Interesting thoughts

Handling of VIPs at Indian airports: Personal experience

2011-04-10T00:44:00.000-07:00

Last week, I had been to Kerala on a personal visit and waiting at one of the smaller airports. I was told at the check-in counter that my Kingfisher flight's departure to Bangalore has been delayed by 15 minutes. Since such delays are normal at most airports in India, I completed the security check & was waiting in the lounge for the boarding call.

The flight was supposed to leave at 15:15 hrs and there was no sign of a boarding call even at 15:00 hrs. Since this was the only flight at that time scheduled for departure, I was a little annoyed at the delay.

At 15:05, I heard a little commotion in the departure lounge outside of the secured area. To my surprise, Mr. L.K Advani walked in with some local entourage (3-4 guys). I was surprised to see him along with his entourage walk through the security check area without being checked! All this while the CISF guys at the security check gate stood and watched. What if any of these guys were carrying arms / ammunition? Mr. Advani & his folks were not only putting their lives in danger, but also all the other folks at the airport who had gone through a thorough security check.

I am really surprised at the attitude of our VIPs who don't want to be checked. Let us assume that their time is more precious than all others. In that case, let them get priority at every counter at the airport including the security check counter. But, not going through the security check is like introducing a loophole in airport security itself. Any terrorist even with limited expertise can take advantage of this loophole & do anything.

I hear Mr. L K Advani give big speeches when it comes to national security. But he himself seems to be unaware of the dangers of the VIP treatment he is getting. Why can't he table a bill in parliament which will remove the exceptions to VIPs when it comes to security checks? I am more than 100% sure that Mr. Advani is well aware of the dangers of this security hole, but I guess, he is like any other VIP in India who likes to enjoy that special treatment.

In summary, as citizens of India we are very much vulnerable to terrorist attacks with gaping security holes like these. Is there any way out of this? May be Anna Hazare has an answer.

Indian corporates: Do they really pay attention to long-term strategic planning?

2011-03-09T20:35:00.000-08:00

I have been tracking some of the large and medium-sized Indian corporates for sometime to understand their long-term planning. Initially I used to focus mostly on IT companies, but later started looking at other sectors as well. To my surprise, I found that most of the Indian corporates don't do any strategic long-term planning at all!

Let me take some examples to illustrate my point. In the recent Hero Honda split up, I don't think Hero would have wanted the split. I strongly believe that it would have been initiated by Honda. Why? because, Indian 2-wheeler market has become too big to ignore, for Honda. They would have had limited growth if they stick to Hero. So, they would have initiated the split. Now that it is official, Honda can focus on selling bikes on its own. But what about Hero? If I were Hero group, I would have been ready with my own R&D team by now. I am sure it will take another 4-5 years for Hero group to have a good R&D set-up in place. I have my own doubts if they would seriously invest in R&D at all! In all probability, they would tie up with some chinese manufacturers & continue their business.

Take the case of defense deals which are up for grabs. This has been the situation for a long time now and will continue to be so further. This is completely dominated by overseas firms, absolutely no Indian representation. Indian companies knew this for a very long time. Why didn't they build the required expertise and lobby with the government to open up the defense production for the private sector in India? If we can buy from a foreign company & insist on 30% indigenization clause, why not buy the whole thing from the Indian companies? The plan & simple answer is that no Indian company is yet ready with the required expertise to manufacture such products. Companies like L&T, Tatas, Mahindra & Mahindra have been trying to enter this sector now, but don't seem to have any long-term strategy yet.

None of the Indian IT companies have a well defined India strategy yet, while most of the foreign MNCs have figured out how to take advantage of the Indian IT opportunity. In fact most of the large/key deals from both public & private domains have gone to foreign companies so far. The other day I heard Anand Mahindra tweeting in support of Rajat Gupta while one of his companies (Satyam) has been working with SEC for quick re listing in the US stock exchanges! While HCL & Wipro started making computers much before the entry of foreign MNCs like HP & DELL into India, they never leveraged their early mover advantage.

This is not to say that there are no exceptions. Bharti Airtel is one such exception. They not-only came up with lot of business model innovations which set the trend in the Indian telecom space, but what they did made the foreign telecom MNCs sit back and take notice.

In summary, it looks like most Indian corporates don't do long-term strategic planning. This will mean that they will always remain followers of foreign MNCs when it comes to business model innovation. So far, it is the foreign MNCs which are well placed to reap the benefits of the India story and not the Indian corporates. I am sure the Indian corporate realize it soon and start paying attention to long-term strategic planning.

Aruna Shanbaug's case: What really got missed out

2011-03-09T06:20:00.000-08:00

For the last couple of weeks, Pinki Virani's euthanasia plea for Aruna Shanbaug managed to catch media's attention. The judges did the right thing. They elicited medical opinion about Aruna and then passed the judgment that Aruna should not be forcibly put to sleep. I completely agree with the court's argument that no one has the right to take Aruna's life. In fact, our system has failed to protect her and that is why she is in that state. Hence, we (read government) need to ensure that she does not suffer from inadequate medical attention, whatever be the cost. Since the nurses at KEM are taking good care of her since 38 years, let the same arrangement continue as long as she lives.

The judges who passed the judgment in Aruna's case, ignored one important aspect in the Indian laws which is crying for attention. That is about the inadequate quantum of punishment in such cases. This case had provided the right opportunity to bring it into focus and have the government change the laws accordingly. Without very hard punishment, the Sohan Lals who ruined Aruna's life would continue their acts without much deterrance.

Let us take Aruna's case itself. Sohan Lal, the sweeper, managed to ruin Aruna's life forever by his heinous act. If this incident had not happened Aruna's life would have been a great. But, for ruining her life forever, what punishment did he get? Just seven years in jail. In fact it was stupid for the judges to allow 2 7-year terms to run in parallel, in his case. In fact, our laws should discontinue this practice which is unfair to the victim. For the crime that Sohan Lal committed, the magnitude of punishment must have ruined his life. That is when I would say Aruna got justice. The judges did not focus on this aspect of the case at all.

In India, every day, there are so many cases of rape, acid throwing and so many other heinous crimes committed, but the perpetrators of crime get away with very short life terms for ruining someone's life. If you ask me, the cases of rape do much more damage to the victim than a murder. Thus, the laws should get changed accordingly. I would have been thankful to Pinky Virani if she had brought this aspect out in her case instead of assisted suicide. That would have changed the system for good. The court did not have to allow passive euthanasia in any case. It was already being practiced in different forms by the medical fraternity.

In summary, the Indian penal code needs a lot of urgent amendments to make it more effective. This includes de-criminalizing suicide attempts, but unless it addresses the root cause which is the quantum of punishment in various heinous crimes, the suffering of the people would continue unabated which Sohan Lals continue with their crimes.

India's obsession with cricket

2011-03-01T05:17:00.000-08:00

India's obsession with cricket has reached gigantic proportions. The recent lathi charge at Bangalore of ticket-seekers goes to show the extent to which the people are ready to go to cheer the team in the stadium. The iconic status enjoyed by the Indian team in general and folks like Sachin Tendulkar is tending to go beyond abnormal behavior.

No one in our cricket fraternity in India dares to make any negative comment about him even when it is warranted. For example when Dhoni made a statement that the team will win the world cup for Sachin, no one in India made any comment. The Indian team is represents India and not Sachin Tendulkar. But no one had the spine to make this statement. It was Waseem Akram who made a fair statement on this. So far, I have not heard any Indian comment on this one. It is also a known fact (statistics can prove it) that whenever Sachin has scored well, in majority of the cases, the Indian team has lost the match. Does someone like Harsha Bogle have the guts to talk on these lines? Never.

The lure of the IPL money and the clout that BCCI has on International cricket has made things worse. A batsman of high potential like Manish Pandey gets signed for a paltry 20 Lakhs while some one like Virat Kohli who has played just a couple of matches for India gets crores. These kind of discrepancies will induce a lot of corruption in the team selection in a country like India. I would be surprised if it is not true already. Even in the current team that is playing the world cup, there are many players who should not have been there in the team if the selectors were fair in their selection procedure.

