By Rahul Srivastava
India has been extremely successful at providing services to the world, from developing software to manning call centers. There have been many theories as to why, but there is no single answer.
For example, knowledge of the English language is often noted as a key Indian (and Irish and Israeli) advantage; the size of the workforce is another, but the success of Ireland and Israel, which employ only about 30,000 engineers, each belies this. The Philippines’ 20,000 software engineers speak English in the American style and work in an environment with better and cheaper telecommunications, roads, and electricity. Yet they are well behind India in the quality of the software they develop. Even in simple call-center work—where American English may be considered as an overriding advantage—the Philippines lags behind India.
Infrastructure is another negative for India relative to the other countries named. Also, China, keen to catch up with India in software, offers government support and superior infrastructure at a lower cost. It has stronger connections to technology and venture capital companies via the diaspora. There are more than twice as many engineers of mainland-Chinese origin in Silicon Valley than of Indian origin.
China produces a better quality of software engineer than India, if one goes by the patent record. Even so, innovative companies like Yahoo! and Adobe are shifting their highest-quality work from all over the world, including China, to India.
Indian government policy has, generally, been unhelpful. In the 1970s, when India began exporting software, policy was statist and protectionist. The state seemed to actively hinder private enterprise in software. It imposed high tariffs on the imports of hardware and software and discouraged foreign companies from operating in India.
Another key talent that is needed, entrepreneurship, perhaps we shall emerge from the quicksand of unsatisfactory explanations. Indian industry has created a class of determined and innovative entrepreneurs—even if they were not the most technically up-to-date in all fields. That is because after independence entrepreneurship had to be highly productive in order to offset the effects of hostile government policy, crumbling infrastructure, and expensive capital.
With no significant domestic market and no exposure to world markets, it was impossible for India to conceive of a new software product like the Microsoft operating system. Hence, Indian software began as a custom service—that is, software programs were written to specifications provided by their customers.
To the retail user reliant on mass-produced packaged software like Windows, this might seem like an expensive way to produce software. And it is. Despite this, the global custom-made software industry as of 2007 is worth about $400 billion a year, about twice the size as the packaged-software industry. The reason is that large companies in retail, banking, insurance, telecommunications, and others who view their offerings as proprietary regard the software that is behind these offerings as a competitive tool. For example, a large bank such as Citigroup that offers its customers online banking wants to make its service better than the competition. For this, it needs to customize the service in ways that distinguish it from others. This almost always requires writing software that is specially tailored to the service. It costs more, but it is willing to pay the price.
India did not invent the writing of custom software. The business was invented by companies like GE trying to capitalize on IBM’s decision in 1969 to separate the selling of hardware from software. IBM did this by specifying open standards for its hardware. An independent software provider could use these standards to develop software that would work on IBM’s machines.
After IBM made that fateful decision, the software world was never the same. Earlier software firms survived in an IBM-dominated world by providing simple services such as computer maintenance and time-sharing. After 1969, they could also provide software for operating the computer and for specific industry applications that IBM’s software engineers might not have written well. A large independent software vendor (ISV) industry quickly developed. By 1974, when India began exporting software, the ISV business was already well developed in the West, particularly in the United States.
At that time, the large mainframe manufacturers, such as IBM and Burroughs, were established in India. Burroughs had a joint venture with TCS, a division of India’s largest industrial group, Tata Industries. As S Ramadorai, the CEO of TCS told me, “Burroughs soon noticed that our engineers did an excellent job
of installing and maintaining Burrough’s products in India. So they asked us if we would send a few of our best engineers to the US to do the same for Burroughs’s clients in America.” Thus began the business of software exports. TCS sent programmers to the United States to install the systems of Burroughs. The industry’s term for the business was body-shopping. It was an odd term because the best minds, not the best bodies, of the country were being sent overseas.
The Indian software industry thus began by recruiting for western companies. It sought talent that could mimic western programmers using the same production techniques. The difference is that costs were lower than the West’s owing to India’s low labor costs and its large labor pool. This approach, termed labor arbitrage, had already succeeded in East Asia a decade earlier, though in manufacturing. It was to be replicated with even greater success by China—again in manufacturing—a few years later.
However, there were some differences between China’s mass-based manufacturing and Indian software exports. The first difference was that, for the first two decades, software exports from India were not exports of written code. Instead they were exports of people to clients’ sites in the United States and other places to write code.
Second, the technology exported to China was, for the first two decades, simpler than what was used in the West. The output that emerged from Chinese factories was of second-tier quality. By contrast, Indian programmers, from the very beginning, worked side by side with western programmers in the same work environment and used the same equipment.
Showing posts sorted by relevance for query software. Sort by date Show all posts
Showing posts sorted by relevance for query software. Sort by date Show all posts
Tuesday, January 27, 2009
India and the IT industry
By Rahul Srivastava
India has been extremely successful at providing services to the world, from developing software to manning call centers. There have been many theories as to why, but there is no single answer.
For example, knowledge of the English language is often noted as a key Indian (and Irish and Israeli) advantage; the size of the workforce is another, but the success of Ireland and Israel, which employ only about 30,000 engineers, each belies this. The Philippines’ 20,000 software engineers speak English in the American style and work in an environment with better and cheaper telecommunications, roads, and electricity. Yet they are well behind India in the quality of the software they develop. Even in simple call-center work—where American English may be considered as an overriding advantage—the Philippines lags behind India.
Infrastructure is another negative for India relative to the other countries named. Also, China, keen to catch up with India in software, offers government support and superior infrastructure at a lower cost. It has stronger connections to technology and venture capital companies via the diaspora. There are more than twice as many engineers of mainland-Chinese origin in Silicon Valley than of Indian origin.
China produces a better quality of software engineer than India, if one goes by the patent record. Even so, innovative companies like Yahoo! and Adobe are shifting their highest-quality work from all over the world, including China, to India.
Indian government policy has, generally, been unhelpful. In the 1970s, when India began exporting software, policy was statist and protectionist. The state seemed to actively hinder private enterprise in software. It imposed high tariffs on the imports of hardware and software and discouraged foreign companies from operating in India.
Another key talent that is needed, entrepreneurship, perhaps we shall emerge from the quicksand of unsatisfactory explanations. Indian industry has created a class of determined and innovative entrepreneurs—even if they were not the most technically up-to-date in all fields. That is because after independence entrepreneurship had to be highly productive in order to offset the effects of hostile government policy, crumbling infrastructure, and expensive capital.
With no significant domestic market and no exposure to world markets, it was impossible for India to conceive of a new software product like the Microsoft operating system. Hence, Indian software began as a custom service—that is, software programs were written to specifications provided by their customers.
To the retail user reliant on mass-produced packaged software like Windows, this might seem like an expensive way to produce software. And it is. Despite this, the global custom-made software industry as of 2007 is worth about $400 billion a year, about twice the size as the packaged-software industry. The reason is that large companies in retail, banking, insurance, telecommunications, and others who view their offerings as proprietary regard the software that is behind these offerings as a competitive tool. For example, a large bank such as Citigroup that offers its customers online banking wants to make its service better than the competition. For this, it needs to customize the service in ways that distinguish it from others. This almost always requires writing software that is specially tailored to the service. It costs more, but it is willing to pay the price.
India did not invent the writing of custom software. The business was invented by companies like GE trying to capitalize on IBM’s decision in 1969 to separate the selling of hardware from software. IBM did this by specifying open standards for its hardware. An independent software provider could use these standards to develop software that would work on IBM’s machines.
After IBM made that fateful decision, the software world was never the same. Earlier software firms survived in an IBM-dominated world by providing simple services such as computer maintenance and time-sharing. After 1969, they could also provide software for operating the computer and for specific industry applications that IBM’s software engineers might not have written well. A large independent software vendor (ISV) industry quickly developed. By 1974, when India began exporting software, the ISV business was already well developed in the West, particularly in the United States.
At that time, the large mainframe manufacturers, such as IBM and Burroughs, were established in India. Burroughs had a joint venture with TCS, a division of India’s largest industrial group, Tata Industries. As S Ramadorai, the CEO of TCS told me, “Burroughs soon noticed that our engineers did an excellent job
of installing and maintaining Burrough’s products in India. So they asked us if we would send a few of our best engineers to the US to do the same for Burroughs’s clients in America.” Thus began the business of software exports. TCS sent programmers to the United States to install the systems of Burroughs. The industry’s term for the business was body-shopping. It was an odd term because the best minds, not the best bodies, of the country were being sent overseas.
The Indian software industry thus began by recruiting for western companies. It sought talent that could mimic western programmers using the same production techniques. The difference is that costs were lower than the West’s owing to India’s low labor costs and its large labor pool. This approach, termed labor arbitrage, had already succeeded in East Asia a decade earlier, though in manufacturing. It was to be replicated with even greater success by China—again in manufacturing—a few years later.
However, there were some differences between China’s mass-based manufacturing and Indian software exports. The first difference was that, for the first two decades, software exports from India were not exports of written code. Instead they were exports of people to clients’ sites in the United States and other places to write code.
Second, the technology exported to China was, for the first two decades, simpler than what was used in the West. The output that emerged from Chinese factories was of second-tier quality. By contrast, Indian programmers, from the very beginning, worked side by side with western programmers in the same work environment and used the same equipment.
India has been extremely successful at providing services to the world, from developing software to manning call centers. There have been many theories as to why, but there is no single answer.
For example, knowledge of the English language is often noted as a key Indian (and Irish and Israeli) advantage; the size of the workforce is another, but the success of Ireland and Israel, which employ only about 30,000 engineers, each belies this. The Philippines’ 20,000 software engineers speak English in the American style and work in an environment with better and cheaper telecommunications, roads, and electricity. Yet they are well behind India in the quality of the software they develop. Even in simple call-center work—where American English may be considered as an overriding advantage—the Philippines lags behind India.
Infrastructure is another negative for India relative to the other countries named. Also, China, keen to catch up with India in software, offers government support and superior infrastructure at a lower cost. It has stronger connections to technology and venture capital companies via the diaspora. There are more than twice as many engineers of mainland-Chinese origin in Silicon Valley than of Indian origin.
China produces a better quality of software engineer than India, if one goes by the patent record. Even so, innovative companies like Yahoo! and Adobe are shifting their highest-quality work from all over the world, including China, to India.
Indian government policy has, generally, been unhelpful. In the 1970s, when India began exporting software, policy was statist and protectionist. The state seemed to actively hinder private enterprise in software. It imposed high tariffs on the imports of hardware and software and discouraged foreign companies from operating in India.
Another key talent that is needed, entrepreneurship, perhaps we shall emerge from the quicksand of unsatisfactory explanations. Indian industry has created a class of determined and innovative entrepreneurs—even if they were not the most technically up-to-date in all fields. That is because after independence entrepreneurship had to be highly productive in order to offset the effects of hostile government policy, crumbling infrastructure, and expensive capital.
With no significant domestic market and no exposure to world markets, it was impossible for India to conceive of a new software product like the Microsoft operating system. Hence, Indian software began as a custom service—that is, software programs were written to specifications provided by their customers.
