‘anticipatory hiring’, so much a part of the boom time, would not work. Nor would astronomical salaries. Soon, ‘just in time hiring', became the buzzword. Even today, when much of the gloom has lifted, companies are careful about how many employees they have. As is the case with every investment, RoI is crucial with human resources too. The backlash of the dotcom bust saw VCs being far more cautious with their money and companies themselves evaluating revenue models more carefully before they launched operations with a bang.

Et u, US?
Traditionally, nearly 70% of the revenues of India’s software service exporters have been coming from the US. Had the dependence on the US been considerably less, India may just have been able to weather the impact of the US slowdown better. But being badly hit, most companies realized the importance of exploring geographies other than the US. Even today, 61% of Indian IT exports end up in the US, but companies are increasingly talking about clients in Japan, UK, Singapore, Germany, Canada and Italy as well.

Even when it came to IT professionals seeking overseas assignments, the US was always the most preferred destination and experienced professionals would often refuse assignments in other countries. This was not only because of better remuneration, but also the USA’s reputation as a melting pot of cultures. A major deterrent that discourages many to take assignments outside the traditional UK market is— racial discrimination. For instance, Germany, which launched the green card scheme a couple of years ago, to popularize permanent residence in the country, had a serious setback when Skinheads (a group against Asians and Africans, also called Neo Nazis) assaulted the first green card incumbent. Also, language is considered as a major barrier. So, the US still remains an attractive proposition. But as the last 20 months saw the H1Bs returning, and the employee’s market switched to an employer’s market, IT professionals have been eager to take up foreign language courses and migrate to other geographies.

PwC & IBM
In the year 2000, Hewlett Packard almost bought PwCC for an astronomical $18-billion price tag two years ago. A big concern then was about how credible a top consulting firm would remain once it was absorbed into a systems vendor like HP.

But just two years later, another global IT vendor, IBM acquired PriceWaterhouseCooper’s (PwC’s) global business consulting and technology services division, PwC Consulting (PwCC), for an estimated $3.5 billion in cash and stock. PwC Consulting and IBM’s Business Innovation Solutions form a new unit within IBM Global Services. The new outfit has 55,000 employees and is expected to generate around $13 billion in annual revenue and has Ginni Rometty as general manager of the new unit. The PwC acquisition typifies the trend of IT companies acquiring consulting and service businesses, currently the most lucrative segments. EDS (Electronic Data Systems) has a consulting wing with A T Kearney. Even Hewlett Packard’s acquisition of Compaq was seen largely because of Compaq’s strength in services.

In God’s Own Country...
As if the economic slowdown in the US was not bad enough, September 11, 2001 saw the attacks on the World Trade Centers (WTC). The US declared its ‘War on terrorism’ even as its people buckled under the psychological after-effects of the terror and the added Anthrax scare. But even as things slowly began to look up, the immediate fallout of the September 11 catastrophe was that the information storage and security security segments shot to prominence. The sheer shock of the destruction on Black Tuesday redefined the word back-up for companies who had been lax about data storage so far. The storage market has been growing steadily since and CIOs, even in India are talking about business continuity, disaster management and backups in remote locations. Terms like DAS (direct attached storage), SAN (storage area network) and NAS (network attached storage) are doing the rounds of boardrooms in enterprises. IT training in storage technologies too has made its beginnings in India. Indian IT companies did see a southern movement of billing rates, affecting the profitability of even blue chips such as Infosys and Wipro. Their overseas clients insisted on rock solid alternate communication channels. Subsequently, Indian IT companies have invested in development centers in other locations in order to ensure "business continuity".

Demise of Dewang Mehta
In April 2001, a one-man army holding forth the cause of Indian software was vanquished.   Right since he joined Nasscom in 1991, Dewang Mehta had grown the erstwhile fledgling industry body into the voice of Indian software in global markets. Mehta died of a heart attack in his hotel room in Australia, leaving behind a trail of mourners across the IT industry and tremendous goodwill borne out of years of concerted networking.

With Mehta passing away, speculation was rife about his successor and the course Nasscom would take. The appointment of Nasscom’s current president Kiran Karnik, had come as a surprise to many-given his diverse experience in areas other than IT. But Karnik took on Nasscom in much the same way as he dealt with his earlier assignments including Discovery Channel—in an unassuming but forthright manner. Karnik and his team, including vice president Sunil Mehta have been at the forefront of the course of software in the country, successfully carrying on the good work that Dewang Mehta initiated.

