Market Dynamics..

Japanese Earthquake Insurance Payout

2011-03-13T08:35:00.000-07:00

As the event unfold in Japan, I think big news and tragic stories will be how insurance companies are skipping out on payments and shilling the payouts they do make. Don't think Big Insurance is actually going to do the right thing here.

Japanese life insurance companies holds a lot of US treasuries. I wonder if those Japanese insurance companies (and Japanese gov. )have to sell some US treasuries to fund their liabilities. But will Japan sell it's US treasury holdings to pay for the cleanup and how much of it?

my guess to focus to be- while wouldn't be allowed to act in their own interest and do anything to offend the US gov (i.e military) in their current help efforts. But it would be a great act of generosity on the part of the US to allow without prejudice, Japan to use its savings for this most spectacular of rainy days.

Will be very interesting to see JPY trade (especially against EUR and USD) on Sunday night after initial reaction to the upside.

Fukushima (Blessed Island) …Trinity Unleashed…
http://aadivaahan.wordpress.com/2011/03/12/fukushima-blessed-island-trinity-unleashed/

Power of Arithmetic

2010-12-27T21:41:00.000-08:00

I consider myself math/number guy and I like good arguments with data. thanks to friend's facebook update- recently I stumble upon this nice presentation by Albert Bartlett, a retired Physics prof. at University of Colorado-Boulder. You can obvious notice the passion of the prof. and his angry about lack understanding among powers to be. while I dont what is talking is new concepts but to put things in perspective.

This also reminded me about the Ted Talk on Statistics

Monkey & Human behave the same for market economics

2010-02-18T14:20:00.000-08:00

very interesting research shows, we like monkey make bad economic decision because we are wired that way.

The Recession Started 35 Million Years Ago

Question: What has your research revealed about monkey and human economic reasoning?

Laurie Santos: Yeah so a lot of the work with primates actually tries to explore all these aspects of human cognition that we’re in some sense most proud of. You know, things like a theory of mind and so on. But less work is actually focused on some of these processes that are just universal in humans but are kind of dumb and in some ways really systematically dumb. So we took up the charge of saying well you know are any of these dumb biases shared with other primates. And we started in the economic domain, in part because this is really a spot where humans can be bad and the fact that we’re bad can have really enormous consequences such as the current financial collapse and so on. But to do this, to sort of study this question you know do monkeys share our economic biases we had a bit of a challenge because of course our monkeys don’t actually use money yet. So the first task was actually to introduce a new currency to our monkeys. We did this by giving them little metal washers and teaching them that they could trade with human experimenters for food and the amazing thing was that they actually picked this up really quickly so the monkeys got really flexible with this and we just then put them in a market. So they get a little wallet of tokens in the morning and they got to go into their enclosure and they had a choice of different experimenters who sold different foods at different prices and we just said you know, “How do they do?” “How do they compare to humans?” And what we found was really striking because in the spots where humans are very rational, where they obey all of the economist’s models, the monkey did the same. So when different goods go on sale so if apples go on sale today the monkeys would buy more apples. And they do it in a way that all the economic math would predict almost perfectly, almost amazingly even though they had you know pretty much no experience with the market. The other striking thing was that the monkeys seemed to show exactly the same biases that humans show and one of the important ones is what’s often called Loss Aversion. Basically, this is the idea that we don’t like losing things and we get more emotional about losing things that we get happy about gaining things and this can actually lead to a bunch of biases that play out in real markets. Like the fact that many people would be better off selling their home at a slight loss than holding on to it while the market kind of careens downward and so on. So our Loss Aversion plays out in all these ways we said you know are the monkeys loss averse? And the way we looked at this was to present the monkeys with a choice between traders; one trader gave a piece of apple as promised, so he showed the monkey a piece of apple, and then when the monkey paid him he got that piece of apple. The other experimenter always showed the monkey two pieces of apple but when the monkey paid that experimenter, the experimenter only got one. And the idea was does the monkey take into account what they think they’re going to get or do they just care as they probably should in what they get overall? And we found is that the monkeys reliably avoid the guy that gives them less than what they expect. It seems like they too might be averse to losses, averse to these situations that seem like their losing out even though it doesn’t actually affect how much food their getting overall. The cool thing about all of this is it suggests that many of these biases that play out in the financial crisis might actually be shared with capuchin monkeys, which means they might actually be thirty-five million years old.

Deregulation: The reason for crisis

2010-02-09T15:39:00.000-08:00

Morality of Markets

2010-01-16T03:27:00.000-08:00

Harvard Professor Michael Sandel delivered a speech titled "Markets and Morals" as part of the Chautauqua Institution 2009 Summer Lecture Series. He tackles some of economist's toughest ethical questions, such as the business of commercial surrogacy and the price of citizenship.

http://fora.tv/2009/07/20/Michael_Sandel_on_Markets_and_Morals

Principles of economics, translated

2009-12-31T06:25:00.000-08:00

Economics in 10 easy steps

Ross Gittins, Herald’s Economics Editor, has written a very nice article on principles of economics (HT: Greg Mankiw). He says there are 10 broad principles of economics:

Here’s a never-to-be-repeated holiday special: all you need to know about economics in 10 easy steps. They come courtesy of the best-selling introductory economics textbook by Gregory Mankiw of Harvard University (with Joshua Gans and Stephen King co-authors of the Australian edition).

Economics is the study of how society manages its scarce resources, where ‘’scarce” means there are fewer resources than we’d like to be able to use.

The 10 principles are divided into 3 sections. Here is a further summary of the 10 principles:

* Section 1: How people make decisions?
o Principle 1: Economics is about trade-offs – efficiency vs equity
o Principle 2: Opportunity cost – Joining a Univ vs Working fulltime
o Principle 3: Marginal Thinking – The pricing should be in line with marginal costs
o Principle 4: Incentives matter
* Section 2 : How people interact?
o Principle 5: Trade makes everyone better off
o Principle 6: Markets are a good way to organise economic activity. Central Planning doesn’t work
o Principle 7: Govt can improve market outcomes in case of market failures, market power, spillovers etc
* Section 3: How Economy works?
o Principle 8: Country’s standard of living depends on its ability to produce goods and services.
o Principle 9: Prices rise when the government prints too much money
o Principle 10: Society faces a short-run trade-off between inflation and unemployment

Notice how principles move from ‘within individual’ to ‘between individuals’ to ‘country level economics’.

Very useful summary of principles of economics.

How to you Twitter for your advantage?

2009-11-05T15:30:00.000-08:00

Thanks to Nextweb

Origins of behavioral economics

2009-10-23T07:38:00.000-07:00

Bharthi-MTN deal based on Rupee convertibility

2009-09-28T02:53:00.000-07:00

Bharthi-MTN deal reopens the debate of full convertible rupee. Its been in discussion for good part of decade but I couldn't find good study on impact of this. below article from TheHindu was published in 2003 is still more relevant I think (except the numbers).
Share your thoughts(& links) on pros and cons on this.

Capital account convertibility — Why it's better for India to go slow:

THE international financial system is in a state of introspection, jolted by several financial crises caused by violent capital movements over the last two decades. On their part, Indian policy-makers are also in a state of revisionism and are moving the country to greater capital account openness after several decades of extensive controls.

This article examines the arguments in favour of and against full capital account convertibility and, considering India's experience with partial convertibility in the 1990s, concludes that it would be in India's interests not to move to full capital account convertibility in the near future.

Gains from full mobility: Theoretical arguments...

The proponents of full capital account convertibility advance these arguments in its favour:

An arbitrary (i.e. pre-capital mobility) distribution of capital among different nations is not necessarily efficient, and all countries, irrespective of whether they borrow or lend, stand to gain from the reallocation caused by freer capital mobility. National income goes up in the country experiencing capital outflows due to higher interest incomes, while that in the debtor country increases as the interest paid is less than the increase in output.

Capitalists in the labour-abundant economies tend to lose with a fall in the marginal productivity of capital, and the opposite happens in labour-scarce countries, so that developing nations, which are usually capital-scarce, are doubly blessed under unhindered mobility of capital — the inflow of capital raises the national income and produces a healthy, egalitarian impact on income distribution as well.

It is argued that if there is only a small correlation between the returns on investment in different countries, risk can be reduced by the ownership of income-earning assets across different countries. Free mobility of capital, thus, helps reduce the risks that each country is subjected to.

Finally, it is argued that when full capital account convertibility is in place, government profligacy and distortionary policies are likely to be followed by currency crises that threaten to make the government highly unpopular. Therefore, under capital account convertibility, the salubrious effects of capital mobility are magnified through a change in domestic policy in the right direction.

... the evidence and the counter-arguments

This rosy picture painted by traditional neo-liberal thinking is sullied when we look at what actually happened to developing nations that have gone the full-capital account convertibility way in the 1980s and 1990s.

In a widely quoted study, Dani Rodrik (1998) finds little evidence of any significant impact of capital account convertibility on the growth rate of a country. Worse, a 1999 World Bank survey of 27 capital inflow surges between 1976 and 1996 in 21 emerging market economies found that in about two-thirds of the cases, there was a banking crisis, currency crisis or twin crises in the wake of the surge.

Since the early 1970s, there have been several crises triggered by speculative capital movements: the Southern Cone financial crisis in the late 1970s; the Mexican crisis of 1994-95 and the `Tequila Effect'; the East Asian crisis of 1997; the collapse of the Brazilian real and its impact on the rest of Latin America; the Russian crisis of 1998 and the Argentine crisis of 2001.

Here are the theoretical counter-arguments why full convertibility is correlated with the crises and why, even otherwise, it is not such a good thing:

Contrary to the assumption of the neo-classical model, a large volume of capital inflows into developing countries has actually been used for speculative purposes rather than for financing productive investments.

Capital account convertibility exposes the economy to all sorts of exogenous impulses generated through financial channels, as domestic and foreign investors try to shift their funds into or out of a country. Since financial markets adjust very quickly, even minor disturbances may exacerbate into major ones.

Under flexible exchange rates, capital inflows lead to an appreciation of the domestic currency directly. On the other hand, in a fixed exchange rate regime, increased capital inflows lead to monetary expansion and price inflation (unless there is substantial unutilised capacity), which also causes a real appreciation. In both cases, therefore, capital inflows tend to cause a real appreciation and the possibility of swollen current account deficits because of cheaper imports and uncompetitive exports which, if not controlled in time, will lead to loss of confidence and capital flight.

Because of the massive volume and high mobility of international capital, it has been observed that the government tries to play it safe by keeping interest rates high, thus discouraging domestic private investment. The government also desists from spending on public investment because, through an expansion in government spending, it could send signals of impending increases in fiscal deficits that have the potential of destabilising capital markets and inducing capital flight.

Policy implications for India

The experience with liberalisation of inward capital flows in India has been similar to the economies of Latin America and East Asia, only the magnitude of these flows has not been large enough to cause serious macro and micro management problems.

Based on the experience of other countries, the following issues are of concern for India:

Flexibility in exchange rate: To prevent a nominal appreciation because of the capital inflows, the RBI has been adding billions of dollars to its reserves; the foreign exchange reserves with the RBI are a whopping $69 billion.

However, intervening foreign currency purchases to stabilise the exchange rate and accumulation of forex reserves have implications for domestic monetary management, which can be seriously impaired by divided short-term monetary responses during a capital surge.

On the other hand, the option of a more flexible exchange rate would cause an appreciation in the value of the rupee, which may hurt exports.

Hence, the usual macroeconomic trilemma (Obstfield, M and A. M Taylor 2001) where only two of the three objectives of a fixed exchange rate — capital mobility and an activist monetary policy — can be chosen. Since the government has already liberalised inflows of capital to a large extent, the authorities could attempt to deal with this problem in one of the following ways: It could begin relaxing capital controls, allowing individuals to exchange rupees for dollars. Indeed, some piecemeal measures in this direction have already been taken. But this, perhaps, is a risky proposition.

For one thing, the embrace of full convertibility is itself likely to bring more dollars into the country in the initial phase and add to the existing upward pressure on the rupee. More important, given the lack of regulatory capacity, such convertibility runs the risk of a future financial crisis that may scuttle the growth process.

Alternatively, the government could tap this opportunity to liberalise imports. Further liberalisation will stimulate imports and create the necessary demand for dollars, mopping up the excess supply of dollars and relieving the government of the burden of low-yielding foreign exchange reserves.

Inasmuch as the imports are used as inputs for further exports, the move will kill two birds with one stone — it will relieve the upward pressure on the rupee, and bring the usual efficiency gains. In this regard, therefore, import liberalisation seems to be a distinctly better option.

Banking and capital market regulatory system: The relatively greater contribution of portfolio capital towards India's capital account, and the fact that these inflows could increase to significant levels in the future as India's financial markets get integrated globally, show that an important sphere of concern is their skilful management to facilitate smooth intermediation.

Banks intermediate a substantial amount of funds in India — over 64 per cent of the total financial assets in the country belong to banks. However, many Indian banks are undercapitalised, and their balance sheets characterised by large amounts of non-performing assets (NPAs).

Unless banking standards are duly brushed up, viable competition introduced and government interference reduced, it would be reckless to go in for full capital account convertibility, which requires flexibility, dynamism and foresight in the country's banking and financial institutions.

Transparency and discipline in fiscal and financial policies: It is well known that the last thing that a government wanting to gain the confidence of investors should do is to be fiscally imprudent. However, New Delhi does not seem to be paying heed to this consideration at all.

The ratio of gross fiscal deficit to GDP increased to 10.4 per cent in 1999-2000 from 6.2 per cent in 1996-97 and 8.5 per cent in 1998-99, and has hovered around the 10 per cent figure since then. Such high fiscal deficits can prove to be unsustainable and frighten away investors.

Hence, there is an immediate need for putting brakes on government expenditure, and until that has been satisfactorily done, opening up the capital account fully would carry with it a big risk of sudden loss of faith of investors and capital flight.

Caution on outflows

Whatever the apparent theoretical benefits of capital account convertibility, they have not yet been vindicated by the actual empirical evidence; rather, the experience of the countries in the developing world that have experimented with capital account convertibility has been that of increased market volatility and financial crises.

Moreover, at least a part of the large inflows of capital into India are a consequence of the recessionary conditions elsewhere. The country's macroeconomic fundamentals, though better than before, are not good enough to warrant long-lasting confidence from foreign investors. The reform process is not proceeding with adequate speed, banks are saddled with large volumes of non-performing assets, the financial system is not deep or liquid enough and the country ranks high in the list of corrupt nations.

Once the conditions in the rest of the world improve, and the interest rate differentials between India and the rest of the world narrow further, this capital may move on to greener pastures. Hence, one cannot bank on the continuous supply of foreign capital to finance whatever outflows occur from the country.

Therefore, we believe that India should be extremely cautious in liberalising capital outflows any further.

While it should leave no stone unturned to promote inward FDI, which, because of its very nature, is less susceptible to sudden withdrawals and also tends to promote productive use of capital and economic growth, it should be wary of short-term capital flows that have the potential to destabilise financial markets

The `slow and steady' stance that the RBI has taken towards capital account convertibility is to be appreciated.

It must be emphasised that only over time will the Indian economy be mature enough to be comfortable with full capital account convertibility — financial markets will deepen, macroeconomic and regulatory institutions grow more robust and the government will learn from past mistakes.

The Government would do well to focus at present on the fundamental processes of institutional development and policy reform because, in the long run, these would serve the country better than an early move towards full capital account convertibility.

Capitalism and Freedom

2009-09-23T07:37:00.000-07:00

Great Speech in "Home Town Story"

Stats

2009-09-20T07:35:00.000-07:00

Google Killer Stats Widget:

via The Next Web.

Why you should not to listen to Fed Chairman?!

2009-08-12T07:04:00.000-07:00

“This video should make people think twice about listening to anything that Chairmen of the Fed Ben Bernanke says. It’s a compilation of statements he’s made from 2005-2007.”

Source: video-o-rama stabilization benefits risky assets

What the F*ck is Social Media.!?

2009-08-05T01:41:00.000-07:00

What The F**K is Social Media?

View more documents from Marta Kagan.

What the F**K is Social Media: One Year Later

View more documents from Marta Kagan.

Its Friday

2009-07-31T02:11:00.000-07:00

Quote of the week
Nothing is illegal if a hundred businessmen decide to do it, and that's true anywhere in the world.

Yahoo + Microsoft still not good enough match for Google

2009-07-30T01:43:00.000-07:00

VenturBeat redirected me to Jason Calacanis's blog and I totally agree with his comments.

Yahoo was once the No. 1 search site on the Internet, but no one remembers now. That’s because the company farmed out its search engine, the core of its brand and largest source of its traffic, to upstart Google. Yahoo’s increasingly cluttered home page shooed Web users away to the faster, cleaner Google interface which delivered the same search results more quickly and effectively.

In 2009, Yahoo didn’t need to make the same mistake again with Microsoft. In fact, it’s Microsoft that needs to grow the audience for its expensive Bing search engine. Instead of outsourcing, Yahoo should have done what Microsoft did: Acquire a bunch of core technologies and build a Google rival. But no, Yahoo took their eyes off the prize by ceasing to innovate and trying to bizdev their way to success. That’s why the founders of Flicker and del.icio.us, prize Yahoo acquisitions of innovative Web 2.0 sites, have left the company, as did chief scientist of search Marc Davis last week. Microsoft, meanwhile, invested in building the search engine Yahoo should have developed.

Carol Bartz is a competent dealmaker and operator, but not a product genius like the Google kids. Without innovation, Yahoo will now die on the vine. The End.

This deal may be good for Microsoft and will cause big problem for yahoo in long run. Don't know how much people remember from 2000-2004 Yahoo search was powered by Google then Yahoo built its own search technology but people moved out with Google. same will happen if Microsoft search is good enough. if not people will move to Google. Eitherways Yahoo is the loser.

And Microsoft has no focus no strategy and keep following the new popular kid in town. It was AOL, Yahoo, and now its google. with big cash from windows + office business they are tring to do everything and anything but nothing good. and I feel best of Microsoft is behind them.

India's Inflation

2009-06-18T06:33:00.000-07:00

India's WPI Inflation rate fell to -1.61% for the week ended on June 6 2009

SONAL VARMA, ECONOMIST, NOMURA: "The only significance is that this is the first negative WPI reading in the history of the series. "What is interesting is the decline in primary article prices this week. The high base effect will keep the WPI inflation in the negative zone for atleast three months. "The inflation momentum has been picking up and a continued rise in commodity prices will exert upward pressure on input costs. With consumer prices still high and signs of the economy stabilising, we judge that the rate cutting cycle is over."

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA: "This is due to the high statistical base, but going forward inflationary risks are already in sight. Oil prices have more than doubled in the last one month and also the fact that primary article prices are not showing any signs of easing. "By end-March 2010 inflation is expected to be between 5.5 percent to 6 percent based on the current trends, when we may see the RBI going back to the tightening cycle."

GUNJAN GULATI, ECONOMIST, JP MORGAN CHASE: "As expected the headline inflation this week reported a negative print, led primarily by the high base last year. "On the overall prices, a sustained and sharp rise in global crude oil prices and delayed seasonal rainfall could likely be a big uncertainty going forward."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK: "It was a widely anticipated phenomenon. I can attribute this to largely a statistical base. I anticipate the trend to continue for the next couple of weeks. "However, inflation pressures are expected to gradually build up towards third and fourth quarter of the current fiscal. By (fiscal) year-end, we expect inflation to exceed 5.5 percent."

A PRASANNA, CHIEF ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP: "It has come in along market expectations. I don't think this number has any significance. It is just a statistical occurance and has no monetary policy implications. "On a seasonally adjusted basis inflation is going up and I think the RBI will be focusing on that." "It could be in the negative zone for 2-3 months."

Source: EconomicTimes

Deadly Sins of America are Mapped

2009-05-07T16:27:00.000-07:00

Very interesting map about One nation, seven sins: Geographers measure propensity for evil in states, counties

Greed was calculated by comparing average incomes with the total number of inhabitants living beneath the poverty line. On this map, done in yellow, Clark County is bile.

Envy was calculated using the total number of thefts — robbery, burglary, larceny and stolen cars. Rendered in green, of course, Clark County is emerald.

Wrath was calculated by comparing the total number of violent crimes — murder, assault and rape — reported to the FBI per capita. Vought and his colleagues used the color red to illustrate wrath, so Clark County looks like a fresh welt. Washoe is slightly statistically duller. Everywhere else is a friendly pork pink.

Lust was calculated by compiling the number of sexually transmitted diseases — HIV, AIDS, syphilis, chlamydia and gonorrhea — reported per capita. Here again, Clark and Washoe counties are worst. Carson City County is a close third.

Gluttony was calculated by counting the number of fast food restaurants per capita, and this is one category where Clark County is bested. First in deep fry goes to Carson City.

Sloth was calculated by comparing expenditures on arts, entertainment and recreation with the rate of employment. Here again Clark County is beat, scoring only average on the scale of sloth.

And pride, lastly, is most important. The root of all sins, in this study, is the aggregate of all data. Vought and his Kansas colleagues combined all data from the six other sins and averaged it into an overview of all evil. So pride, mapped in purple, shows the states two darkest bruises: counties Clark and Carson City.

Kick A*s: Jon Stewart vs Jim Cramer

2009-03-13T04:58:00.001-07:00

Jon Stewart vs Jim Cramer: It was fun to watch and it was very honest both side (I think).
Watch full unedited interview (with strong language).

I don’t think there’s any way Stewart is more knowledgeable than Cramer on markets, he’s just in the position of not being caught spouting garbage for the last several years. I like the fact that Jon made it a serious episode of it and hats of to Cramer for comming on and exposing the whole fiancial debacle. There would’nt have been a better way to handle the feud in which jon has repeatedly said that it was about the whole system.

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Interview Outtake Pt. 1

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Interview Outtake Pt. 2

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Interview Outtake Pt. 3

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

and Impact of this-- to early to tell but already some noise about this on CNN

Remember Jon stewart's role in throwing CNN's Crossfire

Bailout Explained

2009-02-23T06:49:00.000-08:00

Oracle of Alan Greenspan

2009-01-13T02:57:00.001-08:00

71 people have died as a direct or indirect consequence of Greenspan's policies, actions or advices,.. Source: Alan Greenspan's body count

Low inflation vs. No inflation vs. Deflation

2009-01-05T03:04:00.000-08:00

With Inflation in India rapidly going down(now at 6-7% from 14% 6months back) and potentially heading into deflation. what & why that would be any good for indian economy in long-run? I think, answer would be very subjective based on who you ask and for India's scenario it would very difference due to high % of unorganized workforces/SMEs.

