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The OG EdTech Founder | NIIT
If you think that pioneers of the Edtech revolution in India are Byju or Munjal, then you would be sorely mistaken.
The Edtech revolution in India actually started way back in the 80s when some employees of HCL tech could foresee the coming IT services revolution and decided to build a business to prepate the talent India would need for this revolution.
In this very special episode of the Founder Thesis podcast I am in conversation with Rajendra Pawar, founder and chairman of NIIT Limited – the OG EdTech startup of India.
If you missed the engineering express in the 90s but still craved an IT career, NIIT was the education station you couldn't miss – and Pawar was the visionary leader behind it all.
Pawar takes us on a journey through his multi-decade experience of building NIIT into the giant on whose shoulders many of today's startups stand.
He talks about building a global training platform, taking a company public, and cultivating a customer-focused culture. This conversation is packed with the kind of insights that take decades to learn and will help any founder looking to build for the long term.
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Read the complete text version of the episode below:-
[00:00:00] Rajendra Pawar: My name is Rajendra Pawar. I'm the founder and chairman of NIIT Limited, which just completed 41 years.
[00:00:07] Well, we created NIIT in 1981 which was as is characteristically called the closed economy pre-liberalization, a whole decade before liberalization. As, so passing out from IIT Delhi, quite obviously we didn't have the, pre-placement talks or in campus placement.
[00:01:48] I remember in my year, only two companies came. So the idea at that time was you'll finish your degree, and then start looking for a job, which is what I did.
[00:01:56] And joined L&T So 72, I joined L&T then soon from there to DCM as a management training, which was very useful. And those were sought after very difficult to get into jobs. And then few years down the line, I joined HCL In 76 I joined HCL . Which was the entrepreneurial company for manufacturing computers that time, which had been set up by a senior of mine from DCM Shiv Nadar.
[00:02:20] But I joined a year after they set it up. So four years there. And then while at HCL , you know, I had, we had the luxury in those days as a young company to choose my title, so, and then, and I said, okay, I'll be corporate planning manager. My, I wanted to see how planning gets done, how we integrate all the functions of management because as somebody's starting up a regional operation, I saw so many missing pieces, and we had to work directly with the research group and we had to work with the marketing team.
[00:02:47] So I said, shouldn't we be a little more organized? Shouldn't our planning be a little more organized? So I chose to come into head office and, and set up the Office of Corporate Planning, which actually involved, right from thinking about the new product, talking to marketing, getting input, then talking to the research group, talking to the software teams, and therefore creating, we created the first, um, 16 bit microprocessor based disk based computer in the country.
[00:03:12] So I had the opportunity to work in the center of all the functions that were going on. And while doing that, actually I was reading extensively. I was, I was looking at what's happening all over the world, traveling to conferences, on computers, used to be something called the National Computing Conference, NCC of US that used to be the big event well before whatever else happened.
[00:03:31] And so the opportunity of the world computerizing was very obvious. The pace of it was obvious. And particularly for India, which was still kind of a closed economy, the promise of computers making a big difference was huge. And sitting in the corporate planning function, looking at the usual strengths, weaknesses, opportunities at the formats of how do we plan, it was becoming very clear that while the demand for computers would be very high, the constraint would be the people who have to program, the people who have to drive computers. The people have to use computers. And not only that, even the chairman, the board of companies, you know, had the question, what do I do with computers? So the gap of understanding what to do with computers and the absolute absence of skills to me was appearing as something which would constrain the growth of the company.
[00:04:21] And you know, threats are, opportunities that are in disguise. So these constraints are opportunities, challenges are opportunities in disguise. So that was the genesis to say, well, if this is such a constraint to the growth of the IT industry, then shouldn't one do something about it?
[00:04:37] You have to, it can block the growth. And I think that was a germ of the idea and so we set it up and we did rent, not a garage, but there was a small consulting firm, which also was someone we knew.
[00:04:48] So we used a part of their office for a few months before we rented a place in Delhi, so initially I had to find a partner and, so my batch mate, Vijay Tharani, IIT Delhi, who was who had joined the Tatas. He had worked in Nelco with Mr. Ratan Tata briefly before he went to join Keltron, the Kerala State electronic operation, which was into power management, power systems, and distribution and power control. When I was in Bombay in HCL , he was running the Keltron operation for Western India. So we caught up after a few years almost five years after passing out, and we used to just compare notes.
[00:05:28] And then I moved to Delhi in 79. And when I was thinking about this idea in 81, then I told him that, I said, look, this is what I'm thinking about. So would you give up your job and come, he says, I don't know what you're talking about, but I'll come and we'll start something, whatever. I had taken a look at the role of technology in learning because it was very clear that if there aren't people in this field who will work on computers, they're not going to be teachers who can teach these people.
[00:05:54] I mean, the, the root is, you know, where is the fountain head? Where are the teachers who will train these people that they didn't exist? And those few who were there had been pulled away by the large computer companies, a handful of computer companies there. So the question really was, if you have to solve this problem at scale, we will have to lean on technology, As, as engineers, we were thinking about that, and I'd had the exposure in these conferences to take a look at the rule of video in learning; video assisted instruction as it was called.
[00:06:19] And I had experimented with that in 81 itself. So anyway, it's a long story of how we conceptualized the pedagogy, but basically we launched in 82, company was founded December 81, second December.
[00:06:32] And by then Vijay had had to leave Keltron and join, and we decided we'll set up the first operation in Bombay, being the center of everything, all commercial activity and Vijay was located in Bombay. I had, I had moved to Delhi and then we, the, the third important person to join us was a junior of ours from IIT who I didn't know, but who was working in Keltron with Vijay, 2 years junior then, Mr. Rajendran, Raju, as we call him. So Vijay motivated Raju to say, look, you'll probably have to now, and he was posted on a Keltron project in . And so we got him to be in Bombay for some time. And our idea was that we would do Bombay and Delhi and Chennai as a third place. And so the idea was that he would move to that place whenever we set it up.
[00:07:18] Because in the, in the course of 82, we started in Bombay, then Delhi, and then Chennai.
[00:07:23] Akshay Datt: How did you find three cities? you know, every city would need you to rent, rent meant some upfront security deposit and all of that, and.
[00:07:32] Rajendra Pawar: So this was all from savings. It wasn't big money that time.
[00:07:35] And then as I told you, some people starting with Shiv Nadar were also funders. Arjun Malhotra many of those people, but for small funding. But the thing you have to remember is in education, it's a positive cash flow activity. See you, if you, you have your kids in school, you have to pay the fee before, so you can't say, I've studied for one year now I'll give the fee.
[00:07:54] So education is a positive, money come before the expenses are incurred. And so that has been a very important factor nowadays, people have to blow up, you know, millions of dollars before the first piece of revenue comes. We neither had the luxury, thank God we didn't have the luxury.
[00:08:10] Because the necessity, you know, gets you to think about ideas. So negotiating the terms of everything, and even when we started doing corporate business, telling companies to pay upfront for training was not easy. So it didn't need too much. But we did have to take loans. We did have to, and the early banks Indian Overseas bank was one of the early banks. The, their, their executive director had visited when we launched NIIT, it was in Computer Society of Indian Madras, Mr. Soni, he came and he, at that time we had launched NIIT as as an idea whose time has come.
[00:08:42] That was our presentation. Okay. So he met us. At the end of it, he says, I'm an executive director. We are looking at new things and you people are doing something interesting. So then with some assistance of people who were in the finance function, we went and met him. So they stick the, they stuck their neck out.
[00:08:55] They, they said, this is a project that needs to be supported, small amounts of money. And in, in, in few lakhs, it wasn't in few crores. And then somewhat later with ICICI and Mr. Kamath, it was one of the first loans he was involved with. And and, and and that relationship holds to this day. I mean, we'll talk about that even when we did the joint venture with ICICI bank to do the financial training in 2006, 25 years later.
[00:09:21] Akshay Datt: So, tell me about the products you launched and what kind of pricing you had, how you were selling it what kind of response you got in terms of how much revenue you were able to make and all.
[00:09:31] Rajendra Pawar: So, when we launched the first programs in Bombay, not even point in early 82, we launched two courses.
[00:09:41] Akshay Datt: Okay.
[00:09:42] Rajendra Pawar: And one was on the basic language. It was called entry level basic. Okay. And we call that a short term course because that was, I think, four weeks long. Okay. And they were aimed largely at students, so we had to keep our time windows. It was two hours a day slot, and we had slot throughout the course of the day.
[00:10:01] We didn't know which one would be popular, but we knew that post-college, post classes and before classes will be popular. That was a four week course. And then we had long-term courses, we called it, which was 12 weeks at that time.
[00:10:12] Akshay Datt: Okay.
[00:10:13] Rajendra Pawar: So long-term for us. And then we were teaching people cobol language. So the, the need was for computer programming languages. That was the need. But in building up the, the idea of these products, we were quite clear that not just programming, it has to be the foundations of data, foundations of the programming logic. And as I mentioned, we started using videotaped instruction material from, from the US.
[00:10:39] There were basically two companies who competed intensely at that time. And one of them was called advanced Systems Incorporated , ASI. They had outstanding content on video. And so we, we looked at, they had a re- huge library of videos and they used to actually rent it to companies in the US. So we made an arrangement with them.
[00:10:58] Interestingly, the arrangement happened because in, when I was in HCL looking to solve this problem, I had looked at this material because in the same area where HCL office was in Nehru place, there was a little, a one-man shop set up by one-man company set up by the ex EDP manager. Now it's called CIOs of ICICI, Mr.
[00:11:18] Udham Singh. And after retirement, he had, he was very interested. He was a avid reader. He'd got an agency for a few things, and one of which was these videotapes, but he didn't know how to go about. So I had seen this when I was trying to look at how to deal with the problem. So the, we started this company with an acquisition.
