Here is the second part of the Future Cities story published in Dataquest. The stories written by me and featured herein are based on personal experience and secondary research. Suffice to say, that the issue was a personal favorite. I would like to thank all the people that took time out for me and were so very generous with there time. They might or might not be the future cities, but they sure are warm (emotionally) cities of India. Again like last time, this is the original and unedited version and would be quite different from the one that got published.
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Allahabad: Holy modernity

It is a rather cruel irony that the point of reference for the Indian Standard Time or IST, actually lies very close to modern-day Allahabad. Thus every time an Indian checks his watch, he is actually checking what time is it in Allahabad. But for a city that gives us our time, time has more or less stood still. Indeed, Allahabad is completely devoid of any encumbrances of modernity.

A ride through the city on a three-tyred rickshaw driven my a thin skin and bones, would sufficiently convince you to either want to escape to back to modern times or probably enjoy the time and tide of the bygone era. It is quite a numbing experience.

Yet, wait a minute. When I refer to modernity, I do not mean the brands or technology – indeed, the latest and the best would surely be available in Allahabad. I hint at the comfort level of usage of computers in every day life. Even today for an average Illahabadi (resident of Allahabad), computer is a mysterious tool that has great promises but complex functions. It still scares him.

The reason is not hard to gauge, the biggest state in India, Uttar Pradesh, has also been the slowest in terms of IT adoption. There have been a few e-government projects, but they have been quite few and very far between. As, the private sector is more or less non-existent in UP, this has ensured that the computer has not really seeped into the very last nukkad. It is indeed a fact that UP has more or less miss the IT bus.

But there has been a ripple in Allahabad that just might turn into a wave and is worth mentioning. There are lots of prestigious universities and colleges in and around Allahabad, Banaras Hindu University is one and so is the Indian Institute of IT or IIIT Allahabad. It is these institutions that are driving IT adoption and purchase. Thus a majority of equipment is sold to these institutes and this is having its effect on Allahabad.

Today, there are quite a few communities of Allahabad on portals like Orkut. Even the government of India has done its nominal bit by setting up a STPI in Allahabad, thinking that companies would flock to a place like this. But they haven’t really. Till the ground level situation improves drastically not many companies would like to stick their neck in Allahabad.

But before we go, let me underline again the amazing intellectual and intelligent abilities of Illahabadis with an instance. Last year, the High Court in Allahabad was in news for very different reason. Thanks to a committee set up, the honorable high court went online so as to say, by having its own portal, http://www.allahabadhighcourt.com/. The best thing was, all the judgments of the court were not only available now in ODT and ODF format (the court underlined its commitment to FOSS), but they were available in RSS. Thereby making Allahabad court, the only probable court in the whole world to make judgments available through RSS.

Thus one might not be able to really see any outwards signs but a silent revolution of bits and bytes is indeed taking place in Allahabad, driven by institutes like IIIT Allahabad and others. So ignore this holy city at your own peril.

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Surat: The jewel in the crown

Diamonds and Surat are synonymous, after all 92% of all diamonds in the world pass through the town. Surat is the diamond capital of the world, where much of the polishing and cutting takes place. Surat also happens to be the textile town, with scores of textile mills that lie in and around.

But the ascendancy (if we could term it as ascendancy) of Surat has not been sudden or in spurts. Since the times the Mughal dynasty ruled, Surat started emerging as a premier trade centre. Surat had a major port and trade tries spread all across the world. Also travelers to the annual Haj had to travel through Surat itself. So by the 17th century, Surat was one of the foremost cities of India, so alluring that even Shivaji sacked the city twice to be able to fund his war campaigns. The British East India Company for the first time settled their factory in Surat, before eventually shifting to Bombay. But then, things changed and Surat fell into disrepute.

Things went so bad that the city had to be quarantined because plague that spread across Surat. So that is story of fall of Surat.But now, thanks to vibrant support of the Gujarat government, the economy is again picking up. The state government has chalked an aggressive plan to promote the state as a knowledge hub and make best use of the intrinsic qualities of each city.

Since much of the gem and jewelry centers are present in the city, obviously it would be these firms that would take a lead in terms of modernization efforts. Thus the government announced the setting up of a special economic zone (SEZ) at Icchapore near Surat. Set to be completed this year, the SEZ will supposedly drive the economy of Surat in a big way. There will be quite a few specialized IT companies present in the SEZ that cater to the industry.The textile companies have also had an impact on the domestic market, as the mills like Govardhan, Everest and Motiani Fashions have modernized and used computers for mass scale production. This as coaxed companies like Sun Microsystems and IBM to have a focus on these markets as well. As much of the upper segment of tier I cities nearly taken, vendors are eagerly on the lookout for business potential of tier II and III cities. As many of the big players have given Surat a skip, it is the internal companies itself that have taken the onus of modernizing, like Asian Vision and Gati Softtech Solutions, etc.

Even the channel industry seems to be perking up to the opportunity, evident from the fact that they have been growing at a rate that is as good as any other in Gujarat if not better. The top three players from Surat are Jupiter Automation (annual turnover Rs. 25 crore), Valsons Computer (Rs. 22 crore) and Chopra Enterprises (Rs. 11 crore).

From the perspective of education, Surat offers good facilities like SVNIT, CKPCET, SCET, and others. This bodes well for the city as it looks to ramp up for growth for the future. Much of the growth again will come from the textile and jewelry business itself.

Surat is a vibrant city in close proximity to Mumbai. It is also immensely cosmopolitan city. A century or so ago, Russian literary stalwart Leo Tolstoy had crafted a short-story, wherein the action takes place in a Coffee-house of Surat. In it people from all across the world come together to discuss and debate on issues of varying interests. So there was a Persian mendicant with his African slave, a Hindu Brahmin, a Turk, a Roman Catholic, a Protestant, a Jew, a Chinaman, etc. Even to this day, Surat maintains the spirit of multi-culturism. History might not have been fair to Surat, bringing about constant upheavals in the city’s fortune. Yet, the future beckons brightly, much like the diamonds that pass through the city and dazzle the world with the glitter.

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Nashik: From Myth to modernity

Traveling through Nashik is an experience by itself, the outskirts of the city is as agrarian as you can get with the farmer and bull duo tilling the land and inside the city there are the multiplexes and the flyovers. So on one hand there exists a Nashik that is extremely rural, and on the very other it is up-to date and modern with all the computer hardware boards, etc. The dichotomy is hard to miss.

