Feature: Rupee Vs. Dollar

To say that every Indian is obsessed with the Rupee would really be of no surprise, considering our very material existence depends on the currency that has the Mahatma printed on it. But, of late, there has been surge in the obsession and it is directly proportional to the surge of the Rupee versus the US Dollar. Thus, the rise of the Rupee is a tale that everyone is talking of; right from the mantriji to our business magnates. And yet, something seems to be lost in translation. If you happen to track the Dollar (even for the past few days), it has been falling against all currencies quite like the London Bridge (remember the rhyme, London bridge is falling down…). Thus to be quite honest, it certainly is not strengthening of the Rupee but rather the weakening of the Dollar.

Nonetheless, the impact is quite evident on the Indian IT industry, that has been quite dependent on exports from the US. Personally, I feel it is a time for reassessment, a time to get back to the basics and start working from there. Indian IT industry has never really considered the domestic market as a viable proposition. If there were ever a right time, it is right now. And that is what I intend to say in my latest story published in the Dataquest magazine, in which not only did I try to assess the impact on the IT industry, I proposed some solutions (nothing out of the world believe me). Read on.

The Brighter Side of a Stronger Rupee

There is no denying that a stronger rupee has eaten into the profits of the export services firms in India, sometimes forcing them to take drastic measures. But a strong local currency has a positive impact. Not only can it make imports cheaper, it can force the export-oriented firms to look more seriously at the local market. By all means, the latter has started happening. Will the strong rupee be a blessing for Indias domestic market?

On a balmy May night in 1991, a Swissair Airbus took off from the IGI Airport, New Delhi. It was headed for Zurich, Switzerland. As some of the passengers figured out, there was something special in the cargo. At the airport, there was much heightened security around the cargo-hold and officials seemed unusually nervous and edgy. In its belly, the Swiss aircraft was hauling 20 tonnes of gold from the Indian governments treasury, to be sold in the international marketplace. A news item in the NYT stated that the gold was sold for around $234 mn, priced at $11.7 mn a ton.

Some days later, another 46 tonnes of gold was carted away to the Bank of England, London. But this time, the consignment was drawn from the Reserve Bank of India (RBI) coffers and pledged in return for loans from the Bank of England, and Japan. The hush-hush transaction had been necessitated due to the terrible state of the Indian economy at that point in time.

The situation so was bad that the near-zilch forex reserves were just enough to cover a few weeks of imports, and the country was on the verge of defaulting on loan repayments. At that point, the finance minister, Dr Manmohan Singh could only wring his hands as the gold was moved out of India.

Naturally, as soon as the news leaked, there was uproar throughout India. Gold is more than a precious metal for Indians, it is a sign of prosperity and wellness. People decried the governments decision; many termed it as a sell-out, while others equated it to mortgaging national honor. Indeed, India’s credibility had touched rock bottom, lenders were not willing to loan without gold as a mortgage (that too insisting on moving it physically). At that time, the exchange rate was some 20 rupees to a US dollar.

This ripple (gold reserves transfer), in time, converged into a wave that changed the course of the Indian economy. Under pressure from the International Monetary Fund (IMF), India had to liberalize the economy and open up the markets. The rest, as they say, is history.

Over 16 years have passed since that gold was sold, and so much has changed. Made in India is a tag used with pride and Indian businesses are creating news all over be it steel or tea. Even Indian forex reserves, which had dipped to less than $1 bn in 1991, have crossed the $200 bn mark. With GDP growing at around 9% for the past few years, and massive inflow of FDI, the picture is quite rosy.

An indicator of the same is the Indian Rupee or INR that is appreciating. Today, it stands at around 40 INR to a USD. Yet, not everyone seems to be celebrating. The reasons are not hard to miss.

Little Miss Muffet
For the past decade or so, the IT Industry has been the most estimable sector of the economy. Growing at over 20% per year, the industry, according to Nasscom figures, is set to touch $60 bn by 2010. Much of this growth can be attributed to cost arbitrage. The idea is fairly simple: earn in USD, pay in INR and sing tralalala on your way to the bank. Due to the big differential in value terms (it was 48 INR per USD in 2002), Indian companies were able to sell services much cheaply. And foreigners woke up to outsourcing.

Even so, there was a catch, as Indian companies were riding on a cost plank, the billings were competitive and always under pressure. Meanwhile, due to a spurt on the domestic shore, the costs (most importantly, manpower) were always on the incline. Quite like miss Muffet (the IT players) had been sitting on a tuffet, eating curd and whey, before the spider (price rise) came and sat beside her.

Since 2002, the INR started appreciating, and IT companies were caught in a quandary. With every rise in exchange rate, the margins (almost anorexic) were furthered squeezed. Yet, the companies weathered the situation with fair stoicism. The fact that the government was proselytizing rapid growth and thus giving away tax sops, could have played on the minds. Anyways, there was little noise about the gradual increase in the INR rates.

As the INR continued on its northward trek, some noises were made, now and then, here and there. Steadily, the squeaks became a chorus, and much concern was expressed at the way the currency tide was turning. But when the trek turned to a sprint, the IT industry was wrought with fear. A pall of despondency descended on the sunshine sector, everyone discussed the issue with aggravated disbelief. Doomsday scenarios were plotted. And everyone spoke about how the rise would be the toughest challenge faced by the industry, an uphill battle for survival. Experts proclaimed that the rise of the INR was impacting the competitiveness of Indian players and would lead to companies favoring other locations.

Yet, what everyone seemed to miss was that the rise of the INR was a natural economic phenomenon and, to be correct, was not really a steep rise. It was more a case of USD depreciation (read the box Rupee Up or Dollar Down?).

Time to go Desi
If there was ever a time to sing the Indian song, it is now. Over the last many decades the IT players have been looking beyond India for growth, nothing bad in that. But in these years, the domestic pie has been increasing steadily. Consider this, according to the DQ20 figures, the domestic IT market has touched Rs 73,315 crore (growing by 27.2%) as IT spreads to B and C tier towns. A good indicator of this has been the fact that during the past year, over 11 lakh notebooks and 49 lakh desktops have been sold.

MR Venkatesh, a CA based in Chennai, and author of many papers on the various economic issues including exchange rate, thumps the table enthusiastically. “I have always believed that there is huge potential in the domestic market, after all, the population of India is greater than the combined population of the US and Europe. It is simply a no-brainer. Now that the INR has strengthened, it makes an even more compelling case,” he says. He talks of how the Indian Railways has made use of technology in a big way not only to increase its efficiency but also to grow revenues. “Like railways, there are many more IT success stories waiting to happen,” he adds.

The process might have already started. Till date, while TCS, Infosys, Wipro, and others were blazing trails overseas, the IBMs and the HPs became huge players on the domestic scene. Thus every big outsourcing deal like TCSs ABN Amro, was matched by IBMs big domestic deals like Bharti and Idea. The MNCs were marching away with the domestic cherries most of the time. Not anymore.

There seems to be a change in the mood now, as players are focusing on the market with renewed zeal. A good illustration would be the latest TCS deal with BSNL, worth over Rs 570 crore. “If players believe that the rupee will continue to appreciate and appreciation is not going to be reversed soon, it may provide an additional incentive to develop the domestic market,” says Alok Ray, former professor of economics, IIM Calcutta, and visiting professor of economics, University of Pittsburgh, USA.

Even the BPO industry is looking inward. Take the case of Intelenet Global, while its international revenues declined due to the tanking of the USD, it has become a power to reckon with on the domestic BPO front. Intelenets acquisition of Sparsh (a domestic BPO) is paying high-dividends as its domestic business grew handsomely and currently accounts for 23% of the total revenues. Thus the dip in the overseas is being offset by the rise in the domestic. So, are other BPO companies like Sitel India turning inward. “The myth that domestic clients do not pay well has been shattered. In fact, domestic companies are ready to pay provided you have a good business case. The demands of the domestic industry are quite like overseas ones,” says Safir Adeni, CEO, Sitel India.

There is more to the desi story though. The process will lead to democritization of IT. The benefits from the IT Industry were transferred to a limited audience, usually in the metros and fairly well-heeled. The common man was largely untouched by the miracle. But as when the markets expand, the growth is bound to be more inclusive. The telecom sector is a brilliant case study. In a few years time, India has turned into a Mecca for all mobile companies and this transition has benefited all. Similarly, as the laptops and routers and servers reach the Indian hinterland, it will create a domino effect.

The Good, the Bad and Imports
Now then, the hardware sector should be on a roll. As India is a net importer in terms of hardware, be it chips or LCDs, the industry benefits the most from the current scenario. Considering that INR has appreciated by over 7% in the past few months, one expects to see big banners proclaiming never-before prices hanging on the roadside. But that has not really been the case.

Indeed, hardware prices have been dropping, but not dropping as suddenly as they should. The suddenness of it all is missing. Could it be that the hardware manufacturers, the smart cookies are pocketing the margins that they are deriving from the rise. Disagrees Vinnie Mehta, executive director, Manufacturers Association for Information Technology (MAIT). “The advantage gained from a stronger INR versus the USD has more or less been nullified by the rise of the Japanese Yen and the Chinese RNB. Since much of the hardware that comes to India is imported from these two destinations, there has really not been that much advantage to talk of,” he says.

Meanwhile, all that Raj Saraf, chairman and MD, Zenith is willing to say is that “the benefits have been passed on to the customer.” Ask why and how much, Saraf is not willing to go into the nitty-gritty. The silence from the hardware industry is a wee-bit surprising. After all, one mans poison is another’s honey. The cheer on the hardware side should have mitigated the gloom on the software side. But that has not been the case so far.

Also, could the INR appreciation impact the evolving manufacturing story? If it is cheaper to import, why manufacture? “I dont think so,” says Mehta, adding, “the attractiveness of the Indian market would not be impacted simply because of its sheer size. Manufacturers are coming to India to tap the domestic market and not due to cost arbitrage or other things.” That is indeed the moot point: the domestic market. The hardware sectors focus (by choice or force) on the domestic industry seems to be paying off finally.