[00:11:35] We bought his little company. Yeah. And the little company basically meant some distribution rights, but more than that, he had stocked some of these programs. So then studying this video instruction, which had started doing early 81 and 80 actually out of curiosity became clear that there was a huge repertoire of stuff.
[00:11:53] So putting together a series of modules to construct that, four week program and then a 12 week program. And we also realized quite early on that the accent would be a problem for our students. So we realized that it's not gonna be enough to put a video. And, and so we learnt quite this even before when we were testing, we did some testing.
[00:12:14] We learned that people have many questions, and so we said, okay. And some pertain to, okay, I didn't understand that. Or what did he say? Something, something like that as well. So we decided that we would build con, we build material to support. So we had to make, we had to build, we built very good manuals. We call them student guides.
[00:12:31] And then we would've a coordinator guide. We, by the way, we never used the word teacher or faculty in our history. We were not in the education or teaching business. We were in the learning business. There's a very, very important difference. As we learned at that time, and we've been trying to say that in the teaching business, you focus on the teacher in the learning business, you focus on the learner and they're two different things.
[00:12:54] So even the, the literature on the subject had started talking about learner-centered, you know, the science of the subject, the science of pedagogy. And so it was learner centered, objective driven learning. What now is called outcome, outcome based. At the end of this module, you should be able to write 10 lines of something in one hour with so many defects, less than so, so it was measurable outcomes, but was learner centered.
[00:13:19] So we had the video instruction, we had a coordinator and we had a learner. So there was a coordinator guide book, there was a student guide book and there was a video. But soon we discovered that video was not enough. And those days the overhead projector had just arrived on the scene. Okay. Looks archaic right now.
[00:13:37] But today, at that time with those plastic foils. So we, our classroom had the video, it had an overhead projector in the screen. It had a whiteboard. It had students with their learner guide, student guides as we call them. And we had a coordinator with the coordinator guide. And so, so we defined the pedagogy that you first have to see the video, then you have some exercises in the student guide, then the coordinator will pose some questions, then you work as a team and then you go to the computer room.
[00:14:04] So for us, hands-on was key. This is what we started off with the four week and 12 week course.
[00:14:09] Soon, people trickled in and we had a batch of students and we had restricted the batch to 24. Never more than that. Because that I think was common sensical that large class, class small class.
[00:14:20] Akshay Datt: But how did you spread the word? How did those 24 students come in?
[00:14:24] Rajendra Pawar: Well, we put in an ad. We put in an ad. We put in an ad. Yeah, we put it in ad and when we did the tests, we did a small ad, by the way, those were the days of full page ads. We could afford even, we could afford a full page ad. But of course that was a big investment. And then we, and and we figured that, you know, students our early, early thing was that, well, students who had have done a degree and they're waiting for a job, which was true for even the IT guys that time around a little before that it was a situation.
[00:14:52] No, no campus placement. No, early nowadays, people go six months early and so on. So the ad which we put the message was quite a simple one. It said, if you have a college degree and no job, this ad can change your life. That's the ad. Okay. Now, two years later, we actually had to do a huge correction, but I'll come to that later.
[00:15:09] But this was a proposition, so I think just the sheer size of the ad, and we used very creative people to do our advertising. So people came, but I think what worked was that these, the, the whole setting of our place, the intense focus on learners, and I will talk about the people dimension of everything.
[00:15:27] Because we were the largest recruiters of MBAs in the early eighties. We just wanted the best talent. And so we had this bright young MBAs from the IIMs and focused on, on this whole new method of learning, which is exciting to everybody. And we built a very strong capability to, I don't want to say research, but to do development and testing and, and new ideas and new methods.
[00:15:51] And for us, you know, understanding the process of learning was, was not technology, it was science. And so, so how to design instruction that works. So many things we learned, we'll see if they come up for discussion later, but so what happened is that the word started spreading. The ads were quite responsible for things.
[00:16:09] And quite quickly in Bombay we figured that people did want to learn this subject. There was curiosity, but more than that, the learning method was so different from what they were used to. And they had very young people teaching them. And people very keen to help people learn. I would say very, very obsessed about seeing the outcomes.
[00:16:28] And so, it started I think it started picking up by word of mouth. There was no internet then, but all these, many of these were college going students, even though we said, if you have no job, you're college going students And then more, more came. And then we started seeing people coming from companies . So someone came and then their EDP manager came and said, I have more people to train, so so they also sent a few people. So I think the people saw the value of it quite quickly. They found the environment of other equally eager people trying to learn the cohort they were young, you know, bright people and we used to do an aptitude test from day one.
[00:17:02] We were quite rigorous. We'd spent a lot of time. Yeah, So we are looking for aptitude. We are not, we looked at how they have done in school, but our, our thing because by then that I had learned in HCL also that an aptitude for programming has nothing to do with maths and physics and chemistry, first of all.
[00:17:17] And it took us a few years to prove to the world that you didn't have to be mathematics to be a brilliant programmer, but we proved it with then with ample evidence. It doesn't matter whether you're a boy or a girl, didn't matter what subject you had studied, if you had the aptitude. So we had invested a lot of time to figure out how to assess aptitude.
[00:17:32] We'd looked at all kind of tests from all over the world to see how to judge aptitude. And then we also realized that those who were doing a short-term course, many of them said, now we want a long-term course, but not everybody said. So that shaped our thinking that we have to be careful not to, that there should be multiple exits that shaped our product thinking over a period of time.
[00:17:50] And we had long-term programs said, okay, sign up for a semester if you want, and then some people could. So then we had the whole highway model of enter anywhere exits at different points, multiple entry, multiple exits. So all these were based on the immediate customer feedback.
[00:18:04] Akshay Datt: When did corporate training get set up? In the eighties only?
[00:18:07] Rajendra Pawar: Yeah, it was all in the eighties.
[00:18:09] In fact, it was quite rapid. We were working 18 hours a day, so it was like three shifts. But each one doing three shifts. So it was exciting time.
[00:18:16] Akshay Datt: Like, like give me a summary of what all you achieved in the eighties, like.
[00:18:20] Rajendra Pawar: So we, a lot happened. So we started these three centers and we opened Calcutta, then we opened Bangalore, then we opened Pune.
[00:18:28] And quite, quite, quite early in the business, we realized that we were onto something very important because there was a demand for it. And of course we realized we'll have to scale. So in addition to doing much more development of our own, because the video tapes were helpful, but they had constraints.
[00:18:45] So by then we started building content. We realized it'll have to build a lot of content. And then we hired again a few PhDs from IIT Delhi, my alma mater. We started interacting with thought leaders on the subject in the US and Europe. So the MIT, MIT had a center for information systems research, and the Oxford University had Oxford Institute of Management.
[00:19:05] So these people were experimenting with what to do with information systems and information. It wasn't as much technology. And we were immediately realizing that the, the among these segments that were opening up for us we said, do you have a college degree and no job is where we started. and soon it became, you know, people who were studying in college as well.
[00:19:24] And soon it became people who were working. And soon it became the chairman of companies who said, look, my company wants to do something. So we started looking at these as segments to deal with, and the, these segments opened up quite rapidly. I think within the first two years, we had done a program for the Indian Oil Chairman and his executive directors, and he just had come back from abroad he said that everybody's using computers, we are using, you guys are doing something, tell us.
[00:19:49] So we had an informal chat and became, and then we, we designed much later, we designed a program, a two day program for senior management. But in, in, in terms of evolution of segments, to your question, in two years later, we came to a very important conclusion. We said, A college guy who has no job, is he the smartest guy?
[00:20:09] Shouldn't we be looking for smart people in college? We go upstream. And one of the very bright youngsters, youngsters who joined us, from IIM Calcutta he worked, used to work with me as product manager, we say. And he, he was very instrumental in getting us to rethink that let's not look at the college kid who doesn't have a job.
[00:20:27] Let's look for the smart college kid who's still in college and has enough time and has the intellect to absorb some more and is curious. So we started at that time what we called the dual qualification scheme, that while you are in college, you do our programs. Now, that was a game changer because suddenly we had to then start going into colleges.
[00:20:45] So there, the ad wouldn't work, college kids don't read newspapers even then, then we started going into the colleges and doing many different kinds of events. So we would, for example, We would just say, okay, we're gonna give a a talk and we'll give a quiz. And whoever tops gets a free course.
[00:21:01] Now, kids love to compete. I mean, that we've known as children. So they would all come and compete for the who's first, who's second, who's third. And most of them came to do the course, but some were doing it for the heck of it. So within colleges also, this whole thing of computers was getting hot because colleges didn't have computers and they were beginning to see that computers are coming in, it's being talked of.
[00:21:19] And so this attachment to institutions of higher learning which then became even institutory decade later with schools as well. But that became a very important change for us. That was one. Second is the interest started coming from smaller towns, and then we realized that we either have to, now this is all in the eighties, I'm talking about the eighties.
[00:21:40] So first thing was quick response to newer segments, recognition of the different segments, preparation of products for these, which were very distinct. And and then the fact that computer time was a real problem, so we realized we had to maximize that. And then this whole need emerging from many locations, even young, some people coming and saying, we want to why don't you start NIIT here and so on.
[00:22:02] So this last point was very important for us because we were very clear that in the service industry between the customer and the key decision maker, between the customer and the key decision maker, you can't have too much of a gap. For example, if you, your favorite restaurant, if you go to the owner comes and checks up, how's stuff going?
[00:22:20] Because he can take the decision which make a difference in services. So, so Habib the, the haircutter when people say Habib nobody else. Then he, even when he built his franchises, the problem was he couldn't be in so many places. So we realized that we if we started building layers of management, management between us and the guy who runs the center, we lose it all.
[00:22:42] So we said, how do we retain the entrepreneurship at the point of contact? And that is how the idea of creating business partners was, we never used the word franchisee, because that's in literature, that's an adversarial, adversarial relationship. You know, we, the whole idea of partnership, I was telling you earlier as well, they're important, so we said we want business partners who do this. Like we are doing it in the big cities. So if Vijay was based in Bombay and I was in Delhi and Rajendran was in, and then these young, bright young MBAs were in different places, we said that there's a limit to how many centers we will be able to run without having an entrepreneurship element. So we started this idea of setting up centers in partnership with like-minded people.
