My tenure at the telecommunications department caused headaches I hadn’t anticipated. But at the same time I found myself involved in interesting projects, some of which had profound consequences for India’s economy. GE chairman Jack Welch’s visit to India was one such instance.
Welch was already a living legend when he came to India in 1989 intending to sell GE products like airplane engines and turbines. He tried to set up a meeting with Rajiv Gandhi, but their schedules didn’t match and Rajiv wasn’t able to see him. He asked me instead to meet with Welch at his place.
I arranged a breakfast meeting in a private dining room at the Taj Mahal hotel. I had my colleague Jairam Ramesh with me, along with Montek Singh Ahluwalia and Jay Choubey from the prime minister’s office. Welch would be bringing six or seven of his executives along. I was a little wary of the cost of this get-together. The Taj was going to charge 8000–9000 rupees, which I thought would not look good on the prime minister’s account books. Rajiv was always under close scrutiny, and a fancy meal with foreigners at a five-star hotel, for official purposes, had the potential to generate negative publicity. To preclude this I called one of my public-sector CEO friends and told him, ‘Look, you’re going to get a bill for a Taj breakfast. Please, just pay it. Don’t even ask.’
Welch and his team arrived at eight and we were assembled to meet him. After the pleasantries and coffee we got down to business. Welch knew we were aware of what he wanted, so he asked, ‘Sam, what do you propose?’
My answer surprised him. ‘Jack, I want to sell you software.’
‘I’m not buying software,’ he said. ‘I want to sell you engines, that’s what we are here for.’
‘Jack, I’m not buying engines.’
‘Strange,’ he said. He had come all the way to India, expecting a very different conversation. ‘Then what do we do?’
‘I guess we have nothing to do,’ I said. ‘Let’s have breakfast.’
There was dead silence. The GE guys just sat there, perplexed. I could feel the waves of discomfort washing over my guys. They felt awkward. I was locking horns with Jack Welch, CEO of General Electric. This wasn’t the way to start a conversation. There wasn’t any need for confrontation.
After a long silence, Welch broke the spell. ‘Okay,’ he said, ‘tell me what you want to tell me about software.’
I had prepared a 35mm-slide presentation. India, the title read, Country of Snake Charmers, Sadhus and Software. The slides rolled on. People think of India as a land of mysticism. But we also make software. A slide showed a priest praying in front of a computer. We have a young population with advanced education and great ability. We have a large number of software engineers. GE can benefit from our software talent. India can develop software for GE.
Welch watched. He listened carefully. ‘What, specifically, do you want?’ he said.
‘Given a choice,’ I said, ‘I would want a 10-million-dollar software order from you.’
‘I’ll tell you what,’ he said. ‘I’ll send you eleven top people from my company; you convince them first. I’ll send them here in thirty days.’
Thirty days later eleven GE executives appeared in Delhi from their plastics, consumer goods, appliances and other divisions. Our job now was to show them around and give them a sense of our software capability. We had several government-sponsored organizations with software people, including C-DOT, the Centre for the Development of Advanced Computing (C-DAC, our supercomputer operation) and a national informatics centre. But in the private sector there wasn’t much, and the GE executives would want to assess our consulting potential.
The truth was that the Indian software-consulting industry was just being born. Tata Consulting had a few people, Infosys had five, Wipro eight or ten. When I called to set up meetings, Infosys called back to say, ‘Sam, you’ve set up this meeting with GE, but we don’t even have an office.’
‘Don’t mention that,’ I told them. ‘Arrange the meeting at one of the five-star hotels. Say that you will be there anyway for some other meetings. You might as well meet them there.’
While we didn’t have the proper organizational infrastructure back then, we definitely had better software engineering talent in India. What I wanted to do was show GE the quality of our people.
It so turned out that the GE executives were very pleased with the visit. At its conclusion, they announced that they would be giving us the 10-million-dollar order.
Today, these software companies have gone global. Together, they have over half-a-million employees and a market cap in the area of hundreds of billions of dollars.
As soon as GE placed their order, I put in a call to IBM to also explore a relationship with them to develop software in India. Before long, things snowballed. At one point, Texas Instruments (TI) came to us with a plan to launch their own software facility in Bangalore. But to do that they needed a satellite link to connect to their Texas facility. I agreed. I had a hard time getting the proposal through, though. ‘You want what?’ people said. ‘You want to give a satellite link to a foreign company?’ Getting the relevant approvals and permits took a lot of pushing, but we persevered and in the end TI had a satellite link running between Dallas and Bangalore to help develop their software using Indian talent.
We had the talent to begin with. And after GE we had customers interested in using the talent too. We just had to put the deals together and build some confidence. Most importantly, the government had to be willing to help, willing to bend a little, to compromise and facilitate. Small companies wouldn’t be able to talk to GE. But as the government representative, I could. That was our job.
