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In the investment gamble, investing in the government probably reminds one of
betting on the old, steady horse, who might never really win the race, but
always does reasonably well. With IT companies facing the slowdown after years
of high growth, one would think that the natural inclination would be to play
safe by avoiding high risk ventures, and going in for steadier investments like
those in the government vertical.
However, when questioned on this, most IT companies denied the slowdown being
a reason for their interest in the government. The market recession is
definitely not a factor, says PK Gopalakrishnan, senior vice president and head
of India operations, MindTree. He says, If an IT company cites the recession as
a reason for entering the market, it is not a true IT player in any sense of the
word.
The Safe Side of the Bets
A theory that was thrown up was that though the number of government deals
was lesser than those in the private sector, the deal volumes were much larger.
Even though there might be umpteen private sector deals, their amounts are low.
Within the NeGP itself, the government is talking about mind-boggling
numbers, says Ranbir Singh, general manager, government and defense, Wipro
Infotech. The government is talking about projects worth almost Rs 40,000 crore.
Even if one-fourth of that happens, its a huge amount. And out of that
one-fourth, if we get another one-fourth, it really is something to speak
about, he adds.
The amount the government plans to spend each year is highlighted in the
Finance Ministers Budget speech in the Parliament, at the start of each fiscal.
This years budget proposes to enhance the allocation to the Department of
Information Technology from Rs 1,952 crore last year, to Rs 2,802 crore this
year.
The government business has the advantage of being long-sustaining. The other
attraction is the opportunity in terms of the learning experience that
businesses can gain. The challenge of working with such mammoth numbers is what
draws a lot of companies to the sector, as the experience increases confidence
from both the governments side (for future projects), and the self-confidence
of the company in taking up large-scale ventures. To be a true IT player, you
have to be in all segments of the market. And you cannot skip the government
sector, says Gopalakrishnan.
The Deals at the Booths
The process of the government outsourcing deals to IT companies consists of
a number of steps and procedures. Before the bidding takes place, there is the
RFP stage, followed by technical evaluation of the interested companies, after
which companies are shortlisted and are then allowed to make their bids.
There are two kinds of dealsL1 deals and T1L1 deals, says Binod HR, head,
India business unit, Infosys Technologies. He says, In L1 deals, its the
lowest bidder who wins, irrespective of technological competence. But in T1L1
deals, the government considers the best technology at the lowest prices.
Most of the players openly deny any CSR or goodwill stimulus behind their
expedition in the government sector. At the end of the day, were here for
business. And the government is as good a vertical as any other, articulates
Singh. This does not mean that we dont subsidize projects for the government.
But the scale of such subsidized projects is very small.
Its all business here, says Binod. The competition is as high as in the
private sector. What makes this sector particularly attractive is the sheer
scale at which projects can be implemented. For example, no matter what sector
you take in India, its probably one of the largest in the world. For instance,
if you are working with the railways, you know that youre working with one of
the largest rail networks in the world.
While companies like TCS have been in this vertical for long, its been
catching up only recently with other players. Its not us who have changed our
approach, its the government, claims Binod. Working with the government needs
a certain level of maturity. Also, its only now that the government is coming
out with public-private partnership and transaction-price models.
Interestingly, Tata is the only IT company which claims that the motivation
behind their association with the government is CSR. Improving the standard of
life of the common man has always been Tatas philosophy. We aim at bringing
technology to the people and improving the standard of average lives, says
Tanmoy Chakraborty, vice president and head, TCS global government industry
solutions. Tata has been involved in the government sector since its start-up
in 1968, he adds.
The Scores till Now
Infosys has been involved in a project with the government involving the setting
up of an Income Tax Central Processing Center (ITCPC). They also bagged the eBiz
projecta T1L1 bid. The idea behind eBiz was to have a single window agency for
start-up companies. Today, if you want to start a company, you have to run from
pillar to post, says Binod. The portal is expected to be fully developed by mid
2010.
TCS has been involved in the MCA-21 initiative, a program executed by the
Ministry of Company Affairs. The initiative enables the public to directly
interact with the Ministry online from their offices and homes. Another big
government project for TCS is the Rs 1000 crore Passport Seva Project aimed at
digitalization of the entire passport process in India. TCS also has a number of
other government solutions being implemented in various states.
TCS has been talking to the government about offering learning capsules to
parliamentarians to sensitize them to the need for e-governance. We do this as
a part of our corporate social responsibility, says Chakraborty. We are
willing to provide forty hours of presentations to the parliament, and talks are
on for this, he adds.
Wipros affair with the government started in the 1980s, when they used to
manufacture ruggedized PCs for the defense. The company claims that their
Computer Aided Administration of Registration Department (CARD) project with the
Andhra Pradesh government which aimed at complete computerization of the land
registration process, was very successful. Wipros biggest project currently is
the Employees State Insurance Corporation (ESIC) project, which will be rolled
out by August 2010. The bidding amount was a whopping Rs 1,182 crore.
MindTree, one of the younger players (just ten years old), has been working
on projects, including a large one for the Rajasthan Government. There are a few
others in the pipeline with state governments, and two for the central
government. Their project in Rajasthan, called e-Mitra, was implemented with the
objective of providing a wide range of citizen friendly services.
In the past, MindTree has also worked on a project conceptualized byNational
Institute for Smart Government (NISG), and a security consulting assignment with
the Border Security Force (BSF). The company admits that they get a very small
percentage of their revenues from the government sector. Initially we did not
have a strategy, and its only now that we have a dedicated team who works on
government projects, says Gopalakrishnan.
The Unique ID project has sent another flurry of excitement and anticipation
in the IT industry with Cognizant, Infosys, and Wipro, being among the companies
expected to place their bids. The situation says that the government is not the
safe, steady vertical it has been made out to be all these years. IT companies
today invest in government, not for goodwill or to play safe, but solely because
the government is as good a bet as any other vertical, with immense potential to
win the race.
Vandana Sebastian
vandanase@cybermedia.co.in Page(s) 1
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