[00:23:26] And this is also the time when we were realizing that we had to rewrite a lot of the content we can't depend on, because India was interesting at that time, our, our, our new computer companies were working with micro processors at the same time as Bill Gates was not the mainframe companies. Right. So India was quite ahead at that time.
[00:23:42] So we said that if we have to set up centers then we want, first of all, we want to maintain the standard. So we, we knew that, you know, NIIT should stand for something and be consistent wherever you do it. That was very important, very clear, very clear to us. And second is that we need someone who we can trust at that place and someone who will deliver to the quality.
[00:24:01] So we, when the, even within our own expansion, we realized that processes had to be good. It's not a machine. We are in the services business, we're not, you can get a good machine, put good raw material, the same stuff comes out, but in services, you know, it's very different. So we said now, okay, what kind of people do we need?
[00:24:17] And how do we make sure they will do the right thing? So we had got under the ISO process even before we thought of this so international standards, but the process, documenting your process to the last level of detail and training people and measuring and all of that.
[00:24:32] So the processes were falling into place and as engineers, we had, you know, we were accustomed to that control engineering. So then we said fine, so we can put processes together. But we, we said, fine, we'll also design the layout of the place. Any center should have the same look and feel. And so the color schemes and the kind of furniture and the kind of equipment.
[00:24:52] So we said the bill of materials is very clear. The drawing layouts are clear, but of course it'll be different places. So then each one, each office that we went to, we found different office, but we had the same architect helping us to figure out and same central team looking at that. And then came the question of what kind of people should we find?
[00:25:08] And we made, again, a very important decision. We said, all the big cities have youngsters coming from small towns looking for jobs. And so the guy belongs to Meerut, he's got a family bungalow, he's got everything, and here he comes and lives on on a paying guest, or barsati in Delhi as call it. So we said these guys are bright, they've gone through education, they come to big companies, which are in big places.
[00:25:32] So among them, and so they, they'll know systems, they'll know processes. They, they'll know standard. They have you know, they have not shooting from the hip. And we said among them, we have to find people who want to try something of their own.
[00:25:43] And that thinking was very useful. We've picked nine people in the first year, 86, 87, and handpicked and did extensive work in those cities to make sure that they have to take ownership for that city ownership to get the right students and their responsibility to, to run the program. By that time, we were doing a six month program as well.
[00:26:04] So the products were coming out and responding to needs. We were trying to structure them into, okay, this is now a three month program. And then we had another three month model, become a six month program. And as we came to the end of the year, we had got, you know, a one year program. So we had also had to start thinking about how to structure these products to make them meaningful.
[00:26:24] And so when we got the first set of business partners, we also quite quickly realized a couple of things, which came in very handy. We said, how do we make sure this guy doesn't compromise on quality? So it struck us that if these guys are bright people who've worked in big cities and go can go back to their home, their parents would be happy, they'll be happier, but they won't get that job.
[00:26:44] But maybe they have an itch to do something of their own, but they don't have the, the risk-taking capacity to do it on their own. So this, we started thinking is an ideal person for us. But then we also found an interesting thing we said, because there's a huge demand at that time when we went to a city and then hundred people would apply, or not hundred, but they said 20 or 30, then we would do, get them to do a study.
[00:27:03] We give them a little format study. Is there a demand? So we trained 15 people or 20 people in the city. Then we narrowed down to five or six. Then we gave them a, you know, it was called a business information brochure one, and which was just, okay, how many schools, how many college, how many people, blah, blah, blah.
[00:27:18] And then we looked at those people, heard them out, and then took three or four or five who said, look promising. Now let's look at their family background, look at their ability to invest because they'll have to now invest. So your question about investment, we were looking for people in our, in our mold and therefore they should have the ability to invest in, in their center.
[00:27:36] And then we said that give them the business information brochure number two, two, which was very big, which was detailed. It gave them a lot of the stuff of what we were doing. So in fact, we were giving a lot of our know how away, but we said we didn't think of it then. And then we had to choose one out of the two or three finalists.
[00:27:52] And, and I can recall that for the many years, it used to be a real problem for us because there were two or three very good choices. They were so emotionally involved by then. And we said we can only give it to one. And but that time then we said, okay, one criterion, which is important, is that look for a person from a family which has a reputation in the small town.
[00:28:09] Because that's our best check for quality, the father will not let the son cut corners. This was very important for us, and it's not a surprise that many of them got then recognized in their cities and states as people who've contributed to digital literacy, to job creation. And all of them, I can say the early phase, at least the first five, six years of partnership went on to do exceedingly well in life.
[00:28:32] Children studied wherever they want, went abroad, do whatever. And in fact, that posed for us a problem much later of succession of these partners, and I'll come to that later. Some way was a plus some ways was a minus. But, so this partnership for us, was key I was making that point. And we had realized that, in fact, when we started NIIT we had to make this student guide and coordinator guide.
[00:28:52] We needed to get them printed. And so in our team, the third person Rajendran and then there was the fourth person who joined us later, a couple of years later. So Rajendran is the, is the perfectionist of the lot, so his, his task was to make sure that this stuff is to the last level of detail. And so making the booklet, making the folder, you know, making sure it's zero defect and perfect.
[00:29:14] In fact, even now, when I met, I met somebody recently who says I still have the folder. I started with that in 86 or 87. I still have it, it sits in my desk. So anyway, so we had to then find a printer. So we went to the big printers in Delhi and they were not too excited about this bunch of guys coming. They wanted to print the Bible, they wanted to print big things, 10,000 copies.
[00:29:36] Akshay Datt: They would have some minimum order quantity.
[00:29:39] Rajendra Pawar: Yeah. We found someone behind South Extension, maybe a 10 by 15 shop of three brothers who were starting a printing business who now are, by the way, north India's biggest printers. It remained with us when we went to ISO Raju told them, you be ISO otherwise you won't work with you.
[00:29:54] So we forced them to keep moving up and I think they followed processes, they followed the sensitivity to quality. And so if, when I'm talking of partnerships, every one of our vendors, we, I never differentiated between the respect you pay to a customer and the respect you pay to a vendor, which is I think a very common weakness. The customer, please come in, it's a supply, just sit outside. That to me was, was not human, humane thing to do. I think in 84 or 85. We were the biggest recruiters of MBAs from, IIM Calcutta we 19 people majored in systems that year. And professor Ram used to be director there. Then we hired 18 of them. IIM Calcutta, but then we had got into working for large companies and they said, no, come and help.
[00:30:35] So these large companies, public sector in the beginning and then many others, they just said, you've taught us for two days now help us plan out. So we got into consulting practice and the fourth person in our team, Arvind Thakur, was IIT Kharagpur 75, he joined us in our, in our third, second, or third year. But I call him a founder. He's in that sense.
[00:30:55] By the way, another, another first in our industry, the same set of people who started are still intact. Can't find another company with that. And again through the same issue of relationships and, and partnerships. So Arvind was the only one among four of us who had written the line of program because he, after he is doing his studies, he went to industrial engineering at NITIE and then joined BHEL He was a program in BHEL.
[00:31:16] Then after, soon after that, he joined us. So he in fact, eventually became the CEO of a software business. He set up the software business, but he was working with the CEOs and they would say, why didn't you help us do an information system plan? And so the, the guy who had sent one young employee to go and do a course at the NIIT center and saw this guy doing stuff, he said, some more have to come. And then he told his boss that looked let's, and then the boss, some of the guys at the top said, okay.
[00:31:42] People at that time, the CEOs of companies were going and working with their partners in the US and Europe and saying, bloody hell, they're far ahead. We have to do something in computers. So that demand was a latent demand. And that time we used to go around to the big cities and do what we called as an equivalent of fireside chat, call in 10 or 15 CEOs and have an evening chat with coffee till late afternoon or drinks in the evening.
[00:32:05] And we we had a brief session called Top Management Imperatives for Computerization based on all the studies done all over the world of how management has to get involved or doesn't get involved. So we'd give them an evening, one hour session. And many of them would say, look, I think I need it for my whole team.
[00:32:20] And then we designed that as a two day program, morning till evening. And I would say that, you know, even the CEOs of the largest companies at that time sat in and they were accustomed to coming for an hour and starting the seminar and going away. And many stories, we don't have time. But Dr. Irani was head of Tata steel and his head of HR told him that, look, we have to do this program.
[00:32:40] Many, many companies are doing it to get your board. We're going from a mass scale computerization. So they said, we'll, he sit for an hour, he won't sit more. But he sat through both days and first day night he said, please come and chat with me. And some people, I think what you guys are making saying is making sense.
[00:32:54] Because they have to do mass scale computerization. We have the labor issues we have, so they were surfacing issues, I would say we were responding. So we said, fine, this two day we will do. And then many of them said, fine, it's very easy for you to come and tell us, teach us now why didn't you help hand hold us?
[00:33:09] Arvind Thakur then took the responsibility to build a methodology for consulting, which is where we started information systems planning as it was being taught in the best institution in the world. And we would invite people to do lecture circuits and learn from them. And so we built a methodology called critical information system planning, which would help companies board port a three to five year IS plan with budgets, target structure.
[00:33:31] There has to be a CIO, there has to be a department. So this was all happening in the eighties, second half of the eighties. So we started with consulting before we did software development.
[00:33:39] And so now at this time it was still integrated. There were people who were doing the instruction, they were coordinator of the learning process, they were also consulting. And these are a lot of these very bright young people coming out of IIMS with their textbooks of what, what's the latest literature.
[00:33:54] And then sitting with this chairman of Indian Oil and reading the book on the Sang says, you know, it was taking knowledge to practice. And I have to say, our customers were really, really supportive and fond of us. If you can say, we told them, look, this is new. And they said, right, we know it's new, but we trust you guys.