John Chambers
Another high profile visit, that of John Cham-bers, president and CEO of Cisco Systems, to the country was marked by announcements of investments and commitment plans for India. On his maiden visit to the country in January 2001, Chambers a announced a total of $200 million investment in the country for developing networking technologies. Cisco is gambling on the proposed $38 billion investment to be made in the country to increase tele-density to 7% by 2005. A substantial part of the investment will go to converged networks and Cisco is eyeing a sizable pie of that investment.

Bill Gates
The most visible of   these    visitors was of course, Microsoft Corporation chairman and chief software architect Bill Gates on his three visits to India. The first was a three-day affair in 1997. The second, in September 2000, marked 25 years of Microsoft worldwide and ten years in India. He also announced the now hugely popular MSN in India, outlined his .NET vision for the future and set up the .NET Lab in Bangalore. His recent visit in November 2002 was more of a philanthropic affair as the Bill and Melinda Gates foundation pledged $100 million to help fight AIDS in India. Once again, extensively covered by the media, the event was preceded by a bit of a controversy over the scale of AIDS affliction. (Government officials and health activists rejected a US National Intelligence Council report cited by him - that forecasts the number of HIV-infected people in India to rise to 20-25 million by 2010 from about four million now.)

Michael Dell
Another global giant, with relatively little Indian presence saw its head honcho on Indian shores in Spetember 2000. Michael Dell, chairman of Dell Computer Corp and one of the richest Americans, was here to inaugurate Dell’s India operations and roll out the company’s direct marketing strategy. The $28.5-billion Dell Computer Corporation, a computer systems company and provider of Internet infrastructure is focusing on the corporate segment. It is also contemplating back-end technical support services and other IT-enabled services.

Richard Stallman
Minus the fanfare and attention that Gates got, the father of open source software— Richard Stallman stepped into India in March 2002. Richard M Stallman is a real big name to a multitude of software developers across the globe. Even in India, he fired the imagination of the techie community after he spoke at Farmaguddi’s engineering college in Goa. And even as Microsoft continues to pump in its millions, the free software movement has made inroads in the Indian market, its low cost advantage spurring state governments to promote its usage. The Andhra Pradesh government is already set to execute projects on the free operating system (OS), while the well-known Simputer Trust has showcased this OS in its low-cost computing appliance - Simputer and some of the new technology start-ups like CDC Linux are already developing high-end clustering and parallel supercomputing solutions on the GNU/Linux operating system.

During his visit, Stallman, the man behind GNU/Linux (GNU developed by Stallman and a Linux kernel developed by Linus Torwalds), spoke of the Free Software Foundation, which makes most of its revenues by selling copies of the software and training manuals while some funds come in by way of donations. The foundation is also looking at a business model where it will function as the certifying agency and will certify compliance of free software users with the licensing rules.

Of flashbulbs and photo-opps
The last 20 months were witness to key visits from global leaders from the IT industry. The message that clearly came across was that the importance as an IT destination was growing in the global scheme of things. Each of these visits were characterized by high profile meetings not just with industry leaders, but the top guns in the government too. Media presence with a top gun from the global IT industry, gelled well with the new, progressive, IT-savvy image that Indian netas and bureaucrats have consciously began to create. The high profile visitors too, got they wanted—Each of them had stepped on to Indian shores with the aim of "reiterating their commitment to India", announcing increased investment in the country and boosting their own company’s image as a serious player in the geography. The extensive media coverage that each of these visits got, ensured that they got all of this—and more.

Craig Barrett
Intel Corporation President and Chief Executive Of-ficer Craig R Barrett too was in India in October 1998. On his second visit in August 2002, Barrett announced that Intel would invest up to $200 million in India to ramp up its software design center and more than triple the number of engineers to 3,000 in a few years. Barrett said Intel would set up a new design team in India to work on "32-bit Intel architecture microprocessor design and development". Intel has invested in close to 30 Indian startups, among them privately-held Sasken Communication Technologies, out of a total basket of some 500 firms around the world. One of the best known IT veterans globally, Barrett joined the world’s # 1 chipmaker in 1974 as a technology development manager.

Zhu Rhongi
Different from the visits of the corporate barons but equally important, was Chinese Prime Minister Zhu Rhongi’s arrival in India in January 2002. He called for a bilateral relationship, between the two countries, in the world of technology and science.

Reiterating what industry experts have been suggesting, Rhongi suggested that China’s hardware expertise and India’s software strength be combined to become world leaders in the world of information technology. Rhongi had approved NR Narayana Murthy’s request to open an Infosys office in Shangai. (Infosys had submitted an application seeking permission to operate in China to Rongji when he visited Bangalore). However, in June, Infosys announced that it has delayed its plans for setting up a development center in China. Besides Infosys, TCS, Satyam and NIIT, too, are exploring opportunities in China.