Embrace the right technologies

Putting your neck out, betting and embracing the right technologies to create a differentiator is one of the major challenges that R. Muralidharan, Chief Information Officer (CIO) of Syntel India is facing. In a interview with Manu Sharma of CIOL Bureau, he shares his views of his achievements as a CIO and also on what he wishes to hear from vendors during the next fiscal. Excerpts:

CIOL: What are the major challenges faced by a CIO?
R. Muralidharan: The major challenges faced by the CIO today revolves around
* Reduction in total cost of ownership of running IT
* Ensuring that IT is always driving business value and consistently being perceived as a business enabler.
* Putting his neck out, betting and embracing the right technologies to create a differentiator.

CIOL: Does your organization link IT budget with the company's performance/growth? If yes please elaborate?
RM: Yes. Syntel does link IT budget with the company's performance /growth. The total IT spend is typically pegged as a percentage of revenue.

CIOL: Can you cite any specific areas where IT has come up as an accomplishment in your stint as a CIO?
RM: There have been quite a few major areas of focus for IT over the last two years in my stint as the CIO of Syntel. There have been significant achievements across not just implementation of technologies but the entire aspect of effective deployment of people, process and technology all aimed towards the goal of being valued as a true business enabler. The areas of significant achievements cuts across all areas of infrastructure such as network, storage, systems/servers, security, telecom all supporting critical internal business applications and connectivity needed for providing services to its global customers. Apart from focus on investments in technologies, there has been a significant focus on processes and people competency development all aligned to delivering value to customers.

CIOL: Going forward, what are the challenges which you foresee?
RM: The challenges of the future envisaged revolves around more and more Green IT initiatives thus enabling significant environmental benefits apart from providing a lower cost of ownership for running IT in the organization. The other challenge revolves around betting on the right technologies for the future which will deliver the maximum benefit to the organization.

CIOL: How far have you come as regards adopting 'Green IT technologies'?
RM: Green IT initiative is a moving target and Syntel is investing significantly on ensuring the all the campuses being built to support the growth is enabled using Green It technologies. On a parallel front, there is a large effort on driving investments in terms of time and processes to ensure that Green IT initiatives are inculcated across the organization thus focusing on reducing carbon foot print.

CIOL: What will be the IT budget for the new fiscal year/ What is the growth rate over last year?
RM: Syntel has been consistently growing at around 25-30 percent and hence the IT budget has also been growing to meet these needs of the growth. Apart from the growth of the operating budget, there is also significant amount of investment being done in investing on cutting edge technologies in its campuses.

CIOL: Name the top 5 items that you expect to spent on this fiscal year?
RM: The top five areas of spend is expected to be in the areas of:
* Build out of campuses to support growth
* Business productivity applications
* Security and Compliance
* Network Optimization
* Virtualization

CIOL: Do you feel the amount allocated for IT is sufficient if yes why? If not why not? How much should you be spending?
RM: IT being typically treated as a cost center, it is extremely important that any investment made in IT should be measured by evaluating as to how it has lowered the total cost of ownership to business. As an IT company that is growing, it is not possible to lower the absolute amount of investment. Hence the yardstick for measurement is to primarily focus on reducing the unit cost of providing IT services to the employees of the organization. We have been able to successfully demonstrate this across all domains. The business value delivered in terms of contribution to the bottom line has been apt so far.

CIOL: How big is the IT staff in your organization?
RM: The total IT organization size globally inclusive of outsourced staff is around 160. This team supports the various business entities within the group engaged in the business of IT services and KPO.

CIOL: As a global company how are you networked all the centres?
RM: All the global delivery and sales offices are networked using multiple technologies such as ATM, MPLS, Frame Relay and IPsec VPN's over the Internet cloud. The core network is built over Nortel Passport WAN switches that support data, voice over IP and video traffic. This backbone enables us to seamlessly integrate into our customer networks securely while at the same time providing scalability and high availability to meet varied requirements at an optimum cost.