Even the agrarian picture is quite different from any in India. The small fields have these small bamboo sticks that jut out, a few feet in length and placed at some small distance apart in a very methodical way. Finally the whole field is covered with a parchment of sorts that conceals the fruit rather brilliantly. But then who does not know about those “sweet grapes” from Nashik. Much of the grape produce of Nashik is converted into fancy wine and sold under brands like Sula, etc. Passing through these fields, one cannot miss the similarities between Nashik and other popular wine destinations like Riviera or Napa valley.

Lying just a few hundred kilometers away from Mumbai, Nashik is indeed the place to be in. There is a hectic buzz of activity, of entrepreneurship, that truly sets the city out. Even the administration seems to have woken up to the potential of promoting Nashik and has started doing so in a small but significant way. There has been a concerted effort to start up industrial zones that more or less help the SMB segment. As of now, there are close to 6 MIDC and 10 Co-operative Industrial Estates in existence in and around Nashik and more are coming up. There has also an STPI established on the Ambad region.

In the past few years, industrial activity has really picked up in Nashik, especially after the launching of a mega SEZ in Sinnar area. Many reputed companies like Mahindra & Mhindra, MICO, Siemens, Crompton Greves, Kirloskar, Reymond steel, Jindal, Brook Bond, L&T, Ceat, VIP, Carbon Everflow, Garware, Jyoti Structures, Samsonite, Datar Switch Gears, Glaxo India etc. have established their units in Nashik. This has led to a spurt in IT adoption in the region. Even the PSUs are aiding the local economy, companies like India Security Press, Hindustan Aeronautics Ltd., Currency Note Press and Thermal Power Station etc. are located in Nashik.

The region also has more than its fair share of educational institutes. Around 9 government ITIs, 13 private ITIs, 2 engineering colleges and numerous other institutes. This ensures steady availability of talent for the industries. The big drawback as of now in Nashik is the power situation, frequent load shedding can be quite a bane. But then it statewide issue and not something specific to Nashik and as and when the issue is resolved for the state so will Nashik benefit.

Due to the close proximity of Nashik to both Mumbai and Pune, it has been touted as an ideal BPO destination. A vindication of the same was when WNS arrived in Nashik after acquiring ClaimsBPO, an offshore division of the US-based Green Snow Inc, which provided HIPPA-compliant BPO services. As of now, around 7-8 non-voice BPO companies, including Mumbai-based Tricom India and WNS Global Services, are working out of Nashik. There are also a close to a half-dozen smaller BPOs that have an average of around 50 each.

To sum up, Nashik is indeed a very good investment opportunity from the perspective of RoI and also the potential of growth. Not only that, the city is also renowned as a pilgrimage center, with the Shirdi close by and Sai Baba looking over the city. In fact, Nashik derives its name from an incident in Ramayana, wherein Lakshman cut off Ravan’s sister Soopankha’s nose (nasika/nak). The history of this region stretches out to pre-historic times. One can find almost everything in Nahik, right from modernity to mythology. The grapes are certainly sweetest, here!

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Raipur: Emerging out of shadows

Here is a small test, ask any of your friends to identify Raipur on the Indian map, nine times out of ten, he or she will fail. Now, ask your friend where is indeed Raipur and even on this seemingly easy test, many will falter. And that sums up much of the problem with Raipur.

The capital city of new formed Chattisgarh state is not all that well-known on even a national scene. It has been over 6 years now since Chattisgarh was carved out of Madhya Pradesh. Lying on the precious mineral belt in central India, Raipur has a whole lot of mining companies that have set up operations in and around Raipur. Traditionally, the city of Raipur has been described as “an agricultural-processing and saw-milling town”. The city is located centrally in the state of Chattisgarh, and serves as a regional hub for trade and commerce for a variety of local agricultural and forest products. There are several small-scale industries, which include oil milling, soap manufacturing and electrical welding.

Not only that the region is also emerging as an important educational hub. A lot many engineering colleges have come up in and around Raipur providing excellent educational facilities. In fact many domestic IT companies regularly go to these colleges for campus recruitments, companies like TCS, Wipro, Cognizant, iGate, and others. The famous colleges are Raipur Institute of technology, National Institute of Technology, AT College of Electronics and MJ College of Information Technology. These colleges ensure that there is a steady stream of employable talent available in Raipur. Though the government of Chattisgarh was caught in a situation when the Supreme Court came down heavily on the high number of universities cropping up, even Aptech had fallen for the lure and launched a university operations in Raipur.

The state government is also actively wooing IT companies and asking them to set up shop in Raipur and invest through the SEZ way. A few companies are supposedly assessing the possibility, whether it is feasible in the long-term considering the geo-politics of the region.
The government of Chattisgarh is actively promoting the use of ICT for development. In this regards, a host of e-governance initiatives have been launched within the state. Recently the state government launched the first e-Court system in Raipur. In fact, the government has created a vision document that speaks about how it will pursue e-governance initiatives. One of the objective that is representative of all, says, “ICTs will be used extensively in enhancing the productivities and efficiencies substantially in all the sectors of the economy, especially, agriculture, manufacturing banking and services sectors.”

The change is quite evident when one sees the emerging channel industry gaining strength and growing at a healthy rate. There are quite a few strong channel players in Raipur that mainly cater to the industries and the SOHO as well. Some of the names are, Priyanka Computer Services (annual turnover Rs. 22.79 crore), Balaji Computer (Rs. 12 crore) and Shriram Computers (Rs. 8.5 crore).

But the change is very evident, recently, the states and Raipur very first mall, ‘City Mall 36’ was inaugurated. The mall comprises number of national and international brands such as INOX, McDonalds, Big Bazar etc. According to news reports, Raipur is getting ready for 7 more such global malls by end of 2008 namely. Even the TAJ group of
Hotels has started the constructing its Five Star Hotel in Raipur. The government is also actively developing a vast tract of land near the city, dubbing it as Naya Raipur. The place is well-laid and would have the best infrastructure available in the whole of the state. According to many, once this project is completed, moving to Raipur (for IT majors) will not be difficult decision to make.