Where is it headed? In my view, a time will come very soon when the Indian team will start losing against most good teams. I am assuming that the matches will not be fixed. When the team gets into a losing streak, then, at-least a good number of fans will lose interest. That is the time when I propose that some corporates with deep pockets do the unthinkable. i.e start promoting other sports which can really make a difference to India. Some of these include Gymnastics, Badminton, Athletics & Football. In Badminton & Athletics, we have already seen some stars and hence there is some momentum already, but in the other two, the momentum has to be built up. This would ensure that India's obsession with Cricket comes to an end, sometime in the near future.

Indian Railways: Wasted opportunity?

2011-02-27T06:42:00.000-08:00

A couple of days ago, we had another railway budget. As expected, the monister had no clue how to prioritize things for the railways. It looked like a tamasha. Like a Raja giving away dole to his constituents. In this case, the constituents happened to be the state going to the polls which included the railway minister's home state as well. How long this tamasha should go on? Shouldn't there be an end to all this very soon? In fact, Railways is also one of the important pieces of the infrastructure puzzle which is very much essential to achieve the 9% growth that we everyone is talking about.

To understand the mess that the railways is in, let us atke some examples. Every year, more passenger trains are introduced in the northern & eastern sectors and not southers & western. It is a known fact that less than 10% people buy ticket in the sectors which Railways is prioritizing whereas in sectors which are not getting any attention, most people buy tickets and exceptions are few and far in-between. For example, in Karnataka, there is so much traffic between Bangalore-Mysore, Bangalore-Hubli & Bangalore-Mangalore sectors. If I was running railways, I would have laid 3-4 lines in these sectors and run superfast trains. But, the reality is that each of these sectors have only one railways line built very long ago. I would have built a lot of lines from various mineral ruch areas of Karnataka to Mangalore port to cash-in on the freight traffic.

What needs to be done so that Indian Railways can not only be run efficiently, but also stop its dependency on the government? To start with, it should be converted into a corporation, like SBI or BHEL and allow it to be run by a professional like Sreedharan who is running DMRC. This would ensure that the finances of Railways becomes more transparent and we would atleast know where it stands in terms of its assets & liabilities. Otherwise, it will be Mamatha's word against Laloo's. Someone like Sreedharan who knows how railways works can work out a suitable corporate structure for railways. He may need external help, but this needs to be the first step.

After Railways becomes a corporation with its own CEO & board of directors, the government can slowly start diversting its equity like it did for other PSU's and ultimately make it a completely professional run corporation like L&T. Since Railways operates in a space where having more than one corporation does not make sense, we cannot allow private operators. We just need to ensure that the existing corporation is run efficiently without any government interference. Competition with Airlines & road transport will make it more efficient in the long run, but only if it is not under government clutches.

In summary, Railways needs to come out of government clutches for it be a real partner in the India growth story. Otherwise, its contribution will be as dismal as Air India.

Air India: What should the government do?

2011-02-21T04:56:00.000-08:00

Air India is the best example for a government-run business. Like most government-run businesses even Air India is not run efficiently. It is still buying planes when its debt burden is mounting. If given a free hand, I am sure Air India management would have cancelled their orders, may be reduced its fleet size, let some employees go and many more actions which would have helped them turn around the airline's fortunes. But the government does not care. The results are there for everyone to see. Still we (tax-payers) keep throwing good money after a business in which I don't foresee any possibility of a turn-around. What is the best way out for Air India at this point? Before we get into answers, we need to set some context.

Air India (along with Indian Airlines) was the only carrier in India for a very long time till government decided to open up the aviation sector for private operators. When Air India had the monopoly over Indian skies, its efficiency of operation did not matter so much as it is now. When the government decided to open up the aviation sector for private operators, Air India along with Indian Airlines should have been sold to a private enterprise. In fact this is what the government did with VSNL before it allowed private operators into long-distance telephony. A lot of private enterprises would have been interested in buying into a monopoly even though it meant taking over government employees of Air India and Indian Airlines. An attempt was made in 2001 to sell, but it fell through for lack of buyers. I am sure even now the situation will be the same if an attempt is made to sell it.

The government allowing private operators and retaining control of Air India & Indian Airlines dealt a double whammy for both these carrier. The government control meant that most major decisions required government approval and this literally killed the airline while the private operators thrived. The private operators not only ate into Air India's market share, but also managed to attract performing employees from Air India. Left with mostly employees with not enough motivation to perform, Air India has been losing market share. I would not be surprised if it becomes bankrupt very soon.

What can be done now so that the tax-payer money does not keep going down the drain any more? The best option is to put it on the block and give incentives for the buyer. Without incentives no one will come forward to buy a sick government controlled business with so many demotivated employees as carry-on baggage. The incentives list should include some kind of debt-restructuring / write-off, a tax-holiday and a free-hand for the new owners to let go non-performing employees. With 40,000 Crore debt, no one will be ready to buy Air India. At the rate that Air India is losing money, as a tax-payer, I would be happy if I don't have to pay for keeping Air India afloat. Imagine what would have been the state of Satyam if government had continued to run it instead of giving it off to Mahindras for a pittance.

It is high-time the government gets out of running businesses and focuses on regulating them well. Whether it is oil or steel or telecom, it is a well-known fact that governments cannot run businesses efficiently. The government may have strong reasons to control some businesses but it should exit all services-centric businesses.

In summary, Air India should be handed over to private management as quickly as possible before the losses mount any further. Tech Mahindra bought Satyam because the pricing was attractive. Otherwise, with the kind of risks involved, no one would have dared buying Satyam at that point. Air India has vast assets which includes landing rights at key airports of the world and any good private businessman can run it profitably and this in turn will get money to the government by means of taxes.

Patni Computers: Is the marriage with iGate really worth it?

2011-01-12T06:03:00.000-08:00

Patni Computers is one of the first IT companies to start business in India. While the ones like Infosys, TCS & Wipro, which started at the same time or later have grown quickly into multi-billion dollar businesses, Patni is yet to reach the one billion dollar mark. The reasons are obvious. The promoters were never really serious in growing the business either organically or inorganically. For the last few years, it has been on the block and finally, it looks like Patni has found a suitor in the consortium led by iGate (or is it really APAX partners?). Is this partnership good for Patni in the long run? May be.

In a typical M&A deal, three things matter for the deal to succeed,

1. The company being bought either has a business of complementary nature or helps the buyer to add scale: Patni is helping iGate in only adding scale. In return, Patni is getting aggressive management which was the only ingredient impeding Patni's growth so far.

2. The company work cultures are compatible: On this front, I don't see too much of a problem either since both of them have not reached a size to be called full-fledged IT service providers in the league of TCS & Wipro. I would classify both of them to be operating at the low end of the value chain.

3. Timing: In my view, this is very important. After Tata Steel bought Corus, the steel cycle turned negative and without the deep pockets of the Tatas, it would have been a disaster. In this aspect, if we hit another 2008-kind of situation in the near future, the deal will mean trouble for both iGate & Patni since the PE players will not keep throwing money, but may want to sell off the company in bits & pieces & exit. In this aspect, someone like Fujitsu would have been a better fit for Patni.

Now that iGate has pulled off the deal, it has to focus on completing the formalities quickly and start getting into the details.Here is how I think iGate can make this deal work:

1. Pay enough attention on employee integration, especially retaining key employees.

2. Focus on retaining key customers of Patni. This should not be an issue given the fact that long-term IT contracts are not cancelled /transferred just because of top management change. But the new management must spend time to assure them that they are in safe hands. Phaneesh has a very tough task ahead on this front.

3. Keep a tab on the cash-flow. This may look like a no-brainer for an IT services company. But any serious issue on this front can get the merged company into a lot of trouble. With both iGate & Patni being highly leveraged because of this merger and the presence of a PE player with a significant stake in the merged entity, Phaneesh should tread carefully.

