MindTree's Gardener

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http://www.forbes.com/global/2008/0519/020.html


Subroto Bagchi was the outsourcer's operations chief. But the key to operating, his company thinks, is tending to its talent
At a time when India's outsourcing companies battle a rising rupee, mounting staff salaries and a looming U.S. economic recession, midsize MindTree Ltd. of Bangalore is hoping to buck the trend and grow to a billion dollars in revenue. To pull this off, the 5,600-employee outfit is shifting course. In April its chief operating officer, Subroto Bagchi, was redesignated "gardener" and moved back to India from the U.S.--where he looked after clients--to tend to staff shoots.

In his new role Bagchi, 50, will repot, fertilize and, yes, weed and clip the human resources. In an industry where people are critical, Bagchi and his collaborator, Vijay Govindarajan of Dartmouth's Tuck School of Business, concentrate on what they call "emotional infrastructure," an aggregate of the positive feelings employees have for their company and for one another. It is distinct from the physical and intellectual (skills and knowledge), says Govindarajan, who is on leave to be professor-in-residence and chief innovation consultant at General Electric (nyse: GE - news - people ).

Lest the term "emotional infrastructure" be dismissed as jargon, Bagchi spurns traditional hierarchy by not reporting to anybody and having nobody report to him. He has traded his corner office for a floating desk and no assistant. "He will anticipate future industry shifts much in the same way a gardener anticipates weather change and pest attacks," says Ashok Soota, chairman of MindTree and a former vice chairman at outsourcing leader Wipro (nyse: WIT - news - people ), who founded MindTree with Bagchi and eight others.

The idea is that dispensing with even the new-style hierarchies that have grown up in Indian outsourcing and adding to performance an emphasis on "high caring," MindTree can get an edge on bigger rivals, some closing in on 100,000 employees.

Bagchi will share this high caring in four to six sessions with top employees, many of whom are subject to drift from boredom or frustration. In the sessions Bagchi and the managers will not discuss organizational issues but personal and professional ones. Bound by nondisclosure, the gardener will help the managers to question and reflect. "It is capacity building through self-awareness," he says. Such one-on-one time with a top exec is rare even at midsize outfits.

It has been a decade of dazzling growth for India's top outsourcing firms such as Tata Consultancy Services (other-otc: TACSF.PK - news - people ) (TCS), out of Mumbai, and Infosys Technologies (nasdaq: INFY - news - people ) and Wipro, in Bangalore with MindTree. The industry will export $40 billion worth of services this year, after an era of 30% annual growth rates.

But recently, in the country's Silicon Plateau and elsewhere, outsourcing companies have been buffeted on one side by pressure from overseas customers demanding not just cheaper and faster services but also innovation, and on the other by a shortage of quality talent. In this environment, the large brand-name firms with annual revenues of $2 billion to $3 billion are able to woo the best talent and win the biggest overseas contracts because of scale and expertise.

Other outsourcing firms stagnate in the $100 million to $200 million revenue bracket. "Smaller companies flounder because of the lack of a focused management effort and vision," says Partha Iyengar, head of research at Gartner's Indian subsidiary. Most midsize outsourcing companies, Iyengar believes, are "too late" for the big leagues.

When MindTree was founded in 1999, rivals like Wipro and TCS were already brand names. Infosys got listed on the Nasdaq that year. Though MindTree is growing at above industry-average rates and it early on took up high-end work with the likes of Volvo, Ebay and Epson, its revenues will fall short of $200 million this year. Even with deals such as lately acquiring a controlling stake in smaller outsourcer Aztecsoft, MindTree's late start and challenging environment make it imperative for it to find a way to stand out--to customers and employees. "There is a war for talent out there," says Mohandas Pai, head of human resources at Infosys. Having senior management nurture leadership could give a company an edge, he says.

MindTree's employee-centered practices have encouraged transparency. For instance, its "95-95-95" principle is designed so that 95% of its employees have access to 95% of the information 95% of the time. For such practices, it has consistently ranked on top of a list of favored employers by independent Indian workplace surveys such as those conducted by Hewitt Associates (nyse: HEW - news - people ).

Today much of the industry is hunkering down. TCS recently cut performance-linked pay for its workers. IBM has laid off 700 employees in India. Many top-tier companies are deferring college recruitment. Things could turn brutal when the economy slows, says Tuck's Govindarajan.

Stocks of outsourcing firms, once investor favorites, reflect this funk. MindTree shares are at 483 rupees ($12.07), just over its IPO price on the Indian exchange last year.

In a globalized economy bigger firms have fractured emotional infrastructure because employees are widely dispersed and have no proximity or access to leadership in times of need, says Govindarajan. Typical of outsourcers, MindTree has employees spread across regions in offices in Cologne, Dubai and Denver and has served customers in Queensland, Egypt and Sri Lanka.

So Bagchi plans to spend time with the firm's managers on all matters except for compensation issues or their home lives. This winter he told 45 software developers that they were going on an "unknown journey" and gave them only the start and end times of the trip. They drove six hours in a bus to a coffee estate where they were told to pick coffee berries as part of a learning exercise to appreciate the value of time and money. Many were shocked to learn that together they had picked only 75 rupees' (less than $2) worth of berries in two hours.

The next morning developers were taken to an ancient ruin where Bagchi asked them to correlate design principles of the 11th-century ruins with software concepts like object-oriented design, demonstrating that anything designed and built with care could be immortal. Such mixing among high achievers, Bagchi says, helps them analyze and envision things in new ways. Bagchi also shares books and movies with colleagues.

It is not every day that you discuss career and life issues with a top executive, says Rahul Nambiar, 23, one of the developers on the trip who was initially amused by the title "gardener." "The exercise made people feel special," says Nambiar, recruited to MindTree straight from engineering school.

Bagchi says many top employees have been surprisingly forthcoming. Ashutosh Shukla, nearing 40 and MindTree's head of sales (IT services) in the U.S., came asking for an assessment of his effectiveness. What followed was a session about conflicts and contradictions, and Bagchi asked Shukla to write down an "opportunity statement," a kind of goals list. Bagchi says that at the end of three or four intense sessions, he expects top performers to soar even higher. "All this may look abstract in the short term, but we hope it will have far-reaching impact," says Puneet Jetli, head of "people function" at MindTree.

At the higher end of the chain, the skills required are far more complex, says Bob Hoekstra, former head of Philips' Innovation Campus in India who is tracking MindTree's moves as a globalization consultant in the Netherlands. "Sergeants will not do; companies need lieutenants and generals," he says.

Recession talk or no, Indian outsourcers need talent. By 2009 every third MindTree employee will have been hired straight from college in the previous three years. "My work will be unending in the same way as a gardener is eternally connected to every tree and plant in his garden," says Bagchi. "A gardener's work is never finished."