Party UID – The Big Opportunity IT Services Industry!

OK ๐Ÿ™‚ 19 bids have been received against UIDAI’s tender invitation to engage and Application Software Development, Maintenance & Support Agency (ASDMSA) via.

TCS, Infosys, Wipro, HCL and IBM are few among the participants in the competition.

Now before I set to dissect the exercise, let’s take a look at the following sequence-of-events in the tendering process adopted by UIDAI to spend a cool Rs. 190,000 lac in 2010-11 alone. Yeah, you got it right we are discussing the tendering process here.

Progress:

The fate of UID decided with agreeable competition in roughly 24 working days! Or not quite.

The Philosophy:

Anyone, who is in Business today easily understands the rigid & often biased process ofย  Tenders (Bid invitations). The process was developed centuries ago during the era of World Wars when concepts like mass production, supply-chain, competitive bidding took birth etc.

For UID too, the same process was applied. Of course there must have been some work from UIDAI Technical team prior to the dates of tender mentioned above, but those are background processes whose sanctity one could only guess or make out from the nature of competition which one usually sees in similar Government/Corporation tenders.

Information Technology did not exist during World War.

Applying such an old philosophy, in a modern day situation and that too for a Technology driven project where technology itself is advancing at a break-neck pace is nothing less than – (IMHO) – making a fool of oneself. Time and again Government & big organizations have failed to keep up with quality & technology in such an environment. Read this & this if you are not convinced.

In midst of tenders, the checks & balances in the British borne system of Indian Governance (through Vigilance & Technical examiners) are post-facto methodologies and do not help in prevention nor recovery of the lost tax-payer’s money.ย  And the situation is no different from that in some of the most advanced states around the world. Take California, for example. In a recent post on BusinessWeek Prof. Vivek Wadhwa explains how billions of dollars are being wasted with pathetic services and infrastructure because of legacy systems.

He writes “I wrote about California’s IT challenges and encouraged Silicon Valley entrepreneurs to come to the rescue. I cited an example of one system for which the state has budgeted $50 million over several years, which I believed could be rebuilt for less than $5 million in less than a year. I received several credible offers.”

Now is the situation India worse or better than this?

Game the UID project.

Coming back to our subject, in case of UID project too the assumptions of the tendering process make the overall situation look terribly flawed. Seriously. 19 bids may seem enough competition to believe that everything is going fine. But a simple mathematical evaluation & a close look at social tree of industry today can show us that it’s very easy to ‘game the tendering process‘ or at least ‘fool oneself‘.

In case of projects where Government (or technical evaluators) is not very clear about Technical scope of work, they normally adopt a two-bid system and/or hire a Consultant as a stand by. To draft the scope then, the Government offices rely more on “Competing Agencies ” and more often than not almost completely depend upon them. Thus comes in the perfect loophole in the system.

For UID also the situation was no different.

The technical scope is not easy to define and the one which was drafted in hurry and contribution from “competitors” might be manifest with several opportunities for the bliss-mongers. Even in a completely non-ideal situation where the UID work is distributed equally among all the 19 bidders (A Few Good Men, that is) the profit-per-party in work would amount to Rs. 190,000 lac/19 parties = Cool Rs. 10,000 lacs! Amazing figures, to play with right?

Understanding the Social Tree of IT Industry.

IT industry is a big social network. Let us have a close look at the format of human connections and relations here. People in IT industry think alike, work alike and are mostly well connected. Not that there is corruption everywhere (for I fully believe in integrity of these big competing organizations) but is there any “competition” in true sense in this tendering process at all?

It is quite often seen that man-power of TCSes,ย  Wipros and Infys are poached, exchanged and sometimes joked around as well. In such a situation there is very remote chance that marketing wings of the competing agencies are not closely knitted (or aware of information). Now this does not mean that a cartel is place, but if one guy makes a mistake in preparation of Technical scope, the other guy being a participatory member will not correct it unless the opportunity affects his chances of winning the business. Thus making a unoptimized situation.

Here are some flaws in ASDMSA tender that we highlighted earlier, for example.

Predicting the Next

Well I leave this question open for now. Is there a replacement for tendering process? Any strategy which could alleviate us – the tax-payers – over the incumbent mess of tenders. Is there any buyer for this question in the first place?

Anyone around the world if the situation applies.

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