As things stand now, it looks like Phaneesh may just be able to pull it off.

India in a hurry: Are we working towards development or chaos?

2010-12-27T05:50:00.000-08:00

The sentencing of Binayak sen, the PUCL activist from Chattisgarh brings to the fore the way the country looks & treats naxalism. Naxalism is getting equated to terrorism & lot of innocent people are being targeted just because they are protesting against government's inaction. The governments of the day seem to be either hell-bent on taking advantage of naxalism or have tried to address the symptoms at best. No one is trying to address the root cause.

What is the root cause of naxalism? It is a deadly mix of poverty and perceived belief of being wronged. In most of the cases it is true. In a hurry to sanction lands for development (for obvious reasons), the state forgets its responsibility of the need to take care of its citizens in a wholesome manner and provide for their bare necessities at the least.

Whenever land is identified for a particular project, a thorough analysis is not done about the effect of the intervention on the ecosystem at that location. For example, when land is acquired for a mine in a tribal dominated area adjoining a forest, what could be the impact? The tribals who are generally dependent on the forest ecosystem are suddenly reduced to penury since the resource which they depended on is no longer there nor they are provided any alternative means of livelihood. The forest ecosystem is also disturbed, but so far I have not heard anybody paying serious attention to analyzing the impact on the animals & forest ecosystem. Ideally, both the tribals & the forest need to considered together while working on a rehabilitation process. Otherwise, tribals become naxals while the forest animals run into people in neighboring villages & get killed.

The case of acquisition of agricultural land is much more simpler. Either the complete ecosystem should be created elsewhere or people compensated appropriately so that their standard of living does not get negatively affected. In fact, the government should ensure that their standard of living becomes better since they are in a way sacrificing their convenience for the betterment of the country by surrendering their land. Unfortunately, the people who come up with the relief & rehabilitation programs either do not understand what needs to be done or simply not bothered.

So, in a hurry to get more projects off the ground quickly, the governments end up creating Singurs across the length & breadth of the country. In some places, the people succeed in halting the project while in some others, the movements are just suppressed and the result is there for everyone to see. While India's GDP is increasing at a scorching pace, more than half of the country lives in poverty. More development projects will lead to more chaos unless enough attention is not paid towards relief & rehabilitation. The end-result could be a Laloo-time-Bihar kind of situation across the country with affected people taking to unlawful means to earn their livelihood.

Should political parties be run like businesses?

2010-12-06T05:02:00.000-08:00

More than a year ago, seeing the sad state of Congress party, I had written a letter to Rahul Gandhi about the need to fix the rot quickly. Otherwise, the party as a whole is headed towards a state in which it is in Bihar now. I had also asked an audience with Rahul to explain my strategy to fix the rot. I have not heard from him since then. Needless to say, the Congress party has sunken to further lows since then.

What if Congress party is run like a business? For the benefit of Gandhi family, let us assume a comparable family business situation like that of Reliance Industries. If Congress party is run like a business, then the voters will be its customers and different states will be the market segments it operates in. Needless to say, it has to be in No.1 (Delhi) or No.2 (Punjab) position in each of the markets in which it operates. Otherwise, it loses its relevance (Bihar). In markets, where it cannot go alone, it needs alliances (Tamil Nadu). But it needs to ensure that the alliance partners (like JD in Karnataka) do not eat into its margins (voting percentage).

What is really happening to Congress as a business? Sonia Gandhi is the Chairman & CEO while Manmohan Singh is the COO and Rahul Gandhi is the second-most influential director on the board. Sonia's so-called coterie is the list of other board members who influence decision-making. Congress, instead of operating like Reliance Industries, is operating like Hindustan Motors. In most markets it is neither No.1 nor No.2. Even in places where it is No.1 or 2, it is losing market-share very quickly.

Is the situation so bad that Congress is on the verge of becoming history? No. The reason is because the competition is not doing well either. Though BJP controls many major states, it is also losing control. The customers (voters) don't have credible alternatives to move to (like in Bihar). This is what is protecting Congress from becoming history.

What can the party do to stem the rot? To start with, the people who are running the party (Sonia & the coterie) need to get connected with what is happening at the ground level (lowest levels of party machinery). Otherwise, you end up devising strategies which don't work. Rahul's strategy for Bihar is one such example. When some of your business units are continuously making losses, you will have the board spend more time to get into the last detail and take measures to fix the problems. You can't assume that the middlemen will always get you the correct information. This is what is happening in Congress now. There should be a mechanism to verify the authenticity of the information, which is the missing link.

Another item that the Congress, the business, needs to focus on, is to groom mid-level management which does not always look up to the top management before taking any decision. The high-command model is not sustainable for a long time. Congress badly needs good salesmen at the state level & lower who not only do the selling (promoting the party's views & policies) but also do the account management (take care of voters issues) on a day-to-day basis. This is how businesses are managed and that is what Congress needs to do at the organization level.

In summary, it is high-time that Congress party leadership learns a trick or two from the businessmen and runs the party like a business (act like as though there is no tomorrow!) which could potentially become history if the issues are not addressed immediately.

Business Policy: Simple IT strategies which would have worked

2010-12-06T01:57:00.000-08:00

In my corporate career, I have been fortunate to be part of different kinds of IT businesses including start-ups. In the process, I have been involved in situations which required us to come up with solutions to business problems, most of them involving business policy decisions which changed the direction of the business most of the time. I would like to discuss some of the interesting ones for the benefit of everyone.

In one of my first jobs with a leading Indian IT services major, I was thrown into a situation where one of the US customer accounts in the Insurance sector (in the late 90s) was in trouble. When I landed there and had some initial informal conversations with the customer & our folks working there, I realized that the problem was on the customer side. As soon as the first set of folks from our company started working on their premises on-site, some of their employees had got laid off and the word had spread that these two are linked and more heads will roll. I had to work with the senior management on the customer side to ensure a clear message was sent across to all employees that the new IT contract has nothing to do with jobs being lost in other divisions. In fact, I convinced them to hold back some of the other layoffs till things stabilize. This ensured co-operation from the customer side for us to take over some of their IT functions while their employees focused on new application development. This account later went on to become one of the marquee customer accounts for the IT major in the BFSI segment. This is the best example how right messaging can change the whole game.

In one of my stints with a IT services startup started sometime before the dot-com burst, we were focused on one specific technology segment where we had a lot of expertise. When the dot-com bust happened and some of the customers pulled the plug on some projects, the founder-investor really panicked. He wanted to do 2 things. One, layoff some consultants and dilute the focus of the company to include all kinds of services. I had no problem with the first step, but argued that the second step would take away our USP and when things turn-around, we will be classified as yet-another-it-services-company and that can be disastrous. But the founder went ahead with his plan. The end-result was that most of the experts left the company and now, even after 10 years, it has not managed to grow even 10 times in revenue terms & is still a struggling IT services company. Had it stuck with the niche segment where the margins were higher & we had the best people on-board, the company could have done really well instead of being forced to compete with thousand other IT services companies as it is doing now.

In one of my later assignments with a venture capital firm, I had a mandate to come up with business ideas suitable for the India market. One such idea was to build a technology platform for preventive healthcare in India. For this to take off, having at-least one hospital chain as anchor was important as this requires feeding patient data into the platform. None of the leading hospital chains I talked to showed any interest in this idea. But, I later found out that Apollo Hospitals (whom I had approached) had started a similar venture. Another new startup called LifeMojo has also started operating in the same segment. This goes on to show that if you don't pursue your idea someone else surely will. Another idea that I had come up with was to have a SMS based GIS service on the mobile phone. This was in 2006 when there was no market for smart-phones in India. Some companies have started offering this service now. I could not pursue either of these ideas myself as my venture firm could not put the heavy upfront investment required for these content-intensive ventures.

