Tuesday, February 17, 2009
A roundup of news informed me that the World Mobile Congress is going on in Barcelona and its difficult to keep track of all the new things they are coming up with... like a James Bond style wrist phone. Another interesting article was this.
Well another pathbreaking headlines for the day is that today was the last class of our Introduction to Marketing course. Yippee to that!!! Given the amount of cases, readings and surprise quizzes I have faced for the course, I have surprised myself that I haven't ranted (read blogged) about it yet!!!
But in hindsight (yeah, the most powerful and useless tool available to mankind) I find that it was the most realistic course in our term, and that's a scary admission. More so after reading the book by Trout and Riese "22 immutable laws of marketing".
The power of brand comes to fore every time I flinch at Pepsi, when I have asked for Coke. Valentine's Day is an exercise in positioning by all eligible (this topic by itself merits a post) and what to say about consumer buyer behavior, easily understood. The only issue with studying the course has been to reconcile all these innocuous acts with hair raising frameworks and psychological factors. The huge ocean of terms doesn't help the cause either. Why do I care if someone is an opinion leader or chief opinion dispenser (wow!!! i made that up) .. its just a guy whom i listen to!!! Plain and simple huh!!! now try not losing sleep while remembering painful terminologies!!!!
Perhaps the most important piece of truth was revealed in the last class, while discussing channels. The whole concept of buying/ selling value to/from consumers/companies can be laid into 3 statements:
1. Your product doesn't deserve to be bought
2. The customer doesn't think your product needs to be bought
3. Your product is not available to be bought
If we look carefully at the first point then it indicates a possible failure of both market research and the quality departments while the second indicates failure of promotions and marketing efforts. The third is a failure of the SCM guys and in management of channels. Neat huh!!
Anyways the most important point is that hopefully I'll use some of this gyan in my Introduction to Marketing exam as well!!!
Signing off... gotta do lotsa project work!!
Monday, February 16, 2009
An article originally intended for L!VE, our student magazine @ SJMSOM:
Working in one of
Unsurprisingly, the high cost of operation in the metros coupled with the high rates of attrition prevalent among the leading companies has made them look other places for a better option. The Tier II cities have a distinct advantage in this regard for many companies. The reported cost differential is around 10 percent for non-voice based services and higher for voice based services create a huge margin of operational profits for the firms. Also, thanks to the large population of the country and increasingly effective education system, the number of university graduates coming from these cities is enough to take care of the major manpower requirements for the companies.
All major outsourcing companies have scouted out new locations, away from the hustling bustling metropolitans to locales such as
One another reason associated to moving to Tier II cities is the low cost of transportation involved in the cities, because of their small geographical stretches and comparatively low count of vehicles compared to outsourcing hubs. The average employee starting out in the service industry is a college graduate, who mainly relies on public transport for commutation to the workplace. As an unwritten rule, the companies have decided to include transportation costs as part of the compensation packages, providing for company buses and cabs, which again hit the operating margins of the companies. Though the outsourcing industry has funneled in loads of money into the metropolitan cities, the infrastructure development has been unable to maintain pace with the rapid growth and the lack of development in transport facilities are not helping the cause of these cities.
An additional impact of the gradual shift towards Tier II cities has been the entry of many smaller service providers, specially the ones catering to niche sectors like high-end data analysis. The Tier II and Tier III cities make the entry level costs of these companies substantially less and are fostering the entrepreneurship ventures of many technology specialists. The presence of sufficient talent pool in these cities helps these firms by reducing their attrition rates and hence, their training and recruitment costs are also going down, further promoting the cause of the Tier II cities.
However, all is not well with the migration plans of these companies. The primary concern of all the companies is the infrastructure related issues that generally accompany the Tier II cities. The doubt that whether the smaller cities will be able to rise over the infrastructure handicap and dicey connectivity, to actually make the small city boom happen still looms large in the minds of the senior management of many companies. It is estimated that 30% of the workforce of all leading IT/ITES companies is going to be based in these Tier II and Tier III cities. Hence the onus is on the respective public bodies to develop the amenities in these places to provide for the large workforce.
Another area of concern for the companies is bringing quality talent to these cities, especially with respect to the senior management and experience middle management employees, to these smaller cities. Obviously the promise of better work-life balance is not a good enough reason for these executives to relocate to these new situations and hence, companies might be forced to offer relocation bonuses or other such perks to facilitate the shift of work force to the new places. Also, an interesting trend that has been observed in the recent recruits is that, they do not want to leave the glitz and glamour accompanying a metropolitan city for relocation for some nondescript city offering little or no life outside office hours or during weekends.
Another major impact of this relocation to smaller centers in the country will be a more symmetric distribution of the outsourcing pie between the large hubs and the fast catching up wannabes. The recent years had seen a skew in favor of the metros, with the retail and real estate booms in the city projecting them as the face of modern
However, none of this is going to happen in near future. The challenges are still clear for all of us to see. Firstly, the infrastructure needs a great impetus from the government. It is heartening to see projects like the Golden Quadrilateral being visualized because they will improve connectivity of the smaller cities with the outsourcing hubs. Also, the telecom revolution in the country should help ensure that the network and data connectivity are maintained at requisite levels for the companies to show confidence in these cities. Finally, the public amenities need to be improved to attract the skilled labor into these cities rather than switching jobs in the major cities themselves. The rise of latent talent and potential in the smaller cities is not under any sort of doubt, it is just the timing of the event that is debatable. The sooner it happens, the better.
