Merger of IT R&D bodies: a sign of the times

Last year, when the ministry of information technology (MIT) announced its intention to recast organisations coming under its umbrella, sceptics dismissed this move as just another bureaucratic procedure that would go nowhere. With the decision to merge the country’s renowned IT bodies—C-DAC, NCST, ER&DCI and CEDT—the government has proved its detractors wrong and has moved in the global direction of consolidation. Srikanth R P explains the implications of the merger

Dr P V S Rao says the challenge of merging different IT R&D bodies is a daunting one as each of these organisations was started with a specific mandate and has developed its own distinctive culture

In line with global trends, mergers and acquisitions (M&A) have become commonplace even in the Indian IT scenario. Cash-rich companies went shopping with a vengeance and bid aggressively in the current times where valuations have dipped to all-time lows. But amidst the slew of M&As that took place in the last six months, one particular merger went relatively unnoticed—that of the country’s advanced R&D organisations in IT. As per the government’s announcement made last year, R&D organisations ER&DCI (Electronic Research and Development Centre of India), CEDT (Centre for Electronic Design and Technology) and NCST (National Centre for Software Technology) merged into C-DAC (Centre for Development of Advanced Computing).

This development is significant when one considers its impact. For a while now, industry observers have said that there were too many similar projects going on simultaneously in different R&D organisations, thereby depleting already-scarce resources. Additionally, while many of the organisations were involved in cutting-edge work, their efforts were not bringing in the desired results. The move to merge the R&D organisations into C-DAC is therefore timely, as it is aimed at decreasing overlapping functions, increasing synergies and most importantly, leading to optimal utilisation of resources.

Says R K Arora, C-DAC’s executive director, "With the merger of NCST, ER&DCI and CEDT Mohali, the entire organisation will operate as one mega R&D organisation, where each entity pursues activities in its area of expertise. Further, the expertise brought by various centres would facilitate system integration activities and help the organisation to undertake larger projects." With the merger, the total manpower of C-DAC would be approximately 1,800 people, while the asset base would touch Rs 200 crore.

Benefits

In addition to the huge savings that the ministry could achieve with the merger, the move also increases C-DAC’s core areas of competence. Consider ER&DCI, which has three research centres in Trivandrum, Noida and Kolkata. The Trivandrum centre has done notable work in the areas of forensics, embedded systems, VoIP, wireless security and control instrumentation. Similarly, the Noida centre specialises in machine translation and language technologies.

Though C-DAC too has an expertise in language technologies, which could overlap with the ER&DC’s expertise in the same field, there are some areas that could enhance C-DAC’s strengths. For example, ER&DCI’s Noida-based centre’s strength in bilingual dictionaries could complement C-DAC’s strengths in language technologies. Additionally, ER&-DCI has also developed a set-top box for conditional access, thus giving C-DAC the advantage it needs to tap this market. The third centre at Kolkata too has got phenomenal achievements under its belt, like satellite-based multilingual disaster warning systems and specialised solutions in the areas of tea and jute industries. ER&DCI Kolkata has also been active on the distance education front, which could complement C-DAC’s existing range of e-courses.

Similarly, NCST’s competitive examinations are treated on par with courses conducted by universities. This would give C-DAC the advantage of leveraging synergies and gaining a larger share of the e-education market. Thus, the merger gives both organisations an opportunity to rationalise different, long-term and short-term courses and leverage it to their advantage. The merger also gives C-DAC a presence in over 10 locations on the IT education front.

Challenges

While the merger is a positive step and in keeping with industry trends, the challenge of merging different IT R&D bodies is a daunting one. Expressing his concern, Dr P V S Rao, noted academician and adviser to many R&D projects says, "Historically, each of these organisations were started with a specific mandate and purpose. Over a period of time, each of them developed their own distinctive culture and method of operation. Bringing all these factors together into a single organisation has both pros and cons. Economy of scale is the obvious benefit, from a bureaucratic point of view."

"Also, the synergy between different mutually complementary groups could improve if they operate under a single umbrella. These benefits, however, would depend more on personal equations and cultural compatibility, rather than on administrative fiat and organisational structures," he adds.

R K Arora says the expertise brought by the three organisations would facilitate system integration activities and help C-DAC to undertake larger projects

The organisation has kept this in mind and has formulated a roadmap to ensure smooth integration. While M&As are always a huge challenge, especially in the integration of human resources, it is more important and significant in an R&D organisation. Dr Rao sums up this issue perfectly when he says, "Creative activity that is involved in first-rate R&D has a significant emotional and personal dimension. These issues can be given requisite attention in compact organisations, where individual idea generators have personal contact and share rapport with policy and decision-makers. In large and geographically dispersed organisations, there is a danger that individuals might feel insignificant and neglected." C-DAC clearly has to iron out these challenges before the other organisations start imbibing its culture.

The merger of the IT R&D bodies also emphasises the growing confidence of the ministry in an organisation like C-DAC. For instance, C-DAC is perhaps the only government- backed organisation that generates enough funds (approximately Rs 70 crore in revenues) to meet its own expenses. C-DAC, under R K Arora, has also been gradually shedding its image of an R&D institution, and has undertaken a series of initiatives to give itself a corporate image.

Arora is known to say, "A government institution should not merely eat into government funds and focus only on R&D. As a responsible institution, we believe we should also contribute positively to the coffers. We need a set-up which not only provides an opportunity for developing technologically sound products, but also provides an equal opportunity for marketing these products." In these times when governments too have been cutting down R&D budgets, this attitude could help fund more R&D efforts in the country.

Conclusion

While C-DAC has been successfully able to give its R&D efforts a business focus, Arora’s challenge now is to merge the different cultures of the various organisations and give it a corporate focus. Thus leaving the ministry of information technology with more funds to bridge the ever-widening Digital Divide in India.