In one of the subsequent jobs where I had a chance to head APAC for a valley-based telecom solutions startup, I realized how biased thinking can prevent someone from seeing the obvious. We had a development center in India and we had finalized channel-based selling strategy for the APAC region since we were too small for going solo. I had also generated some leads in the region. Suddenly we had the 2008 bust hitting us and the US market where we had all our business coming from, orders just vanished. At that time, I advised the top management that the APAC region is the one which is going to recover first and if we aggressively pursue the leads in this region. But, they went ahead and wind down the APAC operations which included the India development center. The company decided to focus on the US market only. The US market has still not recovered fully and Europe is not doing great either while APAC has surged ahead.

In summary, most of the so-called strategic decisions of companies are just simple changes in the way business is done and most of the time, companies end up making the wrong moves without seeing the obvious. The experiences I have shared is just a small sample of what really happens in the corporate world on a daily basis.

Value-sourcing: Next frontier for Indian IT MNCs

2010-12-02T05:36:00.000-08:00

The Indian IT companies, most of them, including the likes of Infosys, TCS, Wipro, etc. have had a very good run so far. They have been reporting good results quarter on quarter, good profit margins, good growth & good outlook. Is this growth sustainable in the long run? Yes, if these companies are ready to move up the value chain instead of focusing mostly on the low-hanging fruit, as they have been doing till now.

In order to put things in perspective, some discussion about the way the Indian IT industry has grown so far is due. In the first round of out-sourcing / off-shoring that started in late 80s & ended during the dot-com burst, we saw most of the IT companies do well irrespective of their size. This was possible because the cost-differential was huge and even companies operating at the 3rd or 4th level in the out-sourcing chain could make a decent margin.

The dot-com burst of 2001 changed the rules of the game. Most of the corporations across the world had become aware of the benefits / pitfalls of out-sourcing, off-shoring and also the costs / risks associated with it. Hence they started demanding more. This reduced the number of layers in the out-sourcing chain leaving less room for the smaller players to make money, unless they could offer some special advantages like domain expertise, very good understanding of the client's business, etc.

Post 2004, lot of changes were happening in the emerging markets like India, which started seeing a lot of development. With double-digit growth year after year, the developed world started taking notice. Corporations across the world started focusing on India as a market for their products / services in a big way. This included companies like IBM, GE, DELL, HP, CISCO etc. While the world started focusing on India in a big way, the Indian IT majors still continued to focus only on overseas markets without making an attempt to understand the long term implications of that strategy.

Now, in 2010, most of the big Indian IT MNCs are still doing well, but their margins have reduced. They are going after billion dollar contracts, but the competitors like IBM, HP, Accenture are way ahead. With so much cash on their books, what is that our IT MNCs are not doing right to make the competition even? In order to understand that, we need to dig deeper into the competencies that Indian IT MNCs have managed to build so far.

Indian IT MNCs, including Infosys, TCS, Wipro started off as body-shoppers and that was their main business till late 90s. After the dot-com bust, most of them started focusing heavily on fixed price contracts as the margins were higher there and also they had mastered the global delivery model. At the same time, IBM, Accenture and other global MNCs realized that the Indian IT MNCs have an undue advantage in terms of their heavy off-shore presence. To off-set that they started investing heavily on building their off-shore presence here. In addition, they also started looking at India as market and started beefing up their sales/marketing organization here.

Another area where companies like IBM & Accenture score over their Indian counterparts is domain expertise. Over the years, consciously, the IBMs have built domain expertise in key business verticals as well as technology horizontals. The Indian IT MNCs have realized this but their approach to bridge this gap has been patchy at best. The Indian IT MNCs must first get their definition of domain expert right. They think that anyone who has worked on Insurance projects for 7-8 years is an expert on Insurance. Some of them even went to the extent of hiring retired bankers to beef up their banking domain expertise.

In my view, a domain expert in banking would have spent lot of time in not only understanding the banking domain, but also the kind of technologies being used in the industry. He/she would also be an authority on the direction the industry is taking in terms of application of technology for better ROI (Return On Investment). Unless an IT major has top-of-the-line domain experts, they cannot even bid for taking over entire IT function of large corporations like Citibank, Walmart, Airtel, Exxon Mobil etc. Even in case of well-established relationships, the IT majors need to work with their client businesses as partners. To be able to do that, they need to understand the client's business domain very well. Companies like IBM & Accenture, I hear have folks who can operate at that level.

After having discussed the state the Indian IT majors are with reference to their foreign counterparts, I would like to propose a long-term solution to the problem. Before I discuss the solution, a little context-setting is necessary, especially with regard to the growth of the Indian IT MNCs.

In the first era of out-sourcing, the Indian IT majors were well positioned to cash-in. During this era, the focus was mostly on body-shopping kind of contracts. In the next era which pretty much ended with the 2008 bust, the focus was on fixed price contracts, but the mindset did not change. The Indian IT majors still focused on $ per hour before they even decided to bid for contracts. That is why we did not have any Indian IT names even being heard when the high-profile Bharti contract was signed not too long ago. The current era, which, in my view, started after things stabilized (2009-10) and the focus totally turned on emerging economies, the focus is going-forward will be completely on value which I would like to refer as "Value-sourcing".

There are two reasons why I feel "Value-sourcing" is the way-to-go for Indian IT majors. Firstly, we Indians have always looked for value in anything we put our money on. It is in our DNA. Secondly, for organizations, it is not what they spend on IT which counts, but the ROI (nothing but value) is what counts in the end. For example, in the IBM-Bharti deal, I am sure nobody would have discussed in terms of rate per person-hour, but instead focused on SLA (service-level-agreement), penalties for not meeting SLA, how to tie payments to IBM to Bharti's revenue & customer-satisfaction etc. Our Indian IT majors have realized this and have started making amends, but they have lost a lot of time already.

Secondly, Indians have traditionally been very good at analysis, number-crunching, etc. This particular quality, coupled with a lot of domain expertise is what will prepare the Indian IT majors to succeed in this era of out-sourcing. For example, if Wipro goes to Reliance Industries with a proposed solution which will help Reliance increase their operating efficiency by 10%, won't Reliance sit back & listen? definitely yes. For a company of the size of Reliance, a 10% reduction could even mean a couple of billion dollars which is almost equal to Wipro's turnover for a quarter. The analytics business, if leveraged well, can give the Indian IT majors a good foothold not only in India, but also outside India.

The "Value" business of which the analytics business is a sub-set does require very strong domain expertise, good understanding of the market and attention to detail. But the most important is of-course the ability to find patterns / trends which need be identified for the clients much ahead of everyone else. This is where the Indian IT majors can leverage a fast-growing domestic market to try out their "value" offerings and take it to the world market at pretty much the same time.

In the first era, companies looked for software & services, both of which were expensive. In the second era, they started looking at solutions and not software & services separately. In the current era, the businesses are looking only for "value". Before they spend any money on IT, they want to understand what return they can expect from their investment. To cite an example, at the height of the financial bust in 2009, one sales person known to me was trying to convince a top-10 bank in the US to buy his high-end contact center solution which would enable them to handle all forms of media (voice, chat, e-mail, ...) together. An excellent proposition in the by-gone era. In this case, the customer refused to upgrade saying that the ROI is not convincing enough to make the investment ( just a few million dollars for a Fortune-50 company ).

In order to re-iterate the potential of value-sourcing, let us take a few illustrative examples. Every company operating in India will be launching new products / services as frequently as their industry segment requires them to. Each one of them will also be running lot of internal initiatives to improve efficiencies, increase customer satisfactions levels, look at new market segments, etc.

Let us take a FMCG conglomerate like Hindustan Lever. By now they must have already invested sufficiently in IT across different departments and also at the corporate level. They would already have an SAP solution (or similar) across different processes, a good call-center solution to handle customer calls & other software / solutions used in their domain. In all probability, they already would have out-sourced their entire IT function to a third-party like IBM or TCS. Most of Hindustan Lever's competitors would also be in a similar situation. Under such circumstances, if someone like Wipro wants to increase their market share in the FMCG vertical, where do they start? They will have to either wait till contracts come up for renewal or pray for the existing vendors to goof-up big-time.

