A mechanical engineer from the Indian Institute of Technology (IIT) at Chennai and an MBA from the Indian Institute of Management at Kolkata, Srinath joined the Tata Administrative Services (TAS) in 1986. Starting as a project executive in Tata Honeywell in 1987, he moved to Tata Industries as executive assistant to the chairman. Part of the team that set up Tata Information Systems (later Tata IBM), he moved into that company full-time in June 1992. In 1998, he returned to Tata Industries as general manager (projects) and worked with Tata Teleservices, moving to Hyderabad as chief operating officer responsible for the operations of Tata Teleservices in 1999. In 2000, he took over as CEO of Tata Internet Services, a position he held till the Tatas took over VSNL.
In February 2002, when the Tata Group became the strategic partner in VSNL through the government's disinvestment programme, the company had a monopoly in the Indian International Long Distance (ILD) market. This monopoly was terminated two years ahead of schedule on 1 April 2002, requiring that VSNL reinvent its business model and enter new businesses, both in India and overseas. Srinath has played a major role in transforming VSNL from a domestic monopoly to a global telecom major in just five years. This makeover was achieved at a time when the Indian telecommunications market was being de-regulated and becoming fiercely competitive.
As we walked into Srinath's sparsely furnished office, what caught our eye – apart from the stunning view of Mumbai's Mahim bay and the unfinished Bandra-Worli sealink bridge – was his collection of baseball caps and a cuckoo clock. But behind the MD's soft-spoken exterior is a hard-as-nails, hands-on executive who leads by example. When Srinath was head of Tata Internet Services, the employees of the network division of the company gave him a certificate, conferring on him the 'Slave Driver of the Year' award!
We don't know which award Srinath cherishes more, but the work he has put in to give VSNL a truly happy fifth anniversary indicates that he probably will find it hard to choose. In a freewheeling interview, Srinath spoke to Shubha Madhukar and Ashwin Tombat. Excerpts:
Considering that you had to start changing its business model so soon after you took over the company, what was it that the Tatas saw in VSNL when the group acquired it?
The calibre of the people in VSNL was excellent. In fact, the skills of many of the technical people were among the best in the world. If VSNL lacked anything, it was marketing skills. We needed to have a much stronger customer focus and market orientation, and a much greater determination to compete in the marketplace.
VSNL was a government-owned public sector unit (PSU) before you took it over. Government-run companies usually have a different culture and their employees generally have a different mindset from private companies. How did you handle the integration of the company into the Tata Group?
Given the people we had, we were able to handle the issues of integration surprisingly well. It is a mistake to think that all PSUs are poorly run, or that PSU employees are lazy and unmotivated. Just as in the private sector, in the government sector too, there are well-run and badly-run companies.
In fact, rather than overstaffing, we found that there was a mismatch between the skills available in the company and the skills required to take it forward, because telecom technology had changed so much. We had to announce two voluntary retirement schemes, in which about a third of the staff took the golden handshake we offered. But now, the company has around twice the number of people working for it than when we took it over either on rolls or working in various outsourced functions.
You took over a company which handled international long distance (ILD) voice communications for one country and turned it into a global telecom powerhouse – an Indian multinational corporation (MNC) – within five years. Tell us how.
Right from the time we took over VSNL on 13 February 2002, we knew that its ILD monopoly would end before the scheduled date, and that we needed to move into other businesses – and to take our business international – to grow the company. All our measures towards business diversification stemmed from this. Our first international acquisition, in 2003, was the business of a small company called Gemplex in the US, which enabled us to enter the business of Internet Protocol-based Virtual Private Networks (IP-VPN).
But it was our acquisition of the Tyco Global Network (TGN), starting in 2004, which really enabled us to take this India-centric story to the global stage. Tyco had a 60,000-km submarine cable network linking UK to the US across the Atlantic Ocean, and from the US to Japan and Singapore across the Pacific Ocean. It also had a terrestrial cable across the US and two small rings covering northern and western Europe. Coupled with our own submarine cable from India to Singapore and capacity on cables from India to Europe, the TGN gave us the ability to provide high-speed connectivity to all the major countries in four continents.
Our takeover of the Canada-based Teleglobe, a leading international voice player plus a major service provider to ISPs and mobile operators, has catapulted us to become the third-largest global voice carrier. Today, we have operations in 30 countries, 25 per cent of our employees are based outside India, and nearly 60 per cent of our revenues come from our international operations. We have more than 1,400 wholesale customers and over 5,000 enterprise customers. But we are not relaxing as yet. We are not going to close our eyes to any opportunity, whether in India or abroad.
Even though so much of your business is located in the United States and Europe, VSNL has established its international headquarters in an Asian country – Singapore. Why?
Locating our headquarters for international operations outside India was more to maintain an "international" flavour to the business. Singapore offered several advantages such as proximity to India as well as legal flexibilities and tax benefits.
What is the direction you are moving in; what does the future hold for VSNL?
Traditionally, telecom companies have been infrastructure providers. Our core offering is bandwidth, which is used to connect locations. It's like a gigantic pipe and this pipe is becoming a commodity.
We now want to move beyond that, to a value-driven market where our customers begin to buy our services based on their value, not just on their price. Today, industry is looking up, and the enterprise market is growing fast because of the networked business environment. Enterprise customers are increasingly looking for a single partner that can offer them both IT and telecom solutions. Partnering with Tata Consultancy Services (TCS), we are getting into managing hardware, software, networks and applications; into managed services.
Apart from that, we are also looking at other geographies. Already, we have a significant stake in the second national telecom operator in South Africa, and we run ILD operations in Sri Lanka.
How has being a part of the Tata Group helped VSNL in this five-year journey?
Had it not become part of the Tata Group, none of this would have been possible. Being a Tata Group company helped enormously in the transformation of VSNL. All our acquisitions have been made possible only with the active assistance of the Group. We have an underlying set of beliefs, values and culture that sets us apart from other corporates. I am able to draw upon the resources of other group companies. I have TCS to help me with IT, and Tata Teleservices (TTSL) to help me with domestic wireless networks. I myself came from a Tata company, and I have been able to bring in people from other Tata companies into VSNL. Strategy, people, skills, support… It has been extremely beneficial to work under the umbrella of the Tata Group.