To the retail user reliant on mass-produced packaged software like Windows, this might seem like an expensive way to produce software. And it is. Despite this, the global custom-made software industry as of 2007 is worth about $400 billion a year, about twice the size as the packaged-software industry. The reason is that large companies in retail, banking, insurance, telecommunications, and others who view their offerings as proprietary regard the software that is behind these offerings as a competitive tool. For example, a large bank such as Citigroup that offers its customers online banking wants to make its service better than the competition. For this, it needs to customize the service in ways that distinguish it from others. This almost always requires writing software that is specially tailored to the service. It costs more, but it is willing to pay the price.
India did not invent the writing of custom software. The business was invented by companies like GE trying to capitalize on IBM’s decision in 1969 to separate the selling of hardware from software. IBM did this by specifying open standards for its hardware. An independent software provider could use these standards to develop software that would work on IBM’s machines.
After IBM made that fateful decision, the software world was never the same. Earlier software firms survived in an IBM-dominated world by providing simple services such as computer maintenance and time-sharing. After 1969, they could also provide software for operating the computer and for specific industry applications that IBM’s software engineers might not have written well. A large independent software vendor (ISV) industry quickly developed. By 1974, when India began exporting software, the ISV business was already well developed in the West, particularly in the United States.
At that time, the large mainframe manufacturers, such as IBM and Burroughs, were established in India. Burroughs had a joint venture with TCS, a division of India’s largest industrial group, Tata Industries. As S Ramadorai, the CEO of TCS told me, “Burroughs soon noticed that our engineers did an excellent job
of installing and maintaining Burrough’s products in India. So they asked us if we would send a few of our best engineers to the US to do the same for Burroughs’s clients in America.” Thus began the business of software exports. TCS sent programmers to the United States to install the systems of Burroughs. The industry’s term for the business was body-shopping. It was an odd term because the best minds, not the best bodies, of the country were being sent overseas.
The Indian software industry thus began by recruiting for western companies. It sought talent that could mimic western programmers using the same production techniques. The difference is that costs were lower than the West’s owing to India’s low labor costs and its large labor pool. This approach, termed labor arbitrage, had already succeeded in East Asia a decade earlier, though in manufacturing. It was to be replicated with even greater success by China—again in manufacturing—a few years later.
However, there were some differences between China’s mass-based manufacturing and Indian software exports. The first difference was that, for the first two decades, software exports from India were not exports of written code. Instead they were exports of people to clients’ sites in the United States and other places to write code.
Second, the technology exported to China was, for the first two decades, simpler than what was used in the West. The output that emerged from Chinese factories was of second-tier quality. By contrast, Indian programmers, from the very beginning, worked side by side with western programmers in the same work environment and used the same equipment.
India and the IT industry
By Rahul Srivastava
India has been extremely successful at providing services to the world, from developing software to manning call centers. There have been many theories as to why, but there is no single answer.
For example, knowledge of the English language is often noted as a key Indian (and Irish and Israeli) advantage; the size of the workforce is another, but the success of Ireland and Israel, which employ only about 30,000 engineers, each belies this. The Philippines’ 20,000 software engineers speak English in the American style and work in an environment with better and cheaper telecommunications, roads, and electricity. Yet they are well behind India in the quality of the software they develop. Even in simple call-center work—where American English may be considered as an overriding advantage—the Philippines lags behind India.
Infrastructure is another negative for India relative to the other countries named. Also, China, keen to catch up with India in software, offers government support and superior infrastructure at a lower cost. It has stronger connections to technology and venture capital companies via the diaspora. There are more than twice as many engineers of mainland-Chinese origin in Silicon Valley than of Indian origin.
China produces a better quality of software engineer than India, if one goes by the patent record. Even so, innovative companies like Yahoo! and Adobe are shifting their highest-quality work from all over the world, including China, to India.
Indian government policy has, generally, been unhelpful. In the 1970s, when India began exporting software, policy was statist and protectionist. The state seemed to actively hinder private enterprise in software. It imposed high tariffs on the imports of hardware and software and discouraged foreign companies from operating in India.
Another key talent that is needed, entrepreneurship, perhaps we shall emerge from the quicksand of unsatisfactory explanations. Indian industry has created a class of determined and innovative entrepreneurs—even if they were not the most technically up-to-date in all fields. That is because after independence entrepreneurship had to be highly productive in order to offset the effects of hostile government policy, crumbling infrastructure, and expensive capital.
With no significant domestic market and no exposure to world markets, it was impossible for India to conceive of a new software product like the Microsoft operating system. Hence, Indian software began as a custom service—that is, software programs were written to specifications provided by their customers.
To the retail user reliant on mass-produced packaged software like Windows, this might seem like an expensive way to produce software. And it is. Despite this, the global custom-made software industry as of 2007 is worth about $400 billion a year, about twice the size as the packaged-software industry. The reason is that large companies in retail, banking, insurance, telecommunications, and others who view their offerings as proprietary regard the software that is behind these offerings as a competitive tool. For example, a large bank such as Citigroup that offers its customers online banking wants to make its service better than the competition. For this, it needs to customize the service in ways that distinguish it from others. This almost always requires writing software that is specially tailored to the service. It costs more, but it is willing to pay the price.
India did not invent the writing of custom software. The business was invented by companies like GE trying to capitalize on IBM’s decision in 1969 to separate the selling of hardware from software. IBM did this by specifying open standards for its hardware. An independent software provider could use these standards to develop software that would work on IBM’s machines.
After IBM made that fateful decision, the software world was never the same. Earlier software firms survived in an IBM-dominated world by providing simple services such as computer maintenance and time-sharing. After 1969, they could also provide software for operating the computer and for specific industry applications that IBM’s software engineers might not have written well. A large independent software vendor (ISV) industry quickly developed. By 1974, when India began exporting software, the ISV business was already well developed in the West, particularly in the United States.
At that time, the large mainframe manufacturers, such as IBM and Burroughs, were established in India. Burroughs had a joint venture with TCS, a division of India’s largest industrial group, Tata Industries. As S Ramadorai, the CEO of TCS told me, “Burroughs soon noticed that our engineers did an excellent job
of installing and maintaining Burrough’s products in India. So they asked us if we would send a few of our best engineers to the US to do the same for Burroughs’s clients in America.” Thus began the business of software exports. TCS sent programmers to the United States to install the systems of Burroughs. The industry’s term for the business was body-shopping. It was an odd term because the best minds, not the best bodies, of the country were being sent overseas.
The Indian software industry thus began by recruiting for western companies. It sought talent that could mimic western programmers using the same production techniques. The difference is that costs were lower than the West’s owing to India’s low labor costs and its large labor pool. This approach, termed labor arbitrage, had already succeeded in East Asia a decade earlier, though in manufacturing. It was to be replicated with even greater success by China—again in manufacturing—a few years later.
However, there were some differences between China’s mass-based manufacturing and Indian software exports. The first difference was that, for the first two decades, software exports from India were not exports of written code. Instead they were exports of people to clients’ sites in the United States and other places to write code.
Second, the technology exported to China was, for the first two decades, simpler than what was used in the West. The output that emerged from Chinese factories was of second-tier quality. By contrast, Indian programmers, from the very beginning, worked side by side with western programmers in the same work environment and used the same equipment.
India has been extremely successful at providing services to the world, from developing software to manning call centers. There have been many theories as to why, but there is no single answer.
For example, knowledge of the English language is often noted as a key Indian (and Irish and Israeli) advantage; the size of the workforce is another, but the success of Ireland and Israel, which employ only about 30,000 engineers, each belies this. The Philippines’ 20,000 software engineers speak English in the American style and work in an environment with better and cheaper telecommunications, roads, and electricity. Yet they are well behind India in the quality of the software they develop. Even in simple call-center work—where American English may be considered as an overriding advantage—the Philippines lags behind India.
Infrastructure is another negative for India relative to the other countries named. Also, China, keen to catch up with India in software, offers government support and superior infrastructure at a lower cost. It has stronger connections to technology and venture capital companies via the diaspora. There are more than twice as many engineers of mainland-Chinese origin in Silicon Valley than of Indian origin.
China produces a better quality of software engineer than India, if one goes by the patent record. Even so, innovative companies like Yahoo! and Adobe are shifting their highest-quality work from all over the world, including China, to India.
Indian government policy has, generally, been unhelpful. In the 1970s, when India began exporting software, policy was statist and protectionist. The state seemed to actively hinder private enterprise in software. It imposed high tariffs on the imports of hardware and software and discouraged foreign companies from operating in India.
Another key talent that is needed, entrepreneurship, perhaps we shall emerge from the quicksand of unsatisfactory explanations. Indian industry has created a class of determined and innovative entrepreneurs—even if they were not the most technically up-to-date in all fields. That is because after independence entrepreneurship had to be highly productive in order to offset the effects of hostile government policy, crumbling infrastructure, and expensive capital.
With no significant domestic market and no exposure to world markets, it was impossible for India to conceive of a new software product like the Microsoft operating system. Hence, Indian software began as a custom service—that is, software programs were written to specifications provided by their customers.
To the retail user reliant on mass-produced packaged software like Windows, this might seem like an expensive way to produce software. And it is. Despite this, the global custom-made software industry as of 2007 is worth about $400 billion a year, about twice the size as the packaged-software industry. The reason is that large companies in retail, banking, insurance, telecommunications, and others who view their offerings as proprietary regard the software that is behind these offerings as a competitive tool. For example, a large bank such as Citigroup that offers its customers online banking wants to make its service better than the competition. For this, it needs to customize the service in ways that distinguish it from others. This almost always requires writing software that is specially tailored to the service. It costs more, but it is willing to pay the price.
India did not invent the writing of custom software. The business was invented by companies like GE trying to capitalize on IBM’s decision in 1969 to separate the selling of hardware from software. IBM did this by specifying open standards for its hardware. An independent software provider could use these standards to develop software that would work on IBM’s machines.
After IBM made that fateful decision, the software world was never the same. Earlier software firms survived in an IBM-dominated world by providing simple services such as computer maintenance and time-sharing. After 1969, they could also provide software for operating the computer and for specific industry applications that IBM’s software engineers might not have written well. A large independent software vendor (ISV) industry quickly developed. By 1974, when India began exporting software, the ISV business was already well developed in the West, particularly in the United States.
At that time, the large mainframe manufacturers, such as IBM and Burroughs, were established in India. Burroughs had a joint venture with TCS, a division of India’s largest industrial group, Tata Industries. As S Ramadorai, the CEO of TCS told me, “Burroughs soon noticed that our engineers did an excellent job
of installing and maintaining Burrough’s products in India. So they asked us if we would send a few of our best engineers to the US to do the same for Burroughs’s clients in America.” Thus began the business of software exports. TCS sent programmers to the United States to install the systems of Burroughs. The industry’s term for the business was body-shopping. It was an odd term because the best minds, not the best bodies, of the country were being sent overseas.
The Indian software industry thus began by recruiting for western companies. It sought talent that could mimic western programmers using the same production techniques. The difference is that costs were lower than the West’s owing to India’s low labor costs and its large labor pool. This approach, termed labor arbitrage, had already succeeded in East Asia a decade earlier, though in manufacturing. It was to be replicated with even greater success by China—again in manufacturing—a few years later.
However, there were some differences between China’s mass-based manufacturing and Indian software exports. The first difference was that, for the first two decades, software exports from India were not exports of written code. Instead they were exports of people to clients’ sites in the United States and other places to write code.