The other option is to look at what kind of solutions would add value to Hindustan Lever's business either in terms of top-line growth or improvements in bottom-line. What could this be? If customer service at Hindustan Lever is really bad when compared to its competition, Wipro folks can try to figure out how that can be improved. It could be just that Hindustan Lever is using an outdated set of solutions for handling customer service or they may not be running it efficiently. In either of these cases, Wipro can really come up with a better solution and go to Lever with the clearly articulated ROI (like extra investment of $1 million which will improve customer satisfaction ratings to 90% or more and also saving $0.5 million every year due to increased efficiencies) Hindustan Lever will definitely be interested. This is a classic case of identifying the customer pain-point & proposing a solution to address it.

Let us take another case where a particular customer has everything going right and no visible pain-points. Even in such cases, they will be ready to listen if the IT vendor that they are dealing with comes up with a solution / offering which will make their business more profitable or enable them to grab more market-share or even better help them expand the market itself. As we all know, IBM is running Airtel's IT in India. Airtel's 2G business has almost reached saturation. How does IBM increase its revenue from Airtel under such circumstances? IBM has complete access to Airtel's data. They can do wonders with that. Lot of analytics can be done and patterns identified and solutions proposed to the customer. If one such solution can enable Airtel to reduce the tower-density by 50%, wouldn't they be ready to pay even a fortune to IBM to buy that kind of a solution?

In summary, value-sourcing is all about showing customer the value. Indian IT majors are well positioned to leverage the India advantage in order to move up the value chain. It does require good amount of up-front investment. Are the Indian IT majors ready to make that investment? I am not really sure about that, going by the past trends, but hopeful that I am proved wrong.

Is India fundamentally right or left?

2010-12-01T23:29:00.000-08:00

When India became a sovereign republic in 1950, we choose to be secular in our leaning. We have fundamental rights guaranteed in our constitution that guarantee every citizen the right to freedom of religion. But, is the noble intent outlined in the constitution really implemented in both letter and spirit? This is what I will try to delve into in a little more detail.

Firstly, no country in the world is secular in the true sense of the term. The religion of the majority will definitely influence the policies of the country. I am not saying that is bad, but knowingly or un-knowingly this changes the colour of secularism. In most of the countries the people belonging to minority religions do get heard but whether this gets translated into policy measures is a big question mark.

In India, the policies of the government have been more than accommodating by making exceptions to the minorities, especially with regard to personal laws, which, according to me, instead of benefiting the minorities is working against their progress!

As a country, in order to make sure that everyone is treated equal, we should have a common set of personal laws irrespective of religion. It is only then the country will be able to guarantee religious freedom to everyone. Otherwise, each religion will try to hold a given set of people to ransom by chaining them to their religion-specific principles interpreted wrongly for the benefit of some people while the rest suffer. This is what, we, as citizens should fight for. Instead the fight mostly ends up taking a communal colour.

Secondly, what most people in India, especially the intellectual folks, are not ready to accept is the fact that the secular fabric of India was destroyed beyond repair much before independence! We could blame the leaders at that time for this situation, but we are better off in trying to figure out how we can have uniform personal laws so that some section of the society does not suffer at the cost of the other.

The role of religious institutions in destroying the secular fabric of the country is not understood very well, courtesy the partisan media. Each media house in India is associated with some political party or the other. This distorts the focus of their reporting and the viewers don’t get the correct picture. Whenever some religious clashes happen in India, which generally have some political backing, I have not seen a single instance when the media has tried to get to the bottom of it.

In conclusion, is India, as a country really secular or is leaning to the right or left? I am tempted to conclude that we are right leaning at heart, but publicly claim that we are left leaning. This dichotomy has to change if we have to prosper as a true democracy. I am not even sure if this can happen in this century!

Karnataka crisis: Options before BJP central leadership

2010-11-22T07:35:00.000-08:00

The attempt by BJP central leadership to replace Yeddyurappa, the Karnataka chief minister, has landed them in a spot. With Yeddyurappa refusing to resign, what are the options before the BJP central leadership? Not many. Before we get into those details some context setting is needed so that the options can be put in perspective.

First of all, Karnataka is the only place where BJP has a government in the south. Yeddyurappa and his close confidants have been with the party from the beginning and have been through its thick & thin. But, not too long ago, Yeddyurappa had lost his security deposit in an assembly election. It was only after he became the deputy chief minister for the first time, he can claim some following.

Secondly, Yeddyurappa's craze for the chief minister's chair has been well-known. On that count, his behavior now is not totally unexpected. But the support that he is claiming to have from the religious mutts is due to some magnanimity that he has shown for those institutions earlier. For someone in the position of power, buying the support of seers is not difficult.

Keeping the above two points in mind, the BJP central leadership has 3 options in front of them.

1. Allow Yeddyurappa to continue in the chair with some cosmetic change in the composition of the ministry. This option is not feasible because Congress & JD(S) will try to stall the assembly proceedings and the congress government at the center can also possibly invoke president's rule.

2. Throw only Yeddyurappa out of the party and warn his followers of similar action if they continue to support him. Most of them may fall in line while a few of them may show solidarity with Yeddyurappa. But most of the BJP MLAs are not ready to face the elections at this point with so much taint on their government. This may ensure that the government would survive & even if it falls, BJP should be able to face the elections confidently by boasting of being on moral high-ground.

3. Allow Yeddyurappa to nominate his crony to be the chief minister. The danger with this option is that people can see through it if the opposition plays their cards well. This would ensure that BJP will be defeated in the next assembly election whenever it happens.

In my view, option #2 is the best option under the present circumstances. That would ensure that BJP's image will not suffer much and they will be able to fight a snap election also, projecting someone else. After all there are very few people (less than 10) in BJP who can win election on their own. The rest will need party's support to win. This includes Yeddyurappa also, if he is thrown out of CM's chair at this point.

If Yeddyurappa is allowed to continue and manages to dissolve the assembly, it is a disaster for the BJP. He seems to think that he is bigger than the party and that needs to be fixed quickly before things go out of control. Going by the past behavior of the major political parties, I think BJP central leadership may choose either option #3 or option #1 but not option #2. Seeing the way the BJP leadership has handled the situation so far, we may have to wait for another week or so before we see any action on the ground.

Oracle's Sun Acquisition vs Dell's acquisition of Perot

2010-11-22T00:28:00.000-08:00

Oracle acquired Sun Microsystems after a long battle while DELL did not have much difficulty in making the Perot acquisition. While both the acquisitions seem to fit well with the long-term strategies of the two companies, i.e Oracle & DELL, depending on how they go about integrating these acquisitions will decide if they will be able to derive any value from these transactions.

Oracle is a software product company which also offers services around its products, which are essentially solutions involving its products. DELL is a computer manufacturer which has done extremely well in computer hardware including desktops, servers & storage. So, the DNA of both these companies is different. One is a whole & soul software company while the other a hardware giant.

Oracle gets a good hardware portfolio from the acquisition of Sun. Sun's strength is servers and that is what Oracle's software runs on. This would help Oracle offer complete solutions (hardware & software) which otherwise it could not. But the key here is the role of hardware. Most of the money will still come from software & services while the hardware will make the solutions complete (one-stop-shop).

DELL gets a services portfolio from the Perot acquisition. Perot's strength is in the healthcare, government & data center business verticals. Hence the services portfolio is still not complete. Key verticals like BFSI, Retail, Automotive & Telecom are missing. DELL may be trying to take the IBM route to grow to the next level, but IBM has a very strong software portfolio in addition to a very good hardware (mainframe & servers) business. But most of DELL's revenue still comes from Laptops & desktops.

In my view, if Oracle uses Sun as a supporting aid in its software & services offering, it can derive maximum value from Sun acquisition. In all likelihood this is where it is headed. In the case of DELL, it should use its servers & storage business to support its services business. This seems to be very unlikely, given its DNA. Hence DELL may not be able to derive much value from Perot acquisition in the near future unless it manages to transform itself into a services-centric company from being manufacturing-centric.

