Silicon India Sep 09 Issue

siliconindia PUBLISHED SINCE 1997

BUSINESS & TECHNOLOGY

IN THE U.S. & INDIA

CellSpin

EXPANDING CELL PHONE TO THE

NEXT LEVEL

Bobby Gurvinder Singh, CEO

SEPTEMBER - 2009

SILICONINDIA.COM

Contents August 2009 Cover Story

14

CellSpin Expanding CEll phonE to thE nExt lEvEl By Jayakishore Bayadi

06 [In My Opinion] 4 Important Entrepreneurial Lessons By Bharat Desai, Syntel

10 [Infocus] H1-B Restriction: Silicon Valley to be Hurt Indians Paid 20 Times Less Than US Employees Cloud Computing IT industry’s Latest Hype Talent Deficit to Haunt Indian Firms Americans, Britons visited India the most in 2008 13 [VC Chakra] Simply Hired Raises $4.6 million in Series D round of Funding 13 [CEO Spotlight]

Bobby Gurvinder Singh, CEO

22 [Company Spotlight] EC Manage: Betting on Efficiency and Competency By Jayakishore Bayadi

24 [Technology] ROI from Web Experience Management: Making the Case

By Loren Weinberg & Elaine Chen, FatWire Software

28 [Business] A Journey in CEM Customers Perceive Value Based on Experiences They Receive

43 [SI 20 Profile] 44

[Entrepreneur 101]

Entrepreneurial Vision By Gunjan Sinha

46 [SiliconIndia Blogs]

31

Indian Infrastructure Sector Paving the Way for Tomorrow’s Growth

32

Telecom – the Great Leveler of Social and Economic Strata

34 37 38 39 40 42

ByAnil Seth, Projects and Marketing Limited (SPML)

By Anil Nair, Avaya GlobalConnect (AGC)

Having Lost its Competitive Advantage, Textile Industry Faces Decline By Sanjay K Jain, TT Ltd

Future Outlook for Cement Sector, Strong By Vinod Juneja, Braj Binani Group

Pharmaceuticals Healthy Future Ahead By Ranga Iyer, Wyeth

Indian Electrical Equipments Sector Switching to Faster Growth By Sunil Sikka, Havells India

India The Road Ahead for Retail

By Govind Shrikhande, Shopper’s Stop

Indian Shipping Industry Sailing through a Rough Weather By Shri S.Hajara, The Shipping Corporation of India

siliconindia

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September 2009

siliconindia SEPTEMBER - 2009

Publisher & Editor-in-Chief

Harvi Sachar

Managing Editor

Pradeep Shankar

Associate Editors

Jayakishore Bayadi Christo Jacob Jaya Smitha Menon Senior Correspondents

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Correspondent Sr.Visualizer Online Manager Subscription Manager

Vimali Swamy

Eureka Bharali Raghu Koppal Suresh Kumar P Magendran

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September 2009, volume 12-08 (ISSN 1091-9503) Published monthly by siliconindia, Inc.

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Editorial

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Learning from Failure

ndia’s maiden moon mission launched on October 22 last year was abruptly terminated, as the radio contact with the Chandrayaan-1 spacecraft was lost last month. A mission life of two years lasted only for ten months. However ISRO scientists claimed that the mission was a great success and 95 percent of its objectives were completed. Government has set up an assessment committee to look into the performance of the mission in totality. But what is more important for the team of Chandrayaan is to learn from the failure and bounce back with full vigor with the already announced Chandrayaan –II. As Murphy’s Law states “Things will go wrong in any given situation, if you give them a chance.” Or more commonly, “whatever can go wrong, will go wrong.” In the Indian context, it is a great challenge for the team from an emotional and social point of view since somehow failure is not respected in our culture. The social stigma and pressure attached to failure poses the biggest challenge. This is perhaps one of the biggest stumbling blocks in building a Silicon Valley in India. As Randy Komisar, Partner at Kleiner Perkins Caufield & Byers says, “What distinguishes the Silicon Valley is not its successes, but the way in which it deals with failures. The Valley is about experimentation, innovation, and taking new risks. Only a small business that can deal with failure and still make money can exist in this environment. It is a model based on many, many failures and a few extraordinary successes.” Whether in profession, project or business, failures are bound to happen. By learning to bounce through repetitive process of success and failure, you will develop a resilience that will lead to the true business confidence that will ultimately determine our success. We at siliconindia always attempt to talk to entrepreneurs, business leaders, technology professionals across the ranks to understand some of the mistakes they did and their learning. We could all share and learn from each other and in turn will drive the economy. As usual, please keep your contributions, feedback and comments coming! Harvi Sachar Editor-in-Chief [email protected]

4 By Bharat Desai

The author is Chairman, Syntel

in my opinion

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he story of Syntel is one of transition and evolution. I moved to the United States in the late 1970s while working for an Indian technology services firm. Through my work as a consultant, I realized that there was a significant business opportunity delivering high-quality programming talent to companies in need of software expertise. I decided to further my education by attending The University of Michigan on nights and weekends, eventually earning an M.B.A. In 1980, my wife Neerja and I were both in graduate school and founded Syntel (then called Systems International) using our savings of $2,000. We started providing IT staffing services to Detroit-based automotive companies, and earned $30,000 in our first year of operations. We faced the usual challenges getting the business off the ground – landing our first customers, convincing people to come work for us, and learning new sets of skills like legal, finance, and HR. We also had to address some of the nagging doubts that every entrepreneur faces, like the questions:  Is this really what you are most passionate about?  Do you believe you truly have something unique to offer?  As a fledgling company, how will you attract large corporate clients? siliconindia

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September 2009

Important

Entrepreneurial Lessons

Answering these questions frankly and thoughtfully brought things into sharp focus, and changed the direction of the company. It became clear that the long-term business opportunity was in ‘taking the work to the people’ rather than ‘bringing the people to the work’. It was then that our mission began to change, and Syntel started to undergo its first transformation.

Bharat Desai

As Syntel continued to grow and evolve into a global company, I quickly faced another steep learning curve. I experienced the same stark realization that every successful entrepreneur comes to face at some point or another. I suddenly lay awake at night telling myself, ‘How do we attract the right talent in order to grow the company?’ There are two ways to address this challenge:

An exercise in continuous evolution and anticipation of trends; anticipating the direction the market is likely to take and staying ahead of the curve The catalyst was the revolution in global telecommunications that took place in the early 1990’s, which was a real game-changer for the IT industry. From that point forward, the conventional ‘time and materials’ onsite-staffing model became passé and ‘globalization’ became the name of the game.

1. Learn new skills yourself and try to cope with the increased complexity of the business. 2. Recognize the need for quality talent and establish a process to attract and retain the best people to grow the company.

For me, the latter one was the clear Client centricity, superior execution, and delivery choice. excellence are not just operational goals or metrics – In 1992, Syntel opened its first Global Development Center in Mumbai, they are the lifeblood of business and the path to which signaled the first of two major transitions – first from a staffing business customer loyalty to a solutions business, then from onsite 2. Talent is irreplaceable focused on our India-based facilities. delivery to an offshore delivery model. From entry-level programmers to Syntel has committed to investing What has happened since then has top management, you will sink or nearly $100 million in capital exbeen an exercise in continuous evolution swim based on the skills and talents penditure on our Pune and Chennai and anticipating trends. From Y2K, the of those around you. For example, I campus facilities. dot-com bust, the push to offshore-cenrecently stepped back from my positric delivery, the emergence of Web-ention as CEO to assume the role of a 3. Customer for Life abled business services, the growth of mentor, coach, and strategic advisor. One of the first lessons that any enKnowledge Process Outsourcing right In turning over the reigns to Ketrepreneur will learn is that since through to remote infrastructure services, shav Murugesh, I was able to place landing a client can be so tough, why to cloud computing and SaaS, we have my trust in an experienced, seasoned not keep them for life? Client centried to anticipate the direction the market executive who has progressed within tricity, superior execution, and delivis taking and stay ahead of the curve. the company from CFO to COO and ery excellence should not just be Though it may have seemed chaotic now, you'll join the now to of CEO. At Syntel we believe in viewed as operational goals or metat times – simultaneously trying to stayelite group readers who receive unbeatable, promoting from within, and in conrics – they are the lifeblood of your profitable, maintaining the right mix oftop-quality venture capital news every day. tinuously training and educating our business and the path to customer skills, and retraining our workforce to employees. Over the past three loyalty. avoid obsolescence – looking back over years, the training, retention, and deOne of the advantages that entrenearly thirty years in business, it is clear velopment programs launched by preneurs and smaller startup compathat several rock-solid constants have our Global HR Head, Srikanth Karra nies have is their ability to be nimble taken both Syntel and the IT industry forand his team have made a huge difand flexible in adapting to customer ward. The following are the important ference to Syntel, and an enormous needs. Whereas other players in our ones among them: contribution to our growth. space may focus on a factory apI believe that investing in your emproach, Syntel has worked over the 1. The Path toward Globalization is ployees not only reinforces loyalty, years to retain this entrepreneurial Irreversible but also ensures that you have the philosophy and to tailor our business Syntel itself is proof of this. Today, best talent to develop solutions for model to stay flexible and adapt to over 80 percent of our work is peryour customer problems. It also crethe changing realities of the global formed in India, and we have sucates an atmosphere that is collegial IT market. cessfully transitioned our core legal, instead of hierarchical, which brings finance, and human resources funcout the best in people. Conclusion tions to India. This makes us one of Although the business world has the very few companies to have succhanged dramatically in the past 30 cessfully made the transition from 3. World-class Infrastructure is Critical for Brand Building years, these four principles have rebeing 100 percent onsite, and posiSince we opened our first Global De- mained constant. If you have the drive, tions us uniquely to help our clients velopment Center in Mumbai, we stamina, and flexibility to take on the make this journey themselves as they have recognized that world class fa- challenge of running your own business, adapt to the new realities of the global cilities and infrastructure are critical these simple precepts should serve you economy to building a strong brand to attract well in the long run. They will enable Tomorrow’s entrepreneurs can rest talent and customers. you to think critically and make tough assured that this trend will continue, Since we broke ground on our decisions that will keep you and your as clients increasingly focus attention Pune Development Campus in 2006, business going through today’s uncertain on their core businesses and continue Syntel has continued to invest ag- and turbulent market and into the future. to outsource non-essential functions gressively in infrastructure, with the to improve cost, quality, flexibility, vast majority of capital expenditures Good luck! si and time-to-market.

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September 2009

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in H1-B Restriction: Silicon Valley to be Hurt

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everal bright minds outside America fly to the US seeking better opportunities in places like Silicon Valley, which is referred as the entrepreneurs’ Mecca. However, with the hue and cry surrounding the H-1B visas the flow of immigrants into the US may get affected, which may diminish the tech prowess of the most technologically advanced nation in the world in the long run. There was at least one immigrant founder in 25 percent of tech companies established in the US between 1995 and 2005, reveals a study by the Duke University and the University of California. These entities generated over $52 billion sales, while creating over 450,000 jobs in 2005. The US administration under George W Bush pushed for immigration reforms, which failed to take shape.

Now Barack Obama is in the White House; are these reforms on his priority list? Recently, Obama assured pro-immigrant activists that the reforms would not lose its importance to the healthcare and energy legislations. However, Senators Richard Durbin and Charles Grassley have sponsored a bill to stop the alleged abuse of H-1B visas. They have introduced a legislation to restrict the number of H1-B visas issued. These visas are popular among

major technology companies that bring some of the brightest minds to the US. The current situation can make the US less attractive to immigrants, who may eventually contribute to the country’s growth. Take the examples of Vikram Pandit, Indra Nooyi, or Sanjay Jha who came to the US and are now heading some of the largest companies on the planet. Commentators like CNN’s Lou Dobbs have highlighted a huge reverse brain drain from the US, which has been his dream, to be closer to reality. Immigrants that have received their education and work experience in the US, are packing their bags to go back to their homelands. In addition, for the first time in five years there is also a decline in the number of foreign students seeking admissions in the US universities.