Survival of the Fittest
All said and done, the exporting software (read services) needs to reassess and realign the goals. They need to gear up for the changed scenario. As TR Madan Mohan, director, Consulting, ICT Practice, Frost & Sullivan puts it. “Margins of export intensive firms such as BPOs have been adversely affected in the last two quarters. A 1% increase in INR against the USD can impact 70-75 base points for KPO/BPOs and about 35-40 base points on margins of IT companies,” he says.

Volatility is the real devil, points out Ameet Nivsarkar, VP, Nasscom. “While one can learn to live with a gradual rise of currency, it is the sudden one (like the one witnessed in the past few months) that is hard to digest,” he says.

S Gopalikrishnan, CEO, Infosys, echoes the same sentiment. “Rupee appreciated 7% during the first quarter and 9% during the year. It takes time to absorb such a change and is a challenge for the company,” he said. According to him, the company plans to raise its billing rates by 3-4% for new contracts and by 2-3% on renewal of the existing contracts.

But that could be tough, as says Sudin Apte, country head & senior analyst, India Operations, Forrester Research: “First, the margins of Indian IT vendors are affected by INRs rise against the USD. In the quarter ending June 2007, the rupee appreciated almost 7% and this has hit their profitability. In addition, Indian IT exporters claim that their revenues have gone down, while costs have risen. Our research based on (IT Vendors) client interactions indicates that some of the Indian IT-ITeS companies are trying to raise prices to cope with the situation and are asking their North American clients to share some of the risks. Moreover, the bigger Indian vendors are exploring a pricing model with some of their clients that would maintain a base-level convertibility and assured returns in dollars. But we don t see a very positive reaction to this by their clients,” he states candidly.

Apte has a solution for the industry as well. “To negate the impact I advise Indian IT companies to look beyond just pushing up the utilization because there are limits as to what extent firms can raise utilization. Raising it a few points further may not be the solution as the results are limited. So these firms have to take other initiatives such as enhance efforts for non-linearity; further flatten the delivery pyramid by using process IP and automation of several managerial tasks (that are manual at present); and boost front-end sophistication, for instance, firms like TCS and Infosys have made reasonable strides in this regard, most other firms need to upgrade skills related to sales, relationship management, account management, negotiations, standardization of sales process among others,” he says.

Also, as the INR is more or less stable in comparison to other currencies, it makes sense to look for greener shores namely in the Europe, and other places. “It is always a good long-term policy to diversify your markets for reducing risks, irrespective of short-term fluctuations in exchange rates. It should be easier, given our past successes and the good brand image and reputation that some Indian IT companies have already built up,” says Ray.

Don’t forget that with INR rise acquisitions become cheaper as well. As Indian companies look to spread far and wide, a strong currency will surely be of help and servicing the loans taken earlier would be easier.

Big Squeeze on Small Vendors
While the big players have been able to tide over the crisis, it is the small ones that have been feeling the heat. Caught between the devil and the deep sea, i.e, lesser revenue and high costs (as they don’t have the economies of scale), IT SMEs do not seem that sure anymore. According to experts, they need to do the same things like their bigger cousins, namely increase productivity and diversify, except they have a lesser margin for error.

“Apart from these initiatives, for smaller vendors, the time has arrived to identify their strengths and focus on just one or two lines where they can provide services instead of spreading too thin,” adds Apte.

Nivsarkar also talks about the numerous initiatives taken by Nasscom to help the SMEs diversify. “We are actively promoting new locations for our SMEs and running quite a few country programs,” he says.

It is deja vu for the Indian IT industry. When the Al Qaeda had rocked the world in September 11, 2001, there were talks of a US meltdown and the resultant impact on the world economy. Then too, the Indian IT Industry was under the scanner due to its exposure to the US economy. But nothing of that happened, on the contrary, Indian companies grew and benefited.

The INR appreciation (the minor that is there) is a sign of times to come; an indication of India’s growing economic stature. In 1991, we had to pledge our gold to foreign banks and take loans from the IMF. Just 12 years later, in 2003, India became a lender to the IMF, contributing some 180 mn to a reserve fund used to bail out countries in a financial mess. India also wrote off 12.5 mn that seven heavily indebted poor countries Mozambique, Tanzania, Zambia, Guyana, Nicaragua, Ghana and Uganda owed to us! Prime minister Manmohan Singh must be surely rubbing his hands in glee now.

In light of such positive changes, it is but natural that currency will appreciate and should. There has been much speculation of another fall in USD due to the messy situation of the US economy, a mammoth trade deficit and rising unemployment rates. But no one is ready to stick his neck out to guess when and by how much will the hallowed USD fall. “When and how is a million dollar question with a billion dollar implications,” says Venkatesh. IT players just need to stop cribbing and realign their focus. The mantra is simple; go desi and go now!

As far as the currency conundrum is concerned, the only advice that one can give to the industry captains, is the one governess Miss Prism gave to Cecily in Oscar Wilde’s ‘Importance of Being Earnest’ written in 1890s. Albeit, with a minor change.

“That would be delightful. Cecily, you will read your Political Economy in my absence. The chapter on the Fall (read RISE) of the Rupee you may omit. It is somewhat too sensational.”

That’s the story of the “rise of the rupee”. Somewhat too sensational. The reality may be different.

Shashwat DC

Rupee Up or Dollar Down?

Amidst the reports and panic about the “rising rupee”, the real picture may have got fuzzy. While it is true that the INR has appreciated against the dollar to record levels over the past one year, and now hovers at INR 40 to a USD, the fact is: so have most other currencies, including the Euro, gained against the US dollar. Little googling reveals something not so startling. The INR may have gone up in comparison to the USD, but so have most others. Thus, effectively, the INR has maintained its level against most other currencies (that have let market forces determine the rate). Hence, the real issue is not that the INR is appreciating, but that the USD is depreciating. This minor wordplay betrays the bigger implications.

SaysVenkatesh. “Quite many have been barking up the wrong tree because almost all world currencies, barring a few like Yen, have appreciated in comparison to the USD. It has been a global phenomenon. The rise of the INR is an economic phenomenon; as the economy becomes stronger so does the currency. But the current spurt should be referred to as the dollar depreciation rather than merely a rupee appreciation. In this light, I do not really think Indian exporters have much to complain about,” he says.

Not quite says Nivsarkar. “While the USD has indeed depreciated on a global scale, the INR has also appreciated quite reasonably due to the huge inflow of foreign investments into the Indian economy. Thus, it is a blend of both the factors,” he states.

So lets rake up some dust on this matter. In 2002, according to data available from RBI, 1 USD was equal to 48.59 INR; 1 GBP was equal to 73 INR and 1 euro was equal to 45.92 INR. As of today (according to XE.com), 1 USD is equal to 40.35 INR; 1 GBP is equal to 81.91 INR and 1 euro is equal to 56.11 INR. Thus, over the last 5 years, INR depreciated against the euro and the UK pound, while going up against the USD.

Again, the reasons are not hard to fathom. Over the last few years, the US economy has been going through a meltdown. Economic growth has been tardy and has been beset with crises, like the latest meltdown in the sub-prime lending market. In fact, according to a report published on BBC today, “The USD has fallen to a record low against the euro as investors bet that the Federal Reserve will cut interest rates to help the economy.

By late afternoon in Europe, it took $1.3901 to buy a euro, passing the last record of $1.3852 set on 24 July.” QED, it is the USD that is going down and not the INR going up. Hence, the glass might seem half empty, but is half full as well. The USD has dropped against most currencies. While that may affect the cost savings accrued to Ameriocan companies, there is little change in the attractiveness of any specific offshore location

Attrition Blues!

It is Catch 22 for the IT giants in India. On one hand, the margins are being squeezed, on the other, they need to pay more to retain the workforce. There have been signs that at least the big companies are resisting wage hikes, namely, TCS, Wipro, and Infosys. In fact, in the recently announced Salary Survey conducted by Dataquest and IDC, Infosys ranked at #12 and TCS at #13, in the top paymasters in 2007.

Result, rising attrition. According to a report published by PTI, the big four, namely, TCS, Infosys, Wipro and Satyam have seen an exodus of about 10,000 people in the first quarter. Though these firms have been rapidly hiring, they collectively hired more than 25,000 employees in the April-June period, the net addition was just about 16,300taking their total headcount to 2,85,357 employees.

Most of these employees seem to be leaving due to the lure of greenback, thus joining MNCs and smaller firms that are ready to pay higher. If there is any further strengthening of the rupee, great salary hikes (average salary growth of 11% and average salary hike 19%, according to DQ-IDC Survey) might be a thing of the past. Already there has been talk of how the wage hikes are becoming unrealistic, and currently forms one of the biggest components of the operational costs. The good news is that salary satisfaction is not really linked to salary hikes and much of this attrition can be controlled by imaginative HR strategies. A lot of small players seem to have learnt that and are finding newer ways of retaining their employees, rather than just trying to pay them more.

Call it the revenge of the native!

The chart shows the movement of stock/ADR prices of selected IT Services firms. Is offshoring falling out of favour with the American investors in the wake of a weakening dollar?
After enjoying immense favor with the investors, thanks to their impressive growth rates and margins for more than four years, the leading offshore service providers saw their stocks plummeting in the last six months, thanks to a weakening dollar that gave rise to fears about the sustainability of offshoring economics.

Between March (23rd) and September (7th), the price of Infosys ADR dropped 9.6% while that of fellow Bangalore company, Wipro, dropped 15.7%. But the most drastic fall was seen by the stock of “growth machine,” Cognizant which plunged by a whopping 23.5%.

In the same time period, the traditional North American outsourcing firms like IBM, Accenture and CSC saw their stock prices going up by 21.6%, 9.9% and 5.6% respectively.

The Indian firms like Infosys, Wipro and TCS (not listed in the US) have admitted that the weakening dollar has hit their margins.