CIOL: Is it difficult to gets adequate funds for IT implementations?
RM: The biggest challenge for CIO's for getting funds for new IT implementations is to continuously work on reducing operating expenses as a percentage of the total budget for keeping lights ON and meet business expectations of IT availability. It is always a moving target as every CIO would like to get the maximum funds diverted for new implementations.

CIOL: What part of IT implementations plays a more prominent role? Software or hardware or networking? Why?
RM: IT needs to be viewed as a tool and not the end. Hence no individual component whether it is hardware, software or networking is individually more or less important. What business gets in a highly mobile environment in today's context is a function of achievements across all these domains to enhance the user experience level.

CIOL: The success or failure of an IT deployment should be attributed to whom, the CIO or the vendor, or is it a collaborative accountability?
RM: Though any CIO would like to always have a joint accountability or would like to blame it on the vendor to cover up for failure, I firmly believe that it is always the CIO's accountability for the success or failure of an IT deployment. One can't have a situation where the CIO is complemented for success but the stick is on a collaborative accountability or put on the vendor. The CIO is in the best situation to know what fits his business the most and also the prerogative to choose the vendor and partner most suited to be successful for his business environment.
CIOL: What percentage do you outsource a portion of your IT project?RM: To a large extent possible, Syntel works in developing and implementing core technology components internally. What is typically outsourced for BAU support is low end hardware support activities. For any IT project under implementation, Syntel works very closely with its vendor partners to ensure that an optimum solution is implemented while ensuring that internal skills are developed. This helps us leverage our experience in these domains to deliver value and thought leadership to our clients while delivering IT and infrastructure services. CIOL: Has the nature and pattern of IT adoption become more sophisticated? If yes, to what extent?RM: IT has become an integrated tool as every aspect of business relies on IT. To this extent the dependency on IT by the various stakeholders and users has become very high. Some of the complexities or sophistication arises out of the diversified business needs and this coupled with the plethora of vendors providing various technology options. The sophistication of diverse user requirements is translated into sophistication in the need for integration of various technologies to deliver business value to the end user and business. This is making the task more and more difficult for the IT organization in terms of timely delivery of integrated solutions matching the pace of the need by the business.

CIOL: Are some enterprises under the myth that modernization processes such as automation and IT deployment can take place only in large enterprises? Elaborate.
RM: Yes. Today IT is all-prevalent and an enabler for growth. Investment in the right technologies for small and medium enterprises will help them be well prepared for scale up and growth. CIOL: As a CIO what would you wish to hear from vendors during the next fiscal?RM: One of the biggest challenges hearing from vendors is always the gap between what then can deliver vis-à-vis what they actually deliver. Secondly, there are a lot of exciting technologies in the areas of virtualization, unified communication etc. which is going to key investment areas. Key areas that I would like to hear from vendors is factual information of what they can deliver which will really help in reduce the time spent on POC's and implementing thus enabling a faster return on investment and maximizing business benefit.

CIOL: With so many vendors pushing their products, how are you able to distinguish what really works in your organization?
RM: We have a very elaborate and rigorous evaluation methodology when it comes to embracing any new technology and product. One of the key aspects of product selection focuses on relevance and adaptability to our work environment and we have been able to do a decent job so far.

CIOL: So many IT products fail after being implemented Why?
RM: There a lot of elements that needs to be addressed for a successful IT implementation. Beyond just simply what the product can do which can be addressed using a one time good evaluation process, there are areas of continuous investments in the right processes and people competency development that needs to be done to sustain the implementation and also keep upgrading it on a periodic basis to meet the changing business requirements as well as technological advancements. These are bigger challenges than the product itself and this also has a longer lifespan. These are areas where most failures occur. Or put differently, this is where competing organizations adopting similar products and technologies also differentiate themselves.

