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Monday, February 19, 2007

How the 'TDC model' helped Satyam

One had a agricultural background and the other was in the construction industry, but somewhere they both dreamt of technology and what services could be provided to the world, by an Indian IT firm. They are brothers with a single, united vision and the combined abilities to make it all come true.

B Ramalinga Raju is a modest man and his humble beginnings are shrugged off - not out of shame but more out of simplicity. Founder & Chairman of Satyam Computers, B Ramalinga Raju told CNBC-TV18, "I can't claim that I dealt with agriculture directly and I was behind my father in the early days, but otherwise, it is the education opportunity that I have got and I am sure Rama has gone overseas and got to do an MBA and acquire some skills."

He recalls, "Once I went to the US, the whole environment was so different, wherein you for the first time went into a shell - you said what is this, where am I? Am I in a different world or am I in the same world - and in my opinion, that has made some of the dormant gray cells active and I became very introspective and once I came back and became part of the business world, we were doing a number of things and to my mind all of them appeared to be very mundane. It had nothing to do with knowledge businesses and we were in the background, wanting to do something exciting."

So a general dissatisfaction with the way things were working out led them to come up with a business plan. Co Founder & Managing Director, Satyam Computers, B Rama Raju elaborates, "I still remember those days in 1991 because when we started, we took a different approach, compared to any other company which started in Hyderabad at that time. So we thought, whatever little money we had, we will invest in people and we sat together and said, are we doing the right things, but I think we stuck to it and the rest is history."

Initially, the small beginning that was made almost embarrassed Ramalinga Raju and he almost didn’t mention it in an application he sent out to Harvard!

Ramalinga Raju says, "In 1991, I distinctly remember attending a programme at Harvard University and they required you to send your resume and we were into a number of businesses and we had just started this company and we had a revenue of less than maybe USD100,000 or USD200,000."

"I was quite embarrassed to list certain computer services as one of the businesses that we were in, but I decided nevertheless to list it and I am glad that I did that. We spent almost 5-6 years thereafter, to move away from other businesses so that we could focus on this business."

But, back then, even the Indian bankers were skeptical about these upstarts and what they wanted 128 acres of land for. B Ramalinga Raju says, "The banker said, how many employees do you want to have – maybe a couple of hundred - and why do you need 128 acres for that, you can construct a multistory building and place all the terminals that you want and what purpose does this serve, that was the outlook."

Today, their technology centre is sitting pretty in 128 acres of land that they have developed. There is also a development centre, a golf course, a helipad and even a deer park! Satyam has managed to create visible signs of prosperity, in order to convince global clients.

B Ramalinga Raju explains, "Recently, I was reading this book called ‘Blink’ and it came very close to many decisions that we have taken in the past. To us, it was a simple-minded approach. We told ourselves that the only asset that we have are the people, and that their ability to do productive work, would be to convince them and to delight them. What was going to delight them? The quality of the people and the environment around them."

The two complement each other very well, One looks at operational issues, while the other formulates visionary strategies. B Rama Raju agrees, "From the beginning my focus has been on the operational issues and Ramalinga has focused on strategy."

"Apart from this, I would say that he is a great visionary. In 1995, we were less than 500 people. At that time, during our internal meetings, Raju used to say that we should be 10,000 people by 2000. Most of us, including myself, used to come out of the meetings and laugh, but I think it is quite satisfying that by the year 2000, we could get close to that mark."

So what has made Satyam the company it is? B Rama Raju says, "I think if you want to talk about the one strength about Satyam, it is distributor leadership, which we very strongly believe in.” B Ramalinga Raju explains, "Today, this distributed leadership concept is being referred to as full lifecycle businesses and within Satyam, we have 1,400 of them. Every process in the company is dealt with as though it is a business by itself."

The knowledge industry, like any other, has witnessed a boom period and a period of inertia. So what are the management strategies for the short and long-term put in place? B Rama Raju says, “In the last few years, there has definitely been a bit of a slowdown and things are looking up again and looking quite good."

"The way globalization is taking place and we work with Fortune 500 global customers, so in the last 12 years Satyam has started moving up the value chain. So there is some kind of consolidation and customers are clearly seeing the value-addition, in the services we are providing."

B Ramalinga Raju remembers, "In March 2000, the market capitalization of Satyam had touched its peak and that was the time when Bill Clinton was in India and he visited Hyderabad. People were saying after he goes back, all the prices will double because the confidence in India is so high and so forth. By June, it became very clear that we are not going to be able to continue this business because things have changed and there was a dramatic downfall in the markets and in outlook."

"So one fine morning, we all got together and discussed what we had to do. We took a decision that all the senior leaders who were sitting in the comfort of the AC room had to be closer to the customers and therefore one decision that was taken was, that Rama can continue to be in India, and I will move to the US with my family."

That would explain the 'TDC model' prevalent at Satyam. Where 'TDC' stands for 'thinking, doing and communication'. B Ramalinga Raju claims to have moved on in matters relating to ideas and issues because he tends to get bogged down with details. So he leaves it to Rama Raju.

B Rama Raju says, "We had JV with GE Industrial Systems and the CEO of GE Industrial Systems was here and he was saying that his job is the difficult part of dreaming, and he said the easier part of implementation was left to the team! So, I think all great visionaries and leaders are very unreasonable in their demands."

But their vision extends to beyond the boardroom and as a measure of Satyam’s corporate responsibility, the company has adopted 142 villages in Andhra Pradesh. They have got truly involved in the welfare of these villages in the last four years but say politics is not for them.

They have also launched emergency services. In the US, the emergency number 911 is so commonplace, that everyone knows about it. In India, such integrated services don’t exist. So, Satyam decided to put in place such an integrated service. That’s how the emergency number 108 was born.

B Ramalinga Raju gives credit where it’s due, "The communication ministry has been quite kind, to have set aside 108 and the state government has been very kind to sign a public-private partnership with us and a few days back, 30 or so ambulances have been put on the road."

At the end of all this hard work, do they see themselves slowing down? Retirement plans are made and then put on hold but B Ramalinga Raju does take the time out for a little snooker sometimes. Otherwise, mostly reading and meditation occupies his leisure time.

Even so, retirement plans can be put in cold storage for the time being but dreams and visions live on. B Ramalinga Raju agrees, "Now we would like to position ourselves to be one of the select few companies which is respected for the quality of work that we do. A company, which is seen as creative, is seen as addressing the higher-end of the value chain, while it has the ability to integrate things in a comprehensive manner. So we have lot of positive challenges ahead of us."

For more on careers at Satyam Computers:

Written for www.moneycontrol.com


Anonymous said...

What a sad end for satyam in 2009... I see bill clinton sitting next to raju,, we should check if bill got that $5 million from raju via amar singh ?

Manali said...

I agree with you. May be it's hubris. The incredible way that accumulating of money can corrupt people isn't exactly something we are not aware of. Both the Rajus should be asked to surrender personal assets and foreign bank accounts to make good the loss.