Second, the technology exported to China was, for the first two decades, simpler than what was used in the West. The output that emerged from Chinese factories was of second-tier quality. By contrast, Indian programmers, from the very beginning, worked side by side with western programmers in the same work environment and used the same equipment.
Saturday, June 13, 2015
Special Focus: Could India Prove To Be A Stable And Sustainable 'Silicon Valley' For 'Emerging Markets'?
Twitter made international headlines in January with the acquisition of Indian mobile marketing startup ZipDial for a reported $30 million. ZipDial is a brainchild of California-born Valerie Wagoner who moved to Bangalore after a stint with eBay.
Monday, July 11, 2005
CAN INDIA RETAIN ITS REIGN AS OUTSOURCING KING?
By M H AHSAN
Hardly a day has passed in recent months without an announcement from a major international corporation that it is outsourcing software development to India or investing in building its own software development center there.
Just today, for instance, France-based Cap Gemini Ernst & Young, the world's fifth-largest information technology services company, opened a new development center in a suburb of Bombay that will house 250 engineers. "We are really looking at this as a stepping stone to build a much bigger presence in India," said the company.
Major Indian outsourcing announcements have come fast and furious recently: IBM will open a Linux research lab employing 500; Nortel Networks, which already has 1,300 developers in India, will spend $350 million in the next three years and employ 500 additional research and development scientists; Cisco Systems will spend $200 million on a development center; and Deutsche Bank is dropping $4.3 million to build a 50,000-square-foot development center that will eventually house 550 software professionals.
India is clearly on a roll--but how long can it hold onto its crown? With the National Association of Software and Services Companies predicting $6 billion in software exports this year (up from $4 billion last year) and $50 billion by 2008, some are starting to question whether India can maintain its competitive edge. Low-cost technology centers in China, the Philippines, Russia and Pakistan are sprouting up and competing for outsourcing projects, making it increasingly unlikely that India will reach that lofty goal.
The Information Technology Association of America, an industry trade group, estimates that some 840,000 information technology (IT) jobs in the U.S. will go unfilled this year. Those jobs, for a first-year graduate, start out with typical salaries of $45,000 to $50,000 and rapidly escalate. The offshore software outsourcing industry will no doubt continue its hyper-expansion in the next few years as Western firms look for cheap offshore talent to fill that gap, but it is clear that India could stumble and lose its crown.
According to Marty McCaffrey, executive director of Salinas, Calif.-based Software Outsourcing Research, India will likely face troubles ramping up to the projected 2008 level.* He estimates that India would need to have 1 million qualified software engineers to support exports of $50 billion, and the country currently graduates around 110,000 computer science students a year. With a dearth of experienced project leaders already on the horizon, that problem will reach a crisis point as outsourcing continues to expand at a rate of more than 50% a year. Additionally, many of India's best and brightest will continue migrating to the U.S. in search of higher wages.
When and if India does slip, there are plenty of low-wage countries that would be only too happy to pick up the slack.
Pakistan, for instance, has sought to emulate India's success by offering similar tax breaks for multinationals and is aggressively modeling their own educational programs in computer and information sciences on India's.
While China would seem to be the biggest threat, with 400,000 software professionals, only 35,000 of them are qualified to do the kind of high-level, systems-integration projects that are so coveted in India. Most of China's high-tech laborers are well qualified to work on software applications maintenance and migration projects, and these workers come at a significantly lower salary than do their Indian counterparts doing the same work.
The Chinese environment has traditionally been grounded in manufacturing and hardware, but that appears to be changing, and the Chinese government has recently placed great emphasis on teaching English to students and IT workers, which is an extremely important skill requirement for American firms looking to outsource.
As a former British colony, India has already been extensively educated in that critical skill set, but perhaps not to the extent of the Philippines, a former American colony, where American culture and language is widely emulated. According to some analysts, those cultural and communications skills could prove to be so appealing to American firms that they would outweigh slightly higher labor costs in the Philippines.
As far as Russia is concerned, McCaffrey calls the situation there "murky." After the fall of the Soviet Union, there were more than 1 million registered engineers, but many of them have since retired, been out of work for long periods of time or don't have the necessary skill sets. Nevertheless, McCaffrey praised Russia's university programs in physics and mathematics and noted that the country has "tremendous outsourcing potential" as an alternative to India. While top-notch talent falls into roughly the same price range, programmers can be found in areas outside of Moscow for as low as $3,000 a year per programmer.
Those countries, along with a host of others such as Indonesia, Malaysia, Thailand and even Vietnam, will collectively challenge India's IT prowess in the next few years. Projects that last year and this year went to Bangalore, India's hi-tech center, might well be going to Manila and Guangzhou, China.
Hardly a day has passed in recent months without an announcement from a major international corporation that it is outsourcing software development to India or investing in building its own software development center there.
Just today, for instance, France-based Cap Gemini Ernst & Young, the world's fifth-largest information technology services company, opened a new development center in a suburb of Bombay that will house 250 engineers. "We are really looking at this as a stepping stone to build a much bigger presence in India," said the company.
Major Indian outsourcing announcements have come fast and furious recently: IBM will open a Linux research lab employing 500; Nortel Networks, which already has 1,300 developers in India, will spend $350 million in the next three years and employ 500 additional research and development scientists; Cisco Systems will spend $200 million on a development center; and Deutsche Bank is dropping $4.3 million to build a 50,000-square-foot development center that will eventually house 550 software professionals.
India is clearly on a roll--but how long can it hold onto its crown? With the National Association of Software and Services Companies predicting $6 billion in software exports this year (up from $4 billion last year) and $50 billion by 2008, some are starting to question whether India can maintain its competitive edge. Low-cost technology centers in China, the Philippines, Russia and Pakistan are sprouting up and competing for outsourcing projects, making it increasingly unlikely that India will reach that lofty goal.
The Information Technology Association of America, an industry trade group, estimates that some 840,000 information technology (IT) jobs in the U.S. will go unfilled this year. Those jobs, for a first-year graduate, start out with typical salaries of $45,000 to $50,000 and rapidly escalate. The offshore software outsourcing industry will no doubt continue its hyper-expansion in the next few years as Western firms look for cheap offshore talent to fill that gap, but it is clear that India could stumble and lose its crown.
According to Marty McCaffrey, executive director of Salinas, Calif.-based Software Outsourcing Research, India will likely face troubles ramping up to the projected 2008 level.* He estimates that India would need to have 1 million qualified software engineers to support exports of $50 billion, and the country currently graduates around 110,000 computer science students a year. With a dearth of experienced project leaders already on the horizon, that problem will reach a crisis point as outsourcing continues to expand at a rate of more than 50% a year. Additionally, many of India's best and brightest will continue migrating to the U.S. in search of higher wages.
When and if India does slip, there are plenty of low-wage countries that would be only too happy to pick up the slack.
Pakistan, for instance, has sought to emulate India's success by offering similar tax breaks for multinationals and is aggressively modeling their own educational programs in computer and information sciences on India's.
While China would seem to be the biggest threat, with 400,000 software professionals, only 35,000 of them are qualified to do the kind of high-level, systems-integration projects that are so coveted in India. Most of China's high-tech laborers are well qualified to work on software applications maintenance and migration projects, and these workers come at a significantly lower salary than do their Indian counterparts doing the same work.
The Chinese environment has traditionally been grounded in manufacturing and hardware, but that appears to be changing, and the Chinese government has recently placed great emphasis on teaching English to students and IT workers, which is an extremely important skill requirement for American firms looking to outsource.
As a former British colony, India has already been extensively educated in that critical skill set, but perhaps not to the extent of the Philippines, a former American colony, where American culture and language is widely emulated. According to some analysts, those cultural and communications skills could prove to be so appealing to American firms that they would outweigh slightly higher labor costs in the Philippines.
As far as Russia is concerned, McCaffrey calls the situation there "murky." After the fall of the Soviet Union, there were more than 1 million registered engineers, but many of them have since retired, been out of work for long periods of time or don't have the necessary skill sets. Nevertheless, McCaffrey praised Russia's university programs in physics and mathematics and noted that the country has "tremendous outsourcing potential" as an alternative to India. While top-notch talent falls into roughly the same price range, programmers can be found in areas outside of Moscow for as low as $3,000 a year per programmer.
Those countries, along with a host of others such as Indonesia, Malaysia, Thailand and even Vietnam, will collectively challenge India's IT prowess in the next few years. Projects that last year and this year went to Bangalore, India's hi-tech center, might well be going to Manila and Guangzhou, China.
Tuesday, July 25, 2017
An Indian IT Firm Hires High-School Graduates And Turns Them Into Software Programmers
Not inclined to pursue his studies beyond high school, 17-year old Abdul Alim dropped out of school in 2013. Unable to find a job in his hometown in North East India, Alim moved to Chennai in the South with nothing more than Rs 200 in his pockets.
Monday, August 10, 2015
Why India Producing Qualified Unemployable Engineers?
• While 97% want jobs either in software or core engineering, only 3% are good enough to be engineers in software/product roles, and only 7% can handle core engineering tasks.
• Only 11% find jobs in knowledge-intensive sectors because their English skills are poor (74%), as are their analytical or quantitative skills (58%).
• A student from a tier-3 college will get Rs 66,000 per annum less than a student of equal merit from a tier-1 college.
Saturday, January 24, 2009
Reversal of Fortune: How Will Indian IT and BPO Firms Cope with a Global Slowdown?
By M H Ahssan
Infosys Technologies once was a software engineer's dream, with a reputation for creating multimillionaires through its employee stock option program (ESOP). But the days of these nearly instant millionaires may have ended -- or so it seems. Not only has the company stopped issuing ESOPs after new accounting rules that require them to be expensed against profits, but the company's stock price, as of January 22, was at a 52-week low of Rs. 1,212.20 ($30.55). That is down 50% from a 52-week high of Rs. 2,439 in February 2007. The decline in the company's market capitalization has taken some of the sheen off the Infosys brand. But if panelists at the TiE Entrepreneurial Summit 2007, held in Delhi in December, are to be believed, the largest of India's software and business process outsourcing (BPO) companies have little to fear.
The outlook is less benign, however, for medium-size and small companies that provide plain vanilla, me-too IT services with a sole "we do it cheaper" approach. "If you are a small company with an innovative idea in the tech domain then you need to leverage the idea by a rapid scale-up of the business," said Anish Tripathi, chief knowledge officer of KPMG India. The rapid scale-up is imperative for smaller firms to monetize the advantage of being a first mover, according to Tripathi, who noted that opportunities exist in rural tech deployment and in the mobile space.
"Core intellectual property-based product companies can still compete" even if they are small, according to Jai Das, partner at SAP Ventures, the venture capital arm of SAP AG, because these companies' products could enjoy patent, trademark or copyright protection. Even companies founded with intellectual property based on processes and systems can succeed, he noted. While many of these firms may get bought out before they become billion-dollar businesses, entrepreneurs will benefit from the value-creation exercise.
The conference panelists urged smaller firms to take advantage of a trend away from selling software licenses and toward selling software as a service. In this web-based approach, the developer provides and maintains software for clients, who are billed based on usage rather than a fixed, annual per-user license fee. "Ninety percent of companies will want software as a service as they don't want a headache with IT," Das said.