Agrawal, Vice President of Strategy and Innovation at Deloitte. Agrawal has authored a study on the evolution of the Indian manager from the pre-liberalization period till now. The report states that globalization has helped Indian managers to develop their competencies

and a global outlook that has unleashed a lot of creativity and innovation in the domestic industry. “However, not many managers in the country have the required soft skills such as communication abilities for operating in a global environment among others. We need to build such skill sets to enhance our talent pools,” Agrawal adds. The Deloitte report states that it remains to be seen as to what extent the country would be able to enhance the competency level of its young population to make them employable. This is also a challenge, which the government would have to deal with in the years to come, it adds. According to Agrawal, if the shift is made now it will take 5-10 years to generate a good quantity of employable talent. si

Talent Deficit to Haunt Indian Firms

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fter showcasing their talents to the world all these years, companies in India could face a huge ‘talent deficit’ in the coming years, says a report by Deloitte. According to the report, the reason for this scarcity is that the country is not producing enough people equipped with the right skills required for the globalized environment. The ‘New India Manager’ report also states that new talent management model in companies will have to shift in their outlook. The report suggests that the paradigm of ‘scarcity of jobs’ should convert to ‘scarcity of talent’. “Unless a fundamental shift occurs in the educational system, it will continue to produce degree holders that will lack skills to operate in a corporate environment,” says Manish siliconindia

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September 2009

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loud computing is the latest super-hyped concept in IT. According to Gartner’s latest Hyper Cycle Report (2009), cloud computing is a very simple idea, but there are many issues regarding its scope for deployment that makes it a subject ripe for a Gartner Hyper Cycle Report. Gartner examined the maturity of 1,650 technologies and trends in 79 industry areas for this report. “Technologies at the peak of inflated expectations in 2009 include cloud computing, ebooks, and Internet TV, while social

Cloud Computing IT industry’s Latest Hype software and micro-blogging sites have tipped over the peak and will soon experience disillusionment among enterprise users,” says Jackie Fenn, Vice President, Gartner Fellow, and Co-author of ‘Mastering the Hype Cycle’. As enterprises seek to consume their IT services in the most cost-effective way, interest is growing in drawing a broad range of services from the ‘cloud’, rather than from on-premises equipment. The level of hype around cloud computing in the IT industry is deafening, with every vendor expounding its cloud strategy and its variants such as private cloud computing and hybrid approaches, compounding the hype. Another report released this year that paints cloud computing as over-hyped is

the McKinsey Reporttitled ‘Clearing the air on cloud computing’. According to this report, large organizations could lose money through adoption of this hyped technology. While cloud computing is optimal for small and medium-sized businesses, large companies will spend less if using traditional data centers. Virtualization is the optimal way to go, and by implementing virtualization in-house, corporations can reduce costs when factoring in depreciation and tax write-offs. Large technology vendors are launching new initiatives and are educating enterprise customers. Hype or no hype, cloud computing continues to be catapulted to the forefront as companies and governments use this emerging concept in the real world. si

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

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Americans, Britons visited India the most in 2008

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mericans and Britons continue to top the list of foreign arrivals in India. According to the latest figures published by the Tourism Ministry, out of the 5.37 million foreign tourists who visited India last year, 827,866 were Americans and 787,197 were Britons. The arrivals from Britain saw a decline of 1.1 percent in 2008, while that from the U.S. rose by 3.6 percent. However, there is a decline in the number of travelers coming from the neighboring Pakistan. Interestingly Bangladesh and Sri Lanka, the other neighbors, were third and fourth on the list, accounting for 540,092 and 228,548 tourists respectively. During the same period, 223,587 Canadians, 217,816 French and 209,252 Germans visited India, fol-

lowed by the Japanese (150,732), Australians (148,055) and Malaysians (119,040). In 2007, about five million travelers had visited India (nearly double from 2000), according to the Tourism Ministry. Visitors from the U.S. accounted for 15.7 percent of the total. According to a statement made by the Tourism Ministry, “Tourists from these 10 countries constituted about 64.34 percent of the total arrivals to India.” However, there is a reduction in the numbers from five countries including Pakistan, Finland, and South Africa. Arrivals from Pakistan reduced by 25.1 percent and from Finland and Kenya by 10 percent, compared to 2007. The number of travelers from Mauritius and South Africa fell by 8.5 percent and 6.2

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Gautam Godhwani

percent respectively. The first five months of 2009 showed a sharp decline in the number of foreign tourist arrivals in the country, compared to the same period in 2008. However, officials say that a slight increase has been witnessed from June. In other areas, the maximum growth was seen in tourists from West Asia and Eastern Europe in 2008, an increase of 20.9 percent and 18.5 percent over that of 2007.

Indians the Fastest Growing Illegal Immigrants in the US

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ndians are the fastest growing group of illegal immigrants in the US, according to the American Community Survey of the U.S. Census Bureau. Indians in the U.S. are the fastest growing Asian community as well, and the Asian Indian population in the U.S. grew from 1,679,000 to 2,570,000 in the seven years from 2000 to 2007. siliconindia

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September 2009

Indian Americans have the highest growth rate of 53 percent amongst Asian American communities. It is also amongst the fastest growing ethnic group in the U.S.. So far, Chinese Americans are the largest Asian American ethnic group followed by Filipinos and Indian Americans. Many Indians get into the U.S. with an H-1B Visa so they do not have to cross the border illegally. These might contain Indians who go to the U.S. for better job prospects but end up living illegally. The survey also shows that Indian illegal immigrants have attained a higher level of education than other illegal immigrants in the U.S.. Also, another reason for the increase in Indian Americans could be the fact that Indians can speak English fluently. Immigrants from India often work for high-tech companies and

perform highly skilled jobs such as engineering and computer programming. When it comes to illegal immigration, Hispanic illegal immigrants largely outnumber other undocumented immigrants. Even after restrictions imposed and the recent drug-blood bath, Mexicans make up nearly seven million of the estimated 12 million illegal immigrants. The next largest group of Hispanics is Salvadorans and Guatemalans. But Indians are the fastest growing group of illegal immigrants in the U.S., according to U.S. Department of Homeland Security report. As per the report, there are 270,000 unauthorized Indians in the U.S. - a 125 percent jump since 2000. This is the largest percentage increase of any nationality with more than 100,000 illegal immigrants. si

imply Hired, a Silicon Valley based job portal headed by Gautam Godhwani, has bagged $4.6 million in its series D round of funding. IDG Ventures and Foundation Capital led the funding to assist the company to further augment its presence in the international market. “With this new round of funding, we aim to support the future domestic growth, increasing the headcount from 50 to 80 in 2009, and accelerate our international expansion,” says Gautam Godhwani, Co-founder and CEO, Simply Hired. The funding follows 16 consecutive quarters of revenue growth and four quarters of positive cash flow. Including this round of funding, Simply

Simply Hired Raises $4.6 million in Series D round of Funding Hired has raised $22.3 million to date. According to ComScore and Nielsen Media, the privately held Simply Hired was the fastest growing job site in 2008. Its network, where Simply Hired powers job listings, includes LinkedIn, MySpace, The Washington Post, CNNMoney, BusinessWeek, and Plaxo, reaching 24 million visitors monthly. This strategy of reaching job seekers where they are spending their time on the Web, has earned SimplyHired.com and its network the ranking as one of the forty most trafficked websites in the US, according to Quantcast. “Job search is a global problem, and Simply Hired is committed to reaching both active and passive job seekers

globally at both SimplyHired.com and at other online destinations through our network,” says Godhwani. Founded in 2003, Simply Hired has recently launched localized job search engines for Brazil, Belgium, Ireland, Italy, and the Netherlands. Its other markets include Australia, Canada, France, Germany, India, Spain, and the UK; and the company now operates in 13 countries and seven languages across five continents. Godhwani says that IDG Ventures enables Simply Hired to continue to expand its footprint with additional resources and facilitates the company’s relationship with the network of 450 IDG online properties. si

CEO SPOTLIGHT

Mobile Apps Becoming all the rage!

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By Arish Ali, CEO, Skava Skava provides strategy and execution to brands, retailers and content owners to reach out to consumers across social sites, widgets and mobile devices. Arish Ali

he mobile apps space is all the rage today in large part thanks to the app store arms race started by Apple’s iPhone platform. Apple has to be congratulated and thanked for its enormously successful marketing campaign evangelizing mobile apps. Now that consumers have been educated to spend on mobile apps, there is obviously a lot of entrepreneurial angst directed towards exploiting the new platforms. As a veteran of the industry who has seen the development and launch of MIDP1.0, BREW 2.x and WAP applications, we have definitely come a long way in terms of features and capabilities

afforded by modern day mobile OS platforms such as iPhone 3.0, Blackberry, Windows Mobile 6.0, Android and many others. Any developer with basic programming skills can now develop a GPS enabled, network-aware app with video streaming capabilities integrated with popular social networking sites! Perhaps more importantly, any developer can now sell that app to millions of users. This new era of “un-walled gardens” brings a completely new set of challenges for any entrepreneur with a business plan that includes mobile apps. With the commoditization of the technical skills and distribution channels necessary to launch mobile apps, it is back to the basics for entrepreneurs thinking

of creating mobile apps – Content and Marketing. What compelling and unique content does your app provide to the user that users will actually pay for (adsupported apps just an indirect way of users paying you)? How will users find out that your app exists and is better than its clones? If you can provide convincing answers to these two questions, then you have the beginning of a mobile apps business plan. If you cannot answer these questions just yet, then I will still encourage you to dabble in the mobile apps space as a hobbyist. You will get a better feel for the industry, and you know what, you just may strike it lucky with the next great viral app that makes bodily noises. But….that is not a business plan. si siliconindia

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September 2009

CEO SPOTLIGHT

Phones must be ‘Smart’, Not Just ‘Smart Phones’ By Sanjeev Agrawal, CEO, Aloqa

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Sanjeev Agrawal

(Aloqa, founded in 2007, is the company, which created application for mobile phones which pushes notifications in real-time about nearby events and social opportunities – with relevancy based on the user’s current location, pre-defined interests, and social networks. Aloqa has offices in Palo Alto, CA and Munich, Germany)

n the next few years, phones will change in three fundamental ways to become a lot ‘smarter’ than they are today. Phones will add value by notifying us of interesting things than just being used as browsers. A phone is not a PC. It is an interrupt-based device that is intended to alert you – it rings when someone calls or buzzes when an SMS comes in. In the same way, it should ‘proactively notify’ you of content, people, places in your surroundings that would add value to your everyday life. You should be able to use your phone as a phone – a device that alerts you, as obtrusively or unobtrusively, as you’d like, of opportunities to socialize, play, work, shop, watch a show, or just grab a coffee.

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tion based apps is marketing material of various kinds, of course I would hate LBS too. Here is what we believe. Location is one very important component, but only one component of a user’s context. Who the user is, what they like, the time of day, their social graph – these are all important inputs to context as well. The phone has the advantage of always being with you – it knows your location, it can be trained to know whom you are and what you like, including social relationships you enjoy and therefore a perfect device for you to get ‘Context Based Services’. And in some contexts, those coupons we talked about do make sense – like if you want to shop or are looking for a cheap place to eat. si

Mobile Video: Overcoming Fragmentation issue is Important By Dr. Nickhil Jakatdar, CEO, Vuclip

Dr. Nickhil Jakatdar

obile video players, large and small, are currently in a pitched battle to replicate the success of online video in the mobile space. Indeed, the mobile video space – whether it be user-generated-content or premium content – is exploding as the amount of content being uploaded to the Web is increasing at a frenzied clip (estimates just for You Tube are that there is 20 hours of video being uploaded every minute). What makes this so challenging is the vastly different nature of the online video platform, which is essentially uniform, from the mobile platform, which is almost completely fragmented – across siliconindia

Interestingly, location will be a commodity and will be used in conjunction with other aspects of a user’s ‘context’ to enrich their experiences. Location Based Services (LBS) has become a dirty word for our generation of mobile users for a good reason – historically, ‘location’ has been used a little too simplistically by most mobile apps. The example people give of the holy grail of LBS is always the same – You are walking by a Starbucks, and you get a coupon sent to your phone. Well from what we know, Starbucks doesn’t even have coupons – the occasional unsatisfied customer may get a free drink voucher from the barista to use next time. And even if they did have coupons, if all I got all day from loca-

September 2009

(Vuclip is a mobile video search portal, which allows users access any videos in the web on mobile. The company is based in Milpitas, CA) handsets, operating systems, networks and now, even “app stores.” More than any other factor, fragmentation has been a barrier to the adoption of mobile video, and success in the mobile video space will be defined by those that can overcome the fragmentation problem and find a quick path to monetization. We belive an “on the fly” mobile video transcoding approach, along with the ability to use the native browser and media player of the individual device, is the best answer to solving the fragmentation problem. Together, they eliminate a significant barrier to adoption, both on feature phones as well as smart phones. Content is then limited only by what can

be indexed on the Web and there would be no need to pre-encode or store any videos, thereby making it practical to keep up with the exploding amount of new devices added weekly and new content uploaded daily. As for monetization, in-video advertising is going to be key. And make no mistake that the mobile video platform offers an exceedingly rich potential for monetization of video since the mobile phone offers the potential for very specific ad targeting–whether it be demographic, geographic or by interest. A dynamic mobile video ad-stitching engine will enable taking advantage of these ad-targeting opportunities. si

Monetization would be the Key Challenge

Ramu Sunkara By Ramu Sunkara, CEO, Qik Inc (Qik is a mobile live video streaming platform, which enables anyone to stream video live from their mobile phone to anywhere in the world. The company is based in Redwood City, CA)

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n the last two years, the mobile handsets have matured to become a viable development platform. Today, one can leverage the touch screen interfaces, GPS, accelerometers, good quality video capture, Wi-Fi access capabilities and build very sophisticated applications. Secondly distribution is also there, thanks to the proliferation of marketplaces like Apple App Store, Nokia Ovi store, Android Market place and so on. In just around two years, iPhone has thousands of new applications and growing. On the other hand, two years back, most of mobile users were using the phones to call or text someone. Now if we look at the mobile users, they know what mobile apps are and are choosy

about which they use without their carrier involvement. Many are free, so it’s easy to try new applications – and to discard them. In fact, most of the new applications have very limited use and the user never gets to use them after the first few tries. This ability to build sophisticated applications, distribute easily with out going through a lengthy carrier process and get consumers to try them out is creating an unprecedented opportunity for mobile application vendors. Over the next few years, we will see consolidation of the Software platforms (iPhone, Android, Symbian, Windows Mobile) for mobile handsets. In addition the intense competition among the handset vendors will drop the prices

considerably making it very affordable for most people. This creates a phenomenal opportunity and a challenge for entrepreneurs in this space: It’s crucial to be innovative both in product development and in how we monetize. On the product side, engagement upon first use is crucial. Customers need that rush of excitement the first time they open the application. On the monetization front, customers are looking for solutions that bring value to their lives. Value can be something that solves a problem or something that’s fun. Entrepreneurs have to be very creative on monetization as they are competing with other individual creators with zero overhead and equal access to global mainstream consumers.