Sunday, February 15, 2009
Just back to the room after collecting few materials for my Marketing project, its about Apollo tyres and currently, rudderless, inspite of the most energetic starts. On my way out i was wondering that some how the number of things you need to carry while moving out seems to be increasing.
Earlier it was just the little watch that Dad gifted for birthday, then came the wallet and gush of pride with it... Much later, of course, arrived the cell phone and now, whenever I move out of the room I carry a pendrive along with me, for some unforeseen data exchange. Of course, the tech-savvy will argue that a capable cell phone will make the pendrive redundant but currently such analysis is beyond my (and many others... with the crisis around) financial condition.
Another latest of latest developments has been my new-found love for Lynyrd Skynyrd, which makes them permanent fixtures on my playlist for the next week atleast. Ofcourse, the songs have been generously mixed with Delhi6 and DevD songs.
Saturday morning isn't the best time for any kind of industry interaction, let alone financial but then some people really do make us sit up and listen. So was the case this weekend when Mr A.V.Rajwade, visiting faculty at IIM A and SPJIMR and a practitioner in the financial services industry for more than 50 years, dropped by (for lack of better words) for a tete-a-tete with us. He talked about the existing financial crisis and brought out certain new perspectives to the issue, even though I thought there was nothing much left to discuss about the issue.
He started of discussing the various economic philosophies, right from Adam Smith to Keynes through Marx, and walked us through the socio-political transformations associated with the rise and fall of each of these beliefs. There was also a brief discussion on laissez faire capitalism and emergence of state responsibility in purely capitalist economies.
Thereafter the discussion moved to the banking business and I guess, the whole industry was summed up succintly when he said that it has moved from "lend and wait for repayment" to "originate and sell" model. He went on to explain certain aspects of the industry, especially risk-reward asymmetry and the disadvantages of complex of financial instruments. He attributed the current crisis to the willingness of most investors to invest in risky assets, even though they couldn't make much sense of the products that were being offered to them. He also initiated a brief discussion on various credit derivatives and their complexities.
Finally, and probably most importantly, he touched upon the things that a budding finance manager should learn from the crisis. To summarise in three points:
1. understand the risk/return compromise
2. Models are no substitute for common sense
3. Financial services are only slaves to the real economy and cannot be its master.
I also asked him whether he thinks this is the end of laissez faire capitalism to which he agreed. I, however, do not concur with his view. But more of that later need to publish this before the LAN stops working.
And yeah... I gotta know that I stood 4th in the PG cult elocution competition... Kudos to Vishesh for getting that info... he he he!!!
Wednesday, February 11, 2009
Mother asks the son, ‘what use are thee?
Slay thy womb for riches, has it been decreed?
With knives of steel piercing my bosom,
Dipped in the poisons of thy greed.’
Businesses have been known to operate for the bottom lines. Through centuries of unbridled slaughter of the resources, we have steamed ahead on the path of ever-increasing gains. However, we stand at crossroads today, with a choice between the established path of blissful living, and yet eventual extinction, and a more mellow, conscientious disposition towards our Earth.
As business leaders of tomorrow, it is imperative not to focus just on the myopic margins of operational profit but to instill a greater, graver sense of sustainability and longevity. And if the purists scorn at this as altruism then let them be aware that this makes solid business sense. With increased awareness amongst the society and a watchful government, no business can succeed unless it conforms to the sustainability framework. Besides this, the positive correlation between financial performance and sustainability has been amplified by the growing energy costs and lack of viable alternatives for current energy sources. These factors make sustainability a completely business driven idea.
One is that there has been a general rise in the number of engineering students in B-schools of India. This gives the future managers a techninal orientation in their approach of business. The onus therefore lies on us the techo-preneurs and techno-managers to "engineer" a path towards sustainable businesses and reliance on sustainable systems and products. Thus, I hope that India will be at the forefront of the technological and sociological revolution for sustainability. The key to this, however, lies in educating the business leaders towards this goal and making the current crop of practitioners (and students) sensitive to the future eminence of this topic, so that we don't miss the bus this time around.
Another thing that crossed me in the past week was a term called the Triple Bottom Line. Its an interesting concept which captures the holistic effects of a company's activities on the society. The method tries to capture the effects of the company's economic activities on the 3Ps, namely, People (human capital), Planet (ecological) and Profit (businees). Though the basic concept may sound similar to the emergence of Corporate Social Responsibility in India, this platform provides a lot more quantitative basis for evaluation of company performances and could act a key determinant of corporate performance in the time to come. I am not sure how many companies in the country are actually aware of this method of cost accounting but a legislation in this regard will go a long way in improving the accountability of corporates towards societal and ecological responses.
Sustainability has long been contemplated and negotiated, both in business circles and on geo-political forums but unless the tangible effects of these methods are not visible to the corporate world, it would be altruistic to expect overnight transformations into sustainability evangelists. Thus, I see the development of the TBL concept as a major mvoe in that direction. As is widely quoted, “We have not inherited the earth from ancestors, rather we have loaned it from our children”. And we would be wise enough to remember that.
“Loathe me not, for I had been blinded,
With lust of gold and greed unknown.”
He spoke of love to “wash away thy pains of yore”,
Oh Mother!! Be resplendent again with glories galore!!!