[00:34:09] And I think that has stayed with us through, I mean, last year, for example, last two years in an international business where we deal with fortune hundred companies, we had this hundred percent customer retention. All of our, you know, the, the, the Unilevers and the Rolls Royces, all of them continue with us.
[00:34:25] So I guess it comes back to the question of the people equation and the trust and and partnership.
[00:34:31] Akshay Datt: You said that video you wanted to replace the, the video instruction format. What did you replace it with?
[00:34:37] Rajendra Pawar: So, in 84 along with IIT Delhi, which is my Alma Mater, and with the panel which had the who's who of computer science in those days, Dr. Sheshagiri being one of the early youngsters at that time. But elders also people who were, had been head of Thedo, we held a conference called Computers in Education and Training.
[00:34:57] So 83 come at 83, we, we did that in IIT and we were pushing for the use of computers in learning at that time. And the very first conference of that anywhere happened in 84, in the US which I attended and did all of them presented papers. So we had these very, very bright people, as I told you that many of them were IIT, IIM types large measure, pushing the foundations of knowledge. We had a brilliant guys, two brilliant people who came from IIT Delhi PhDs, Dr. Sugata Mitra got Ted Prize recently, who also did the hole in the wall experiment in 1999 to show that what if you have no teachers that that research, we did call hole in the wall because outside our software facility was a slum.
[00:35:37] And he pretty much made a hole, stuck a computer with very good touch sensitive screen and mapped it in the lab to see if you have uninitiated kids who are not even going to school, how do they learn? the, the theory is that we build on what we learn before, but if you have groups of constructivism is the knowledge is the term that you construct. But collaborative constructivism is what we coined by saying that if you give a bunch of kids uninitiated kids, a device which has a touch sensitive screen and is connected to content like the internet, then they'll find a way to learn.
[00:36:07] They'll co-teach. So that was the hole in the wall experiment, which then became very globally very important. And right now we have a foundation NIIT foundation that already runs a thousand of these kiosks in the rural parts of India as CSR activity. Because there, the question we were asking is earlier we've said, okay, we found in the eighties we found a way to find teachers and coordinators of the learning process,
[00:36:29] Then when the scaling started to happen in, in eighties, nineties, when the, we finally went,
[00:36:34] Akshay Datt: how many uh, centers did you have in nineties? Like by the time you
[00:36:38] Rajendra Pawar: 40 countries, 2000. No, by the end of the nineties, 40 countries, 2000 learning centers, which then shrank in the next decade because of colleges teaching it school, teaching it, and people didn't have to spend years learning a programming language.
[00:36:50] All things happened. But in the scaling up we were posing newer questions. So our, the RnD center, which we had had joined the board of IIT, around that time, my alma mater. So we were trying to get the industry academia linkage thing happen. So I really nudged our board at IIT Delhi to get some startups in the campus.
[00:37:10] So we built a new building called Synergy, that's the name I gave it. And we said, couple of floors have to be startups. So we took a floor to set up the NIIT R n D center. We moved it from Nehru Place. And later on, by the way, when the university was formed, that was a gift from NIIT limited to the university.
[00:37:24] The whole research team went to that not-for-profit. So Dr. Mitra and co were always pushing the limit on so by then we were saying, okay, we are now finding a way to get coordinators to the learning process. But what, what if you don't even have a teacher? So the digital divide question was posed to us actually little later, late nineties.
[00:37:44] Which then got us to create a line of business, which was working within a, in a public private partnership, one of the first and very successful ones with state governments. We would do a build operate transfer project for schools. And, and we started the project in 1999, did it for 10 years, where at peak we were in 26,000 government schools in most states in the country.
[00:38:06] And we would sign a contract to run and we would say, in your government, will this school give us a room? We will put the phone line. We put, you know, hundreds or thousands of phone lines in places which didn't have phones. We got a generator because some place is very hot. We had to have an air conditioner.
[00:38:20] We did the civil work of the room. The doors and windows were broken. We got the furniture. We put an instruct coordinator, we gave them course materials. We built course materials in multiple languages. And that was actually a digital divide thing. 11 billion people, children were trained in, in that decade as a public private partnership thing.
[00:38:38] So we said, okay, now this we are doing, but simultaneously, what about children who are outside school? And that led to the hole in the wall research, which basically said that if you give connected devices along with some structure and content, and with easy to use screens and let a young group of children self-organize, Sugatha was proving that the people didn't have to come to the NIIT classroom.
[00:38:59] He was telling us, you guys will be out of business, because and we said, keep pushing. We have to obsolete ourselves. So the, so there was a continuous improvement. So for example, in the, in 1990, I remember the biggest challenge used to be computer time. So we introduced something called unlimited computer time. So in new Delhi in connaught place, we rented a huge place.
[00:39:18] Which had about 150 computers. We called it computer DRDO, like a cyclo DRDO or, and there were, and we did that in, in Chennai. We did it in Bangalore, in Calcutta . We couldn't do it in Bombay because you can't get that space. We did something else in Bombay. So the computer drone was a place where every student was entitled to unlimited time.
[00:39:36] So from your learning centers all over Delhi, you took time, but when you wanted another 10 hours and you want to work in the night, twenty four by seven, this is working. So we broke this myth of limited computer time and in Bombay we had to do something else. So we did something called carry pc. There was some person who was trying to make a portable little computer, low cost.
[00:39:53] And so in Bombay we announced that, that if you join this course, you carry a PC home. And we, we encountered a credibility problem. People said, come on, yeah, people don't have computers, are you kidding me. So it was, it took time to convince people. You said, they said, you mean I can take it home? I said, yeah, take it home because you want unlimited computer time.
[00:40:11] So it ran for a few years. So I think all these, as you can see are responses to problems. And, but listening very actively. And, and I think when people say you have vision, I think you don't need a vision. Well, you need a vision. Vision and madness basically. But you need to be very aware of the problems on the ground.
[00:40:29] So our business partners were entrepreneurs.
[00:40:31] Akshay Datt: When did you go international? This was in nineties, like.
[00:40:34] Rajendra Pawar: So 1991 when we were 10 years old, precisely. And a year before we listed, we had work coming to us in India from US on computer-based training, on the use of computers and learning. So there's an entity in the US which had figured out this small outfit, which is using now it's using the laser disc as well as using, it's on the cutting edge of using new technology, computer based training and then beyond.
[00:40:59] Then the laser disc, random access disc came into picture. We've tested all of them. We've built, we've built many software technologies and platforms and so on, what people are now talking about all the time. So learning management systems and so on are built early on. So, so we had a customer, that customer was IBM, so they said, we want to do CBT, but you have to come and do it here.
[00:41:17] So we went to Atlanta for that reason, because that Center for Education customer education was in Atlanta. That's why we set up the office in Atlanta. And that still is our US headquarters. Now, of course, Atlanta is seen as a good place to go to, but at that time it was nice cool place. So IBM became the first customer to build computer-based training because IBM was, for quite a while the biggest trainer in the world. They were training the whole world. So they had zillions of courses all taught in the classroom and they wanted to then convert them to CBT. That was one of our big contracts. So it was outsourcing of a very interesting type that we would have our people sit in their five day classroom video, shoot it, make a lot of notes, ship their stuff back to our instructional software entity, who would then convert into computer based training and send it back.
[00:42:02] It started like that. But then the software business actually came out of, for us, Singapore office. We set up an office and the interesting thing was the consulting work we had done in the eighties was extremely useful in the Far East, which had more open economies. You know, people were importing all the computers they wanted to buy, but they didn't have, they didn't know what to do with them.
[00:42:19] India had been starved of computers in the eighties, But we had done all this information system planning because our customers wanted to. We found great use of that in Indonesia at that time was a big market for us in Malaysia, singapore. Singapore, in fact, in the Prime Minister's office. We had done projects at that time in the early nineties, which were cutting edge.
[00:42:37] So there we were actually doing information system planning, information system management, drawing up IT plan, not body shopping. We never went into the process of body shopping because well this happened that we had, these bright young MBAs were chosen to stay in India. And so had we, we, four of were IIT grads who preferred never to go abroad.
[00:42:56] And so these youngsters were here. So the Singapore operation opened our eyes to the need to help companies put their solution together. Because the US and Europe had a experience Singapore, Malaysia had equipment, which landed up with little experience, India had no equipment, but have, we had to grow from ground up.
[00:43:12] So when we went to the US we were doing instruction, instructional software, educational software. Before we started doing other things in Singapore, we were putting together solutions. In fact, in Bank Bali, which was one of the biggest bank, the whole network was set up by us. So we gathered a lot of experience of putting solutions together, and then we took that to the US and Europe, and that built our software business.
[00:43:31] So the software business, which was a consulting practice in the eighties, nineties, onward was a boom time. But we, unlike big software companies, were doing Y2K and large mainframe software. We were at the cutting edge. We couldn't be teaching old stuff. We were teaching new stuff. So all our projects were on new technologies, on relational databases, on Unix operating system.
[00:43:52] So I remember that one of the first projects we did was for Sun Microsystems which was the worldwide sales incentive system to be run on distributed networks. And we did that project for them which Scott McNealy was personally supervising to see how does this, how do we do a distributed system?
[00:44:09] So we are doing a testing project, and that created the software business, which grew.
[00:44:14] Akshay Datt: Tell me about the IPO. You know, you were a fairly young company when you did IPO what, what kind of revenue were you doing when you did IPO?
[00:44:22] Rajendra Pawar: I'll have to get the figure. Maybe about 20 or 30 or 40 crores something in that some 100 crores and we, I think raised 18 crores that much I remember 10 rupees share with the 40 rupee premium. It was oversubscribed. It went very well. And so 18 crores is what we raised. And many companies have, I've seen raise money when the markets are right.