Mobile Apps: Hot Space to Watch By Ajay Kulkarni, CEO, Sensobi

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Ajay Kulkarni

marter mobile applications that understand more about you and offer a personalized experience based on your usage patterns. There is a wealth of data about you sitting on your phone. Your mobile phone knows how many calls and text messages you send, whom you send them to, where you typically send them from, and much more. And this is information that is unique to mobile—very little of it is available from the Desktop PC. In the past this information, if used at all, was primarily used for targeted advertising. Today, with RIM, Apple, Google, and Nokia bringing faster, more affordable, and more powerful devices to market than ever before, we are entering a Smartphone revolution that changes the

(Sensobi is a Cambridge, Massachusetts based startup building a better address book for business professionals to help you stay on top of your important contacts) game. Thanks to the proliferation of smartphones and the increasing penetration of high-speed data networks, it has become much easier to capture all the information already sitting on the phone, analyze on the handset or on servers in the cloud, and then deliver a personalized experience to the end user. This is exciting. I believe that the top three factors shaping the industry in the new few years are 1) Increasing smartphone penetration, 2) Popularity of the app stores as a distribution channel, 3) Faster, more affordable data networks. The Apple iPhone AppStore has shown us how creative developers can be when given a powerful platform and how enthusiastically customers will download and try out new apps. As more of the world adopts Smartphones and

more manufacturers/carriers develop their own app stores, we will no doubt see a wealth of apps offering a wide variety of services. In terms of challenges, the key challenge that mobile entrepreneurs face today is monetization. Despite the popularity of the iPhone AppStore, we have yet to see any long-term sustainable businesses built entirely on the mobile experience. The onus will be on developers to identify revenue models are do not solely rely on advertising and one-off purchases. However, just as the birth of the Internet led to revolutionary new business models like Amazon, EBay, and Google, we will undoubtedly see novel business models emerge out of the mobile apps industry. si siliconindia

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COVER STORY

CellSpin Expanding CEll phonE to thE nExt lEvEl CELLSPIN QUICK FACTS

Founded: Co-Founders: Space: Investors: CEO:

Headquarters: Website: Bobby Gurvinder Singh, CEO

2006 Bobby Gurvinder Singh & Marcos Klein Mobile applications Angel Investors Bobby Gurvinder Singh SanJose, CA www.cellspin.net

S

ara frequents MySpace to connect with her old friends, make new ones, and drum up jobs. Well, this social networking savvy homemaker isn’t in front of a computer; instead, she uploads pictures and taps into the celebrated social network from her cellphone. “During my son’s birth, I used the CellSpin app installed in my mobile phone to post pictures to Flickr, Myspace, and other social networking websites from the hospital. You can

By Jayakishore Bayadi

also use it to upload videos to sites like YouTube,”says a cheery Sara. Mobile phones have rapidly become an essential and integral part of our daily lives. With over 4 billion people being touched by a cell signal every day, the mobile penetration has exceeded 2 billion connections globally. That’s why the mobile applications area has become one of the hot spaces to watch nowadays. The San Jose, CA, based CellSpin is one such mobile applications company that is all set to leverage the siliconindia

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September 2009

emergent opportunity to start a revolution by expanding the capacity of the cell phone to the next level. CellSpin’s innovative, user-friendly application, which is being used by number of social networking enthusiasts across over 120 countries, and growing with every new app store launch, enables the user to share photos, videos, audio, and text on the Internet quickly and painlessly. “With our simple and quick technology, you’ll never want to go back to the old way of uploading,” says a jubilant Bobby Gurvinder Singh, CellSpin CEO and Co-founder. As an extension of this opportunity, today, CellSpin has been successful in extending its products to the radio and TV stations as well, wherein listeners or viewers can send audio, video, photos, and text to the websites of these stations. When CellSpin was founded in 2006, social networking was just gaining momentum and was expected to be the next big thing in the Web 2.0 arena, founders Bobby Gurvinder Singh and Marcos Klein, both Cisco veterans, envisioned the revolutionary opportunity the convergence of mobile and Web 2.0 was to open up. Why can’t the cell phone in your pocket become a fertile territory for the hugely popular social networking trend? Though social networks take different forms, they typically link folks with common interests and values. The mobile variety tends to appeal to the throngs of young people who have an insatiable desire to stay connected at all times. And mobiles could also help in this. The logic was proved perfect. “That was the beginning of our journey. We set out to build the mobile application that helps users send media content to a wide range of destinations from websites, email addresses, and mobiles, which we call as mobile blogging platform. Just as you receive email and SMS messages on your cell, you can access the status updates,” says Singh. siliconindia

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September 2009

“

Cellspin’s innovative, user-friendly application enables the user to share photos, videos, audio and text on the Internet quickly and painlessly, which is being used across over 120 countries

“

Certainly, mobile blogging is emerging as a hot market segment with immense potential. According to available data, about 10 percent of adult mobile phone owners in the U.S. regularly access mobile blogging services and this number will almost double in 2011. In many respects, mobile could be a natural extension of the PC social networking experience in coming days. Facebook co-founder Dustin Moskovitz says, citing Facebooks’ mobile user base that grows faster than that of the website, “Nowadays things that are inherently social are inherently mobile.” Thus, phones provide immediacy not typically possible on a PC. What is intriguing is that folks can comment on a restaurant, concert, or dinner date during the activity. And friends may not wait until they get home to tell them how the date went! For most people, camera phones are the place where life’s precious moments flourish. Snap a photo of a favorite pet dog, and with CellSpin’s technology you can share your interest and joy by posting it on your social networking site directly from the mobile! Well, CellSpin initially had a plan to build such mobile applications for the smartphones. However, as the company evolved they learnt that smartphones would occupy only 15 percent of the total mobile segment, which made the founders to build the apps for non-smartphones as well. Today, CellSpin has premium application for 300 plus Smartphone models worldwide for media upload and mobile SMS, MMS, and email support for all non-smartphones worldwide. So with CellSpin mobile application and SMS, MMS, and email service, one no longer has to wait to get to his computer to post audio, video, photos, and text to the favorite websites simultaneously, like Facebook, MySpace, Blogger, YouTube, Picasa, Flickr, Live Journal, and Live Spaces,

with others to follow. “What is interesting is that by using the CellSpin software and by selecting multiple publishers on the post screen one can send the content to multiple sites at the same time making life of a user much easier, which is our key differentiator. And CellSpin is the first and only mobile application enabling mobile phone users to seamlessly integrate multimedia content to live eBay auctions,” claims Singh. Today, CellSpin is seeing an evergrowing demand from users across the world. As of now, the company offers its application free for its users, as it is mobile advertisement supported. The application, which is successful on the iPhone platform as well, and is soon launching on Android platform, is available in various app stores, including Apple’s iTunes, Blackberry app store, and Nokia’s Ovi store. “Users, assuming they are already signed up for an account, can also download their apps for Apple iPhone, Blackberry Curve and Pearl, Blackberry Storm, Windows Mobile, Palm OS, and Nokia S60 at their respective websites. Though the company is currently offering its advertisement-supported apps for free to its users, it aims to charge the users for its mobile applications soon. Though mobile advertising is big, it’s not growing as fast as it used to be and as estimated, which prompted CellSpin to launch premium apps wherein users need to buy the application for use. “Also, the big question for us was sustainability in user behaviour. Stickiness factor becomes important in this business. Once the user downloads his app, he may be active for initial few weeks or months. Later on, people’s interest in using the app dies down, due to which advertisers may pull off. Hence, if you charge users for the apps, one will get his investment upfront, rather than waiting for advertisement revenues to fill your investments,” adds Singh.

“

Mobile blogging is emerging as a hot market segment with immense potential. According to available data, there are about 10 percent of adult mobile phone owners in the U.S. regularly access mobile blogging services and that will be almost double in 2011

The Extended Opportunity Singh says, “Let us say you have a radio show, TV show, or you are a famous blogger, celebrity, artist: How do your listeners, viewers, and fans interact with you or your show on your own website. Community blog is a form of blog that allows you and your community to interact with each other, using content from both mobile and the Web on your own website.” It was in 2008 that CellSpin’s founders began exploring another potential market. Why not approach radio stations, TV stations, and media organizations? Even these organizations want to keep their millions of listeners, readers, and viewers engaged with them. For a typical user, there is no easy way to interact or share their pictures, audio, video, and text with their favorite radio or TV station from their mobile other than through email. “Even radio stations wanted the ability for their listeners to send pictures, audio, video, or text, from their cellphones to the station’s website. All the big channels like CNN might have the financial muscle to implement such a capability, which may not be true in the case of small and medium FM radio stations. “That’s why, sensing the needs of the radio stations, we decided to approach them,” says Singh. Today, there are about 13,000 radio stations in the U.S, and 700 in Canada, and about 2,000 newspapers, over siliconindia

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September 2009

2,000 TV stations, about 100,000 potential widget users pertaining to small and medium businesses in the U.S. and Canada. And the potential worldwide market for the medium sized media properties is 100,000 widgets. In India there are about 500 FM stations as of now, and the numbers are likely go up to 1,000 by 2010. Foreseeing this, the company started building their second flagship ‘community blogging’ product for this segment. The company has enhanced the same mobile blogging application to suit the new platform wherein the stations can embed one line of code on their websites and enable their users to send the media content to thewebsite by creating a user generated content (UGC) platform. CellSpin UGC platform will provide hosted media storage and backup for all types of UGC, mobile application for all smartphones worldwide for media upload to radio or TV shows, mobile SMS, MMS, and email support for all non-smartphones, integrated live PC Webcam video recording and uploading, integrated live PC audio recording and uploading, integrated file-browse capability for pictures, text, video, and audio uploading inside the UGC widget for radio or TV shows along with integrated facilty, security, and spam protection and flagging capabilities for each media type for the user community.

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September 2009

“

Cellspin is exactly what terrestrial radio needs to connect with the social media landscape. Their tools allow Radio station’s listeners to interact with FM radio and it’s DJ’s in ways never before possible

“

“CellSpin is exactly what terrestrial radio needs to connect with the social media landscape. Their tools allow my listeners to interact with FM radio and it’s DJs in ways never before possible and as a result my stations ratings and web page views have quadrupled. CellSpin truly is Radio 2.0,” says Aaron Traylor, Program Director, On-Air DJ at Gap Broadcasting Radio, one of the clients of CellSpin that operates 116 radio stations in 24 markets across the USCellSpin. Interestingly, even radio stations promote CellSpin apps so that more users can download the apps and more and more of their users can stay in touch with the stations. In fact, his exercise could give a greater mindshare about CellSpin to the listeners of the station. The company offers its application on SaaS model and charges the station based on the views they had got per show widget. They are also planning to charge these radio stations on a monthly basis. The CellSpin platform is now being used by 10 radio stations in the U.S. The company is working with a major Media Company, which is top player in the radio industry that sells digital technology to radio industry in the U.S. Cellspin is also working with few leading Indian firms to bring the mobile and communityblogging platform to local Indian market. That will have better integration with locally popular social networking sites like Orkut, BigAdda and many more. Well, what is intriguing is that in terms of acquiring users, the mobile blogging and community blogging are totally different ballgames. And even the user patterns differ. “From both we are targeting millions of potential users at a single instance. Moreover, as one may be aware, each radio or TV station or media organization will have millions of users, but

they are local. However, by integrating with social networking sites across the countries, we may get the audience in millions and much more than we get from the community blogging as the user base could be bigger and diverse in nature. User behaviors are also diverse in nature in both the categories,” informs Singh.

Challenges in the Game It is not an easy task to build an application, which should run on different operating systems (OS) when there are over six operating systems out there. “What was challenging was that we had taken every platform which is out there into consideration and write codes for them. Our team has to work extensively in the backend to support this entire social networking site as well,” explains Singh. CellSpin has about 18-20 high-end servers sitting in the data centers along with Amazon servers that take care of activities of millions of CellSpin users. “Furthermore, we need to constantly upgrade our apps as well whenever there are updates in the OSes. This is the biggest challenge for us,” he adds. In addition, the company needs to keep pace with these networking sites by making necessary changes in our backend system and connecting with them so that there is no user interruption due to technical reasons. And adding new features to the application is another task CellSpin carries out in their labs. “Attending requests of integrating from diverse social networking sites from different countries and making this work on all those 400 plus versions of smartphones and non-smartphones is quite a demanding task,” he explains.