Panelists and other conference speakers noted an enormous domestic opportunity for entrepreneurs. Ajai Chowdhry, chairman and CEO of HCL Infosystems, said the PC penetration in India that he had dreamed of years ago is about to happen. "We are on the cusp, with a digital lifestyle powering growth in urban India and with connectivity in rural India," he said, speaking at an awards reception.
In another speech, Infosys co-chairman Nandan M. Nilekani discussed new benefits of IT for the Indian government. "There's a dramatic adoption of many innovative technologies in India, such as electronic voting machines [used] in the 2004 general elections that made us the only country in the world to use these for electing members to Parliament," he said. Thanks in part to growth in technology infrastructure, he added, India's direct tax collections have risen 30% to 40% in the last two years as tax authorities have been able to analyze intelligence from the tax information network. "India is creating low-cost disruptive technologies for growth, and in four or five years we will have a completely portable national pension system and a common way of identifying citizens via one common number," Nilekani said.
Currently, the cumbersome process of transferring one's employee provident fund account can take several years. India does not have a unique identifier for each citizen. Instead, multiple identifiers are used for purposes including tax payments, pension accounts and voter eligibility determinations. "A national dematerialized system for land records is now being created as well," Nilekani noted, adding that the use of IT in the domestic market would enable targeted delivery of subsidies and other benefits.
Indian IT firms are focusing on the mass market to expand their market share. Bigger companies that provide application development and maintenance services expect business from North America to grow. "Inorganic growth is seen as a significant driver in addition to organic growth," KPMG India's Tripathi said. This would be a change of strategy for major IT firms, which have so far relied largely on new and existing clients to post high-double-digit growth in revenue and profit. With the rupee's appreciation shaving off almost 15 percentage points in revenue growth over the last year and a half, IT firms have had to focus on getting 2% to 3% price increases and higher labor productivity to protect their bottom lines. And they have hedged their dollar receivables, locking in a fixed exchange rate to protect them from the rupee's rise, as India Knowledge@Wharton has previously reported.
India has become a key market even for global IT software companies such as Germany's SAP, which has sold licenses for enterprise resource planning system software to customers including the $28.8 billion Tata group and Reliance Industries, India's largest private-sector company. "We are now focusing on new application software for small and medium enterprises to grow our base of 2,000 customers in India," SAP Ventures' Das said. SAP Labs already has located its second-largest development center in India (its largest is in Germany), joining other global giants including Microsoft, Intel and General Electric.
Shiv Nadar, chairman of HCL Technologies, pointed out just how competitive and polarized the IT business is becoming. The smallest of the IT firms could enter into aeronautics, which was using outdated technology, said Nadar, speaking as part of a separate TiE panel. "We have already built aeronautics for Boeing's 787 Dreamliner. Now, we can go out and buy sub systems manufacturers and benefit from the long-tailed revenue stream of product sale, support and services that characterizes the $800 billion global aeronautical business," Nadar said. He noted that HCL would acquire a company in this area soon and in the next 24 months would build this up as a significant line of business.
"The Indian IT industry has done what the auto industry did in Japan," said panelist Kris Gopalakrishnan, CEO and managing director of Infosys. "We have adopted global best practices and adapted them for India."
Smaller businesses setting up in India can profit from Indian IT firms' success in the global markets. "In the U.S. and U.K., 'brand India' has arrived. Now Indian companies can hire top talent instead of also-rans from these markets," said Uday Challu, CEO of iYogi, a venture capital-funded tech support company headquartered in Gurgaon, near New Delhi. Given the double-digit wage inflation and benchmarking of Indian mid- and senior-level salaries to global levels, it's becoming easier to hire talent from the developed world, Challu said. Because smaller companies typically need fewer key people, looking beyond Indian shores for key officers may be a practical option, he added. As Russell Parera, CEO of KPMG India, noted, "It's ironic that in a country of a billion people, the single biggest challenge to growth is the availability of talented staff and not customers."
Changes in the investment climate also can benefit smaller companies. "Now, investors don't scoff at rupee revenue components in the business plan," Challu said. "The IT and telecom sectors in India are early adopters of new technologies," so new companies can get their first break right in the domestic market. "What's more, references of an Indian user can now be used for global marketing, too," he noted, elaborating on how entrepreneurs could leverage the India advantage in the tech business. Vispi Daver, partner at U.S.-based venture capital firm Sierra Ventures, added that entrepreneurs could now raise $10 million within the country rather than having to seek it in Silicon Valley.
With a good number of globally renowned venture capital firms now in India, panelists urged entrepreneurs to take advantage of the value addition, guidance and insight that these VCs can provide to companies in which they invest, beyond the capital they contribute.
Terence H. Matthews, a Canada-based billionaire serial entrepreneur, had some tips for budding entrepreneurs. "The single most important word for success is 'persistence.' I have so far started up to 70 companies, of which I have lost only two," he said, speaking as part of a separate panel. He said he owed his success to hitting the market at the right time with the right technology and the right product. "But there's absolutely no substitute for work ethic and education," he said. He advised entrepreneurs not to become emotionally attached to the companies they found, explaining that 20 of his companies have gone public while several others were acquired. "I don't treat companies as babies that cannot be sold. [Instead,] I set up three new companies every year."
Matthews said his holding company, Wesley Clover, was looking to acquire companies in India to jump-start his plan to develop software products for the world markets there. Twenty tech companies that he is associated with outsource software to Indian firms. "India is at a tipping point, and the time is ripe for it," he suggested. "Outsourcing is not capped and will grow quite fast and move to the next stage of development of products for the world market."
Just as consolidation has occurred among IT firms in India, the business process outsourcing (BPO) sector is also showing sign of consolidating. The rupee's steady appreciation has put the brakes on smaller and newer players' undercutting established competitors. These challenger firms are being far more discerning in quoting uneconomic rates for outsourced work in the hope of breaking even. "We are already seeing a much easier employee hiring situation as a fallout," said Raman Roy, chairman and managing director of Quatrro BPO Solutions. As firms become more careful in quoting prices, the demand for talent to fuel growth at any cost is moderated, providing a needed breather from the high rates of attrition that have come to characterize the business in India. "Currently, most companies have hedged up to a year's worth of dollar receivables," said Roy, who is widely considered the father of India's BPO business. "The real challenge will come next year, when those hedges run out and we will see a lot of uneconomical companies quickly wither away."
Pavan Vaish, CEO of IBM Daksh Business Process Services, likens the industry's challenges to what happened in Japan years ago when the yen strengthened. "Companies reinvented themselves by investing in technology, R&D and extreme operational excellence. Of course, fewer companies who have the brand, technological capability and the management to make the transition will succeed," Vaish said.
Speakers at the panel discussion "Is the Party Over? The Future of BPO/KPO" were nonetheless bullish about the prospects of the larger companies in the $8 billion sector, whose revenues have been growing at almost 33% a year. Harsh Manglik, chairman of Accenture India, said firms such as his could improve productivity of processes by almost 50% while keeping the same people employed by the client working out of the same locales. "These are benefits we are talking about even before the operation is offshored to another country," he said.
Pramod Bhasin, CEO of Genpact, said India's penetration in the IT enabled services industry has been "minimal" to this point, and human resources is the key to growth. "The demographics of the developed world mean that they aren't going to produce 20- and 30-year-olds in huge numbers. Companies in those geographies will therefore have to find the capacity for growth in other markets. We feel limited only by our ability to hire employees who can provide a very high quality of service to our clients," he said.
The leaders of India's BPO industry have managed to build domain expertise, or in some cases acquire it in chosen areas. This has allowed them to deliver cost savings by reengineering processes rather than just through cost arbitrage based on cheaper Indian labor. Cost savings generated from a fundamental redesign of a process also allow the larger firms to share a part of the savings the client realizes. A lack of deep domain expertise is the reason smaller firms that focus on cost arbitrage are having a difficult time coping with the rising rupee. "Cost arbitrage as a basic reason to exist is over," the Bhasin said. "Now clients come to us because we can give them high-quality service and continuous improvement."
Vaish, of IBM Daksh, said firms will have to focus on delivering greater value, which will call for an enormous amount of investment in research and building domain expertise. Today, "it's very hard to do a [BPO] start-up in conventional areas" such as call center services, he said.
Leading BPO firms are now looking at what departments of top banks and companies they can acquire so they can identify efficiencies and create value by fixing something that is broken and providing the services back to the banks and companies on a contract basis. Focus areas could include such activities as research monitoring in a particular subject area and patent filing work. The biggest BPO firms are also actively exploring opportunities in the local BPO business, as banks, media companies and airlines that are growing revenue by 30% a year are increasingly willing to outsource noncore operations.
Jerry Rao, chairman of MphasiS, said the domestic and international call center business in India continues to grow. Even in a three-decade-old industry, firms are adding value by reducing average handle times per call by 30% to 40% using Six Sigma standards of efficiency. "India now has as many Six Sigma black belts and green belts as any other country worldwide. In five years, we will probably have more of them than the rest of the world combined," Rao said. "There are, however, several other opportunities that domestic entrepreneurs should explore which are allied to the BPO industry. For instance there are lots of opportunities to develop a new recording software used by call centers where an Israeli company currently has almost a monopoly." Rao also illustrated how small entrepreneurs were taking advantage of the growth of the larger players by setting up accent coaching classes to provide trained manpower to the BPO industry. "There are now 150 to 200 such classes in Bangalore alone, and I'm worried that people here will start speaking with a U.S. accent and I will not understand them," he joked.
Panelists pointed out that entrepreneurs need to be prepared for the polishing that graduates of the education system will require to become employable. "Whatever training the government doesn't give, you can provide as an entrepreneur," Rao said.
Infosys Technologies once was a software engineer's dream, with a reputation for creating multimillionaires through its employee stock option program (ESOP). But the days of these nearly instant millionaires may have ended -- or so it seems. Not only has the company stopped issuing ESOPs after new accounting rules that require them to be expensed against profits, but the company's stock price, as of January 22, was at a 52-week low of Rs. 1,212.20 ($30.55). That is down 50% from a 52-week high of Rs. 2,439 in February 2007. The decline in the company's market capitalization has taken some of the sheen off the Infosys brand. But if panelists at the TiE Entrepreneurial Summit 2007, held in Delhi in December, are to be believed, the largest of India's software and business process outsourcing (BPO) companies have little to fear.
The outlook is less benign, however, for medium-size and small companies that provide plain vanilla, me-too IT services with a sole "we do it cheaper" approach. "If you are a small company with an innovative idea in the tech domain then you need to leverage the idea by a rapid scale-up of the business," said Anish Tripathi, chief knowledge officer of KPMG India. The rapid scale-up is imperative for smaller firms to monetize the advantage of being a first mover, according to Tripathi, who noted that opportunities exist in rural tech deployment and in the mobile space.
"Core intellectual property-based product companies can still compete" even if they are small, according to Jai Das, partner at SAP Ventures, the venture capital arm of SAP AG, because these companies' products could enjoy patent, trademark or copyright protection. Even companies founded with intellectual property based on processes and systems can succeed, he noted. While many of these firms may get bought out before they become billion-dollar businesses, entrepreneurs will benefit from the value-creation exercise.
The conference panelists urged smaller firms to take advantage of a trend away from selling software licenses and toward selling software as a service. In this web-based approach, the developer provides and maintains software for clients, who are billed based on usage rather than a fixed, annual per-user license fee. "Ninety percent of companies will want software as a service as they don't want a headache with IT," Das said.