[00:44:43] Somehow we felt that that was not the right thing to do. We felt you raise the money when you need it. Now I have to think twice about it because there are times when you can get money easily and times when you can't, but you should have a plan for it. So we use that money at that time to set up our, as we call them, the software factories.
[00:44:59] Okay. We pushed the idea of, off shoring because we did, we were not into business into body shopping, which is a big thing in the eighties and nineties also. So because we were India centered India based software facilities were here. So I think as a percentage of our offshore body shopping was minuscule because that was not the model we were built on.
[00:45:17] Good, bad is not an important issue. And we were working on new technology because we had the education business, which is predicated on knowing the future. People want to learn new things, which is still valid. We, we, our courses do come up pretty much ahead of anybody else on any topic. So that time the idea was then to set up our software c enters. And we also figured that even in the metros we had to set up more centers. We set up what we called as automated learning centers which is where working professionals could come. And we had most advanced technologies, the laser, disc, techno, all, all content, everything. And we've done many, many things with technology and learned that we were always ahead of time and learned that technology alone never does a solution, which is what people are discovering now, after this covid time, we, you know, I should send you an article I wrote quite early on when Covid started, when people were going bonkers about online learning. And so I had written an article, I'll send it to you. It was called, I think, online Learning: Bored Students Exhausted Teachers. Okay. And people kind of laughed it off, but over a period of time, I think became very obvious.
[00:46:22] Because we had been at it from 81, you have to remember. And yet we were doing the mistake of, in 1996, we had announced the first virtual university called Net Varsity, but it didn't do well because net was too slow. So while we offered it to student, right.
[00:46:37] Akshay Datt: It was way ahead of its time.
[00:46:38] Rajendra Pawar: Yeah. Yeah. So 2013, we launched what we called as a cloud campus.
[00:46:42] So this curiosity, we just keep testing the ground, got us to test very many things before time. And therefore some didn't fly, many didn't fly. And at NIIT.tv we were giving free instruction long time back. And we found that no one wants it if you give it free. So we also bought a company who's we still have the url, which we will use called training.com.
[00:47:01] We own that url Because I think we knew early on that, you know, and now we know that the native digital natives will learn a little more, but even they only 5% thumb rule. And they say, now look back and say only 5% of all learners are motivated enough that they will sit under the lamp with the book and learn all the remaining ones need a teacher and a test and a beating, and a mother and a stick, and a, you know, we need a huge support system.
[00:47:27] We need a huge support system. And India is, is is even more over caring. The mother will give a milk glass of milk, (hindi) the father will come and see no comics going on. So we have a very intrusive structure to assist the learner to learn. So when you remove that, don't learn. And yet I know that the cohort in any cohort, the 5% of the brightest who need not be the highest marks, scorers are self-learners..
[00:47:52] They always were. They even today are. But the, for the rest of the rest of us, we need a blended model. And so, so these, these tests which we were doing, pushing ourselves ahead of time and continue to, to this date is helpful because it, it set, helps us set the right boundaries.
[00:48:08] Akshay Datt: So the IPO was essentially to set up the software consulting and rather expand it like the consulting?
[00:48:15] Rajendra Pawar: So yeah. Software factories, no, no. By then, then consulting then become a small part of the big thing.
[00:48:20] Akshay Datt: What is the difference between the consulting business and software factories, like software factories where you're actually writing code for clients?
[00:48:27] Rajendra Pawar: You're writing code, you're testing stuff, you're populating databases.
[00:48:31] So it has a reasonable amount of Process, sizeable work consulting is you're asking new questions. So of course all, all practices have to be led by consulting led, so as I said, when we were listening to our customers, we were doing consulting without calling it that bright, curious people, talking to customers and trying to see what does he want to do next.
[00:48:50] And that has pushed us to keep ahead of time all the time because we continue to have bright people. So we, so on the people side I'll, I'll just talk of the first two decades, then we go, the eighties was when we were populating our organization with really brilliant young people. Nineties, when we had started the GNIIT program, which was the product, if ever there was a product on earth, everybody wanted do GNIIT
[00:49:11] Akshay Datt: that was a flagship three year you do with college?
[00:49:14] Rajendra Pawar: Well it was, yeah, it was like this. So I told you we said college degree and no job was two years. Then we said dual qualification. You're bright enough in college and we said if you have three years to do college and you do six months or one year concurrently, then when you go for a job interview, you're better equipped.
[00:49:31] Okay? Then when we did the GNIIT, that was actually, we, we had the good fortune that two very bright people post-retirement. One was Professor Mitra, retired director of Bits Pilani, and the second was Professor Jimmy Isaac, j Isaac of IIT Bombay, who had set up the computer center there. One of India's bright computer scientist, they retired and they said, we want to spend some time with you.
[00:49:52] So 10 years we had from 19 till 2000 1, 2, 3, we had these two people guiding us one on information science and what it means on the other, on, on education, administration. And I haven't seen a smarter education administration person, I can say worldwide than Mitra, Bits Pilani shift our thinking. So he is actually, he visited us to say that he had seen what we were doing and he had some thoughts of what we should do.
[00:50:15] So we, he helped us conceptualize the journey for the next 10 years. And so the G NIIT was born out of that work, which he and the team did, which basically meant that a college going student has at least three years in BA, BSc and so on, later on four years in engineering. During that time, we should give them enough computer input concurrent to their studies.
[00:50:35] The moment they finished their three years, we should put them in a company for internship for one year. We will have to arrange that. So the task of signing up hundreds and then later thousands of companies to be partners for that. And we pretty much bullied them to saying, you have to give them this much salary internship.
[00:50:50] And that was fixed as the amount, full fee the student has paid us. So at the end of four years, the student has done his three years in college, got a degree done one year with us as internship, but four semesters. And then we gave it a title. We couldn't give a degree as a for-profit. So it was, it stood for graduate of NIIT, but we couldn't say, call it, it was called GNIIT.
[00:51:08] And so that person didn't have to go for a job because those companies where they did internship nine times out of 10 they hired them. So our, our desire to fulfill the basic obligation for a learner that they come and get a job, and now of course it is to, to get an upgrade or to get the next job so that the, at the outcome of our activity consistently has seen even the (inaudible) university, which is a young university, 13 years only every year, every student before convocation has a job including the couple of years. So, because that's the, that's the commitment. That's the commitment.
[00:51:39] Akshay Datt: So, by the end of 1990 end of nineties you said you had 2000 centers, 40 countries. What percentage of your revenue was training? What percentage was from software? Because you also had the software factories running, and like did you do acquisitions during the nineties also, or did it start in the two thousands?
[00:51:56] Rajendra Pawar: No, we started from the nineties, I would say. And I did say we started with an acquisition a little one.
[00:52:01] Akshay Datt: Yes, yes, yes, yes. True.
[00:52:03] Rajendra Pawar: But we did in the nineties, so the US office, which we set up, I said, I told you, we sent two bright guys. One was an 82 batch MBA from IIM Ahmedabad the first batch that we should catch. And the other one was an 84 batch from 84 85 batch from, IIM Calcutta.
[00:52:19] So the first one went to the US to set up the US office. The signal went to Singapore to set up the Far East office and the US we started doing projects in newer technologies and came across some very interesting small companies, which were doing creative work. And so in the, I think it was perhaps in the nineties itself that we started second half, we started saying, okay, how do we learn about that, what these guys are doing?
[00:52:43] So we started a process of taking a small equity in some of these companies, because some of these people were doing work, which was interesting to corporate customers. So we saw it also as an, as a way to tag along with them or take them along to solve a problem. So the edge investing, we called it at the edge, invested the edge and give us a sharp edge.
[00:53:03] So we did some of those investments. And we then also started looking at toward the end of the decade, in fact, early part of the decade, we, we saw that so for example post.com, which is the same situation as today or was like 2008 as well. We saw some very, very good assets were getting into difficulty.
[00:53:24] And the, the very good, some of the very good acquisitions we did were in in that period. Some very good acquisitions.
[00:53:31] Akshay Datt: Tell me about some of them.
[00:53:33] Rajendra Pawar: Let, let me talk about a very interesting one we did in 2003 which was not the biggest, but was a very interesting one. So there's a company called Cognitive Arts. Now, cognitive Arts was set up by a guy called Professor Roger Shank, who was at Yale and they were, he had done his, his work is very interesting.
[00:53:51] His work just to take 15 seconds, was premised on an insight that learning takes place when there's a failed expectation,
[00:53:59] you can relate to that, okay? You, you take a road every year, you turn right every year, and one day there's a repair work going on. Now you learn that you can't go this way.
[00:54:07] There was an expectation to go this way, so I'm oversimplifying, but everything is like that. You do things in a certain way, something goes wrong. Why we see mistakes are an opportunity and so on. So when there's a failed expectation, that is one. So he said, okay, we have to now design instruction. We'll get people to fail.
[00:54:21] Okay. But then there he went a step ahead to say, okay, now people are making mistakes all the time. The purpose of learning is to go to zero mistakes. So the management aspect of his work was you go study mistakes in large organizations in repetitive jobs, and put a cost to each mistake and see how many million they make in a year, and then list them down in descending order of where is the money getting lost and attack that problem.
[00:54:42] So this, they had got as a know how when they came into Northwestern University and set up university, got them to set up the Institute for Learning Sciences and Roger Shank and his team were working on that. And then the boom was happening in the nineties, so they got some investment. They created a company called Cognitive Arts.
[00:54:58] So Cognitive Arts was doing work for the biggest, okay, on this what was called the Critical Mistakes analysis methodology.
[00:55:06] So imagine the number of cashiers in a Walmart, for example. Okay? Zillions of them, okay? All of them make mistakes. Or the guys with things who stock things in shelves. So repetitive jobs of a large scale, finding the mistakes, then simulating those mistakes in instruction and getting people to draw lessons.
[00:55:23] So cognitive arts started becoming a great success, and then they got some investors, then .com happened. Then people tried cutting their budgets, and then this company came up for acquisition. So we bought it and the designs, many of the early original PhDs team came along with them, with the, with the team.