Inflation has now reached 6.61% for the week ended Dec 6. It is likely to go lower, from reduced petrol prices, interest rate cuts and drop in global crude prices ($36 and not quite counting). Source & for more detail(chart): India Investor's Blog

Inflation is defined as increase in the price level of general goods & services. And Its most due to: demand increase, supply decrease, which cause increase in general pricing. Increase in production cost (& material cost) will decrease supply. If this remains the same, and assuming that economic growth is another of macroeconomic objectives, then an increase in demand is necessary to stimulate economic growth within an economy, causing demand-pull inflation. That's one of many reason why inflation is considered as necessary for a growing economy.

Low inflation is better because:

• No increase inflation (or zero inflation) economy might slipping into deflation. Decrease in pricing means less production & wages will fall, which in turn causes prices to fall further causing further decreases in wages, and so on. so a low rate of inflation will provide safety barrier against this. Also its very hard for monetary bodies to correct deflation. Offering negative Interest rates wouldn't be any effective.

• Low inflations will keep interest rate positive also provides incentives for investement instead of having decreasing-value-money. Particularly good for higher return, since higher risk projects that are still beneficial to the economy would otherwise may have been ignored if firms/investors were not looking for inflation exceeding returns.

• People and trade unions are naturally very reluctant to accept any nominal cuts in wages. so salaries are very hard to negotiate downwards. And if downward adjustments were not possible then it would cause instability & lack of growth due to disequilibrium in the economy. Instead of nominal cuts but by having wage increase lesser than inflation could mean real wage decreases. so in some sense inflation is grease for economy wheels.

I remember reading- Technically, Growth with no inflation is feasible by having supply-side policies. Policies which helps to increase in supply that inturn allows the economy to grow through its increased demand and therefore greater consumption, due to many factors. An increase in supply equivalent to that of the increased demand would theoretically result in inflation of zero. Also the increased supply would help stimulate economic activity and economic growth in the long-run, serving the economy better for future generations.

On one hand, Low inflation rate is better than no inflation rate because there is a negative relation between inflation and unemployment. If we reduce the inflation rate to zero, it might increase unemployment rate which ofcourse is not good. Loss due to increase in unemployment rate is multitude- not only skill loss but tax revenue, social order, and etc. Thus by increase the inflation rate, consequently, unemployment rate will decrease and economic growth will increase.

And on the other hand, low rate of inflation in not good as compare to zero inflation rate. since as per definition- inflation rate is an increase in general price level. I.e. poor people with fixed (/low) income will suffer from inflation.

Surely one of many good things about inflation is- it does help in preventing people hoarding money, since money looses value a small percent every year. Thus, triggering people to use money in some kind of investment products, which encourages a bit more investment or a bit more spending than would otherwise occur.

Collapse of Iceland and who is next?

2008-12-01T12:32:00.000-08:00

Have you ever wonder, why on earth Iceland is bankrupt during this global credit crisis? Assert bubble ofcourse (translation greed of Iceland's public/companies).

This could every well be happening for UK and/or Switzerland since these countries are major financial intermediaries with big external debt and both countries currency is outside the major currency blocs, which only means if & when GBP and/or CHF devalue their debts will become more onerous since their debts are denominated in other currencies.

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.- Thomas Jefferson @ 1802

Inclusive Capitalism for India

2008-11-28T05:53:00.000-08:00

Knowledge@Wharton posted very interesting article about
The Poor as Stakeholders: Can 'Inclusive Capitalism' Thrive in India?

India Inc. are bound to surrender to social business enterprise unlike most of its western counterparts. It makes business sense as the World Resources Institute has recently put a number on the size of the bottom of the pyramid market: US$ 1.2 trillion in terms of purchasing power parity and 84.8 per cent of the national market. It is, therefore, very much in their interests to target this segment rather than the affluent top of the pyramid. There is also a growing political backlash against policies of rapid industrialization.

Financial crisis and the future of banking news

2008-11-21T03:49:00.000-08:00

Source: domain-b.com

It is obvious that the banking industry will see the most dramatic changes after this financial crisis. Should the big global banks stick to their universal banking model or should they become boutique firms? Also, can we afford to have banks that are just too big to fail? By Vivek Sharma

The other day a friend called me to ask if he should close his bank deposits and take out the cash. Most of his money was in a small cooperative bank, which offered better interest rates, and someone had told him that the smaller banks in India were definitely unsafe when huge American and European banking giants were going bankrupt.

It seems surreal to most that so many of these banks can be in trouble all at the same time. Even the best capitalised banks with absolutely no exposure to asset-backed securities and other derivates, like many banks in India, have seen a huge erosion in their market value.

Are the current business models of banks fundamentally flawed? If so, how will they change after this crisis?

In their glory days, the big banks were much more than regular banks. Apart from their traditional business of raising deposits and lending to individuals and businesses, most banks expanded into a whole range of new businesses over the last few decades. They set up separate divisions or subsidiaries to handle fund management, advisory services for corporate and wealthy individuals and even broking services.

When restrictions that separated commercial banking from investment banking were lifted in the US in the late '90s, almost all the big banks jumped right in and started competing directly with the Wall Street investment banks.

There is a lot of merit in allowing banks to offer a wide array of services to their customers, or to become one-stop financial superstores. As long as there is healthy competition, the economies of scale bring down intermediation and other service costs that benefit the customers. Diversified business models, both geographically and across product lines, are less risky for shareholders as weakness in some segments is counterbalanced by growth in other segments.

But, the insatiable appetite for better returns on capital and fatter bonuses encouraged bankers to move into more complex and risky businesses. Proprietary trading, where a bank made trading bets using its own money, called global markets division by many banks, contributed more to the bottom line of many banks. When the business of asset securitisation exploded, it opened up lucrative opportunities in origination and trading of derivatives.

Unfortunately though, the regulatory structures that are in place and the risk management models currently followed by banks are not designed to accommodate the more recent, and riskier, diversifications. Regulators always take time to understand market innovations and hence regulations always come after a lag. But, on hindsight, it is incredible that the risk management models followed by banks failed to evolve and capture the potential downside.

There is a reason. The systems didn't evolve because the new businesses were too complex and hence risks were underestimated. One of the perceived attractions of financial securitisation was that risks were evenly spread across a large number of investors who held derivative instruments, unlike the pre-securitisation era when lenders shouldered the entire risk of default. Also, the more complex derivatives allowed investors to pick investments according to their desired risk profile. Some derivatives were even thought to be as secure as sovereign bonds, but with better yields. Then there were credit insurers who offered further protection to make the investments even more secure. It seemed like a perfect world, where risks are low and returns are high, and where business was always expanding which allowed the banks to continue growing.

When the system started crashing, most banks were undercapitalised and ill-prepared. Instead of reducing risks, derivatives became a source of risk as most banks had loaded up on them. By the time they realised that too much of a good thing can indeed cause harm, it was too late and the world was caught in the worst crisis in nearly a century.

Should the universal banking model be scrapped?

When the dust settles and the world recovers from this crisis, even if much of the global economy remain the same, banks will see major changes. Many of them will be forced, either by their precarious financial position or by regulators, to redraw their current business models. Are there better models?

It is fashionable to talk about freshly minted Nobel laureates and their theories. So let me bring this year's economics Nobel winner Paul Krugman's trade theory into the frame. It may appear odd, trying to stretch a theory on global trade to analyse a specific industry. It is not so.

Krugman expanded on David Ricardo's theory of comparative advantage which essentially said countries benefit when they specialise in what they are best at producing and then importing other goods and services. This did not explain why some countries traded in the same set of product, for example both exporting and importing cars. Krugman said this is because of differentiations within the same product group and countries specialise in segments within a product group rather than the entire product group. So, Germany specialised in high-end cars while Japan focussed more on efficient small cars.

Stretching Krugman's theory to the banking industry, will banks be better off specialising in some products and services rather than trying to be everything to every customer? It will indeed be advantageous for many banks to focus only on select businesses. Even now, within the broader banking and financial services industry, there are large firms focussed only on select segments.

The large Wall Street investment banks were obvious examples until their demise. There are a large number of fund management firms that are not directly tied to any global bank. Then there are boutique banks, like the many privately-owned Swiss banks which focus on advisory and wealth management services to select clients. Reports indicate that Goldman Sachs, which converted itself into a regular commercial bank, wants to take this route and focus only on the upper-end of the retail banking market rather than have a large network of branches across the world.

It is very likely that more and more banks will gravitate towards more focused business models. Even if the managements are not prepared, shareholders and governments which now hold big stakes in banks may force them to do so. This is already happening. Royal Bank of Scotland or RBS, which received a generous capital infusion from the British government, has already shut down its proprietary trading desk.

Nevertheless, attractions of the 'universal bank' business model still remain. Most customers, both retail and businesses, and especially in the low-end of the market, want a wide range of financial services. And they want the services to be cheap. Only a universal bank business model, like a supermarket, can satisfy this market and not the specialised, boutique firms, which obviously would charge more for their services. Then there are the benefits of big global brands and extensive networks for customer interface, both regular bank branches and online stores for financial products.

So, both models will continue to exist. The focussed, boutique business model will become more popular, but the era of big universal banks are definitely not over. In fact, if the recent consolidation moves are any indication, big banks like JP Morgan and Citigroup are likely to become even bigger after acquiring their smaller rivals which are struggling to survive.

Too big to fail? Why should they be?

As it is evident in this financial crisis, there is a huge risk in allowing banks to grow beyond a certain size. They become 'too big to fail' and will pose risks, not only to the individual firms but to the entire financial system. As The Wall Street Journal columnist Daniel Henninger asked recently, 'if something is too big to fail, isn't it …… too big?'

But, regulators are actively encouraging the big banks to acquire the smaller ones and grow even bigger. Even if such shotgun marriages are arranged to protect the depositors of smaller banks which are failing, aren't the regulators creating even bigger monsters? Won't such monsters become unmanageable in the next crisis and force governments to roll out more expensive bailouts?

While the universal banking model is beneficial, beyond a point, the huge systemic risks far outweigh the benefits of economies of scale. Regulators should look for ways to discourage banks from becoming too big to fail. Else, regulators should ensure that banks which are too big have the ability to take care of themselves in a crisis and not run to the government for support.

One of the options that regulators may consider is prescribing progressively higher capital and reserve requirements as banks grow in size. In other words, the bigger the bank, the higher should be its capital and reserves as a percentage of liabilities. Setting aside funds to meet reserve requirements involves a cost for banks. So, unless the incremental gains from growing in size do not offset the costs of higher reserve requirements, banks will prefer not to grow beyond a point. If a bank still finds it worthwhile to continue growing, it will have more capital and reserves than other banks and will be in a better position to face a crisis.

Also, regulators may ask for better risk management practices for larger banks. The risk committee of Spanish bank Banco Santander's board meets twice a week and that bank is one of the least affected in Europe by the crisis. Regulators should prescribe such practices for all big banks and can even think of nominating their own independent representatives to the risk management committees.

The banking industry should not repeat the same mistakes all over again and it is the job of regulators to ensure that they don't.

The world cannot afford another financial crisis... at least for a few decades.

Indian Banks are not affected by Credit Crisis..!

2008-10-07T10:58:00.000-07:00

Yes Indian banks are not affected by global Credit Crisis but you should know -- Indian Bank Accounts - Are your deposits insured?

Indian financial sector will be largely unaffected in any direct manner on account of deteriorating global markets.

Remember 60s/70s during Indian banking crisis, India goverment nationalized banks. Today that's happening in developed world. Ofcourse I don't think nationalizing assets will solve all problems but I do believe free market cannot regulate itself with third-public-eye.

Also Thanks to (ReserveBank of India)RBI's stringent regulatory requirements that require banks in India to maintain a cash reserve ratio of 9%, a statutory liquidity ratio of 25% and a capital adequacy ratio of 9% - measures to ensure a bank is not highly leveraged and is adequately capitalised.

Banks in Indian often complain that the regulatory cost of doing business in India is one of the highest anywhere in the world but given the unravelling of the credit crisis, they will have the central bank to thank for India being relatively unscathed.

Interesting read...

2008-09-23T08:08:00.000-07:00

India's Strong Growth Should Continue

Moving From Engineering To Product Management

Moving from an IT to a Product Organization

Economy Model: European vs American

2008-08-05T08:36:00.000-07:00

After reading Europeans may not be so lazy after all, I was thinking may be finally now somebody gets it. I lived in US for a while and moved to EU. and personal i can experience the difference in quality of life.

If you measure a good economy by the pay check, then american 25% richer per capita than Europeans. But if you measure wealth by quality of life, then the EU 15 passed up America at least 10 years ago in some areas. America has the best graduate schools in the world -- though there are some good ones in Europe -- but on the elementary and secondary level, students in 18 European countries performed better than American students in mathematics. America is the only industrialized country other than South Africa that doesn't offer its citizens universal healthcare -- american got 45 million people uninsured and have fewer doctors per capita. The EU 15 population lives a year longer than Americans and EU have a much lower infant mortality because they have less poverty. Europe does have serious poverty and you do see it, but it's not as bad as in the US, where one out of four kids lives below the poverty line. When it comes to leisure time, Americans get an average of 5 to 10 days off a year while Europeans get or to six weeks off as a right mandated by law. Americans often say the Europeans are not as productive, but the OECD figures show that from the late 50s to mid 90s, the EU 15 countries had higher growth in productivity per hour almost every year.

European Union is the largest exporter in the world -- it's ahead of United States and China. That will shock a lot of people. Europe's largest exporter, Germany, sells more goods abroad than either the US or China, and that's only one EU country. Europe is the largest internal market in the world; 61 of the world's largest 140 companies are based there. It dominates in banking and insurance, aerospace with Airbus, engineering, construction, and the chemical and food sectors. America leads in some pretty big industries, too--pharmaceuticals, automobile manufacturing, software and telecoms- but to say US is big economic giant and Europe's falling apart..is ignorant statement

If Europe is so moribund and America so economically strong, why is the dollar continuing to devalue against the euro? It's because the investment community says economic fundamentals are sound enough to guarantee payoff. this is what you'll get if you go with the American model. You'll get a winner takes it all system, a greater disparity in income, you'll have increased poverty. You'll get debt for your family. The only other country that has really followed american system is Britain, and it now has the worst consumer debt ratio in the world-- an achievement it has accomplished in just five years. The average Brit spends 120 percent of his or her income.

If you look at the American economy in a detached way, there's no doubt that the unfettered market produces some innovation and growth. But the truth is that the recent economic growth seen in the US has been, in large part, the result of a massive increase in consumer debt. The US came out of the 1989-92 recession by issuing credit cards. went on a huge credit binge and basically kept the American economy and the whole global economy afloat on consumer credit and American consumers continuing to buy. The cost of this was the depletion of the family savings rates of millions of Americans -- we had an 8 percent family savings rate in 1990 and it's in almost in below zero(-ve) today.

But there is no positive correlation between eliminating all your social programs and a positive economy -- there's only a negative correlation. If you eliminate the social benefits, you get negative GDP -- more crime, more prisons, deteriorating healthcare, deteriorating infrastructure and greater pollution. A lot of the European countries and their social programs are too paternalistic and they need to be streamlined the way the Scandinavians have done it. Indeed, the economic successes of the Scandinavians have shown that you don't have to eliminate your social net in order to grow your economy -- you can also find growth by streamlining the net.

There needs to be a balance between personal accountability and social solidarity. You can't be so dependent on the state that you no longer have any initiative. And you can't be so abandoned by society that you're all on your own and there's no helping each other.

Europe(certainly Asia/Africa/Latam can start trying) shouldn't look to adopt the American free-market capitalist system or to preserve the lavish social net that exists in countries like Germany and France is the wrong one. Instead, Europe should be looking for a third way -- and Scandinavia provides a good model.

Power of Saving

2008-07-08T14:32:00.000-07:00

Everyone knows the saying, "It takes money to make money." But how much does it take? It's easy to assume it takes, well, more than we have. Believe it or not, though, the headlines you occasionally come across that say "Minimum-Wage Worker Retires Millionaire" are true.

The secret? Compound interest. The method? Work, discipline, and saving.

If you're earning a minimum-wage salary of $5.85 per hour (or $12,168 per year), and you start saving and investing 10% -- the recommended portion -- at age 20, you'll retire at 67 with $1.2 million. $57,152 in savings turns into $1.2 million. That's the magic of compound interest.

Now compare that return with simply putting your nest egg into an average savings account:

Years	Savings Account Return (3%)	S&P 500 Annualized Return (10%)
10	$14,358	$21,318
20	$33,655	$76,611
30	$59,587	$220,027
40	$94,439	$592,012
50	$141,276	$1.56 million

Source: MoneyChimp calculator. For purposes of this illustration I have taken the S&P 500 historical annual return of 10%.

Granted, in 50 years, $1.56 million won't have the purchasing power it has today, but it will still add significant comfort to your retirement lifestyle. And if you earn more than minimum wage -- or if the minimum wage itself is raised -- that figure will be higher.

But what if you don't have 47 years to invest? However many -- or few -- years you have until retirement, the best time to start is always now.

Our retirements are less secure than ever. The future of Social Security is uncertain, and company pension plans are becoming underfunded or vanishing altogether. If you want to retire a millionaire in the future, it's up to you -- and the less time you have, the more you need to contribute annually.

Robert Brokamp, advisor of the Fool's Rule Your Retirement service, says that to secure a comfortable retirement, folks should crunch the numbers and get a plan -- now. Some of Roberts' tips include:

Calculate. Start by determining how much you need to save. Studies have shown that people who take the time to run their numbers are more likely to take action and improve their retirement prospects. As a rule of thumb, if you've saved less than $50,000, find ways to save more. The amount you save will have a bigger impact on your net worth than the return you receive on what you've saved.

Automate. Put your plan on autopilot by setting up automatic deductions from your paycheck to your retirement plan. You can also transfer money automatically to an IRA or brokerage account from your checking account. Discount brokerage firms like Sharebuilder allow you to set up automatic investments for about $4 a trade. This guarantees monthly contributions -- you'll be less likely to skimp on savings or skip a month.

Diversify. Improve your rate of return -- and minimize your risk -- by diversifying your nest egg. A well-diversified portfolio focuses on the whole, not the parts, and includes all five asset classes: U.S. large-cap stocks, U.S. small-cap stocks, international stocks, REITs, and commodities. If one asset takes a hit (like the housing market is currently doing), your risk is mitigated by the balance of the other four.

If, on that minimum-wage salary, you don't start saving and investing until you're 30, you'll earn less than half of that $1.2 million by the time you hit age 67! The amount you save, and the length of time you invest it, will have a substantial impact on your net worth -- whatever the market does over the long run. So run the numbers, put your plan into place, and be on your way to retirement security.

Investment tips: The easiest way to begin is with a low-cost, broad-market index fund such as the Vanguard 500 Index Fund (VFINX). With one investment, you'll be exposed to stocks that span the S&P 500, including well-known U.S. blue chips. For international stocks, you might consider an actively managed mutual fund like Dodge & Cox International (DODFX). This fund boasts a very impressive five-year annualized return of 22.8%, but it's also cheap (no loads, 0.65% expense ratio) and led by a talented management team.

Source: msn.fool.com

Sovereign Wealth Funds..its not Bad afterall

2008-07-08T01:48:00.000-07:00

The Arabs, the Chinese, and the Russians are about to buy up large swathes of Western economies. Or so the scare story goes. A frenzy of recent activity, including Dubai’s purchase of an undisclosed amount of Sony shares, Abu Dhabi’s acquisition of $7.5 billion worth of Citigroup, and China’s $3 billion stake in private-equity firm Blackstone, has many commentators fretting about so-called “sovereign wealth funds”—investment entities set up by governments to manage their surplus savings. According to an estimate by Morgan Stanley, sovereign wealth funds have poured some $37 billion since April into (mostly Western) financial institutions. One hyperventilating observer of these developments even bemoaned the onset of a “sharecropper economy” in the United States.

In truth, such funds are nothing for Americans or Europeans to fear. If anyone should worry about them, it’s the people whose governments are amassing them. That’s because governments tend to be terrible at managing money that is best left in the hands of private citizens. And locking away billions of dollars in wealth can have pernicious economic side effects. Maybe that’s why sovereign wealth funds are popular with dictators and semi-authoritarian regimes, which don’t have to answer for the consequences when they make poor economic gambles.

Sovereign wealth funds are nothing new, but they are growing larger. They emerged in the 1970s in oil-producing emirates, such as Kuwait and Abu Dhabi, as a way to accumulate current account and budget surpluses during the oil boom. Now, Abu Dhabi boasts the largest fund, sized at $600-700 billion, and other countries have followed its lead. Norway established a fund for its excess oil incomes in 1990. Singapore has accumulated two large funds that, unusually, are not based on oil income. And more recently, China and Russia have instituted large sovereign wealth funds of their own. Today, such funds hold as much as $2.5 trillion in assets, according to Ted Truman, a senior fellow at the Peterson Institute for International Economics. Some economists forecast they will grow to $12 trillion by 2015, an amount that roughly corresponds to the size of the entire U.S. economy.

The motives of the funds vary, and they don’t always make sense. Consider Abu Dhabi and Kuwait, which wanted to save their oil endowment for future generations, an admirable goal. But today these two bureaucratized emirates look like poor cousins in comparison with freewheeling Dubai, which has much less oil. Because the rulers of Abu Dhabi and Kuwait centralized their nations’ wealth in the hands of the state, their state sectors stifled their economies. Abu Dhabi’s fund may be impressive, but the entrepreneurial emir of Dubai has done a far better job of putting sustainable wealth in the hands of his citizens.

Another motive for the rise of sovereign wealth funds is to form a buffer against volatile commodity prices. In the 1970s, major oil exporters adjusted their expenditures to their enlarged oil revenues, but after 1980 the international oil prices plummeted, landing them in crisis. Learning this lesson, oil producers such as Russia have established “stabilization funds.” It may sound like a good idea, but the Russian deputy minister of finance responsible for foreign assets has just been arrested and accused of embezzling $43 million. Why trust the state with your money if the risk of theft is excessive?

A separate but related trend is the enormous currency reserves that Russia and especially China are amassing thanks to persistent large current-account surpluses. After the Asian and Russian financial crises of 1997-98, these governments realized that they could not rely upon the International Monetary Fund (IMF) to bail them out but needed sufficient reserves of their own. These reserves have since reached $450 billion in Russia and $1.44 trillion in China, corresponding to one third of Russia’s GDP and half of China’s.

But the low returns on international reserves make this arrangement costly. It is much more economical to reinforce the multilateral financial regime led by the IMF. Ballooning reserves, moreover, are a result of undervalued exchange rates, which are only tenable in the medium term. In the long run, inflation will eat up the competitive advantage. By purchasing foreign currencies and issuing domestic currency, central banks are boosting the money supply and inflation, which is becoming a major concern in China and Russia. Both countries would be better off letting their exchange rates appreciate to reduce inflation, which would slow their accumulation of reserves.