All those years ago, we started with nothing. Now, in 2015, Indian software services bring in about 150 billion dollars every year, year after year. At the end of the day it’s a credit to Indian software talent and Indian entrepreneurs that we have been able to build this.
As a part of the Rajiv Gandhi government, I was privileged to meet a large number of global leaders and interact with them at official dinners, meetings and social events. The list included people like Mikhail Gorbachev, President of the Soviet Union, Chancellor Helmut Kohl of Germany, President François Mitterrand of France, Prince Aga Khan, the prime minister of Italy, the President of Vietnam, and many others. State dinners at the Indian President’s home and at the Hyderabad House in Delhi were special events to interact with not only political leaders but leading global businessmen and intellectuals as well. I also had an opportunity to meet and interact with many distinguished Indian persons like Mother Teresa, Amartya Sen, Jyoti Basu, N.T. Rama Rao, Atal Bihari Vajpayee, L.K. Advani, and so on. One morning I received a call from Prime Minister Rajiv Gandhi saying that he wanted me to meet with the President of Vietnam while he was visiting Delhi. So that same afternoon, I spent an hour with him, discussing telecom, technology missions and the software industry in India. After carefully listening through a translator, he told me that he would like to send General Vo Nguyen Giap to spend some time with me in Delhi. While studying in America during the Vietnam War, I had heard of the formidable general many times; he was one of those rare few who had fought against the Americans and the French in Vietnam. He was the most prominent military commander besides Ho Chi Minh during the Vietnam War, and led and managed operations
until the war ended. He died in October 2013 at the age of 102.
In Delhi, he and I spent a full day at C-DOT talking about our indigenous design and manufacturing efforts, the role of information technology, and the technology benefits available to the people at the bottom of the economic pyramid. He listened carefully, took notes, asked questions, and was keen to learn from the Indian experience. After his visit, C-DOT started exporting rural exchanges to Vietnam to improve their village-to-village communication.
Then, strangely enough, one day I received a call saying that saying Mr J.R.D. Tata, Mr Godrej and Mr Bharat Ram, the leaders of the Indian industries, wanted to come by and have tea with me. I was not mature enough to understand and appreciate the importance of their visit. The trio came and spent an hour with me, talking about population control, liberalization, privatization, education, health, employment, and other important national issues. I was intrigued by their focus on nation-building, the public good and social concerns, especially due to the conspicuous absence of any conversation on business opportunities. These people were the true visionaries and business leaders who had been directly impacted by the Independence movement. Their concern for the country was loud and clear in every conversation I had with them. Later, I learned that they visited me to simply encourage me to continue doing public good. I wish I had videotaped some of our conversations, now that I understand the importance of their generous gift to me.
Another high-tech project evolved even before Jack Welch came to visit. We had been negotiating with the Reagan administration for a Cray supercomputer, which we needed for weather forecasting, agriculture development and, more generally, for number-crunching. We had been told that our request was being looked at favourably, and we had every expectation that the deal would go through.
I happened to be with Rajiv Gandhi one day when a call came in from Washington. When Rajiv got off the line he looked concerned. It was Reagan, who had told him that the approval for the Cray purchase was being denied; the Americans were afraid that we would use the technology to develop a nuclear weapon on our own.
‘I don’t think that’s a problem,’ I told Rajiv. ‘We can build our own supercomputer.’
‘What do you mean? How much would something like that cost?’ ‘We have the ability to do it ourselves. Off the cuff,’ I said, ‘I’d estimate a cost of about 30 million dollars—about as much as what we’d be paying for the Cray. I think we could get it done in three years
at the most.’
When Rajiv agreed, we took the project up with the Scientific Advisory Council and established the Centre for the Development of Advanced Computing, or C-DAC, in 1988. As with C-DOT, we made it a point to hire young engineers. We worked on parallel processing, and ultimately developed India’s first supercomputer, the PARAM. By 1990, we had produced a prototype, which we demonstrated at that year’s Zurich Supercomputer Show. Our machine placed second after the United States. Vijay Bhatkar, a leading computer scientist, was our original CEO, and I served for a while as the chairman of the C-DAC board. Today, the centre has over a thousand engineers and is a leader in several fields of supercomputing.
The Soviets collaborated with us for the initial development of PARAM. The fact was that India and the USSR had enjoyed a long relationship, encompassing deep scientific and technological ties. From its birth, India has been a democracy, but Jawaharlal Nehru had admired the centralized economic system of the Soviets and had nurtured ties between the two nations that were still alive and well.