Meanwhile, the North American firms have built significant India delivery capability and are fast mastering the art of managing talent in a highly competitive labor market like India, as revealed by a Dataquest-IDC survey. This has leveled the offshoring battlefield further, and that has certainly not helped the cause of investor confidence in Indian firms.

Interview: Karlheinz Brandenburg (Inventor of MP3)

Getting to interact with Prof. Brandenburg was really a high-point for me. It was not only because he is renowned as the ‘father of the MP3’ (which he disputes), but also for the person he is, a true academic genius. I really admire the values that Prof. Brandenburg stands for. A few decades back, the fledgling IT industry was dominated by people who were inventors, people like Gary Kildall, Gene Amdahl, Seymour Kray, Bob Kahn, Vincent Cerf, and so many others. Today, it is mainly dominated by business magnates (Yes, there is Steve Jobs and one could argue even Bill Gates, still).

In those days, inventors tinkered with technology not for the money that could be made out of it, but how it would aid people in their everyday lives. Prof. Brandenburg belongs to that genre, he was instrumental in inventing MP3, and once he had done so, he returned to Fraunhofer Institute to aid other people. When during the conversation, I talked about money and compared him with Sir. Tim Berners-Lee, he baulked and said that he had made money (thanks to a German legislation) from his invention and he seemed quite content with it. His simplicity is truly touching.

The whole interaction was published in Dataquest: (http://dqindia.ciol.com/content/q&a/2007/107091702.asp)


‘For the next decade, MP3 will exist and be alive’

Music and mathematics make the unlikeliest of pairs. Arguments abound about how the two are interrelated, and how mathematics can be used to understand, evaluate and analyze music. Some even passionately debate how at the core of a composition is an algebraic equation. Still, the correlation between the genius of Fibonacci and the brilliance of Beethoven is a little hard to swallow.

Notwithstanding the debate, the contribution of mathematician Karlheinz Brandenburg to the mellifluous universe of music is incontestable. The audio engineer, by using simple algorithm, unshackled music in a way it was barely conceivable.

Brandenburg (and his team of inventors) invented the Motion Picture Experts Group (MPEG) Audio Layer 3, more popularly known by the file extension MP3, at the Fraunhofer Institute in Germany in the early nineties. It was on July 7, 1994, that the Fraunhofer Society released the first software MP3 encoder called l3enc. And it completely changed the way we looked at and heard music. All of sudden, music had turned portable; it could be played anywhere and was more or less freely available. Over the next few years, MP3 completely lorded over all the music formats that existed in the past and the present.

But instead of basking in the glory of his invention, or raking in money by the millions, Brandenburg decided to return to Fraunhofer as the director of the Institute for Digital Media Technology (IDMT) in the picturesque town of Ilmenau, Germany. He now enjoys simple pleasures of life like listening to music on his iPod Nano, swimming or trekking.

Widely regarded as the father of MP3, Brandenburg is currently working on futuristic technologies in the same domain, like a program that automatically discerns and unearths music based on the type of music that we listen to from the Internet. In an interview with Dataquest, Brandenburg talks about his invention and himself. Excerpts.

It has been around thirteen years since the MP3 format was publicly launched, and yet it continues to be the most popular format for music. In this rapidly changing world isnt that a sort an anomaly?
I think MP3 is a common ground for compressed music; it is one format that is supported by all kinds of equipment and can be decoded and listened to anytime, anywhere. People like this continuity; they dont want to change the format of their music every other year. It is due to this universitality that MP3 continues to be popular.

MP3 is the second most popular search item on the Internet, and, ironically, it wasnt even invented keeping the computer in mind. Did you have an inkling of how popular it would be?
Yes and no. One always has dreams, when I did my PHD work, I was dreaming that my work would be used by millions of people. But I dont think I or anybody else in the group had a feeling of how large our work would really be.

How do you feel about the marriage between Internet and MP3?
In was in late 1994 and early 1995, that we at Fraunhofer had an internal discussion about the future potential of the Internet. We knew that we had a window of opportunity to make MP3 the Internet audio standard. Quite shortly after we released the shareware encoder and decoder software, we saw the first people using MP3 on the Internetthat was in 1995.

How does it feel to be referred to as the father of MP3?
I am certainly not the father of MP3. I know who else contributed in the development of MP3, whose shoulders I stand on and who else worked on the topic. Hence, I never refer to myself as the father of MP3, I do know that I contributed significantly to the development of the standard, so feel very connected to the MP3, thats it.

Your views on MP3 and P2P servicesdo you not think that like any other commodity, users have a right to share and trade music?
I always had the opinion that IP should be treated with respect. A musician, and others in the creative process, should benefit from their creation, so I didnt like the idea of Napster. That does not mean I endorse every move and idea of the music industry. I do think, there should be a chance for musicians to make money from their creation, while others continue to enjoy music.

The music industry seems to hate MP3, do you think their fears are justified?
Justified to an extent, but highly exaggerated. In fact, this exaggeration became a problem by itself. They feared MP3 and would not embrace it, and it took a long time for legal services to come up. Internet provided lots of opportunities for lesser-known musicians. It is important that websites like Myspace and others provide a way for these artists to showcase their talents. The music industry did not capitalize on this opportunity.

What do you think of DRM? Should there be some sort of protection for MP3 files?
MP3 by itself is a format that plays everywhere and a blank MP3 does not have any sort of protection. Though I do understand that people do want some sort of protection. But having multiple proprietary systems that do not work with each other complicated things. It was a bad idea. DRM should work in a way that as a customer you should not notice it. If you are a legal customer, you should do whatever you are entitled to with your music without getting into any difficulties. For instance, if your computer breaks down or you have to replace files from another computer, or if you have different brands of devices, so on. All the current problems we have with DRM is bad in terms of usability.

Ideally, DRM should not be visible at all to the consumers and as long as we dont have that, it is better to have no DRM (the current multiple format one) at all.

What do you think of the numerous patent disputes that have arisen over the use of MP3?
Some of these issues have been very bad for the industry and the population, as commercial interests have driven them. As nowadays, everybody tries to get in and make quick money. Patents themselves are a good idea. I cant comment on any specific legal dispute. But it is clear that a lot of things have happened that make us all worried as to what the future will be.

There is often the discussion about your own personal gains, you could have benefited a lot more. Does that thought ever occur to you?
Thats a frequently asked question. But then, I have indeed benefited commercially from MP3. I am holding one patent that is about to run out, and am on a number of patents that Fraunhofer Institute holds. In Germany, there is a law that the inventor gets a fraction of the revenues generated from royalties so not only me but also a lot of others get a share from the royalties, as well. There are a lot of patents and lot of people who contributed to MP3, so it is a win-win situation.

What do you think of the current generation of MP3 players, do you feel they are good enough?
There is always more to come. What I think we will see is more of connectivity, like it will get easier to connect to my computer to get music. What I would like to see, and we are working currently at Ilmenau, is an automatic play list generator. Even when companies have done a lot in improving the user interface, I still have to search for what I need to listen to next. The MP3 player or the iPod could help with that selection. Otherwise, I really like the current breed of MP3 players.

What do you think of the iPod?
It is quite good. I own a couple of iPods and other MP3 players as well.

How many MP3 players do you own?
I must have bought close to 15-20 MP3 players over the years. At the moment, I use my 8 GB Nano, but I recently bought Samsung, and have several Creative Labs players.

What is the future of MP3?
On one hand you have the AAC format. We worked quite a bit on AAC as well. We all at Fraunhofer are proud of what became of AAC. My colleagues are also working at MPEG surround and MP3 surround. I think for audio in general, we will see a big step forward beyond the current surround systems. The current systems are based on ideas that have been around for over two decades. We are now working on it and calling it Ozono, there you can have immersive audio, you feel like you are somewhere out with much better sound quality. It gives you a much better idea of surrounding, of being somewhere else versus 2-channel or 5-channel audio.

You have also been involved with a program called Soundslike, what is the progress on it?
Work on Soundslike has been continuing. The original Soundslike did not work that well, the newer version discerns music patterns and helps with the selection of music. If I understand right, we can see the first products incorporating Soundslike to be out this year. It would be some PC software product.

A lot of people have argued against the idea, saying that an algorithm can hardly choose music?
The debate is quite interesting. True it is difficult for machines to understand all the different nuances and finally decide for me whether I like the music or not, and generate a play list. There are a lot of Web 2.0 technologies involved in this, like sharing play lists, doing the metadata, synthesizing the style, etc. In the future, we will have a combination of those, the automatic system will help us in a limited way. I heard reports that on testing, people enjoyed it a lot. It is intuitive, wont be cent percent right. But it will work enough so that it can help in the selection process.

What other projects are you involved with?
I am now the head of the institute in Ilmenau and am responsible for all the activities here. In many ways life has come full circle; two decades back I was working on audio compression, now my job is to look around for what could be interesting, and work out the money and people issues.

MP3 is not a very fancy name, did the team think of any other name at that time?We just needed a 3-letter extension, because that was the time of the Windows 3.1 OS and the file extension could not be more than three letters. Others had in fact used the term MP2 for layer 2 music. If I recall correctly it was the Internet Underground Music Archive that already had music in Layer 2 format. So we had an internal discussion on what extension to take and then it was just a file extension. Little did we realize that this file extension would be used as a generic name for the whole technology. It wasnt a conscious decision by us, we always referred to the technology as MPEG Layer 3, and only later on started to use the term MP3, after the term had gained popularity.

What do you feel about MP3 and open source?
MP3 on one hand is a patented technology but its source was available for free for a long time. We do support the idea of open source and feel that it is a good idea. But that does not make MP3 free in terms of no strings attached because it still is patented technology. Of course, I did watch what was happening with Ogg Vorbis and so on, and, overall, I think for the whole of the software industry and the whole of the Internet culture it is a good thing if we have both. We need a world where people cooperate without commercial interests. I think it is a very nice model, but things would not work if it were the only model. We need a free software and free technology model as well as companies investing money and resources to do work, apply for licenses and patents and work on proprietary technology. In the end, if both systems co-exist it will be of advantage to all.