KPO fastest growing vertical for Syntel Inc

With a growth rate of 51 percent annually, Knowledge Processing Outsourcing (KPO) is emerging as one of the fastest growing business opportunities for specialized players. India's leading global Information Technology provider -- Syntel Inc -- with global development centers in India and US has leveraged on its domain knowledge in financial services and forayed into KPO space.
In a discussion with Manu Sharma, Associate Editor of CIOL, Keshav R. Murugesh, president & chief operating officer of Syntel India speaks on Syntel's service portfolio of consulting, IT and business process outsourcing and also how Syntel emerged as one of the largest diverse 3rd party services provider across the investment operations spectrum.

CIOL: Why and when did Syntel foray into KPO space?
KM: KPO with a growth rate of 51 percent annually, is one of the fastest growing business opportunities for specialized players like us. Today, KPO as a whole generates $3.05 billion revenue annually and directly employs around 25,000 people in India. The worldwide KPO market is expected to grow to $16.7 billion in revenues by 2010-2011. From this, India would account for $12 billion.
Syntel had a rich 23 years heritage of providing IT services to Fortune 500 financial services firms across banking and capital markets. In 2003, we completed the entire build-out of a complex performance attribution system for the investor services division of one of the top 3 global custodians. It made logical sense for Syntel to leverage its extensive domain knowledge in financial services and provide an end-to-end service portfolio to existing and new clients. We forayed into KPO in late 2003 providing middle office investment operations services to one of the top 3 global custodians.

CIOL: What are the other businesses Syntel is presently into in India?
KM: In early 2000, Syntel's revenue was divided into staffing services and IT outsourcing services. We have remodeled our portfolio based on emerging trends and changing customer requirements. Today, we service clients across verticals via a three-pronged integrated service portfolio of consulting, IT and business process outsourcing. Our consulting services range from technology to process engineering across verticals. In KPO, Syntel is arguably the largest diverse 3rd party services provider across the investment operations spectrum. For e.g. Syntel KPO services one of the top 3 custodians across North America, UK, Europe and Asia Pacific for the entire middle and back office investment operations spectrum. We manage the entire post originations functions for a large retail brokerage firm. Similarly, we have an almost 1000 FTE KPO operation across the life insurance vertical.
Syntel provides customized IT, BPO and KPO solutions to verticals such as automotive, education, retail, finance, insurance, healthcare and life sciences. The BFSI industry overall outsources more than 20 percent (amounting to $400 billion) of its cost base to offshore services. Syntel offers value to its customers by offering services such as cash management, settlement, underwriting, claims, reinsurance etc.

CIOL: How much of business does KPO contribute to Syntel?
KM: The KPO business is the fastest growing vertical across Syntel businesses. KPO is a key revenue driver for Syntel, exiting the year 2007 at 19 percent of total revenue and posting 155 percent year-over-year growth.

CIOL: Is KPO emerging big in India like the BPO sector? If yes in what areas do you see the growth?
KM: Yes, the evolution and maturity of BPO services has given way to more knowledge intensive outsourcing services in India. The KPO industry is growing at a fast pace and the high talent base of chartered accountants, doctors, MBAs, lawyers and research analysts in India is certainly going to capture a big pie of the global KPO business. The knowledge process outsourcing industry (KPO) is likely to grow 45 percent in size by 2010 whereas the BPO industry, only 26 percent. Global KPO pie in 2010 will be around $17 billion of which $12 billion (70 percent) will be outsourced to India. Thus, India is fast emerging as a global KPO hub.
We see the fastest growth across banking and financial services, data management and legal services. Similarly HRO and pharmaceutical outsourcing shows promising growth by 2011.

CIOL: Syntel has been in the list of Global Services 100 list? How important is this achievement to the company?
KM: We are honoured that Global Services and neoIT chose Syntel as one of the world's top technology providers. Syntel is dedicated to delivering flexible solutions and innovative uses of technology to its clients that help them remain at the forefront of their industries and operate in their businesses more efficiently. It's encouraging to know that Syntel's business model has gained broad acceptance as an effective and well-proven method of providing innovation to businesses. This ranking is a testament to the great value Syntel delivers to our clients.

