"If there’s a good company, I am not afraid of acquiring it"

Computer Associates International's president and chief operating officer Sanjay Kumar, 35, has been on the top of the list of youngest pre...

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Computer Associates International’s president and chief operating officer Sanjay Kumar, 35, has been on the top of the list of youngest presidents of Fortune 500 companies. In the three years Kumar has been in this key position, the value of CA’s stock has tripled, and its market capitalisation has risen from $ 6 billion to $ 25 billion. Excerpts from an interview with Rajiv Saxena:

Computer Associates (CA) has made acquisitions of over $ five billion since 1987. Are acquisitions the cornerstone of your expansion strategy ?
No, it is one of the expansion strategies. Strategy really has four pieces. Strong internal development, acquisitions -they are very important also – integration, which is to tie the two together, and then to partner with other companies outside. Acquisitions get a lot of press. So there is this incorrect perception sometime that we are built by acquisitions.

Acquisitions have been very important to the company. That is how I joined the company, for example, 10 years ago. Many people came by acquisitions. I was with CA’s chief competitor at that time, Uccel Software. We have developed very good products internally – our number one product today which sells over a billion dollars a year in software is developed entirely inhouse.

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CA, one believes, is planning to invest $ 100 million in the next five years in India. Won’t the image of an acquisition-hungry company be a handicap?
In fact, that is not an issue to the people whom I have talked to. If there is a good company to acquire, I am not afraid of acquiring it. Absolutely not. But I think it is more important for us to build internally in India than to acquire this time…… (CA India head Ian Hughes interjects to say acquisitions are very uncommon in India). But I believe it will change over time in India.

So are you targeting any companies?
No, really not.

Because none is good enough to acquire?
No, not that they are not good enough, but because they are in different markets. We are in very specific package software business, not for consumers but for big businesses in networking systems management and database kind of products. Companies in India do not build those kind of products…. Yes, the field is quite open. That is why I am making a big investment here. The opportunity for us is also very strong.

Which foreign companies do you see as your competitors in India?
IBM probably is the biggest competitor in the software business. And then there are some very small other companies, most of them not in India… We still cooperate and work with IBM today. However, we do compete in the software business and we have over a long time.

How do you intend to expand in India?
First is the people strategy. Software business is entirely driven by people. We plan to recruit the best talent we can in India for India. Hiring local people is an important part of our global expansion strategy. Even though we are clearly thinking global, we act local. Our sales manager here is local. So is our technical manager. Second, is the infrastructure. So we are investing in building customer facilities to demonstrate our software, offices and those kind of things. Third: it is very important for expansion to recognise that there is a big local market. India has been preoccupied with exporting software. I think it needs to focus internally as well and realise that India itself is a gigantic software market. Last one is entrepreneurship – very important for India and CA. I tend to encourage entrepreneurship within CA all the time.

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What has CA done in India so far?
We have already invested around $ ten million. We would like to invest a hundred more in the next five years or perhaps sooner. We are planning to set up a technology centre, but of a different kind. Everybody is opting for Bangalore. But I think you have to go to a place where you can attract good quality people, retain them for a very long time and give them a standard of living that is higher than what they can get elsewhere. We will be setting up this facility where no one else is going. That is thinking outside the box. We will be finalising the place any day now.

Would you use India only as a hub for code writing or do you have something more in mind?
Most companies do only some offshore development here. I want to build real value in this business… We have a very successful product called Unicenter-TNG. It is today the number one product for management software. There is tremendous demand for building add-on products to manage additional networks and computers. We are working on managing telephone switches, mobile networks etc. As long as I am selling the core product around the world customers want all the pieces around it. I would like to build those pieces here. They will have value by themselves… Yes, India will then automatically be an export base.

Apart from acquisitions, will you be entering into partnerships with Indian companies?
Absolutely. That will be happening in a big way in the next six months… There are a number of very successful IT companies in India – HCL, Infosys, Mastek and a number of smaller ones. I would like to figure out how we can cooperate and create win-win situations. We had talks with some of these companies and will have some announcements in the coming months.