Full speech of NR Narayana Murthy
Indian IT trailblazer NR Narayana Murthy, founder of Infosys, now a global leader in technology services and consulting, is among two companies and two individuals who were honoured yesterday for their extraordinary success and contribution to the economy at the 18th edition of the Bangladesh Business Awards, the annual event that honours the movers and shakers of the corporate world.
The following is the full speech Murthy delivered at the award ceremony:
18th DHL-TDS Bangladesh Business Awards ceremony, Dhaka July 05, 2019
By Narayana Murthy Founder - Infosys
Thanks for inviting me to speak on building a vibrant software services industry in Bangladesh.
We live in an extraordinary era. Never before was the competition so intense, opportunities so huge, and challenges so daunting. It is because of one significant phenomenon - globalization.
What is globalization? To me, globalization is sourcing capital from where it is cheapest, sourcing talent from where it is best available, producing where it is most cost-effective, and selling where it is most profitable, without being constrained by national boundaries.
In this globalized world or flat world, every nation that has something to contribute to the global bazaar can improve the lives of not just its own people but people throughout the globe—the rich and the poor, the urban and the rural, the powerful and the weak, the educated and the not-so-well-educated. Never before in the last two hundred years did the developing countries have an opportunity to take their share of limelight as they do today, thanks to globalization. In fact, currently, more than half of the world’s GDP (measured on purchasing power parity) is accounted for by the developing countries.
The globalized world is essentially about how fast you can innovate and develop new ideas, implement them, and gain competitive advantage in the marketplace so that you can create a better company, society, country and world. Thus, hardworking and well-educated people are the key differentiators for a nation in this flat world.
It is quite natural for people to wonder whether technology, in general, and software technology, in particular, have any major role in helping the poor in such a world. They do and let me elaborate. Technology makes the life of human beings more productive and more comfortable by reducing cost, improving productivity, saving time and improving comfort. Let me give you a few examples to illustrate the power of IT for the poor. Fishermen in Pondicherry use wave pattern data on the high seas broadcast by the US Navy to improve their yield by as much as 40%. NASSCOM of India used IP-based videoconferencing to bring joy and relief to a taxi driver and his family at Mumbai by connecting him with his family in a remote village in Uttar Pradesh. A balance inquiry at a manned bank counter costs Rs. 40. The same transaction costs Rs. 8 at an ATM while the Internet brings the cost down to just Rs. 2! Technology is a great leveller. It does not distinguish between the rich and the poor. For example, one of my younger colleagues who is a janitor at Infosys is happy to use an ATM because it does not discriminate against him unlike the clerk at the manned bank counter. The use of the e-governance paradigm for deployment of inexpensive, efficient, quick and corruption-free community services is another case in point. Information Technology enhances transparency in decision making and, thus, improves the confidence of people in the government.
Now, let me come to an important reason for why Bangladesh, with its large educated population, should embrace global software opportunities. Today, we live in a global village. No country can afford to isolate itself from the global market. Even countries that did so for a few decades realized their mistake and got back to the global bazaar and have succeeded in improving their prosperity by enhancing the share of exports in their GDP. We have to focus on an export orientation due to the following reasons:
1. Every country leverages its competitive advantages to trade in the global bazaar products and services that leverage these advantages. This is the best way to create jobs in Bangladesh. In fact, I define self-sufficiency as being able to earn enough global currency from your competitive advantages to import the best products and services at the best prices from the global market.
2. You have to maintain a certain healthy proportion of exports and domestic revenues in order to ensure balanced and de-risked growth in the economy. The contribution of exports to the GDP of Bangladesh is around 15%. This is low compared to countries like China with an export of 20% on a huge base of USD 13.4 trillion of nominal GDP.
3. An export orientation helps Bangladeshi enterprises benchmark their products and services on a global scale. If you succeed in the highly-competitive global market, you are likely to provide high-quality products at the best prices even in the domestic market. Now, let me come to what areas of software export Bangladesh can focus on. Given its huge population and its large educated workforce, the export of services based on remote application development and maintenance (ADM) and business process outsourcing would be viable for Bangladesh for a long time. This model would succeed as long as the opportunity for outsourcing of software development and maintenance (ADM) remained.
Indian software services companies created differentiation for their customers by implementing (development) and constantly updating (maintenance) company specific business rules and algorithms through either bespoke development of commercial software applications or through building a layer of customization around a standard package bought by our customers.
Imagine two companies C1 and C2 both implementing a standard package P available in the market. The only way these companies can compete successfully in the market is by demonstrating differentiation over each other to their stakeholders – customers, employees and investors. Therefore, they will have to implement unique business rules on top of the vanilla functionality provided by the package P. Some of it could be through parametrization but most of it will be through creating a layer of customization around the standard package P. This is application development.
Further, as these two companies start competing, they have to bring new innovations to improve their products, services, and business rules. The corresponding changes in their information systems are implemented through application maintenance. Generally, for one USD of a package license revenue, there will be between 1.5 to 2 USD of customization revenue and between 0.15 to 0.30 USD per year of maintenance revenue. This maintenance opportunity generally lasts for well over seven to ten years. No automation effort can eliminate this opportunity since requirement definition, analysis, design, some programming and installation will be handled by human minds, perhaps aided by machines.