The Road Ahead For CellSpin it was indeed a challenging journey. Though the company initially started with the vision of becoming a leader in mobile blog-

“

With more than 400 million smartphones expected to be sold by 2010, Cellspin is sitting on the gold mine of a huge market opportunity. Even in the emerging markets like India and China where 3G is set to roll out, it is creating novel opportunities

ging space, now it has evolved to provide mobile applications to the small and medium media companies by enabling them reach out to more people using CellSpinits technology. “A company may start with a vision; however, over a period of time a company should evolve to see what is the right thing to do, where the opportunity and money is, and what the strategic direction of the company should be,” opines Singh. The privately held, angel funded company has been conferred the Top Mobile Application Award for 2008 by the leaders in mobile industry and was selected as one of the Top 10 companies to launch at DEMO 2008. Going forward, with more than 400 million smartphones expected to be sold by 2010, the company is sitting on the gold mine of a huge market opportunity. Even in the emerging markets like India and China where 3G is set to roll out, it is creating novel opportunities in mobile space. With well-defined strategies, certainly there is a bright prospect for CellSpin to fulfil its aim to touch the sky of unlimited opportunities. Certainly, CellSpin is all set to become the leader in mobile social media services space that connects mobile consumers with their online social networks, personal blogs, photo storage sites, and their favorite community destinations like radios or TVs from the pint-sized gadget called cell phones! si siliconindia

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September 2009

EC Manage Betting on Efficiency & Competency

Company Spotlight: By Jayakishore Bayadi

“W

hen we approach a client, we do not sound as just another SAP and Oracle Applications services provider. We work on core of the products as we have the team with deep expertise, few of which are worked before in development of these applications, which is our key value proposition to the client,” claims Rabi Chakraborty, CEO of Fremont, CA based EC Manage. The 10-year old IT services company, incorporated in April 1999 provides SAP application services; offshore development; outsource development; and workforce management services to companies in the life sciences, retail, financial services, telecom and media, and utility/energy industries. Interestingly, the company has also indigenously developed few applications which SAP and Oracle doesn’t offer and could seamlessly work hand-in hand with larger frameworks like SAP and Oracle. It was during 2002, when Chakraborty, an Oracle veteran, and his team decided to bestow a whole new outlook for the company, which was till then working on web technologies, Java, J2E platforms, and prosiliconindia

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September 2009

viding consulting services apart from developing several small extension of products. “We found applications services would be the preeminent area to work as we believed that in coming times businesses need to pursue the business applications in order to survive and be efficient and hence we began with offering Oracle, Peoplesoft applications services. In 2004, we started on SAP applications services as well. In 2006 we started on development of our own frameworks, like eMed Report, a health records management solution and eWork Bench, a workforce management solution which are hugely appreciated by our customers,” says Chakraborty. With hundreds of ERP solutions vendors and service providers floating around, it is interesting to note that why EC Manage stands out from the crowd. On the one hand, you have big firms who threw bodies at implementation projects and clocked big time fees, and on the other hand you had these small-to-big players who were finding immigration loopholes and building body shops. Despite all these, as a competent team firm off the street, EC Manage has been betting on their core expertise and domain knowledge. “Our consultants in the company pride themselves with their successful

EC MANAGE AT A GLANCE Founded: Space: CEO: Global Headcount: Headquarters: Global Revenue: Website:

Rabi Chakraborty

stints on projects on technology domain solutions such as SAP, Oracle, PeopleSoft, Microsoft, Java, and mainframe/legacy systems. We follow a framework that allows us to approach a much broader client sector. We recognize that each organization has its own way of doing business and as such may require a custom fitted solution that is technically precise and form fitted to their business needs,” explicates Chakraborty. To make this happen, EC-Manage, which is now grown into over 692 people organization globally, deploys a wide range of technology professionals including developers, business analysts, subject matter experts, specialists in database, networking, and others, interestingly, all having average expertise of over five years.

Focusing On $50-$500 Segment Today, most industry experts agree that the large enterprise market for SAP and Oracle solutions is nearing saturation. There is also a general consensus among experts that the market for selling SAP and Oracle solutions to small and midsize companies is nearing an inflection point and is poised for rapid growth. However, though EC-Manage maintains a long history of project delivery for its For-

1999 SAP Applications Services Rabi Chakraborty Over 692 Fremont, CA $72 million as on July 31, 2009 www.ec-manage.com

tune 500 clients all over the U.S., since the beginning, the company’s focus has been the category of companies who fall between $50-$500 million in revenues, of which Chakraborty calls as “$50-500 segment”. Total addressable market in this segment is estimated as over $2 billion. That’s why as a nimble, mid-sized organization with a deep talent pool, proven capabilities, Chakraborty believes EC Manage can build competence quickly and price more competitively than its competitors or big players in the market, whose diverse portfolio of services creates inefficiency with SAP/Oracle and whose high overhead often prices them out of the “$50-500 segment”. “We are efficient people. We are not looking at cheap way of executing things. Our focus is fulfilling client’s need, which should be done in an efficient manner,” explicates Chakraborty. He claims that the company provides over 30-40percent cost advantage compared to its competitors, depending on case to case. And that is the reason while many of the SAP and Oracle application services providers in the market are floundering without a viable business model, EC Manage has managed to grow, and grow steadily. As on July 31, 2009, the company has registered consolidated global revenue of $72 million. Today the company has big names like Accenture, Cognizant, Synopsys, IBM, which is the latest acquisition, as some of its key clients. The company has its presence in the

San Francisco, San Diego, and Dallas. Internationally the company has offices in the London, Toronto, and Canada along with specialized Global Support Centers in Hyderabad and Bangalore in India. Other key reason for EC Manage’s sustained year-over-year growth since its inception, according to Chakraborty, is the firm’s steadfast focus on building deep expertise implementing, customizing and maintaining, and upgrading SAP and Oracle solutions. “We’re well known for our SAP and Oracle experience. It is why they put faith and trust in EC Manage. We get the job done right, on time and on budget,” says Chakraborty. Another differentiator is that the company’s customers, not EC Manage, own their SAP/Oracle Applications licenses. This helps the company develop the superb working relationship with SAP/Oracle that could keep their consulting practice and customer support so strong.

of immigrants into U.S. may get affected, which might create scarcity of good manpower for the industry. Well, till date, the company has been managing the business with their internal accruals. However, going forward, the company’s top priority would be to growing the top line. “We also intend to create separate entity to market our product portfolios in the near future. And most importantly, the company is actively looking for technology level partnership with SAP and Oracle. “As we stepped on our 10th year in the IT consulting services business, we embarked on a remarkable Quality Journey to prepare itself in achieving SEI-CMMI Maturity Level 3 certification by the year’s end. Our executive team is aware of the challenges that await the company, but the team is fully committed to deliver only the best services to our company,” states Chakraborty.

Challenges and the Road Ahead Despite all these, journey may not be smooth either. There are few challenges as well. Particularly, since the company is focusing on “$50-500 segment”, Chakraborty fears of uncertainty in this market segment, as there have been the instances of delay in decision-making and implementing solutions and abrupt termination of projects by the companies. Not only that. Overall availability of capital in the market is limited as most of the companies in this segment are run by internal accruals. Another key challenge he perceives is that with the current hue and cry surrounding the H-1B visas, the flow

Though the global industry landscape was drastically changing with ongoing difficulties affecting key business players, the company is seeing vast opportunities which is yet untapped. Currently, the company is strengthening its SAP practice in preparation for new challenges and opportunities in this ever-changing business climate. For the next decade, EC-Manage aims to position itself as a choice SAP application services provider to leading SAP partners in the West Coast. Certainly, with EC Manage being focused on its goal of becoming key solution provider in the space rather than just a service provider, it is well prepared, and well led to achieve its growth goals. si

“We follow a framework that allows us to approach a much broader client sector. We recognize that each organization has its own way of doing business and as such may require a custom fitted solution that is technically precise and form fitted to their business needs”

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September 2009

Technology: By Loren Weinberg & Elaine Chen

MAKING THE CASE

Loren Weinberg, Senior VP, Marketing and Product Management and Elaine Chen, Director of Marketing, FatWire Software

Q Participate

50 40 30 20 10 0

Analyze

Conceptualize

Web Experience Management

Deliver

T

Target

Design Publish

Fig1

he Web is a primary channel for driving sales, customer loyalty, and operational efficiencies; so building an effective Web presence is clearly business-critical. Investing in the right Web initiatives can also quickly deliver a meaningful return on investment (ROI). Web Experience Management (WEM) capabilities can enable enterprises build and deploy an effective Web presence that will help drive revenue and cost savings. This makes it easy for business users to manage the Web content, campaigns, and the websites as a whole and deliver a relevant and engaging experience to website visitors. However, in today’s challenging economic scenario many enterprises have become cautious about major new technology investments. To secure a budget for these important initiatives, one must therefore demonstrate a positive ROI from the Web projects. Fortunately, one can make a compelling case for WEM using a straightforward method of ROI calculation and measurement. The solution begins with outlining a business case for the WEM initiatives and determining the metrics most important to your business that WEM projects siliconindia

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September 2009

Author

ROI from Web Expe rience Management

With WEM, organizations can centrally manage and globally deliver a rich customer experience and consistent branding across multiple sites in multiple languages can have an impact on. From there, straightforward ROI projections can be created based on potential bottomline as well as top line improvements. These projections can help get your projects funded and off the ground; and can also demonstrate success to your organization as the project progresses.

From Managing Content to Managing User Experience The Web is critical to a positive customer experience overall. Organizations have realized that to be effective in marketing, customer service, internal and external communications, and more, they need to deliver highly relevant content and a rich and interactive customer experience online. According to Forrester, 63 percent of WCM decision makers view improved customer experiences as a goal for Web content management implementations. WEM capabilities are the set of tools the marketing and customer experience professionals need for easily

managing and updating Web content and for transforming the site visitors’ Web experience as rich and effective as possible. The right WEM platform not only supports revenue-generating activities, but also drives significant operating cost savings by enabling organizations to engage a broad audience in a targeted manner, to encourage communities around their products and services, and to manage a large Web presence with ease. WEM capabilities are thus central to driving both top and bottomline business results. WEM solutions offer the ability that enable business users to collaborate around Web content, author content online, design the site layout, publish content to the live website, create targeted campaigns for online visitors, dynamically deliver the right content to the right site visitor in the right language, analyze and optimize the effectiveness of Web content, and enable online community interactions with user-generated content. With WEM, organizations can centrally

manage and globally deliver a rich experience and consistent branding across multiple sites in multiple languages, supporting and utilizing a diverse set of content contributors. Fig1: The components of WEM

Driving Top Line Success By offering an engaging online customer experience, organizations across many industries can gain tremendous benefits, including increased site traffic, conversion rates, customer advocacy, and customer loyalty. Organizations can drive revenue-using WEM through several key techniques:  Increasing return visits and loyalty: With the relevant content and an engaging Web presence, organizations can influence the prospects, customers, partners, and other site visitors to return more often and recommend the organization’s products and services to others. For companies selling online ad space, this leads to greater revenue through more eyeballs on the site. For organizations selling products, this leads to a greater likelihood for prospects to convert into customers, as well as shortened





sales cycles. For information-based services this leads to a higher quality service being delivered, driving subscriptions and readership. Increasing online conversion rates: Through enabling targeted content and campaigns – and making it easy to optimize these campaigns regularly – WEM can help increase conversion rates as well as upselling and cross selling. With targeted promotions and recommendations, organizations can provide site visitors with the most relevant information based on their preferences, needs, or stage in the sales cycle, making them more likely to register and make purchases. Improving time to market: By

launching new online content and promotions more quickly, organizations can realize the gains from their programs sooner, as well as respond rapidly to new developments or market changes. For example, a news site that is able to post frequent updates during a major newsworthy event can increase page views significantly, and thus its reputation and ad revenue as well. In the meanwhile, a product company that can get information on a new product or service to market online faster can see the impact of those new capabilities realized earlier. Fig2: A model for the top line revenue results organizations can achieve by implementing WEM

WEM Revenue Generation Net Benefit Model Stratergies

Reduce Time to Market

Increase Return Visits and Site Stickiness

Increase Conversion Rates

Increase Customer Loyalty

Metrics

Time to publish time-sensitive content/news

Number of site Visitors

Ratio of visitors: purchasers

Repeat site visits

Number of page views per visitor

Ratio of visitors: registrants

Time to luanch new campaigns and products online

Fig2

Repeat purchase rate Customer satisfaction ratings

Time spent on site Volume of UGC items posted

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September 2009

Driving Efficiencies and Saving Time WEM solutions can provide significant savings by minimizing the amount of time it takes to perform routine site maintenance tasks, and enabling IT and business resources to be used more strategically. The key efficiency drivers include:  Increasing IT output: By enabling marketers, content contributors, and other lines of business staff to author and edit content, WEM solutions can create dramatic savings by taking the burden off the IT staff that perform the daily content management tasks. IT resources can thus be used instead on higher-value technical tasks. For example, a major financial company has been able to support over 100 sites and 150 different content contributors globally with a team of only four developers, driving tremendous efficiencies for their business and enabling a small development team to strategically and successfully support a global business.  Increasing content contributor and marketer output: Easy-to-use tools for managing website content and campaigns can also provide the marketing department and the other lines of business with great efficiency. With intuitive tools, business people can more quickly and effectively manage content and campaigns without having to wait in a queue for assistance from technical staff. Reduced time in creatWEM Cost Optimization Net Benefit Model

Business Stratergies

Metrics

Increase Content Contributor and Marketer Output

Improve Customer Service Efficiency

Time to create/edit content

Number of customer service calls

Page layout time

IT Increase IT Output

Time to support content authoring Time to support page layout

Time to publish Time to support content publishing

Targeted content creation time

Time to support campaign management

Training time

Fig3

Collaboration time

Time to support content repurposing Time to train business users

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ing and editing content, finding and reusing content, and creating and launching online campaigns leads directly to greater business efficiency. The user-friendly interfaces can also limit training time required and encourage a high rate of adoption of WEM tools.  Increasing customer service efficiency: Using WEM tools to create and maintain an up-to-date customer support site with the content targeted at the individual customers’ needs can result in major savings. By enabling customer self-service and encouraging them to go online rather than call the customer service phone center, organizations can deliver high-quality customer service with limited resources. For example, a global technology company was able to cut support center call volume by half after implementing a new dynamic customer support site, saving millions of dollars per year. Once bottomline cost savings are calculated, they can then be added to top line revenue increases to produce the net benefit of implementing the WEM solution. Fig3: A model for the savings organizations can achieve by implementing WEM

Net Benefit and ROI Once an organization has calculated the projected net benefit of the solution based on the metrics most relevant to its goals and strategies, this number should be compared to the total cost of ownership (TCO) for the WEM solution. TCO is calculated by adding software license fees, professional services costs for implementation, and ongoing maintenance and support fees for the WEM project. The TCO of any pre-existing Web content management system should be subtracted from this amount to calculate the true incremental TCO of the new system.