Panelists and other conference speakers noted an enormous domestic opportunity for entrepreneurs. Ajai Chowdhry, chairman and CEO of HCL Infosystems, said the PC penetration in India that he had dreamed of years ago is about to happen. "We are on the cusp, with a digital lifestyle powering growth in urban India and with connectivity in rural India," he said, speaking at an awards reception.
In another speech, Infosys co-chairman Nandan M. Nilekani discussed new benefits of IT for the Indian government. "There's a dramatic adoption of many innovative technologies in India, such as electronic voting machines [used] in the 2004 general elections that made us the only country in the world to use these for electing members to Parliament," he said. Thanks in part to growth in technology infrastructure, he added, India's direct tax collections have risen 30% to 40% in the last two years as tax authorities have been able to analyze intelligence from the tax information network. "India is creating low-cost disruptive technologies for growth, and in four or five years we will have a completely portable national pension system and a common way of identifying citizens via one common number," Nilekani said.
Currently, the cumbersome process of transferring one's employee provident fund account can take several years. India does not have a unique identifier for each citizen. Instead, multiple identifiers are used for purposes including tax payments, pension accounts and voter eligibility determinations. "A national dematerialized system for land records is now being created as well," Nilekani noted, adding that the use of IT in the domestic market would enable targeted delivery of subsidies and other benefits.
Indian IT firms are focusing on the mass market to expand their market share. Bigger companies that provide application development and maintenance services expect business from North America to grow. "Inorganic growth is seen as a significant driver in addition to organic growth," KPMG India's Tripathi said. This would be a change of strategy for major IT firms, which have so far relied largely on new and existing clients to post high-double-digit growth in revenue and profit. With the rupee's appreciation shaving off almost 15 percentage points in revenue growth over the last year and a half, IT firms have had to focus on getting 2% to 3% price increases and higher labor productivity to protect their bottom lines. And they have hedged their dollar receivables, locking in a fixed exchange rate to protect them from the rupee's rise, as India Knowledge@Wharton has previously reported.
India has become a key market even for global IT software companies such as Germany's SAP, which has sold licenses for enterprise resource planning system software to customers including the $28.8 billion Tata group and Reliance Industries, India's largest private-sector company. "We are now focusing on new application software for small and medium enterprises to grow our base of 2,000 customers in India," SAP Ventures' Das said. SAP Labs already has located its second-largest development center in India (its largest is in Germany), joining other global giants including Microsoft, Intel and General Electric.
Shiv Nadar, chairman of HCL Technologies, pointed out just how competitive and polarized the IT business is becoming. The smallest of the IT firms could enter into aeronautics, which was using outdated technology, said Nadar, speaking as part of a separate TiE panel. "We have already built aeronautics for Boeing's 787 Dreamliner. Now, we can go out and buy sub systems manufacturers and benefit from the long-tailed revenue stream of product sale, support and services that characterizes the $800 billion global aeronautical business," Nadar said. He noted that HCL would acquire a company in this area soon and in the next 24 months would build this up as a significant line of business.
"The Indian IT industry has done what the auto industry did in Japan," said panelist Kris Gopalakrishnan, CEO and managing director of Infosys. "We have adopted global best practices and adapted them for India."
Smaller businesses setting up in India can profit from Indian IT firms' success in the global markets. "In the U.S. and U.K., 'brand India' has arrived. Now Indian companies can hire top talent instead of also-rans from these markets," said Uday Challu, CEO of iYogi, a venture capital-funded tech support company headquartered in Gurgaon, near New Delhi. Given the double-digit wage inflation and benchmarking of Indian mid- and senior-level salaries to global levels, it's becoming easier to hire talent from the developed world, Challu said. Because smaller companies typically need fewer key people, looking beyond Indian shores for key officers may be a practical option, he added. As Russell Parera, CEO of KPMG India, noted, "It's ironic that in a country of a billion people, the single biggest challenge to growth is the availability of talented staff and not customers."
Changes in the investment climate also can benefit smaller companies. "Now, investors don't scoff at rupee revenue components in the business plan," Challu said. "The IT and telecom sectors in India are early adopters of new technologies," so new companies can get their first break right in the domestic market. "What's more, references of an Indian user can now be used for global marketing, too," he noted, elaborating on how entrepreneurs could leverage the India advantage in the tech business. Vispi Daver, partner at U.S.-based venture capital firm Sierra Ventures, added that entrepreneurs could now raise $10 million within the country rather than having to seek it in Silicon Valley.
With a good number of globally renowned venture capital firms now in India, panelists urged entrepreneurs to take advantage of the value addition, guidance and insight that these VCs can provide to companies in which they invest, beyond the capital they contribute.
Terence H. Matthews, a Canada-based billionaire serial entrepreneur, had some tips for budding entrepreneurs. "The single most important word for success is 'persistence.' I have so far started up to 70 companies, of which I have lost only two," he said, speaking as part of a separate panel. He said he owed his success to hitting the market at the right time with the right technology and the right product. "But there's absolutely no substitute for work ethic and education," he said. He advised entrepreneurs not to become emotionally attached to the companies they found, explaining that 20 of his companies have gone public while several others were acquired. "I don't treat companies as babies that cannot be sold. [Instead,] I set up three new companies every year."
Matthews said his holding company, Wesley Clover, was looking to acquire companies in India to jump-start his plan to develop software products for the world markets there. Twenty tech companies that he is associated with outsource software to Indian firms. "India is at a tipping point, and the time is ripe for it," he suggested. "Outsourcing is not capped and will grow quite fast and move to the next stage of development of products for the world market."
Just as consolidation has occurred among IT firms in India, the business process outsourcing (BPO) sector is also showing sign of consolidating. The rupee's steady appreciation has put the brakes on smaller and newer players' undercutting established competitors. These challenger firms are being far more discerning in quoting uneconomic rates for outsourced work in the hope of breaking even. "We are already seeing a much easier employee hiring situation as a fallout," said Raman Roy, chairman and managing director of Quatrro BPO Solutions. As firms become more careful in quoting prices, the demand for talent to fuel growth at any cost is moderated, providing a needed breather from the high rates of attrition that have come to characterize the business in India. "Currently, most companies have hedged up to a year's worth of dollar receivables," said Roy, who is widely considered the father of India's BPO business. "The real challenge will come next year, when those hedges run out and we will see a lot of uneconomical companies quickly wither away."
Pavan Vaish, CEO of IBM Daksh Business Process Services, likens the industry's challenges to what happened in Japan years ago when the yen strengthened. "Companies reinvented themselves by investing in technology, R&D and extreme operational excellence. Of course, fewer companies who have the brand, technological capability and the management to make the transition will succeed," Vaish said.
Speakers at the panel discussion "Is the Party Over? The Future of BPO/KPO" were nonetheless bullish about the prospects of the larger companies in the $8 billion sector, whose revenues have been growing at almost 33% a year. Harsh Manglik, chairman of Accenture India, said firms such as his could improve productivity of processes by almost 50% while keeping the same people employed by the client working out of the same locales. "These are benefits we are talking about even before the operation is offshored to another country," he said.
Pramod Bhasin, CEO of Genpact, said India's penetration in the IT enabled services industry has been "minimal" to this point, and human resources is the key to growth. "The demographics of the developed world mean that they aren't going to produce 20- and 30-year-olds in huge numbers. Companies in those geographies will therefore have to find the capacity for growth in other markets. We feel limited only by our ability to hire employees who can provide a very high quality of service to our clients," he said.
The leaders of India's BPO industry have managed to build domain expertise, or in some cases acquire it in chosen areas. This has allowed them to deliver cost savings by reengineering processes rather than just through cost arbitrage based on cheaper Indian labor. Cost savings generated from a fundamental redesign of a process also allow the larger firms to share a part of the savings the client realizes. A lack of deep domain expertise is the reason smaller firms that focus on cost arbitrage are having a difficult time coping with the rising rupee. "Cost arbitrage as a basic reason to exist is over," the Bhasin said. "Now clients come to us because we can give them high-quality service and continuous improvement."
Vaish, of IBM Daksh, said firms will have to focus on delivering greater value, which will call for an enormous amount of investment in research and building domain expertise. Today, "it's very hard to do a [BPO] start-up in conventional areas" such as call center services, he said.
Leading BPO firms are now looking at what departments of top banks and companies they can acquire so they can identify efficiencies and create value by fixing something that is broken and providing the services back to the banks and companies on a contract basis. Focus areas could include such activities as research monitoring in a particular subject area and patent filing work. The biggest BPO firms are also actively exploring opportunities in the local BPO business, as banks, media companies and airlines that are growing revenue by 30% a year are increasingly willing to outsource noncore operations.
Jerry Rao, chairman of MphasiS, said the domestic and international call center business in India continues to grow. Even in a three-decade-old industry, firms are adding value by reducing average handle times per call by 30% to 40% using Six Sigma standards of efficiency. "India now has as many Six Sigma black belts and green belts as any other country worldwide. In five years, we will probably have more of them than the rest of the world combined," Rao said. "There are, however, several other opportunities that domestic entrepreneurs should explore which are allied to the BPO industry. For instance there are lots of opportunities to develop a new recording software used by call centers where an Israeli company currently has almost a monopoly." Rao also illustrated how small entrepreneurs were taking advantage of the growth of the larger players by setting up accent coaching classes to provide trained manpower to the BPO industry. "There are now 150 to 200 such classes in Bangalore alone, and I'm worried that people here will start speaking with a U.S. accent and I will not understand them," he joked.
Panelists pointed out that entrepreneurs need to be prepared for the polishing that graduates of the education system will require to become employable. "Whatever training the government doesn't give, you can provide as an entrepreneur," Rao said.
Monday, July 22, 2013
Why Indian IT Firms Are Hiring Failed Entrepreneurs?
Eyeing fresh business from outsourcing clients, IT firms are creating start-ups focused on disruptive technology. India’s biggest information technology (IT) firms are hiring failed entrepreneurs and successful venture capital executives in Silicon Valley as they seek to win fresh business from top outsourcing clients such as Target Corp. and Citigroup Inc. by creating internal start-up organizations focused on building disruptive technology solutions.
Monday, April 20, 2015
Tech Jolt: Are Technology Companies Ripe For Disruption?
I ask myself why I understand so little of the policy issues, product discussions, and even general news coming out of the tech world. That's my problem. I need to fix it by doing what Jack Welch asked all of his senior colleagues at GE to do: find a mentor no older than 30 to help me update my tech skills and knowledge.
Thursday, June 10, 2010
Flex technology - The Ruling Technology In The Market
By M H Ahssan
Flex is one of the ruling technologies in the market. Flex seeks to minimize problems by providing good work flow and programming model that is familiar to the flex developers and flex programmers. Flex development enables you to create expressive, high-performance applications that run identically on all major browsers and operating systems. Expressiveness, performance, rich media, real-time messaging features helps the flex developers to show best results. Flex is a framework that helps you build dynamic, interactive rich Internet applications. Flex applications are delivered on the web via the Flash Player or to the desktop.