It has been 13 years, how much longer will it stay with us?
MP3 will stay the common denominator; it will continue to be the format for a lot of different equipment for the next ten years at least. What will happen after that is hard to guess. Over the past years, more bandwidth and more storage capacity has been available to us, so you could have newer formats for multi-channel sound. It will be very interesting. Will it be MP3 Surround for portable devices or will we go for different format altogether, is anybodys guess. But, for the next 10 years while there will be new systems, MP3 will co-exist and be alive.

Shashwat DC

Feature: Anti Money Laundering and India

One of the biggest faced by governments across the globe battling terror is money laundering. How to stop the funding and transfer of funds to terror outfits? Post 9/11, a lot of measures have been put into force to curb the transactions. All these actions are labelled as Anti-Money Laundering or AML. Recently there were reports of how sleeping cells in Germany and Canada were recieving money through Internet. In fact, Internet has become a favored means for surreptiously sending across money by terrorist outfits.

AML is a war, rather an ongoing war. And the biggest weapon that the governments have with them is technology. By using IT extensively, money laundering can be curbed to a great extent. Indian authorities have also woken up to AML and are trying to put in place the strategy, it is an uphill task. I had authored a story on the issue, and it was published in CIOL. Thought, I’d share the same….

Battling terror by choking finance

Several countries are in the process of implementing anti money laundering measures to fight off the evil of terrorism. Where does India stand? An analysis.

One hot summer morning in June, 2000, Mohammed Atta and his close associate Marwan al-Shehhi sauntered into the Florida SunTrust Bank and opened a joint account with few and forged documents. Just a few months ago, Atta and al-Shehhi had opened accounts in Citibank and HSBC’s Dubai branches, respectively. Over the summer, approximately $109,440 was wired into their account from their U.A.E. bank accounts. According to FBI, the deposits to their bank account totaled $303,481.63 in over a year. This money was used for airline tickets, flying lessons, living expenses, etc. The whole operation culminated on the morning of September 11, 2001, when Atta crashed the American Airlines Flight 11 Boeing 767-223ER aircraft in the North Tower of the World Trade Center. And the world woke up to terrorism, and the evil known as money laundering.

Post 9/11, U.S. came down stringently on money laundering, trying to eradicate the financial sources was an important objective of America’s war on terror. To that end, numerous legislations were promulgated; in the U.S. it was the Patriot Act, while the European Commission set up the Financial Action Task Force (FATF) recommendations and the Wolfsberg Principles on Private Banking. “The FATF has a set of forty recommendations which are updated on a consistent basis to keep pace with money laundering techniques. The FATF membership now includes 31+ countries with some countries from the Gulf Council as permanent members,” says Hanuman Tripathi, MD, Infrasoft.

It is certainly not an easy task, as the criminals try and stay one step ahead of the legal dragnet. And technology is on their side. With the boom in Internet banking and online transactions, fraudulent funds can be transferred at click of the mouse. Premjit Dass, associate director (Advisory), Forensic Services, KPMG, estimates that close to $590 billion to $1.5 trillion are laundered annually, “When viewed in the context of the global GDP, it is a very large amount,” he points out.

But the authorities are trying to catch up, with the use of technology, especially software. Major banks across the developed countries have put in to place anti money laundering (AML) processes; these could range from appointing an officer to installation of an enterprise wide software solution.

In the Indian context, money laundering has always been a big problem. Hawala and black money economy are the two big issues that have plagued the various regulatory authorities over the years. Black economy according to estimates was around 40% of GDP in 1995-96, (Source: The Black Economy in India, author Arun Kumar). “Few can realistically estimate the dramatic amount of wealth locked out of the Indian economy and the myriad means through which is seeks legitimacy,” says Suheim Sheikh, managing director, SDG & head (Capital Market & Anti Money Laundering Solutions), 3i Infotech.

Ironically, money laundering has never been considered a serious issue in India, it is often deemed as a legitimate mean to save money from the tax department. All that seems to be changing now, with the Reserve Bank of India (RBI) and the government coming down heavily on money launderers and trying to get to the very roots of these activities.

The Prevention of Money Laundering Act 2002 has come into effect from July 1, 2005. The RBI has issued KYC (know your consumer) guidelines to banks that were needed to implement by December 31, 2005, but many Indian banks are still in the process of implementing these guidelines. “SEBI (Securities and Exchange Bureau of India) has also issued AML guidelines to stock brokers vide its notification ISD/CIR/RR/AML/1/06 dated January 18, 2006. A FIU or Financial Intelligence Unit has also become operational,” adds Premjit.

According to source at Indian Bank Association, the format for the KYC feedback forum is still being discussed.

To help banks and financial institutions keep track of fraudulent transactions, many IT firms have developed enterprise level AML software. “AML software is essentially a pattern recognition and behavior detection technology. It is largely comprised of a KYC and transaction monitoring modules,” says Hanuman. Simply speaking, if there are constant transactions of big amounts of money, the system will alert the bank and it could then keep a tab. Were, this system in place in 2001, the big transactions made by Atta and al-Shehhi would have alerted the authorities. The software has the ability to categorize the customer from a risk-based perspective. The bank customers are a worried lot though, as the authorities will be watching and recording every transaction.

Indian IT companies are vying to grab a chunk of the global anti money laundering that is estimated to be worth around $10 billion, whereas the Indian market is estimated to be worth around Rs. 185-220 crores. Companies like Infrasoft and SDG-3i Infotech are the leading players in the domestic space. While most of the multinational banks have or are in the process of implementing AML processes, it is the nationalized banks that seem to be dragging their feet.

There are many reasons as to why public sector banks are lacking in comparison to private ones, chiefly because they have much larger number of branches situated in far-flung areas that are difficult to connect and they also have a complex decision making process.

“The MNC banks have an additional advantage since they have had to implement their group AML standards as they fall under the purview of the regulators in the home jurisdictions that have had AML legislation and rules and regulations for a number of years,” adds Premjit. Banks like Vijaya Bank, UTI Bank, Karnataka Bank, Canara Bank have all implemented AML systems.

Indian IT firms are also making a foray into the Middle East and South Asia markets and looking at garnering a major share. Meanwhile, companies like TCS, Iflex, Infosys, etc. are also looking at tweaking their core-banking solutions, so as to be able to deliver AML features.
Finally, will the stopping the cash flow really make an impact on global terrorism?

The answer is unequivocally yes. Nothing works like money, if these terror groups are deprived of their legitimate finances, they will be unable to carry out any major attacks. It isn’t a coincidence that with the implementations of these measures, U.S. has become a lot safer and hopefully there never will be another 9/11.

Interview: Krish Mantripada (RFID)

Radio Frequency Identification or RFID, has been in news for past many years but yet it remains an enigma. Walmart popularized the tags and entreprises were promised manna, freedom from manual tracking, from the manufacturing floor to the warehouse. Well, the picture might not be as rosy, things have been moving on the ground. For instance, DHL has been a big case, using RFID tags to track the parcels. There is still a lot in store on that front.

Sometime back, I had interacted with Krish Mantripada, from SAP. He is evangelizing the use of RFID and is well-known for his work on the same. The interaction was published on CIOL.

‘The application of RFID is only limited by your imagination’

During the Second World War, the Allied commanders were having a tough time identifying friend from foe when it came to aircrafts. From ground, it was virtually impossible to discern a Lutwaffe (Geman Air Force) Messerschmitt from RAF’s (Great Britain Royal Air Force) Spitfire; hence the anti-aircraft batteries were not much of help. The problem was solved by ingenious British scientists with the invention of IFF radio transponder. IFF stands for identification friend or foe, and all the Allied aircrafts were fitted with one, making it easier for ground troops to identify Lutwaffe planes using radio frequency. This was the precursor to the RFID (radio frequency identification) tags that one finds at numerous malls spread across the global.

RFID has been around for quite sometime, but has been creating news in the past few years only, all thanks to retail giant Wallmart. A few years back, Wallmart decided to automate all its back-end processes. Supply chain management or SCM was the biggest challenge, especially if you consider Wallmart vendors are based all across from Shenzen to San Francisco. Wallmart readily adopted RFID, using it to track its goods, manage inventory, business intelligence, etc. Today, it has become a poster boy for RFID deployment.

The technology is slowly making a mark on the Indian landscape as well. The early adopters were suppliers to international retail giants like Wallmart, etc. Now, Indian companies are also actively evaluating the deployment of RFID on a mass scale. SAP offers a quite a few integrated ERP solutions that are RFID enabled. Krish Mantripada, Director, Global Solution Strategy, RFID, SCM Solutions Management, SAP, spoke to Shashwat Chaturvedi from CyberMedia News at the recently held SAP Summit about the latest on RFID and his projections about the future. Excerpts.

RFID has often been associated with the retail space only, though it promises to do a lot more. Do you think the perception is changing?
Indeed it is. With increasing RFID adoption, enterprises are becoming more and more aware about the possibilities that this technology presents. Currently more than 16 different industry verticals are actively using RFID, from the manufacturing to pharmaceutical. Even, a lot of governments are employing the technology for tracking and identification; pretty soon U.S. passports will carry RFID tags. While it started off as a great retail industry tool, RFID has become much bigger now.

RFID was termed as expensive, especially due to the prohibitive costs of the tags, has that changed?
The price for the tags have come down drastically, currently they are hovering in the 10-15 cents (U.S.) per tag bracket. Sometime ago, the cost was around 50 cents. As the adoption spreads, the economies of scale will bring the cost further down. Also, there has been a lot of innovation; some companies are testing polymer-based tags instead of silicon. One firm is also testing paper-based tags with the use of conductive inks.