Calculating ROI Net Benefit Revenue increase annual net benefit Cost savings annual net benefit Total annual net benefit (A+B)

Value A B C)

Incremental TCO Proposed solution cost Current solution cost Total net cost (D-E) Yearly ROI Payback in months

Fig4

A WEM solution can create dramatic savings by taking the burden off the IT staff that perform the daily content management tasks as it enables marketers, content contributors, and others to author and edit content With both projected net benefit and incremental TCO, one can determine how quickly the investment made in the WEM can be paid back. Using these data points, the payback time in months and subsequently the annual ROI payback percentage one can expect to achieve can be calculated. These calculations are critical to building a strong business case for investment, and for showing the success of WEM projects over time. Fig4: ROI worksheet One final note: In addition to the measurable ROI, it is also important to consider the added non-financial benefits the WEM can provide – such as higher customer satisfaction and loyalty, an enhanced brand image, and improved employee job satisfaction and performance. No matter what solution or approach you choose, continuing to measure and analyze your results over time will be key to achieving your business goals and showing results to your stakeholders. si

siliconindia

St art up city ...the big event ffor sta startups rtups

D E C/F F/(C/12

September 12, 2009 Mumbai

Highlights

Come Meet the ‘cool startups’

100 Startups to showcase their products

Watch live product demonstrations

More than 50 VC firms to attend & judge the presenting Startups

Get a peek into cutting edge technologies

Awards to Best Startup in 10 Categories

Lay hands on the best-of-breed solutions

Significant presence of partner companies and potential customers

Meet young, energetic, passionate geeks

Over 500 Startup companies to participate Over 5000 delegates to attend the product demos at booths

For Sponsorship opportunities please contact [email protected] or call 080 43402000

Exhibitors

Silver Sponsors

Media Partners

For more details visit:

www.siliconindia.com/startupcity

BUSINESS: By Karthikeyan Krishnan

A Journey in CEM The author is Lead Consultant at Collabera

Customers Perceive Value Based on Experiences They Receive

I

Introduction n the extremely competitive telecom sector customer satisfaction is a vital metric of success.Customer Experience Management (CEM) is a crucial aspect for communication service providers (CSP) that aim at achieving this. In the current market scenario, CSPs are dealing with a dynamically changing economy. As of today, we have moved from a product economy to a service economy, and heading towards an ‘experience’ economy, which adds a level of emotion, that was previously missing in a product or a service economy. The complexity of dealing with emotions of a customer increases, given the fact that today’s customers are using multiple channels and complex methods to do business, like IVR, Web, contact center, email, chat, and POS.

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Today’s new service offerings are possible from the convergence of not only the wireline and mobile communications sectors, but also from bringing together the communications, computing, media, entertainment, and advertising industries. Still, customer satisfaction remains one of the key differentiators in the battle for market share in a converged services world. A solution for this problem is not to simply add another system or improve a business process, but to continually monitor what the customers experience. In this article, we talk in detail about Customer Experience Management (CEM) such as ‘What is CEM?’, ‘Why do we need it?’ and ‘How to successfully implement it?’.

Customer Experience Management (CEM) CEM is a ‘strategic approach taken by the CSP to augment business processes and integrate a myriad of data sets, software systems, processes, and people to positively impact the subscribers’ experience’. In order for a business to assess the customer experience (CE), each interaction must be managed across each part of the CSP business throughout the customer life cycle. Customer Experience Management might be characterized as the next logical generation of Service Quality Monitoring (SQM). CEM truly connects the monitoring and assurance functions of the OSS to business objectives - ultimately leading to enhanced customer satisfaction and a stronger business bottom line.  CEM assumes that products and services are no longer sufficient to satisfy the customer and elevate the value proposition to the next level of an experience.  In addition, it promotes an equal relationship between customers with CSP and ongoing dialogue



that improves and strengthens quality and length of the relationships. Companies that have adapted CEM strategies have placed an emphasis on their system, process, people, and customers as a part of the experience creation and delivery. It is a strategy and not point solution.

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throughout different parts of the organization, making it difficult to gain a unified view of the customer. It creates inconsistent customer experiences across channels. Currently, ARPU is dropping and churn is increasing in the CSP business model. As a result, it is nearly ten times costlier to win a new

CEM emphasizes the duration of relationship and treatment of the customer as a journey, placing a greater emphasis on every interaction that leads to the experience of the delivery of promised relationships Importance of CEM for CSPs A telco has lot many systems in the world to address Customer Satisfaction from various perspectives. Then why we need CEM? Let’s look into some of the reasons:  CSPs are investing billions of dollars in capital to provide convergent mobile and fixed broadband services to consumers and businesses but this has not led to improvements in customer loyalty, which is reflected in price concessions and churn in mature segments of their business.  CSPs may have the most innovative loyalty and retention programs, highly competitive marketing for their products and services; however, the churn rate is increasing.  CSPs are adding more and more product and service offerings for their customers; and these customers are experiencing and perceiving them through new and emerging touch-points and channels. Managing such a dynamic and complex mix of channels is a nightmare. In many cases subscriber information is scattered

customer than to retain one. How do you manage these challenges? 1. A management system that provides you quantifiable metrics to measure results. 2. A scientific approach that clearly explains the relationship between satisfaction, spending behavior, and customer preference or recommended products. 3. A sound and solid management principles to correlate customer experience and CSP brand strategy. 4. And a systematic framework and methodology to design and monitor effective customer experience delivery across multiple channels and touch-points throughout the entire customer lifecycle. CSP can significantly improve their Return on Investment (ROI) with a well-implemented Customer Experience strategy.

CEM for CSPs, ‘HOW’ CSPs should have a four-step approach, a cyclic model to be successful in CEM. (see fig1) siliconindia

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September 2009

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FAQ: CSPs already have CRM. Does one need CEM? Difference between CRM and CEM Traditionally, CRM systems have been internal or operational centric; they are about profiling and collecting customer data for marketing and cross selling purposes. Too often,

CRM can be explained in the following way: Every time the company interacts with the customer, the company learns something new. By capturing, sharing, analyzing, and acting upon this information, companies can better manage individual customer profitability. Gartner Research says that

STEP 1: Discover

• • •

Identify CE Improvement Areas Identify Indicators Identify Metrics Note: You should use one of the Customer Experience Analytics tool That will help STEP 2: Benchmark your business

• • • •

STEP 4: Validate

•

Customer Experience Results against measured attributes or metrics parameters

fig1

Identify CE Specific Biz Scenarios Analysis of your performance against CE Metrics Determine your Goal As- Is Analysis Gap Analysis

STEP 3: Implement Incremental changes in System, Process, and People to achieve the benchmarked goals

the emphasis has been on the company’s goals and not necessarily what the customer wants.

around $46 billion was spent on CRM systems to help institutions get closer to their customers. 55 percent

CRM was born originally to maximize revenues and profits from loyal customers. CEM differs from it in that it aims at managing each customer’s experiences and learning and mutually benefiting from them

CRM was born originally to maximize revenues and profits from its loyal customers. With CRM there were very few, if any, listening mechanisms or other aspects of mutual relationships. Most companies simply viewed it as a quick way to increase revenues from existing customers. siliconindia

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September 2009

of all these CRM programs actually drive customers away and dilute earnings, bringing forth this emphasis on customer experience. CEM, on the other hand, is highly customer-centric and utilizes systems, technologies, and simplified processes to improve the customer’s experience with the company.

CEM is emphasizing the length of the relationship and the treatment of the customer as a journey and not as a destination. In addition CEM places a greater emphasis on every interaction, thus leading to the creation of experience to the delivery of those promised relationships to the desired target customers. Customer Experience Management is turning the customer experience towards company process and tunes it accordingly. CEM’s premise is almost the mirror image. It says that every time a company and a customer interact, the customer learns something about the company. Depending upon what is learned from each experience, customers may alter their behavior in ways that affect their individual profitability. Thus, by managing these experiences, companies can orchestrate more profitable relationships with their customers. Customer-Centric Journey: Summary In today’s competitive communications market efficient customer acquisition and retention is critical; and service providers are locked in a battle for customers and wallet share. In response to the competitive pressure, many service providers are moving from a network-centric to a customer-centric mindset in order to provide excellent customer service, build brand loyalty, and maximize profitability.

Key aspects: CEM is a strategy involving Systems, Processes, People, and not a point solution  CEM is different from CRM  CEM is a continuous strategy and not one-time implementation A successful CEM will enable a CSP to conquer the last frontier: positive customer experience is a strategic differentiator. si 

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INFRASTRUCTURE

ByAnil Seth

INDIAN INFRASTRUCTURE SECTOR Paving the Way for Tomorrow’s Growth

he Infrastructure sector in India is traversing through one of its most interesting phases today. If we look at our growth pattern over the past few years, we will realize how important it is for a country to have a strong infrastructure to enable growth and development. It’s imperative that the nation prepares itself for the future and the next anticipated growth curve. I am happy with the fact that our government is pro-development and will look into the issue with utmost concern and expedite the necessary initiatives. Infrastructure projects, such as urban public transport systems like metros, expressways, superior quality highways, flyovers, and world class airports will enable us achieve our dreams – however, these projects need to be envisioned with a long term perspective. There is a huge opportunity for other allied sectors to participate in the infrastructure sector’s growth across India. A huge gap in demand and supply of power, additionally plagued by the losses in transmission and distribution provides an opportunity to augment this requirement. We would need to up the power generation as well as make sure that proper transmission and distribution systems are in place so that the AT&C losses, theft, and pilferage could be minimized. Opportunities in water and environmental engineering are immense. Investment of Rs. 2.3 trillion ($55 billion) is proposed for water resource management in the eleventh five year plan. Moreover, India’s water market is one of the largest in the world, with approximately one-third of the total estimated value dedicated for water provisioning, one-third for municipal water treatment, and the remaining one-third for industrial water treatment. The overall annual growth rate is 15-20 percent, with the drinking water and industrial segments growing even more rapidly. India’s urban water demand is expected to double and its industrial demand triple by 2025. The PPP model will be crucial to accelerate growth and increase output and efficiencies in this sector. In addition to this, we also need more foreign collaborations so that we can replicate models that have worked elsewhere in the world after suitable customization to Indian conditions. Also, integrated solutions are the need of the hour.

We need to ensure the clients engage with one single partner for construction, operation, maintenance, and management to ensure ownership. Important steps to accelerate infrastructure growth in our country are initiatives such as public-private-partnership, a long term contractual partnership between private and public sector agencies, specifically financing, designing, implementing, and operating infrastructure facilities. Similarly, the road networks across the country need to be expanded and the existing networks need to be overhauled, so that our nation can race ahead on the fast lane of growth. India needs a large amount of investment in coming years for upgradation and modernization of its existing infrastructure and for creation of new marvels like the Bandra-Worli Rajiv Gandhi Sea Link in Mumbai. We also need to uplift the standard of living of the population in the country. A healthy population will lead the nation on the road to development. Along with urbanization, steps need to be taken to ensure environmental protection too. We need to step up the projects pertaining to renewable energy and water conservation to ensure a sustainable development. The Union Budget 2009 has sent the right signals to the infrastructure industry and should provide the necessary fillip to accelerate the overall growth and development in the country. The government has stated that bottlenecks for speedy implementation of infrastructure projects will be removed to ensure that sufficient funds are made available to this sector. Allocation for the National Highways Development Programme being increased by 23 percent, Jawaharlal Nehru National Urban Renewal Mission by 87 percent, and Accelerated Power Development and Reform Programme by 160 percent are a definite welcome signal from the government for renewed growth across the board. Rajiv Awas Yojana, the new program aimed at making the country slum free in the next five years by providing hygienic dwellings to the urban poor is a progressive initiative. On the whole, we will be seeing a lot of activity in the infrastructure sector in the near future. si siliconindia

Anil Seth, Chairman, Subhash Projects and Marketing Limited (SPML)

Developments in the infrastructure sector encompass and impact growth in every other sector; and we are in the right path in giving priority to this most important sector

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September 2009

TELECOM

By Anil Nair

Anil Nair, Managing Director, Avaya GlobalConnect (AGC).

He can be reached at

[email protected]

telecom

the of

great leveler

T

Social & Economic Strata

he phenomenal growth of Going forward, there is Indian telecom sector in a great opportunity for the last ten years has been marketers to use the most defining developtelecom infrastructure ment in India’s history, as a reliable channel for which is second only to the economic business reforms of 1991. The Indian telecom siliconindia

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September 2009

sector has played a pivotal role on two counts: growth and inclusion. The telecom sector got the wheels of socioeconomic development rotating really fast while covering almost half of this country’s population, bringing them all on one common platform.