Flex offers multiple benefits to its users that let them reap maximum advantages. Flex enables the users to create custom components in Macromedia flash MX Professional 2004 and export them as SWC files for use in the flex applications. It allows the flex programmers, designers and developers to use MXMLO, the flex XML based mark up language, and macro media flash action script 2.0. Flex technology makes it ideal development platform when it comes to TCO (total cost of ownership) issues as it is easy to maintain and enhance through ongoing revisions. Enterprises can use Flex to quickly build and deploy applications that improve the user experience, boost the bottom line, and analyze data to enable better business decisions. Flex has got remarkable speed letting the user to wind up the projects in minimum time.
You can take the maximum benefits of the flex technology at A-1 technology. Flex enables you to have significant savings in Social Security, Medicare and pension contributions -savings that can be used in part to pay for implementing the flex plan. Through flex offshore development you can take the advantages of flex technology in every part of the world. Flex enables you to use it with a number of other programs and languages like Ajax, flash, etc. Flex Builder runs on Microsoft® Windows 2000, Windows XP Professional, Windows 2000 Server, or Windows Server. A-1 Technology offers easy, affordable application development to developers in any kind of organization working on any kind of flex or other projects.
The author is a Writer working with a leading company providing services on software outsourcing Company, software outsourcing, Software Development Outsourcing, Software IT Outsourcing, Offshore Software Outsourcing IT, Offshore Outsourcing Services India, Offshore software outsource.
Flex is one of the ruling technologies in the market. Flex seeks to minimize problems by providing good work flow and programming model that is familiar to the flex developers and flex programmers. Flex development enables you to create expressive, high-performance applications that run identically on all major browsers and operating systems. Expressiveness, performance, rich media, real-time messaging features helps the flex developers to show best results. Flex is a framework that helps you build dynamic, interactive rich Internet applications. Flex applications are delivered on the web via the Flash Player or to the desktop.
Flex offers multiple benefits to its users that let them reap maximum advantages. Flex enables the users to create custom components in Macromedia flash MX Professional 2004 and export them as SWC files for use in the flex applications. It allows the flex programmers, designers and developers to use MXMLO, the flex XML based mark up language, and macro media flash action script 2.0. Flex technology makes it ideal development platform when it comes to TCO (total cost of ownership) issues as it is easy to maintain and enhance through ongoing revisions. Enterprises can use Flex to quickly build and deploy applications that improve the user experience, boost the bottom line, and analyze data to enable better business decisions. Flex has got remarkable speed letting the user to wind up the projects in minimum time.
You can take the maximum benefits of the flex technology at A-1 technology. Flex enables you to have significant savings in Social Security, Medicare and pension contributions -savings that can be used in part to pay for implementing the flex plan. Through flex offshore development you can take the advantages of flex technology in every part of the world. Flex enables you to use it with a number of other programs and languages like Ajax, flash, etc. Flex Builder runs on Microsoft® Windows 2000, Windows XP Professional, Windows 2000 Server, or Windows Server. A-1 Technology offers easy, affordable application development to developers in any kind of organization working on any kind of flex or other projects.
The author is a Writer working with a leading company providing services on software outsourcing Company, software outsourcing, Software Development Outsourcing, Software IT Outsourcing, Offshore Software Outsourcing IT, Offshore Outsourcing Services India, Offshore software outsource.
Monday, March 23, 2015
GE’s $5 Billion Annual R+D Budget Is Transforming Advanced Manufacturing And The Industrial Internet
That mission is inspired by no less than Thomas Edison, founder of the General Electric Company, and inventor of the first practical incandescent light bulb. “I find out what the world needs, then I proceed to invent it,” he said, offering GE a vision to build upon its early, life-changing innovations in domestic appliances, medical imaging systems, and the basis of the modern electrical grid.
Friday, January 16, 2009
Satyam's watchmen under spotlight
By M H Ahssan
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
Satyam's watchmen under spotlight
By M H Ahssan
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
Satyam's watchmen under spotlight
By M H Ahssan
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
A sneezing cold is not always pneumonia and concerns that the US$1.5 billion fraud at Satyam Computer Services raised for the Indian software sector and wider economy may be overstated. Yet skeletons tumbling out of the Satyam cupboard have forced the Indian government into hurried damage control.
Investigators are now looking at whether the trigger for the Satyam fraud, confessed to on January 7 by chairman Ramalinga Raju, was a greedy land deal gone bust, rather than problems in the company's software and outsourcing business.
Those problems are not limited to the confessed fraud. The World Bank said in December it had imposed an eight-year ban on Satyam for providing "improper benefits" to bank employees. This week, Wipro, India's third-largest software exporter, revealed that it had been barred by the World Bank more than 18 months ago for four years for offering bank employees shares in its 2000 stock offer in the US.
Growth at Satyam's main competitors in the country unhit by scandal certainly continues strongly, as clients overseas place orders as they cut costs amid the global recession.
Infosys Technologies, India’s second-largest computer-services provider, this week said profit in the last three months of 2008 climbed 33%, the fastest in six quarters. Sales jumped 35%.
Sales at Tata Consultancy, the country's biggest exporter of software, gained 24%, although net profit rose only 1.6%, hit by a 2.51 billion rupee foreign-exchange loss after the Indian currency dropped 19% against the US dollar last year. Wipro is due to report its earnings on January 21.
Goldman Sachs Group this month said revenue growth at Indian computer-services companies may slow to 6% this year, as global information-technology spending shrinks 4%, Bloomberg reported.
The National Association of Software and Service Companies (NASSCOM), an Indian industry body, is more optimistic, claiming the industry will increase export revenues 20% to $60 billion by March 2010.
Nine days after Raju confessed in a letter to his board of directors to faking profits for eight years and creating a non-existent cash balance of $1.5 billion, the Satyam website continues to forecast an increase of about 20% in net profit for the year ending March 31.
While no definite pointer has emerged so far on the mechanics of the Satyam fraud, one trail points to $6 billion worth of local governmental contracts to Maytas, an infrastructure development company that Raju's family has owned and run for the past 23 years. Maytas, Satyam spelt backwards, is run by Raju's two sons, Teja and Rama.
Raju, in judicial custody until January 23, has reportedly confessed to interrogators that he diverted Satyam funds in speculative land deals for Maytas. He came unstuck after land prices crashed in his home state of Andhra Pradesh.
Political parties, including the Communist Party of India, have asked Prime Minister Manmohan Singh to order a "high-level probe" into this aspect of the fraud, which could involve Raju personally owning about 4,000 hectares of land.
More immediate concerns for the central government include reassuring domestic and foreign investors of the good health of India's economy and ensuring January salaries being paid to 53,000 Satyam employees.
Manmohan, who holds the government's finance portfolio, said on January 8 that the Indian economy would remain among the fastest growing in the world this year, with a 7% growth rate.
"Despite the global economic downturn, the fundamentals of our economy continue to be strong," he told delegates to the Pravasi Bharatiya Divas, the annual meeting of Indians living overseas. "Much of India's growth is internally driven and we can maintain a strong pace of growth in coming years."
External Affairs Minister Pranab Mukherjee continued the reassurance song on January 13, at a joint press conference in New Delhi with visiting British Foreign Secretary David Miliband. He said the "basic fundamentals are strong" for the Indian economy and "there is no need to hit the panic button".
Even so, a sense of betrayal by Satyam dominated sentiment on the streets. "I lost 5 lakhs [US$10,126] after the Satyam fraud," 40-year-old Ramesh Gupta told Asia Times Online, while standing with small groups of investors morosely gazing up at the electronic ticker atop the Bombay Stock Exchange (BSE) building on Thursday, after seeing the BSE Sensex dive by over 340 points. "I'm going to look more closely at the promoters of companies I next invest in."
Satyam stocks, which plunged about 80% on Raju's initial confession, tanked 33% on Thursday, reducing the market capital of the company to less than $450 million from over $7 billion in 2008. Amid an overall bear market and with the chairman of a bellwether company in jailed, the black statue of a charging bull outside the 28-storey exchange building looked appropriately caged behind spiked metal barriers.
Gupta, a former secretary of the Bombay Shareholders Association, predicted more checks for fraud at other clients of Satyam's auditor, PricewaterhouseCoopers (PwC). Gupta in particular queried the credibility of PwC and its operations in Dalal Street, Mumbai's financial center. "Why does PwC get four times the fee than other auditors of companies such as Infosys?," he asked.
The Hyderabad police have raided the PwC office since the fraud confession by Raju. The multinational auditor, with offices in 150 countries, is yet to explain how it passed Satyam's fudged accounts for eight years, apart from a statement of the obvious on January 14 saying that its audited Satyam accounts were "not reliable".
Multinational auditors KPMG and Deloitte have now been appointed to check Satyam's affairs, said Deepak Parekh, a senior banker and one of the new six-member, government-appointed Satyam board of directors to delve into the scandal.
The fraud opened numerous credibility cracks, bringing market regulators, various governmental institutions and market analysts themselves under investigation.
The Institute of Chartered Accountants of India (ICAI), which is looking into the role of PwC, is also likely to question market consultants Ernst & Young on its valuation of two Maytas companies, as well as the basis on which E&Y declared Raju the "E&Y Entrepreneur of the year 2007".
ICAI is itself under the cosh, with the Mumbai-based Small Investors Grievances Forum declaring India's top chartered accountants body, the second-largest in the world, to be among respondents in High Court public interest litigation filed by the forum on the Satyam fraud.
The stock market regulator, the Securities and Exchange Board of India (SEBI), has announced investigations into allegations of insider trading among senior Satyam officials. However, decisions by SEBI, which does not have an impressive track record against insider dealing, can and has on occasion been overruled by its oversight body, the Securities Appellate Tribunal on appeal.
Satyam executives made $1.8 million from share sales in the six months before the scandal broke and the stock price crashed, filings by the company to the Bombay Stock Exchange show. Chief financial officer V Srinivas and eight other officials sold a combined 267,358 shares after July 14, more stock than the combined insider sales at 30 companies on India's benchmark index, according Bloomberg.
The Reserve Bank of India has also ordered an investigation, while the central government has asked the Serious Frauds Investigation Office, under the Ministry of Corporate Affairs, to probe the scam. Government concern over what answers emerge from these investigations will be sharpened by the impact they might have on the prospects for the wobbly ruling coalition, which faces general elections in April.
The plethora of investigating agencies has not impressed cynics who fear too many sleuths probing the Satyam soup may be a complex coverup for senior politician friends of Raju.
Eyebrows are also being raised at Raju having a battery of 25 lawyers to prove he isn't guilty after admitting his guilt, though this could be Raju's interpretation of his confessional letter where he said he is "now prepared to subject myself to the laws of the land" - by stretching the slow arm of Indian law as long as he can.
Monday, July 11, 2016
IT Graduates Aplenty In Hyderabad, But Where Are The 'Skilled'?
A steady 6% to 9% year-on-year increase in workforce notwithstanding, Hyderabad's IT sector is faced with a severe crunch - that of skilled resources.
Experts rue how a majority of the nearly 2 lakh students graduating from city engineering colleges every year do not have technical expertise - particularly in fast-growing fields such as cyber security and analytics - thus creating a huge demand-supply gap.
Thursday, December 11, 2008
BUSINESS TIMES
By M H Ahssan
Salaried employees take the business plunge even as young B-school grads join family businesses, their dream job a recession away.