Why has the Indian markets been largely untouched by the RFID revolution?
It is steadily changing; a lot of enterprises are evincing keen interest in the technology. It is really surprising about how much people are aware about RFID. In fact many firms are actively pursuing pilot projects. Indian markets would no longer be untouched by the revolution.
Are you working with Indian companies on an RFID implementation?A few leading companies are currently in the early stages of implementation. Will be unable to share precise details as of now.

From which sector do these clients hail from? Is it retail only?
It is retail and manufacturing both.

Has SAP also tied up with any company in India for RFID?
We have tied up with TCS and Infosys as system integrators; there are more such partnerships in the offing.

Isn’t it strange, that while retail is the key driver behind the RFID adoption, SAP does not have a major client in this space?
But we are actively working with all the retail majors. Consider this, a majority of Wallmart and Home Depot suppliers are SAP customers. We are catering to the RFID ecosystem.
There has also been talk about the emergence of RFID viruses, your views.Yes like every other technological innovation, there will be mala fide users who will try to misuse it. Similarly, counterchecks are evolving for RFID as well, like firewalls, etc. that will detect malicious behavior and take preventive actions. As we learn more and more, so will the protective measures evolve.

Finally, what are innovative uses of RFID technology?
There are just so many, take for instance, in California, I just drive through the Expressways, while the tollbooths capture the data with the use of RFID tag and send me a monthly bill. Some hospitals are talking about tagging their patients with RFID, to ensure that correct medicine is given to the correct patient. As mentioned earlier, a few countries are talking about RFID tagged passports. Chinese authorities in Shanghai, used RFID to track slaughtered pigs. Pharma companies are trying to curb counterfeit products with the help of RFID. In fact, Nokia has come out with a few handsets that enable RFID authentication. The application of RFID is only limited by your imagination.

Feature: Green Electronics

Everyone talks of green nowadays; so you have green IT, green servers, green storage and now even greeen electronics. The vision is simple, move towards eco-friendly world, so many NGOs, especially Greenpeace, are leading the call for manufacturers of electronic goods to go clean and stop using toxic material. The biggest movement has come from the EU, that has put in regualtions and stipulations on the same.

Talk of green is important for India, as we are steadily ramping up our manufacturing capabilities, it makes sense to put in best practices at the start. It would be very foolish if, we did not. The story on Green Electronics was published in Dataquest magazine…(http://dqindia.ciol.com/content/industrymarket/focus/2007/107091701.asp)——————————————————————————
Call for Green Electronics

Electronics manufacturers need to stop using toxic metals in the manufacturing processes; they need to go green

Monday, September 17, 2007

‘At my signal, unleash hell, roared Maximus Desmus Meridius to his wearied men lined up against the last of the Saxon tribes. Which they summarily do. This scene from the film Gladiator captures the might and ferocity of the Roman Empire. In its heydays, the empire spread form Western Europe to Northern Africa. At the turn of first millennium, there was no other force in the world that could face up to the mighty Romans.

Yet, something from within the empire was gnawing at their strength. Most of the affluent Romans were stricken by Gout or strange mental illnesses. In fact, the Roman emperor Nero was supposedly playing the fiddle out of his insanity, when the city of Rome was aflame. Imperium Romanium was crumbling due to a bluish white metal known to them as plumbum, and to us as lead.

Toxic lead was responsible for most of these ailments, as the use of the heavy metal was quite prevalent in ancient Rome. The citizens, especially the blue-blooded ones, used to wine and dine out of vessels having lead in them. Lead was used in make-up, lead sugar (lead acetate) was used to sweeten wine, and so on.

Even today, some 2,000 years later, lead accounts for hundreds of deaths annually across the world, especially in developing countries. And, this time the culprit is not vessels or food but modern technologythings that making our life easier are the very things that are threatening our existence.

Modern equipment have made our lives much easier and comfortable. Yet, they are laden with toxic and health endangering chemicals. Right from the computer monitor to the semiconductor chip, almost all the part are either fabricated out of toxic metals or treated with them. Take the case of lead, it is found in glass panels and gasket (frit) in computer monitors (3-8 pounds per monitor), and solder in printed circuit boards and other components.

Cadmium occurs in such components as the SHD chip resistors, infrared detectors, and semiconductor chips. Mercury is used in thermostats, sensors, relays, switches, medical equipment, lamps, and mobile phones are found quite liberally in batteries. Barium is used in the front panel of a CRT. Beryllium is found on the mother-boards and “finger clips” as a copper beryllium alloy used to strengthen the tensile strength of connectors and tiny plugs while maintaining electrical conductivity, and so on. All these metals are known to have quite perilous impact on the human health.

But how can all these metals inside the computer and the mobile phone threaten us? E-waste is a term that describes the process of the transfer. Every year, users discard millions of PCs and phones across the globe, more so in the developed world. These PCs and phones are dumped for newer, better and sleeker models. With hundreds of millions of such equipment discarded annually, the amount of electronic waste (or e-waste) that stacks up is mind-boggling.

According to Greenpeace, the amount of electronic products discarded globally has skyrocketed recently, with 20-50 million tonnes generated every year. To get an idea of the amount, if the estimated e-waste generated every year would be put into containers on a train, the train would go once around the world in terms of length!

Poison in the Soil
Sadly, much of this e-waste finds its way into the developing countries in Asia and Africa. China and India have been one of the favored destinations for such dumping. Local contractors are paid to dismantle these products, which they do by employing cheap manual labor. It is during this dismantling that toxins come to the fore. They not only endanger the life of the laborer but also seep into the soil thereby contaminating the water table. Now the dangerous domino is set in motion, the contaminated water used for irrigation results in toxin-tainted food crop and poisons the whole food chain. The ill effects of these toxic metals are bone chilling. Poisoning threatens even people who have not been in direct contact with these metals; people like you and me.

Going Green
Of the many solutions for tackling this gargantuan e-waste crisis, green electronics is the most promising. Rather than trying to solve the crisis at the ground level, isnt it better to deal with it at the very onset at the manufacturing level? The idea is simple and sure to work. All electronic manufacturers must stop using hazardous metals while fashioning computers or other devices. And, going a step further, they should put into place a robust recycling strategy for their discarded products. If there are no toxins in the e-waste, it wont threaten our lives. Yet Green Electronics is easier said than done.

There has been a lot of resistance to this movement, not surprisingly from electronics manufacturing companies. In this outsourced world it is difficult to control all the manufacturing processes, take the case of a mobile phone, the screen could be fashioned in one part of China, the IC in Taiwan, the plastic body in Vietnam, and the software in India. And this is just the tip of the iceberg as these contractors would further sub-contract the work. In such a scenario, where the company is not in complete control of the manufacturing process, it is very tough to ensure that the manufacturing process does not harm the environment.

Secondly, the process of finding replacements for these commonly available products can be quite expensive, not only in terms of research but also in sourcing. Little wonder that companies have often shied away from sharing information about their manufacturing processes. But the tide is shifting.

Green Guide
Under pressure from governments and non-governmental bodies, electronics manufacturers have been under fire for a shift towards a greener manufacturing process. The biggest push has come from the European Union that has over the last few years passed strict legislations against the use of toxic materials in the manufacturing process. Waste Electronics and Electrical Equipment (WEEE) Directive and Restriction on Hazardous Substances (RoHS) Directive are two legislations that have set the ball rolling.

From the NGO side, Greenpeace has been a driving force behind the move for Green Electronics. Every quarter, Greenpeace publishes the Green Electronics Guide that ranks leading mobile and PC manufacturers on their global policies and practice on eliminating harmful chemicals and on taking responsibility for their products discarded by consumers. All these companies are ranked on information that is publicly available and through communications/clarifications with companies.

The last list was published in the end of June, 2007. Of the fourteen companies that were ranked, Nokia, Dell and Lenovo were the toppers, while HP, Panasonic, LGE, and Sony came in last.

Greenpeace list of companies that are using environment friendly manufacturing and recycling processes. Released every quarter, Nokia tops the list this time, followed by Dell and Lenovo. The ranking criteria were based on two aspectscompanies clean up their products by eliminating hazardous substances; and take back and recycle their products responsibly, once they become obsolete.

Over the years, Nokia has maintained its leadership on the top of the table, but the gains made by Dell have been very impressive. The computer manufacturer has put in place a strong definition of the precautionary principle, timelines for substituting toxic polyvinyl chloride (PVC) and brominated flame retardants (BFRs) and explicit support for individual producer responsibility. Dell has also announced its intention to provide global free take back and recycling services to individual consumers wherever its products are sold.

The only reason why Dell lost points is because it did not have models free of PVC and BFRs on the market. Dell now scores top marks for reporting its recycling rate as a percentage of sales. The company has even put in a recycling program in India as part of global efforts. Even the Environment Product Environmental Assessment Tool (EPEAT) has given a Gold to Dells latest OptiPlex 755 line of desktops and notebooks.

On the other hand PC manufacturers like Lenovo, and Apple lose points on the Greenpeace list because of a weak global take-back program, and also not eliminating the worst chemicals from their product lines. HP has been falling on the tables because of its failure to provide clear timelines for eliminating the worst chemicals. It also looses points for weak definition of take-back policies.

Not all Agree
But even the Green Electronics Guide is not without its detractors. Patrick Moore, co-founder and former leader of Greenpeace, does not quite agree with the findings and disputes the very basis of the report. Moore disputes Greenpeaces contention that PVC is dangerous for the environment and should be discarded. He recently pointed out that PVC is one of the safest and most sustainable materials available and that in contrast, it is the alternatives that often pose unknown health or environmental risks. According to media reports, he told electronics manufacturers not to “blindly follow the Greenpeace political agenda,” which is “devoid of any scientific basis” and would result in more costly, less climate-friendly products.

Whatever might be the outcome of this debate, it has quite significant implications for countries like India, simply because we are already suffering due to dumping of e-waste, and if proper mechanism for environmental control is not established in the numerous manufacturing facilities, the results could be dire. Hopefully, the global companies setting up operations in India, will continue to follow the principles of Green Electronics and not resort to malpractices due to laxity in legislation and enforcement.