[00:55:41] And that's our design studio, which is based even now in Chicago. Instructional design. Part of the team is, they're part of course the big team in India as well. Very big team in India. India, we probably have one of the biggest content facilities under one roof anywhere in the world. So, but that's the design bedrock of consulting.
[00:55:55] The pedagogical design. And so that was a very interesting company. Because then we started using that across the system and led us to build on to build a proposition, which we call as managed training services. So we cannot manage the training service in a company because you're coming with a business logic.
[00:56:13] So if you go to a CEO of any large company and say, how much does your company spend on training? You wouldn't know if you're asking, what do you get out of it? He says, I'm not sure. So what the software business was doing for software outsourcing, we said we should do it for learning. So the learning process outsourcing was the idea.
[00:56:30] And then we said, why don't we go to them and say, look, you can't even measure what you're spending and you don't even know what you're getting. And we've been working on outcomes for forever and ever, and we are curious, people will figure out what the problem is. So now we have multi multimillion dollar contracts in that corporate part of the business for the fortune hundred.
[00:56:47] And jump to 2022 acquisitions. We've done very interesting acquisition called St. Charles Consulting. So Arthur Anderson, when it had to break up, if you remember, and do when, when all the problems happened 2008 when, yeah. All, all of that. So that time they, like many other companies, they had this central training facility in a place called St. Charles, and we was doing all their internal training. So when all that breakup happened, the person who was running it bought over that activity. And they've been running that as a very, very top-end strategic training thing with a large network of, on small network of full-time employees, a large network of trainers.
[00:57:28] We have bought that now.
[00:57:29] Okay. So
[00:57:30] Akshay Datt: so they would train on soft skills and
[00:57:32] Rajendra Pawar: No, no. It's also on strategy, but they have a methodology. They, they, and they have a good understanding on how the fortune hundred companies think about building capability and building talent. So, so I'm just saying that, jumping to the next stage, but coming to the, that's the last, the last acquisition that we did was St. Charles. But so cognitive art became very important for, for getting a good idea of the science and the management of delivering learning to corporates and built a line of business for us, which we call management training services, which has made us one of the top three players to pure play training in the world now.
[00:58:04] But the, the bigger one we did was a company called Element K, which was in Rochester. And I'm just trying to see, that was in 2006, cognitive Arts of 2003. Now this was a big company they had, they were actually 80 million revenue. It was huge for the, for us at that time.
[00:58:21] Akshay Datt: And what was your revenue at that time when you were acquiring them?
[00:58:24] Rajendra Pawar: I think by then we were doing with them, we were doing 160 million, so it was half our size. It was very big. Together we became 250 million that time. So, so this was this was a very big thing for us. And interestingly, we exited this many years later to another company at a very good profit because it gave us a huge library of content and a huge access into the market.
[00:58:48] Then we built, we moved the content development to India and then another company, which is very big in digital content, who was a customer of ours for training. They bought that entity because we, we didn't want to do packaged content development. We wanted to customize it more and more. So that was a very big one.
[00:59:04] And then 2000 so there are many, many acquisitions. 2016 we did a very interesting one in India, a very bright young team in Bangalore called Perceptron. They were doing a pedagogy for teaching advanced technical skills to people very rapidly. And so that, that was we call it Stack Route Full Stack learning.
[00:59:23] So Stack Route today is, delivers the best impact on learning for complex skills to bright young people. So it's a whole methodology, and that that's what we're using now for Indian, large Indian customers we will take it to the US as well. So that's another thing, which is collaborative constructivism, different bright young people, broken into group, given problems with mentors.
[00:59:43] Very little classroom. They're just, they're making, it's a maker model. Then recently we bought, two years ago, we bought a company called Regatta, which is an aqui hire a small team in the US, which is working with ARVR. Then we bought a company called Eagle, which is US again, 2018. They were very focused on doing some kind of training for the pharmaceutical industry.
[01:00:02] So they do rollouts, you know, when they have a new method or a new regulation or something, they have to roll it out across the organization. So they had very strong capability of rollout in a regulated sector. We saw that as a core, core kind of capability. So that got us also very quick entry into the pharma sector in the managed training services business.
[01:00:20] So then in 2008, we had bought an India small company called Evolve. They were teaching English language in India. Then actually last four years, I talked about 2020. We did Ricotta 2021, we did a very interesting company in India, which was a good size company, and we bought them for about 80 crores called RPS.
[01:00:39] So they're working in a very focused manner on the, the, you know, what are call the GCCs the Global Competency Centers, large international companies who have the development centers in India, like, think all the large companies have huge development centers in India, in Bangalore, in Hydrabad, you know, the, and so RPS has been focused on doing their internal training.
[01:00:59] So that was a segment we were not doing, not doing too much what we were doing for the big IT companies of India. We're doing global companies, but this whole GCC community, they have very good capability in that. But the range of products we have, the extent of science, we have technology, we have, so coming together of this is 20 20, 20 21 and 2022, we did another Indian, small Indian company which they have very good immersive content.
[01:01:25] They've methodologies to do good immersive content. And so we, we've done a small investor. It's It's not a full acquisition. So you can see that we are very careful about and, and, and I think very nuanced about what we want for what. And then I told you about St. Charles, which is a full, full acquisition. So the acquisitions, entries and exits have happened over a period of time to fit into the strategy of what we are trying to work on.
[01:01:49] Akshay Datt: Tell me something. Why did you change your strategy to focus more on B2B? From, so in, in 2000, you had I think you told me about 2000 centers across 40 countries. So, then you know why the pivot to focus more on B2B from here and in 2000 training was contributing to how much of revenue, like was it more than 50%? Between software factories consulting and trainings.
[01:02:14] Rajendra Pawar: By then, they were probably coming to equal levels.
[01:02:17] Learning was probably a little more, but both good size, both good size, equal profitability. So we did not pivot to B2B, first of all. So the consumer part of the learning business, which is where individuals had to pay for themselves, is a developing country model, in the US, the company would pay for their employees, number one. Number two, building a brand in a developed country is a dam site expensive process. So when we went to an Indonesia or an af- one of the African countries or Middle Eastern countries it was much easier to take our brand, to take our business model of franchise or business partners.
[01:02:53] We did try to be fair, we did try in the US in, in to do that and discovered that it was the marketing costs were just prohibitive and we wanted to remain within the reach of people and their personal budgets. On the other hand we didn't pivot to b2b. What have to say is that when we started the India business, it was a consumer activity and gradually we got pulled into working for companies. And so therefore that became a business where we were then reaching out to companies and doing training programs for them. Okay.
[01:03:21] When we went global, when we went to the US, we were doing first for IBM and then we actually at peak, within about a decade, we were working for 39 out of 50 computer companies doing content for them in the US. Okay. And then soon, many of those companies said, you're doing IT content, can you do other content?
[01:03:39] But on the computer, So, so earlier it was IT as content and IT as form both the form and content then became IT as form, but non-IT as content. That happened in the nineties as well. And then when the cognitive arts and all happened, then we realized we had a methodology, we had a set of customers, we had very good references.
[01:03:58] So the US Europe business watching, working with fortune hundred was growing very well. Our few experiments we even tried actually in Hong Kong, we tried to do a center that was our second center. The first one we did in Nepal when we went outside in 1995, Nepal ran like India. It was a grand success. Hong Kong, we discovered the cost of marketing was too high, we had to remodel.
[01:04:20] So we discovered that the B2C, B2B, whatever you want to call it, that getting to consumers is a very expensive proposition in markets where the cost of marketing are huge and also where com- companies pay for that. There's an entitlement mentality. So, so today we don't use that word in India because in India we work for, if you do work for a bank.
[01:04:38] So we have trained thousands of people. For ICICI, Axis bank, that's a combined thing. There we make a proposition to the marketplace. So we will say, okay, ICICI is gonna hire so many people. If you're interested, you have to do this course because if we find you're suitable for the course, you'll get an appointment later.
[01:04:54] So now is it b2b, b2c, those are artificial constraints. So it's all what the real need is. So therefore this though both have been growing and we are just responding to market needs as they come rather than decide see, today you want to have a market entry, we over specify to get a little narrow place and keep spending money to crack it, within quotes.
[01:05:15] In our case, we think that an evolutionary model, but we were fortunate, as I said, to start early, there's always a beginner's advantage. But even today we have started and then rolled down many businesses. We exited, we exited software, which is a highly profitable business because our main thrust was always education.
[01:05:34] But it was a very profitable business. And till a certain point, they were reinforcing each other. Consulting was about, you know, the marriage of both. We saw ourselves in the knowledge business always. And so we merged the companies in 2004. The idea was the two different businesses have different characteristics.
[01:05:50] Shareholders have different demand. And then we thought that we would say only 2019, finally we could get the exit and that (inaudible), which is a very successful software business. And we used that name for a year after we, we exited the business.
[01:06:02] Akshay Datt: The software factories you set up in the nineties essentially got demerged in 2004 as NIIT technology.
[01:06:09] Rajendra Pawar: Yes. It was then consulting practice, but also mostly it was software development, mostly offshore. That was our interest. Okay. We, we pushed the software factory idea quite a bit in the early, in the nineties, so late nineties, we had made a software division, we call it NIIT technologies, a division off in 2004, we demerged it, listed it, so it became two listed companies, but NIIT held onto 25%, which it exited. So the, the, the passion and the love for, for learning and education has kept us where it's, which is why we have a foundation which has trained 6 million people since 2004. And a university which is formed in 2009, both those are not for profits. There's much more passion to, to do the learning agenda for different communities. So for us, these word B2B, B2C today, if you have to enter the business, we have to be far clearer because it's, you know, people are experimenting with, will I get customers or not with big money. Right. Our approach always was that you have to taste the ground and look for adjacencies and then keep exiting and entering depending on what the needs are.