One manifestation of these ongoing ties was that back in 1987, Rajiv Gandhi and Mikhail Gorbachev had agreed to hold science and cultural festivals in India and the USSR. Rajiv was eager to put on the best show possible to showcase India’s achievements, and the government had allocated funds to put on a large, wide-ranging science- and-technology exhibit as a part of the ‘Festival of India’ scheduled to be held in Moscow, Leningrad and Tashkent.
The problem was that the ministries involved told Rajiv that it wasn’t feasible to mount the science exhibition on the schedule he and the Soviets had agreed on. They said it was impossible, that there just wasn’t enough time for it.
This resulted in Rajiv asking me to do it. He was as frustrated with the country’s bureaucracy as I was, and he found in me someone he could use to cut through the red tape and foot-dragging. He asked and I said yes.
The science-and-technology exhibition was going to be huge— the Soviets had allotted about 200,000 square feet for us, which meant we had to fill all that up. The first thing I did was call Air India to book two 747s. Then I worked backwards. Along with Gulshan Kharbanda, a museum technology expert, I designed layouts for the space. Then I called a meeting with the heads of the various science and cultural departments and industries. ‘The PM said this has to be done,’ I told them, ‘so we have to do it well and on time.’ I described the overall scheme and the space allocations for each category. ‘Aeronautics and space industries, you have 4000 square feet; leather crafts, you have 2000. Drug industry—I want a capsule that people can walk through and be shown the Indian drug industry. The capsule should be 8 feet high and 20 feet long. Technology, I want two robots. As visitors enter they will be able to walk between the robots—a female robot in a sari, and a male one in maharaja clothes, saying: “Welcome, welcome.” Delegate this to some institute, they’ll design the robots and put Indian dresses on them. Visitors walking in should see a big slide-show—India, a land of deserts and mountains and tigers. Water, dancing, music, a ten-minute show, 150 slides. Everyone has ninety days to produce their exhibits and booths. You don’t have to worry about transportation or anything other than designing and producing your part of the exhibition. You just have to get it done in time.’
The Festival of India and the science-and-technology exhibition
were a great success. The skills, creativity and talent it displayed were striking. As I saw it, the effort it took to design and create the exhibits was equally exceptional. My role in that effort was simple. The only thing I had to do was lay out the requirements and provide people with the necessary motivation and direction. After that, they were on their own. Once they knew what to do, they did it superbly.
Everywhere you looked, India had a wealth of talented people. All that was needed to propel the country into the highest rank of nations, at least in my opinion, was a modern approach to organization and management. That, and a mindset focused on goals to be achieved rather than on the sterile demands of status and hierarchy.
The festival came at a time when the practices of glasnost and perestroika were the watchwords of Gorbachev’s efforts to restructure and open up the USSR. To me, that meant an opportunity to create partnerships that would give India a significantly larger scientific, technological and commercial role in the USSR’s development. I told Rajiv that I’d like some private time with Gorbachev during his upcoming visit. I wanted to present some ideas to him along those lines. Rajiv didn’t think that would be a problem. ‘I’ll arrange it,’ he said.
Shortly afterwards he called. ‘Sam, it turns out you can’t meet with him after all. It’s a matter of protocol. My meetings with him are devised as purely one-to-one. There’s just no opening for him to meet separately with one of my advisers. I’m sorry, you must be disappointed,’ he said.
I was disappointed, but I knew Gorbachev and his wife were coming to Rajiv’s house for a family dinner.
‘You could just say after dinner,’ I said, ‘when you’re going to have coffee, that you happen to have Sam Pitroda and a couple of other friends here, and that you’d like him to meet them. Something like that. Don’t tell the foreign officer, protocol guys or anybody else anything.’
That appealed to Gandhi. ‘Good idea,’ he said, ‘let’s do it.’
That evening while the Gandhis and Gorbachevs were having dinner, I was in another room setting up a slide presentation with Jairam Ramesh and Dr Ashok Ganguly (then chairman of Hindustan Lever) and Dr V.S. Arunachalam (then chief of the Defence Research and Development Organization).
At ten o’clock Rajiv ushered everyone into the room and introduced us. We had a few minutes of casual talk. Rajiv’s children, Rahul and Priyanka, were also present. Gorbachev picked up a cardamom pod from a little bowl, and Rajiv started telling him about cardamom. But as soon as I could, I turned the discussion to IT, telling Gorbachev that I believed that perestroika and glasnost, in essence, were about information technology. That might have sounded a bit presumptuous. Rajiv passed me a little note. ‘Remember, you’re talking to the President of the Soviet Union.’
I read the note, tucked it in my pocket and went into my presentation. The idea was to tell Gorbachev that if he really wanted to take advantage of the Indian relationship, India and the USSR should do some joint roll-outs together. ‘We can help you develop IT,’ I said. ‘We’re good at it. We can also provide you with consumer goods, pharmaceuticals, computers, etc.’