Congress Party: Has it become totally Gandhi-centric?

2010-11-21T23:28:00.000-08:00

The Congress party, which was mostly headed by the members of the Nehru family after independence is turning quickly into a Gandhi-family centric party. Is it a new phenomena? The answer is no. Even during Indira Gandhi's time, the situation was similar. It was only during Nehru's time, there was some room for others views in the party fora. What will be the likely fallout of this? To find out the details, we need to dig a little deeper.

During Nehru's time, he was the tallest leader that the Congress party had. But, there were other leaders who have made significant contributions. This includes Patel, Ambedkar & a host of others. But, there were cases like that of defence minister Krishna Menon's which did embarrass the party, but Nehru could brush it aside because of his stature & influence.

During Indira's time, she ensured that no other leader in the party grew big enough to challenge her authority. Whenever it happened, the punishment was severe. Very soon most of the congressmen realized that it is the cronyism which gets rewarded and performance took a backseat. This started the rut which ended in emergency and subsequent Janata government. Indira managed to break the Janata party and managed to come back to power, but unfortunately could not last longer.

Rajiv Gandhi started off very well, made the right moves, but the party, which was used to cronyism ensured that Rajiv did not make much progress that he wanted to. He made some of the worst mistakes like the Shah Bano case which will continue to haunt the country for a long time. Nehru's gift to India was the Kashmir problem which Indira allowed to grow, while Rajiv's gift was his inability to enforce uniform civil code when he commanded 4/5th majority in parliament and had a supreme court verdict to help him in his efforts.

Now, Sonia & Rahul are also trying to cultivate the same breed of cronyism. This is leading to most of the top leaders being spineless and non-performers. Take the case of former home minister Shivraj Patil. The way he handed 26/11 was a disaster. At the state levels, the party is headed mostly by those loyalists who do not have neither a mass base nor have their own point of view on any key issues. In quite a few key states like Maharashtra, Tamil Nadu, Karnataka & West Bengal, the party has been piggy-backing on other regional parties for a very long time. In quite a few other key states like UP, Bihar & Gujarat, it has no base.

Where does the party go from here? Rahul Gandhi made all the right noises like his father. He talked about democratization of the party, but with no real action on the ground. He picked up good issues to talk about, but only in opposition ruled states. In most of the opposition-ruled states, the party has not been raising any real issues to keep the state governments on their toes. Karnataka's case is the best example for this.

In order to change things for the better, the party high-command (Sonia & Rahul) need to groom the next level of leaders who are capable individuals who are allowed to speak their mind and implement their views. The party needs more intellectuals who can bring in lot of experience in different fields to ensure better governance. It is not difficult for the party to attract better talent, but the party needs to change its DNA to become more democratic & accommodating.

2G Scam: Curious tale of a Raja not agreeing to be the fall-guy

2010-11-12T09:19:00.000-08:00

The Indian media was quick to pick up the next scam after Adarsh and expectedly started making a lot of noise. Political analyst after analyst is analyzing different aspects including why Raja should resign, what should the congress do if he does not, etc. But all of them, may be intentionally, missing one important point here. That is the role of the Prime Minister's office. I suspect that a scam of such a high magnitude is not possible without the involvement of many more key people in the government. When Raja is crying foul that the PMO was in the loop in all these actions, why is media not exploring that angle?

The 2G scam is like any other scam that we have seen in any government and the current government is not an exception. In each of these scams, every time, when it becomes clear that the government cannot deflect the blame to someone else, they try to quickly identify a fall guy who is asked to resign. After that, the media moves on to the next scam and the show goes on. The guy who resigned, generally goes scot-free unless he/she is very careless & had left too many clues that he / she could be nailed.

What if the fall-guy refuses to resign? He /she will become another Natwar Singh. So, guys generally end up taking the resignation route so that they are rehabilitated by the party later.

Raja's case is a very interesting case. He does not belong to the congress party and has the solid backing of his party boss Karunanidhi. Now, the congress is trying to make Raja the fall-guy. Whether Raja is guilty or not will be revealed by investigations that are going on (assuming they are allowed to reach their logical end), but why will Karunanidhi agree to sacrifice Raja for the sake of congress? First of all, he does not care who is ruling the center. He is just bothered about his state where, even if the congress pulls the plug, he will have to go to polls this year itself instead of the next year. So Karuna's reaction was expected.

The only thing that is not clear in this whole drama is the next move by the congress. With Raja pulling in the NDA ministers also into the discussion, the BJP may not want to drag this too long if the telecommunication ministers in the NDA government can be faulted for their actions. In all probability, the congress & the BJP may come to an understanding and wait for the next scam to blow this one off the table. Anyway the congress party knows that the investigations that are currently on are not going anywhere (for obvious reasons).

In summary, this scam will also run through its course and die its natural Indian death ( by inaction of course ). That is resurgent India for all of us.

Indian IT companies shying away from big-ticket acquisitions

2010-10-24T00:03:00.000-07:00

India has produced quite a few success stories in the IT space with the likes of Infosys, Wipro, TCS, HCL, Tech Mahindra, Satyam, Patni, etc. Each of these companies, without any exception, have grown mostly through the organic route. It is not that they did not do any acquisitions. They did. But none of them were worth more than the revenue from their largest customer. Can the Indian IT companies reach the next frontier without big-ticket M&As and consolidation? When I tried to dig deeper into the reasons behind this, what I found was interesting.

Firstly, most of the Indian IT companies are either family businesses (HCL, Wipro, Patni) or cash cows of big business houses (TCS). Though Infosys is an exception, it was never considered a serious risk-taker when it came to growth. When companies have such background, we can only expect them to be very conservative when it came to M&As. Mahindra group buying Satyam cannot be considered a classical case of M&A because it was a classic case of government intervention & fire-sale at the same time.

Secondly, when you go for big-ticket acquisitions, there is always the question of control of the merged entity. Most of the Indian IT companies will not be able to handle that situation well. They are used to having most of the decision makers in India while some local folks are taken in at on-shore locations to handle the clients. Let us take the case of Infosys & Cap Gemini merger which was talked about some time ago. If that had materialized, I am not sure if the Infosys would have managed that well. It would have been an utter failure given the management structure at Infosys. I have not heard of any other Indian IT biggie even thinking of a big-ticket acquisition.

Going forward, I don't think Indian IT companies can afford to shy away from taking the M&A route to reach the next level. That is because, most of IT companies are engaged in IT services and don't have any clear USP which differentiates one from the other. None of the Indian IT companies have invested heavily into developing functional expertise which is key to win large deals. To make things worse, foreign IT companies like HP, DELL, IBM, Oracle, etc. have very strong India presence as well as other cheaper offshore locations. So, when big-ticket IT deals are up for grabs, Indian IT biggies are up against formidable competitors who can offer more complete solutions (Hardware, Software, Consultancy) than these guys can.

Now the question is what kind of acquisitions that the Indian IT biggies should go after so that they are not only successful in managing the integration and grow to the next level, without too much of disruption? The answer is not simple. They should go after companies which can get them formidable leads in specific verticals as well as key markets. For example, when DELL acquired Perot, one thing which mattered most, in my view, is Perot's leadership in Government,Healthcare and Infrastructure verticals in addition to having a strong offshore presence. Indian IT biggies have a strong offshore presence and hence they need to go for acquisitions which will get them strong advantage in specific verticals and leadership position in key markets.

Indian IT companies need to go after finding companies like Perot which can quickly get them to leadership positions in specific verticals. But, for such mergers to succeed, the top management of these companies should change their mindset from being offshore leaders to business enablers. I still don't see that shift happening yet. With Indian economy on a roll, Indian IT companies are enjoying phenomenal valuations. At the same time, foreign companies, because of the muted growth in their base locations, have very low valuations. This is the time to go after good acquisition targets and make it happen. Indian IT companies which capitalize on this opportunity will manage to scale to the next level. The rest will become acquisition targets of the successful ones, later.