In short, sovereign wealth funds are often a lousy bargain for the countries that have them. That may explain why they have been developed mostly by authoritarian regimes in semi-developed countries, where citizens don’t have a chance to demand smarter economic policies. Take Singapore, whose economy depends on trade rather than a declining resource such as oil, and yet has locked up billions of dollars of its wealth in a fund since 1960. The government there has exceptionally managed to maintain its authoritarianism after the country became wealthy, but authoritarian regimes are more vulnerable to economic downturns than democratic systems. Singapore’s autocratic rulers need a reserve to pay off dissatisfied subjects to maintain power when economic times get tough.

In democracies, the politics work differently. The only democratic country with a large sovereign wealth fund is Norway. Since the Norwegian fund was established in 1990, every incumbent government has lost elections because the opposition has promised all kinds of popular expenditures from the abundant fund. Democratically, it is difficult to defend an excessive public reserve fund.

Certain international reserves are always needed, and exporters of commodities with highly fluctuating prices require larger reserves as a safety net. However, sovereign wealth funds are something different. They reflect a paternalistic—and economically illiterate—notion that the ruler knows best while citizens are so irresponsible that they cannot be entrusted with their own savings. It would be more economical and democratic to cut taxes and let citizens save and invest themselves.

Editor’s Note: The original version of this article characterized Singapore’s rulers as “unelected.” Technically speaking, they are elected, but neither freely nor fairly. Freedom House rates Singapore as only “partly free.”

Source: foreignpolicy.com

Investing vs. Trading...

2008-07-03T07:32:00.000-07:00

I have traded few stocks in the past but mostly I have been an investor. I haven't made any loss in the market so far that's because I never had selling pressure. I could always wait to sell for reasonable profit. Not sure same logic can work for trader.

I thought now is better timing to understand and throw my hands into. Because short selling, Intra-day trading always fascinated me. Partly because- if you know the game well enough and can read charts, it can fetches better returns than say when you stay invested in good stocks for a reasonable period of time. Ofcourse volatile market is trader’s paradise and nowadays that seems to be the cases. so I thought it may be optimal to try out now.

Mindset is completely different thou. Investing is trusting company with mid/long-term view. So timing buy is not really very important (thou its helps to maximize profit).

I did some reading about tricks, rules of the game and I find following discipline needed for reasonable success:

Set your objective- profit and loss goals (+/-10%, etc...)
Don't enter a trade if you are unsure of the trend.
When in doubt, get out, and don't get in when in doubt.
Be willing to make money from both sides of the market.
Always Trade at the markets and never limit your orders.
Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
Don't follow a blind man's advice.
When you lose don't blame it on luck.
Never risk more than 10% of your total portfolio in a single trade.
Always use stop loss orders.
Avoid taking small profits and large losses.
Never cancel a stop loss after you have placed it.
Never buy or sell just because the price is low or high.
Never change your position without a good reason.
Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
Avoid trading after long periods of success or failure.
Don't try to guess tops or bottoms.

Open for more insights.

useful link: How to be a successful day trader?

Business Process Modeling

2008-06-26T06:17:00.000-07:00

Most Business will formulate requirements for system change/implementation in some form of write-up and those requirements translated into product(technically code) often at distance shores and mostly from those who don't understand business very well (/in some worst case- misunderstanding it from different market practices or past experience).

Result ofcourse is implementation overrun schedule, budget. I think most of us be there.

Business Process Modeling based implementation framework will address to most of the traditional challenges of IT’s implementation.

BPM provides BAs with the ability to model the processes and System Designers (SD) with the ability to run what the BAs had modeled with almost no alterations. There is no gap between BAs and SDs in this method. It seems like a clear, simple, and proven concept to accept & implement for both sides, as it benefits both sides with increased business agility and decreased time-to market.

SOA based BPM with help address almost all major problems system management, Optimization cost of implementation and moving away from legacy systems/processes will be made easier & faster, better Business agility, better change management.

India: Investing...

2008-06-10T08:47:00.000-07:00

In India, assured profit days are almost over now. And with more investment products comes increased benefits and options but also ofcourse increased the complexity of understanding/evaluating.

Recently I read article which gave good indicator to measure investments options. It is- tax, risk, liquidity and ofcourse ROI(return on investment). Article outlined the usual good indicators, some interesting point worth a mention:

Risk- Aim should be managing risk and not evading risk. since Investing and risk go hand in hand. not investing is also a risk. also peer(product/offering) comparison is good indicator of risk involved.
Liquidation- should keep about 4-6 months of average monthly expenses in savings account or short term FD or Floating Rate/Liquid Funds. This, in most situations, should be sufficient to meet any emergency.
Tax- different tax applies for different investment options and ofcourse tax has impact on return.
Return- peer product comparison might highlight risk. Expectation should be according to current market conditions.

Good investing is all about getting the right mix of all these factors according to risk preference and investment goals.

India: Family wealth Creation & Tax planning

2008-06-06T06:38:00.000-07:00

Some interested points for India couples - Why you should get married?

With some smart manœuvres, you can reduce taxes substantially through your spouse. This works especially if you are in the highest tax bracket and your significant other does not have a taxable income.

At the risk of being labelled a chauvinist, let us assume (only for the sake of argument), that the wife stays home and the husband earns.

First, let's do some ground work. Let's say there are two separate joint accounts, one for husband/ wife and the other for the wife/ husband. Bear with me if this sounds pointless to you right now. But it is important!

Source: Moneycontrol

Managing your investments while you work overseas

2008-05-16T02:06:00.000-07:00

Telegraph published article about 'Managing your investments while you work overseas'
It provides some interesting questions that you should consider while working overseas and trying to manage investment back home.

Stock Market Tips

2008-05-05T01:08:00.000-07:00

Now a day’s everyone wants to make it big in the stock market. Trading can be a rewarding task when you get the hang of it. I found these to be interesting list of stock market tips:

Develop your own system. This is perhaps the most important part of investing. You must develop your own system of strict rules that tell you when to buy and when to sell. These rules should be simple enough for you to be able to follow them effortlessly.
Don’t trade against the trend. Bottom fishing and top picking are the most dangerous ways to trade. The risk that you would face with picking tops and bottoms far outweigh the rewards. It is better to buy a stock that is heading up then to short it.
Cut your losses short. It is very important to cut your losses short in the stock market. Capitol preservation is a very important key to remember. Think about it if you lost all your capitol when you were right you will not have any capitol to make money with when you are right.
Don’t trade against the industry group. It is said that 50% of what a stock does is based on its industry group. If the steel industry group is going up then stocks in that group are likely to go up to. There will be stocks in that group that go down, but it is best to stay away from these.
Keep your emotions in check. If you cannot control your emotions when trading you will lose money. Some traders get in and out of trades because they are scared, as opposed to when there system tells them too. This will only hurt them.

Recession..so what?

2008-01-17T07:08:00.000-08:00

If you are of a sensitive disposition, I advise you to turn the page now. I am about to break the last of the universal taboos. I hope that the recession now being forecast by some economists materialises.

I recognise that recession causes hardship. Like everyone I am aware that it would cause some people to lose their jobs and homes. I do not dismiss these impacts or the harm they inflict, though I would argue that they are the avoidable results of an economy designed to maximise growth rather than welfare. What I would like you to recognise is something much less discussed: that, beyond a certain point, hardship is also caused by economic growth.

On Sunday I visited the only UN biosphere reserve in Wales: the Dyfi estuary. As is usual at weekends, several hundred people had come to enjoy its beauty and tranquillity and, as is usual, two or three people on jet skis were spoiling it for everyone else. Most economists will tell us that human welfare is best served by multiplying the number of jet skis. If there are two in the estuary today, there should be four there by this time next year and eight the year after. Because the estuary’s beauty and tranquillity don’t figure in the national accounts (no one pays to watch the sunset) and because the sale and use of jet skis does, this is deemed an improvement in human welfare.

This is a minor illustration of an issue which can no longer be dismissed as trivial. In August the World Health Organisation released the preliminary results of its research into the links between noise and stress(1). Its work so far suggests that long-term exposure to noise from traffic alone could be responsible, around the world, for hundreds of thousands of deaths through ischaemic heart disease every year, as well as contributing to strokes, high blood pressure, tinnitus, broken sleep and other stress-related illnesses. Noise, its researchers found, raises your levels of stress hormones even while you sleep. As a study of children living close to airports in Germany suggests, it also damages long-term memory, reading and speech perception(2). All over the world, complaints about noise are rising: to an alien observer it would appear that the primary purpose of economic growth is to find ever more intrusive means of burning fossil fuels.

This leads us to the most obvious way in which further growth will hurt us. Climate change does not lead only to a decline in welfare: beyond a certain point it causes its termination. In other words, it threatens the lives of hundreds of millions of people. However hard governments might work to reduce carbon emissions, they are battling the tide of economic growth. While the rate of growth in the use of energy declines as an economy matures, no country has yet managed to reduce energy use while raising gross domestic product. The UK’s carbon dioxide emissions are higher than they were in 1997(3), partly as a result of the 60 successive quarters of growth that Gordon Brown keeps boasting about. A recession in the rich nations might be the only hope we have of buying the time we need to prevent runaway climate change.

The massive improvements in human welfare - better housing, better nutrition, better sanitation and better medicine - over the past 200 years are the result of economic growth and the learning, spending, innovation and political empowerment it has permitted. But at what point should it stop? In other words, at what point do governments decide that the marginal costs of further growth exceed the marginal benefits? Most of them have no answer to this question. Growth must continue, for good or ill. It seems to me that in the rich nations we have already reached the logical place to stop.

I now live in one of the poorest places in Britain. The teenagers here have expensive haircuts, fashionable clothes and mobile phones. Most of those who are old enough have cars, which they drive incessantly and write off every few weeks. Their fuel and insurance bills must be astronomical. They have been liberated from the horrible poverty their grandparents suffered, and this is something we should celebrate and must never forget. But with one major exception, can anyone argue that the basic needs of everyone in the rich nations cannot now be met?

The exception is housing, and in this case the growth in value is one of the reasons for exclusion. A new analysis by Goldman Sachs shows that current house prices are not just the result of a shortage of supply: if they were, then the rise in prices should have been matched by the rise in rents. Even taking scarcity into account, the analysts believe that houses are overvalued by some 20%(4).

Governments love growth because it excuses them from dealing with inequality. As Henry Wallich, a governor of the US Federal Reserve, once pointed out in defending the current economic model, “growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable”(5). Growth is a political sedative, snuffing out protest, permitting governments to avoid confrontation with the rich, preventing the construction of a just and sustainable economy. Growth has permitted the social stratification which even the Daily Mail now laments.

Is there anything which could sensibly be described as welfare that the rich can now gain? A month ago the Financial Times ran a feature on how department stores are trying to cater for “the consumer who has Arrived”(6). But the unspoken theme of the article is that no one arrives - the destination keeps shifting. The problem, an executive from Chanel explained, is that luxury has been “over-democratised.” The rich are having to spend more and more to distinguish themselves from the herd: in the US the market in goods and services designed for this purpose is worth £720bn a year. To ensure that you cannot be mistaken for a lesser being, you can now buy gold and diamond saucepans from Harrods. Without conscious irony, the article was illustrated with a photograph of a coffin. It turns out to be a replica of Lord Nelson’s coffin, carved from wood taken from the ship on which he died, and yours for a fortune in a new, hyper-luxury department of Selfridges. Sacrificing your health and happiness to earn the money to buy this junk looks like a sign of advanced mental illness.

Is it not time to recognise that we have reached the promised land, and should seek to stay there? Why would we want to leave this place in order to explore the blackened wastes of consumer frenzy followed by ecological collapse? Surely the rational policy for the governments of the rich world is now to keep growth rates as close to zero as possible?

But because political discourse is controlled by people who put the accumulation of money above all other ends, this policy appears to be impossible. Unpleasant as it will be, it is hard to see what except an accidental recession could prevent economic growth from blowing us through Canaan and into the desert on the other side.

Source: by George, The Guardian

Tata's 1 Lakh Car

2008-01-10T03:46:00.000-08:00

Ratan Tata has unveiled the much speculated Rs 1 lakh car that was dismissed by many across the globe as a 'myth'. Called the "Nano", an model carrying a dealer price of Rs 1 lakh (exclusive of taxes) i.e. close to 2500$.

Following are some details on the car:
Length: 3.1 metres / Height: 1.6 metres / Width: 1.5 metres
Engine: Rear-wheel drive, 2-cylinder, 623 cc, multi-point fuel-injection petrol engine. Engine is rear mounted. Tata said it was the first time a 2-cylinder gasoline engine was being used in a car with single balancer shaft.
Safety: Tata said the Nano has an all sheet-metal body, with safety features such as crumple zones, intrusion-resistant doors, seat-belts, strong seats and anchorages, and the rear tailgate glass bonded to the body. Tyres are tubeless.
Environment: Tata said tailpipe emission performance exceeded current regulatory requirements, and the Nano had a lower overall pollution level than two-wheelers made in India. It said high fuel efficiency (20 km/litre) ensured low carbon dioxide emissions.

The Tata "Nano" sports a 624cc 33bhp engine, and is expected to return a fuel economy of 20 Kmpl. It is 8 percent smaller externally than the Maruti 800, but claims to have 21 percent more space on the inside. And now that the "People's Car" has become a reality at the 'Auto Expo 2008' being held in the capital today, much remains to be seen how it will influence the people of India, the existing traffic congestion, and the country's economy. And mostly importantly So far Tata's haven't talked about product profitablity and margins.

But for now, it's a promise fulfilled, as the man behind the vision (reality) chooses to put it. And it sure does puts india in global auto map. Now almost all global is looking at way to procedure small car with lower price. Whatever be the outcome of Tata's Nano atleast it made almost every auto company think about their product strategy specially for emerging markets.

as always Great Show Tata.

Video : @ NDTV

India's tech sector and US recession...

2008-01-09T02:21:00.000-08:00

India’s tech stocks have lost their sex appeal there days. Stock prices are in the doldrums, the industry has been off the headlines for months. There’s a reason why. For one, India has other, more exciting growth industries like retail, auto, real estate, infrastructure as also the evergreen and growing financial services sector. But also, the outsourcers are likely to take a hit with the onset of the recession in the United States, their main market.

Infosys Technologies is coming out with their quarterly results by the end of the week. Guaranteed the management will say they won’t be hurt, that in times of recession, companies outsource more, not less, to save costs.

But many tech executives in India are skeptical about projecting such a cheerful outlook. The more cautious ones say that sure, in the medium term, India will do okay. But in the short term, it will be hit. In the first year of a recession, US companies typically freeze IT and other budgets, and spend money on severance packages and incentives to let people go. After that, they’ll think about how to cut costs further.

So the short term picture won't be that great. The recession is coming on top of a strengthening rupee which is already hurting the outsourcers - not many are sophisticated hedgers. The gloom will not be so visible in the industry - thanks to high attrition rates, Indian employees won't have to be laid off as fewer new contracts come through.

It may not be such a bad thing. With lower attrition levels and fewer new hires, the industry will get a much-needed breather from its break neck speed growth.

Source: BusinessWeek

Citi Banking woos...

2007-11-08T20:58:00.000-08:00

As someone who was associated with CitiBank for many years, I don't like what is happening now. But again with bottom-up inside view of the company, I couldn't expect any better result. It took a while, but US equity investors finally woke up to reality.

Maybe it's because all signs increasingly point to a U.S. recession. Or the fact that more than a few companies are discovering that slowing demand at home matters more than supposedly booming economies overseas. Or the abrupt realization that the technology sector is sensitive to a slowdown in the financial services industry after all.

Then again, maybe it's the malignant cancer that's been festering for months, which has spawned growing turmoil in credit markets and a relentless parade of multi-billion dollar write-downs at banks, brokers, and other financial institutions.

Citigroup has averaged 52 million shares traded daily these past three months. Today, with no news announced, it traded 194 million shares. The most fascinating detail was it traded 100 million of those shares in the last hour with the stock rising from a $31.05 low to close at $32.90. That's major institutional buying that occurred.

We all know the news has been awful and more write-offs are coming in the 4th quarter. Investors expect that the 4th quarter write-offs had better be complete and without the "drip-effect" carrying into 2008.

Although this entire credit crisis is very complicated and full of advanced accounting principles, the "cash flow" of these mortgage portfolios is actually in pretty good shape. IT IS THE UNDERLYING VALUE of the securities that has been marked down. Citigroup made it clear this past Monday that even the higher quality BBB- to AAA -rated mortgage paper has been marked down by the rating agencies, thus causing the bulk of the write-offs.

We will see and know if the financial have indeed "put in their bottoms" over the next month or so, but I think it is safe to say that they are right at their respective bottoms or as close as close can be.

Excellence

2007-09-29T13:19:00.000-07:00

I found this very good speech from Harsha Bhogle sharing some absolute gems and witty comments at his alma mater, IIMA

On excellence:
Talent dazzles, but it has hardly anything to do with excellence. It is what you make of that talent that matters. Arrogance is the biggest stumbling block to excellence. It is something similar to what Shane Warne’s wife recently said — about him living in a ‘rarefied bubble,’ wherein nobody had the courage to tell him he’s doing something wrong. It is more important to surround yourself with people who are better than you.

On cricket:
There are no excuses. The Aussies will never say that we have lost. They’ll just say that we’ll come back and do better next time.

Harsha, the cricketer:
I loved fielding from the bottom of my heart. Have you heard the ‘cluck’ sound that a ball makes on hitting the bat? I used to fantasise about the sound of it hitting my palm. And being a fielder meant I could be friends with everybody. The bowlers loved anybody who could save them even a single run.

On live television:
Being unprepared helped. Initially, I used to compete with others. But you can’t comment on a reverse swing when Wasim Akram is sitting next to you. I realised that if I make them look better, I will look better myself. There is no space for ego here.

On luck and IIM:
At 21-22, I thought it was all a matter of luck, like all 21-22-year-olds do. I did not receive the interview letter from IIM, Ahmedabad. But when my father forced me to call and inquire, I found out my name was in the list, but the letter hadn’t reached. So you see, it wasn’t luck alone, but also the fact that I made the effort to call. It is important to recognise an opportunity. For as someone said ‘The harder I practise, the luckier I get.’ So is also the case with IIMA, which has moved with the times. Excellence, after all, lies in the present.

India’s Home Loan GDP Ratio 5%, versus 50% In US & UK

2007-09-14T09:41:00.000-07:00

Despite real estate witnessing boom in last couple of years with 90% of home loans borrowers being the first timers, home loans GDP ratio in India continues to be at meager 5% as against 50% in US and UK and therefore suggested that it be more than doubled in budget proposals for 2008-09.

Above observations are made in a Paper on Reality Check brought out by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), pointing out that since buying a home requires huge investment, especially for first time buyers, higher home loan GDP ratio is necessary as 90% of borrowers are the first time borrowers.

As such, high interest rates coupled with soaring property prices have only impacted the affordability of buyers, demand, however continues to persist and will become stronger and more intense in near future.
The ASSOCHAM President, Mr. Venugopal N. Dhoot said that at present, India has a housing shortage of about 19.4 million units of which 6.7 million is estimated for urban India and those of 12.7 million units in rural India. However, with rising income, swelling middle class and rapid urbanisation, the demand is set to shoot up and is estimated that additional 45 million units would be required for both rural and urban areas by 2012.

As a result of rising income and swelling middle class, India’s per capita income has doubled over the past 20 years. With population growth of about 1.6% per annum and Gross Domestic Product (GDP), growth of 9% per annum, the per capita income is expected to quadruple by the year 2020.

The average real income of urban India and rural India is likely to grow by 5.7% and 3.6% respectively by 2025. Moreover, India’s middle class is expected to expand by more than 10 times from its current size of 50 million to 583 million people in next 18 years.

Therefore, all these estimates work out to make a strong case for higher home loan GDP ratio so that India and its population is able to keep a pace for meeting the demand for housing units, pointed out Mr. Dhoot.

Commenting on impact of rising home loan rates, the ASSOCHAM Paper says that home loan rates have shot up from 7% in 2003 to 12% in 2007 with its impact massively following across the board including genuine buyers, speculators, real estate developers and bankers.

A case in example is that as the home loan rates have gone up sharply, the interest pay out on housing loans has amplified as a borrower of Rs.10 lakh with loan tenure of 20 years has to shell out an extra of Rs.3250 every month on his EMI. The annual additional burden comes out to be as high as 39,000. Loans up to Rs.20 lakh form 80% of total housing loan portfolio, says Mr. Dhoot.

The Paper also points out that share of housing loans in total personal loans have been on its way up since 2000-01. It has increased from 37.2% in 2001-02 to 48.6% in 2004-05. Home loans constituted 52.7% in the total household credit in the year ended March 2006, marginally up from 52.5% in the previous year. Housing together with agriculture accounted for more than two-third of incremental priority sector lending in 2005-06.

Home loans formed 11% of the total outstanding credit of scheduled commercial banks in March 2005 up from just 2.4% in May 1990. The sales value of housing construction has witnessed an exceptional leap from Rs.17.61 crore in 1991 to Rs.4,182.67 crore in the year 2006. Lower interest rate regime has played a pivotal role in the progress.

However, with the repricing of interest rates in the last four years from 7% to 12% and the sky rocketing prices of the property, there has been a slowdown in the residential property market. The phenomenon signifies suppression of demand rather than absence. Though it is necessary to check the flow of speculative money it needs to be appreciated that augmenting the land supply for development would go a long way in easing the demand pressure on prices.

Credits: IRNews

Theory of Constraints

2007-09-04T14:32:00.000-07:00

Eliyahu Goldratt is an educator, author, scientist, philosopher, and business leader. But he is, first and foremost, a thinker who provokes others to think. Often characterized as unconventional, stimulating, and “a slayer of sacred cows,” Dr. Goldratt exhorts his audience to examine and reassess their business practices with a fresh, new vision.

He is the author of THE GOAL, an underground best seller that utilizes a non-traditional approach to convey important business information--it is a business textbook written in novel form, disguised as a love story. The ideas illustrated in THE GOAL underscore Dr. Goldratt’s Theory of Constraints, an overall framework for helping businesses determine:

• What to change---not everything is broken
• What to change to---what are the simple, practical solutions
• How to cause the change---overcoming the inherent resistance
to change.

Overview of Theory Of Constraints's - Chain Theory

Dr. Goldratt has created this Viable Vision offer to expand the reach of his powerful concepts to small and mid-sized companies.

