Some News

Proposed changes in India’s company law caught my attention. It is almost half the size of current law and works on the principle of lesser regulations and severe punishment.

Governments worldwide focus on principle of “ Not to fail “ which is not an efficient option. This just puts in layers of mindless rules and regulations. Even the government learnings focuses predominantly on what went wrong and not what went right..

A far better approach is lesser controls and a threat of heavy penalties. Why should a majority pay for acts which are likely to be committed by a minority?

Australia India Cricket

I’m impressed by the Australian Cricket team’s recent performance against India in one day internationals. The team is mentally tough and very good at playing psychological games .The on field abuses seem to be a part of a well though out strategy as well. I especially remember the closely fought nagpur game. Indians were close to victory .But Australians had many surprises in store which unsettled the Indian batsmen and kept them guessing all the time . Adam Gilchrist especially would do keeping near the stumps once and then from a distance. Today’s cricket is a mind game and India team need to learn a lot about it.

Rising Rs and strategies for IT companies

The rising rupee indeed reminds me of the rise of yen against dollar in the 80’s. Yen appreciated almost 80% against dollar during the period .But the Japanese continued to dominate the car market in US . But How did they do that ? Well that’s an interesting story .Japanese simply moved low margin car manufacture to US and Mexico and kept the high margin ones in Japan. The strategy was successful and companies like Toyota actually increased the market share in US.

In long term the rupee is also all set to appreciate significantly against the dollar.

The Indian IT industry should also draw inspiration from Japan.

Here are some strategies:

Financial Strategies:

Hedging :

Taking a long term say yearly outlook for the rupee and hegding accordingly

Hedging can however never be a long term strategy.

Marketing Lever

Diversifying the market : move over to Europe, APAC

The long term outlook for Euro is stable .Indian IT firms anyways do not have a significant business with Europe .The best bet then seems to be taking over Eurpean IT companies and offshoring their operations.

Diversifying the skewed US centric business to APAC and South America , China RussiaAustralia and India is also a good hedge. Indian and Chinese markets are going to be huge opportunity for the IT companies pretty soon. ,

Operational Lever

Near Shoring :

Say Mexico for North America , Eastern Europe for Europe ,China for Japan , Indonesia and Thailand for Australia . This is quite a workable strategy if trained resources are available in large quantities in the near shore locations or they are sufficiently skilled enough to be trained.

Increasing on shore content and providing technology and methodology onsite:

This is quite an efficient option without much risk .The methodologies, processes, Technologies developed offshore can be brought onshore to achieve productivity gains and increasing margins.

Demand Supply Levers:

Cutting costs by:

Hiring science and commerce graduates.

Moving to tier 2 and 3 cities .

I do not think that there is much quality difference in metros and Tier 1-V cities . Apart from cost advantages I believe lower tier cities will witness lower attrition.

These moves will however necessitate more front end training.

Some Innovative ways:

Making client work at offshore: Reverse Onshoring

If a project requires continuous presence of client resources then rather than working onsite these resources can work offshore .This will be a win- win situation for the client was well as the IT vendor .All resources of the IT company will work from offshore and

client also need not created space for the IT company’s resources , co-location will also increase team cooperation and success of the projects.

Service Outsourcing- be a quality vendor

All project based organizations will inevitably have benched resources and this is not the most efficient way to provide services .At any time an Indian IT company will have 15 -20% benched resources on an average. There are well established industries that have taken care of this problem.

For example , auto industry sources most of the components from different vendors .A similar vendor structure can emerge in the IT world as well where there are coding companies, testing companies etc.

The IT service provider will merely be a system integrator who ensures that project and services are delivered as per client specifications .This kind of ecosystem will minimize benched resources.

How to operationalise these strategies ? Which strategy will be a good fit for a particular company? Well, keep million dollars ready for hiring my services…..