The opportunity for outsourcing would remain as long as the Bangladeshi software services companies introduce new IT service areas through innovation. It is important to remember that these new services require the application development and maintenance skills though they may use different languages, operating systems, data bases, object orientation, and a host of other new tools and paradigms. Digitalization is essentially providing a web interface on devices with varied real estate sizes of the screen. They will require good quality software engineers with high learning skills. The only exception is the automation of business process management (BPM) activities. I agree that jobs are likely to be lost for your youngsters whose skills are limited to just BPM. However, let us remember that automation of these business processes require ADM skills! Therefore, one strategy would be to assess the competence of your BPM professionals and train them in analysis, design and programming skills.
Words like “transformation”, “automation”, “AI”, “machine learning”, “big data”, “analytics”, “Design thinking” and “IOT” have become popular. These are concepts which will help your software companies deliver better value to customers.
Design thinking is a new addition to the age-old tool set (waterfall method, agile design and programming) of solving complex problems. It is matching user requirements with technological solutions available using creative strategies. Automation is not new. Computers have been automating tasks performed by human beings for well over 75 years now! At its core, artificial Intelligence and machine learning are about computers using cognitive skills to mimic human beings in learning, reasoning, visualizing, processing and understanding natural languages. IOT (The Internet of Things) offers opportunities to develop process and event control software applications using internet as a communication channel. Such process and event controls could be for remote recording of a TV program, scheduling an oven to cook a certain food item, or running machines, appliances or even a car. Using big data, statistics and “Internet of Things (IOT)”, computers have made amazing progress in gaming, reasoning through expert systems, planning, mimicking vision, understanding speech and written text through natural language processing, and robotics. They handle many tasks that were, once upon a time, reserved for human beings like remote surgery, driving, picking stocks, fraud detection, and manufacturing.
The solution is to train your youngsters in learnability – ability to learn new ideas and use them to solve new unstructured problems. The Bangladeshi software services companies must invest resources to continue to explore new opportunities in services by innovating new ideas and build on what they have already done. They have to focus on attracting, enabling, empowering and retaining the best and the brightest. This can happen through hygiene factors like competitive compensation, good career planning, protecting dignity of the professionals as well as enabling factors like 24 week-long entry-level and week-long continuous training and certification programs. You have to invest in latest technology and tools infrastructure, in new methods of requirement elicitation, analysis, design and software development, and in new methods of improving quality and productivity. You have to train your youngsters in understanding the difference between value (what the customers obtain from your company) and price (what your company gets from your customers). Your challenge is to enhance value leverage or the ratio of value to price.
A big advantage of Bangladesh is its pool of well-educated, high-quality, English speaking people. In the software services industry scalability is of paramount importance and analytical reasoning is critical. Therefore, your talent pool is a unique asset. Your youngsters will succeed if they are willing to unlearn old ideas, learn new ideas, apply them and move from “reactive problem solving” to “proactive problem identification and solution” for your customers.
The bulk of software services opportunity is in the US. The 10 to 13 hour difference in time zones between Bangladesh and the US facilitates efficient project execution with compressed timeframes and through seamlessly-integrated cross-border teams. The resulting 24-hour virtual workday enables Bangladeshi software services companies and their clients to leverage the benefits of globalization. Quality is a hygiene factor for software services companies. Quality models like the ISO 9000 and Capability Maturity Model (CMM) of the Software Engineering Institute (SEI) form the process quality benchmarks for the Bangladeshi software industry.
Bangladesh must provide easy access to latest hardware and software technologies from advanced countries. Further, consultancy services in software development, marketing, branding, quality and productivity related areas from developed nations must be made available to Bangladeshi companies.
Broadband communications infrastructure will help Bangladeshi companies implement the global delivery model and use local talent to service customers across the globe.
Bangladesh may like to introduce economic reforms to abolish industrial licensing, rationalise taxes, create a strong thrust on exports, reduce import tariffs, simplify foreign exchange regulation, introduce free pricing of IPOs, encourage foreign participation in your capital markets, and to create a regulatory framework that permits employee stock option plans.
Venture capital should be available in plenty for your entrepreneurs. Further, debt finance should be available from banks as well as from state-owned institutions even for companies that do not have large physical assets.
Infrastructure like English-medium schools and colleges, roads, airports, five-star hotels and stable power supply are necessary. Jobs for spouses are essential.
Bangladesh must provide at least limited convertibility on the capital account to Bangladeshi global software corporations.
Acquisition guidelines must allow proven Bangladeshi software companies to acquire software companies in the developed world.
The judiciary and the legal process must be speeded up and would need an overhaul to create a level-playing field for both Bangladeshi and foreign corporations. Bangladesh must invite leading software companies from across the globe to set up captive software development activities there.
Bangladeshi software companies must improve their brand image to move up their price points.
If Bangladesh implemented most of the suggestions here, I have no doubt that Bangladesh will become a vibrant player in the global software services market.
Thank you!
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