In summary, it is high time Ratan Tata takes similar risks that he took while acquiring Corus, with TCS as well. It is high time Indian IT companies start looking seriously at the M&A route on a much bigger scale and different focus, in order to survive and thrive to reach the next frontier.

The Ayodhya tangle

2010-10-02T10:17:00.000-07:00

The country waited with a bated breath for the Allahabad high-court verdict on the Ayodhya issue. Lot of people expected violence if the ruling goes against any one community. But left to people, no one wants mindless violence in the name of religion. It just does not help anybody, except the political class. That is what happened on Sep 30, 2010. It was a wonderful precursor to Oct 2nd.

What I did not like about the aftermath is the way the media behaved. The Times of India carried a headline "2 parts to hindus & 1 part to muslims". These kind of headlines are not expected from a national daily like Times. Even they proved to be not better than the political class. This clearly showed that even they are not truly independent.

The very next day, the same Times carries 2 headlines "Mulayam feels muslims are cheated by the verdict" and "Some mulsims open to move mosque as a goodwill gesture". While the former is again irresponsible journalism, the second one is a welcome move.

Let me shift focus back to the problem on hand. The problem at Ayodhya is only the tip of the iceberg. The real problem is the trust deficit between various communities in India. This is the root cause for each of these flareups. In fact, there are facts which prove that muslims never attached any special significance to Babri Masjid till it was demolished. The act of demolition is not acceptable, but that allowed the political class to divert attention of people from the real issues to an insignificant issue.

The best way to solve this issue is to just allow it to fade away from peoples memories. The current generation does not care about places to pray, but they do care about opportunities to prosper with better education & job opportunities. It is only when people don't have enough opportunities, we will have a class of people who want to make a quick buck by using other means.

In my view, the best gift by any government to all communities in India is having a uniform civil code. This will remove a lot of oppression we are seeing in different communities in the name of religion. Rajiv Gandhi had this golden opportunity and he was foolish enough to let it go.

In summary, both the hindu & muslim communities can live without one extra temple or mosque at Ayodhya, but not stay hungry without opportunities to earn a decent livelihood.

Yet another naxal encounter. But we refuse to learn.

2010-04-11T00:10:00.000-07:00

The Dantewada massacre resulted in the death of 75 ill-equipped, inadequately trained CRPF personnel. Was this avoidable? Yes. But the government refuses to learn from such attacks. All that happened was a political drama staged by the home minister. Like 26/11 we just refuse to take appropriate action All the people, including our beloved prime minister just talk. But what is missing is real action on the ground.

To start with, let us delve into India's history to understand how we have handled such insurgencies in the past. The problem in the north-east is the best example. There we have the bodo problem, problem in Nagaland, Tripura, & pretty much the whole of north-east. The root cause of the problem is exploitation of the natural resources of the region without the natives getting anything in return. It is this unfair treatment which has made people revolt against the establishment. The government has still not figured out the best way to handle the situation there. How can we expect it to handle similar uprisings well?

The naxal movement in Telengana (Andhra Pradesh) is another example where the state government managed to (that is what they claim!) suppress the naxal movement. The end result was that the naxal leaders migrated to other parts of India. What was Telengana's problem yesterday became some other state's problem. Unless the government tries to address the root cause, there is no end to this problem and it will surely hurt the long-term development prospects of the country.

What should the government do? Whenever massive projects are conceived, the government must take the people in the affected region into confidence and make them party to the decision-making process. They should figure out a way to make these people stake-holders in these projects so that they will be able to reap the long-term benefits that accrue because of undertaking the project. The land-acquisition & the rehabilitation process should be transparent unlike what is prevalent today wherein only some middlemen benefit.

What would happen if the government takes the casual approach towards this issue? Like what has happened in heavily naxal-infected areas in north-east & Bengal, people would hesitate to invest in those areas. Already the naxal problem has spread to almost half of the country. In no time, it would spread to the rest of the country unless urgent measures are taken to address the root cause of the problem, which, in my view looks very unlikely.

In summary, the central and state governments in India are not taking a proper approach to solving the naxal problem. Instead, all the measures that are being taken is making the problem bigger and probably reach unmanageable proportions. Unless this changes, we may not see any improvement in the situation on the ground.

Elected Councilors - Can they be made more effective & accountable?

2010-04-05T21:20:00.000-07:00

In Bangalore, we just had one more election, but a very important one at that. It was an election to select the local councilors. It saw a lot of money being spent (invested?) by the wannabe councilors and they would be spending the next five years maximizing their returns on their investment. If they have some time left, they will attend to the civic problems as well. We seem to be in a very sorry state. What can be done to improve things, for the better? Let us first look at the root cause of the problem and see if any remedies are possible.

To start with, we should understand what the local councilor (corporator) is responsible for. He / she is responsible for the basic amenities of approximately 20,000-30,000 people. If any of these folks have problems with basic infrastructure or services provided by the city corporation, they turn to the councilor for help in resolving the issue. Effectively, the councilor is the admin manager for a corporation with 20,000 employees.

What does the councilor get for being the admin manager for a 20,000 member organization? pittance. He / she gets a meager sitting allowance (Rs.500) for attending council meetings and some other benefits like telephone & some other small allowance. So, in a way, the councilor is doing social service with near-zero official compensation. What do they do to work around this? They find other ways of making money. If a seasoned professional wants to become a councilor to serve people, he / she should have enough money to sustain assuming he / she wants to remain a honest councilor.

In summary, the problem is with the system and not with the people. Unless we fix the system to properly compensate the councilors for the work they do, professionals will not contest the elections as they have no incentive to do so. The only remedy is to have knowledgeable people filing PILs (Public Interest Litigation) to have the courts render judgments to fix the system. Otherwise, we will keep complaining about corruption, nepotism, non-accountability etc.

Is the Indian growth story sustainable?

2010-03-25T10:17:00.000-07:00

Everyone in the world is talking about the India and China growth story. India is considered one of the hot emerging markets. But is this economic growth sustainable in the long run? I am not really sure. I say this because of the inherent contradictions that the country is struggling with, which makes this growth non-sustainable. To understand what I mean, we need to dig a little deeper instead of just scratching the surface.

Firstly, India is no-doubt one of the hottest markets for every one in the developed world who are used to low single-digit growth in their respective countries. India offers a great opportunity to all these entities to balance low growth in developed markets with phenomenal growth in the emerging markets like India. They are looking at India as a fast growing market. But, what will they do when this growth slows down is anybody's guess.

Secondly, the government's role in the growth so far has been minimal. It is true that the software & other services industries grew faster because of the tax incentives, but that was not the only reason for their growth. The government is planning to spend a lot of money on infrastructure, power and other areas which are essential for this growth to continue. But is the pace with which these are getting implemented enough to sustain the growth? the answer is no.

Thirdly, with the way the government is going about implementing its industrial policy, be it SEZs or steel plats or power plants, it is introducing a lot of hardship to the people who are getting affected. In the newspapers, we mostly read about who all made money when Tata set up their Nano plant in Gujarat. But what we don't get to know is the number of Singurs & Nandigrams which are waiting to happen. This will create more naxals and every state will wait for its turn to become another Bengal.

If we put things (that I have mentioned so far) in perspective, we can easily understand that the India growth story which we are all proud of, will probably not happen in such a grand scale after all. Because of the way things are being handled now, a big pause in growth is waiting to happen. The pain such a pause is going to cause is not very clear at this point.

Is there anything that we can do to prevent this from happening? Yes we can.

To start with, there should be some method to the madness of acquiring land for industrial purposes. We should have designated areas where industries are permitted. This will bring some order to the process of acquiring land. In addition, the government should let some independent third-party agency handle the compensation fixing & distribution process, which needs to done scientifically rather than the way it is being done now.

Secondly, we should stop welcoming investment in every sector just because someone is ready to invest big money. The government & the scientific community needs to focus on the long-term impact these industries will have on the environment as well as the people getting displaced. It is the improper rehabilitation plans which are the killers in most cases. We should figure out ways in which the displaced people can be made stakeholders in the development which happens because of their sacrifices.