How to get Introduced to VCs

2007-08-29T02:13:00.000-07:00

Iam reproducing interesting blog by algate on How to get Introduced to VCs

When embarking on raising venture capital, every entrepreneur has heard the advice, "don't cold call VCs, get introduced to them." In my own personal experience, when you're just starting out and don't have a lot of personal VC contacts and relationships, that's easier said than done. When you say "network" to most people, they envision schmoozing with professionals, playing golf, going to dinners, etc. I have always felt that schmoozing helps, but isn't sufficient (or efficient). Luckily, in the internet age, we have a bunch of tools to help. So having gone through the "how do I get introduced?" process, here's a couple of tips for entrepreneurs looking to connect with VCs:

(1) Find out who you know. How many people do you know? This used to be a very time consuming, manually intensive question to answer, but fortunately, today there are a number of tools for the aspiring VC-backed entrepreneur to figure it out. This sounds stupid, but first among them is MS Outlook. Take an afternoon and put all of the paper business cards that you have collected over the years and put them in Outlook. Then go through your Hotmail and Gmail accounts and put all of your friends and acquaitances in Outlook. Odds are you'll have a few hundred contacts or more when you're done. If you've been diligent about keeping your Outlook contacts up-to-date over the years, you might have a thousand...a great start! Now, going forward, every time you "meet" someone (could be just an email interaction), immediately put them in Outlook. LinkedIn (more about this service later) has a great feature called "grab" in their downloadable Outlook plugin. It allows you to highlight the signature in someone's email and automatically generate an Outlook contact. Get it and use it!

(2) Keep your contacts up-to-date. The average person changes jobs every couple of years, even if it's just a move within their existing company. With a few hundred people or more in you Rolodex, you're bound to have out-of-date info for a good half of your contacts. The best tool I've found for managing this updating process is Plaxo. With over 15 million users, most of them professionals, this is a great tool to keep track of your contacts changing details. About 20% of my 2,000 contacts in Outlook are synchronized using Plaxo.

(3) Find out who your contacts know. I'm a huge fan of LinkedIn. If you're not a member already, you should definitely join. There are some 10 million registered users and it really is a great networking tool. If you download the LinkedIn toolbar which is a plug-in for Outlook, it will scan your Outlook contacts and identify people you know who are already LinkedIn members. Send them invites. They're already LinkedIn users and they know you which is a great way to start finding out who your contacts know. Once you have 50-100 connections on LinkedIn, you'll be able to "get introduced" to almost any VC there is through someone you know.

(4) Make it a habit. If you allocate an hour or two per week to managing your network as mentioned above, in less than six months you'll find that you have "one of the biggest networks" of anyone you know.

If you have everyone on your management team do the above 4 things, I guarantee that you'll be able to get 2 or 3 intros to pretty much any VC firm that you're interested in pitching.

Innovation as Organization Culture

2007-08-03T02:13:00.000-07:00

As I gear up to participant an Innovation forum- I spent very brief time to collect my thought about the topic which we are going to discuss: Creating a organization culture to encourage Innovation especially in Financial Service Industry.

Any successful Organization or Leader will understand and acknowledge that the Innovation is a key drive for business growth. Only by continuously innovation-- new markets, products, services, higher business can be achieved. So It’s important to seed culture to innovate at all levels of organization— Innovations on Strategy/Vision, Procedures/Processes, etc… and senior management should lead this effort by supporting Investments, Empowering employees driving innovations and by setting up cross-functional teams mapping innovation, etc…

Organization has to attract people to share vision, values and enabling them to thrive on performance. Effective and honest Communication is key and will increase employee trust and make them believe that they have an opportunity to be part of decision making process, taking necessary risks and creating environment that is tolerant to mistakes and get recognition/ rewards for performance. Ofcourse, this requires much sustained effort from management team. Leadership has to encourage environment to be creative, experiments, and to certain level encourage individualism. Inspirational managers will become Leaders by creating culture to inspiring employee to be more productive, by articulate vision and shared values. And by helping employees to align their individual goals by working within framework to achieve business goals.

If there is anything we can learn from History, is that-- good innovators has based the work on uncertainty, experiment, and draw the plan from forward-looking customers base. Organization has to create various forum to get employees step out of BAU routines, give them access and involve them through various external & internal resources like forecasting strategy, business plan, technology, new project proposals/plan, employee periodic rotation policy between departments/units which will enable fresh ideas, etc.

Good Example: Google’s 20% time for project of choice. of course, with an required approval process and necessary oversight process, allowing creative employee to be more creative. And Google's also share ideas mailing list: a organization wide suggestion list where people can post any ideas from food, parking to the next best innovations.

Scope in Financial Service Organizations:

Front-End: Changing Distribution Balance. Direct and Indirect Marketing, etc…
Back-End: Optimizing Operational Process, Power of Call Centers & Data Centers, Customer Service and retention, etc..

Few interesting Links:
Centre for Financial Services Innovation
Online Financial Innovations: Strategies & Reports

Trouble in the US mortgage market

2007-07-26T12:53:00.000-07:00

The riskiest segment of the U.S. mortgage market, which serves borrowers with poor credit histories at high interest rates, has seen rising default rates in recent months.

'Subprime' Mortgage-- are "no doc" loans. That's when you get a loan without giving the lender any documentation about your income. There are also "low doc" loans, or when you get a loan with just a little paperwork about your employment and income. The number of non-traditional loans extended with low or no documentation jumped by 20% (to 65%) between 2003 to 2005. While subprime mortgages have spread credit more widely and helped more people buy their own homes, critics contend a hot real estate market encouraged lenders to get more aggressive and offer increasingly complicated terms that borrowers did not always fully understand. These risks are being exposed as the housing market cools.

Some analysts believe the crisis in the subprime mortgage market could boost the chances of the Federal Reserve cutting its target for benchmark interest rates. One of the factors driving the poor performance of subprime mortgages has been a series of interest rate increases by the Fed.

Even if interest rate cut might be coming, it may be too little, too late for as many as millions Americans who could lose their homes in the subprime shakeout.

Outsouring, Offshoring-- Success & Issues

2007-07-13T14:16:00.000-07:00

The concept of saving money by sending Operational & IT jobs overseas has taken strong hold in corporate world today. To some extent, offshore outsourcing is a logical extension of the idea of the global marketplace, which technology like the Internet has helped create.

That being the case, it's not surprising to hear that the jobs aren't coming back. According to a Gartner report titled "U.S. Offshore Outsourcing: Structural Changes, Big Impact": "The movement of IT-related work from the United States and other developed countries to vendors and offshore sites in emerging markets is an irreversible megatrend."

Success will come if you know what you are getting into-- some tips:

Do your homework-- Companies that haven't yet moved into offshore outsourcing can expect a steep learning curve. Top 3reasons to choose offshore outsourcing are "cost, cost and cost," but companies will not reap a rich fiscal harvest if they aren't careful during the evaluation portion of their decision-making process.
Consultants might be worth the investment
Be specific about deliverables-- Know exactly what you're getting. To start with, the terms of engagement must be very clearly specified
Factor in the hidden costs-- moving the work overseas involves significant time and travel expenses, Companies will also need to hire onshore liaisons, and they'll need to beef up network and security measures to support the offshore project. Travel costs will go up. And finally, there's the cost of laying off staff -- and the costs are both fiscal and psychic. Severance packages don't come cheap, and the CIO will have to deal with a morale problem as the staff survivors come to terms with the new reality.
Actively manage the project-- Vendors would like Managers to believe that they can toss project specs over the wall and then forget about things until the finished project appears magically at the door but it doesn't work that way.

Clearly, with the traction that offshore outsourcing already has in the corporate world, Managers can only expect to see more of it. While nobody likes to be the person cutting jobs, the reality is that this trend is here to stay. Smart Managers will learn how to make the best use of it.

Both from my experience and historical study/data-- Culture & Operational Issues standard out the most.

Assuming your strategy is to grow the offshore center by hundred employees over the next years-- you increase your hiring, you no longer have access to as many employees who have prior experience with American or multinational companies. the virtual global teamwork pattern affects ever-larger numbers of onshore employees. The growth of your center puts in place a whole offshore management structure that may or may not mesh well with your domestic management structure. Employees at both ends exhibit symptoms of stress. Frictions and mutual irritations don't disappear with time. You hear complaints about communication failures, commitments not met and tensions around matrix reporting relationships. If you ignore this state of affairs long enough, you get to the point where initial good will and positive expectations between the onshore and offshore teams give way to finger-pointing and mutual blame. there has usually been a history of cultural mismatches in work styles that has left significant tracks in people's consciousness. This impacts retention and results -- at both ends.

Often struck by a certain confusion between hope for a cultural awareness Quick-fix and realization that there are probably some operational root causes that need to be identified and addressed. This results in a jumbled analysis that lumps together issues such as the different meanings of "yes, no and maybe" in American and Indian culture with issues such as time zone differences, HR policies, decision-making structures and hand-off protocols. The expectation is either that cross-cultural awareness will solve the operational issues or that the cross-cultural issues can be addressed adequately though operational improvements.

Expertise will help to manage issues proactively by implementing organizational processes for:

Systematic assessment (at both ends) of cultural work style differences impeding the effectiveness of your teams.
Facilitated strategic analysis of the strengths, weaknesses, threats and opportunities present in the operational model of your onshore-offshore operations, involving key stakeholders on both sides.
Region-specific cross-cultural awareness training customized to your company and delivered to all levels of your management and workforce (both offshore and onshore), starting at the top.
Facilitated strategic development process involving these key stakeholders in strategic planning, organizational execution (including structures, processes and skills development) and results tracking over time

Click here for more on Outsourcing

Program Office Setup

2007-07-13T12:01:00.000-07:00

Thought of sharing my recent experience in setting up Program Office.

Setting up a program or project management office (PMO) to oversee organization or department-wide business & IT initiatives can be a daunting task, especially when no formal processes currently exist beyond the individual project manager level.

Although few would dispute the benefits such processes, procedures, project redundancy and relevance, control over costs, etc…but for successfully establish a PMO, its important to gain agreement at the start of the process, as to the responsibilities. And to understand Business goals expected from Program/Project Office.

A useful and speedy technique is to workshop the possible activities with the key players, and gain consensus as to what the office is intended to do. The starting point is to create a list of possible activities, then hold a workshop to evaluate the responsibility of the office, for each activity. It is likely in some cases there will be no activity, and in other cases, the activities will need to be split down further. It is also useful if the office is not to have responsibility, to identify who does have the responsibility.

PMO can play varying charter range from simple offices for managing large projects or programs, to strategic planning entities inside of project driven organizations, the most common being Information Technology. Comprehensive approach is to undertake basic practices under PMO responsibilities: Project Management - establishing Project Management process, methodologies for execution of business & IT projects. Resource Management - projects staffing to manage resource time and conflicts management. Portfolio Management - organizing and tracking portfolio of initiatives and managing priority based on business needs (and in my case-- also responsible for processes, change management, strategy planning and expenses management). PMO will be commissioned to maintain the focus on the qualitative, quantitative facets of projects. Having consistent tools, procedures, & competent personnel that execute these integrated procedures.

Below list is in no particular order and not definitive. It is intended to form the basis of a review of the role. Each organization will have specific activities that may, or may not be included in the role of a Project Office.

Methodology & Processes-- creation, Standardization & rationalization processes and procedures
Tools-- training, timesheet, MPP, etc...
Scope, Sizing, Budget, Planning, Mentoring/tracking & Change Mgmt
Dependencies, Risk & Issue Management-- create and manage log
Maintain Documentation Library-- standards, examples, project docs,..
Communication/Reporting & Escalation-- overview, status, projections, earned value, scope changes, cost vs benefit, budget vs expenditure, escalation process,..
Audit-Compliance with organizational standards
Post Implement Review
Acceptance & Conformance-- standards & deliverables
Configuration Management
Business Interaction

Setting PMO can be treated as any other projects. This will help in effective planning & execution. Identify the success criteria for Project Office in tangible terms by establishing metrics in order to measure benefits as a result of PMO implementation. Its important to make sure PMO doesn't carry an impression as yet another level of bureaucracy instead a value-additions for business. Thus, Top-Down approach works better.

PMO full scope includes strategy and usually attempt to establishing PMO usually involves a project specific suite of functions.

Interesting Read: Why you need PMO? and Videos: SoftwareProjects

Social Media Strategy

2007-07-12T04:03:00.000-07:00

Recently I crash landed on INGAsia-Blog and noticed post about Financial Advisor Blog.

Its certainly an innovative idea, to have forum for advisors and (not just customers but)any registered users can interact and share ideas. Advisors have her/his own blog space where s/he can to share financial advice. Its brilliant both as sales & as relationship building tool. No doubt that good quality Blog can helps to position the bank or the advisor as the expert. In this case, ING Advisor's would already know a good deal about their products/services and this blog gives opportunity to easily share that knowledge with interested people. I posted my comments, requesting them to consider enabling some kind of social networking feature as well. Since I remember reading, although blogging is still very much the centrepiece, but it's still only one part. In today's marketing landscape, need for using sites like Technorati, Digg, flickr, YouTube and others to more effectively to convey message.

I think, Traditional Direct Marketing industry was very slow(specially in Asian Market) in embracing Search marketing. Since Direct Marketing is pushing content and search is about customers pulling content themselves. Its very different way of thinking. Social Media is emerged as next big things. May be its time for Banks to have "Social Media Strategy". Since now more than ever customer have upper-hand in interpreting companies brand via such web channel.

Organizational culture plays key role in determining such web strategy. One social media consultant made observation that: "Social media/blogs often change an organization's business paradigm. The challenge is to ensure the culture of an organization can accept an open communication model between internal staff and external stakeholders." Yes, Willingness to be open (honest and thinking transparent) is very important to engage customers in bloggersphere territory. Management should be able to allow uncensored comments from employees. And Trust employees will value organization goals and express with authentic voice. Also, Need for process to handle Customers comments/response appropriately will enable customer trust.

10 Social Media Strategies for the Fortune 1000 Corporations is interesting read which summarize the web strategy recommendations and highlights some of its issues.

Secret History of the Credit Card

2007-07-06T01:03:00.000-07:00

In “Secret History of the Credit Card”, FrontLine and The New York Times join forces to investigate Credit Card industry which few fully understand.

very Insightful.. even thou currently I work with world's #1 Financial service company, I wish industry is better regulated. But underline fact this documentary don't highlight is- its our(/consumer) responsibilities to under what we are buying? how we are buying? and manage our Finance to our interest(/like the banks do for they interest). I am not a credit card revolver nor I ever will be and not because I am banker even otherwise, I will not want to spend more than my earning potential.

We work so hard to earn our money and I wish more people will spend enough time, effort to understand & make our money work harder for us.

Secret History of the Credit Card - part 1 of 3

Secret History of the Credit Card - part 2 OF 3

Secret History of the Credit Card - part 3 OF 3

Global Executive's view on Technology and Innovation

2007-07-03T05:27:00.000-07:00

Recently, McKinsey Quarterly published interesting survey Global Executive's view on Technology & Innovation and its role for future growth in their business. Study was done across many industries.

Most important action for growth over next five year (order by highest%):

Innovation with current product,
New products,
M&A,
Efficient distribution,
New markets.

Most important capablity for growth(order by highest%):

ability to innovate,
ability to manage/allocate talent,
ability to manage global organization,
locating capital,
managing increasing regulation cost,

Action required for operational efficiency(order by highest%):

Business Process Automation,
Economy of scale,
Reducing overhead costs,
Moving to low-cost suppliers/service providers,
better managing sales & marketing cost.

Clearly, Innovation is highest priority and Talent management is biggest challenge across industries. and That's seem to reflect in this survey.

Innovation

2007-07-03T02:16:00.000-07:00

very interesting presentation about Innovation from Marissa Mayer, Google.

Innovation at some level is dependent and combination of knowledge, practice, people and economic. various studies highlight future trend about rate of innovation (high vs. low) but interest to notice historical data.

Ofcourse, we will still be generating more innovations than the dark ages had but the rate that has declined. I don't subscribe to the continually exponential rate of growth, nor to an imminent drying up of innovation. few factors can be pointed to that make us inclined to feel that innovation will not continue to be healthy. One is that it becomes increasingly more expensive to produce innovations of significance and sources of funding are not increasing commensurately. Environment for Innovation is primary based on policies and funding.

Analyzing Return-On-Investment(/ROI) for innovation is very challenging. what most doesn't consider is that for some innovation, market don’t exist but created by new technologies,etc..

Prioritisation cannot be a process of simply deciding which of the current trends are preferable and then choosing mechanisms to enhance or support their growth. I was reading interest analogy on prioritising innovation-- simple framework is useful and it is helpful to take three complex criteria and plot them on three axes, forming a space in which those can be judged in terms of their likely:

scale and scope: by which we would take into account the pervasiveness of their utilization and the extent to which they are dependent on vertical linkages.
temporal characteristics: by which we would take into account the likely rate at which they would be adopted and disseminated.
controls available: policies, standards setting and regulatory activities,etc...

Prioritizing will always be a process of bringing together a careful analysis of capabilities with an awareness of what is desirable. Only after that does it make sense to take into account the likely rates of diffusion and other temporal features of the early stages in the lifecycle of a Innovation.

Disclaimer: Neither Iam qualified or expert by experience on this subject but I thought to share my view anyways. I recently enrolled to Innovation forum for Banking Industry, not that Iam very senior in my organization(yet)) to influence management decision about future course of actions, but I believe participating, driving and supporting innovation is only better way forward in any industry.

Inyosys & Capgemini...

2007-06-29T06:42:00.000-07:00

Infosys is considering a bid for Capgemini that's speculation is making news in Indian as well as international media. If such deal happens then it would be the biggest overseas acquisition by an Indian corporate.

Most of the Indian IT services firms are US focused with very little IT consulting revenues. Infosys is no exception. I was check number close to 75% revenue last year came from US region while Europe constituted less than 20% and Consulting revenues were less than 5%. Clearly, Capgemini acquisition would help Infosys move up the IT services value chain and also establish a significant presence in European market.

Ofcourse if this deal does happen then Integration will be very big challenge.

In the News: Infosys likely to acquire Capgemini

Employee Motivation..

2007-06-28T06:00:00.000-07:00

I posted below as my response to Linked Question about Motivation for Employee on Knowledge based Industry.

Recently survey ranked order of motivating factors: good manager and team, interesting work, good wages & working condition, full appreciation of work done, promotions and growth in the organization, sympathetic help with personal problems...

I don't believe anyone can motivate people. they have to motivate themselves. You can't motivate people anymore than you can empower them. Employees have to motivate and empower themselves. However, you can set up an environment where they best motivate and empower themselves. The key is knowing how to set up the environment for each of your employees. Also, Motivation for me and my employee will be very different. And Certain things like money, a nice office and job security can help people from becoming less motivated, but they usually don't help people to become more motivated. A key goal is to understand the motivations of each of your employees.

Motivating self is first to motive others-- if you're doing a good job of taking care of yourself and your own job, you'll have much clearer perspective on how others are doing in theirs, it's much easier for others to be, too. A great place to start learning about motivation is to start understanding your own motivations. The key to helping to motivate your employees is to understand what motivates them. So what motivates you? Consider, for example, time with family, recognition, a job well done, service, learning, etc. How is your job configured to support your own motivations? What can you do to better motivate yourself? Again, Each person is motivated by different things. Whatever steps you take to support the motivation of your employees, they should first include finding out what it is that really motivates each of your employees. You can find this out by asking them, listening to them and observing them

Align goals of the organization with goals of employees-- employees can be all fired up about their work and be working very hard. However, if the results of their work don't contribute to the goals of the organization, then the organization is not any better off than if the employees were sitting on their hands -- maybe worse off! Therefore, it's critical that managers and supervisors know what they want from their employees. These preferences should be worded in terms of goals for the organization. Identifying the goals for the organization is usually done during strategic planning. Whatever steps you take to support the motivation of your employees , ensure that employees have strong input to identifying their goals and that these goals are aligned with goals of the organization.

Don't just count on cultivating strong interpersonal relationships with employees to help motivate them. The nature of these relationships can change greatly, for example, during times of stress. Instead, use reliable and comprehensive systems in the workplace to help motivate employees. For example, establish compensation systems, employee performance systems, organizational policies and procedures, etc., to support employee motivation. Also, establishing various systems and structures helps ensure clear understanding and equitable treatment of employees.

Next in Trading Operations & Technology..!!

2007-06-28T04:58:00.000-07:00

I remember reading ITAnalysis about research that the needs of customers for advanced trading functionality will mean high costs for banks over the next few years. Significantly, the sell side's technology spends of around US$400m annually on e-commerce components will nearly double by 2010. In addition, while the proportion of client volumes traded electronically is currently approximately 50 per cent, this is set to increase to around 75 per cent by 2010 when the FX market is expected to see volumes of US$3 trillion a day traded. And Buy-side increasingly requires the ability to deal with one click on guaranteed prices wherever they wish to trade from multiple location from their bank's proprietary FX trading desk or via a multi-bank portals. At the same time as a result of moves towards streaming pricing and clients' requirements to be able to trade from multiple locations, it is questioned whether the foreign exchange market has evolved to the extent that many banks’ pricing engines are no longer adequate for them to remain competitive.

Upgrading and adapting pricing engines to meet the demands of the marketplace is apparently a priority for many financial institutions. consortium approach to investment and development of e trading platforms (may be not for FX) is more in future.

The functional, integration and technology risks of using 3rd party trading technology providers appear to be higher than in other Markets partly because of the perceived added value IP of successful, market connectivity and partly because choice of provider is limited. Lack of major 3rd party competitors has probably reduced the competitive innovation pressures. It is vital that the larger banks continue to capture substantial amounts of transaction flow from increased volumes if they are to fund their proprietary platform developments. Conversely the medium sized and smaller banks maintain heir business through relationship building and servicing the customers. They will continue to adopt a collaborative approach towards investment and development of trading platforms.

Is manufacturing the future of banking?

2007-06-27T03:33:00.000-07:00

Is manufacturing the future of banking?

The Banking world is undergoing and major shift in the way banks have to function and compete in an evironment where the regulators keep coming up with new demands on making the system more transparent not just for the supervisors but also for the customers of the banks.
..
banks have started scrutinizing their existing systems and processes and the role of IT as a business enabler. Many are questioning whether IT should be a strategic investment or just a commoditized service. Why should a bank spend millions on keeping a huge set of applications, people and infrastructure which is inflexible and cannot respond to changing regulatory and competitive pressures? Several banks (esp. in Europe) are coming to the conclusion that it is best to use Software as a Service (SaaS) or a customized of the shelf (COTS) product which is owned and maintained by the service provider; the bank just uses and pays for it as a service. The infrastructure will be provided by an infrastructure provider again as a service.
..
Banks are increasing coming out with very large (billion $) deals which they want to outsource to a select group of vendors. Smaller players like Patni, NTL are getting elbowed out by large players like Infosys, TCS, Wipro, Accenture and IBM because the annual deal size itself is sometimes more than the revenue of the smaller company!
...
I foresee a scenario in which there will be three tiers in ths Banking supply chain:
Tier 1: The Banks (customer)
Tier 2: Manufactures - Large service, solutions providers providing end-to-end solutions to customers
Tier 3: Ancilliaries - Services companies that provide components/services to the manufactures

I agree but I not very sure banking (like car manufactures) can maintain/manage multiple vendor for multiple service (say payments, settlements,..) largely because these had to be integrated and working for different service provide (either IT or operations) will be challenge. also privacy laws will make it very difficult to separate some of these functions.

iPhone success..!!