Every year thousands die due to toxic poisoning. For the sake of humanity, lets hope that history does not repeat itself. It goes without doubt that companies like Dell, Apple, HP and others have a responsibility for reigning in the hell that has been unleashed upon our environment, knowingly or unknowingly.

Shashwat DC

Effects of Toxic Metals

Lead: Lead causes damage to the central and peripheral nervous systems, blood, kidneys, and reproductive systems. Effects on the endocrine system have been observed and its serious negative effect on children’s brain development are well documented

Cadmium: Cadmium compounds are toxic with a possible risk of irreversible effects on human health, and accumulate in the body, particularly kidneys

Mercury: Mercury can cause damage to various organs including the brain and kidneys, as well as the foetus. Most importantly, the developing foetus is highly susceptible through maternal exposure to mercury

Hexavalent Chromium/Chromium VI: Chromium VI is still used as corrosion protection of untreated and galvanized steel plates, and as a decorative or hardener for steel housings. It easily passes through cell membranes and is then absorbed, producing various toxic effects in contaminated cells. Chromium VI can cause damage to DNA and is extremely toxic in the environment.

Plastics including PVC: Plastics make up 13.8 pounds of an average computer. The largest volume of plastics (26%) used in electronics has been poly-vinyl-chloride (PVC). PVC is mainly found in cabling and computer housings, although many computer moldings are now made with the somewhat more benign ABS plastics. PVC is used for its fire-retardant properties. As with other chlorinecontaining compounds, dioxin can be formed when PVC is burned within a certain temperature range

Brominated Flame Retardants (BFRs): BFRs are used in the plastic housings of electronic equipment and in circuit boards to prevent flammability. More than 50% of BFR usage in the electronics industry consists of tetrabromobisphenol A (TBBPA), 10% is polybrominated diphenyl ethers (PBDEs), and less than 1% is polybrominated biphenyl (PBB)

Barium: Studies have shown that short-term exposure to barium has caused brain swelling, muscle weakness, damage to the heart, liver and spleen

Beryllium: Beryllium has recently been classified as a human carcinogen as exposure to it can cause lung cancer. The primary health concern is inhalation of beryllium dust, fume or mist. Workers who are constantly exposed to beryllium, even in small amounts, and who become sensitized to it can develop what is known as Chronic Beryllium Disease (beryllicosis), a disease primarily affecting lungs. Exposure to beryllium also causes a form of skin disease that is characterized by poor wound healing and wart-like bumps. Studies have shown that people can still develop beryllium disease even many years following the last exposure

Phosphor and additives: Phosphor is an inorganic chemical compound that is applied as a coat on the interior of the CRT faceplate. Phosphor affects the display resolution and luminance of images that is seen in the monitor. The hazards of phosphor in CRTs are not well known or reported, but the US Navy has not minced words about the hazards involved in some of their guidelines: “NEVER touch a CRTs phosphor

Coating: it is extremely toxic. If you break a CRT, clean up the glass fragments very carefully. If you touch the phosphor, seek medical attention immediately.” The phosphor coating contains heavy metals such as cadmium and other rare earth metals, eg, zinc, vanadium, etc. as additives. These metals and their compounds are very toxic. This is a serious hazard posed for those who dismantle CRTs by hand.

Source: http://www.itwastesolutions.co.uk/

Did you know?

The average lifespan of computers in developed countries has dropped from six years in 1997 to just two years in 2005 Mobile phones have a lifecycle of less than two years in developed countries 183 mn computers were sold worldwide in 200411.6% more than in 2003 674 mn mobile phones were sold worldwide in 200430% more than in 2003 By 2010, there will be 716 mn new computers in use. There will be 178 mn new computer users in China, 80 mn new users in India

Source: Greenpeace

Feature: India’s Best IT Employers

Every year Dataquest in conjunction with IDC India, conducts a comprehensive HR survey titled as the Best Employer Survey (BES). The purpose is simple to gauge the latest trends in the IT industry from the perspective of the employers and more importantly from the view point of the employees. Like every year, this year’s BES also throws up some interesting surprises, the biggest one is the downfall of the domestic companies and rise of the foreign firms. The implications are quite obvious, Indian companies can no longer take foreign for granted, thinking that Indian employees will choose them over the latter. They need to buck up, as the IBMs and Accentures of the world are adopting Indian customs and amalgamating themselves in the Indian milieu. The flattening of the world had benefited Indian companies, now the foreign firms are going for the kill.

I would encourage, all of you to read this story on DQ website (the link given below) as there are a lot of graphs that complement the story. Hopefully, it will be accessible. Await your comments…
The Other Side of the Flat World

American and European services firms have figured this out and are taking on the India-based firms head on in people management, even adapting global HR policies to suit Indian needs.
They’re succeeding.

Friday, August 31, 2007

Smugness and Infosys hardly go together. Yet, in the spring of 2004, Nandan Nilekani had famously proclaimed that the global playing field “had been leveled. The CEO of Infosys was conversing with visiting American journalist Thomas Friedman. The change, according to Nilekani, had been brought about by technology and globalization. For once, Nilekani seemed to let go of his natural modesty as he extolled the strategies adopted by his company. And also by his other Indian peers.

Friedman was impressed. So much so that he called his wife from his hotel room to tell her that the world was “flattening”. His book, World is Flat, eulogized the tactics adopted by Nilekani, Ramadorai, Premji and others, proclaiming a new world order. It was meant to be a warning note to the developed nations, particularly, America.

But even before Friedman loudly asserted it, companies like IBM, Accenture, EDS, CSC, and ACS the North American services firms were feeling the heat. Not only were these Indian firms taking their market share in IT services, many of them had listed in America and had soon become the darlings of Wall Street.

The Indians, of course, were beating them hands down in cost. A large part of that cost advantage came from Indias low-cost work force, which was equally good, if not better than the American IT workers.

It was time for them to tap that talent too. Between 2004-2007, almost all American firms and a few European ones significantly ramped up their Indian delivery. Today, for many of them, including the biggest of them all IBM have more workforce in India than in any other part of the world, excluding of course, USA.

In short, the success in the American (or European) marketplace is increasingly depending on how successfully you compete in the Indian market for talent.

While many of them were hiring rapidly, the Indian firms maintained that just hiring by paying more would not make them successful in India. Satisfying the needs of Indian employees which are very different from those in the US (say the need for job security)was not going to be easy.
Easy, it was not. But possible, it is.

This years DQIDC Best Employers Survey (BES) gives enough reasons to believe that the non-Indian firms are steadily mastering the art of managing Indian employees, because that has become the numero uno factor for success in the marketplace.

This years BES gives an interesting insight that seems to coincide with Friedmans flat world contention. For long, Indian services companies were making the most of tech democratization, going from strength to strength. But, somehow, non-Indian service firms have come to terms with the new order, and are bringing the battle to India. They have realized that the Indian workforce is the key to the future and have staked a claim.

The success in the American (or European) marketplace is increasingly depending on how successfully you compete in the Indian market for talent . When Indians started to pitch for American IT contracts, they were the challengers; the American firms were the incumbents. In the Indian talent market, the same phenomenon is repeating itself, with the order having been reversed. It is the Infosys and Wipros who are the incumbents; it is the IBMs and Capgeminis that are the challengers.

The survey results show that the world is indeed flat equally flat for all. Or, as they often say, globalization is a two way street. We have come a full circle.

Challenge to Indian Service
If Friedmans flat world was the new world order, call it the new, new world order. In BES07, four non-Indian services firms have made impressive debut. Now there are a total of five non-Indian services firm in the list. IBM, Capgemini, Cognizant, CSC, and Ness Tech these companies have either made a debut or have moved up in the ranking, while the Indian giants, but for TCS, have tumbled.

Non-Indian services firms have also learnt how to make best talent in this flat world It is obvious that Indian services companies that had been using the global service delivery model had a lot of faith on their people management skills. While these companies were bidding and winning contracts abroad against global service companies, so were the non-Indian service companies. Not only have these global companies set up base in India, they have also studied and adopted themselves to the Indian climate. Thus IBM India is just like any other Indian IT biggie, only more attractive due to the international lineage. The implications are loud and clear.
Non-Indian services firm have also learnt how to make best use of the not-so spiky world of ours.

The Charge of the Foreign Brigade
It is certainly not the first time that these non-Indian services firms have performed well on BES. Over the years, they have staked claim to quite many places on the Top 20 list. Last year, five non-Indian firms were on the list, of which three (Cadence, CSC, and Kanbay as part of Capgemini) are back again this year. There were six non-Indian firms in 2005 and over 10 in 2004. In fact in 2004, non-Indian firms topped 4 out of the 8 broad categories like image, culture, job content, etc, while they had topped 8 of 10 in 2003. Over the last few years, non-Indian firms have been recruiting heavily, for instance, IBM India and Cognizant added around 14,000 employees each in the last year itself and were amongst the largest recruiters in India. Little wonder these companies are gaining prominence in the BES.

By and large, the reasons remain the same over last year. The only significant change: overseas opportunities now matter more than growth opportunity. However, managers complain that the love for overseas is restricted to postings abroad for one-two years, unlike earlier. Most of them want to come back to India after a short overseas stint

Of the lot, Cadence has been the most persistent. It was ranked at the very top (#1) in 2003, came in #4 in 2004, #6 in 2005, and #5 in 2006. This year Cadence falls 9 places to be ranked #14because of a fall of 12 places in HR rankings. IBM India has been another regular in the BES, it was ranked at #5 in 2003, #3 in 2004, and #8 in 2005. It did not participate in 2006 and this year IBM re-entered the list again at #6. IBM ranks at #3 on HR rankings and #12 on employee rankings, meaning it still has a lot of work etched out for it. The other most interesting MNC debut this year was that of the European major, Capgemini that ranks at #6, with IBM. The interesting part being that it ranks #31 on the HR list and #5 on the employee ranks, a difference of 26 ranks between the two, the second largest in BES this year.

