With such high-cost structures, the inability to move up the value chain fast enough, and the shortage of quality-manpower staring at the IT industry in India, is it an attractive investment for your firm?
I think the notion of creating another Infosys or Wipro is not there because there was an opportunity at a time and that was seized. Now to create large platform companies that do everything would be difficult. But there would be many opportunities for more on the back office processing stuff you can do "" like the GECIS deal that happened.
We will see segment-specific BPO, for instance, you can see more people playing on something like animation, specific areas around health record processing and so on.
What are the other IT opportunities?
Consolidation in mid-tier companies. When a client comes to the Indian market with a multi-million dollar contract, he would go to the larger companies.
While the large companies are growing at 50 per cent, the smaller companies are growing at 20-30 per cent. So one strategy is to bring together two or three of these mid-tier companies.
Increasingly, what you would see is European companies trying to change their business models. For instance, there is this billion dollar multi-suite IT services company that is now on the block (I can't get into specifics on this).... Now this company probably has 90 per cent of its execution in the US, so it has high cost structures. You could think of transforming the business model by bringing it to India, China or eastern Europe.
Then we don't see many success stories about software product companies out of India "" everybody is wary of the fact that it would require a large capital and, second, require a distinctive approach. There are some good companies here that would need about $50-100 million to go to the US markets.
The life sciences scene is not looking too hot in India "" both on contract research or manufacturing. What's your take?
There might be a slight dip, but there's no question on which way the action is. Newbridge's (one of TPG's arms that invests in mid-tier companies in Asia, with a focus on those companies that are looking for expansion capital overseas) view is that India will be the centre of gravity for IT, technology and life sciences.
Bio-generics, the whole area of wellness using Ayurveda and traditional medicines and areas such as nutraceuticals (combination of pharmaceuticals and nutrition business) have huge investment potential. In molecule and clinical research, and clinical process outsourcing, there are no big stories yet but from an investment perspective, that does represent an opportunity.
Then there is possible future in domestic healthcare delivery space where you have expansion capital going into companies (companies such as Apollo and Max Healthcare)
Have you seen any private equity in the traditional medicine space?
Not yet, but going forward on that is an enormous opportunity.
Would India no longer be the focus in your role at TPG?
My role is focused on opportunities wherever they may be, but India is certainly a big piece. I am a partner in the ventures fund arm but will also work alongside Puneet Mehta (managing director, Newbridge) for opportunities in more established companies looking at overseas expansion, requiring $50-100 million.
I will also work alongside the TPG guys in Europe and America and even there, there is an opportunity to bring an Indian side to it. Let's say that TPG makes an acquisition in Europe "" a business services company.
I can help reframe that company with a big Indian component "" so even though the acquisition is in Europe or America, it will still have an Indian component.
If you had to invest a corpus in next two to three years, where would you invest?
The action is in India, China and the US. If I look at investment over the next three years, I would say India would take a big chunk.
What is the kind of freedom you have in your new job?
As it is a partnership, you have to collectively decide what you want to do. It's a complete departure from a hierarchical corporate structure. For instance, when I was joining TPG, it was not that one partner decided to invite me.
Contrast this with a corporation like Wipro "" hierarchical at the top and then flat with 46,000 employees. The total number of partners at TPG is nearly 40.
Do you see a management issue in Indian companies that are owner-led and have professional CEOs?
The owner makes the investments and asks the professional CEO to deliver results... but he is not expecting himself or his son to takeover the roles. So you have an ownership view that is basically around the capital and you have a professional view on how to perform "" and the two go hand in hand in every company.
If you look at the Fortune 500, companies you will be amazed to see that the owner-led companies have done better than others. I don't think there is a bad guy here. The owner and the CEO have to work together.
