Leo Apotheker | I don’t view India as a place for labour arbitrage

Leo Apotheker | I don’t view India as a place for labour arbitrage
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First Published: Thu, Nov 12 2009. 01 15 AM IST

On uniform standards: Apotheker says much of the healthcare industry is fragmented, which is why it is costly. Rajkumar / Mint
On uniform standards: Apotheker says much of the healthcare industry is fragmented, which is why it is costly. Rajkumar / Mint
Updated: Fri, Nov 13 2009. 04 15 PM IST
New Delhi: Given India’s importance in SAP AG’s global scheme of things, the company is seeking to fill the sudden vacuum following the death last month of Ranjan Das, managing director, SAP Indian Subcontinent. SAP AG chief executive officer (CEO) Léo Apotheker discusses SAP’s strategy in India. Edited excerpts:
Can we expect an announcement on new Indian leadership?
On uniform standards: Apotheker says much of the healthcare industry is fragmented, which is why it is costly. Rajkumar / Mint
First of all, Ranjan Das’s tragic demise was a very sad event and it shocked everyone at SAP. That said, Ranjan has left a very strong legacy behind. We have a strong business here in India and we asked Stephen Watts to step in as the interim CEO. But Steve also has another job—he’s running part of Asia- Pacific as chief operating officer and the board of SAP is looking at all options here in India.
Will there be a revision in SAP India’s growth strategy and will you be adding more people?
We have invested substantial resources in the Indian operations here—India is now the third largest country in terms of employment for SAP, right after our home country Germany and the United States of America. The lab here in India is the second largest we have—more than 5,000 people. We have large education capabilities here in India and while the core of the growth strategy will continue, we might consider accelerating that.
This year, we took a breather to consolidate our presence—let’s not forget that we are coming out of a few years of crazy growth in India, including in terms of hiring. It was also an opportunity to introduce new methodologies such as lean development so that we can become an even better player in this environment. Hopefully, if things pick up in 2010, we can start looking at new hires.
I don’t view India as a labour arbitrage place—that is a fundamental mistake. We view India as a source of very skilled labour so we are looking not necessarily for numbers. Our strategy is to develop high-end capabilities, to use our lab capabilities in India to create complete sets of software products.
How embedded is SAP into India’s SME (small and medium enterprises) sector and what sort of customisation is required?
What we said was that we wanted to have a way more prominent future in the entire space called small and mid-size enterprises. I should make it very clear that it is not so much very small enterprises but more the little bit larger companies, anywhere upwards of 20 employees. We have a 27% market share, which is a good number. And we keep on pushing to grow that number and we are focusing on this segment by bringing a high diversity of solutions. There are many products we deliver to the mid-size market. At the low end, we have SAP Business One—that is a general purpose business management solution. At the higher end, we have a solution called SAP All In One that encompasses the entire management of business including very precise vertical solution. We are also working on a new on-demand business software service solution, SAP By Design and one of the first markets we have targeted for By Design happens to be in India. In fact, a significant part of that solution has been developed by our lab in Bangalore.
Would you consider catering to micro enterprises, say less than 20 employees?
With Business By Design, we actually are going to aim for entry points that are even lower in terms of people actually using the system and I believe that in future there will be a capability that will be made available to try to go as low down as possible. Of course, it is also a fact that certain business processes are not required in a company of one—a single proprietorship for instance. For example, you don’t need HR—usually a company of one knows how to manage its human resource. You don’t need sophisticated accounting processes. But you might need good CRM—customer relationship management or some smart marketing capabilities. In the large-cap space, we have 40% market share in India.
We have also announced a whole new set of capabilities on the analytic side—with high-speed analytics, high-speed predictive analytics, high-speed natural language analytics that are very important for global companies and there’s a lot interest for these here in India.
Which are the newer sectors SAP is tapping into?
Financial services, telecom companies and the public sector, which is also becoming more relevant for us now that the Indian government has announced an initiative to go in for e-governance.
Given the government’s focus on healthcare and education, are you looking at some sort of a collaboration in that direction?
Much of the healthcare industry is fragmented, the standards are not uniform which is why it is so costly. I believe the healthcare industry is going to massively changed by technology—I think it is about to get globalized. For instance, more and more Americans are coming to India to get surgery done. I think we can support some of that though we need to work out how we can support.
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First Published: Thu, Nov 12 2009. 01 15 AM IST
More Topics: SAP | Leo Apotheker | India | SME | Healthcare |