It was the summer of ’79. For M.S. Rangaraj, a Masters’ student at BITS Pilani then, it was his first week of internship at a Vadodara-based computer systems-making company.
“It was my second or third day. At lunch there was a lot of commotion and animated conversations,” Mr. Rangaraj recollects. On enquiring about it, he came to know that it was the excitement around a huge tender that everyone was sure the company would secure.
Two days later, Mr. Rangaraj came across the same group of people, this time with sullen faces.
“We lost the bid to a tiny little never-heard-before company called PSI from Bangalore,” one of them told him.
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It was the first time Mr. Rangaraj too heard of PSI or Processor Systems India, but it piqued his curiosity.
Known today as ProcSys, it was one of the first IT companies born in what is today’s IT capital, Bengaluru.
The company, which celebrated its 50th anniversary recently on December 29, 2023, was founded by Dr. V.K. Ravindran, his brother Dr. V.K. Harindran and Mr. Ravindran’s friend from Stanford University Vinay Deshpande, in 1973.
From the golden jubilee celebration of ProcSys
The IT boom was still almost two decades away. The term ‘start-up’ was yet to become popular. But, if to go by the words of the current and former staff at the company, ProcSys was much ahead of the times and one of the first Silicon Valley-model companies in India; In Gen-Z terms, the ‘OG’ start-up.
A history of many firsts
Born in the basement of the Classic Building on Richmond Road, PSI envisioned popularising computers with microprocessors.
It started by providing modern computers to Indian industries. A relatively new concept to the Indian market, securing funds as well as clients was not easy.
People refused to believe that microprocessors could be used to run big applications like data centres.
But it was around the same time that IBM exited the country.
The giant was unhappy with the 1973 amendment to the Foreign Exchange Regulation Act (FERA) that capped foreign equity at 40%. Around the same time, several malpractices by IBM, such as misuse of import entitlements and dumping used mainframe computers in India at inflated prices, came to light.
In 1978, IBM packed up its India business.
This, combined with the strict restrictions to establish IT companies in the country then, worked to PSI’s advantage.
In the years that followed the company bagged several ‘firsts’ to its credit. It was the first Indian tech company to provide products and support to clients in the US, Japan and other countries, the first to create application-based systems in India for different industries, and one of the earliest to bring mini-computers to India.
A startup before the startup wave
Mr. Rangaraj later joined ProcSys in 1980. He reminisces how he was fascinated to hear the description of the company from others.
“I was told they were no small company, that they worked out of a basement, were U.S. returnees, worked in their shorts, and there was music being played all the time. I heard that there was no project that this company would turn away. The young engineer in me was excited and I made up my mind that this is where I was going to work.”
The basement office where ProcSys was born was recently renovated.
Walking into PSI’s R&D centre on Primrose Road for his job interview, he was surprised to the interviewers seated on the floor and reviewing a systems design. Three walls of the rooms were covered with printouts of the design.
Mr Rangaraj, who worked at PSI for eight years, describes the time as life-changing as he got to work on dream projects including a computer-based education system funded by the Japanese government.
The job roles at the company were fluid similar to what is seen at young startups today. Kalyana Rao, who joined PSI in 1977 as a young engineer, remembers how he donned several caps - from business development to client meetings to proof-of-concept projects to engineering - during his stint with the company.
“Technology changes so often in our field. But to my advantage, what I learned at PSI was so advanced that I never had to read anything new after that. Whether it was operating systems, databases, communication protocols, embedded systems, or application software… we had done all of those. Technology shifts never bothered me because at PSI we were having technology shifts every month,” he says.
Working with a visionary
Dr. V.K Ravindran, one of the cofounders of the company, was its backbone and brain.
Mr Rao describes him as ‘a slightly different person’ and ‘a man with funny-looking hair, who was rarely seen wearing a jacket or coat.’
Dr. V.K. Ravindran
“Some of us used to ask him why he came back from Stanford. He would answer that the whole IT spend of India was less than the IT spend of a small country like Norway or Sweden, but in the future when India grows, the Indian IT spending will be far higher. He wanted to be part of that future.”