2007-06-18T06:29:00.000-07:00

Apple introduces its iPhone this month. Big Questions is-- will it be a success?

I was reading about pattern of Failure of Convergence Devices.

An iPod is a divergence device; an iPhone is a convergence device. MP3 players(before iPod) were are with flash-memory units capable of holding only 20 or 30 songs. The first iPod, on the other hand, had a hard drive and could hold thousands of songs. Now there were two types of MP3 players, a classic example of divergence at work.

in the past--

* The computer/phone. AT&T, Motorola and others introduced combination products. Few were ever purchased.
* The computer/TV. Apple, Gateway, Toshiba, Philips and others tried to market combination products with little success.
* Interactive TV. Microsoft spent $425 million to buy WebTV and then poured more than half a billion dollars into the venture. That didn't work, so it moved on to Ultimate TV, which didn't work either.
* Cellevision. Everybody is talking about the third screen, watching TV on your cellphone, but relatively few people do. (The real action in TV is the booming market for divergence products such as big-screen plasma and LCD sets.)
* Media-center PCs. Everybody was going to run everything in their homes from personal computers. It never happened.

A convergence failure is never seen as a "conceptual" failure; it's always seen as an "execution" failure. "The concept was sound; they just didn't do it right."

for Steve Job, more than one thing has to be right this time (mobile operator, internet connection speed/cost,..). for sure, it will make in-road in BlackBerry market but in wider consumer mobile market its impact is remain to be seen. Iam Apple Fan, I can only predict it will be very very successfully (subjective analysis)

UN warns US debt could trigger dollar collapse

2007-06-14T05:21:00.000-07:00

The United States dollar is facing imminent collapse in the face of an unsustainable debt, the United Nations warned today.

United States debt, which had now deepened to well over $3 trillion, might turn out to be unsustainable in the rest of 2007 or next, putting further downward pressure on the United States dollar, Rob Vos, the Director of the Development Policy and Analysis Division of the Department of Economic and Social Affairs (DESA), told correspondents at a Headquarters press conference.

He pointed out that since its peak in 2002, the dollar had depreciated vis-à-vis the major currencies by some 35 per cent and by 25 per cent against a broader range of other currencies.

Vos made these comments at the launch of the 2007 World Economic Situation and Prospects report midyear update.

With that increased debt the risk of a sharp depreciation of the dollar continued, he warned. If countries willing to invest in United States dollar assets expected further depreciation, they might be less willing to hold dollar assets, triggering a much sharper fall in the United States dollar. The risk of disorderly adjustment and the steep fall of the dollar existed. The policy challenge was how to prevent a hard landing of the United States dollar and forge a benign adjustment of the global imbalance.

In terms of the United States housing sector, he noted that a recession in the housing sector had continued in 2007, with a slowdown in activity and a large number of unsold homes. While house prices had not fallen, that might happen in the months and years to come if the recession continued as expected. A decline in prices would affect the domestic market, particularly household consumption in the United States, resulting in the risk of a serious recession in its economy, slowing growth from 2.1 per cent to 0.5 per cent in 2007 and 2008. That would then significantly slow the world economy and transmit the recession into the rest of the world.

The United States deficit had increased to $860 billion at the end of 2006, and was expected to fall to $800 billion in 2007. That deficit was basically being financed by surpluses in the developing and oil exporting countries, as well as some major developed countries, in particular Japan and Germany. The European Union,at large, was projected to continue to have a slight deficit on its current account.

Continuing, he said the current tendency in macroeconomic policy was not all in the right direction, particularly in the surplus countries where there had been a tightening of monetary and fiscal policies, particularly in Germany and Japan, making it more difficult for the United States to lower its external deficits by export growth. The United States would also need to adopt some contractionary policies to slow down its deficit, he recommended.

Source

The United States dollar is facing imminent collapse in the face of an unsustainable debt, the United Nations warned today.

He pointed out that since its peak in 2002, the dollar had depreciated vis-à-vis the major currencies by some 35 per cent and by 25 per cent against a broader range of other currencies.

Vos made these comments at the launch of the 2007 World Economic Situation and Prospects report midyear update.

Credits: Press Esc

Price advantage on buying Online...!!!

2007-05-24T06:15:00.000-07:00

You are almost certain to find any camcorder or DVD player are being sold at a wide range of prices for same Product.

Ofcourse with no overhead cover, garage operations and with low operating costs push price below manufacturers suggested retail price.

Another (hidden) secret of online price variation is that eRetailers offer the same products at vastly different prices as marketing strategy. Because if everyone sold DVD or Digtial Camera for the same price then their is no reason for shop comparison, we almost certainly would buy from the same places/e-retailer, which makes companies profits stagnated.

Retailers who vary their prices over time—increasing and then discounting later creates kind of price instability that encourages consumers to shop around or wait. Thus we trent to visit many sites before buying, which ofcourse what they want us to do.

another interesting thing, I read recently no matter where you buy iPod products would cost the same. Because Apple use an Minimum Advertised Price to discourage resellers from discounting. Its lowest price any retailers are allowed to advertise. MAP is usually enforced through marketing subsidies offered by a manufacturer to its resellers. If a retailer keeps prices at or above the minimum advertised price, then a manufacturer like Apple will give them money to help advertise. If a store's price dips too low then manufacturer can withdraw these advertising subsidies.

This helps smaller retailers compete, since it aids in reducing the kind of cutthroat price competition from big-box stores that can put them out of business. Also, Stable prices are important to the company with retail outlets, because it's a manufacturer and a retailer (both online and through its chain of Apple Stores). If Apple resellers dropped prices on iPods at or below cost to get customers in the door, or as a way to cross-sell stuff like software or iPod skins—they could squeeze the Apple Stores out of their own markets.

And Ofcourse downside is, almost everytime MAP keeps prices artificially high (or at least higher than they might otherwise be with unfettered price competition). As for Apple, part of what you pay for when you buy an iPod or a MacBook Pro is for its coolness feature. But for Digital cameras, LCD TVs, and DVD players tend to be so similar from brand to brand and model to model that low prices play a larger role in determining which of them we ultimately buy. When we purchase an iPod, however, it's understood you're getting something unique. And you can be sure Apple knows that—and sets its prices accordingly.

Google Voice Search

2007-05-22T05:21:00.000-07:00

Google is testing new Voice Search, to connect to local businesses in the U.S. using your phone, for free by dial the toll-free number 1-800-GOOG-411 (1-800-466-4411) and speak the name of a business or its category. You can choose to connect to the business directly over phone or, if you are calling from your mobile phone, you can also say "text message" and we'll send you the business's details by SMS.

Currently Google is not charging for this service but ofcourse regular phone charges will apply.

Google, a step ahead of the rest.

H-1B Visas is Trade Issue not Immigration Issue..

2007-05-16T04:42:00.000-07:00

Immigration will become key topic in 2008 US Presidential election. Many in US are against the idea of increase H-1B visa cap. and Ofcourse, Both Indian & US companies are lobbing to increase to current quota of 65000 (same was 195000 couple of years back).

Some US Senator had written letter asking for explanation for increases H1-B visa application. Now, NASSCOM had replied stating H-1B visa is trade issues not immigration issue, since IT skilled workers are reducing in US.

PCWorld Reported:

Work permits and intra-company transfers from India to the U.S. are trade issues and should not be confused with immigration issues, says an Indian agency.
John Ribeiro, IDG News Service

Work permits and intra-company transfers from India to the U.S. are trade issues and should not be confused with immigration issues, India's National Association of Software and Service Companies (NASSCOM) in Delhi said late Tuesday.

NASSCOM was reacting to letters written by U.S. Senators Chuck Grassley, an Iowa Republican, and Richard Durbin, an Illinois Democrat, to nine Indian companies asking for details on their use of the H-1B visas. The nine companies account for close to 20,000 visas, the senators said on their Web sites. The companies include India's top outsourcers Tata Consultancy Services Ltd., Infosys Technologies Ltd. and Wipro Ltd.

More and more it appears that companies are using H-1B visas to displace qualified, U.S. workers, Grassley said in a statement Monday. "Now, as we move closer to debate on an immigration bill, I continue to hear how people want to increase the number of H-1B visas that are available to companies," he said.

Work permits are primarily a tool to facilitate trade and allow global companies to bring key staff to the U.S. on temporary assignments, just as U.S. staff often travel across the world for temporary assignments, and this is clearly different from immigration, NASSCOM said.

Grassley and Durbin introduced legislation in April that they said aims to give priority to U.S. workers and crack down on unscrupulous employers who deprive qualified U.S. citizens of high-skill jobs.

The H-1B visa is an employer-sponsored, nonimmigrant work visa for a foreign worker coming temporarily to the U.S. in a specialty occupation. The issue of H-1B and L-1 visas is important to India's outsourcing industry, as it has a large proportion of staff working on-site on client's projects in the U.S. Indian outsourcing companies, as well as U.S. technology companies, have been demanding an increase in the number of H-1B visas allowed in a year, which are currently capped at 65,000.

The Indian outsourcers Grassley and Durbin wrote to were not willing to comment on the letters.

NASSCOM on Tuesday repeated its demand for an increase in H-1B visas. Both U.S. and Indian companies have repeatedly stressed the need to raise the H-1B visa cap, which was reduced from 195,000 to 65,000 two years ago, it said. Constraining the supply when demand is high gives rise to problems for U.S. companies and Indian IT companies, the association added.

Indian Political Reform...

2007-05-16T04:07:00.000-07:00

Everyone is talking about Economy Reform and its importance for growth & Opportunities. But what we need today is Political Reform for better governance.

Yes, with UP election just completed and recently DMk drama, I was thinking India Political system needs Reform. Its hard to believe, why not many is talking about it? and brains of media is not spending time & effort to push such agenda among person (in)directly into Election Commission.

my suggestions:

1) any MP or MLA, elected cannot switch parties after election. Doing so, should trigger new election for that constitution.

2) Collusion cannot be formed after election results. any such collusion will not be allowed to form government. (reelection or president rule if need be)

3) all collusion MUST name leader (CM or PM), cabinet ministers (name & post) BEFORE the election and ofcourse with backup nominees for unavoidable changes. any change after election has to be examined by EC for reasons(which should be non-political) & approval.

4) government should specific measurable agenda/target (for performance appraisal). target/goals, how to measure & when to measure can be mention by party and president/EC will do the checking as specified. failing that should result in recall.

5) all MP, MLAs, CM & PM has to be paid at power with CEOs/CFOs (in millions)

6) President should be elected by people and President role should be head to state (military, civil service, judicial, government) and to make government & civil service more accountable.

Please do comment to add or debate.

India cannot afford villages...

2007-05-04T01:29:00.000-07:00

There has been a general tendency to romanticize village life as a return to our roots. What is noticeable, though, is that most people who romanticize village life in India tend to live in cities—in India, or elsewhere. They also seem incapable of noticing the irony implicit in this romanticization, since their forefathers, too, were once villagers —who migrated to cities for good reason.

There was no greater proponent of villages than Mohandas Gandhi, who had been educated in London, and had a law career in urban South Africa. Gandhi’s most vehement critic at the time was Ambedkar, who knew about village life as an untouchable. Attacking Gandhi’s view on the republic of villages as overly sentimental, Ambedkar urged his followers to leave their rural persecution behind, get educated and move to urban centres.

Clearly, anyone who lives in the average Indian village and has access to information and money would like to leave for towns and cities.

The conflating of the development of rural people with the development of villages perhaps explains the misplaced emphasis on the latter. The fact that despite decades of attempts at developing rural areas, nothing much has been achieved in the development of rural people suggests that the answers may lie elsewhere.

Every developed economy has followed a path which begins with agriculture being the main source of income for the majority of the population, and ends with agricultural employment being a very small fraction of the total labour force. The shift has always been from a village-centric, agriculture-based economy to a city-centric, non-agricultural economy—as agriculture becomes more productive, labour is released into manufacturing and services, which have higher productivity and incomes.

At the low levels of economic prosperity seen in rural India, economic growth is a precondition for development. Economic growth, in turn, is a cause and consequence of urbanization. The reason is not hard to see. In urban areas, people aggregate in numbers sufficient for markets to deliver goods and services efficiently and cheaply. Consider the supply of an essential infrastructural service such as electricity. The economics of power generation and distribution do not allow decentralization to the level of villages that are home to a few hundred people. The average cost of per unit of power makes it prohibitive. The only way for a small 1-2MW decentralized plant to provide power for a village of 1,000 people is for the villagers to pay substantial premiums—which is highly improbable. No wonder then that essential services such as uninterrupted electricity are not available at the village level. By comparison, supplying decentralized power for the needs of a few tens of thousands of people is economically feasible.

Villages are not the proper object of analysis when it comes to economic growth, and hence economic development. By insisting on the development of villages, scarce resources, which could have been more efficiently used elsewhere, are wasted. The same resources can be used in the development of cities. It seems to us that the answer to the development of rural people paradoxically lies in urban development.

About 700 million Indians live in villages. Clearly, there is little scope for urbanization in their case by having them migrate to existing cities—those are already bursting at the seams. Practically all Indian towns and cities are unplanned and inefficiently use land and other resources. They are inadequate even for current residents, leave alone the idea of adding hundreds of millions of more people to them. The country requires new urban centres to accommodate the hundreds of millions of people who need to be in such centres.

In fact, the answer to Mumbai’s or Delhi’s problems is, interestingly enough, that these cities lose their centrality to the Indian economy as other regional centres come up and mass migration to large cities ceases. People tend to forget that New York (or London) was once considered an unlivable, hopelessly polluted city. At least part of the solution to the city’s problem lay in the creation of other centres such as Chicago, St. Louis and the cities of the west which relieved the pressure on New York itself.

India has a choice of futures, say, in 2030. Will the majority of Indians continue to live in 600,000 small villages engaged in near-subsistence agriculture or will they be in living in 600 well-planned vibrant cities (or 6,000 towns of 100,000 population, for that matter) working in non-agricultural sectors and enjoying a rich social and cultural life? Looking at current revenue ratio- income from agricultural is slowly declining and service sector is increasing even with 60% India's workforce is in rural agricultural sector.

Depending on how we use our resources, the latter future can be a reality. Achieving that reality would be the greatest challenge for India and arguably, the most rewarding as well. Rather than trying to trap people in villages and agriculture, the focus should be on the creation of new urban centres which will lead to economic growth and development of people.

Source: WSJ's Livemint

Advantage Chennai

2007-05-01T22:59:00.000-07:00

PEOPLE who study far but play safe, and a city with little activity are descriptions often used to parody Chennai. The caricatures have had an unlikely spin off: companies providing support for overseas consulting, equity research and finance firms appear attracted by them.

Companies such as Frost & Sullivan, OfficeTiger and Irevna provide support to consultants and analysts overseas. More such work is headed here, say people working in the sector. The reason is that Chennai's caricatures provide it a cost advantage over competing cities such as Bangalore and Mumbai.

The US consultancy Frost & Sullivan's Chennai centre with about 160 people is its biggest operation in India. The Mumbai office deals largely with the Indian practice while a significant number of people in the city provide support to the overseas consultancy.

Mr Anand Rangachary, Deputy Director of Frost & Sullivan's India operations, said it is easier to retain skilled people at a lower cost here. Supporting the view was The World Bank's Vice-President, Mr Fayezul Choudhury, who felt there is stability in the workforce here because the attrition rate is low (the bank has established a back office in Chennai).

The low attrition rate may not stem from a deep-rooted sense of loyalty to employers. People working in the sector feel it could be partly explained by fewer opportunities the city offers in relation to Mumbai or Bangalore.

Another cost-related benefit is in the form of office space. Not only is it cheaper to lease office space here, but also there is room left to build new offices within the city. The World Bank back office centre, for instance, plans to build an office spread over 60,000 sq ft of land within the city.

Stable workforce and inexpensive real estate count only if a city has a communication infrastructure and a pool of qualified people. Chennai gets high marks on both counts.

A person employed in industry said that the metropolis has a large pool of finance professionals such as chartered accountants who are suited for the support jobs. Perhaps the large pool has nudged the World Bank to study the possibility of moving some of its complex work such as monthly valuation of bonds and derivatives here.

The fallout of the influx of new firms is bound to neutralise cost advantages. Mr Rangachary identified the development of the planned information technology corridor in south of the city as a factor that would drive up costs. "It's a good three years before Chennai loses advantages," he added.

Cost advantages that brought companies to the city have a limited shelf life. However, that may not be the end the story. Mr Joseph Sigelman, Co-CEO of OfficeTiger, feels Chennai has other advantages.

Mr Sigelman is sceptical about the importance of cost advantages. He felt locating business in cities such as Chennai is sustainable only if "we actually perform services better than they can be performed anywhere else." He said forces that make this business sustainable such as quality of people are available in Chennai.

Even with the benefit of hindsight, Mr Sigelman said if OfficeTiger had to start all over again the choice would be Chennai.

The search for a low-cost environment may have brought the companies. Improving quality of manpower may help them stay and grow here.

Source: The Hindu

India: Understanding OBC and Quota

2007-04-26T00:13:00.000-07:00

Either they support or against OBC Quota, I don't how many people know what makes OBC?

Why and What are we fighting for or against?
Guidelines for Consideration of requests for Inclusion and complaints of under Inclusion in the central list of OBCs - http://ncbc.nic.in/html/guideline.html

Castes is included in almost all measuring indexes. Which means, if you caste is better educated & richer then Government expect your caste people to take care of you or help achieve atleast minimum. Thus encouraging caste biased society.

Is this vision Government has for the people? instead of encourage society which is not built on caste?

It also mentions Communities- What that means ?

India's population of other backward classes
According to national election studies - OBC population of our country is between 40-44 percent. According to Mandal Commission - has estimated the OBC population in the country at 52 percent. and regarding National Sample Survey - reports had problems since Many of the respondents were not aware of their status in terms of caste.

When the question on the size of OBC population was placed before Human Resource Development Minister Arjun Singh recently, he did not have the precise figures and he said, "I think, that should be decided by people who are more knowledgeable. But the point is the OBCs form a fairly sizeable percentage of our population". I think, he should be fired for this answer.

Is it irrational to ask for statistics to find better or clear solutions? May be after the survey, we might find 50% Quota is not enough. might required to be 80%. This way, both group can base the argument on fact instead of shying away from it.

Creamy Layer
Politicians should understand that the concept of excluding creamy layer from reservations is now firmly established. It is pointless for them to argue that creamy layer does not apply to quotas defined under Article 16 (4) and Article 15 (5). This is because the Indira Sawhney judgment does not provide for exceptions to the creamy layer principle. The order observed that "determination of creamy layer is a part of constitutional scheme".

These yardsticks for creamy layer cut-off can hardly be considered unrealistic, considering that all-India poverty among OBCs on the basis of a poverty line defined by a monthly per capita expenditure of Rs 361 for rural areas and Rs 567 for urban areas is broadly at 19 per cent in rural areas and 25-35 per cent in urban areas.

for example - In Karnataka, a family whose income exceeds Rs 2 lakh a year is excluded from quota. Similarly, a family who has one member in Class-I or Class-II service is considered a creamy layer.

But India's annual per capita income, notwithstanding its billionaires, estimated to be Rs 26,000, thus Karnataka ceiling does look reasonable.

Don't Change Quote, Change OBC definition to include people in need and exclude cream layer.

Yes, Iam not against OBC Quota BUT against the OBC definition. Instead of fight for wrong reasons, lets us first understand what are we fight for? and who are we fighting against (poor people belong to different(/'s0-called-forward') caste)?

as Time's article mentioned - The mandate in the preamble, ‘We the people', empowers both the legislature and the judiciary equally. A legislature elected for particular period cannot assume the mandate of sovereignty of the people exclusively to itself. Both wings must display humility in the exercise of their powers in order to avoid unnecessary collision.

also for read, Indian Express - A to Z of OBC

appreciate your rational comments in a language which wouldn't hurt others feelings.

Population, not free trade, behind China and India booms

2007-04-11T02:46:00.000-07:00

An academic paper has challenged widely-held views about the emergence of China and India on to the world stage, one of the most important economic phenomena of recent years.

The reasons for the growth of these countries are usually thought to be globalisation, free trade and high wages in developed countries. But a paper by Professor Paul Sharp of the University of Copenhagen suggests the answer is much more prosaic. Drawing on a study of 19th century America for the Economic History Society's annual conference at the weekend, Prof Sharp said America's emergence in the 1800s was due to phenomenal population growth, not the free trade that was sweeping the globe at that time.

The increase in wheat trade between Britain and the United States in the nineteenth century had little to do with falling barriers to trade, but was linked to a rise in production in the US. This was almost certainly the result of large-scale population growth as immigrants flocked to America and became farmers. Prof Sharp's statistical analysis shows that a 1% increase in US production led to a 3% increase in UK imports. US production increased well over 1,000% in the nineteenth century.

The populations of China and India have been outpacing those of western economies for years, so it should be little surprise that most electrical appliances are manufactured in China or that an increasing amount of software outsourcing goes to India.

Source: Guardian

who is Middle Class?

2007-04-09T23:46:00.000-07:00

very Often we hear about term Middle Class, Lower Class & Upper Class while talking about India. with Economy as indicator --How can we define in measurable scale..!! with that Quest, I gather information to compiled this blog.

With a per-capita Gross Domestic Product (GDP) under US $1000, India is often regarded as a poor nation. Over 300 million Indians live with incomes comparable to the least in the world's other acknowledged poverty zone - sub-Saharan Africa. Moreover, the deep poverty of the country is borne unequally by lower income groups within this population. 46% of the income is accounted for by the top one-fifth of the people, while the lowest one-fifth accounts for only 8% of incomes. Even this breakdown presents only an incomplete picture; in fact the top 10% alone earns 33% of all income.

This large-scale deprivation has a curious companion - a grossly incorrect understanding of what the term 'middle class' means. The median family income in India is approximately Rs.4500 a month. By its conventional definition, the middle class includes families whose incomes lie between 75% and 125% of the median. Families with monthly incomes over Rs.6000 are thus above the 'middle class' line, and families earning more than Rs.8000 or 9000 a month are certainly among the top fifth of the nation. Still, among the urban salaried class that constitutes most of the audience for media outlets, many believe themselves to be members of the middle class. The view that they obtain 'middle class' incomes is widespread among many such families.

What's more, with proficiency in English largely confined to those who can afford private education, nearly everyone who can fluently say 'middle class families like mine' is almost certainly part of the India's economic elite.

U.S., Immigrants == Future Entrepreneurs

2007-04-03T02:44:00.000-07:00

A new study found that one in four technology and engineering companies founded in the U.S. between 1995 and 2005 had at least one founder who was foreign-born. Many of them were from India and China. Nationwide, immigrant-founded companies generated $52 billion in sales in 2005 and employed 450,000 people. Non-citizen immigrants living in the U.S. also are increasingly being named as inventors or co-inventors on patents.

