‘In India the infotech infrastructure does not exist at all’

‘In India the infotech infrastructure does not exist at all’
Arjun Malhotra

TechSpan, floated in August 1998 is an internet consulting company focused on e-business integration and marketing net solutions and services. The company, headquartered in Sunnyvale in California, is a $12 million investment venture by Goldman Sachs and Walden International Investment Group. The company, which believes that the Indian internet market will grow by over 200 fold in the next five years, has invested $2.2 million in its Indian subsidiary. Arjun Malhotra, co-founder of HCL and now chairman of TechSpan believes that the net not only reduces the cost of competition and lowers barriers to competition, but also masks brand awareness. In an interview with Arundhati Bakshi, he shares his views on how the net is changing the entire business landscape.

Tell us about the genesis of TechSpan?
At the time I left HCL, the internet phenomenon had just begun. Then the idea was to have an internet start-up which could leverage the internet to get a better market share as well as be able to deliver its services and products through a set of new ways. For traditional companies it is difficult to adapt to a changed business environment, having followed a certain set of rules for several years. However, for us, this very fact proved to be an advantage. We did not have an install base, as a result we started from scratch. Initially, however, we wanted a more hybrid approach. So, we thought, we would spend half our time on traditional services and the rest on e-services. Traditional business here means everything from ERP (enterprise resource planning) and CRM (customer relationship management). Client server and mainframe maintenance is also part of traditional business. But from the pace at which the market was growing, it was soon quite clear to us that we needed to change our focus. So, eventually wedecided to get out of the traditional business altogether. So, while we technically started operations in last January, it was only in March, that we got totally out of the traditional business.

Why is it that India has become merely a major outsourcing destination?
There are basically two reason for that. Firstly internet is still in the emergence phenomenon stage. Not too many Indian companies are comfortable with it as of now. Besides, business on the net is not software programming alone. It is to attract more and more customers. When you get into such a paradigm shift, IT becomes more of infrastructure and not a product per se. We (Techspan) are an e-business architect. We make companies do business. We write codes like HCL and Infosys, which goes on to help our customers the companies do business. We web-enable the legacy applications.

Does India have the required infrastructure?
India is not yet ready with the infrastructure. The physical infrastructure does not exist at all. Tell me how many people do financial transaction on the net? We are still weary about giving our credit card number on the net. Even in the banking sector, financial infrastructure through the net does not take place.

Will the slowdown in the US economy affect us in anyway?

Today we are already a global economy, so the US economic slowdown will definitely affect us. Growth rates will become more and more realistic. We had seen the slowdown happening as far back as last June so we had already started decreasing the overheads. We shed all our low margin businesses too as they were not adding much to our profits.