“He would say don’t worry about the whole country, earn enough export dollars so that we can at least pay for all of Bangalore’s petrol by our exports. He never said he wanted to be a billion-dollar company, and people were lifted by his kind of vision.”
In the 1980s, PSI Data Systems was formed as a separate entity. If PSI focused primarily on design and research in the 1970s, PSI Data Systems focused on mass-producing the products developed by the design system. The latter went public in 1985 and was later taken over by Groupe Bull of France in the 1990s. PSI, on the other hand, got rebranded and became ProcSys.
A boon and a bane
Dr. Ravindran’s dream in the ‘70s then sounded like a ‘fairytale told on a moonlit night’ for Mr. Rao.
But proving him right, India saw an IT boom in the years that followed. The IT industry in the country today is close to 250 billion dollars.
While PSI continued to add behemoths from across the globe to its roster of clients, unlike several of the younger start-ups that emerged in the 2000s, ProcSys did not become a billion-dollar company.
What could have wrong?
Several factors played a role, one of them being the timing, says Mr. Rao.
“When you are ahead of time, sometimes you also have to pay a price,” he says. PSI being a pioneer had to create a new market on its own which proved expensive.
Yet another factor was the dearth of private capital. India is home to 111 unicorns today, all plush with Venture Capital (VC) money, but that was not the case then. For PSI all the money had to either come from the cash flow or from banks, at high interest rates.
“The third factor was the dollar to rupee arbitrage. The dollar was only seven rupees in the 80s. So, the arbitrage advantage of using the currency was also not there,” says Mr. Rao, adding that yet another factor was the high import duties.
And then, in 1988, Dr. Ravindran passed away, which Mr. Rao believes was the most telling factor.
A man of ideas
“His vision was unlike anybody else’s,” says Mr. Rao, recollecting an incident.
The customers of a company that Dr. Ravindran visited wanted to know when their products would be shipped from the factory. But accessing that information was no mean task then, and involved booking several trunk calls to the factory, component suppliers and so on.
“Seeing this Ravi came back and told us ‘let’s make an acoustic coupler.’ We had never heard of such a thing before. What he suggested was what we call a modem today,” Mr. Rao says.
“At that time, there was no acoustic coupler anywhere in the world. To make that product was no joke. You had to make the mould, the plastic, and so on. Nor could we get it done cheaply in Taiwan or China then. Ravi always underestimated the cost of manufacturing. He was hesitant to take up projects that were purely software. But his ideas were unbelievable. Had he lived a little longer, he would have been talked about as much as some of the giants of the world computing scene today.”
Slow and steady
The company which initially focused on telecom and data communications works, diversified into industrial communication, industrial healthcare, and IoT in the 2000s.
Hemanth Kumar K.R., vice president - engineering at ProcSys , has been with the group for a long 38 years, and notes that the period up to 2005 was extremely good for the company.
In 2007, the global meltdown affected the company and business became slow. Nevertheless, no employee was laid off.
From the 50th anniversary celebrations of the company.
“We have not laid off any employees for financial reasons until now. It’s been part of our principles. There were times when we had to trim down some salaries, but we didn’t let anyone go.”
“Since 2010 we have been growing steadily. We have remained small and beautiful without trying to grow too fast because our focus has not been on resource augmentation by bringing in more and more people. It’s not about body shopping for us, we are into complete product development for the customer. We are happier off doing good state-of-the-art work and maintaining reasonable profitability,” says Mr. Kumar.
According to Shreedhar. M.R., vice president - embedded software services at ProcSys, the company has been working on high-end technology, high-end data and high-speed products for clients outside as well as inside India. The list includes PSUs like BHEL.
“Since 2010 we have been working in the IoT space and over the last few years, on some of the AI-ML projects too,” says Mr. Sreedhar.
Going forward the company would like to speed up a little and grow from a 100+ team to around 300 in the next three to four years, says Mr. Kumar. “We would also like to do more work in AI, green technologies, autonomous vehicles and so on,” he adds.
Published - January 25, 2024 09:00 am IST