All these factors are indicative of major change that is happening on the ground at Raipur. For long it has remained under the shadows of bigger cities like Indore, Bhopal, Nagpur and others. Now it is finally ready to break out.

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Chandigarh: Symbol of the future

Jawaharlal Nehru wanted to prove a point and many with Chandigarh. He envisaged the city to be a metaphor of modernity, a symbol of the tryst that we had embarked on. After having witnessed the bloodiest human migration in history in the form of partition, Nehru decided to build a beautiful capital city for the state of Punjab. He famously proclaimed Chandigarh to be “unfettered by the traditions of the past, a symbol of the nation’s faith in the future.” Like any of the city-builders in history, he would not leave a stone unturned. So the best architects were involved in the project, namely Swiss-born French architect and planner, Le Corbusier and American architect-planner Albert Mayer who was working with the Polish-born architect Matthew Nowicki. And thus Chandigarh came into existence.

Today some 5 decades or so later, one needs to revisit Chandigarh again to assess whether it is still a beacon for modern India or just milestone left behind. Speaking from the perspective of IT industry, Chandigarh has largely been a mixed bag. The biggest draw of the city is definitely the amazing infrastructure, the broad roads and the comfortable housing. Yet, IT companied have not really flocked to Chandigarh, setting up their shops. Rather strange, if one considers the fact that in North India, there is hardly any city that can stand in comparison of Chandigarh, with the possible exception of Gurgaon.

A host companies like Infosys, Quark, Dell, Webart Softech, Netsoft Informatics, and others have already set up base in Chandigarh. The government had some years launched the Mohali SEZ amidst much fanfare, though according to certain observers there hasn’t been much difference on the ground. Not only that, there have been numerous discussions on how well suited Chandigarh is for BPO work, a few companies have indeed set up shop like IBM Daksh, Kalldesk, Bay Infocomm, UCIL and others.

Now, another exciting project is coming up in close vicinity, an IT Township in SAS Nagar. A Consortium formed by Reliance Industries, real estate investor Landmark Holdings, Berggruen Holdings India, subsidiary of a New York-based company, and Punjab-based Yellow Stone, is expected to infuse over Rs 950 crore in the IT township. The project, to be set up within 10 km of the upcoming international airport at Chandigarh, is expected to set aside 60 per cent of its area for IT companies, 30 per cent for housing and 10 per cent for commercial operations. Considering the host of engineering colleges in the vicinity, Chandigarh still has the potential to be a symbol of the future, all it needs now is a big push, that’s it.

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Coimbatore: Moving up with Speed

Like its beloved son, N Kartikeyan, Coimbatore also seems to be in love with speed. How else can one explain the rapid work that is taking place in Coimbatore. After Kochi, Coimbatore is place in South India that is witnessing a construction boom. And if that was not enough, a new IT park is being constructed by ELCOT and TIDCO.

Infrastructuraly speaking, Coimbatore has always been known for its well designed roads and well though out architecture. Renowned as the Manchester of the East, because of so many textile mills in close proximity. The city’s primary industries are engineering and textiles. The district also houses the country’s largest amount of hosiery and poultry industries. Most of the industries are run by entrepreneurs, often indigenous with family based or community financing. The city’s industrial growth started in 1920’s and accelerated after independence, without any government assistance or the entry of external industrial houses. Of late, information technology companies have started opening offshore development centers in the city.

The result: a robust economy and a reputation as one of the greatest industrial centers in South India. The engineering prowess of Coimbatore can be gauged from the fact that TCS has already established its Centre for Engineering Services.Coming back to the park, according to reports, Wipro is quite keen to be the anchor partner for the park. Whereas there have been enquiries from Satyam, HSBC for back-end operations and a few companies from Bangalore and Chennai too for readymade space in Coimbatore to begin their operations. A CII-commissioned study by Pricewaterhouse Coopers indicates that companies setting up shop in Coimbatore can increase profits by 60 per cent compared to those in metros. Coimbatore has more than 80 engineering and arts and science colleges, so it has an abundance of talent for the kind of workforce required.
The city also boasts of two STPI earth stations, one at PSG- Science and Technology Entrepreneurial Park (STEP) and another at the KG Information Services Limited (KGISL) campus at Saravanampatti. But things are changing steadily. Some of the major industries are Lakshmi Machine Works(LMW), Premier Instruments & Control Limited(PRICOL), ELGI Equipments, Roots Industries, KSB Pumps, Dresser Valves, Flowserve, Janatics, Texmo Industries, Aquasub, Sharp Industries, CRI, Deccan Industries & ITC. Suzlon is also setting up a huge plant for renewable energy.

Also the fact that till quite sometime back, the minister at the Centre, Dayanidhi Maran was quite keen to see Coimbatore as a favored destination also helped.

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Mangalore: Fishing for big investments

From a sleepy fishing hamlet to being the fastest growing non metro in South India, Mangalore (Mangalooru to be precise) has indeed transformed much over the years. Yet the transition is not that startling, simply because Mangalore always had the potential to emerge as one of the biggest cities of India, even in comparison to ‘former pensioner’s paradise’ that is Bangalore.

The reason is not much hard to find, since the middle ages, coastal Mangalore has always been a vital trading point on the western shore. Thus produce from surrounding areas namely Kerala, Goa and even Maharashtra was traded through the harbors of Mangalore. Thus, over the last many years a number of related industries came to exist in Mangalore. Right from coffee traders to ship building companies like Swan Aquatics, etc. Not only that, there are a few major chemical and fertilizer companies also present in Mangalore like Mangalore Chemical and Fertilizers Ltd. (MCF), Kudremukh Iron Ore Company Ltd. (KIOCL), Mangalore Refinery and Petrochemicals Ltd (MRP), BASF, ELF GAS, etc.

Nonetheless, Mangalore is ready to move to the next level, in fact it is very much doing so and is wooing IT companies in a big way. Infosys is truly the first and the biggest in Mangalore. Spread over an area of 300 acres, Infosys’s campus in Konaje is quite a landmark by itself. Infosys also has significant presence in Blue Berry Hill STPI in Mangalore. Wipro is also actively working on a facility in Mangalore to complement its huge campus in Mysore.