[01:07:08] So towards the word sustainability has been important. And and that's something we can talk about.
[01:07:13] Akshay Datt: Most of your, diversifications were as a result of listening to customers based on which you started tell me about NIS, so what led to the birth of NIS and why did you eventually shut that?
[01:07:23] Rajendra Pawar: So NIS, NIS was basically, again, we were looking at diversification in the nineties itself, and we thought that okay another concrete skill, which this country disrespects, but it'll need as liberalization happens, is professional selling. Because we, the whole idea of salesman, eh, was something which was antithetical.
[01:07:43] So we said we should professionalize this because that's how it is all over the world. We would see professional salesman who retired as professional salesman. They have big houses, they have everything else. They love to do that. And this idea of ours was, so we said, let's get into it. But then late nineties became such a busy time for IT itself, and that was largely largely we found that, that there, there were companies which were very interested for us to do stuff.
[01:08:06] So we'll talk about that. That's, that's and then we found that it was one customer who was our biggest customer that was Reliance. And so the person we had, we had a person who had joined us to set up this business, and we thought that he should get an exit. And so then we had a chat with very good chat with the founder, with big people, with Mukesh Ambani actually.
[01:08:24] And he was very interested. So we exited that because the whole team then, because they was a hu- they were expanding that time like crazy, like they are. And so we exited that business because we, we felt that that's not something we should get our attention with this booming of, of IT. So that exit was done because we had a good home for that place and something which should give them growth and our people there that were happy to get that situation.
[01:08:45] Akshay Datt: You could make a plan about achieving certain either capability or market access, and then you would possibly make some sort of a calculation that, okay, instead of spending a year or two and building this in-house, I'm okay to spend $10 million to acquire this company.
[01:09:01] What is the way in which that calculation happens that how much you're willing to spend to acquire that capability instead of building it organically?
[01:09:08] Rajendra Pawar: Well see building new methods and practices takes many years, so very often it's not a complicated calculation of 10 years will take so long.
[01:09:17] We used to do those mathematics earlier. Then we realize that if someone has a distinct competence, which we are missing, it has to be a reasonable deal. It, it's not this EdTech kind of valuation, which are unrealistic. Many of our, we haven't gone into any of those by the way, and neither do we intend now, post the, the challenge that they have.
[01:09:35] Things will be reasonable and we'll obviously look at them more seriously because that's a different engine. There the economics is never an issue. It's just perception of opportunity, we've never done based on that. So we've seen what do people have and how does it fit in? Does it give a leverage internally? Then we build the whole logic of saying, okay, what's the rationale? How will we convince our investment committee and our board that you, this is what we spend in acquisition and this is what return it'll give on its own. And then we look at, you know, okay, what else can we leverage that's on top of it?
[01:10:04] So the economics is done more around, if we do this investment, what does it do to our capability, which gets translated into revenue and profitability
[01:10:12] Akshay Datt: And NIIT technologies is NIS.
[01:10:16] Rajendra Pawar: So NIS we had started that business in the early nineties and then it was, it was a very interesting business.
[01:10:23] I think it still is something we should do at some point because our recognition was that sales is not a respected role or salesmen, you know, people getting bags. But we knew that as India, you know, as India, as a market, mature, professional selling will be in demand. So we started that, it was doing well but then late towards the end of the nineties, early part of the decade, next decade, we were so busy with technology right, and consuming and we had one customer who had, was such an overridingly large customer that, you know, the, there was a decision that it may make sense for us to divest that and put our energies elsewhere. So it was much less to do with values and funding. It was reasonably good return. But the bigger issue was that we are getting more focused on technology with all, all new technology areas and therefore this would be something which someone else can do justice to. And NIIT Tech, of course as I, as I recalled when I told you about the history, we started training, then we started consulting and that got us into software business. And we, we prided ourself on having this model, which Vijay called the hospital and medical college model, which is the pr-, the, the, the doctors practice and the bright ones do research and create new knowledge. And you teach people the practical way as you've seen doctors and interns going around. It's a very integrated model of learning.
[01:11:41] So for us, that was a very important contribution the first two decades on the people doing software, also doing training. Then we make divisions over a period of time. Then it gets a little separated, but it's a common common development facility. So the, the work is being done in the field for clients and that actually gets translated into cases and knowledge and so on.
[01:12:00] And when we listed that time, nineties was a great time. Everything was going well. Financials were running similarly. But there were a set of our investors who were more focused and interested in education. They were typically the more long-term bit pension funds and stuff. And then there were those who were looking at soft software as a high growth, risk embracing area. And, and so they were keen to see that we you know, they understood part of the business, focused on businesses. And so we started giving them separate breakouts, financial numbers. And then towards the end of the nineties, both companies had become a certain size and there was then a discussion that now should be, and they're big enough and they both have their own capabilities across the board, and therefore, should we not look at first of all two different listed companies.
[01:12:42] But when we went for listing 2003 or 2004, I think markets are not really right, but we had decided to move ahead. And so we, what we did is we demerged the software division and listed that while NIIT held onto 25%. So they became two listed companies with two boards, but common promoters and both ran quite well independently.
[01:13:03] And then we thought that it was time to now for, for us to focus on education, which needed that time, much more funding and growth. And then markets were not very right at that time. 2008, again, we were ready, but markets were not right. And then 2012 and finally after starting a search in 2019, we found a good equation to make sure that we had a team, the whole team went along there and, and as I mentioned, they're doing exceptionally well as Coforge and so therefore NIIT limited in a sense stays with the business that it started with.
[01:13:35] Akshay Datt: Okay. Interesting. So, coming to the topic of people NIIT currently has about three and a half thousand kind of a headcount. I wanna understand how does one organize and you know, build such a large people organization, you know, and I'm sure it, it would've evolved over the years in terms of how you organize it and, you know, are there like functional divisions or are there like SBU strategic business units and each business unit has all the functions within it?
[01:14:03] And I wanna understand that a little bit more.
[01:14:05] So let me say, in 42 years, we've tried every, every model there is in the book. Okay? Every model. So we started as a monolithic entity. In fact, I remember presenting a paper somewhere 20 years ago, so I called it EDE. That is, everybody does everything.
[01:14:19] That's the first fail, okay? And then from there you organize into functional areas. Okay? First thing that happens, you got marketing, you got sales, you got delivery, you got everything. And then when the complexity starts growing complexity, not in a negative way. One is newer markets, so you want to do a geographical distribution.
[01:14:37] And then there's a complexity in terms of product lines, as I said, to even software and education for us. So then we, we went in fact, through a strategic business Divisional structure that you have this business, that business, that business has some functions which are its own staff function, but maybe finance is common, but you have a controller in each.
[01:14:54] So you give a little more independence to each line of business in the head of the business to run the PnL. Then you realize that you're becoming bigger. There are too many overheads, so you go into a matrix structure. So matrix is basically all of HR all of all of all the staff function and then all the, you may have a geography matrix, you may say US is one geography it has so you may have geographies and businesses. So matrix structure actually is what many companies went through at one point. But matrix is very difficult to manage because there's too much of contention to deal with.
[01:15:25] So just an example to understand the matrix structure better for example, an HR manager would have one reporting to a CHRO and another reporting to a business head where he's the HR manager for like that, that would be a metric structure?
[01:15:40] Rajendra Pawar: As an example. As an what we'll have a geography. Geography has all profit leaders for lines of business and then the lines of business.
[01:15:47] And there's someone sitting here responsible for a product across geographies. So many companies still do that very well. Many Europeans companies do that well. But the thing is that has huge amount of complexity. So for high growth companies, for high growth companies, it gets in the way of growth for companies growing at three to 4% per year.
[01:16:03] Real, real growth. Very, very large companies, sometimes that can work well, but even their companies have changed after too much my my view is when you have a structure for too long, some habits of the structure, bad habits accumulate then some chief executive officer says this is not working well now let me just make it divisional again or make me different companies again.
[01:16:23] So, so here again, I would say that structure follows strategy, not the other way around. Structure follow strategy. So if your strategy is that you are going to go have geographical expansion, if you're saying next five or 10 years, that's our game. So then we also, when we started 91, we said, first we called it exports.
[01:16:43] Okay. Then we say, no, no, no, it now we have to do internationalization. That means you have, instead of, you have guys flying to and fro, you have a US office, a Singapore office, and you're going international. And there our measures used to be that, okay, now in this country, let's get a local chief executive, or what percentage of people are local.
[01:17:02] That's an internationalization strategy. And then from there you go into globalization. That is not that it's a center and then geographies. So if you're r and d center, somewhere, production, somewhere your sales is distributed, then you are a global organization. So these phases as well, and different companies call it differently, but for us, we went through exports and then internationalization then globalization.
[01:17:23] Akshay Datt: Is there a formal way to do strategy, uh, you know, at at, at a large organization? Like NIIT, you know, I can understand for a small organization is the founder thinking and brainstorming with a few close associates. But how does it happen in a?
[01:17:38] Rajendra Pawar: No, no, no, no. That's not necessary. For example, we've always believed in deep and wide engagement of the planning process, even from the earlier days.
[01:17:47] So we'll get the top 10 people together think of an approach, then those 10 go back to their locations or geographies or regions of, and then they deployed all the way down. This is what we are thinking of. We want your views. Then the aggregation is bottom up. That has been our approach. So what that does is it gets many more people to buy into the idea.
[01:18:06] So, so we used to have what we used to call at one time, the blue blue sky vision exercise, which would be maybe the top 50 people coming together for three days to Delhi. And then everybody's doing their, you know, the product managers, the product line, everybody's dreaming their dreams and the regional guys are dreaming, dreaming their own dreams.
[01:18:23] You also want this, and then you have this blue sky vision. Then you aggregate it into something. Say, okay, now if this is the overall picture, now we want you to go and go test your ideas and see what your people have to say. And then the budget would be come coming bottom up on what they can do with such a plan.