Research shows that immigrants have become a significant driving force in the creation of new businesses and intellectual property in the U.S. -- and that their contributions have increased over the past decade.

If anyone thinking that U.S. is losing its edge due to immigrants this was proved wrong by study. Infact, advantages the U.S. has, is something unique to be able to bring in the world's best and brightest.

The study also found that:

* Indians were the most dominant ethnic group, heading up 26% of the companies that were founded by immigrants.

* California led the way with immigrant entrepreneurs. There, 39% of tech companies were immigrant-founded. New Jersey was close behind, with 38%, and Georgia and Massachusetts also had a healthy number of tech companies founded by immigrants. Immigrant-founded companies were much less common in Washington, North Carolina and Texas.

* Chinese (either mainland or born in Taiwan) were most likely to set up their companies in California. Nearly half of the companies founded by mainland Chinese and 81% of companies headed by Taiwan-born immigrants were in California. Indian-founded companies were well represented in both California and New Jersey, while British entrepreneurs favored California and Georgia.

* The immigrant mix differed from state to state. In Florida, 35% of immigrant-founded companies were started by people from Cuba, Columbia, Brazil, Venezuela or Guatemala. In Massachusetts, Israelis were the biggest founding group, accounting for 17% of immigrant-founded startups. In New Jersey, Indians headed 47% of the new companies started by immigrants. The researchers suggested that the ethnic clustering of start-up companies reflected the tendency of immigrants to form social and business networks.

* Immigrants were most likely to start companies in the semiconductor, computer, communications and software fields. They were least likely to start companies in defense/aerospace and environmental industries.

* While immigrants are making their mark all over the country, Silicon Valley remains a hotbed of entrepreneurship. Just over 52% of start-up companies there had immigrant founders, with the highest proportion from India, followed by China and Taiwan. By comparison, just under 19% of startups in Research Triangle Park, N.C., another high-tech center in the country, had an immigrant founder.

Immigrant entrepreneurs may be especially attractive to investors since they bring certain advantages to the business equation, For instance, there may be a chance for enhanced revenues because the immigrant's ties to the homeland afford a "pathway to lucrative, larger markets." On the cost side, the immigrant may have access to lower-cost workers, supplies and manufacturing facilities in the home country.

I hope U.S. government will take these fact has input and reflect in Immigration Policies accordingly.

Mobile video banking

2007-04-02T00:21:00.000-07:00

The UK's first direct in November announced plans to offer video access to customer representatives over the mobile phone network in an experimental technology trial with wireless operator 3.

And now AT&T has previewed a new mass-market service for transmitting live streaming video via mobile phone. The VideoShare service will be launched this summer in more than 50 US markets. The telco is providing a demo of potential applications for the service here. The seven flicks on show demonstrate use of the system by field technicians, tourists, consumers,etc..

Much will depend on pricing (and battery drain), but it’s a compelling application that could quickly capture the popular imagination.

The banking industry would do well to follow first direct’s example and start thinking through the implications, with particular reference to call centre training programmes and offshore service provision.

The days of broadcast media training for bank call centre operatives may not be far off.

Bank of Tomorrow..

2007-03-19T06:02:00.000-07:00

The bank of tomorrow is already moving…towards community based services.

In UK: Zopa.com
In UK, Zopa contributes since March 2005 to the democratization of the banking economy and festival its second birthday. During these 2 years, Zopa called on 135.000 users impassioned who lent themselves money between them, without traditional banking intermediary.

Thanks to Zopa, the lenders obtained an average output of 6.75%. The borrowers could obtain advantageous interest rates (4,2% on appropriations at 3 years). The noted rate of average defect (borrowers not having been able to refund their loan) was not 0,2%, which much lower than what is noted in the traditional banking environment. Why? The social relations create a pressure by the pars which control the good relations within the community.

Also, Zopa is plans to move into US Market

In US: Prosper.com
In the US, the bank of tomorrow thrives with Prosper (180.000 members, 1 year of existence). Prosper, it is the eBay money. Prosper is a creator of confidence. A place of market of “social lending” can function only with the active participation and the enthusiasm of its members. The latter give a constant feedback: Zopa and Prosper work without relache with their community to improve their platforms uninterrupted.

Prosper is America's first people-to-people lending ... all » marketplace, and was created to make consumer lending more financially and socially rewarding for everyone. The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform. People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers. It's a new asset class in investing. In addition to criteria commonly used by institutional lenders, such as credit scores, people who lend can base their decision on a borrowers' group affiliation. Groups on Prosper are critical to bringing people together for the common goal of borrowing at better rates. Groups earn reputations according to their members' repayment records. Groups with successful repayment histories should attract more lenders offering lower rates.

In the Netherlands: Boober.nl
The bank of tomorrow has just opened and has as a promise: “No banks, better deal”.

MicroFinance: http://kiva.org/
Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.

Google is cashing-in on Cricket fever

2007-03-14T16:25:00.000-07:00

Google, India had created a blog for Krish Srikkanth, which also features videos of the former cricketer hosted at Google Video and a microsite(http://www.google.co.in/cricket) lists a few blog posts, a widgets for the latest world cup news and scores, and links to Cricket related gadgets for Google Desktop. There are also Blogger roadshows planned(http://www.google.co.in/cricket/bloggerroadshow.html). What really caught my attention was the Orkut community that they’ve created with Krish Srikkanth. Now Orkut is big in India, and this community already has 593 members. I liked the way Srikkanth is interacting with members of the community, inviting them to a chat in the community (not on Google Talk?) between 1-2pm every day, and in the events section posting a contest, where three selected winners can meet him for dinner in Delhi. All very informal, making readers feel that Srikkanth is a part of the community, and not distinct from it. If you have cricket related blogspot, you can join the contest - http://www.google.co.in/cricket/contest.html

Google is trying to cash-in with Cricket Crazy fastest growing online community. By this initiative its probably to bring more and more people into the Google ecosystem of services, track their usage and serve contextual ads.

Also CrickeM.com, the social networking and video sharing website for cricket fans has, changed its name to http://www.crictv.com. The latter obviously sounds good, and is also simpler. The Silicon Valley-based site has tied up with Reliance World and appointed the latter as its broadband partner.

This Cricket World Cup seems to create quite buzz in web2.0 world.

what to be VC?

2007-03-13T10:54:00.001-07:00

Below embedded Presentation with interesting details, Thanks to Will Price's presentation about Introduction to Venture Captial.

SunTV refuses to air Rediff’s Commercial

2007-03-13T10:54:00.000-07:00

Sun TV have refuses to Air Rediff’s advertising campaign for its unlimited email storage offering, since it has claimed to find objectionable content. The south Indian TV company has rejected the ad, and so it will not be aired on any channels of the group. The ad apparently shows two girls having a conversation about something “big” their colleague Raju has. They ask each other in amazement, ‘Is it really that big?’ The shot moves to the rest of the office, where other employees are also wondering about Raju’s ‘big’ thing. Finally, one of them asks Raju, ‘Is it really that big?’ Raju replies, ‘It’s not big, it’s unlimited.’ Funny! The commercial has anyways been rejected by Kala Nidhi Maran’s Sun TV network.

Do you find this ad content offensive?? If yes, Does it make sense if only TV network takes this stands..!?

Frankly, I don't care.

Editorial Reviews: Planet India

2007-03-08T08:17:00.000-08:00

Planet India: How the Fastest Growing Democracy Is Transforming America and the World

Book Description: India is everywhere: on magazine covers and cinema marquees, at the gym and in the kitchen, in corporate boardrooms and on Capitol Hill. Through incisive reportage and illuminating analysis, Mira Kamdar explores India's astonishing transformation from a developing country into a global powerhouse. She takes us inside India, reporting on the people, companies, and policies defining the new India and revealing how it will profoundly affect our future -- financially, culturally, politically.

The world's fastest-growing democracy, India has the youngest population on the planet, and a middle class as big as the population of the entire United States. Its market has the potential to become the world's largest. As one film producer told Kamdar when they met in New York, "Who needs the American audience? There are only 300 million people here." Not only is India the ideal market for the next new thing, but with a highly skilled English-speaking workforce, elite educational institutions, and growing foreign investment, India is emerging as an innovator of the technology that is driving the next phase of the global economy.

While India is celebrating its meteoric rise, it is also racing against time to bring the benefits of the twenty-first century to the 800 million Indians who live on less than two dollars per day, to find the sustainable energy to fuel its explosive economic growth, and to navigate international and domestic politics to ensure India's security and its status as a global power. India is the world in microcosm: the challenges it faces are universal -- from combating terrorism, poverty, and disease to protecting the environment and creating jobs. The urgency of these challenges for India is spurring innovative solutions, which will catapult it to the top of the new world order. If India succeeds, it will not only save itself, it will save us all. If it fails, we will all suffer. As goes India, so goes the world.

Mira Kamdar tells the dramatic story of a nation in the midst of redefining itself and our world. Provocative, timely, and essential, Planet India is the groundbreaking book that will convince Americans just how high the stakes are -- what there is to lose, and what there is to gain from India's meteoric rise.

Introduction: Life on Planet India

I remember the last time the world was talking about India. It was a fleeting fashion moment following the Beatles' trip to Rishikesh. Nehru collars and beads came into fashion, along with paisley motifs in psychedelic colors. Transcendental Meditation became the latest fad for stress relief. Laugh-In replaced Leave It to Beaver as the iconic American show. India was suddenly cool. Countercultural types embraced India as the antithesis of the West, lost to the empty materialism of the famous "plastics" scene in the movie The Graduate. India wasn't backward; it was wise and spiritual. But then the West moved on. Plastics prevailed, and India faded into the background.

My Indian father's family lived in Bombay. Every few years, we prepared for the incredible journey to the other side of the world. We collected precious supplies for our relatives in India: jeans and sneakers for our growing cousins, huge jars of Tang, later giant bottles of Tylenol, plastic bags of California-grown almonds and pistachios. Our family mailed us lists, and we stuffed whatever we could into our suitcases.

Living in Bombay in 1967 and 1968, I felt like I had been exiled from the real world. My grandparents' flat in Juhu, though surrounded by the homes of Bollywood stars, had no television. Across the main road near the apartment building was a reeking slum. The only relief from the paralyzing heat was to sit under a crazily beating fan. Everything was different: the food, the language, the climate, the rules of what could and couldn't be worn, what could and couldn't be said. There was no privacy. From early morning until late at night, I could hear neighboring housewives banging pots, parents screaming at children, Hindi film songs blasting, and bicyclists ringing their little bells.

In the morning the milkman came around with his cow. My grandmother or one of my aunts brought a brass pot down to him and he squatted next to the cow and sent warm streams of milk into the pot. I learned to keep a keen eye on the milkman to make sure he didn't, via a well-concealed tube, water down the milk. We took the milk upstairs and boiled it. While I sipped hot milk mixed with Ovaltine, I dreamed of dragging my fingers through the condensation on the outside of a tall glass of cold milk.

My aunt and uncle live in Gurgaon now, a booming suburb south of New Delhi. They have two refrigerators and buy pasteurized milk in sealed plastic bags. A huge, flat-screen television with cable brings hundreds of Indian and foreign channels into their living room. They keep in touch with family dispersed around the world via e-mail and telephone. Air conditioners in the bedrooms keep the apartment pleasantly cool. A late-model Honda four-door sedan is parked downstairs.

From the rooftop terrace of my aunt and uncle's flat, I can see buildings going up everywhere, the little tarps of the migrant construction workers dotting vacant lots. Women in full gathered skirts and flowing half-saris, arms covered with bangles up to their shoulders, carry loads of freshly mixed cement in baskets on their heads to the men who transfer the burden onto their own heads before scrambling barefoot up rickety scaffolding to deliver the wet mass. Near the tarps, a child runs crazily next to an old tire he urges forward with a stick. Beyond him, a Citibank office tower rises into view.

On a recent trip to India, I sat in the new Bombay domestic airport waiting for a flight on Kingfisher Airlines, whose slogan is "Fly the Good Times," my laptop propped on my knees. I typed in the code from the card I had just bought from a Tata Indicom kiosk and immediately got a strong wireless connection. On the way to the airport from the old family flat in Juhu, I had passed forlorn groups of destitute families, huddled under an unfinished highway overpass on thin mats of filthy cotton, the little babies naked and snot-nosed. It was the kind of scene that profoundly shocks first-time visitors to India and to which I have never become immune.

As I checked my e-mail in the gleaming terminal among the Indian and foreign businessmen and families waiting for one of the many flights departing for every part of the country, I thought about the India I lived in forty years ago and India today, and I wondered where India would be forty years from now.

"'Where are we headed with our billions?' That is the question India is asking itself," a friend told me in New Delhi over a drink. It is a question the entire world should be asking.

Half my family is Indian. During most of my lifetime, India changed, but did so almost imperceptibly. Then, suddenly, the changes began to come with dizzying speed. With each arrival, I felt I was watching time-lapse photography. No democracy in history has undergone a transformation of India's magnitude or velocity.

Traveling the length and breadth of the country, I witnessed the churning of India's incredible metamorphosis. I interviewed hundreds of people who shared their visions of India's future, most utopian, some grim, with me. I talked to the people in the culture industries who are reimagining India's ancient stories for a new global audience. I met businessmen who are dedicated to including the poor in India's booming economy, even as they take their companies global. I listened to household servants, taxi drivers, farmers, and street vendors talk about their daily struggles, their frustrations, their faith that their children's lives would be better. Everywhere, I was stunned by the pride, the bullishness, the sense that this moment belongs to India. I caught a glimpse of India's future, its possibilities and its perils, and in that future I saw our own, for as goes India, so goes the world.

The World in Microcosm

No other country matters more to the future of our planet than India. There is no challenge we face, no opportunity we covet where India does not have critical relevance. From combating global terror to finding cures for dangerous pandemics, from dealing with the energy crisis to averting the worst scenarios of global warming, from rebalancing stark global inequalities to spurring the vital innovation needed to create jobs and improve lives -- India is now a pivotal player. The world is undergoing a process of profound recalibration in which the rise of Asia is the most important factor. India holds the key to this new world.

India is at once an ancient Asian civilization, a modern nation grounded in Enlightenment values and democratic institutions, and a rising twenty-first-century power. With a population of 1.2 billion, India is the world's largest democracy. It is an open, vibrant society. India's diverse population includes Hindus, Muslims, Sikhs, Christians, Buddhists, Jains, Zoroastrians, Jews, and animists. There are twenty-two official languages in India. Three hundred fifty million Indians speak English.

India is the world in microcosm. Its geography encompasses every climate, from the snowcapped Himalayas to palm-fringed beaches to deserts where nomads and camels roam. A developing country, India is divided among a tiny affluent minority, a rising middle class, and 800 million people who live on less than $2 per day. India faces all the critical problems of our time -- extreme social inequality, employment insecurity, a growing energy crisis, severe water shortages, a degraded environment, global warming, a galloping HIV/AIDS epidemic, terrorist attacks -- on a scale that defies the imagination.

India's goal is breathtaking in scope: transform a developing country of more than 1 billion people into a developed nation and global leader by 2020, and do this as a democracy in an era of resource scarcity and environmental degradation. The world has to cheer India on. If India fails, there is a real risk that our world will become hostage to political chaos, war over dwindling resources, a poisoned environment, and galloping disease. Wealthy enclaves will employ private companies to supply their needs and private militias to protect them from the poor massing at their gates. But, if India succeeds, it will demonstrate that it is possible to lift hundreds of millions of people out of poverty. It will prove that multiethnic, multireligious democracy is not a luxury for rich societies. It will show us how to save our environment, and how to manage in a fractious, multipolar world. India's gambit is truly the venture of the century.

In Search of a New Paradigm

"Our biggest challenge is the challenge nobody has solved in the world: how to grow equity," Mukesh Ambani, chairman of Reliance Industry, India's biggest company, told me. Can liberal democracies forge a global market economy that is environmentally sustainable and reduces inequality? The United States has failed to achieve this. While it has proven its capacity to generate vast wealth, the so-called Washington consensus has advanced corporate interests over the welfare of average citizens and small businesses, exacerbated gaps between the affluent and the poor, and operated with stunning disregard for the environment. America's prosperity is dependent on overconsumption of the world's resources -- with just 6 percent of the world's population, the United States consumes 30 percent of the earth's resources. And it produces a disproportionate share -- 25 percent -- of dangerous greenhouse gases.

American technological, economic, and strategic dominance is being challenged for the first time since the fall of the Soviet Union. Ironically, the communication and information technologies that propelled America to the forefront during the 1990s are now contributing to the erosion of American dominance. These technologies have created a world where time and space are compressed as never before, where ideas, money, services, and people are constantly in motion, freed from the constraints of national boundaries.

The process of globalization spurred by these technological innovations...

M&A: Oracle bought Hyperion.. so what happens now?

2007-03-02T08:20:00.000-08:00

BI Industry most certainly must be wondering about the Oracle’s Hyperion Deal, since its came as surprise news. But Ofcourse, its obvious for Oracle to buy Hyperion. Oracle is in buying-mood for some years now to trigger more growth and market share deals in financial planning applications (essbase,etc..), solutions-oriented sales force applications (peoplesoft,etc) and now BI tools.

Growth by acquisition is not New but Can Oracle successfully acquire companies (remember Cisco days) ?? by industry track record specially in product integration, answer is ‘wait-and-watch’.

But trend will continue — more acquisition can be expected in BI market. I would imagine SAP is working on their product strategy since many small vendor are still active.

India: Budget 2007-08 Highlights

2007-02-28T10:20:00.000-08:00

India's Union Budget 2007-08 Key Highlights/Summary:

Income tax exemption hiked by Rs 10,000.
Five-Year tax holiday for 2,3 & 4 Star Hotels.
No excise duty on instant food mixes.
15 specified machinery import duty to be reduced from 7.5 % to 5%.
ESOPS to attract FBT.
MAT extended to IT companies.
Duty on sunflower oil down by 15%.
Excise duty for plywood down from 16 % to 8%.
Water purification devices fully exempted from excise.
Private importers of aircraft : 3% import duty to be levied including helicopters.
Tax exemption for senior citizens : Rs 1.95 lakh.
Income tax exemption : for women Rs 1.45 lakh.
Education cess : service tax now at 3%.
No change in corporate income tax.
Bank cash transaction tax : limit raised to Rs 50, 000.
Service tax exemption on tech buz incubators.
DoT to review Telecom tax structure.
Effective corporate tax rate at 19.5 per cent.
Tax exemption limit : raised to Rs 1.1 lakh.
Cement excise: Rs.350/tn on Rs.190/bag .
Excise cut on cement (till Rs 190/bag) to 350/mt.
Duty on mouth freshners is to be cut by 45%.
Excise Duty : Bio-Diesel fully exmpted.
Import duty : cut on medical equipments to 7.5 per cent.
No change in service tax rate.
e-filing of returns has been a success.
Excise duty : raised to 5% on cigarettes, tobacco.
20,000 hotels more for Commonwealth Games.
Coking coal : exempted from customs duty
Losses on CST,VAT Rs 5495crore to be compensated.
Reduction in customs duty on Polyester & Fibre by 7.5%.
Centre to give Rs 1.42 lakh crore to states in '08 taxes.
National level goods & services tax to be introduced from Apr 1
Central Sales Tax : 1% cut
Physically-challenged : 1 lakh jobs for them.
Gross tax revenue : increased by 19.9%, 20% and 27.8% in first 3 years of UPA Govt.
UPA Govt promises tax rate to be stable.
SMEs : Government to encourage banks to lend SMEs.
Inflation between 5.2% and 5.4% in 2007.
Micro irrigation in Andhra Pradesh and Tamil Nadu to benefit.
Mumbai will become a world class financial city.
To study climate change Govt. to appoint committee.
Defence : allocation up at 96000 crore.
e-governence programme : Allocation raised to 719 crore.
Overseas investment: even allowed by individuals via MFs.
Rural electrification : Rs 3983 crore.
PAN: sole identification number for markets.
Weather-based crop insurance scheme.
Tech upgradation scheme : Allocation up from 535 to 911 crore.
North-East: Rs 14365 crore allocated
Textile parks : Allocation up from Rs 189cr to Rs 425cr.
Farm credit growth doubled in two years.
Average inflation seen between 5.2%-5.4%.
Tourist infrastructure : Allocation up at Rs.520 crore.
Women-specific programme : Rs 8795 crore.
National Highway Development Programme : allocation up from 9948 to 10667 crore.
Fertiliser sector : Rs 22452 crore subsidy.
For NABARD : Rs 1800 crore allocation.
NABARD to issue rural bonds worth 5000 crore.
FDI in Apr-Jan at $12.5 per cent.
Central PSUs to invest Rs 1.6 lakh crore in year 2007-08.
7 UMPPs under review. 2 of it will be approved by July.
Power capacity addition needs to be boosted.
Social security scheme for unorganised workers.
Aam Aadmi Bima Yojna Scheme will be started.
Special funds for coffee and rubber.
Rs 11,000 crore for irrigation project.
Govt to scale up production of certified seeds.
Rural banking to benefit.
Bharat Nirman allocation up 31.6% to Rs.24600 crore.
Education allocation up 34.2%;school education 35%.
Allocation to health hiked by 21.9% to Rs 15291cr.
24 lakh hectares under new irrigation projects.
XI Plan target of 4% Growth in agriculture sector.
Rs. 2800 crore for Sampurna Grameen Yojana.
The strategy for polio eradication is revised.
Rs 1290 crores proposed for polio eradication.
The National Rural Employment Guarantee Scheme - initial allocation Rs. 12000 crore.
National Aids Programme scheme will start in 2007-08.
1 lac scholarship to be introduce every year.
National Means and Education Scheme for students above class 8.

Overall.. mixed reaction so far and 6 out of 10 rating.

Indo-US relationship.. complication & opportunities

2007-02-22T02:40:00.000-08:00

Best explained by Stephen Cohen, Washington seems to understand very little about the complexities and ambiguities present on the Indian of this putative alliance. India is a democracy; while there was continuity between the past conservative nationalist BJP-led coalition and the current left-liberal Congress-led coalition, the fact is that India is likely to remain governed for many years by ideologically diverse coalitions of uncertain durability. This means that US-Indian relations will remain hostage to Indian domestic politics. Further, there are important differences within the Indian strategic elite as to the wisdom of the growing American tie. India has four schools of thought in India regarding relations with America. These derive from differing readings of the past and differing visions of the future.

The Enthusiasts tend to look upon past strains in the U.S.-Indian relationship as stemming from the Cold War or America's ignorance of India's importance. They believe that times have changed, and emphasize the many benefits that will accrue to India if it were to join with the United States in a quasi-alliance relationship. The Vajpayee government invented the term "natural alliance" which has been adopted by Prime Minister Singh's government ,and American officials. The Enthusiasts, found in the Indian business community, in a few corners of the foreign ministry, and among some politicians, are confident that they can manage the Americans via the growing India lobby, by more gracious diplomacy, and by holding out the prospect of collaboration on a number of issues of mutual importance, notably terrorism, containing China, and coping with Islamic radicalism. They see the US-Israel relationship as a model, and for that reason have strongly cultivated Indian-Israeli ties. In the distant future, they see this new alliance as ensuring that American support for Pakistan will wither away.

