Bangalore: At 62, M. Vidyasagar is returning to the university to teach. Having spent almost nine years as executive vice-president of Tata Consultancy Services Ltd (TCS) and head of the company’s advanced technology centre (ATC) in Hyderabad, he is now heading to the University of Dallas in Texas to teach systems biology. He says TCS decided not to extend his term despite an earlier informal agreement that it would do so. This, despite his team of around 75 people creating “valuable assets”, particularly in the field spanning biology and information technology (IT).
Vidyasagar’s story may well be representative of the approach of Indian IT services firms to research and development (R&D). The numbers say part of this story: In 2008-09, TCS spent Rs43.92 crore, or 0.2% of its revenue (Rs27,813 crore) on R&D; Wipro Ltd spent Rs49.2 crore, or 0.19% of its revenue (Rs25,544 crore); Infosys Technologies Ltd spent Rs267 crore, or 1.3% of its revenue (Rs21,693 crore).
Indian IT services companies haven’t come to terms with R&D, says Pankaj Jalote, professor of computer science, who was earlier at the Indian Institute of Technology Kanpur and now heads the Delhi government’s year-old Indraprastha Institute of Information Technology. “Even services companies need to spend at least 2-3% of their revenue on R&D for branding, problem solving, and eventually to get into consulting,” says Jalote, who’s had a two-year stint at Infosys.
A noted academician whose electrical engineering books have educated generations, Vidyasagar came to TCS after heading the Centre for Artificial Intelligence and Robotics, a Defence Research and Development Organisation lab in Bangalore. Now renamed the Innovation Lab, ATC was founded in 2000 to conduct research in three focus areas—life sciences, security and open source applications.
“I even presented a business plan to TCS showing some of our technologies to be capable of generating $500 million (nearly Rs2,440 crore) in revenue over the next five-six years,” he says, regretting that two of the front-runner products in bio-informatics and digital certification were launched locally, but not marketed globally. TCS neither denied nor confirmed these claims. And it didn’t directly respond to queries on whether it was downsizing its R&D and future focus for ATC.
In an email response, outgoing chief executive S. Ramadorai said: “TCS has very strong global academic alliances and we are very encouraging of employees pursuing their academic interests, be it research or teaching. Going on sabbaticals, pursuing further studies or joining academia is not unusual for the organization, given that we are in the knowledge business. TCS encourages and supports continued dialogue and involvement of such professionals on an ongoing basis.”
“Dr Vidyasagar has a wonderful opportunity at the University of Dallas as professor in the systems biology department. It is a unique chance to showcase Indian academic talent and we wish Dr Vidyasagar the very best,” he added in the email.
Still, even though Vidyasagar is returning to academia, he intends to float a cross-border start-up to pursue and monetize some of his ideas.
Life sciences focus
Indian IT’s brush with life sciences began in the early 2000s, a time when market research firms, including IDC, predicted the global bio-IT market would reach $27 billion by 2005. TCS started its life sciences business in 2001; and Infosys and Wipro in 2002, though the latter restructured its health sciences business within a year and merged it with its global IT services and products, saying the revenue contribution was too small.
Since then, all three have floundered some times and flourished at other times. Yet, the firms insist that the focus is still very much on life sciences.
The companies have found some niches, but are largely confined to offering back-end and compliance services such as data, marketing and supply chain management, and pharmacovigilance. Each serves some of the top 10 pharma companies in the world, even clinching large service contracts, such as Infosys did from European drug maker AstraZeneca Plc in 2008, and TCS from Eli Lilly and Co. in 2006. Wipro’s vice-president of life sciences vertical Vijayanand Vadrevu maintains that this is “a strategic and fast growing segment” for his company.
However, these companies can’t really be said to offer end-to-end services that span science and IT, says Vijay Chandru, chairman and founder of Strand Life Sciences Pvt. Ltd in Bangalore. Being an IBM or an Accenture in this space would be the ideal goal and IT companies have even made some efforts to move from low-value, high-volume to high-value, low-volume work, but there are no visible signs of this, he adds.
In the fast growing bio-IT field, Vidyasagar says IT companies can generate half a billion dollars in revenue if they tap the genomics space alone. He says his team created some proprietary products for TCS, which gets at least 5% of its revenue from life sciences, much higher than Infosys’ and Wipro’s sector earnings. Mint couldn’t independently verify this claim.
Infosys’ head of life sciences division Arun Kumar agrees that the next generation sequencing technologies have a lot to offer. His group has developed a product in this category and plans to add more.
Kumar says Infosys’ life sciences vertical is growing 100% annually, faster than the competition or the parent company’s overall growth. “We are now stepping up investment in life sciences and are looking for a few small and medium-size acquisitions that would bring scale as well as intellectual property.” A firm that would double its life sciences revenue would be an ideal candidate, he adds, and Infosys plans to close one deal this fiscal.
But Kumar admits pursuing high-value work is the way to go. “Our stated goal is to be an Accenture alternative,” he says.
His group is working with a California start-up that has developed a wireless health monitoring system, which recently won the US Food and Drug Administration approval. Infosys is also strengthening its in-house R&D capacity.
At a time when the government and the industry are clamouring for research personnel, trying to attract expatriate talent to build capacity, says Chandru, “it’s a pity that we are losing an exceptional talent like Vidyasagar to a US university”.