‘Rurban’ Growth is for Real Going forward, what I see is a great opportunity - an opportunity for marketers to use telecom infrastructure as a reliable channel for business, especially when it comes to the hinterland. Recent surveys indicate that rural markets have contributed around half the sales of home and personal care products, beating the slowdown. Sectors like automobiles or durables have grown steadily on similar lines. There is a large market in the rural and semiurban (rurban) India, and this fortune at the bottom of Indian market pyramid is for real. For some time now, marketers have debated whether lack of credit in rural India barricades growth. After six decades, merely 10 percent of the population of independent India can qualify as financially included (68 districts out of the total 611). The other debate has been that if rural markets need different (read ‘lower quality’) products or a ‘sachet’ approach to bridge the cost-affordability gap. While ‘credit infusion’, ‘sachet marketing’, or a ‘no-frill product’ does take you closer to the rural market, there is another approach that combines these strategies into a potent solution for rural marketing. ‘ProVAS’ – the Next Big Thing ProVAS (product as a value added service) is the next big thing waiting to happen for the Indian telecom sector and for the Indian marketer in general. ProVAS solves many problems of rurban marketing. Let me explain. The rurban consumer is no different in aspirations or consumption needs and hence would typically want the same products and solutions that one would offer the urban markets. Secondly, the ‘what this consumer needs is a service’ approach to his needs instead of simply infusing credit (loan). A rurban consumer is ‘value’ conscious. Sweating every buck he or she spends to the hilt is important. With ‘product as a value added service’ ap-

proach this consumer gets a quality product, gets credit (pay per use), and gets more value for money. And here is where the telecom sector has a pivotal role to play.

The surge in the telecom sector acts as a leveler of social strata, and provides a new opportunity to reach out to the rurban population with products and services Building the ‘Mobile’ Supply Chain The rurban markets become unviable mainly due to high distribution cost. The cost of activating, acquiring, and servicing this large geographically spread out market outweighs the returns, or rather the ‘pace’ or ‘rate’ or return. An alternate channel like the Web does reduce this distribution cost but is severely constrained by affordability of PCs and low broadband penetration. What solves this problem is the affordable mobile phone. With more than a mil-

lion subscribers getting added every month and mobile phones getting cheaper by the day, it is poised to become the new ‘supply chain’ for the rurban markets. It can connect the consumer with an enterprise from anywhere, any time, and at almost one-tenth the cost. If products are distributed as a ‘value added service’ on this new supply chain, it can make selling to rurban markets not only viable, but also profitable. These ProVAS applications can be offered as a service by telecom companies or other managed service providers in conjunction with the supplier of relevant products.

Mobile Wallet The determining factors for success of ProVAS in India will be ‘simplicity’ and ‘regulations’. Anything complex will have to remain backend (within the enterprise or with the service provider), keeping the mobile device as simple and ubiquitous as possible. On the regulatory front the RBI is likely to come out with guidelines around monetizing instruments like pre-paid mobile vouchers, enabling ‘using them to purchase goods and services at an identified network of establishments up to a certain amount’. This will give a great boost to development and adoption of ProVAS. With this a consumer, having once invested in a mobile phone, can now avail durables, financial products, and a host of other services, while paying it over a period using the ‘talk-time’. On a concluding note, the next decade is likely to see a paradigm shift in the way Indian enterprises think. Products offered as ‘service’ will expand the rurban market. New alliances and business models will emerge converting the billion plus population into a real competitive advantage for this country. The telecom sector will undoubtedly play a crucial role in this transformation. si siliconindia

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September 2009

TEXTILE

By Sanjay K Jain

T

Sanjay K Jain, Joint MD, TT

Having Lost its Competitive Advantage, Textile Industry Faces Decline

he Indian textile industry has been one of the foremost contributors to the country’s employment, exports, and GDP. The industry has been rated as one of the key drivers of the Indian economy and a bold target of exports of $50 billion (currently it’s $22 billion) had been targeted by the year 2012 by the government after the dismantling of the quota regime in 2005. However we are still far away from that target. Though now it can be blamed on the worldwide recession, I think we need to do some soul searching as to was it anyways possible. Globally, the Indian industry is recognized for its competitive advantages, especially in the cotton segment. The government has set huge targets for the industry and expects to attract investments of about Rs 1.5 lakh crore during the eleventh Plan period. This would meet the export and domestic targets, while taking various initiatives like setting up textile parks, training centers, and ‘made in India label promotion’ to global markets. It also assured continued interest subsidy through the Textile Upgradation Fund. I keep hearing in many conferences that India has a lot of potential and we are very confident about the industry meeting its potential and that the current situation is just a blip on siliconindia

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September 2009

the monitor. Speakers talk about getting more efficient, delivering more value added products, and adopting new technology to meet the new challenges. However, no one talks about what is the country’s real competitive advantage against its existing competitors like Pakistan, Bangladesh, China, Indonesia, and the newly upcoming ones like Vietnam, Cambodia, and may be a few African countries.

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only the exchange rate which is killing us, even in terms of dollars we had not grown at all. How will we then achieve those high targets set by us, when in a high GDP growth scenario we have losses? And even more alarming is that cotton garments (which constitute about 45 percent of exports), fell over the same period by 6.86 percent in terms of dollar and 16.6 percent in terms of rupees. It clearly shows that we are losing not only

Having become a large exporter of raw cotton and importer of manufactured products has set the textile industry on a downhill roll

Currently the textile industry is one of the worst hit sectors in India, as almost 50 percent of the industry is dependent on exports. Hence, maybe this is not the most opportune time to analyze performance and draw conclusions. However, if we go back a bit when the world was still growing we didn’t have any great performances by the textile industry in exports. In the period from April to August 2007, our export turnover saw a meager rise of 0.15 percent in terms of US dollars over the same period last year, while in terms of rupees it fell by 10.52 percent. This shows that it is not

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on the aggregate basis, but are losing more on the value addition basis. I was just going over our competitive advantages to understand our strengths in facing the global markets. Firstly, I looked at the basic raw material – cotton fiber, which looks very promising. We have doubled our production in five years and have sufficient cotton to feed the growth of the industry. We are the second largest producer today and have also become the second largest exporter of cotton. This means that we have a clear advantage on the cost of cotton. However, the shocking news is that it is

not necessarily true – the relative advantage of India vis-à-vis competing countries like Bangladesh, Pakistan, Vietnam, Indonesia, and Thailand has come down, with the gap between Indian cotton price and that of the other countries reducing over the last five years due to the acceptance of Indian cotton by other nations and large scale exports from India. The most alarming point is that the landed cost of Indian popular cotton Shankar 6 is cheaper or equal for mills near the ports in the far eastern countries and Pakistan and Bangladesh by road as against the same for the south Indian mills (Tamil Nadu has the maximum number of spinning mills in India). Road transport is much more expensive than sea transportation, for e.g. it costs $50 (Rs 2,500) to transport 150 bales from Mumbai to China and it costs Rs. 75,000 to transport it from the place of production in north and western India to Tamil Nadu. Further, in a falling global market where prices were falling across the board, the government hiked the minimum support price (MSP) of raw cotton by 40 percent, making the raw material expensive for our local industry, when on the other hand the price of end products were falling. Hence the industry got squeezed both ways. To top the agonies of the industry, in February 2009 the government introduced with retrospective effect five percent license against ex-

ports of cotton, hence making our cotton cheaper for our competing nations – We need to rethink whether we want value addition on Indian cotton. We have been talking about a ‘fiber policy’ for the last two years, but still there is nothing offered except promises. On the manmade fiber side, due to our inherently high raw material prices and import duties, we are clearly out priced. Despite import duties, many manmade textile intermediaries are being imported into the country. Secondly, let us analyze the technology access and its cost. India has access to the best global technology in addition to its locally available machinery. However, apart from ginning and partly spinning, we are largely dependent on imported technology. Europe is considered a hub for it, but the severe appreciation of its currency has made it more expensive by about 20 percent over the last few years (European machinery is anyways not cheap), which is further compounded by import duty despite export obligations. The Chinese textile machinery industry is much more developed and, in fact, is selling all over the world including India. This, coupled with rising interest rates over the last two years, has made capital expensive and projects like spinning mills difficult. Despite the Textile Upgradation Fund, the effective rates are about 7-8 percent, which is high compared to today’s inter-

national funding rates. Even our discounted working capital rate for exporters at 7 percent means a labor plus five percent rate, which makes us uncompetitive. Due to the recession interest rates have crashed globally; but India rates have only fallen marginally and due to the risk premium going up the positive impact is further reduced. Thirdly, we can talk about labor – our favorite listing when it comes to analysis of our advantages. However, in absolute terms we are higher than many of our competitors like Bangladesh, Pakistan, and other developing countries and if adjusted for productivity we are higher than all major textile nations like China, Indonesia, Thailand, and Vietnam. Further, we have a restriction on labor flexibility, making it very difficult for the garment industry, which has seasonal loads of work – thereby allowing very limited space for companies to adjust to the changing times and seasonal demands. The Government has a minimum guarantee employment program of 100 days (NREGS). Why can’t it,on a similar basis, allow a 200 hundred days guaranteed employment to laborers of the garment industry? The important point is that the industry would pay higher wages and would also enhance skills of the workers. Fourthly, we have the ‘cost of power’, which is probably the most exsiliconindia

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September 2009

pensive amongst all the nations globally. Our power costs are 10-12 cents per unit and still we don’t have uninterrupted supply leading to higher costs of selfgeneration. On the contrary, most other nations have power costs in the range of 5-7 cents per unit. Textile industry is fragmented, making it difficult for selfgenerating units to be set up and reduce the power cost impact (the steep oil price hike in 2008 made them anyways unviable unless based on coal or wind). Fifthly, we have the issue of markets. India is in a unique position where it has no preferential access for any product nor does it enjoy any proximity advantage. Turkey has the whole of Europe at its doorstep, the ASEAN countries can trade amongst themselves with preferential duty structure and even Korea is giving them preference. Pakistan and Bangladesh have enjoyed preferences for various markets. We are, on the contrary, opening up our markets to the low and competitive nations like Bangladesh, Pakistan, and Sri Lanka with duty free access to our growing consumer population. Hence, even our growing domestic market is under pressure of duty free imports from SAARC nations and other major countries like China and Thailand due to their competitive cost structure of manmade fiber. The question is, under these circumstances how will the industry move ahead? In the absence of internal accruals, loss of fancy of equity investors, and no FDI – how will the industry invest? And without equity how will debt come in? The large investment and turnover targets are fast becoming a pipe dream. Unless problems of each of the pillars of the industry are not tackled very soon in a cumulative manner, we may be headed for a disaster. And for those who think that it is only the exports that are affected and the local industry is doing fine, just have a close look once again. Has there been any increase in prices of the manufactured textile products domestically over the last three years? We say our economy siliconindia

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September 2009

is growing, there is pressure on prices but still price levels of this industry have even fallen in some segments. The prices in retail selling may have gone up in some cases, but that is due to the strength of branding and marketing, not due to manufacturing costs. We need to understand that the basic raw materials are interchangeable and are the same for both exports and domestic sales. In the case of lower export prices and weak demand, the exporters try to shift their capacities to the domestic segment, thereby putting pressure on the domestic market, which is not deep enough to absorb any additional capacity. This causes depression and players that are not in exports but operate in the domestic sector also get hit indirectly.

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not able to add value to our own cotton. India has been a leader in cotton yarn for many years now, and it was expected that we move on the textile chain upwards. Unfortunately, we have moved in the reverse direction towards export of raw cotton fiber over the last 3-4 years. It is well accepted that textiles is one of the worst affected industries in India, its downturn started much earlier at the end of 2007 when US economy went into trouble. However, hardly anything has been done for the industry except sympathizing with them. Some of the significant government policies that worked against the industry last year were:  Increase of MSP for seed cotton by 40 percent

Government policies have made it increasingly difficult for the industry to compete with other Asian textile manufacturing countries

The Indian textile industry will no doubt survive and move along by the strengths of its traditional position and domestic market. However, the growth envisaged and it being re-classified as sunshine industry over the last three years from a sunset industry may turn out to be a myth. We forget that dismantling of quotas (remember that China has not been fully let loose) does not mean increase of global demand; it just means re-organization of sourcing strategies on the basis of ‘buy from the best place’. For India to capture market share it has to be more competitive than other competitors on a cumulative basis. The fact that we have become a big exporter of raw cotton and are selling to all our competing textile nations including China does not change the equation greatly. China, despite being the largest producer of raw cotton, is also the largest buyer, which goes to show how under developed our textile industry is – since we are

  

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Introduction of five percent export incentive for raw cotton exports Reduction of duty drawback rates Removal of interest subvention of 4 percent and later restoring to 2 percent

It is difficult to find anything special done for the industry over the last year or even in the 2009 budget. Usual prebudget tall promises were made and it was assured that something would be done, but unfortunately nothing new has been done. Still worse, huge incentives are pending from the various departments of the government for over a year and this is adding to the already tight liquidity woes in the face of huge losses. The government has followed a policy that effectively meant ‘first pay, then do immense amount of documentation and then wait for the government to have funds to pay the money you have paid to them as excess’. si

CEMENT

By Vinod Juneja

FUTURE

Outlook Cement Sector, strong

T for

he cement sector is gearing up for a fast track growth and the next few years will see the sector zooming past new milestones. The production of cement is expected to cross 400 million tonnes in the next 10 years, with leading players focusing on capacity expansions two to three times their present capacity. At the same time, the demand for cement is increasing at 8-10 percent and, if this trend continues, players can easily increase their capacities from 21 crore tonnes (210 million tonnes) to 50-60 crore tonnes (500-600 million tonnes) per year. This sector will drastically change with stand-alone bags giving way to ready mix concrete (RMC). The form of this RMC will be tailor made concrete customized to suit various infrastructure needs. Ready mix concrete is still a relatively nascent market in India. However, it is slowly but steadily gaining ground and will be the most sought after product in this sector. The greatest advantage of RMC is that it is economical, stronger, and environment friendly. Moreover, no large storage of cement bags is required and hence there will be no wastage. Currently, 55-60 percent of cement produced in India is consumed by the housing sector. This is expected to change in the next few years when the emphasis will be on infrastructure developments like roads, bridges, and railways, which will consume a significant percentage of cement produced in the country. The consumption of cement in agriculture is negligible today; but with a greater thrust on agriculture and the suggested ‘second green revolution’, this sector too will extensively use cement to build warehouses and other logistics.