[01:18:38] And then we seal it into a three year direction or a one year plan. So, but there are very many methods. Strategy, strategy is a broad question, And in strategy also, isn't that the lowest man determines strategy, strategy, ultimately it's a set of choices. So, but everyone should be involved in creating options and choices.
[01:18:54] So they have a say in the decision. And that's why you have a financial strategy sometimes, okay, will we raise funds, will we go public?
[01:18:59] You have a technology strategy, will we be buy, will we invent? So then there is these subsections within that.
[01:19:05] Akshay Datt: What is the NIIT method? How, how do you, what model do you use or currently?
[01:19:10] Rajendra Pawar: We, as I said, we, it, it's sort of our rhythm is that around October we'll start a prospective planning workshop where, where the business leaders present to the board their views and you know, what's happening and what's competition doing and what are the opportunities.
[01:19:25] And the board increasingly our board has become a board that challenges, the executives say, okay, why this, why not that? Then sometime we'll take the board to an offsite. So this last year the board went to an international customer meeting in the US and came back very enlightened about what's happening.
[01:19:40] Because there we worked with the fortune hundred. So then they will start posing questions. So the, so the board challenges these groups, then they have to go back, modify, go back to the next level, work through the plans, come back again for the second round, which will happen for us end of this month. And so that's revisiting the prospective plan f focus, and then putting some, looking at the golden aspiration and then challenging them if they're good enough or this looks unrealistic.
[01:20:05] So there's a moderation and a challenging process by the board. And then that guideline is used to make the budget for the next month. So that by end of February, early March, the plan for next year is set and broken into quarters and so on, so forth. So, and yet every board meeting we do sometime to, if some board member says this is happening, what are we doing about it?
[01:20:23] Or some large thing happens in the markets. Okay. So for the last couple of quarters it's about saying, okay, if there's such a funding winter, there's, it's an opportune time to look at some good assets. The tech payer now, but we've been looking because ever since we divested, we've been looking for assets.
[01:20:39] So this now gives a flavor. So things are more dynamic. The old long-term horizons are not the thing of the moment, I mean, One is we are not looking beyond three As and now then within that we have to start looking at how will this risk emerge? What will happen in China? What'll happen in the US? What will happen, what did Brexit mean?
[01:20:54] You know, those questions come into conversation to inform the process so that everybody's realistic. So,
[01:21:01] Akshay Datt: at what stage should a startup think about building a strong board? How, how early should they start thinking about.
[01:21:07] Rajendra Pawar: Conceptually before you start the company? Conceptually you need some good sound. They call sounding words. Okay. It's not words, but you better not venture in completely hip shooting on a white stallion out of the blue.
[01:21:19] And that's not my style. Many people do that, but it's good to have wise counsel. So people not like you. People who don't think like you, people who'll challenge you. The idea is challenging. They'll say, have you looked at this? Have you looked at that? But this happened there, that happened there. Something you should have asked yourself.
[01:21:33] You will want to make sure you're not missing. So a sounding board is desirable in any case, in the current format, the guy who invests becomes a board member and sometimes is good and sometimes not so good. Particularly when people who are funding you have short horizons, then your alignment is to build a company.
[01:21:48] So you have to see that there's enough people in the board or in the team who share the long-term vision with you rather than a short-term vision. Because this question comes up very often and therefore, people who have a view, people who are knowledgeable, people who can be challenging. Then of course, now you do need, y our board will have to have strong people on finance who the chair of the finance committee can't just be anybody. There is a choice. So you don't put committees early on. You have a board, but individuals who have expertise in various areas, and some of them may be friends who have known you and who know your strengths and weaknesses.
[01:22:20] And you are not to praise you all the time, you get them on the board or (inaudible) from college, that's never useful. But people who have some capability which your, your team needs to be challenged on for superior knowledge. And then you need a very conscientious set of board members who will keep you honest.
[01:22:35] Because my view on corporate governance is that, you know, any decision you take in this whole ideal of a widow who has one share in your company, what will it do to her, so, so not that that's a written thing, but that's the, that's the sensitivity, the minority shareholder. But that becomes more important when you go for listing.
[01:22:53] That's a big, big difference when you go for listing. And we can go into that question about IPO but initially you make a, a sounding board for the first few years. I mean, in our time we had more time. Now people are quite busy to get funding and then quite busy to do listing. So it, the time is getting compressed.
[01:23:10] So in the early phase sounding board, then a good board of people who can challenge you. And obviously those who fund will be there, but you should take people if you have technology than someone who's really smarter than your senior most people or has a vision of technology. Very important. If you're going to be consumer market, then someone who understands that better than you guys do.
[01:23:30] So you see your deficiencies basically. And then when you're going towards listing, then there are many stipulations. You know, the independence is a very important. you can't get on board with only those people who have been with you all long because they're already aligned to your ideas and they may have missing links.
[01:23:44] So then getting independent directors actually is a knack. And non executive independent directors, because you have who are executive directors and then there are many ratios assigned to how many you can have and of this and how many you can have of independent and so on. So then the choice really is that you want corporate governance to be a very important thing.
[01:24:01] You want risk assessment to be very important. because if you look at the very large companies, the big thing is risk. because even an opportunity is a risk. You have to see, take a risk view, okay, what should we be doing if Ukraine something risk? So risk assessment and risk management, and also these are becoming statutory things.
[01:24:18] So then your thing is much more about the board not being the people who conceive products and drive businesses. The board is a, once again, a board that challenges management. So you have to devolve the power. So you have to, board has to look at the talent. So it's a very important role of the board.
[01:24:33] There's a committee for that nominations organization committee that looks at this. And then you have an audit committee and then you have internal audit. You have many functions which are helping the board to challenge management for its new ideas and helping the board to keep an eye that everything is going well.
[01:24:49] So that becomes a much more evolved and well documented set of district, you know, the, the, the impositions of from SEBI and so on, actually help people to decide what kind of people they should have. But by then, I mean last time we, we listed of course in 10 years only many companies were that time doing much later.
[01:25:04] But now people try to do it even quicker.
[01:25:07] Akshay Datt: What are the benefits and disadvantages of listing , like, you know, what has been your experience as you know, running a listed company?
[01:25:13] Rajendra Pawar: So I think what the, the going public pluses are, of course, you raise funds, most important, you, you raise funds and, and the original founders get an opportunity to divest something. So they generate some wealth, they want to make the house, they wanna buy a car, they wanna do whatever, their hard earned money.
[01:25:30] And then now of course, after ESOPs came, which was much after we started, it also becomes a method to compensate at a wider level. So there's more sharing of wealth and and you also get written about quite a bit, which get keeps the markets informed about to keep customers informed about you. And I tend to feel, you know, if you're a good company with good practices, then no one will talk of this practice unless you're listed, so there's a plus for that as well. But fundraising, keys is fundraising, I guess people go to the market to, to distribute the holding and to raise more funds and Downside is reporting, if you call it a downside. But I think if it's, if you take reporting appropriately, sometimes you feel there's a bit, some, some things are a bit too much, but there's no perfection in these things.
[01:26:12] But I think doing it through a structure gives a board a responsibility to make sure that your actions are not violating the, the principals underlying the requirements of governance.
[01:26:23] And, and I think it keeps you in good, in good shape, I think.
[01:26:27] Akshay Datt: So, my last question to you how do you drive culture down to the lowest level of the organization?
[01:26:32] Rajendra Pawar: So the simple answer is one person at a time. First of all, let's be clear. Okay, one, each person is unique. Are you focused around each individual or not?
[01:26:42] So if we have said from day one that people's growth is our growth, then you're clearly focused on, okay, if you can get each person to grow, then growth will happen. We, that's our belief, which means that you're investing in them. So we have many, many kind of truisms or rules or policy, but one of them is promote the person before he is ready.
[01:27:00] He or she is because then they will aspire and they will work harder and they have a lot to prove and they're making some mistakes and learning in the process, it also holds people because people know the and everybody's getting a, you know, step up or that we invest. We used to, there was a period of time when we were counting the number of days of training per person that we were giving across the company.
[01:27:20] So investing, we had something called the School for Employee Education and Development called SEED very appropriately. Everybody had to go every year for x number of days. And, but, but that's a mechanism to engage. What do you engage them on? So you obviously have to state things you think are okay and not okay, and you do it through your, you know, value statements.
[01:27:39] And then you also want to be able to tell people what we are up against and what do we want to do. So we ritualized the thing which we call the annual day. We did it in our eighth year and every year we do it earlier, it was just three cities and five cities and many cities and then zones. And last few years was virtual, not half, half as much fun.
[01:27:57] But those annual day ritual is an important day when we get in distributed manner, everybody to spend the day with leaders talking about what they plan to do, what they did. And it's not as much financial numbers because those are visible, not to everybody quarterly, but we set out to do this. This is what we've done.
[01:28:13] This has worked well and a lot of time is for recognition of people. Very large number, about five to six to 7% of people every year get some kind of recognition and some accumulate. And you know, we have an excellence award. Third time you get it, we call you an accelerator. And then if you get it a couple of more times, you become unstoppable.
[01:28:30] So there's a whole thing. And people aspire for all kinds of things. And it's a recognition among peers, very important. Qualities are identified and amplified and talked about as being examples, but what I found is that culture, while all of this happens, you know, if you've stated your culture on a piece of paper as values and mission and beliefs the one thing that works is how you are tested when you have a violation.
[01:28:53] Okay? And it's amazing how quickly everybody gets to know this, okay, someone didn't treat someone well and we don't make a public issue of caning people or whatever, but we take it very seriously. And so people know that such things are not allowed, fortunately, not too many, but such things are not allowed or upholding something broke our back.
[01:29:13] We say, okay, we had to do it, we did it. So, and it's not all done with integrity because bright people know what's real and not real. So, so whenever there's any, any violation of any aspect of the culture, it's how management behaves, how swiftly they behave, that actually codifies in hard codes, the culture.
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