CIOL: Where do you see Syntel emerging by 2012?
KM: We continue to invest into the five-year plan strategy. The plan calls for Syntel to be positioned as a business partner as opposed to as a vendor. We like to position ourselves with our clients as Nimble, Flexible and Right sized as opposed to a giant unresponsive firm. Forrester recently said of us; "Small enough to listen, big enough to deliver."
Physical Infrastructure: We are developing our own campuses in Pune and Chennai. This is about 110 acres of SEZ facility. We are investing in the best-of-class technology and infrastructure. The campus strategy allows us to cater to our rapid sequential growth and meet the specific needs of our clients.
People Infrastructure: We have invested heavily in consolidating and deep rooting of all our talent initiatives, providing coverage across the entire talent life-cycle. These include a focused effort in ingraining our "growth from within" philosophy, with targeted programs to address the needs of specific talent levels in the organization. These investments continue to provide pay-offs in the form of lower than industry average employee attrition and increased client wallet-share and contract renewals.
Geographical expansion: Syntel continues to invest into the expansion of its sales infrastructure in North America and in Continental Europe. This is through front-end staff expansion and expansion in office bases. We are also looking at the EMEA (Middle East & Asia) region and the APAC region to finalize our entry strategy in these regions.
Innovation Labs: In line with our mission, Syntel has invested in Client-Focused, Collaborative Innovation Strategies and establish the R&D division, a Strategic Business Unit, to provide best-of-breed services to our customers to address their needs. Our R&D division initially plans to focus on few broad technology categories e.g. Proprietary technologies, Devices/ Embedded systems, Tools and Products, Open source and Methodologies/ Frameworks. Our R&D division will work closely with different verticals and support organizations within Syntel to foster better talent management, reduce time-to market of new offerings and services as well as support business development.
We continue to position ourselves to achieve a greater percentage of our revenues and growth through outsourcing, including BPO. We work with clients to develop and deliver business process innovations that transform their businesses or deliver higher performance levels at lower costs. Each of our BPO businesses provides function-specific or industry-specific business services to multiple clients on an outsourced basis through standard operating models. Some of our BPO businesses offer services to clients across many industries, while others offer services only to clients in a specific industry.
We have aggressive growth plans at our Indian Delivery Centre and believe this will be sufficient to cater to potential increases in the number of staff over time. Syntel currently has over 3,500 BPO employees working in different areas of capital market operations. The majority of these have been recruited specifically to service individual clients, as that is the business model we adopt for each BPO contract. We typically do not maintain a pool of unassigned generalist resources, because we find they do not meet clients' process-specific needs.
Our current plans anticipate growing our BPO capacity in India to between 10,000 and 15,000 seats within the next three to five years. This will be achieved through a multi-centre strategy, which envisages centers across at least two cities in India and more than one centre in each city, thus providing centre level and city level redundancy.

CIOL: What about your expansion plans in India?
KM: India is an important supply center for Syntel and will also be a good market for us as we introduce some of our key offerings here. Syntel Inc plans to invest $50-60 million (Rs 200-240 crore) in capacity expansion alone in India this year. This will enable the company to add around 6,000 seats. The bulk of our hiring will be in India and .we are very excited about the prospects of the country.

CIOL: Do you have plans to foray into the other sectors of KPO like legal, Medical etc?
KM: Syntel has a flexible business model that is constantly evolving. We are always looking for new avenues to invest in. The legal offshoring segment is increasingly gaining momentum.
Syntel is definitely looking to diversify its KPO portfolio and leverage its extensive experience for managing critical operations across verticals and explore emerging areas of KPO and pharma outsourcing.
The Healthcare Practice in Syntel contributes 17 percent of overall revenues and is one of the focus areas to aid our growth. Syntel's Healthcare & Life Sciences Practice team includes doctors, medical professionals, HL7 experts and DICOM specialists which help provide a comprehensive, integrated suite of IT and KPO services that help payers, providers, and pharmaceutical firms realize sustainable competitive advantages by focusing on continuous innovation and knowledge management. We continue to leverage our IT expertise in servicing huge healthcare companies to provide back office and analytical support as a full service model.
Syntel was included on the Healthcare Informatics 100, a list of the 100 leading global health care IT providers for four years in a row (2003-2006) and is already is one of the largest healthcare IT providers in the world. Syntel derives 14.5 percent of its annual revenue from healthcare projects.