Vinod Juneja, Managing Director, Braj Binani Group

The eastern states of India along with the border states will be the newer and virgin markets for cement companies and will contribute to their bottomline in future. In the next 10 years, India will become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance the plants in Gujarat and Visakhapatnam, will have an added advantage for exports and will logistically be well armed to face stiff competition from cement plants in the interior of the country.

Cement production in India is poised to grow, as the industry is set to expand significantly due to the increase in construction of infrastructure facilities and exports A large number of foreign players are also expected to enter the cement sector in the next 10 years, owing to the profit margins, constant demand, and right valuation. Consolidation of the cement sector too will take place and cement plants producing less than 1 million tonnes will find it difficult to survive in this market. Cement companies will go for global listings either through the FCCB route or the GDR route. With help from the government in terms of friendlier laws, lower taxation, and more infrastructure spending, the sector will grow and will take India’s economy forward along with it. si siliconindia

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September 2009

PHARMACEUTICALS

ELECTRICAL EQUIPMENTS

By Ranga Iyer

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Ranga Iyer, Manging Director, Wyeth Limited; President, Organisation of Pharmaceutical Producers of India

Healthy Future Ahead PHARMACEUTICALS

wo industries have put India on the world map – IT and pharmaceuticals. India’s pharmaceuticals industry, currently valued at over $ 8 billion, is expected to double in size by 2015, growing at a compounded annual rate of 9.5 percent. The industry has done India proud. It has contributed to improving health indicators like reduced infant mortality rate and increased life expectancy. India is today the world’s fourth largest pharmaceutical producer in terms of volume. It is fourteenth in the world in value, because our medicines are among the lowest priced in the world. India has more than 100 manufacturing sites approved by the US FDA, the largest number outside North America. That’s the positive side; now take a look at the other side. The Indian government spends 1.2 percent of GDP on healthcare, which is among the lowest in the world. According to a reply tabled in the parliament in July, the per capita expenditure incurred by the government to provide healthcare facilities is a mere Rs.37 per month. For a country of our size, we have too few hospitals and doctors. We have 0.6 doctors per 1,000 people compared to 1.15 in Brazil and 1.06 in China. Over 80 percent of Indians pay for healthcare from their pockets in the absence of siliconindia

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Medicines are like software; they need the hardware of health infrastructure to deliver the maximum benefits to population in far lying corners of the country health insurance. Only 35 percent of our population has access to modern medicines, because of poor healthcare infrastructure. There is a misplaced view that cost of medicine is standing in the way of access to medicine. This is not true. Over 200 million women and more than 80 percent of children in India suffer from iron-deficiency anemia. The cost of iron supplement is only one rupee. Its affordability has not impacted availability in rural areas, and the problem is a case of access failure. Similarly, the coverage of routine childhood vaccination is only around 60 percent, though these vaccinations are provided free. Another example is antiretroviral therapy provided free by the government – it reaches less than six percent of the patients. There is immense growth opportunity ahead for the pharmaceutical industry on both fronts – within India as well as outside India. Medicines are, after all, like software. It needs the hardware of health infrastructure to deliver its benefits. More doctors, more clinics, more

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Indian Electrical Equipments Sector

hospitals, and more chemists, especially in the countryside, will ensure more access to modern medicines for our people. Better health will translate to better productivity and better quality of life. Rising R&D costs and falling productivity have made research-based companies in Europe and the US to turn to emerging markets like India and China with a view to cutting costs and tapping talents outside their own companies. It is a win-win situation for pharmaceutical majors as well as for Indian companies that are aspiring to move up the learning curve in new drug discovery. Unfortunately, China is scoring over India in attracting high value investments and collaborative ventures, as China has patent laws that are in line with global standards. India has adopted a restricted definition of patentability. And, unlike China India does not give data protection, which prevents generic companies from commercially using data developed by innovator companies at great cost. It is time to revisit our laws and make them conducive to foreign investment and greater collaboration between Indian companies and the multinationals. If India can capitalize on the opportunities within India and abroad, the day will not be far away when India will be known worldwide for Invented in India medicines in addition to Made in India medicines. si

Switching to Faster Growth he current scenario in the electrical equipment sector is a potential portent for huge growth as the demand for technologicaly better solutions in this sector is growing. Even during the ongoing global slowdown, the overall performance of the industry has so far been good. The industry is investing heavily in upgrading technologies and making improvements in quality systems to cater to the emerging demand. There have been some initiatives by the government that have helped the industry to grow. Some of them are listed below: 1. No roll back on the Central Excise Duties, which was reduced earlier to combat economic recession, which will be surely very encouraging. 2. A lot of investment is being made through APDRP (Accelerated Power Development & Reform Programme). 3. Sanctioning of pending power projects. 4. Increase in the budget expenditure levels by about 36 percent, which will provide a boost to consumption.

The Ministry of Power has taken a number of legislative and policy initiatives to expedite power sector development. These initiatives provide loads of investment opportunities to FIIs and other investors. The power sector reforms, if implemented as scheduled, will create large business prospects for the power sector equipment manufacturers and service providers. We can expect continued growth for this sector for at least another five to ten years. Yet another important contributor to the current growth trend of the electrical equipments industry is the spurt in real estate development. It is not only the major metros that have witnessed large scale real estate development, but also the tier-1 and tier-2 cities that fast emerge as centers of business and industry in the

By Sunil Sikka

country. Further, the lowering of home loan interest rates by banks has fuelled the demand for real estate. Nowadays, real estate developers and contractors demand world class lighting and other eletrical products as they intend to offer complete and ready-to-movein homes to their buyers. On an optimistic note, the generation of total electricity is going to increase, which in turn will lead to more consumption and overall growth of the electrical equipment manufacturers. The large nuclear power projects now nearing completion in different parts of the country will start producing power in the next one or two years and, initially, about 4,000 MW of power will start flowing into the national grid. Energy and Infrastructure have a key role to play in building an economy. The development in the construction and infrastructure leads to higher demand and growth for the electrical industry since they form the essence of any development. Also, with the awareness level of the consumers going up, the marketshare of organized market is expected to expand both horizontally and vertically. Product innovations will also help to boost demand, although pricing competition in the industry will remain intense. On the same path, Havells has taken numerous steps to further strengthen and consolidate the production capacities along with bettering the quality and performance of the products. Being a pioneer in energy efficiency, human safety, and savings, Havells has always worked towards solutions that lead to the overall benefits for consumers and corporates. Havells has been a pioneer in the introduction of new products with the use of state-of-the-art technologies and processes. Taking the legacy forward, Havells will continue to offer solutions that will help everyone realize economy in electricity consumption and achieve better results.

si

siliconindia

Sunil Sikka, CEO, Havells India

The growth of industries and the fast expanding real estate sector, coupled with the forthcoming increase in power production in the country, promise a spurt in the growth of electrical equipments sector

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September 2009

RETAIL

ByGovind Shrikhande

T

Govind Shrikhande, Customer

Care Associate & CEO, Shopper’s Stop

INDIA THE ROAD AHEAD FOR RETAIL

he challenges before Indian retailing in the past year have been unprecedented in both scale and scope, with a number of factors derailing the projected growth in the sector. After many years of double-digit increase in revenues and general optimism for the future, the events of last year have really tested the mettle and skills of the retail industry. In India, not only did we have to face the effects of the global recession, but also the deteriorating security scenario. True, the effect of the recession has not been as severe as it has been in certain parts of the world, like the US and Europe, where the closure of the banking institutions has affected all sectors. But, as the world economy integrates and becomes more interdependent, seismic eruptions in one part of the world, especially the developed one, end up causing tremors globally. Negative Sentiment To a lesser extent, the 26/11 terrorist attacks in Mumbai also created a negative sentiment, especially due to its extensive coverage by the print and electronic media. The live world telecast of the imsiliconindia

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September 2009

ages of a city under siege for almost 72 hours had its own impact. The slowdown in the Indian economy has been real and can be gauged from various indicators like the fall in GDP growth, thankfully not precipitous, from 8-9 percent to 6.5 percent, slow disbursement of housing loans, and the drop in like-for-like sales of retail formats. But, with the people of India giving one party a decisive mandate in the national elections, the stable polity coupled with the freedom to push reforms is anticipated to hasten the process of recovery.

The Retail Expectations from the Government The industry has some integral and long-pending issues that need to be given top priority to resolve. The task before the present government then is not only to create a conducive economic climate with an assurance of security to life, property, and employment of the citizens, but also bring about some concrete changes specific to the retail industry. Towards that end, the following issues can be tackled in the upcoming budget:

Conferring industry status to retail business will enormously help in bringing up small players into organized retail and generating more employment Internationally, the doom and gloom that pervaded the markets is surely lifting, and the same is happening here - one will just have to wait and see how fast the winds of positivism and recovery dispel this air of despondency. It is my estimate that the coming third quarter leading to the festive season should see positive growth, which would further accelerate across all industries in 2010.

Give industry status to retail: The contemporary retail sector in India has established itself in the past few years in the form of sprawling shopping malls, retail outlets, and multiplexes. It has offered the consumers a gamut of choices including shopping, food, and entertainment all under one roof, raising standards of living, and bringing in a positive change in the consumer buying behavior.

Despite the fact that the Indian retail sector has grown in leaps and bounds in the last few years, and has contributed immensely towards employment generation and GDP growth, the sector has not been conferred the status of an industry in the real sense of the term. Doing so will help in better establishment and growth of the sector.

Close the debate on FDI: The debate on Foreign Direct Investment (FDI) has been a long-standing one. In 2006, the government had given its consensus towards 51 percent FDI in single-brand retail but with the formation of a new and largely single party dominated government the industry is keeping its fingers crossed in anticipation of revised retail strategies. Domestic and global retailers as well as private equity (PE) investors are eagerly awaiting the new government’s take on FDI. Increasing the cap on FDI will prove to be a shot in the arm for the industry, as it will open up markets and increase our global competitiveness. The industry also needs closure on the other long-standing issues of big retailers versus small retailers as well as organized retail versus unorganized retail. Simplify taxation: In the backdrop of the global financial meltdown, the industry has been demanding relief on taxes such as VAT, excise, GST, and service tax through simplification or reduction. This will be good for the industry as well as the country’s economy, since every saving in taxes will aid in increasing the competitiveness of Indian players in the overseas markets and bringing down the prices of products in the Indian market.

Tackle infrastructure issues: The interstate permits, Octroi, and various other taxes levied by the state and central governments result in unnecessary confusion and increased paperwork in the transportation of goods. Simplifying this process and having one unified sys-

tem of permits and taxation will reduce the hassle and save on time and money, thereby giving a fillip to the industry by encouraging expansion and attracting more people. The Government should also look at providing reasonable power rates in retail and industrial areas along with an uninterrupted supply. Permission for operating the stores for 365 days will help customers to shop as per their convenience.

Despite the global gloom in economy, the Indian retail sector is moving ahead and is sure to establish itself as a major winner in the new postrecession scenario Looking inward: Having said that, the retail industry also needs to take steps on its own to become more organized and to withstand the challenges that it is increasingly facing. Competition is an intrinsic and inevitable characteristic of trade and, like life itself, works by the unwritten rule of ‘survival of the fittest’. Competition always brings out the best in businesses and, in trying times like these, manufacturers and brands need to improve and reinvent constantly for their survival in the domestic as well as international markets. As far as the domestic market is concerned, brands should, instead of focusing only on manufacturing, work on understanding the consumer’s needs and taste. They should re-work their marketing strategies to align themselves with the needs of the customers and must have a point of clear distinction. Due to the dip in consumer demand all over the world, the industry is seeing a drop in export figures. This, coupled

with intense competition from other Asian countries like China, Bangladesh, Thailand, and Vietnam is making things difficult for Indian exporters. In these testing times, only factors such as quality, design, and differential offerings can make the Indian exporter stand up and be counted. However, despite the competition from China, the global markets look upon India as a vital destination for their sourcing needs. Hence, recognizing the home advantage, it is important for the organized retailers of the country to collaborate with the domestic manufacturers for retail sourcing. This will not only save precious forex, but will also reduce the turnaround time and leverage the Indian strengths of quality, delivery, and affordable fashion for consumers.