On a crisp Sunday morning recently, four young boys in their mid-20s busily packed fish fries and chicken leg pieces in clean plastic containers, throwing in sumptuous amount of sliced onions and lime and liberal helpings of ‘salan’ with their special fried chicken biryani. That this work of taking orders and packing food was a far cry from what they did on weekdays wasn’t obvious. After all, one of them is a banker with a multinational, another a techie, the third an IITian employed with an international consulting group and the fourth partner of this ‘take away’ venture is an assistant professor in an engineering college.
Much like these young boys, who make for rather unusual businessmen, there are more who have been bitten by the entrepreneurship bug. From restaurants to event management and from project management to business outsourcing units, these 20- and 30-somethings say they have found their calling in ideas that make business sense. In fact, at an ongoing entrepreneurship meet at a college the ideas have seen a shift from launching software companies (a favourite concept until last year) to setting up restaurants, internet marketing firms and portals this year.
These ideas are low in risk, reason wannabe entrepreneurs. Moreover, they note that these ventures would insulate them from the recession since having their own venture would help them tide over bad market situations such as these when layoffs and salary cuts are the order of the day.
For instance, the four partners of the take away venture, Kostha Ruchulu in Kukatpally Housing Board, say they did not start it because of the downturn but chose food as a business option since it “does well through the year’’ irrespective of the market conditions. “We had two ideas. One was to start a movie theatre and another to start a take away joint. The latter required less capital compared to a film theatre the investment for which would have run into crores,’’ explains 24-year-old K Shailender Reddy, one of the partners. He says that their investment of Rs 7 lakh (as on date) is paying out well so far with the daily food sales ranging between Rs 6,000 to Rs 10,000. The venture hopes to break even in a few months’ time. The partners say that this appeared as a much better option compared to a software firm or some such idea as a food joint guaranteed returns.
Another IITian Ravi Mundoli, who did his masters in the US and worked there in a software firm for four years, is now in India with his own venture on software construction and project management. Intriguingly, Mundoli had started this business keeping in mind a US-based real estate clientele. But he hastily shifted his focus to India seeing the rapidly sinking US market. “Now we are also diversifying and dabbling in other verticals such as manufacturing and exploring other non-software opportunities with construction companies,’’ he says. “It is low risk,’’ he reasons.
These businessmen say that they themselves are cost cutting to tide over the recession but still have the financial security that a regular salaried job would not have provided them in such times.
Besides, they say they are surprised they are managing to stay afloat in these hard times. And how? “We provide back office services. Companies have to take care of accounts and finance and this is where we step in and provide these services at a price which is cheaper than recruiting staff for each of these functions. In the process, we even get familiar with best practices in various industry sectors and then apply it in our service as well,’’ says R Raj Shekhar, director with Oremus Corporate Services.
Businessmen like Raj Shekhar say that initial days of ventures are ridden with problems but it all settles down. His venture, for instance, started off from a one-room office saw bad times initially when the investment of Rs 50,000 made by each of the three partners was exhausted in three months. However, now the firm employs 30 to 40 people and has opened offices in Bangalore and Chennai.
Even MSR Murthy or DJ Murthy as he is popularly known went through a lean patch when he started his business. “I had to use all my savings. There were no short cuts. We worked from a paltry sum of Rs 500 to reach to Rs 25,000 today. We now have 12 permanent employees and we also hire part time staff for gigs and events,” he says, adding that it was all worth it. Murthy, who has a degree in environmental engineering and M Tech, started his own label called Frequency with a friend to collaborate with international artists and bring them to Hyderabad. “I wanted to make money doing what I wanted to and that why I charted my own career. This way I don’t have to play at wedding and other such functions,” he says.
The new businessmen on the block point out they too are coping with the economy downturn. Mundoli, for instance, is cutting down on meetings at plush hotels and other transport expenses. He admits that he does think of the MNC options that could be waiting for him, but says that he brushes the thought each time.
The Homecoming
Until two years ago before Rohit Chowdhary joined a business management course in Hyderabad, the 23-year old wasn’t exactly keen on helping his father and elder brothers in their ageold family business of importing Petro chemicals, nor did he prefer to return to his native city, Kolkata, soon after college. Rather, what his heart longed for was an independent life as a multinational firm employee probably settled in a high-flying city like Mumbai or Delhi.
But now, he finds it only logical to use his marketing skills in expanding the traditional chemical business. The reason, he promptly puts, is the global slowdown hitting firms leaving the placement season dry this year. “I was looking for a package of at least Rs 6 lakh. But these are bad times and the maximum companies are offering is Rs 3 to 4 lakh. That doesn’t make sense to me as our chemical business promises me more,” he says.
Ditto for Shreyans Bardia, another 23-old student in Hyderabad who says working for his family business of generator manufacturing wasn’t the job he dreamt of during college. “I am forced to join it now since no offers are coming my way,” he says. His family, he says, is more than happy with his decision to be part of the family run business but admits that his dream of a job in a high profile firm has been put on hold.
These are hard times, say these young businessmen and rue that their B-school nurtured wishlist of a plum job in a reputed firm now appears as a distant dream. However they are thanking their stars as they have a good back up plan that can save them from a jobless state, which some of their batchmates have entered now.
In fact for some, moving back to family business almost comes as a saving grace. For instance Rahul Tripathi, who recently resigned from his job as a manager in a leading bank now plans to help his mother manage an Indian restaurant she runs abroad. “The industry is facing a real hard time with the employees forever in the fear of losing jobs. I may want to continue with my present lifestyle but the conditions are suggesting me to think otherwise. Now I only wish market improves soon so that I can join my banking industry again but right now, I feel satisfied with my decision to help my mother run the restaurant,” he says.
Even Vinay Middha, 28, an IIM Calcutta grad and working with a leading bank in London, feels the axe hanging on his head. After a stint with various multinational companies he now, for the first time, sees bright opportunities in his family undertakings of a hotel and a school. Even his younger brother, studying in IIT Kanpur, is now keen on following his elder brother’s footsteps. Both now are busy chalking out plans to expand their age-old business.
‘India needs young entrepreneurs’
K Harishchandra Prasad, senior vice president, Federation of Andhra Pradesh Chambers of Commerce and Industry speaks to HNN about the entrepreneurship trend. This trend of young people turning to entrepreneurship is a chain reaction. The job situation is very gloomy these days and opportunities are uncertain so a number of people are either returning to their family business or setting up their own ventures. Placement offers from companies in even top MBA and engineering colleges are not as good as they used to be so the present graduating batch is not left with too much choice. Those who haven’t managed to secure job offers are either going for higher studies (albeit in small numbers) or people are getting together to start a business if they are able to pool in some money. A number of graduating students are giving serious thought to starting their own establishments and this thought process is steadily settling in.
There are two kinds of people who would like to become entrepreneurs—those who already have the drive for it while others are people who change according to the current (market) scenario. Today there are definitely more entrepreneurs and people are looking at entrepreneurship programmes.
In a developing country like India there is a constant need for young, enterprising entrepreneurs. Unfortunately due to recession the environment is not too conducive for breeding entrepreneurs. Banks are tight fisted while giving loans and thus people who want to start their own business need to generate their own resources from savings or require financial assistance from family and friends. However a number of people who are managing their capital are still looking towards entrepreneurship and family business and the trend is definitely leaning towards entrepreneurship.
Salaried employees take the business plunge even as young B-school grads join family businesses, their dream job a recession away.
On a crisp Sunday morning recently, four young boys in their mid-20s busily packed fish fries and chicken leg pieces in clean plastic containers, throwing in sumptuous amount of sliced onions and lime and liberal helpings of ‘salan’ with their special fried chicken biryani. That this work of taking orders and packing food was a far cry from what they did on weekdays wasn’t obvious. After all, one of them is a banker with a multinational, another a techie, the third an IITian employed with an international consulting group and the fourth partner of this ‘take away’ venture is an assistant professor in an engineering college.
Much like these young boys, who make for rather unusual businessmen, there are more who have been bitten by the entrepreneurship bug. From restaurants to event management and from project management to business outsourcing units, these 20- and 30-somethings say they have found their calling in ideas that make business sense. In fact, at an ongoing entrepreneurship meet at a college the ideas have seen a shift from launching software companies (a favourite concept until last year) to setting up restaurants, internet marketing firms and portals this year.
These ideas are low in risk, reason wannabe entrepreneurs. Moreover, they note that these ventures would insulate them from the recession since having their own venture would help them tide over bad market situations such as these when layoffs and salary cuts are the order of the day.
For instance, the four partners of the take away venture, Kostha Ruchulu in Kukatpally Housing Board, say they did not start it because of the downturn but chose food as a business option since it “does well through the year’’ irrespective of the market conditions. “We had two ideas. One was to start a movie theatre and another to start a take away joint. The latter required less capital compared to a film theatre the investment for which would have run into crores,’’ explains 24-year-old K Shailender Reddy, one of the partners. He says that their investment of Rs 7 lakh (as on date) is paying out well so far with the daily food sales ranging between Rs 6,000 to Rs 10,000. The venture hopes to break even in a few months’ time. The partners say that this appeared as a much better option compared to a software firm or some such idea as a food joint guaranteed returns.
Another IITian Ravi Mundoli, who did his masters in the US and worked there in a software firm for four years, is now in India with his own venture on software construction and project management. Intriguingly, Mundoli had started this business keeping in mind a US-based real estate clientele. But he hastily shifted his focus to India seeing the rapidly sinking US market. “Now we are also diversifying and dabbling in other verticals such as manufacturing and exploring other non-software opportunities with construction companies,’’ he says. “It is low risk,’’ he reasons.
These businessmen say that they themselves are cost cutting to tide over the recession but still have the financial security that a regular salaried job would not have provided them in such times.
Besides, they say they are surprised they are managing to stay afloat in these hard times. And how? “We provide back office services. Companies have to take care of accounts and finance and this is where we step in and provide these services at a price which is cheaper than recruiting staff for each of these functions. In the process, we even get familiar with best practices in various industry sectors and then apply it in our service as well,’’ says R Raj Shekhar, director with Oremus Corporate Services.
Businessmen like Raj Shekhar say that initial days of ventures are ridden with problems but it all settles down. His venture, for instance, started off from a one-room office saw bad times initially when the investment of Rs 50,000 made by each of the three partners was exhausted in three months. However, now the firm employs 30 to 40 people and has opened offices in Bangalore and Chennai.
Even MSR Murthy or DJ Murthy as he is popularly known went through a lean patch when he started his business. “I had to use all my savings. There were no short cuts. We worked from a paltry sum of Rs 500 to reach to Rs 25,000 today. We now have 12 permanent employees and we also hire part time staff for gigs and events,” he says, adding that it was all worth it. Murthy, who has a degree in environmental engineering and M Tech, started his own label called Frequency with a friend to collaborate with international artists and bring them to Hyderabad. “I wanted to make money doing what I wanted to and that why I charted my own career. This way I don’t have to play at wedding and other such functions,” he says.
The new businessmen on the block point out they too are coping with the economy downturn. Mundoli, for instance, is cutting down on meetings at plush hotels and other transport expenses. He admits that he does think of the MNC options that could be waiting for him, but says that he brushes the thought each time.
The Homecoming
Until two years ago before Rohit Chowdhary joined a business management course in Hyderabad, the 23-year old wasn’t exactly keen on helping his father and elder brothers in their ageold family business of importing Petro chemicals, nor did he prefer to return to his native city, Kolkata, soon after college. Rather, what his heart longed for was an independent life as a multinational firm employee probably settled in a high-flying city like Mumbai or Delhi.