The change is evident. In the past these companies tried to fit the operations to the processes they had brought along with them. This was certainly not the best way, as Indian employees lay a lot of emphasis on inter-personal relationships. Indians not only work for a company, but, more often than not, are married to them. So while a good pay package was always good, it was never the be all of a job. Thus, a lot many employees preferred the hospitable and informal atmosphere at Indian companies rather than process driven MNCs.

Non-Indian companies have woken up to this unique characteristic of Indian employees and are changing themselves with a gusto. Take the case of Capgemini, its India center is not a clone of the HQ, but follows distinctive HR policies that are aimed at the Indian audience. IBM is trying to be more personal, with Sam Palmisano making frequent trips to India and displaying his love through huge get-togethers that seem like a typical Indian wedding. On the other hand, Intel, has taken a leaf out of the Tatas and is increasingly talking about its CSR activities. It would seem that these non-Indian services are adapting to the Indian work culture and beating the big Indian players in their own game.

Interestingly, growth opportunity and technology one is working on are the two parameters where people are fairly satisfied; yet they would change for those reasons. The toughest challenge for employers

The results of this transformation are there for all to see. Take the case of dream companies four non-Indian companies have made their place in the Top 10. The implication is clear: more Indians prefer non-Indian service firms to their Indian counterparts.

Even when it comes to work culture, non-Indian firms are scoring. There are four non-Indian services companies in the Top 10 with Infosys plummeting to #20 on the culture parameter. The myth that non-Indian companies pay better seems to be dispelled as there are only three non-Indian services companies in the Top 10 list. In fact Infosys is last at #20, preceded by IBM at #19. When it comes to satisfaction parameters, growth opportunity tops. Not surprising considering the industry is still growing at more than 30% and with that everyone is growing

The signs are ominous. There are still a lot of non-Indian firms, like HP, Oracle, etc that used to be part of the BES in the past but are not so now for a variety of reasons. Whereas companies like Microsoft, Accenture, EDS, SAP, Google, etc, that have been quite active in India did not participate in the survey. In the days to come, as these non-Indian services companies adapt further, they will continue to give the Indian companies a run for their employees.

Bangalore Tigers Tamed
But for TCS, the big Indian IT humptydumpties have taken a fall, especially the Bangalore tigers. The biggest surprise has been Wipro Technologies, which has dropped by 14 places and is out of the Top 20 list. The main reason can be its dismal performance on employee ranking. It is rated quite poorly on parameters like preferred employer (internal), appraisal, training, and culture. But has retained its HR rank, and is ranked at #3. Over the years, Wipro has had its ups and downs on the annual BES. In the first survey, in 2001, it was ranked a #8, rising to #3 in 2002, falling to #7 in 2003, to #18 in 2004, rising again to #15 in 2005 and #9 in 2006. There has been a lot of inconsistency in Wipros performance over the years, and for the first time, this year it is out of the Top 20.

On the other hand, Infosys has dropped by 4 places and is ranked #8. Like Wipro, Infosys also has performed badly on the employee rank, falling from #8 to #15 this year.

The drop could be attributed to the fact that the company has performed badly on the following parameters: preferred employer (internal), company image, salary, and others. In fact, on a lot of parameters Infosys is at the bottom, like appraisal, people, overall satisfaction, image, job content, culture. There seems to be a major discontent brewing among Infosys employees, all this while the company makes a media splash of its foreign interns.

The explanation offered oft times is that as both these companies are ramping up rapidly, there seems to be a tradeoff. Employees joining the organization now might be expecting the same informal atmosphere that used to exist half a dozen years back, for which these companies have been known. But that personal touch might have been lost in the huge number game. Whatever might be the case, one thing is certain, the Bangalore tigers need to get their act together.

A Giant on Top
While the rest of the Indian biggies have tumbled, TCS has, in a way, improved on its performance. This year too it retains its number one position in the overall rankings. In the HR ranking, it tops the list, though there is minor drop in the overall HR score due to low CAGR as compared to last year. But on the employee part, TCS has gone a notch higher and is ranked #3.
TCS is ranked at the top on two parameters: overseas opportunity and job security. With the company going more and more global, obviously the employees seem to be excited about the opportunities opening up. The employees also seem to be quite happy, as the company scored well on the preferred employer (Internal) parameter, as compared to last year.

Yet, TCS must pay attention to lower and mid-level employees as it is ranked #9 on the issue that the appraisal system was fair. It is ranked #10 for “I get regular and constructive feedback from manager/superior” and #8 “I get a sense of great professional and personal accomplishment from the work I do”. TCS is followed by another Indian strong player, HCL Info, ranked at #2.

Size Does Not Matter
Year after year, there is a discussion on how well small companies have fared on the BES. When we talk of small companies it means relatively, in terms of the big Indian and non-Indian giants. This year there were close to eight small companies in the Top 20: iGate, RMSI, Synechron, Tavant, Accel Frontline, Cybage, AztecSoft, and Geometric. iGates performance has been truly impressive as it gained 26 places to be ranked #3.

These small companies have performed well on the employee ranking visvis HR, implying that employees are satisfied with things like salary hikes, payment at par with industry standards or, more importantly, that employees are encouraged to take risk at work. Most of these companies have ranked high on the employee ranking, like iGate at #2, RMSI #4, and Tavant #6. Only Synechron, amongst these companies, has been ranked high on the HR ranking, # 5, and RMSI is #8.

There has also been a change in the way employees perceive these companies. Take the case of image, there are three small companies that have come in the Top 5. Even on the preferred employer (internal) parameter, there are two small companies in the Top 5. Though in the dream company parameter, there is only one small firm (iGate) in the Top 5. Small companies score on the job content front, as was made obvious from the fact that four small companies appear in the Top 5. They are also ranked highly on the culture parameter, with three in the Top 5.

The small companies have also learnt the art of retaining: RMSI is ranked at #1 and iGate at #2 on the retention rate. Though attrition is high as well, as on the same parameter, there were three small companies in the Top 5.

According to some arguments, employee rankings are no real indicator of a companys success, as a sudden windfall to cash to employees or other emoluments like ESOPs could influence that. So these companies need to get their HR processes in place to be termed as the great Indian employers.

The Ones that Lost Out
This year there have been quite a few upsets in terms of companies in the last years Top 20 missing the list this time round. Seven companies, to be precise. As stated earlier the most notable was Wipro that has been ranked #22. The others are GlobalLogic (formerly Induslogic) at #21 and Nucleus Software at #28. Companies like NIIT, Sasken, Sierra Atlantic and Interra IT did not qualify for the employee round.

The main reason being a drastic drop in employee ranks. Take the case of GlobalLogic, while its HR rank fell by three places, its employee rank fell a whopping 15 places. In case of Wipro the fall was all the more drastic, with employee rank falling a whopping 19 places to be ranked #30. Nucleus Softwares employee rank fell by 13 places and it was ranked #26. These three companies fared badly on basically three major employee parameters, namely salary, appraisal and preferred employer (internal).

Meanwhile, there were other companies like Honeywell, Virtusa, Zensar, L&T Indo, Tech Mahindra, Nagarro, Mphasis, and Patni that are ranked beyond the top 20 and could find place in the coming year or years.

Roti, Videsh aur Tarakki
Salary, overseas opportunity and growth opportunity are the top three factors employees cited that would make them shift jobsthe same as last year. However, there is a slight change in priority. While salary and compensation did continue at top, this year, overseas opportunity has replaced growth opportunity as the No 2 factor. Surprising considering that the number of Indians abroad who want to come back to India is also on the rise.

The HR managers agree, however, with the finding, while offering an explanation. Many of them contend that overseas posting is still a big lure for employees; but unlike say ten years back, todays young IT engineers do not want to go abroad to settle there. “It is very difficult to find someone willing to be posted abroad for five-six years; but everyone wants a 1-2 years stint,” says an HR chief. The reason, he explains, is saving some good money “so that you can come back, buy a property and settle in Delhi or Bangalore.” So, in essence, it is a reaffirmation of the first point.

However, what is noteworthy is that in almost all the top parameters (except location), the scores have come down, meaning no single reason is now enough for changing the job. They want a better balance of everything.

When it comes to satisfaction about parameters, growth opportunity tops. Not surprising considering the industry is still growing at more than 30% and with that everyone is growing. Surprisingly, all talks of long hours/stress notwithstanding, most employees feel that they have a good balance of social life and work life. And most of them are happy about organization culture and work climate as well.

The BES also asked the employees to react to specific statements. The maximum agreement was in the area of peer relationships. As many as 84.2% employees strongly agree to the statement that “my relationship with my peers make for a better work environment”. More than 81% strongly agreed to the statement that their colleagues help them when they need them. About 76% respondents strongly agreed that people in their organizations treat each other with mutual respect and trust.

The other area that got a lot of strong agreement to positive statements was company culture. Most employees (more than 70% in each case) strongly agreed about their employers value & ethics, fairness of business practice, honesty & integrity, and professionalism towards all stakeholders.

Not surprisingly, most of the disagreement and “somewhat” agreements were in the area of salary and compensation. Only 34% strongly believed that they are getting paid at par with the industry and 28% said they are not encouraged to take risk at work.

It is still a very positive feeling by Indian employees. Peer relations and organization culture are the areas employees are most satisfied about. The total agreement is obtained by adding the “Strongly agree” and “somewhat agree” responses

Attrition Down
While the Indian employees have become more confident and are demanding more salaries, the average attrition rate of the industry has, in fact, gone down by a percentage point. It currently hovers at around 14%, unlike 15% last year. The main reason for Indian employees leaving the company are: overseas opportunity and growth opportunity. Subsequently, retention rates have improved by a percentage point and are currently at 82% for the industry at large.

