Business Today

When Patni experienced the Eureka moment of outsourcing

The billion-dollar mega deal that brings Patni Computer Systems (PCS) under the fold of US-based iGate is historic.

Dinesh C. Sharma   New Delhi     Last Updated: January 12, 2011  | 15:47 IST

The billion-dollar mega deal that brings Patni Computer Systems (PCS) under the fold of US-based iGate is historic and not just for its size. It is literally historic because it was the founders of PCS who developed the model of outsourcing in 1972 and showed the way for others to follow the path.

Narendra Patni - one of the founders of PCS who was trained at the Massachusetts Institute of Technology (MIT) and later at Sloan School of Management under Jay W. Forrester (discoverer of magnetic core memory) - learnt his early business lessons the hard way.

While working with Forrester at his consulting firm, he saw an opportunity in publication of academic books and journals since Forrester and his colleagues were engaged in writing such books.

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The man

  • One of the founders of PCS
  • Played a major role in the development of the Indian IT industry
  • Prez & Dir of Forrester Group
  • Senior management & consulting positions with the US Trust Company of New York & Arthur D. Little, Inc
First Venture
  • Founded his first Co, Data Conversion (now Patni's US subsidiary) in 1972
  • Bachelors in Electrical Engineering (IIT, Roorkee)
  • Masters in electrical engg, MIT
  • Masters degree in management from Sloan, MIT
  • Printing technology then was at the cusp of a change - from linotype to high-speed photo typesetting machines driven by paper or magnetic tapes. Encoding data on such tapes was laborious and demanding. Narendra had seen similar paper tapes coming out of telex and teleprinters in India. "That's where this idea came to me that why this tape can't be punched overseas, and it started the whole thought process in me about trying to outsource data conversion work to India," he would recall.

What Narendra sensed then was a mere business opportunity in data conversion, hardly realising that actually he was showing the way for a completely non-traditional way of doing business that would catapult India to the forefront of global technology business at the turn of the century. He formed Data Conversion Inc (DCI), forerunner to PCS, to convert physical data into paper and magnetic tapes.

Before shipping tonnes of documents - mostly legal proceedings - to India for conversion into tapes, Narendra and his wife Poonam actually tested the offshore model at their apartment in Cambridge, Massachusetts.

They designated the living room as the 'United States' and the bedroom as 'India'. Documents, along with written instructions, were sent to 'India'. It was decided that there would be no oral communication between the people in 'India' and the 'United States' - simulating the ground reality of poor telephone links between the countries. A team of two dozen data entry operators was then hired in Pune (then known as Poona) for the job.

Narendra formed PCS, along with bothers Gajendra and Ashok (both products of IIT Delhi) in 1976 as a reseller of mini-computers of Data General. It then got into writing software solutions for Data General customers. Narendra picked up N.R. Narayana Murthy, an M. Tech from IIT Kanpur, to head the software division in August 1977. Murthy, in turn, built a software team of six people - whom we all know as the founders of Infosys.

In 1979, PCS signed up one of the largest offshore software deals, valued at $500,000, for developing an apparel package for an independent software vendor in New York - Data Basics Corporation (DBC). It was this project that made the American firm realise the value of Indian programmers and it decided to stay back for more work. In December 1980, Murthy resigned from PCS and later floated Infosys and eventually DBC became the first customer of Infosys.

The model was replicated by several other mini-computer resellers. US mini-computer makers discovered software writing skills of Indian engineers and Indian programmers, in turn, got exposed to American customers.

Courtesy: Mail Today 

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