Meanwhile, there has been lot of talk of how well suited Mangalore is for BPO activities. According to many, the region has more scope for BPO than software because of the high education level. Mangalore has plenty of renowned schools and colleges in the city or the near vicinity, thereby supplying a large labor pool. Little wonder, than MPhasis BPO had set up shop in Mangalore. Not only Indian companies but even MNCs are keen to make a move to Mangalore. Take the case of First Indian Corporation; a wholly owned subsidiary of The First American Corporation has started operations in Mangalore.

As the city of Mangalore attracts investment, so is the infrastructure steadily growing. Off late, the Mangalore airport has been operational and there has also been quite some talk of making it international. With a host of engineering colleges in the vicinity (KERC and PA College), there is little doubt that Mangalore is going to be a major draw for IT companies (the IT exports from city will amount to Rs. 1000 crore by 2007 end). What remains to be seen whether this coastal paradise is able to retain its intrinsic charm in wake of all this high-fly investments. One sure hopes so.

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Mysore: Not a mere satellite

For Mysore, its close proximity to Bangalore is both a boon and a bane. Indeed over the last few years, there has been a major spurt in investments in the hilly town due to the supposed saturation in Bangalore. Companies right from Indian IT majors to MNCs have in some way or the other chalked out a map to make use of Mysore mainly because of its close proximity to Bangalore. And this is quite disquieting.

Before India attained independence, Mysore was regarded as one of the premier princely states of India. Unlike many other royal maharajas who splurged money on themselves and themselves alone, the Wodeyars (the ruling family of Mysore) was certainly not the same. Take the case of Chikka Devraja Wodeyar, who ruled from 1673-1794 and widely reformed the empire by dividing it into sections called as chavadis. Meanwhile, Krishnaraja Wodeyar who ruled from 1902 to 1941 was largely responsible for much modernization of Mysore. Not only was he a great patron of art but also a visionary. He set up numerous educational institutes during his reign, the most memorable being the Indian Institute of Science at Bangalore (he gifted 11 acres of land for it).

Thus, Mysore was much modern before the Silicon magic wand transformed Bangalore. It never did have the big heavy industries, except for Mysore Sandal Oil Factory or Krishnarajendra Mills. Much of the industries were traditional in outlook and small in scale. So while Bangalore hogged the limelight as an IT hub, Mysore continued to retain its old world charm, as the cultural capital of Karnataka. But that is set to change as well.

For the industrial development of the city, Karnataka Industrial Areas Development Board (KIADB) has established four industrial areas in and around Mysore, namely, Belagola, Belawadi, Hebbal (Electronic City) and Hootagalli. This has resulted in fair amount of optimism among IT players about the potential of Mysore. Infosys has made a big splash already by setting up one of the largest technical training center in the world located over an area of 270 acre and can accommodate over 4500 trainees at a time. Wipro has also established its Global Service Management Center (GSMC) in Mysore to complement its facility in Bangalore. There have been a few BPOs also coming up in Mysore, Hinduja TMT launched a 1000-seater sometime back in Mysore

Mysore now boasts of a four-lane high-speed expressway from Bangalore and is hoping that the government keeps its word on providing better infrastructure, connectivity and the much publicized BPO park in Bogadi that would lead to the city’s growth and attract more companies. In the year 2006-07, Mysore contributed Rs. 760 crores to Karnataka’s Rs. 48,700 crore IT exports and has already overtaken Mangalore as the second largest IT center in terms of revenue. But there have been a few controversies as well, namely the tussle between Infosys and the former prime minister Deve Gowda on a range of issues from infrastructure development to things else.

All in all, Mysore needs to be assessed as a city by itself and not due to mere proximity to Bangalore and even on its sole merits it scores wonderfully well. It isn’t a satellite but a planet by its own.

***EOM***

Getting to meet and interact with people from diverse cultures and different regions are certainly one of the biggest perks of being a journalist. People take time out for you, indulge you, talk, explain and often entertain you. You are not considered a hindrance and oft times are awarded warm welcomes. So when Dataquest decide to come out with an issue on emerging cities (later renamed as Future Cities) of India from the IT perspective, I was all excited. I got a great chance to visit cities like Kochi, Trivandrum, Nagpur and Vadodara. I met with people from different companies, from a scientist at BARC in Vadodara to VP from Lord Krishna Bank in Kochi to IT head at Haldiram in Nagpur.

Over a fortnight, I was travelling to all these cities and trying to create a true picture, finding out what makes the cities tick, what are the problems faced and what are the advantages that companies like Infosys, TCS or even IBM have from moving to cities like these. It was an enriching experience, as there was so much that I got to learn from so many people I met. Herein I am putting up the first three profiles of the places I visited. A small disclaimer; the pieces here might differ from the actual ones published due to numerous reasons like sharp editing or paucity of space. I would be putting up a post on my experiences in my personal blog (zewak.blogspot.com) soon enough. The three cities follow:
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Kochi: Now the God’s have IT

The idyllic coastal township is set for big things, as now is banking on IT for them.

“Azim Premji is not only one of the richest Indian but also the toughest Indian to convince,” quips Girish Babu. He must know well because as the former CEO of Infopark, and COO of IT parks, Kerala; Babu was trying hard to convince Wipro to set up base in God’s own country. The sprawling Infopark had been operational in Kochi for year or two and a few entrepreneurs had taken space. But there could not be a better endorsement than Wipro and Babu was well aware of it.

Meanwhile, Wipro had also checked out Coimbatore and company officials were keen for a more developed and investor friendly Tamil Nadu over scenic but labor-issues ridden Kerala.
After much hard lobbying, Wipro set a condition; whichever state gives the company SEZ status first, will get the investment. Babu got cracking and within a day or two was ready with the letter and sent it across to the company. It was in September 2004 that Wipro acquired some 25 acres land and set up operations in the Infopark. “With Wipro much of the perception problem associated with Kerala was solved to a great extent and the gates were open for fresh new investments,” reminisces Babu.

Indeed post 2004, Kochi has literally donned new robes. A trip down the port city and one will be amazed at the frenetic activity all round; big billboards featuring Malayalam stars Mohanlal, Mamooty and even Hema Malini, lord over the cityscape. Newspapers are fully of adverts of upcoming luxurious residential projects all over. There is not a single global brand that would be missed at the malls lining the Marine Drive. Kochi, the commercial capital of Kerala, is shining bright much like the hundred of Alapatt and Alukkas gold showrooms spread all over.