CIOL: Where does Syntel stand among the KPO companies in India?
KM: As mentioned earlier, Syntel perhaps is the only 3rd party service provider to have current experience and capabilities of servicing clients across the entire investment operations spectrum. Similarly, we have the unique experience of helping a large industrial house break into a new service line of brokerage operations.
Today, we manage the entire post origination operations for the client. In the capital markets space, we have a team of almost 4000+ professionals servicing clients across low-end processes like reconciliation to the highly critical functions like performance measurement and attribution. We consider ourselves to be a highly experienced player across the securities processing and capital markets arena and capable of deploying our expertise in transaction processing, data analytics to leverage it across other domains.

CIOL: How big is the KPO industry in India today and what is the forecast for the future?
KM: India is fast emerging as a global KPO hub as globally businesses require specialized solutions, and India's engineering and technical institutes are increasingly providing highly qualified professional to address these manpower demands. The global KPO industry stands at close to $5 billion today.
A NASSCOM report estimates that with an annual growth rate of 39 percent KPO industry is expected to reach $17 billion by 2010, of which $12 billion would be outsourced to India. Also, the number of Indian KPO professionals is set to leap from 25,000 to 350,000 by 2010. Overall BPO revenues are slated to touch 40 billion by 2010.

Opt for better technology to stay agile

Syntel has joined hands with Relativity Technologies for the modernizeation workbench platform to deliver enhanced system transparency and business efficiency.

Syntel Inc., a global information technology services and Knowledge Process Outsourcing (KPO) company, has selected Relativity Technologies' Modernization Workbench platform to support its rapidly growing application maintenance and migration practices.

Market pressures demand that companies stay agile in the face of an increasingly competitive global economy, but many core application portfolios are inflexible and inefficient, which hampers an organization's ability to adapt. A successful modernization effort requires first gathering a great deal of intelligence on the application portfolio.

A recent report by Forrester noted that "emerging application management disciplines such as application portfolio management (APM), application dependency mapping (ADM), and other portfolio disciplines are changing the way CIOs think about applications under maintenance and all work done in IT." The report continued, stating that "…increasingly, corporate management is tapping information to help distinguish the applications that should be kept and modernized from those that must be replaced and retired."

In order to help its customers make these difficult decisions, Syntel has integrated Relativity Technologies' Modernization Workbench into its Application Maintenance and Migration Centers of Excellence.

The Modernization Workbench is a market-leading suite of applications that analyzes a diverse array of legacy mainframe, mid-range and distributed applications and captures application data and business rules in a centralized repository. It generates rich technical and business intelligence about clients' application portfolios, which can be used to gain an insight into how well an organization's systems align with their business goals, enhancing Syntel's ability to deliver efficiency to clients' core business processes.

Syntel has successfully migrated the core operations of numerous Fortune 500 companies to more efficient architectures, and the Modernization Workbench promises to accelerate future initiatives by discovering, isolating, and reusingmission-critical business processes within a service-oriented architecture.

"We believe enterprises today understand that a legacy modernization strategy is crucial for maximizing the value of their investment. Application modernization can significantly reduce the total cost of ownership and align IT investments with business imperatives," said Keshav Murugesh, Syntel President and COO.

"After an intense, ROI-focused evaluation, we decided to standardize our migration framework on the Modernization Workbench. Syntel is pleased to partner with Relativity Technologies, and we look forward to expanding our deployment of this technology," said Murugesh.

"Syntel's adoption of the Modernization Workbench is a major validation of our technology," said Steve Maysonave, Chairman, President, and CEO of Relativity Technologies. "Our combined solution amounts to business intelligence for application portfolios, and enables outsourcers and clients to collaboratively address core business challenges. The result is an application warehouse that improves IT governance, efficiency and alignment with strategic goals like agility, security, and regulatory compliance."