The Economist carries an interesting article:
Hungry Tiger, Dancing Elephant - How India is changing IBM's world
The article analyzes how IBM is changing its business strategy to take advantage of the talent-pool available in India. India is fast becoming the country that houses the maximum number of IBM employees. IBM's business in India is growing @ 40% to 50%. IBM has realized that to compete with top-tier Indian companies it needs to leverage the global service delivery model (pioneered by Tata Consultancy Services - India's largest IT services company) - the model comprising of onsite, offshore and nearshore business development centres.
People who have worked at some point in time in the Indian software industry would know that TCS has a much better and robust business model when compared to the other top-tier companies. Its clientile, focus on innovation and creation of knowledge assets, best-in-class processes, and a deep talent pool have placed it in a strong position to leverage the opportunites that globalization creates, without eroding its short-term competitiveness.
IBM's chief procurement officer John Paterson moved office to China. (Read http://av.blogspot.com/2007/04/offshoring-corner-office.html)
I would not be surprised if within the next couple of years, IBM's Chief HR Officer moves office to Bangalore...
Monday, April 9, 2007
Sunday, April 8, 2007
Private Equity Boom - How long will it last ??
MUST READ
An amazing article (in the CFO magazine dated 1st Apr, 2007) on the private equity (PE) boom
http://www.cfo.com/article.cfm/8909971/1/c_8910395?f=home_magazine
Refer to my comments posted on this blog on March 30th
http://av.blogspot.com/2007/03/fallout-of-ballooning-asset-bubble.html
An amazing article (in the CFO magazine dated 1st Apr, 2007) on the private equity (PE) boom
http://www.cfo.com/article.cfm/8909971/1/c_8910395?f=home_magazine
Refer to my comments posted on this blog on March 30th
http://av.blogspot.com/2007/03/fallout-of-ballooning-asset-bubble.html
Making Mumbai an International Financial Centre
A high-powered expert committee has come out with a report on how Mumbai can join the league of New York and London in the export of International Financial Services.
A summary of the report:
http://finmin.nic.in/press_room/2007/gist_of_report.pdf
It is a well-known fact that India has the basic ingredients for Mumbai to emerge as a world-class IFC. Technologically advanced stock exchanges, intellectual capital, a growing domestic economy, and its strong and independent institutions (market regulation, democracy, judiciary, and the press).
However, the report cites inadequate liquidity in the debt, currency, and related derivatives markets as a major hindrance. The debt for the recent large M&A deals announced by Indian companies were raised abroad. Apart from foreign debt being cheaper, the Indian market does not have the liquidity to manage such deal sizes.
The Reserve Bank of India is uncomfortable with speculative positions on currency. It allows taking positions only for hedging balance sheet exposure. The committee has recommended full capital convertibility (removal of all restrictions on currency transactions).
The report also urges the government to act to bring Mumbai upto world standards in urban infrastructure and governance, so that it attracts immigrants from all over the world.
In a lighter vein, if Mumbai does indeed become an IFC, inbound immigration service could become a great money spinner sooner than later.
A summary of the report:
http://finmin.nic.in/press_room/2007/gist_of_report.pdf
It is a well-known fact that India has the basic ingredients for Mumbai to emerge as a world-class IFC. Technologically advanced stock exchanges, intellectual capital, a growing domestic economy, and its strong and independent institutions (market regulation, democracy, judiciary, and the press).
However, the report cites inadequate liquidity in the debt, currency, and related derivatives markets as a major hindrance. The debt for the recent large M&A deals announced by Indian companies were raised abroad. Apart from foreign debt being cheaper, the Indian market does not have the liquidity to manage such deal sizes.
The Reserve Bank of India is uncomfortable with speculative positions on currency. It allows taking positions only for hedging balance sheet exposure. The committee has recommended full capital convertibility (removal of all restrictions on currency transactions).
The report also urges the government to act to bring Mumbai upto world standards in urban infrastructure and governance, so that it attracts immigrants from all over the world.
In a lighter vein, if Mumbai does indeed become an IFC, inbound immigration service could become a great money spinner sooner than later.