A case of infrastructure
From back in the middle ages, Kochi had been a centre for trade and commerce. The port city had traders flocking in from Manchuria to Persia and beyond. It was a simmering pot of cultures and leisure, coaxing a Chinese traveler to comment that “If China is the place where you earn money, Kochi is the place to spend it”. When the Portuguese under the leadership of Vasco Da Gama were shunted out of Kozhikode (Calicut), they landed up in Kochi and set up the first European factory or trading post.

Post independence, Kochi lost the race for industrialization and the economy more or less stagnated even though the big companies were indeed present. “It was indeed ironical, as Cochin always was more progressive of the cities in all of Kerala. There was the prosperous port and refinery company and of course the Cochin Shipyard, the largest ship building facility in India. Yet the city did not much benefit from all these companies,” says MV Paul, deputy director (Systems), Cochin Port Trust.

Yet, Kochi maintains its lead in terms of physical infrastructure and can give any Tier II city a run for its money in terms of infrastructure. The city has a very reliable power supply, with close to 7 power stations in the vicinity feeding power to the city. There is also no shortage of water supply thanks to the Kadambariar river. And the best of all is the International Airport at Nedumbasserry, the first privately built airport in India. Today there are close to 450 landings every week at the airport and was the only airport in India where the Airbus A380 could land.

Close to the airport in Kakkanad, around 25 kms from the city centre, i.e., Ernakulam, are the upcoming IT hubs. The infrastructure is indeed mind-boggling, there are the broad 4-lanes roads and small landscaped gardens at the roundabouts and of course the imposing glass towers. Except for Infopark, there are new IT parks coming up from L&T, Leela, Muthoothu, and of course the SmartCity by a Dubai based conglomerate.

Little wonder, post Wipro, now TCS has also set up shop in the city. Infosys has agreed for investing in Technopark in Kerala and is also considering at some sort of investment in Kochi as well. According to a Nasscom report, Kochi is best suited for BPO, both voice and non-voice. Currently, ACS and Sutherland have big investment in the Infopark and the way they are expanding, the investment seems to be working. “Currently Kochi accounts for around Rs. 1000 crore of IT exports annually, it will overtake Trivandrum in sometime,” says Babu.

Doubly connected
Kochi is only the city in the country that is the landing point for both SEA-ME-ME3 (it lands in Mumbai) and SAFE undersea cables that connect the country to rest of the globe. Also, gigabyte router of VSNL gateway lies in the vicinity. Because of this unique characteristic, Kochi is always connected, and also best suited for voice based services due to less loss of time due to latency.

“Kochi is the best city in terms of bandwidth connection, as around 80% of Indian traffic is routed through the VSNL gateway. We are very bullish about the prospect of the city and keen to develop IT across the state through the hub and spoke model, where small centres will mushroom around bigger ones like Kochi and Trivandrum,” concurs KR Jyothilal, special secretary, Department of IT, Kerala.

The genteel Malayalee
If that was not good enough to convince people, there is of course the amazing manpower story from Kerala, the first state that was cent percent literate. Kerala also has the distinction of having the largest pool of English speaking manpower and the highest density of IT professionals. The world may have painted a sordid and a combative picture of a Malayalee that is constantly waving the red flag of protest.

But the reality is much in contrast. Thanks to decades of working in other more developed markets in the UAE and US, the modern Malayalee has a more global outlook that any of his up country cousins. Not only is he (or she) well aware of market dynamics but quite willing to inculcate the values of the service industry. Visit any hotel in the city and you will understand the change. The hammer and sickle are best left to the politicians while every one else seems to be pursuing the good ol’ Gandhi or even Monsieur Washington.

As Kochi is just a few hours away from Bangalore, much of the Malayalee professionals that had shifted to the city due to lack of opportunity are quite willing to head back home. Babu talks of how companies in Kochi realized that they had more walk-ins when they advertised the job openings in Bangalore and Hyderabad rather than in Kochi itself. And thanks to the many colleges in the vicinity there is also the abundance of raw talent. “One should hire the employee for his aptitude and train him for his talent. The professionals of this city have the best aptitude, thanks to it being a commercial city that one can find in Kerala or even in South India” says S Venkataraman, deputy director, Lord Krishna Bank (now Centurion Bank).

Red fears
While all may seem outwardly fine, there is indeed a lurking fear in the minds of players in Kochi about the future potential of the city, especially the flip-flop between the Congress and the Communist. While the government officials may argue that investment climate is not affected by change of governments. There does seem to be an ever-so-slight slowdown. Take the case of the SmartCity project, it was riled in controversy in Kerala, while both Karnataka and Andhra Pradesh were ready to offer concessions for the project to shift.

“Kochi has as good as a potential as Hyderabad or even Chennai. We have suffered because of lack of political will. Kerala had a head start over the others when we started with Technopark and yet we have lagged. It is a matter of leadership not ideology as even West Bengal is doing well even though it has been ruled by communists for decades. We are really praying for a good leader,” says Benley Noronha, managing director, Nortech Infonet.

For Ajith Brahmanandan, state information officer, NIC (Lakshwadweep), it is a matter of infrastructure and bad planning. “If you travel through the city of Kochi, especially through Ernakulam, what strikes one is the woe-full planning. In fact, there is no plan at all for the city even though it continues to burst at the seams with people and more people. The government really needs to pay attention to the basic infrastructure,” he says.

Jyothilal dismisses these concerns and terms them as teething troubles. “It is all perception. Even though the governments have kept changing, the policies have not deviated. Today the investment climate is independent of politics and everyone understands the value of IT. That is one of the reasons why the CM himself handles the IT portfolio. Even his son and so many other politicians children are working in the IT industry,” he states.

Whatever is the case of the political front. One thing is certain, Kochi is surely the place to be, if you are not already there. From the time Monsieur Da Gama landed (and subsequently died as well) in Kochi, the city has had a whole lots of firsts, be it the first territory to be colonized, the first state to join Indian dominion, the first to have a private airport, etc. the list just keeps going on. The idyllic backwaters, the scenic sea front and of course the innumerable getaways in close vicinity, makes Kochi a tempting place to shift. The reality market is really booming and everyday counts. After all if the one of richest man (supposedly the smartest as well) in India endorses the city, there is little that can really go wrong. Can it?