Being Fair(er)
As India marches on with high growth and rapid development, so do Indian women. Over the last many years, the percentage of Indian women in companies has been steadily rising. In 2007 it was 23.7% (from the companies surveyed). It has grown from 14.5% in 2004 to 19.7% in 2005 and 23.6% in 2006. A growth of 0.1% point is nothing much to cheer about though, there is a lot of work that needs to be done.

The number of people who strongly agreed that the company is sensitive to its women employees has dropped over the years from 66% in 2004 to 64% in 2006, to 63.32% in 2007. It could also be due to the fact that a lot of women employees in the workforce were able to voice their concerns this year.

Summing up, its obvious that Indian service companies are facing stiff competition from non-Indian service firms. The paradigms of the games have changed. Companies like Wipro and Infosys need to gear themselves against the turning tide. The war for the Indian employee is on, and at the moment the adaptive non-Indian firms seem to have an upper hand.

Much water has flown since Nilekani made the assertion about a flat world. He was indeed right, the playing field had been leveled, but one doubts if he counted on the fact that non-Indian firms could also use it to their advantage.

A flat world is certainly not a safe world.

Shashwat DC

Interview: Vinod Dham (Father of the Pentium)

Beyond doubt, of all the Silicon Valley suits from India, Vinod Dham is a towering name. Dubbed as the ‘Father of the Pentium’, Dham was in many ways responsible for the spread of computing. He might not be a celebrated inventor, but what he might lack in technology, he makes up with his business acumen. Today, Dham is funding new ventures as a VC. It was a bit tough to connect to Dham, but once the call was connected, the next hour or so was riveting, simply because Dham is brutually honest, be it his love for India or his detest for Indian government’s policies. The interaction was published in Dataquest and CIOL: (http://www.ciol.com/content/developer/newsmakers/2006/106101703.asp)

Not physics, but economics limits Moore’s Law’

‘Pentium is dead’ screamed the headline. It had a rather ominous ring to it. For over ten years, Pentium (standing for fifth, penta = five) and ‘Intel Inside’ were symbolic of computational power or rather man’s technological prowess.

The name Pentium stood for trust, people were ready to pay hideous sums of money just for the latest version. And with the launch of every newer version, the previous one met a vain end. Thus, Pentium II killed I; III killed II; and IV killed III. So, it was but natural, to expect Intel to launch a Pentium V, after all it had been over five years since the launch of Pentium IV.

But, that was not to be. Paul Ottelini, CEO, Intel, deemed otherwise. The company last month launched Intel Dual Core brand of processors, signaling the end of the trusted Pentium.

Circa 1975, Vinod Dham, a graduate from Delhi College of Engineering, arrived in Cincinnati on a scholarship, he had a few dollars in pockets but was high on ambitions. After completing his MS, Dham joined NCR and shortly thereafter he was at Intel.

Beginning at the lower rungs, Dham quickly scaled up the ladder and in January 1990 was made in charge of the 586 (later renamed as Pentium) development program. It was due to this, he earned the sobriquet, Father of the Pentium.

Yet, there is more to Dham than Pentium. At the height of his fame in 1995, he quit Intel and joined a startup named Nexgen, which was acquired by AMD. He was briefly at AMD, before the entrepreneurial bug hit again and he joined another startup Silicon Spice. Broadcom acquired the company and Dham moved on.

Currently, he is donning the cap of a venture capitalist; he is the cofounder of New Path Ventures. He has invested in a host of new ventures. In an exhaustive interaction with Shashwat Chaturvedi from CyberMedia News, Dham spoke at length about his views on the latest trends in the semiconductor industry, the roadmap for India and of course, on the death of Pentium. Excerpts:

Your take on the story, Pentium is dead.
I do not know in which context this was said, for 15 years we were trying to improve on the performance of ever-faster processor, if the story spoke about the end of that idea, then they are right about that.

From 8086 to Pentium IV, Intel was always striving for more and more processing power. In the eighties and through the nineties, due to the limitation of the processors, things like surfing on the Internet, or working on the spreadsheet were quite an onerous activity. The only solution was a processor that could do all this and more at a faster speed. But in the last few years, the balance had been achieved. The software that ran the CPU and the processor were finally evenly matched. Thus the imbalance that was fuelling the race for ever-faster processor is over. Pentium was a representative of that idea, that notion. In a way, you could say that Pentium is no more.

Your views on the latest Intel Dual Core processor. Have they got it right with two cores against one?
The idea is not necessarily two against one, the objective is to provide higher performance but with lower power consumption. This requirement has its roots in the laptops, where battery life is a major concern. But now mobile machines are driving this initiative.

Take the case of a cell phone. Normally, most of us charge the battery in the night before and then the whole of next day we do not bother about it. No need to tag along extra battery or charger, and things like that. That’s a good sign of mobility. Even desktops need to adhere to this criterion. With the global energy crisis, power consumption is a big issue and electricity is a part of it. Currently, desktop machines consume too much power. Especially, when you put up a data center like a server farm, the amount of electricity consumed is mind-boggling. We could not afford to continue in this vein.

One of the solution was to keep the performance the same by using multiple cores, each one cooler than the big heavy core. By stringing these cores together, one can get higher performance, at lower power. Dual Core is the first step in that direction. In future, you would multiple cores and more of them. It is the beginning, probably the best solution that one could have.

Does that mean that the focus shifts to power and performance takes a backseat?
Indeed, the focus has shifted to power and as I said earlier mobility is the key driver. Power is an important issue for laptops and more so for the server, for things like data center, grid computing. The next decade, in semiconductor terms, belongs to power, the last two were dedicated to performance.

What about the famed rivalry between AMD and Intel? Who has got it right?
It is not a question about who has got it right, or who has it wrong. AMD has a big leg up on Intel, both in terms of introduction of solution in the market, as well as creating a multi-core product ahead of Intel. Finally, Intel seems to be catching up. But I feel somehow, Intel’s solution isn’t the most elegant one today. Though I am sure, with time they will modify it, refine it and get it right.

Is the semiconductor industry becoming too consumer centric?
The semi-conductor market has evolved over the last four decades or so and has run through its course. Were we to plot a graph, we would be at what one traditionally refers to as the bit curve. First there is the innovation, followed by adoption and then saturation. I think we are at the top of the bit curve, a saturated market, where the cost of semiconductor is very cheap and the performance required is no longer an issue.

Semiconductor has become an integral part of our everyday existence; it is present in cameras, cell phones, DVD players, and others. Every aspect of home is getting the full benefit of this semiconductor revolution and the main beneficiaries are the consumers. Companies have become conscious of this demand, and the industry is re-structuring itself right now.

In the past, you had spoken quite vociferously about the telecom processor, what is the latest on that?
Back in the nineties, I had realized that the race for higher and higher performance would come to an end. Connectivity would be the key in the future. The idea was to stay connected on high-speed bandwidth. But, with Internet becoming more pervasive, there was a slowing in the flow of information. In that context, I had coined the word telecom processor to put the discussion, that we need a chip that allows us to have that connectivity, in center stage. At Silicon Spice, we had created a prototype of the telecom processor that enabled Voice Over Internet Protocol (VOIP) and even allowed multiple VOIP conversations. The idea has now taken off in a big way, globally.

What about the race to Moores Law (according to which the transistor density of integrated circuits doubles every 18 months)?
I think that Moores Law is reaching a point where it is a getting more limited by economics rather than by physics. Doubling the density is getting very complicated by the day and it will take lot more effort and much more expense to reach the same point, every time. Thus very few companies would be able to reach the same point (doubling the capacity). The primary reason for reaching that point was to get higher density, which translated in lower cost. This was the driving force for most of the microprocessor industry to for last 20 years. But now affordability will be a big constraint, thus doubling the density will not be the main objective anymore.

There has been a lot of debate on the road India should take, should we go for manufacturing or design?
India is a great destination for chip design. Silicon Spice, a company I funded back in 2002, is a testimonial to that. I think there is absolutely no reason why Indian engineers who have been doing so well in software, should not move into the new space. India could easily extend its software expertise to chip design.

But as far as manufacturing is concerned, one has to be very careful. There has to be in-depth analysis on the course of action to be taken. For instance, what is the real competitive cost that India can offer over the Chinese manufacturers? How can Indian players compete in against these well-entrenched companies? Before we invest billions of dollars in the country, one has to make a partnership with potential customers so facilities are not idle.

It is like buying a Jumbo 707 and not getting the permission to fly that plane, it does no body any good. One might take the high ground of owning a big plane but you will be losing millions everyday. Hence, I caution everyone against having a fab in India, one has to careful about how to go about such an enterprise.

But then India is losing out to even smaller countries, for instance Intel chose Vietnam over us?
My gut tells me that Intel would have very much liked to do this plant in India. It was in reality an assembling and packaging plant, not exactly a fab. But it was the perfect way to start in India. India should have been very firm on the commitment. But for some reasons the Government of India was not willing to offer the same concessions that Vietnam or prior to that the Chinese and Malaysian governments have offered to Intel. At the end, it is all about business and Intel chose the location that gave them the highest returns. According to me, it was India’s loss.

Indian government should have been more accommodative to Intel because not only would this plant have got more jobs but also the technology. Sadly, the Government of India was not willing to go to the extent where other governments are willing to go, in order to bring these business companies in to the country

What is the latest on you avatar as a venture capitalist?
At the start of my VC days, I had focused on hardware companies, builders of systems, semi-conductors and embedded software, etc. I had invested in companies like Nevis Networks, and others.

Going forward, I am doing a new fund for Indo-US ventures, for which we will be addressing the market in terms of projects in the mobility spaced and things surrounding service infrastructure, healthcare and other areas

A word on Indian innovation and Indians, at large.
Indians are doing an outstanding job, across the board. I am proud of people like Ram Krishnamurthy (at Intel) and others for the wonderful work they have done.

I think it is going to become more prominent then it has been because in 1975, when I came here there were very few Indians who were given the opportunity to lead and work on these kind of programs at big and high profile companies but now a host of Indians across that are doing more.