Saturday, April 7, 2007
Buffett's Annual Letter to Shareholders
Every year Warren Buffett, the world’s most legendary (and richest) investor, makes his annual letter to shareholders public. As always, the 2007 letter is a good read (its labeled “2006″ because its a report about last year).
As always, this year, his thoughts range quite widely. A few parts caught my attention:
His company increased in value by $ 16.9 billion in 2006 - the biggest single year value gain in corporate history (or so they think). Berkshire-Hathaway owns more than 60 companies, including insurance, clothing, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms .
He has announced his retirement, but still don’t have a successor for him. But he is not handing over to children, nor ducking the decision. That would be to risk, in his own words, “decay… accompanied by my delusional thinking that I am reaching new heights of managerial brilliance”.
“Our most important business, insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation. After hammering us with hurricanes in 2004 and 2005 — storms that caused us to lose a bundle on super-cat insurance — she just vanished. Last year, the red ink from this activity turned black, very black.”
Buffett expresses regret at the passing of traditional climate patterns, and had similar sentiments for the glory days of the newspaper industry (another big industry for Berkshire-Hathaway), where he thinks that “eroding fundamentals will overwhelm managerial brilliance”. Even if “non-economic buyers” emerge for newspapers “the ‘psychic’ value of possessing one will wane”.
Buffett does not expect that upcoming disclosure rules will put a stop to “astronomical” executive compensation, often unrelated to performance. That will “only occur if the largest institutional shareholders - it would only take a few - demand a fresh look at the whole system”.
As always, this year, his thoughts range quite widely. A few parts caught my attention:
His company increased in value by $ 16.9 billion in 2006 - the biggest single year value gain in corporate history (or so they think). Berkshire-Hathaway owns more than 60 companies, including insurance, clothing, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms .
He has announced his retirement, but still don’t have a successor for him. But he is not handing over to children, nor ducking the decision. That would be to risk, in his own words, “decay… accompanied by my delusional thinking that I am reaching new heights of managerial brilliance”.
“Our most important business, insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation. After hammering us with hurricanes in 2004 and 2005 — storms that caused us to lose a bundle on super-cat insurance — she just vanished. Last year, the red ink from this activity turned black, very black.”
Buffett expresses regret at the passing of traditional climate patterns, and had similar sentiments for the glory days of the newspaper industry (another big industry for Berkshire-Hathaway), where he thinks that “eroding fundamentals will overwhelm managerial brilliance”. Even if “non-economic buyers” emerge for newspapers “the ‘psychic’ value of possessing one will wane”.
Buffett does not expect that upcoming disclosure rules will put a stop to “astronomical” executive compensation, often unrelated to performance. That will “only occur if the largest institutional shareholders - it would only take a few - demand a fresh look at the whole system”.
Friday, April 6, 2007
Offshoring the Corner Office ???
The link below leads you to an excellent article. It explains how Globalization is creating a shift in the country from which senior management operates
http://www.cfo.com/article.cfm/8834573?f=related
Though the article discusses the phenomenon of senior management team operating in different locations to capitalize on business opportunites, the idea of moving decision making jobs to low-cost locations is increasingly debated in mainstream media.
George David, Chairman of United Technologies, a Fortune 50 company, had earned $88 million in compensation in 2005. He had jokingly suggested outsourcing his own job to India.
The advent of KPO as a business model has increasingly made analytics based decision making "outsourceable". Technology has reduced distance. Travel has become faster and easier.
In such a scenario, it may not be long before boards demand outsourcing management jobs to the country with a vast pool of high quality managers - India.
http://www.cfo.com/article.cfm/8834573?f=related
Though the article discusses the phenomenon of senior management team operating in different locations to capitalize on business opportunites, the idea of moving decision making jobs to low-cost locations is increasingly debated in mainstream media.
George David, Chairman of United Technologies, a Fortune 50 company, had earned $88 million in compensation in 2005. He had jokingly suggested outsourcing his own job to India.
The advent of KPO as a business model has increasingly made analytics based decision making "outsourceable". Technology has reduced distance. Travel has become faster and easier.
In such a scenario, it may not be long before boards demand outsourcing management jobs to the country with a vast pool of high quality managers - India.
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