**EOM**

Nagpur: From Oranges to IT

Zeroing on the Zero Mile City of India

“What else can you get except oranges?” a friend of mine commented, before I set out for Nagpur. The “What else” really baffled me, indeed, come to think of it; there isn’t much that one associates the city with, except the citrus fruit.

With much apprehension, I landed at Dr. Ambedkar airport, only to find chaotic construction all around. There was much frenzy in the air and one could discern quite a few construction cranes in the foreground and the constant din that one associates with them. Five minutes out of the Airport and a first timer like me is bound to be taken aback by the physical infrastructure, the 4-lane concrete roads and the daunting flyovers. It is very unlike any Tier III (or even tier II) city that you will see in India. And that is biggest irony.

Nagpur, the second capital of Maharashtra is the largest city in central India. Located practically at the centre of India, India’s geographical centre (Zero Mile) passes through the city. Thus every distance in India is measured with Nagpur as the starting point. In fact, for quite sometime (to be precise, since the British times) there have been talks of making Nagpur the second capital of India due to its strategic location. Certainly, the infrastructure is worthy of a capital city.

The strength of infrastructure
According to a recent study conducted by UK-based estate consultants Knight Frank, among a host of other cities, Nagpur is ranked at number 1 in terms of physical infrastructure, at par with Chandigarh and ahead of other cities like Vishakapatinam, Jaipur, Kochi, Goa, and others. This is quite a vindication for a city that has largely been untouched by rapid economic developments made elsewhere in the country.

The city is also well connected both by road and railways to different parts of the country. In fact due to its location, Nagpur is the transit point for all the trains that connect the country lengthwise and breadth wise. The city is also connected by air to all the major airports and now even has international flights connecting the city globally. And if that was not enough, with the launch of Multi-modal International Hub Airport at Nagpur (MIHAN) in 2002-03, the city is truly become an important transit location not only nationally, but also for the sub-continent. But more on that later.

The city also had a robust power supply till quite recently. In fact, it had been a power surplus city before the government decided to divert the power to more economic zones like Mumbai and Pune. As of now, there are a couple of hours of planned load-shedding on a daily basis. The residents are agitating against the diversion of power; if they succeed Nagpur will indeed be power surplus again.

An Industrial hub
Spread over an area of 250 sq. km., Nagpur was one of the first cities in India that embraced industrialization. Way back in 1877, Tata’s started the country’s first textile mill, the Central India Spinning and Weaving Company Ltd., in Nagpur. Since then, the city has been the centre of commerce in the Vidarbha region and currently is a large trading centre for a number of commodities and services. A large number of industries are located in Butibori industial area that lies in vicinity of Nagpur. Similarly, there are quite many companies like Mahindra & Mahindra, NECO, Bajaj Auto, Vicco Laboratories, etc. are present in the Hingna industial estate on the western fringes of the city.

IT companies are also waking up to the potential offered by Nagpur, namely in terms of good infrastructure, abundant and cheap labor pool and of course the SEZs. Already a number of companies have taken up space in Nagpur, like Satyam Computer Services and L&T is setting up an Infocity.“Much of the IT business in Nagpur is driven by these companies. There are a few companies that are based in Nagpur and hence local players are benefited. Till few years back not many hardware vendors had a presence in Nagpur but that had changed dramatically. Today every company from IBM to HCL has a representative in the city. Even Microsoft has come here officially and grown by over 900% last year alone,” says Vinod Verma, CEO, Key Computers. “Also the fact that there is no other major city in 300-400 km radius helps the case of Nagpur,” he adds.

One of the major buyers in the region is Indian Air Force that is head-quartered in Nagpur and spends close to Rs. 2-3 crore annually on IT.

MIHAN effect
Nonetheless, every one in Nagpur seems to be talking of just one thing, MIHAN. Go to any software company or an IT vendor, or even some one who is not related to IT at all, he or she would not only know the complete details of MIHAN, but will also rattle of statistics to prove that it is indeed the best thing that could have happened to the city. Not surprisingly, after decades of neglect Nagpur has finally got a project that it deserves and that too the biggest infrastructure project in India.

Taking a chapter right out of China, the government of India is beefing up Nagpur as a major hub. So around the airport over 2000 hectares of land has been earmarked for the MIHAN project. The government agencies are ensuring that this project is of global quality, thus the construction is high grade and so are all the other amenities, right from bandwidth availability to medical facilities. Little wonder, major companies like Satyam Infotech, GE, DLF, Shapoorji Pallonji, L&T Infotech, Patni Computers and Microsoft have taken up large parcels of land in the SEZ within the project. And that is not all; TCS has also announced setting up of 5000-seater facility in Nagpur. Even MNCs like IBM and Dell has taken up space in Nagpur.

“MIHAN is going to completely change the face of the city. It has been the biggest thing to have happened and all of the players within the city as well as outside it are keenly awaiting its completion,” says Malathi Swaminath, managing director, Zeta Softech. An entrepreneur who set-up shop in Nagpur quite few years back, Swaminath is quite bullish about the prospects of the city and has even taken up space in the project.

Costing around Rs. 3500 per sq. feet, MIHAN does indeed make great sense, especially considering the facilities and the amenities that are provided. “MIHAN makes a lot of sense for sense for IT companies that want to set up shop in Nagpur in a big way. Not only is it cost-effective but as the colleges and residential area is in close proximity, there will not be a shortage of manpower to companies working out of it,” says Rakesh Agarwal, CEO, Mayur Computers.

A scientific hub
That brings us to another big plus point of Nagpur, its educational prowess. Over the years largely due to the presence of innumerable engineering government companies, Nagpur has emerged as a scientific and engineering hub. The city is the home to a number of national level scientific and governmental establishments like the National Environmental Engineering and Research Institute (NEERI), Central Institute of Cotton Research (CICR), National Research Centre for Citrus, National Bureau of Soil Survey and Land Use Planning (NBSS–LUP), Jawaharlal Nehru National Aluminium Research and Development Centre, the Indian Bureau of Mines, India’s Intellectual Property Training Institute, the National Academy of Direct Taxes, the Chief Controller of Explosives of the Petroleum and Explosives Safety Organisation, and the South Central Zone Cultural Centre in addition to a regional office of the Indian Meteorological Department.