The Free Riders resemble the Enthusiasts in much of their analysis of the past, and acknowledge the major changes in the international order and in American perceptions of India, but they do not envision a long-lasting, open ended or durable alliance relationship with Washington. They might ride the American bus for a few stops, but not to the end of the line. Widely distributed in the Indian strategic community, the Free Riders believe that sooner or later as India gains strength from the American connection, strains will appear. In their view Indian national interests require a close connection to Washington but that in the long run America is too fickle and too powerful to be trusted. The US can be used, however, to establish India at the global level as a major power (symbolized by admission to the nuclear club, and a Security Council Seat), and to make India the dominant power in South Asia. For some Free Riders, Washington's acquisition of bases in Afghanistan and Pakistan are warning signs that Washington might still be interested in challenging Indian dominance.

The Doubters not only have a different reading of history than the first two groups, they see the future as far more troubling. From their perspective, Washington remains a potential threat to Indian interests, just as it was during much of the Cold War, when it armed and supported Pakistan. While the Enthusiasts and Free Riders might point to the threat to India from a "rising" China, and conclude that Washington sees India as a potential balancer, the Doubters, found among many diplomats and soldiers who came to political maturity during the worst period of US-Indian relations (the 1970s), do not believe that the Americans will consistently hold this view. The doubters favour continued restrictions on American scholars in India, are wary of American attempts to broker an agreement on Kashmir, and are alarmed by the rising "American lobby" in New Delhi and Mumbai, as distorting an independent analysis of Indian-American relations.

Finally, the Hostiles see America as not only a dominant superpower, but as intrinsically opposed to India. From the left we hear that America seeks to dominate Indian markets, exploit Indian labour and manpower, and pollute the Indian landscape, to its own benefit and India's detriment. On the right the arguments include a fear of cultural pollution from Hollywood and materialistic America, a concern that American technology will wipe out indigenous skills and entrepreneurs, and finally that Washington will never really abandon Pakistan because it needs to appease Muslim opinion, and because it fears a rising Hindu India.

These four opinion clusters overlap, and a major Indian debate on relations with America is now underway. Washington must understand this debate, for it will influence future Indian policy decisions. How America responds to these Indian demands will shape the balance of influence among these four schools. Burying Indian-US differences under labels ("natural allies" being one of them), does injustice to the prospect of two democratic states discussing their real differences and their real shared interests, and forging a relationship that is both durable and mutually beneficial.

Wage Inflation...not to Worry

2007-02-15T23:55:00.000-08:00

Widely acknowledged by the outsourcers themselves and until now kept at bay by strong growth, the continual increase in salaries at top Indian companies (tech specially) is changing from annoyance to a present danger. Indian companies are no longer merely competing with one another for the best and the brightest, they must also compete with other MNC opened shops in india.

Why its not to worry? because:

The rising costs will turn away the benefits of India. Even if the wage inflation rate continues to grow at the present rate, then only in 2032 will there be an overlap with the rates of U.S.
wages paid to workers in India represent such a small percentage of total costs for companies that operate there, a 15% increase in salaries results in no more than a 2% rise in prices charged for IT services, says Narayanan. That's well below the current U.S. inflation rate.
IT suppliers in India, for example, are lowering their costs by moving to 'tier two' cities--away from traditional high-tech centres- and opening delivery centres in other countries.

RBI is keeping eye on it - the wage disparity between the U.S. and India remains vast, and it's going to take many years of double-digit inflation in India for that to change. till then relax.

but our worries are : Remaining in position of low-cost workfoce is NOT something great and to be proud of. heap low-cost IT work which only means the nation will remain a poor developing country for another decade or so.

The cost of outsourcing to India is the cost of maintaining a sufficient stable quality of product from India.
Wage inflation isn't the issue here - staff stability is. As wages go up, and the supply of qualified labor goes down in India, the job hopping that will occur will be as bad there as it was here in the early 90's. This will have a further deleterious effect on product quality and quantity out of India.
This will put almost instant pressure on margins for companies. They will have to work incentives and bonuses just to get key staff that are trained and up to speed on key client projects to stay on board.

The timeframe will be compressed. It's not going to take India as much time. Witness the evolution of the middle classes in the Asian Tigers in the 90's. It didn't take long for China to start robbing Malaysia, Taiwan, and Thailand of manufacturing business that made its way originally from Mexico.

In other words, India's future as the tech industry's top outsourcing hub rests not so much on whether it can continue to offer the lowest costs--that seems probable--but whether it will produce enough skilled graduates to ensure that the work is done at acceptable quality levels.

Indian Internet Report: Mumbai mosted connected..

2007-02-02T04:49:00.000-08:00

2006: Mumbai with 3.24 million ever users and 2.6 million active users, leads the pack of top 8 internet using metros. Delhi is second with 2.66 and 1.80 million of ever and active users respectively. This was revealed by the Internet in India (I-Cube) study jointly undertaken by the Internet And Mobile Association of India (IAMAI) and IMRB International. The study also found that the difference between ever user and active users was the lowest in Pune with a 90 per cent conversion rate, and highest in Delhi with a poor 67 per cent conversion rate. Interestingly, Kolkata, with 1.34 million ever and 1.05 million active users is ahead of tech centres such as Bangalore (1.31 and 0.97 million) and Hyderabad (1.29 and 0.95 million). Ahmedabad has the lowest number of users among the top 8 metros.

The Internet Users Base across Top 8 metros

Top 8 Metros (figures in million)	Ever Internet Users (13.12mn of 17.36 mn)	Active Internet Users (10.21mn of 13.23 mn)	% of Active Internet users
Mumbai	3.24 mn	2.6 mn	82%
Delhi	2.66 mn	1.80 mn	67%
Kolkata	1.34 mn	1.05 mn	78%
Chennai	1.48 mn	1.26 mn	85%
Bangalore	1.31 mn	0.97 mn	74%
Hyderabad	1.29 mn	0.95 mn	74%
Ahmedabad	0.78 mn	0.59 mn	75%
Pune	1.02 mn	0.92 mn	90%

While top metros continue their dominance, there is a clear cut trend of small metros, non-metros and small towns catching up fast. Among the ever user category, the share of top 8 metros has declined from 58 per cent in 2001 to 41 per cent in 2006. The corresponding decline in the active users is from 90 per cent in 2001 to 77 per cent in 2006.

Source: I-Cube 2006

In terms of access points, proportion of users accessing from home is the highest in Hyderabad and lowest in Pune. The proportion of users accessing from offices is highest in Mumbai and lowest in Hyderabad. Cyber cafes continue to be the most important access point in Pune and Bangalore. While except in Bangalore, access from schools continues to be dismal.

Source: Main access point across Top 8 metros, I-Cube 2006

Among the various town classes, cyber cafes continue to serve as access points to 50 per cent of users in non-metros with home use showing a healthy 30 plus per cent in all four town classes.

Source: Town Class Distribution of Main Internet Access Point, I-Cube 2

The trend in Internet application usage in India is very interesting and demonstrates the evolution of Internet as a media. Traditional favorites e-mail & chat continue to be dominant across top 8 metros, especially in Chennai, Delhi and Hyderabad except in Mumbai, where information search dominates Proportion of users accessing internet mainly for jobs and matrimony and e-commerce is highest in Kolkata, followed by Ahmedabad and Pune. Proportion of internet users accessing internet mainly for financial or business information is significant in Mumbai and Pune. This may be associated with Mumbai being the nerve centre of the commercial and business activities in India. This justifies the higher proportion of office access from Mumbai.

Source: Main online applications used across Top 8 metros, I-Cube 2006

The proportion of internet users accessing internet for information search is significant in non metros. As observed earlier, almost 40% of the internet users are school/ college going students. Lack of availability and accessibility of reliable sources for information is driving users from non metros towards Internet, mainly for education. The low figures for communication in non metros can be explained with the fact that not many people are comfortable communicating in English in these towns. The regional languages mainly come in use at time of communicating. But with portals and vortals increasingly providing a regional language interface, the scenario is bound to change. Language flexibility would mark the future of information and communication technology especially in a multi-lingual country like India.

Credits: Internet & Mobile Association of India

Tata-Corus deal closed, so What that means..??

2007-01-31T00:27:00.000-08:00

India's Tata Steel has won the bidding war for Anglo-Dutch steelmaker Corus Group with an $12.1 billion auction offer that trumped Brazilian rival Companhia Siderurgica Nacional.

What this means to Tata Steel?
with the trade barriers having been lowered, though not eliminated, most businesses have to align/ benchmark themselves against global practices. National beliefs, markets and boundaries have a role in shaping corporate strategy. But there are other forces as well - customers, technology, investors ! For many of the people in these the national borders, increasingly just mean additional/ specific documentation to be undertaken

For the tata’s this would mean that they would have about 50% of their revenues come from international customers/ operations. For a group which is as diversified and integrated into India as Tata, this is a significant change in their perceptions of business opportunities. Being a global company, does have advantages, but also different benchmarks and expectations. The next 5 years would show whether they have been able to graduate from an Indian Group to a Global group, keeping their core-values intact.

What this means to India?
A decade back, when pessimists thought that opening up of Indian economy will lead to the opposite result - all Indian companies being bought out by maruding foreigners but for the past few years, India Inc. has been looking abroad and lots of great buys have happened.

Tatas themselves have led the pack (with the acquiring of Tyco, Tetley, Daewoo’s Truck business and now Corus), like how they did in the last century - whether it be starting a premier institution - IISc & TIFR or starting aviation industry, steel production, Motors, Sofware services/Outsourcing (TCS)

It seems the phenomenon is spreading throughout, whether it is Pharma, Software/ITeS, Steel, Electronics, Beverages/FMCG… Even public sector companies like IOC and ONGC are refreshingly aggressive in this business. In the future, I would like to see mammoth companies like Indian Railways, SBI (and other group of Indian banks are much healthier than most Asian banks), BSNL, Power Corporations to be removed off their Shackles and enter the world economy in a big way.

and Interesting trend to notice.. Now, India's FDI outflow is MORE than inflow. For long, Indians have obsessed about the amount of inbound FDI, especially when compared to China (India has received less in FDI inflows since 1991 than China will receive this year alone). Interestingly enough, with Tata-Corus deal and if Videocon takeover of Daewoo Electronics does go through, India’s FDI outflows will, for the first time, exceed FDI inflows. Effectively, the projections for 2006 are that India will receive $9 billion in inflows while outflows stand at $19 billion, spread across 100+ deals, turning India into a net exporter of capital (to be precise though, a lot of the external acquisitions are not funded by domestic capital, but from foreign sources). At the very least, the investment bankers among you, especially those working on outbound M&A deals, can expect a big, fat bonus this year.

We have just started as a trickle and it doesnt take a long time to become a flood, as all the individual droplets are getting bigger and their distance is getting smaller. I hope the Indian govt doesnt do any stupid things, as often as they do in the past, and be a silent pusher of Indian companies into the global arena.

Certainly interesting times ahead both for Tatas and India.

Upgrade to Vista now or WAIT?

2007-01-30T04:53:00.000-08:00

Most hyped Software Product released, with 6bn$ investment and over 5years in development - Finally Windows Vista is here. Now, Microsoft marketing blitz for Windows Vista has begun. Confusion and temptation of when to buying Vista?? is question of the season.

If you want a truly seamless transition to Vista - especially if you're upgrading your existing PC versus buying a new one with it pre-installed - I'd say wait. Not the possible 11 months or so it will take for Service Pack 1 to come out, but maybe a month or two to let software and hardware vendors to work out the kinks with their apps and drivers.

Also, Vista haven't publish kernel OS code for 3rd Third party tools/software. So you will not find any 3rd party software for Vista as of yet.

Its good to remember - Historically Microsoft releases a really shoddy product on its initial launch. Windows 95, Windows 98, Windows ME (never had a shining moment anyway), and Windows XP were all mediocre or even terrible until the first or even second service pack or equivalent, with the exception of ME which was just plain terrible.

Vista already has known issues with lots of common hardware. It also doesn't seem to have *really compelling* features to drive an upgrade. And of course, the biggest reason to not upgrade now, is the COST.

Making Globalization Work by Joseph Stiglitz

2007-01-29T23:53:00.000-08:00

An bold new insight about globalization from its one of the closest observers and toughest critic, Noble Prize winner-Sir Joseph Stiglitz .

Books draws equally from author's academic expertise and his time spent on ground-0. Its very innovative and more practical vision for a successful and equitable world. Stiglitz focuses on policies that truly work, offering fresh new thinking about the questions that shape the globalization debate, including a plan to restructure a global financial system made unstable by America’s debt, ideas for how countries can grow without degrading the environment, a framework for free and fair global trade, and much more.

Stiglitz reveals that economic globalization continues to outpace both the political structures and the moral sensitivity required to ensure a just and sustainable world. And he makes plain the real work that all nations must undertake to realize that goal.

Recently The Hindu organized Lecture in Chennai, India about Making Globalization Work. you can find audio files of those interesting speech and Q&A below:

Introduction by N. Ravi, Editor, The Hindu (9.13 mins)
Lecture; Part 1 (8.48 mins)
Lecture; Part 2 (10.00 mins)
Lecture; Part 3 (5.18 mins)
Lecture; Part 4 (3.32 mins)
Lecture; Part 5 (7.02 mins)
Lecture; Part 6 (7.33 mins)
Lecture; Part 7 (10.08 mins)
Lecture; Part 8 (5.23 mins)
Question Time; Part 1 (11.23 mins)
Question Time; Part 2 (13.15 mins)
Question Time; Part 3 (16.42 mins)

Another interesting Q & A with Joseph Stiglitz - Click here

New ROI of blogging report from Forrester

2007-01-26T07:52:00.000-08:00

Eversince Google's high-profile buyout of YouTube, I was wondering about ROI and how this can be extended to blogs. During my quest to understand this better.. I landed on Forrester to find very interesting research.

The ROI Of Blogging: The “Why” And “How” Of External Blog Accountability

Many large companies stand on the brink of blogging, yet they are unwilling to take the plunge. Others, having dove in early, now face the challenge of managing existing blogs without the ability to show that they effectively support business goals. While blogging’s value can’t be measured precisely, marketers will find that calculating the ROI is easier than it looks. Following a three-step process, marketers can create a concrete picture of the key benefits, costs, and risks that blogging presents and understand how they are likely to impact business goals. This, in turn, enables marketers to answer the key questions, such as whether to blog or not to blog, or to make smart choices about an existing blog.

and follow-up research

Calculating The ROI Of Blogging: A Case Study, A Look At The ROI of General Motor’s FastLane Blog

Forrester used the process outlined in the first document in this series to calculate the ROI of General Motors’ FastLane blog; but, this is not merely an exercise to generate a number. Using scenarios, General Motors can understand the risk and impact of increases and decreases of a key metric — the number of press mentions — on the value of the blog. With this knowledge in hand, General Motors can make critical businesses decisions, such as whether to invest heavily in innovations that will rekindle press attention.

Metrics reflect the benefits:

These research deploy a framework to measure benefits of blogs.
Some common benefits highlighted are:

increased brand visibility,
savings from customer insights,
reduced impact from negative user-generated content,
increased sales efficiency

Very Interesting study

Yahoo... oho.. out of the game ??

2007-01-24T08:06:00.000-08:00

Yahoo "blew it", claims Wired in a lengthy expose. Company bounced back in the past five years, only to drop even deeper as it fell behind Google, the story alleges. It's hard to argue with the raw data. Google's revenues have taken a decisive lead over Yahoo's.

Yahoo made two monumental mistakes: it failed to acquire Google in 2003 instead they allegedly brushed off the $5bn asking price, bidding a measly $3bn and it never properly integrated the 2002 Inktomi acquisition, a provider of pay-per-click advertising. The Inktomi deal is scheduled to be wrapped into the Yahoo business later this year, which is an embarrassment by all standards. The Inktomi dilemma is important, because Google has shown that good technology allows you marry the right advertiser with the right consumer/user.

But Yahoo also is betting on content much more than Google is. The firm is trying to be a destination rather than an information broker. Creating content is far more expensive than pointing people towards it.

Fact is: do a search on Google for anything. Anything at all. Then do the same search on Yahoo. One guess as to who comes up with more relevant data. One clue. It's not Google. Come to think of it, Ask.com also has a better search than Google, and I know it's not politically cool to say this on one of these sites, but so do MSN and AOL.

But Yahoo is falling behind, and if it allows this to continue, it risks becoming an acquisition target and Google is laughing all the way to the bank.

Buy StarTV programs at Indya.com

2007-01-23T07:08:00.000-08:00

Indya.com and Star TV team-up to sale Star TV content. Download to own service is powerered by Direct2Drive, and according to the release, the purchased content can be played on up to two Windows Media compatible devices. The service seems to be targeting the global south asian community. Episodes will be put up the same week as they are aired on TV. STAR intends to put up 2000 hours of content within six months and there are deals with other content providers in the works. They also intend to do a prepaid subscription system within the next three months.

Iam not sure about pricing model and dont like to limiting the content to just two windows media devices.

wonder WHO will buy when so many are available in YouTube for free...

Media Spend and Market Share...

2007-01-22T05:43:00.000-08:00

Starbucks spends very little on advertising. The below graph shows the top 10 restaurant chains (ranked on their market share) and the amount of money (in millions) they spend on advertising each year. If you note the trend, marketshare is roughly 1/100 of the amount spend on advertising.

$ million ad spend per share point (2005):
1. Mc Donalds: $94
2. Burger King: $111
3. Wendy's: $162
4. Subway: $147
5. Taco Bell: $121
6. Starbucks: $10

It’s just one more reminder that Starbucks spends its advertising dollars on making better products and better customer experiences and not on making funnier television commercials.

People will be more likely to show up on Sunday morning because a friend invited them than if they receive a postcard in the mail. Not saying postcards don't have their place. I'm just saying the most effective "marketing vehicle" is word-of-mouth.

So why don't the other chains take a leaf out of Starbucks' book, and spend more on product and service, and less on trying to create an "image wrapper" to cover up their shortcomings? One answer is that they are taking the easy route: making a nice new ad is a lot easier and more fun than trying to fix the real issues to do with crappy service, food and decor.

India: 2007 “Year Of Broadband”

2007-01-16T06:04:00.000-08:00

India’s largest telco Bharat Sanchar Nigam (BSNL) plans to provide a speed of up to 2 mbps for its broadband subscribers, says a report in Myiris.com. This was stated by Communication and IT Minister, Dayanidhi Maran. And all those who are using 256 kbps connection currently can migrate to the improved speed at no extra cost. Nor will they have to change their consumer premise equipment. Maran also announced that the government is declaring the year 2007 as the “Year of Broadband” in India. He also said that it’s now upto the private operators to match the BSNL challenge. Currently no telco is offering more than 1 mbps for home users.

Reliance to distribute Indian Mobile Content Globally

2007-01-16T06:02:00.000-08:00

Reliance Communications has signed up with Canadian telco Telus and is in talks with others for the distribution of mobile content across the globe, reports Business Standard. Reliance will offer the usual stuff - games, devotional songs, ringtones, ring-back tones, music and wallpapers, all targeting the ethnic Asian community in US, UK, Canada, Middle East, Singapore and Malaysia. Teleus and Reliance will set up a content portal called ‘Apna Des’. The revenue share for content providers would be around 25 per cent for generic content, and around 80 per cent for premium content. According to analysts South Asian content is expected to be $3Bn by the end of 2008. The other telco’s that Reliance is reportedly in touch with are T-Mobile and AT&T in the US, Vodaphone and Orange in the UK, Singapore Telecom Mobile in Singapore and Telekom Malaysia in Malaysia.

Starbucks in India finally...

2007-01-15T01:02:00.000-08:00

Starbucks is to Partner With Pantaloon and Indonesia's Mitra For India Entry. World's biggest coffee-shop chain is forming a JV with Kishore Biyani's Pantaloon Group and V.P. Sharma, head of Starbucks' Indonesian franchise, PT Mitra Adiperkasa, reports Bloomberg. So the rumours about Starbucks partnering with RPG Group and C Sivasankaran can be put to rest now.

Starbucks will have to compete with local chains Barista Coffee and Cafe Coffee Day. The venture will have to adhere with the FDI norms for Indian retail sector. The government has allowed 51 per cent FDI in single brand retail, and that is the maximum limit Starbucks can have in the venture currently.

BSE to go Public..

2007-01-15T00:54:00.000-08:00

As National Stock Exchange announced its stake sale recently, its counterpart Bombay Stock Exchange (BSE) has declared that it's going public by May'07. So BSE's stake sale is likely to happen any time soon.

BSE is expected to complete transformation with May'07 and are already taking with few foreign exchanges for possible partnetship. BSE exchange has appointed Morgan Stanley, Merrill Lynch and Kotak Securities as its merchant bankers for the IPO.

Meanwhile, there are reports that BSE has shortlisted London, Nasdaq, Deutsche Borse, New York and Singapore stock exchanges for the sale of a 26 per cent stake. But NYSE has already picked up stake in NSE and they cannot invest in any other exchange according to SEBI norms. Others can.

Reuters reports that Singapore Exchange has expressed interest to pick up 5 per cent in BSE. NSE has beaten BSE in the stake sale thing. Last week, NSE's existing shareholders sold 20 per cent to NYSE Group, General Atlantic, Goldman Sachs and SAIF Partners who picked up 5 per cent each in the fast growing stock exchange for Rs $490 million. India has allowed upto 49 per cent stake for foreign entities of which only 26 per cent is permitted for FDI while 23 per cent is for foreign institutional investors.

Every exciting time ahead...

US Corporate Colonization of Iraq...

2007-01-11T04:35:00.000-08:00

Almost everyone except Bush agrees Iraq War is illegal & immoral. Economy(/oil) interest was underplayed by Bush government, But US military invasion that resulted(/resulting) in push corporate globalization agenda without restoring & providing Iraqis with fundamental necessities such as water and electricity.

Testimony to the World Tribunal on Iraq :
The goal of the Bush Administration, as stated in the economic orders already enacted in Iraq is to, "transition Iraq from a ... centrally planned economy to a market economy." This goal is explained even more clearly by BearingPoint, Inc. - the Virginia based corporation that has received the $250 million contract to facilitate this transition. The contract states: "It should be clearly understood that the efforts undertaken will be designed to establish the basic legal framework for a functioning market economy; taking appropriate advantage of the unique opportunity for rapid progress in this area presented by the current configuration of political circumstances... Reforms are envisioned in the areas of fiscal reform, financial sector reform, trade, legal and regulatory, and privatization." Transformation of an occupied country's fundamental laws is illegal not just under international law & conventions but also, the U.S. Army's own code of war - stated in the Army field is "The Law of Land Warfare."