Finally, the way the infrastructure is getting built leaves a lot to be desired. Everything is happening in a reactive manner, with no specific strategy being followed. We are making the same mistake of building too many roads as was done in US rather than build an efficient rail network across the country. But with Railways being run by government, this is not possible.

To conclude, unless we take remedial measures quickly, the economic growth that we are seeing in India may quickly come to a grinding halt in no time. The Indian population, which we are able to leverage now, will itself become the problem when such a thing happens.

Indian IT Industry: Where do we go from here?

2010-03-04T00:52:00.000-08:00

Indian IT industry has been the subject of discussions from Beijing to Washington D.C for different reasons. Indian IT majors have managed to build a solid foundation, on which they need to grow. But the going is getting tougher with every passing day. The global economic downturn forced them to take a step back and take stock of the situation in much greater detail. The question is, is Indian IT ready to scale the next frontier. There are no easy answers.

Firstly, as far as the IT outsourcing pie is concerned, all the low-hanging fruits have been plucked. Indian IT needs to change their mindset of getting better margins by going for a better fresher - lateral mix. It does not work that way anymore. The bigger players like IBM & HP have an edge here. They not only have thriving consulting practices which fetch them better margins but also help them go after bigger deals. Indian players have been very slow in building required domain expertise in order to have a decent consulting revenue.

Secondly, the Indian IT majors never focused seriously on the domestic market. Most of the big-ticket domestic deals have been bagged by IBM before these guys even started taking notice. This clearly shows that our IT majors never focused on corporate strategy. Even if they had strategy teams, they lacked focus. Just having a couple of MBAs will not do wonders unless there is clear direction from the top.

One aspect that most of our IT majors including global biggies have ignored so far is near-sourcing. Instead of outsourcing to India, companies in the US can move their jobs to low cost locations in the US itself. Some of them could be cheaper than the tier-2 cities in India in terms of the overall cost (people + overheads). With project release cycles getting shorter, the near-shoring model would work out better. Jobs will stay in the US and Obama will also be happy.

In summary, unless the Indian IT majors pull up their socks and build up the necessary domain expertise and come up with appropriate strategies to scale up, they will sink without any trace.

Carlton Tower fire in Bangalore: Is anything going to change at all?

2010-02-27T01:44:00.000-08:00

Four days ago, we had fire in a high-rise in Bangalore, i.e the Carlton Towers. The fire brigade folks did not reach on time, they did not have equipment (even ladders to reach the fifth floor), no water in the fire hose in the building, the emergency exit doors locked etc. So many reasons were cited for the failure of the civic authorities to enforce the regulations. The cost? 9 lives and still counting. Do you think anything is going to change after this fiasco? Yes, but very little.

First of all, the occupants of the building (most of them) did not know where the stairs were! In fact when I had gone to Carlton Towers sometime ago, I myself found it difficult to locate the stairs and had to ask a lot of people before I located them. None of the occupants knew what to do in case of fire. They did not even bother to ask why the emergency exits were locked in the first place. The reason? indifference. People in Bangalore and most other places in India are plain indifferent. They just don't care till it hits them. Then they want everyone else to care for them.

Secondly, I saw the head of the fire services come on television and point out a lot of problems with the building. If she really likes to do good work, she should visit the public utility building, another commercial landmark in Bangalore, which is owned by the Bangalore City Corporation. It is a 24-floor building and its maintenance is pathetic and that is true with any government building. To make things worse, if the lifts are not working, some floors of the this building become inaccessible because there are no stairs to reach those floors! If there is fire in those floors, then the people who are stuck there can just pray.

Finally, all the agencies (fire, police, electrical folks etc.) are investigating the cause of fire. Any person with common sense can easily see that all they are trying to do is address the symptoms and not the root cause. I am very sure nothing is going to change in the building after all these investigations. Some reports will be produced and they will lie in some corner of the concerned government department and that is it.

In conclusion, whether it is the Carlton Towers fire, German Bakery incident or anything else, the indifference of the people and their representatives will ensure that everyone will forget these incidents very soon and move on. At the most, one more bill may be introduced in the legislature to create more laws, but when enforcement is the issue, what is the point in having more laws?

Great Indian Budget:: Does it deserve the attention it gets?

2010-02-19T02:04:00.000-08:00

Everyone in India, including the media, the industry and everyone else eagerly awaits for the union budget every year, without exception, as though the budget is going to change the way their lead their lives. Is the budget really that important? I don't think so. In my view it is an hyped up event which does not deserve any attention at all, at least not the amount of attention it gets.

What happens in each budget? The government in power presents its annual report for the current financial year and outlines the income and expense heads proposed for the next financial year. Pretty much similar to what Infosys does at the end of every financial year. The companies do it after the financial year ends, but the government does it one month before. This is the only difference.

Current & potential investors and analysts (so called) pay attention to an Infosys annual result briefing, because, they are affected by it. The analysts need to advise their investors based on the results while investors decide to stay invested or increase their investments in Infosys based on the results and guidance, if given. But, with regard to the union budget, do the investors have such a choice? Yes they do. They can leave the country and go elsewhere if the policies are not favourable. That is it. They have no choice but to remain invested and continue to invest more, every passing year.

So why so much hoopla? It is because media wants it that way. Media needs events to report. For instance, would Ruchika Girotra's case have got so much media attention if Pune blasts had happened at the same time? Most probably not. Every year, the media tries to build hype around what to expect in the budget and soon after the budget, have folks analyze it and say something about it. Once that is done, they move on to the next story.

To summarize, the buzz around the union budget is a media creation and nothing else. We are certainly better of not paying so much attention to the budget, because we pretty much know what to expect in it much before than the announcements are actually made.

Is it time for a homegrown Prometric or Pearson in India?

2010-02-14T22:33:00.000-08:00

These days, We are seeing a lot of action in education, especially higher education. The Right To Education bill is going to become a reality very soon. There is also a move to encourage private investment in higher education in a form different from what it is now. So far, there was not much participation from the corporate world especially in higher education. This is going to change soon. The HRD minister is also talking about having common syllabus and common entrance exams across the country for different professional courses. All these things open up a lot of interesting opportunities for related fields like test prep, test administration, and other allied services. The opportunity is huge. In this article, I will delve into details about one such opportunity.

Firstly, let us assume that the HRD minister is able to convince all the stakeholders to agree for a common entrance test for engineering admissions across India. This means someone should administer a single test for almost 4-5 million aspirants across India. Every year half a million people appear for IITJEE, 1 million for AIEEE and around 3-4 million for state entrance exams. I am sure someone like Prometric (who administer GRE, SAT & TOEFL) and Pearson (who administer GMAT) would salivate at this opportunity. But why no one in India is even looking at this opportunity is puzzling. It should be someone of the stature of Tata, who have built a lot of trust, who will get such an opportunity if the government allows a not-for-profit private organization to conduct such tests. Both Prometric and Pearson are companies with a long history and billions of dollars in turnover and would definitely be pitching in.

Secondly, we, in India are always used to tying up with someone rather than do something from scratch. I guess, it is this trait which is preventing us from going the whole distance in producing products which we can truly call, our own. I would not be surprised if some Indian company ties up with Prometric or Pearson to grab this opportunity. In the previous paragraph I just talked about tests related to admission to under-graduate courses in engineering. In addition there are tests for admission to medical, law & design schools and even post-graduate courses in various fields. In addition, with so many more schools & colleges getting established in the private domain, teacher certification will be another big opportunity. I am just talking about opportunities in India.

So far, most of the focus in India is on test-prep and this needs to change. The revered CAT has already gone to Pearson. We, in India, need to learn to go after bigger and larger opportunities. For that we should first start thinking big and long-term. Everyone in India is talking about education becoming the next big opportunity. But the questions is, are we preparing ourselves to capitalize on this opportunity? At-least as of now, I don't think so.