The city also has several reputed engineering colleges like the Visvesvaraya National Institute of Technology (VNIT), Priyadarshini College of Engineering, Yeshwantrao Chavan College of Engineering, Ramdeobaba Kamla Nehru Engineering College, Laxminarayan Institute of Technology (LIT), G.H. Raisoni College of Engineering, as well as several reputed public as well as private colleges like Dr. Ambedkar College and others. According to an industry player, VNIT has recently set up a nano-technology center in Nagpur, one of five in all of India.

“Nagpur biggest strength is its educational institutes. With around 18 engineering colleges in and around the city, there is a steady flow of workforce. The big problem was that till now there was not much opportunity for these people. But that is changing and as benefits from MIHAN and other projects percolate, Nagpur will see reverse brain drain. All the Nagpur citizens that had to leave the city earlier, will surely flock back,” says Chandrahas Chaudhari, technical head (Business Services), ADCC.

“At the very core Nagpur people are very nice and chilled out; they seldom like to settle down in other cities. Also they are very dedicated and the attrition rate is almost marginal,” adds Swaminath. She was born and raised in Mumbai and settled in Nagpur post marriage, but now prefers the city over the hustle-bustle of big metro like Mumbai.

“Nagpur has all the makings of an IT hub, but sadly it has not been the case. According to me the city is very well suited for high-end R&D and has one of the best engineering graduates that you can find anywhere in the country. The only problem is that it gets a tad to hot in the summers,” says AK Maji, director (Acting), NBSS-LUP.

For far too long Nagpur has been a victim of political machinations. The region (Vidharbha) has been wanting to separate from the state of Maharashtra, which does not want to let go because of the immense natural wealth (remember Chota-Nagpur mining belt). The city has dragged along almost valiantly, been relegated to secondary status within the state.

But all that seems to be changing now and those huge cranes near the airport are laboring towards a new morrow. Nagpur’s time seems to have come to reclaim its rightful position under the sun. So next time, someone asks you “what else” in context to Nagpur. Don’t dwell on it much and ask him to get a new perspective because very soon oranges will have to find a new place as all the orchards would be replaced by campuses and IDCs.

***EOM***

Vadodara: Rise of culture

Dewang Mehta and Sam Pitroda, the two people who single handedly changed the face of Indian IT and telecom, found their bearings in Vadodara

It is a common Indian practice to associate cities with individuals. And the more famous and more numerous celebrities a city can boast, the more it’s snob value. So MK Gandhi is intricately linked with Porbandar and Rabindranath Tagore is associated with Kolkatta, Dhirubhai Ambani with Jamnagar. In more contemporary context, Amitabh Bachchan and Allahabad go hand in hand, while Sachin Tendulkar represents Mumbai, so on.

Going by this logic, Baroda, or Vadodara, should be termed as cradle of Indian IT & telecom, as two of its denizens single handedly changed the face of Indian industry. The first one, Dewang Mehta (born in Umreth, on the border with Anand district) to Indian IT to the world and brought the world to Indian IT. The late president of Nasscom was the public face of Indian IT. Meanwhile, Satyanarayan Gangaram Pitroda or popularly known as Sam Pitroda found his bearings in Vadodara, while pursuing his Masters in Physics and Electronics from Maharaja Sayajirao University. The current chairman of Knowledge Commission and the CEO of C-SAM, is hailed as the father of the PCO and the precursor to telecom revolution.

Yet, the city of Vadodara has largely been untouched by the magic of technology. While the government over the years has actively promoted Surat, Ahemadabad and Gandhinagar; Vadodara has been largely ignored. Ask any citizen and he was look at you askance, no one really seems to have an answer as to why things went the way, they went.

Industrial behemoth
It is quite baffling, considering that the city was at the very forefront of industrial revolution at the turn of the twentieth century. The first modern factory (Alembic Pharmaceuticals) was established in Vadodara in 1907 and subsequently companies like Sarabhai Chemicals, and Jyoti came up in the 1940s. Steadily over the years, Vadodara became a hub for chemicals and textile industry.

If that was not enough, in the late sixties, oil and gas companies made a beeline for Vadodara. Out of the blue, Vadodara was a host to companies like Gujarat Refinery, Indian Oil Corporation. Discovery of oil and gas in Ankleshwar led to rapid development of the city. Even ONGC and GAIL set up there centers in the outskirts of the city. Followed by the oil and gas majors, fertilizers and chemical major like Gujarat State Fertilisers & Chemicals (GSFC), Indian Petrochemicals Corporation Limited (IPCL, Reliance) and Gujarat Alkalies and Chemicals Limited (GACL) also set up shop in the region. By the eighties, the city was brimming with activity, and there was a vibrant SMB sector.

That was before the recession set in. Over the next many years, the city stuck by economic gloom. As the whole Gujarat state went downhill on the economic parameters, so did Vadodara. In the nineties, the situation was so bad that a lot of the SMBs had to shut shop or ship out. That was quite the case till the Modi government came in power in the State after which much of the recession was arrested and subsequently reversed. While Vadodara might not have gained from the boom, it certainly did not stagnate.

From industry to IT
The tide might be turning, or at least there are some signs that it could. There has been an awakening of sorts in regards to the use of IT. Pharma and oil majors had driven much of IT adoption in Vadodara, as they happen to be big users of IT. But much of this equipment is either sourced directly from the computer vendors, for instance, ONGC extensively uses Silicon Graphic machines, thus the local channel community is not really benefited. Of course the servicing and the peripherals industry is flourishing in the city.

Many companies are now keen to exploit the vast talent pool that is available in the city. In a recent report released by CII, “Vadodara: Knowledge City”, stated that the city is attracting a large number of investors to create infrastructure for IT and related companies. “Vadodara has a great potential to develop as an IT hub on account of its large English-speaking population and low cost of living. There are at least three IT parks coming up in Vadodara district. We are also considering to offer land of Gujarat Communications & Electronics and another 17 acre site of defunct Priyalakshmi Mill in the heart of the city,” said Raj Kumar, secretary, department of science and technology of government of Gujarat and MD of Gujarat Informatics. According to him, large presence of IT parks and big banners of IT industry would be visible in the next couple of years in the city.