A Visionary Estimate of the Future Looking at the market indicators, I foresee that the Indian consumer will increase his consumption across the categories, but it is the value mantra that will continue to drive his spend. Consumers will continue to demand more, and only those brands that can give him value for his money in all aspects – quality, variety, service, and after sales follow-up – will continue to grow well in the years to come. We will also see the emergence of at least three to four Indian players with a turnover of a billion dollars in the next four years time. There will be a consolidation of players and many small players will wind up or will be taken over. Indian apparel companies will have to swallow the bitter pill and change their working style if they have to face the threat of new international brands and become billion dollar companies. The industry will also have to mature from its current mode of too many seminars, too many consultants, too many award ceremonies, and too many hyped-up personalities and get to the real business of serving consumers with passion. si siliconindia

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September 2009

SHIPPING By Shri S.Hajara

Shri S.Hajara, Chairman &

Managing Director, The Ship-

ping Corporation of India

Currently the Indian shipping industry is sailing through rough waters as financial assistance is hard to come by, from both the banks and the government

Indian Shipping Industry Sailing through a Rough Weather

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he shipping sector plays a pivotal role in the economic development of the country and is extremely vital for the strategic reasons of energy as well as maritime security. The importance of this sector is very well proved by the fact that 95 percent of the country’s trade by volume and 70 percent by value is moved through sea routes. Today, the Indian shipping industry tonnage has reached the mark of 9.45 million GT. However, the growth of Indian tonnage has not kept pace with the growth of India’s overseas trade. In fact, over the years, the growth of the Indian fleet has remained sluggish and its share in carriage of the country’s overseas trade has gradually diminished from 40 percent in the year 1987-88 to as low as 9.5 percent in 2007-08. On the other hand, the volume of the country’s overseas trade has grown significantly at a compound annual growth rate of about 7.7 percent. In order to maintain the share of the Indian shipping fleet at a level of just above 10 percent, the shipping tonnage would need to be doubled in the next 4-5 years. Therefore, the need to augment India’s tonnage is quite pressing and the Indian tonnage has to grow. Presently, the Indian shipping industry is passing through a very peculiar situation wherein the augmentation of tonnage is of utmost importance to maintain its stake in the overseas trade; but access to funds for acquisition of tonnage has become a huge challenge due to the global financial crisis. Normally, a shipping company invests about 20-25 percent of its own funds and the balance is raised from the financial markets. However, unfortunately, today the normal route of financing i.e. through external commercial borrowing from the commercial banks abroad has almost dried up. Many developed countries have come out with bailout packages for their banks and financial institutions. But these countries ensure that the loans sanctioned are only for supporting the projects that are based in their territories or the ones that are promoted by their

own citizens. A compounding factor is that the Indian banks, in general, have never had any appetite for shipping finance. Hence, in the present situation it is virtually impossible for Indian shipping companies to raise loans at competitive rates for acquisition of tonnage. It is learnt that the Chinese government is supporting its ship owners through local banks for expansion of their fleet. Further, the Korean government has also set up a shipping fund to help Korean companies, which are in distress, for building ships. In a similar way, the Indian government should also set up a fund specifically for the shipping industry, from which Indian shipping companies can draw loans at competitive rates compared to the foreign banks. Besides, the government can incentivize the Indian banks to lend to the Indian ship owners. The Indian shipping industry is also being rendered somewhat uncompetitive due to the taxation which is close to 9 percent inclusive of indirect taxes as compared to 0-1 percent tax on shipping in most of the other maritime nations. The government should also address these fiscal issues so as to revitalize the Indian shipping industry by providing a level playing field vis-à-vis its international counterparts. Many countries are today looking inward and have made a policy to protect their turf entirely for their indigenous industry. Recently, Indonesia has completely reserved their coastal cargo for their own flag. I feel that India should impose a similar trade barrier to control cargo as well as to reserve cargo for the Indian fleet. I am hopeful that the government will address the issues of the shipping industry as a priority and the measures taken would help the industry to grow rapidly and retain its stability in the unstable waters of international shipping commerce. I am sure that the Indian shipping industry, with its spirit of entrepreneurship, can emerge as one of the leading shipping industries in the world if supported by a conducive policy environment. si

siTech20 U.S INDEX

Index of the top tech public companies in U.S founded and managed by Indians

RANK COMPANY

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Juniper Networks Cognizant Tech. Microchip Tech SanDisk Corporation Qlogic Corporation Syntel Tibco Software Starent Networks Sycamore Networks Cavium Networks Aruba Networks Infinera Corporation Netezza NetScout Isilon Systems Ixia iGate EXL Service holdings OSI Systems Magma Design

JNPR CTSH MCHP SNDK QLGC SYNT TIBX STAR SCMR CAVM ARUN INFN NZ NTCT ISLN XXIA IGTE EXLS OSIS LAVA

INDIA INDEX

Index of the top tech public companies in India

RANK COMPANY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Infosys Technologies Tata Consultancy Services Wipro Ltd HCL Technologies Mahindra Satyam Mphasis Tech Mahindra Financial Technologies Patni Comp Rolta India GTL Ltd HCL Infosystems Mindtree CMC Ltd Moser Baer Polaris Software NIIT Ltd Sasken Communications Technology Sonata Software Subex Systems

Stock Price (US$)Closing 08.29.2009 24 35 27 18 16 40 9 21 3 21 9 7 10 12 6 6 7 12 17 1

Stock Price INR Closing 29.08.2009 2191 541 565 306 114 562 916 1542 423 178 295 147 534 1024 91 147 69 158 38 73

52 Week HIGH 27 36 33 24 19 44 10 27 4 21 10 11 14 16 7 9 12 14 25 5

52 Week HIGH 2199 874 576 320 440 604 927 1622 465 360 317 154 588 1075 140 159 92 166 42 112

52 Week LOW 12 14 16 5 9 16 3 7 2 7 2 6 5 6 2 4 2 4 10 1

52 Week LOW 1040 358 180 87 6 116 205 404 94 32 144 63 181 240 40 25 14 35 13 19

% CHANGE IN PRICE 4 Weeks 52 Weeks -11 17 -1 2 22 -1 7 -16 -7 13 6 -2 9 16 38 -16 -7 -1 -21 -1

-8 20 -16 25 -14 22 9 50 -11 23 48 -35 -26 -21 22 -28 -40 14 -27 -71

% CHANGE IN PRICE 4 Weeks 52 Weeks 9 1 16 25 10 19 8 14 29 15 6 28 20 22 6 22 15 33 25 3

CAPITALIZATION In $ Millions 12360 10340 4910 4090 1900 1680 1560 1480 883 869 802 682 591 473 397 389 369 361 295 70

CAPITALIZATION In Rs. Crore 125365 105788 82678 20523 13383 11723 11173 7073 5407 2872 2796 2515 2092 1554 1530 1453 1133 427 402 255

28 -33 30 32 -73 132 33 8 84 -46 46 25 55 77 -11 45 -23 14 34 -25 siliconindia

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September 2009

Entrepreneur 101: By Gunjan Sinha

The author is the Chairman of SiliconIndia.com and MetricStream. An internet pioneer, he was the co-founder and President of WhoWhere? Inc., a Internet directory services company acquired by Lycos in 1998 as well as eGain, an online customer service company. Sinha can be reached at [email protected]

Entrepreneurial

E

ntrepreneurs are said to be visionary leaders. What makes them visionary? How do they develop the capability to see the future ahead of time, and make the future happen? On a personal note, number of budding entrepreneurs has asked me this question of how to get the vision right, so that all the effort and hard work pans out to success. There is no easy or straight answer on developing visionary skills, but in this article I wanted to touch upon some of the critical elements of a visionary entrepreneur and a visionary leader.

{ } Most visionaries have the courage and luxury of making mistakes, failing fearlessly and then learning from them to better see the future.

Vision as a fringe benefit of failure Most visionaries have the courage and luxury of making mistakes, failing fearlessly and then learning from them to better see the future. When you keep trying out enough paths, which lead to dark allies of failure, you begin to get a clear vision of the future. Of course, it is critically important that through these failures and repeated attempts, you do not get disheartened with your goal to innovate in the future or change the world! Successful visionaries try enough number of times, and finally they get the vision of the future – the path that will take them or their company to the promise land of success. Rarely, have I seen entrepreneurs who had the crystal clear vision of their market or product from day one. What

they instead had was a tireless ability to keep “tinkering” with their idea, concept or business model, until they finally had the right “vision” and path to success. It is for this reason, that entrepreneurial regions like the Silicon Valley produce far greater number of visionary entrepreneurs. The cost of failure is low, and people can take chances to invent the future according to what they desire.

Vision as a Black Swan Event Sometimes vision emerges from the rare and the unexpected events that happen around us, events which create a profound impact in our society. Rise of the Internet in early 90’s, or the event of September 11th, have been labeled as “Black Swan” events in the famous book “The Black Swan: The Impact of the Highly Improbable “ by Naseeb Nicholas Taleb. I would highly recommend aspiring entrepreneurs to read this book, to get a view on how to deal with unknown and improbable events, which can lead to high impact. Such black swan events provide a vision of the world to come. The September 11th event, personally gave me the notion that “Risk” in the world has fundamentally changed. What was considered safe really was not as safe after all. It was a black swan event, and from that event, as I have experimented for the last 6 years, the vision of Metricstream, which is now a market leading company

Vision { } in the world of governance, risk and compliance. Notion of risk had fundamentally changed post September 11th, how could we help businesses and corporations to better address corporate risk through governance and compliance? This led to the creation of Metricstream vision. I saw the same opportunity back in early 90’s when Internet and the browser was invented, my first company WhoWhere? was created because there was a strong belief that the world is fundamentally different in the post browser era. The browser had changed everything, and I was willing to risk failure at that time. I had identified a black swan event, and was patient enough to “tinker” and fail, till I had got it right!

Vision as a Smart follower In many cases, it is perfectly ok to borrow the vision from some one else. You do not need to be the trail blazer to be the visionary. You could simply be a smart entrepreneur who learns from other visionaries and out executes them through sheer perseverance and smart execution. Google is a great example of such a company. Google founders were not the original inventors of the search engines, Yahoo!, Infoseek, Excite, Alta Vista had all paved the path for a world where search engines would fundamentally change the way consumers would access information and content. Google

founders saw the vision, and went deep to solve this problem better than their predecessors. They out executed the first generation search engines, and today they own over 70 percent of the market share. Number of such examples exists. As a smart follower, you have to ensure that the vision you have is something where you can indeed create a significant advantage over your more established rivals in the marketplace. Coming from behind is not easy; hence you need some unique technology or business advantages to help you become the market leader over time. So, entrepreneurs must study other visionaries, understand what visions of the future are there in the industry and how can they shape their own vision in a niche area where they can out execute the rivals. In summary, I believe that to establish yourself as a visionary entrepreneur and craft the right vision for your company, you need to be fearless in experimenting and persevering, you need to be an ardent student of black swan events happening around us, and finally you need to have the ability to learn from other visionaries. As you follow these steps, most often in few years, one starts to develop a sense of how things will shape in the future. Over time, with the benefit of hindsight and success, people might actually call you visionary! si

Entrepreneurs must study other visionaries, understand what visions of the future are there in the industry and how can they shape their own vision in a niche area where they can out execute the rivals

siliconindia

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September 2009

Blog

http://blogs.siliconindia.com/Bhupinder/

India World Leader?

http://blogs.siliconindia.com/

Author: Bhupinder Singh

CEO, Modulus Systems

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mischievous campaign is being launched that India is going to be a super power in this number of years, and that it is going to be a world leader in that number of years, and so on and so forth. The sad fact is that India is still a sea of poverty and illiteracy. Most of its cities and towns are showcases of total neglect, apathy, and misgovernance. There is absolutely no concern in any relevant quarters, to tackle the growing monster of population increase, particularly in those sections of the society that cannot provide education or even feed their children. After sixty years of independence, vast areas of this country get flooded every monsoon and the houses and livelihood of millions of very poor people are destroyed. The fate of this country is still dependent on rain gods and almost all waters of its rivers that flood every rainy season are presented to the sea god as a tribute, leaving the fields dry and population thirsty and hungry. A huge part of the population of this country has no access to tap water, electricity, and sewerage systems. It is an entirely another issue that the taps even in posh areas of the cities in this country dispense un-potable water, that too only for a siliconindia

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September 2009

few hours a day. There is no system of cleaning the streets and roads, in vast areas. This country cannot find a few hundred honest people, who can man the airports efficiently and do not cheat our guests who come from abroad thinking India to be a good country. There is no need to see the position of this country on the corruption index of the world. A vast majority of the population is skilled enough to be unskilled laborers only. Can such a mismanaged country depending on rain gods for its water and food, with a growing illiterate and poor population, be a world leader? All this talk of India becoming a ‘world leader’ is a myth intentionally promoted by those who are supposed to deliver, but have not delivered, just to divert the attention of the Indian public from the pains they are bearing and have to continue to bear. It is a conspiracy to fool the people, so that they do not get so frustrated as to start dismantling the system that is so useful only to the corrupt and is useless for the people. Though having self confidence is a good thing, ignoring reality, over looking one’s weaknesses, and unnecessarily building castles in the

air can prove to be a disaster to an individual’s and also a country’s future. An individual, and so also a country, cannot become great unless and until it recognizes its shortcomings and weaknesses and make efforts to get over them. Those of us who really want this country to move forward should come together and make efforts to find a solution to the following gigantic problems of this country: 1. Uncontrolled growth of population, particularly among those sections that cannot take proper care of their children. 2. Inability to provide proper care to the children that we already have. 3. Failure to ensure food security of the country. 4. Corruption in public life. 5. Disorderly water management (As per a recent BBC report, the great Ganges shall be a thing of the past in 50 years from now). 6. Scanty sanitation and healthcare services. Some of these problems are also interrelated. If immediate steps are not taken to tackle these problems on a war footing, it wouldn’t be long before this country, which is already near the bottom in per capita income index of the IMF, may (god forbid) touch the bottom.

Direct from India: An afternoon of crafts, music, dance PLUS live performances by the RAVI SHANKAR InstituteEnsemble, ANOUSHKA SHANKAR, KAILASH KHER, MALKIT SINGH and more!

Beginning 4PM September 20th

HOLLYWOOD BOWL