Archive for April 2007
End of India as an outsourcing destination
Munjal Shah of Riya recently wrote about how the company is moving its base back to the valley, citing wage inflation as the primary reason why they are moving out. If the responses are anything to go by, it has not been a popular move. I think it is a bit unfair to judge companies regarding where they want to operate from on the basis of toeing the line as far as the latest *sourcing/*shoring trend and whatever bits of nationalism you might want to apply to it.
We operate in a profit-driven scenario, where your operating costs can eat into whatever revenue you might have at any point in time. Unless you have the luxury of being a situation where there is going to be a considerable volume of cash flow to meet your additional expenses, which is not coming from your revenues, you have to always keep the opex/capex variable under control. From that point of view, I think it is totally a company’s prerogative to decide where they want to operate from.
India, that way, stands at a very strange juncture. In every sector, from BPOs to garments, we don’t occupy the excellent value for money pedestal in the lower end of the value chain anymore. That, in a way is good, because it would force us to move upwards in the chain, offering something better than ‘cheapness’ as compelling value proposition. The companies who can see that and adapt accordingly now itself are going to do well in the long run, the others will fade away with time.
I still remember my first job, with a web software development firm during the heights of the first bubble. They had a solid client base and decent products, but the owner steadfastly refused to move up the value chain, preferring to go for the easier bang for the buck approach. The end result was that, once the bubble burst, they were on their knees, being unable to retain any of their top talent because they were not doing the kind of work the good guys wanted to do and they also had a hard time keeping the mouths fed because spending disappeared across the board everywhere and what was left was a couple of AMCs for the lower-end work, which did not bring in much money anyway.
In terms of development, we badly need to move out of the mindset that most companies have here. It is insanely hard to find professionally run firms here, other than 10% of any sector. On the web front most are still busy copying what’s already been done-to-death in the west, leading to developers thinking only in terms of copying or being ‘inspired,’ which leads to decrements in value the add to the business.
Eventually, the wages, at least in technology, will go up to a level where in pure cost terms we won’t have any advantage over any market you can think of, necessitating other reasons why people should stick with us and from what I’ve seen, we are still a long way from being able to come up with some pretty compelling reasons.
Google’s revenue tipping point
Buried towards the end of Google’s Q1 numbers for 2007 is the little nugget of data that their international revenues now almost account for half of the company’s total revenues.
It is not debatable whether the 43%-47% will go up and above 50%, even while it certainly debatable when, in 2007 or 2008, that is bound to happen. Google has been increasing headcount in countries like India at an amazing pace. The company now has three centers in Hyderabad, Bangalore and the new one at Gurgaon, covering all aspects from Engineering to Strategy and Enterprise and I don’t think we should be too surprised by the rate at which they are expanding.
Update: To add more context, here’s David Filo’s comment on emerging online markets like India from his Infoworld interview.
Today our reach is 500 million users around the globe, and as we think about where the next 500 million users are going to come from, that is all going to come from the new markets.
Livemint opens up
The Wall Street Journal – Hindustan Times venture Mint’s website — Livemint — seems to have taken down its registration wall. You no longer need an account on the website to access the content. Since I don’t follow the website much, I do not know how recent a development it is, but it certainly was not the case when it launched a while ago. Could it have something to do with the fact that the site has not had any reasonable uptake since its launch? Yeah, I know the usual refrain about Alexa data, but it is worth taking a look at.
Technorati tags: mint, HT, the wall street journal
CEO 2.0
After the unconventional ways of Jonathan Schwartz (Sun’s CEO), who’s kept up his blogging efforts even after being bumped up to the post rather admirably (albeit in a less interesting manner ever since) and Alan Meckler (CEO, Jupiter Media) who is not half an interesting a blogger as the former is, we now have Mårten Mickos (CEO, MySQL AB) battling the hordes in the very unfriendly waters of Slashdot. I quite like the openness in these conversations, though I have to wonder how long it would be (basically around the time till they list) before Mårten would also be snowed under the numerous directives issued by the attorneys and the shadow of the infamous SOX. It is an interesting thread to follow all the same.
Is it whisper, is it a whimper? No, it is AOL.in!
The recently-launched AOL India has to be one of the greatest letdowns in terms of new online launches in India. The production quality is so mediocre that it looks like someone took the US version of the portal and made a cheap Indianised version of it — more like a fake Tommy or a D&G. It kind of, sort of looks the same, but that’s where the similarity ends. It looks like in their rush to release the product, AOL has made the error of bringing out a half-baked product, which is almost an insult to the users.
From the early announcements and noises coming from their Bangalore office, the product was to have a lot of videos, especially its Cartoon Network content, aimed at locking in the future market of today’s kids, and leveraging it to work around the problem of otherwise not having compelling-enough content. There IS video and multimedia on the site, but it is so subdued and run-of-the-mill that it is not even worth commenting on it.
The webmail is nothing but AOL’s international email with a bit of Indian branding and I can only assume that the case won’t be very different with the messenger either. Search is hooked up to Google, an extension of the deal that AOL already has with the search giant, so there’s nothing special there either. They do have a short code ’51515′ and the content and services are powered by Onmobile India.
I was left looking and searching that there should be something more. But that is it, nothing more on the portal, nada, zilch. It is a very simple word — disappointing.