While L&T plans to come up with an IT zone near Vadodara, many more IT parks are also in the offing, in fact Nipium Infotech is planning IT park in association with the Singapore government at the cost of around Rs. 500 crore and is waiting for an approval. There have also been reports that HCL intend to set up operation around the city. Even Pitroda’s C-SAM has a development center in Vadodara.

“Vadodara is fast emerging as a favored destination for companies looking for cost-effective operations and trained manpower. Vadodara might now have highly skilled people available as of now, but that is bound to change as more and more firms set up operations here,” said Yogesh Thakkar, CEO, Rhythm Electronics – one of the leading channel players in the city.
Over a dozen new IT and BPO companies have started operations in the city over the last many years. MNCs are also entering the city through the M&A route, CSC recently acquired local player CSC that provides high-end BPO services from Vadodara center. There is also InteQ IT Services India that operates out of Vadodara and provides RIM services to US clients.

Much of the companies that operate out of Vadodara are 300-500 seaters. Though the biggies are coming in the small way, as of now, TCS has a 200-seater facility in Vadodara, set up especially to work with Gujarat State Electricity Board. “There are a few call centers in city like Fortune Infonet and others. Slowly and steadily Vadodara is catching up as an investment destination. When Dewang Mehta was alive he used to push the city. Sadly after his death, there was not much action,” says Nilesh Kuvadia, CEO, IT Consultancy Group. Kuvadia is also a member of the Baroda Information Technology Group (BITG). BITG currently has around 350 members and has been active for the last 9 years.

A computer savvy city
Like any other smaller city, the biggest asset of Vadodara is the workforce. Thanks to the numerous colleges like Sardar Patel University, Sigma Institute of Management Studies, Parul Institute of Engineering and Technology, and of course MS University, ensures there is a steady stream of well-educated youth flowing into the marketplace year-after-year. “Vadodara’s biggest strength is its well-educated talent pool from the only English-medium University of the state and growing private sector educational institutions. The quality of education is as good as those available at high-tech institutes like IIT Roorkee,” says Indranil Deb, manager (Program), ONGC.

Deb also vouches for the high computer literacy in Vadodara. “The people are very computer savvy and you can find even small-time chemists doing their accountancy on computers. Even in the late 80s, there were students here that were taking up courses on C and C++. The product of Vadodara is as good as any other that you will find in the country,” he states. Currently ONGC operates a high-end Virtual Reality center in Vadodara.

Naresh Kumar Garg, senior scientific officer, BARC, also underscores the same point. “To be honest, over the last many years a lot of amazing work has been done on the e-governance front, especially the computerization of land records. This has led to high computer literacy. Personally, the way Vadodara Municipal Corporation has also gone in for automation is a feat by itself,” he says.

“This city is a heaven for outsiders as the culture is very cosmopolitan, yet not really commercial. I have been in this city for the past 19 years, and cannot think of anywhere else that I rather be,” adds Garg.

Indebted to his highness
Vadodara has a nickname, Sayaji Nagari, it is quite an apt one. Any discussion on Vadodara cannot be completed without mentioning the name of former ruler of the state, Maharaja Sayajirao Gaekwad III, who ruled the state from 1881 to 1939. The visionary ruler is responsible for all that Vadodara has to offer, even today. He was a reformist, and on assuming the power, made primary education free and compulsory, banned child marriages, encouraged fine arts, among other achievements. Maharaja founded Bank of Baroda in 1908 and also University of Vadodara, aptly named after him. To get a glimpse of the amazing personality, visit the Maharaja Fatesingh Musuem, located in the Laxmi Vilas Palace Compound and houses one of the best personal art collection in all of India.

“The Maharaja was so ahead of his time that he had created a man-made reservoir in Ajwa that would take care of the water needs of the city for the next 2 centuries and it is very much doing so,” says Deb.

Situated some 40 minutes (air) away from Mumbai. Vadodara is ideal location for back-office and BPO work. As of now, the real estate prices have not peaked and this makes the city an ideal candidate for investment. The only possible drawback is probably prohibition policy. Thus, after a hard day, you cannot really chill out with a beer or two. Other than that, it is city that really showcases all that is good in a small town-city of India, be it culture or its warm people. It is quite hard not to be in love with Vadodara, as it is unique in so many ways and therein lies it biggest charm. The city does not really need celebrities to associate with it, as every citizen is a ardent supporter.

***

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.

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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
shashwatc@cybermedia.co.in

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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

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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.

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)

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‘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
shashwatc@cybermedia.co.in

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….
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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.

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.
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‘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.

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.

E-wastage
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
shashwatc@cybermedia.co.in

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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/

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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

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…(http://dqindia.ciol.com/content/DQTop20_07/employers07/2007/107083117.asp)——————————————————————————
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 DQ–IDC 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 humpty–dumpties 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 vis—vis 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

It was first time my name was published in the Time Magazine. The magazine has a section, wherein readers are invited to send their question for one of the invited guests. I had a question for Jimmy Wales (in fact I have quite a few still). Of all the hundreds that Time recieved, mine was selected, and answered by Wales .

To be honest, none of us could have imagined that Wikipedia would be the success that it turned out to be. Millions of people across the globe contributing and correcting each other, it is truly representative of what the Web purports to be. But I often do wonder, as to what is the purpose behind so many individuals to contribute and correct anonymously. In this materialistic world, it is hard to imagine such a venture. And this is the reason why I feel that probably Rousseau was right, man is indeed a noble animal..corrupted by the ills of society; the noble savage, so as to say.

Coming back to the article. I really admire Jimbo’s (as Wales is popularly known) work and have had the good fortune of interacting with him at a personal level for my own publication. Also, It is a great feeling to see your name in Time, something that can hardly be described. And I have a strong belief that there would be a lot many more times one would get to see my name in that hallowed magazine. This is just the beginning 🙂

(http://www.time.com/time/business/article/0,8599,1601491,00.html)
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10 questions for Jimmy Wales

What drives people to contribute to Wikipedia? Altruism?—Shashwat Chaturvedi, Mumbai, India

No. It’s realizing that doing intellectual things socially is a lot of fun—it makes sense. We don’t plan on paying people, either, to contribute. People don’t ask, “Gosh, why are all these people playing basketball for fun? Some people get paid a lot of money to do that.”