Dr Ashok Ganguly talked about what we had to offer in consumer goods. Then Dr Arunachalam told Gorbachev about India’s research on hypersonic aircrafts, suggesting how a collaboration on that project could benefit both countries.
We spent an hour with him, and when we were finished, Gorbachev asked, ‘What, specifically, would you like to see happen?’
‘I would like you to send a team of experts to Delhi,’ I said, ‘to have further dialogue with us on all these issues.’
‘Done,’ said Gorbachev. And, sure enough, a month later a group of Soviet scientists and government officers arrived in Delhi—people from different sectors of Soviet civilian and military life. We connected them with people in the right fields and places, and suggested a couple of new programmes.
The Soviet Union, as we all know, was a place where consumer goods had always been in short supply. ‘America has big retail stores like Kmart,’ I told Gorbachev. ‘You have huge consumer needs. We would like to develop Kmart-type outlets in the Soviet Union— I-Marts, which would stock all kinds of Indian consumer goods, like soaps, pharmaceuticals, leather goods, paper products, fashion accessories, and so on. We can build twenty stores. It would be good for Indian manufacturers and good for your citizens too.’
Everybody liked the idea. But Gorbachev said, ‘We don’t think we have enough management skill to run that kind of operation.’
That wasn’t a difficult problem to solve. We could organize a conference. I could send them the best management experts from the US to teach them all they knew—professors and CEOs of Indian origin. When the Soviets agreed to this, I called my friend Dr C.K. Prahalad, a professor of management at the University of Michigan, and he and four other business-school professors of Indian origin went to a conference we set up in Riga (now in Latvia). They gave presentations and seminars on the basic aspects of modern management techniques.
After that I started travelling to the Soviet Union every three months to meet with Soviet scientists and engineers. Among others, I became friends with the then head of the Russian Academy of Sciences, academician Gury Marchuk, who was instrumental in establishing a range of collaborative projects between Indian and Soviet researchers.
I found the Soviets interesting and intelligent, but the Soviet command-and-control economic system had left them in desperate need of help when it came to any kind of market activities. They simply had no understanding of the concept of cost and the relationship of cost to pricing. The people I talked to in the semiconductor industry and other engineering areas had no idea whatsoever of what their costs were. The concept of profit margin was alien to them.
On the other hand, the people I was meeting were well-trained and highly accomplished. I did not, for a moment, foresee how rapidly things would fall apart for them. But their system had been artificially sustained for so long that as soon as the unravelling began, the whole structure collapsed almost overnight like a house of cards.
Rajiv Gandhi was a relentless modernizer, a man with great optimism when it came to the prospect of heralding India into the global mainstream of health, literacy, technology and, most of all, economic productivity. He was receptive to new ideas, willing to listen and explore new opportunities. The challenge in all of this was enormous, but Rajiv was focused, creative and energetic. Since I was involved in part of his efforts myself, I saw things from the inside. Given the progress we were making, I had envisioned Rajiv being prime minister for an extended period of time and me working with him in whatever areas my own energies and interests might be best suited for.
At the end of 1989 India held its ninth general elections. Five years earlier, Rajiv had been elected prime minister in a landslide victory. His party, the Congress, held 70 per cent of the seats in Parliament. But as the 1989 election approached, allegations of corruption began to cut into Rajiv’s popularity. India had bought a large number of advanced artillery weapons from Bofors, a Sweden-based company. Now it had come to light that Bofors had paid 64 million dollars in kickbacks in order to secure the hefty arms order. It was unclear as to who had actually taken the money, but Rajiv was prime minister and so the suspicion naturally fell on him.
It’s typical in India that prior to an election the Opposition will bring up issues of corruption—a perennial campaign ploy. People naturally buy these allegations. The popular belief is that everybody is corrupt anyway. People see little acts of corruption every day, all the time; they’re a common part of Indian life. A teacher takes money for grades, a policeman takes money for not charging someone. The assumption is: Why wouldn’t everybody be corrupt—people in high as well as low places?
When the Bofors scandal began to rock India, I plucked up the courage to ask Rajiv about it directly. My whole experience with him was that he was an honest person, free from greed. I never saw him do anything for the purpose of self-enrichment, and I knew him well. I was reluctant to broach the subject. I didn’t want him to think for a moment that I believed he had done this. But at the same time I wanted to hear the truth from his own mouth. So I mustered up my courage and asked him point-blank.
‘Sam,’ he said, ‘I have not taken a penny, and neither has my family.’
Everything I knew about him said that he was clean, not corrupt. As far as I was concerned, this interaction confirmed my very belief. Okay, I thought, the Opposition is using this as a tool, but it won’t stick. The Congress was wounded, so it was probable we would lose seats in Parliament. But in any case we would stay in power.
But I was wrong. People believed the accusations flying around. I realized that during elections, lies sell well in India.