But now, he finds it only logical to use his marketing skills in expanding the traditional chemical business. The reason, he promptly puts, is the global slowdown hitting firms leaving the placement season dry this year. “I was looking for a package of at least Rs 6 lakh. But these are bad times and the maximum companies are offering is Rs 3 to 4 lakh. That doesn’t make sense to me as our chemical business promises me more,” he says.
Ditto for Shreyans Bardia, another 23-old student in Hyderabad who says working for his family business of generator manufacturing wasn’t the job he dreamt of during college. “I am forced to join it now since no offers are coming my way,” he says. His family, he says, is more than happy with his decision to be part of the family run business but admits that his dream of a job in a high profile firm has been put on hold.
These are hard times, say these young businessmen and rue that their B-school nurtured wishlist of a plum job in a reputed firm now appears as a distant dream. However they are thanking their stars as they have a good back up plan that can save them from a jobless state, which some of their batchmates have entered now.
In fact for some, moving back to family business almost comes as a saving grace. For instance Rahul Tripathi, who recently resigned from his job as a manager in a leading bank now plans to help his mother manage an Indian restaurant she runs abroad. “The industry is facing a real hard time with the employees forever in the fear of losing jobs. I may want to continue with my present lifestyle but the conditions are suggesting me to think otherwise. Now I only wish market improves soon so that I can join my banking industry again but right now, I feel satisfied with my decision to help my mother run the restaurant,” he says.
Even Vinay Middha, 28, an IIM Calcutta grad and working with a leading bank in London, feels the axe hanging on his head. After a stint with various multinational companies he now, for the first time, sees bright opportunities in his family undertakings of a hotel and a school. Even his younger brother, studying in IIT Kanpur, is now keen on following his elder brother’s footsteps. Both now are busy chalking out plans to expand their age-old business.
‘India needs young entrepreneurs’
K Harishchandra Prasad, senior vice president, Federation of Andhra Pradesh Chambers of Commerce and Industry speaks to HNN about the entrepreneurship trend. This trend of young people turning to entrepreneurship is a chain reaction. The job situation is very gloomy these days and opportunities are uncertain so a number of people are either returning to their family business or setting up their own ventures. Placement offers from companies in even top MBA and engineering colleges are not as good as they used to be so the present graduating batch is not left with too much choice. Those who haven’t managed to secure job offers are either going for higher studies (albeit in small numbers) or people are getting together to start a business if they are able to pool in some money. A number of graduating students are giving serious thought to starting their own establishments and this thought process is steadily settling in.
There are two kinds of people who would like to become entrepreneurs—those who already have the drive for it while others are people who change according to the current (market) scenario. Today there are definitely more entrepreneurs and people are looking at entrepreneurship programmes.
In a developing country like India there is a constant need for young, enterprising entrepreneurs. Unfortunately due to recession the environment is not too conducive for breeding entrepreneurs. Banks are tight fisted while giving loans and thus people who want to start their own business need to generate their own resources from savings or require financial assistance from family and friends. However a number of people who are managing their capital are still looking towards entrepreneurship and family business and the trend is definitely leaning towards entrepreneurship.
Saturday, June 06, 2009
Now, a software to change sex!
It's virtually a face off! Scientists have developed a software which they claim
can change the sex of a person on a computer by taking a live video feed of a person talking. The software has been developed by computer scientist Barry-John Theobald at the University of East Anglia in the UK and Iain Matthews, formerly at Carnegie Mellon University and now at Weta Digital in Wellington, New Zealand.
In fact, according to the scientists, the software can take a live video feed of a person talking and make them look and sound like somebody else could actually change that, the 'New Scientist' reported. In their research, the scientists recorded video of volunteers performing 30 different facial expressions such as frowning, smiling and looking surprised. For each expression, the positions of key facial features, such as the eyes, nose and corners of the lips, were manually labelled.
That annotated footage was used to "train" software to recognise the face of each individual featured in the set. Once trained on a person in this way, it can closely track
every move of their face in video footage. Those movements can then be transferred onto the face of another "known" person by calculating how the recipient's features need to change to take on each new expression. Doing that and displaying the transformed face takes just 150 milliseconds, fast enough to allow a conversation over video link to continue in real time.
To complete effect, a person's voice can be manipulated to match their new face. Volunteers were asked to chat to one another in a video conference, but did not know if the face they saw was really that of the person they were talking with," or indeed
if the other volunteer was seeing their own true face.
"The results suggest that our body language during conversation is more reactive to that of others than it is to their physical appearance. We've shown you can present a
female as herself or as a male, and the other participant's behaviour doesn't change," Theobald said. The results will soon be published in the Journal of Experimental Psychology.
can change the sex of a person on a computer by taking a live video feed of a person talking. The software has been developed by computer scientist Barry-John Theobald at the University of East Anglia in the UK and Iain Matthews, formerly at Carnegie Mellon University and now at Weta Digital in Wellington, New Zealand.
In fact, according to the scientists, the software can take a live video feed of a person talking and make them look and sound like somebody else could actually change that, the 'New Scientist' reported. In their research, the scientists recorded video of volunteers performing 30 different facial expressions such as frowning, smiling and looking surprised. For each expression, the positions of key facial features, such as the eyes, nose and corners of the lips, were manually labelled.
That annotated footage was used to "train" software to recognise the face of each individual featured in the set. Once trained on a person in this way, it can closely track
every move of their face in video footage. Those movements can then be transferred onto the face of another "known" person by calculating how the recipient's features need to change to take on each new expression. Doing that and displaying the transformed face takes just 150 milliseconds, fast enough to allow a conversation over video link to continue in real time.
To complete effect, a person's voice can be manipulated to match their new face. Volunteers were asked to chat to one another in a video conference, but did not know if the face they saw was really that of the person they were talking with," or indeed
if the other volunteer was seeing their own true face.
"The results suggest that our body language during conversation is more reactive to that of others than it is to their physical appearance. We've shown you can present a
female as herself or as a male, and the other participant's behaviour doesn't change," Theobald said. The results will soon be published in the Journal of Experimental Psychology.
Friday, February 01, 2013
India's Economic Opportunities And Perils
For starters, the removal of the textile quota and the potential Yuan revaluation are a boon. Garment exports from India to the United States grew by over 60 per cent since early 2005. With the Yuan revaluation, Wal-Mart is expected to increase its textile import from India from $1.5 billion to $5 billion.
Wal-Mart alone can provide a growth rate of 25 per cent to India's textile sector, so the potential is enormous when other large global retailers flock to the country. The fifth Heimtextil India conference — trade show for home textiles and accessories — last year attracted over 10,000 participants from 96 countries. Without much fanfare, all major retailers, fashion brands and intermediaries such as Li and Fung are establishing or expanding offices in India, matching that of the high-tech sector. Some estimates project textile exports to reach $50 billion by 2010 from the current $15 billion, equalling or surpassing the projection for software exports.
Key linkages
The promise for the masses comes from the linkages the manufacturing sector has with the rest of the economy. Textiles, for instance, have deep backward linkages with cotton and silk growers, cotton/silk processors, yarn makers, fabric manufacturers, designers, to tailors that touches rural areas, small and medium-size towns, and large cities. It is no surprise that in 1973 Western economies imposed the textile quota to protect these linkages and associated jobs.
The textile sector can employ skilled, semi-skilled and unskilled workforce from every segment of Indian society. The opportunity to increase income at the lower economic strata is truly great, unlike the pseudo increase reflected in per capita GDP. The backward linkages will invigorate other manufacturing industries such as those supplying to the textile industry and financial services and transportation, thus having a significant ripple effect. The benefits may far exceed those from export-led, software and IT-enabled services, which has primarily benefited the well-educated, urban workforce of India. Of course, cotton and silk still depend on the monsoon and, therefore, India's growth will depend even more on the rain gods.
However, the optimism must be tempered. The demand for water, electricity, roads, distribution and transportation system, and ports fundamental to manufacturing activity will increase more than ever before. Needless to say, despite the progress in the last 15 years, the situation in India on these fronts is bad, particularly in comparison with competitors such as China.
The CEO of a major logistics service provider in India, who spoke to a group of MBA students that I led from McCombs School of Business at the University of Texas, summed up India's distribution system as the "case of rotten apples" and a "case of bitter sugar." The delays due to the awful transportation infrastructure and procedures destroy perishable goods during transportation. He said it was more expensive to transport wheat from Punjab to Chennai than to ship wheat from the U.S. to Chennai. The road infrastructure, and inter-State transportation procedures and taxes are a big hindrance for smooth flow of economic activities.
While India has doubled its port capacity over the last decade, it still lags far behind competition like China. China is expanding port capacity by 20-25 per cent each year for the last 15 years, handling nearly $1 trillion. Given the increase in traffic in India, airport facilities for passenger and cargo languish each year.
The progress over the last decade of the new international airport in Bangalore, India's software capital, for instance, has been hampered by corruption and political fights. Contrast that with the $2.4 billion state-of-the-art Guangzhou Baiyun International Airport in China's Guangdong province that was built in record time with the finest facilities for passengers and cargo in the world.
India's IT sector bypassed the constraints since it relied on data communication infrastructure, which could be built relatively easily. It is not a surprise that Dell Inc. would set up call centres in India but not a manufacturing facility.
However, even the IT sector is feeling the pain now. Some big IT firms reportedly have a grand plan of airlifting foreign executives from airports to their facilities to avoid the mind-numbing experience through traffic and bad roads!
Despite the problems, India can be a powerful player in manufacturing. The number of Indian firms receiving the Deming Application Award for quality has increased to 10, with eight of them receiving this award since 2002. India has enormous expertise in making parts and auto components.
Sundaram Fasteners Limited has been regularly winning "supplier of the year" award from GM.
Indian firms are on acquisition mode of manufacturing facilities and mines worldwide. But, India needs quality skilled labour and more technical training schools, which have become backburner issues in the last decade given the focus on computer education.
India's handicraft, cottage and furniture industries are strong as well, but to a large extent untapped. If India plans well, it can be an equal partner with China to fill up Wal-Mart, Pier 1 Imports and other giant retailers in developed economies.
The handicraft and furniture sectors can employ millions with traditional skills, but no education to move into the IT sector.
Reason for hope
There is reason to be hopeful. The mood is upbeat among government bureaucrats, courts, and executives. The Reserve Bank of India removed "control" (like foreign exchange control) from their operations since it psychologically assumed they "control" and not "facilitate" transactions! Can that mindset percolate to the lowest levels of government bureaucracy where corruption is growing uncontrollably?
Ironically, the growth of the manufacturing sector and exports will be a boon for India's export-focussed software sector. Local consumption of IT products and services will increase from the current abysmally low levels as firms need to interact efficiently with other economies. American firms will benefit as well with exports of computers and software. The increase in per capita income and disposable income will rapidly increase internal consumption of goods and services, which provides more opportunities for U.S. firms.
Prime Minister Manmohan Singh and key policy makers are found oft-repeating China's miracle growth through manufacturing. Can India replicate China's obsession for economic prosperity and seize the moment fast and furious? After a long time, there may be some real opportunity for the Indian masses who are far removed from the glamorous IT sector.
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