In other words, the occupying power is like a temporary guardian. It is supposed to restore order and protect the population but still apply the laws in place when it arrived. As Naomi Klein has written, "bombing something does not give you the right to sell it," yet this is precisely what the Bush Administration is doing.

Changing Iraq's Laws

In direct conflict with U.S. government obligations under international law, the Bush Administration has begun fundamentally altering the economic laws of Iraq. For example, the provision in Iraq's Constitution outlawing privatization of key state assets has been over-ridden, as has the law barring foreigners - other than citizens of Arab countries - from owning property or investing in Iraqi businesses. Both the tax code and the banking laws have been changed.

The exhaustively well-documented devastating impacts of export-led industrial agriculture - particularly based on luxury crops - on countries around the world as implemented by the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO), North American Free Trade Agreement (NAFTA) and other institutions and agreements, demonstrates the danger that these proposed changes pose to Iraq. Those who have been made landless, jobless and impoverished by them are increasingly raising their voices in opposition. One of the most dramatic demonstrations of which occurred at the most recent WTO ministerial meeting in Cancun, Mexico with the protest-suicide of South Korean farmer Lee Kyung Hae. Thus, it should not come as a surprise that conflicts over these same policies have led to the collapse of talks at both the WTO and the Free Trade Area of Americas in the last year alone. Clearly, there is no international consensus that such policies will aid Iraq's reconstruction.

The Bush Administration's proposed changes for Iraqi law go even further, with a special focus on Iraq's oil. BearingPoint describes how current Iraqi commercial law is "woefully deficient in terms of establishing a market-friendly legal and regulatory environment for business formation and operation." Changes to those laws will therefore be necessary "to assure an appropriate legal and regulatory framework for major utilities such as gas, oil, water, and power." The contract includes every sector of the Iraqi economy, from public services, media, banking, investment, taxes, agriculture and the oil sector - implementing "private-sector involvement in strategic sectors, including privatization, asset sales, concessions, leases and management contracts, especially those in the oil and supporting industries."

Iraqi law states that "A foreign investor shall be entitled to make foreign investments in Iraq on terms no less favorable than those applicable to an Iraqi investor." National treatment makes it impossible to require that Iraqis be given preferential treatment (over foreigners) as investors, owners, contractors or employees. Thus, foreign companies can do all of the reconstruction, own every business, do all of the work and not a single Iraqi need to employed or involved in the process whatsoever.

Time magazine recently reported that an American firm was awarded a $15 million contract to build a cement factory in Iraq (using U.S. taxpayer dollars). But When the firm was prevented from doing the work, an Iraqi businessman (using Saddam's confiscated funds) spent just $80,000 to build the same factory.

The potential long-term impact of this provision for the Iraqi economy is monumental, as evidenced by the impact of the same rules on the "financial tigers" of East Asia, as well as Argentina and Russia. Each of these countries experienced devastating financial collapse when foreign investors simultaneously withdrew billions of dollars from their economies while the governments were powerless to enact restrictions on either the inward or outward flow of investments. Iraq is now poised to meet the same fate.

The military occupation of Iraq must end.

Iraq's foreign debts, accrued by Hussein in the suppression of the people of Iraq, must be forgiven. Only with the end of the U.S.-UK occupation should the United Nations, including an UN-commanded multilateral peacekeeping force, return to Iraq. Their mandate should be for a very short and defined period, with the goal of assisting Iraq in reconstruction and overseeing election of a governing authority.

A broad U.S. Federal Government investigation must be launched to scrutinize U.S. corporate expenditures and actions in Iraq, with the power to impose or seek punitive measures for contract violations and over-expenditure, and to provide oversight, regulation and accountability of U.S. contractor's work in the application of their contracts. The citizens of Iraq and the U.S. Congress and public should be informed of the findings.

Reconstruction of Iraq should be based on rebuilding the economy to maximize fulfilling the needs of the Iraqi people. All contract processes should be completely transparent and accessible to Iraqis. The awarding of contracts should be done with preference given first to Iraqi companies, experts and workers. Preference should then be given to international humanitarian organizations with a record of performing similar reconstruction work. If a non-Iraqi private company must be used, the contract must be open to global competition and the profit margin must be held as low as possible at a fixed fee. Oversight must be transparent, public and thorough.

Iraq should be allowed to join the worldwide movement for local sustainability by moving away from export oriented economics that make trade and multinational corporations the basis of economic development. Government spending, taxes, subsidies, tariff structures, etc. should be reoriented to support local environmentally sustainable production that meets local needs (these ideas are expanded upon in the IFG publication, Alternatives to Economic Globalization).

2030: Not India, Not China,..USA still a superpower...

2007-01-03T04:29:00.000-08:00

recent blog lead to this thought..: is Asia is king of 21st century?? that what we are hearing today. then, why I feel America(/'Big brother') will still boss around..?

Now with genX everyone in the family has a word to say/comment to make but 'Big brother' makes decisions and will continue to do so. 2006 events highlights self-confidence among others countries & divide in US community. Lets not forget the fact mr.Bush is unpopular so whatever he(/his friends/his policy) does is & will be unpopular not just around the world but within americans as well. A genuine superpower does not merely have military and political influence, but also must be at the top of the economic, scientific, and cultural pyramids. Soviet Union was only a partial superpower, and the most recent genuine superpower before the United States was the British Empire.

Economy: challenger 'China' - the progress that the US economy would make from 1945 to 2030 (85 years) would have to be achieved by China in just the 25 years from 2005 to 2030. Even then, this is just the total GDP, not per capita GDP, which would still be merely a fourth of America's. (assuming US GDP 3.5% and china's GDP 10%.. by 2030, US economy size $30 trillion in 2006 dollar and china's will be around $2.2 trillion)

Brand america from Inventions to mass-marketing: Creating world-accepting brand such as Nike, Coco-cola, Xerox, Google, (very recently)Youtube,. Europe & Japan had worked very hard in last 50yrs to have few in few specific selectors. Become the nation that produces the new inventions and corporations that are adopted by the mass market into their daily lives. Lets accept American-dominated 'blogosphere' emerged as a powerful force of information & media. USSR was ahead of the US in the space race at first, until President Kennedy decided in 1961 to put a man on the moon by 1969. now, China has plans to put a man on the moon by 2024.

Military power: "Have a military capable of waging wars anywhere in the globe (even if it does not actually wage any). Part of the opposition that anti-Americans have to the US wars in Afghanistan and Iraq is the envy arising from the US being the only country with the means to invade multiple medium-size countries in other continents and still sustain very few casualties. No other country currently is even near having the ability to project military power with such force and range. Mere nuclear weapons are no substitute for this. The inability of the rest of the world to do anything to halt genocide in Darfur is evidence of how such problems can only get addressed if and when America addresses them."

Education & Immigration: 17 of the world's top 20 universities are in the US. ofcourse, we can notice odd good B-school poping-up elsewhere but Noone is even close to MIT. so US will continuce to attract top students from Asia, Europe and retain them. "US effectively receives a subsidy of $100 to $200 billion a year, as people educated at the expense of another nation immigrate here and promptly participate in the workforce". as long as, India & No other country has size & capablities (atleast today) to attract smart immigratent.

Entertainment & Culture: No one will be able to (/willing to) address Piracy issues (we need smart business-man & business plan to overcome this problem). and "When American teenagers are actively pirating music and movies made in India or China, only then will the US have been surpassed in this area. Take a moment to think how distant this scenario is from current reality."

Europe and Japan have tried for decades, and have only achieved parity with the US on maybe two of these dimensions at most.

PS: US will remain superpower, claims CIA

One test match win drives TV ads rates up...

2006-12-20T06:51:00.000-08:00

One win, and cricket ad rates zoom

was wonder with one test win, 15% increase on ESPN star Tv ads rate is good? or worth-it? how ROI(return-on-investment) for these TV ads is calculated?
time to start "TV vs. Internet ads" argument...:

Today, the Internet offers advertisers a wide range of tools, which they can leverage to connect with their customers: email marketing, search engine advertising, floating animated page takeovers, interactive rich media ads, streaming audio/video, viral marketing… the list is endless. Besides scoring high points on the novelty scale, these media offer advertisers a multitude of exclusive benefits: interactivity, measurability, synergy, targeting, multi-media, and even flexibility. Powered by these unique benefits, which are not available in any other medium, Internet advertising revenue has grown significantly faster than television advertising. According to the latest ad spend predictions from ZenithOptimedia, television advertising can begin to lose its global share of revenue in 2007 (after having lost significant bytes of the pie from the US and many parts of Europe).

In India, experts estimated the Internet would take 11 years to reach a base of 50 million people. Growing exponentially with each passing year, the Internet has in the last decade reached 40 million people! Television, on the other hand, took 28 years to reach the same number of people. Radio took 38 years and newspapers, 162 years. By the close of 2005, there were 38.5 million Internet users in the country (32 per cent being women, IAMAI 2005)—more than five times the number of users in the year 2000. While Internet advertising comprised less than one per cent of advertising in the year 2005, it is expected to be four per cent by the year 2010 i.e. 747 crores on a base of 19,562 crores. Until such time, the projected yearly growth rate of the ad industry is expected to stabilize at 11 per cent; the growth of the online ad industry will be consistently more than 40 per cent.

The next 10 years of advertising is set to see a convergence of diverse media. Leading organizations are pioneering new ways of measuring the impact of online advertising. As the Internet continues to lead the way on accountability, traditional media will have to respond with better matrices for audience composition and marketing performance. In order to engage consumers—who today have several choices and great control over message delivery—ad agencies are compelled to make highly innovative advertisements. The new advertising world is set to grow more entertaining, informative, relevant, and authentic.

tomorrow is tomorrow anyways, meanwhile ESPN-Star is making money...

world is getting richer... about at what cost..?

2006-12-13T12:05:00.001-08:00

New Report from World Bank predicts rising economy and push millions into middle class. Incomes will rise in developing countries in the next wave of globalization to enable many of their formerly poor citizens to buy cars and take vacations abroad.

While that may be true to certain extent, I think atleast 2major risks are overlooked:
* Growing income inequality
* Severe environmental/global warming issues

Although fast growth is today the near-universal mantra among Asian governments, the link with social equity has steadily weakened. we could already notice inequality in growth. while some getting into 'middle-class' status but poor are getting much poorer. Increasingly cities are getting much expenses even in developing countries. Trend reflects hefty gains reaped by those at the upper end of the income scale as well as meager gains at the middle and bottom, has disturbed many economists who believe that it may ultimately harm the social and economic health. One is that great disparity seems likely to make it harder for people to practice the value of solidarity. Growing income inequality is particularly worrisome because of its immediate implications for social conflict and tension. an survey finds income inequality in eight east Asian countries increased by 45 per cent overall between 1990 and 2002. And the pattern is heavily skewed by a steep deterioration in China and ofcourse, Thailand always had some of Asia's biggest disparities.

I guess public policy (not just in India but globally) has affects the distribution of income most obviously through tax and transfer policies. Income and corporate taxes are moderately progressive, while transfer policies are very progressive.

Ok. just to clarify - poverty and inequality are two different concepts. Poverty refers to the fraction of the population, or the number of people, whose income falls below a designated amount intended to reflect some minimally acceptable standard of living.

very interesting article here How to Judge Globalism by Amartya Sen

look out for view about 'Severe environmental/global warming issues'

Bank of America & Barclays: may be Bad News

2006-12-11T06:23:00.000-08:00

Guess, Bank of America got a lot of press for passing Citigroup as the world's largest bank based on market cap. Now, it wants to take Citi route : build a presence overseas and expand outside core franchises. While the market is calling to break Citi apart, B of A may be looking at buying British bank Barclays.

Barclays has a market value of $90 billion and Bank of America is over $200 billion. Merrill Lynch believes that even if B of A pays over $100 billion, the purchae could add to earnings next year. Maybe.

Getting into investment and corporate banking is a dicey proposition, especially outside the US. If the market in private equity does not hold or if M&A activity slows or its the world's stock markets meet the laws of gravity, $100 billion could be a lot to pay.

Take a lesson from Citi. Stick to what you do well. Don't get too big and complex.

Why courts has to Govern India

2006-12-09T10:49:00.000-08:00

Why courts has to run India
http://www.rediff.com/money/2006/dec/09ninan.htm

if government is run by corrupts and other sleeping or busy in talk shows,.. then only option is Courts. often this is causing delay and yes, its very sad to be this way but we dont have too much choice.. do we??

Primary Education in India... Reform Required

2006-10-11T07:34:00.000-07:00

Recent YouTube.com success made wondering why such companies are not created in India. certainly we are tech powerhouse and we dont lack in knowledge in buliding such websites or companies.. then why dont we have many such 'youtube' companies not in india with international success..!? Reason could be many - lacks encouragements for start-ups, investments, acquistions, etc.. but I force on people skill to create such market leading invasions.

Free India did not have the will to fulfil Mahatma Gandhi’s dream of reviving the ancient tradition of the village schoolmaster, supported by the community, his status and survival as a "guru" being embedded within the culture and ecology of his immediate environment. Instead the government chose to continue with efforts to educate the masses through a vast, centralised machinery and superstructure of staff, infrastructure and resources. results has show the success of this system depends solely on expenses and affordability. It thus gives rise to a situation where a mass of underprivileged and under-educated children face a largely urban elite population of privileged schoolchildren. Every poor Indian who can manage to make both ends meet thus strives to join the ranks of far better (and more expensive) schools, because only these can form the gateway to higher education.

In my response to Mr.P.V.Indiresan's Vision 2020 Series - Make knowledge utilitarian specially on Education.."Our education system is designed for the well-to-do by the well-to-do who are copying ideas from rich Western countries.".. and.."In India, training institutions operate autonomously in splendid isolation. They have little or no compulsion or incentive to satisfy either the student or the employer".. somuch truth in this. This is one of major reason why many 'youtube' are formed in India.

To certain extent globalization is increasing India's literacy rate but not producing enough educated minds to change political and economy structure. Millions of school children are taught the same content in the same linear sequential order. Teachers continue to deliver an old style of book learning which does not take into account the nature of today's information-age economy or even some of the needs of day-to-day living. Result is: higher drop-out rate among economical backward and immigration to western world among economical forward or capable's. Needless to mention, both is not good for our future.

Land of billion people - No sports, No Invasions,.. I would blame all educators and employers. although, role of government would dominate in any debate, I would keep them out since so much can be done with little/no support from government (may be Iam thinking like the way: IT industry had revolutionized itself thru globalization with little support from government)

Even though the problems in our education system has been recognized and discussed for many years in various forum, little or no action has taken place. I believe, this is due to conservative nature of employers & educators. The main reason for the failure, however, is that contemporary education lacks a mission that is in tune with today's social and economic realities, which has evolved and changed at a much faster rate than our schools. It is not just that so much that the content of the curriculum is out of date and also that the style of education is not suited to contemporary needs and challenges. Some schools may be providing knowledge for development in particular fields (..,doctor, lawyer,..) but certain doesn't have process to equip pupil with skills to update that knowledge in changing times.

A great deal of lip service is paid to the ideas, but neither the schools, employers nor government seem willing or able to commit reform in education. Instead we are wasting time by debating about quota system in IITs and IIMs.

As I read sowhere, It is ultimately left to each one of us in the educational field to move one small step forward towards this transformation of vision towards reorientation of values and objectives of education. Education places an overriding value on products over people, on achievement over harmony.

We now need a name for those who love people more than products,
those who believe that
No people are uninteresting
Their fate is like the chronicle of planets.
Nothing in them is not particular and planet is dissimilar from planet.
We need a name for those who love the earth on which each can meet the other.
And if a man lived in obscurity
making his friends in that obscurity
obscurity is not uninteresting.
- Yevtushenko’s poems

Soft Skills..matters..?

2006-09-26T04:28:00.000-07:00

Recently study Men have higher IQ than women triggered many questions on the way, IQ are conducted, inequality, opporunties,,etc.. one that interest me is in this day and age.. is only IQ can be used for measurement for so-called "good employee"...!?

topic of the day - how important is Soft Skills (which females are very very good at..): I find increasely evidence its very important, just by notice power-puff ladies on boardroom. Needless to mention how talented they are but also they have advantage in soft skills. Are "soft skills" more important than actual knowledge?

Yes.. it may be Hard Truth but Soft Skills Matters...

to give an example from IT industry(to the most reader can relate too) - It's not enough anymore to be a crack programmer or a nimble network administrator. These days, CIOs need IT staffers to share more of the burden of business, to interact with other departments and to communicate effectively with colleagues. These non-IT skills (business acumen, communication, leadership, project management and so on), often called "soft" skills, are increasing in importance as IT becomes more strategic.

HBS Working Knowledge quotes - While top performance usually is what gets global managers their international assignments, soft skills may be more important.

Note of caution : We all want to hire "team players"...but where do we strike the balance? In my opinion the pendulum between hard & soft skills has swung too far in one direction. Among the rarest of traits is the ability to balance the need for consistent corporate practices with the need for regional uniqueness.

Although “Soft Skills” are required to be successful in any team-based or collaborative
environment, evaluation and discussion of them is often accomplished through vague terminology, nebulous examples, and recommendations which sound more like the innards of a fortune cookie than a specification for action. But the gap is not as wide as it seems. By using statistically validated assessment tools, and well-understood frameworks for evaluation and discussion, it is possible to bring some science to the human side of the workplace.

Outsourcing debate - Don't get sore, get smart...

2006-08-23T01:42:00.000-07:00

THE political heat around outsourcing has cooled as the threat it once seemed to pose to western service jobs has diminished. The emphasis now is on improving the process of outsourcing, both at home and offshore. In other words, if you have to do it, try and do it better. This book is a good place to start learning how—especially the penultimate chapter. Called “Five Key Areas to Focus On”, it looks at financial engineering, legal issues, communications, human resources and tax.

If these sound like the sort of areas you would focus on in mergers and acquisitions, don't be surprised. For Jean-Louis Bravard is a former investment banker who now works for EDS, a leading outsourcing firm, and he brings his banking experience to bear on the subject, arguing that outsourcing should be treated much like M&A, for which it is in many cases a substitute. That means fully involving the company's top executives in outsourcing decisions, and expecting outsourcing to be subject to the same “degree of public and shareholder scrutiny” as M&A. It also means looking at many of the same things when judging whether a deal will work or not.

By and large, the authors shy away from the political hot potato of offshoring. When they do touch on it, it is to do little more than make the case for using third parties, such as EDS, IBM or Accenture, for all an organisation's outsourcing requirements. Why tussle with the onshore/offshore decision, they ask, when it can be passed over to experts (such as EDS) to decide for you where to locate your operations?

The authors make an important distinction between offshoring and outsourcing—“most of the processing industry in India still consists of in-house captive operations owned by the businesses that use them”, they say. In other words, they are operations that have been sent offshore, but have not been outsourced to a third party. The authors then leave any further debate about offshoring for elsewhere.

Diana Farrell, director of the McKinsey Global Institute, the consulting firm's in-house think-tank, was one of the first to take the heat out of the issue. Initially, she pointed out how limited is the data on the phenomenon. In a report last year, the institute said that “the debate about offshoring has been fuelled by anecdote rather than fact.” It then set about gathering data which, in turn, suggested some limits to offshoring.

It estimated, for instance, that only “13% of the potential talent supply in low-wage nations is suitable to work for multinational companies”, and it cited three main reasons for this: the lack of language skills; the limited capacity of the educational systems of the offshoring hosts to impart practical skills; and the lack of cultural fit. Other evidence of limits—this time to the demand for offshoring rather than the supply—comes from a recent survey by Proudfoot, another firm of consultants. It found that over three-quarters of the companies it surveyed had no business functions carried out offshore; just over one-third had no business functions outsourced at all, neither at home nor abroad.

Now Ms Farrell has written an article called “Smarter Offshoring” (published in the June 2006 issue of the Harvard Business Review). Echoing Mr Bravard's title, it pleads for a more thoughtful approach to offshoring. She argues that “the most popular offshore sites for service functions are overheating.” It is time, she says, for companies to look “beyond these hotspots and to base investment decisions not just on costs but also on talent, markets, strategic aims and appetite for risk.” Much as you would with M&A.

From Economist

HANSDEHAR - The First Knowledge Village of India...

2006-08-18T06:13:00.000-07:00

One Indian village has connected itself to big wide world via village website thanks to local people interest & effect. throught this website you can see Hansdehar's Village life - residents names, jobs, shops, drainage/electricity, health care. I understand most of residents are yet to surf net since internet is distance dream but not so far.

I believe this first would take them touch with external world and escalate local problems.

Hansdehar's lifestyle is no different from most of other village in india but people are making effect and step forward.

we in big cities/NRIs busy running behind material world would at very best speard this information(/word-of-mouth) for not just to crediting Hansdehar village's effect also this would be role-model for other villages in india.

Solar energy for your home..

2006-08-16T07:18:00.000-07:00

Interesting.. just recently we indians started talking about Solar energy for domestic use but much sunny countries(like Greece) this has been very common. Recently read about Solar usages & ways.

In summer time. Fans are working overtime, the refrigerator is cooling gallons of water and air conditioners are sucking the heat out. Your electricity bill in summer is almost double of what you pay in winter.

Wondered if solar energy can power all your gadgets, lights and cooking devices? Energy can be converted from one form to the other.Of course, a small portion of energy gets lost in the conversion process. Much the same way, the solar energy can be converted to electrical energy in two ways.

Direct method - Electrical energy is produced directly using solar cells or photovoltaic cells. The incident light on the solar cells causes current flow in it. Several such solar cells are cascaded to produce sufficiently large amount of current (at a low voltage) that may be useful for a meaningful application . The output of the solar panel is connected to a battery through a charging circuit . The amount of power that can be stored in the battery or the number of electrical gadgets that can be powered varies depending upon the size of the solar panel. The battery, typically a 12 or 24 volt battery is connected to a sine-wave or pseudo sinewave inverter to produce the 220volt AC required to drive electrical gadgets. There has been no significant development in this technology for reducing the cost of solar cells. So, it calls for a significant initial investment. Electric cars, domestic lighting and electrical gadgets at home can be powered by such a system.

Indirect method - In the indirect method, the heat is collected by large arrays of reflectors that canalise the solar heat onto a long water line.The water gets heated to a temperature that turns water into steam. The steam thus generated, propels a steamturbine (a prime mover to a thermal power generators ).
The rotation of turbines attached to the alternator (alternating current generator) produces electricity.

Using solar power to heat water, cook food and power electrical gadgets is a safe, clean and efficient energy solution . The initial set up cost may be high but in the long run you'll reap the profits.

Govertment should introduce Solar-Friendly-Policies for builders and domestic consumers, for agriculture usage to setup & use Solar system to reduce growing energy problem.

Company in Gujarat got 1000crore deal to export solar cells. Its shame we export but dont use it..