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Polaris episode throws up host of issues

Arun Jain and his colleague have been set free by the Indonesian police, which had detained them on a complaint made by a local bank for alleged dishonouring of commercial obligations by the Chennai-based Polaris Software. It may, perhaps, take a while for them to earn absolute freedom from the Indonesian clutches. Understandably, the Indian business community has heaved a sigh of relief. The Polaris episode, however, has thrown up a host of issues, which the software industry in particular, will do well to ponder.

Not long ago, one saw the ugly spectacle of people making a beeline for the non-banking finance companies of partnership and like varieties which had offered unimaginable returns along with a host of freebies under their deposit mobilisation programmes. Demonstrating a `herd mentality' of unheard of proportions, people of assorted learning rushed in to place their faith and deposits in these finance firms only to regret inconsolably in leisure later. Is there a parallel between this and what has happened to Mr.Arun Jain and his official in a foreign land? A close monitoring of the unfolding Polaris story read in tandem with the overall happenings in the software industry will make this comparison relevant.

Competition is good for consumers. Be it the automobile or the cell phone, one is really experiencing what competition can do for him/her as a consumer. But competition can take the life out of producers. The notorious subvention practice by the car makers (where manufacturers provide discounts to dealers), the prevailing `advancing' in the tractor industry (where the customer is delivered the vehicle even before the loan process could be started) and the like have literally pushed many a manufacturer to the edge of the precipice. The Polaris imbroglio has brought into the open the dangers of an unbridled hunt for business from any corner or anyone in the global village.

The IT companies have never fought shy of brandishing their new orders. They sought to do it under the guise of being transparent. Three cheers to their corporate governance practices! But the road to a new client may be strewn with thorns as Polaris discovered much to its dismay in Indonesia. Many Indian manufacturing firms have no doubt ventured into foreign territories not only to sell their wares but also to buy products and look for partners. But their scale of operations has been insignificant compared to the aggressive efforts of their counterparts in the IT sector now.

The Indian IT industry is roaming far and wide across the globe looking for business. Precisely such aggressive marketing has landed Polaris in its present predicament. Unrealistic marketing promises and unmatched delivery schedules, it appears, are concomitant evils of competition.

More often than not, the quest for a new order has seen Indian firms caught in not so legally watertight contracts, leaving them ruing when some hitch develops. With the thrust on `business, more business and still more business', IT firms are ever ready to drive into unexplored markets of the world without any understanding of the people, their culture, system and the law of the local market. One Polaris problem need not make up the industry's woes. Yet, the Jain episode warrants introspection by the entire IT industry. Why can't an apex body like NASSCOM take upon itself the job of advising member firms on market-specific legal precautionary requirements before taking up an order from a foreign firm, especially in countries where legal systems are not well developed?

How successfully could the apex body put in place a workable solution to address this issue, however, is anybody's guess. One view is that software companies should unite to shun suspect clients — howsoever attractive they may be — and countries which have frail legal systems.

Since Polaris is a listed firm and Mr. Jain a high-profile software professional, the whole government machinery and the entire industry rallied around to put diplomatic pressures on Jakarta to secure his release. What would have happened if a not so well known unlisted company had run into this kind of a problem? It is time the industry sat up and adopted a self-regulatory approach to avoid a replay of Polaris-like episodes elsewhere to someone else.

K. T. Jagannathan

in Chennai

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