FORGET FAT PACKAGES & ESOPS, EXECS NOW WANT LUXE CARS TOO

Mahima Puri & Chanchal Pal Chauhan, New Delhi, September 8, 2008
The Economic Times

Fat bonuses are passé. So are million-dollar stock options. For the top dogs in India Inc, the latest and priciest carrots are luxe marques that look beyond Mercs. From Beamers and Audis to Porsches and Rolls, the line-up is getting fast, furious and seriously fancy.

Suddenly, even big wheels aren’t enough. To be a sticky sop, the wheels have to be bespoke. Picture this—a newly appointed CEO of a major retail company was offered a hefty salary package, but his demands went much beyond just monetary considerations.

His ask—a Mercedes SLK 500 to drive to work. And, the company was happy to oblige. Make no mistake–this car mania is not restricted to a particular sector. In another instance, the CEO of a BPO was offered an Audi before he joined. Nor is this drive peculiar to current sunshine sectors like retail or ITeS. Corner room occupants in banking, aviation and energy are also demanding and getting their share of asphalt adrenalin.

The mad rush for these cars is partly thanks to their growing tyre print on Indian roads. And typically it is the pricier models/variants that are in demand. Said BMW India president Peter Kronschnabel, “We are selling around 30 percent of our cars to corporate customers. We have re-jigged some of our models like the 320i, which is more chauffeur driven and offers more space at the rear. In the second year of operation in India, we have seen a sizeable shift towards the larger and expensive, 5Series coming in the Rs 40 to Rs 50 lakh bracket.”

Head-hunting firms agree that cars are the new crore-competence at the top of the job heap. Transearch India managing partner Atul Vohra said, “For CXOs, cars speak volumes. And unlike in the past, the choice for the ‘executive car’ now goes beyond Mercs to Audis to BMWs with new offerings being added each year. In most cases, the size of the car is directly proportional to the negotiating strength or position of the candidate. Hence, for indispensable talent, companies do not mind providing just about anything on wheels.”

Agreed Head Hunters India CEO Kris Lakshmikanth, “There have been cases where cars have played a vital role in a make or break situation. Like, an energy company had to negotiate for six months before they gave in to the demands of the desired candidate. Reason, he wanted a luxury sedan, at least on par with his last car if not more.”

Nor are the sops restricted to the top guys. Now it’s the middle-level executives who are being pampered even more. Companies are also offering models like the Honda Accord, Toyota Camry and Skoda Laura to their heads.

Also, employees at mid-level managerial positions or key sales personnel are also being offered hatchbacks or mid-size sedans like the Hyundai i10 or Accent, Swift or Dzire and Skoda Fabia, among others.

 

SMALL IT FIRMS OUTSOURCE MARKETING

P P Thimmaya & J Padmpriya, Bangalore, September 08, 2008
The Economic Times

Indian technology firms, which have cracked the software codes, are now ready to learn a few marketing mantras and may actually be practicing what they preach. Small and medium firms are seen outsourcing some key marketing functions like making pitch documents, lead generation, power point presentations and even reverse outsourcing (where they appoint a local agency to market their products and services in the US).

Demand is coming from startups seeking to attract potential buyers and investors and those who are looking at sustained growth. Many VCs and PE players are also approaching outsourced CMO (chief marketing officer) or such outfits for their portfolio companies.

A cluster of service providers are mushrooming to capture business from small enterprises, who either lack the bandwidth or cannot afford a high-cost, full-time marketing resource. CMO Axis, co-founded by Vinod Harith, till recently global head of marketing communications for Wipro Technologies, offers to build and run a company’s annual marketing calendar. “We also work for large companies and free management time by taking over functions like blog and website management IT presentations, powerpoint repurposing,” says Harith.

In the same space is Vijay Menon, a freelance CMO, formerly vice president, marketing at QuEST and Infosys BPO. Menon says, these enterprises may not be able to derive benefits from hiring a full-time CMO, who may come at a salary level bill of up to Rs 50 lakh per annum. Obviously, “during a downturn everybody is cautious of hiring a high-cost professional,” one industry player said.

However, Srini Rajam, CEO, Ittiam Systems, makes a clear distinction between marketing and branding. Marketing becomes the fulcrum of any organisation in deciding the road map as well as the genesis of product and services. Some parts of branding activity could be outsourced especially when a product is being taken to the market, he adds.

Gaurav Gupta of Everest Group, says, “it is a long way to go before sales force is outsourced as most companies like to be in control and have their internal systems in place. Outsourcing is catching up in telemarketing and analytics, particularly in financial services sector like credit cards, insurance and the like. Even captives of i-banks, for instance, bring to offshore tasks like pitch documents, power points, analytics and marketing support, he says.

Globally, there is a case for outsourcing for companies in the $20 million-$100 million range and the biggest challenge for them is lead generation and building a brand. The challenge in the marketing outsourcing service provider space in India stems from lack of integration between analytics, market intelligence and marketing functions, says S Sabyasachi, senior director, neoIT, an offshore advisory firm.

 

SALARY SLUMP

Urmila Rao
Outlook Money (Edition: September 10, 2008)

Next year, there will be less reason to cheer in terms of salary hikes. The average salary increase projections for 2009 are lower by a percentage point, at 13.9 per cent, according to the Hewitt Associates Salary Survey, published by the human resources consulting and outsourcing services firm.

Though 2008 is seeing a strong average salary increase of 14.8 per cent, the global economic slowdown, US sub-prime crisis and rising inflation have caused Indian companies to revisit salary budgets for 2009.

Your only option to beat the odds would be a good performance. In the current economic slowdown scenario, performance-linked salaries are going up for middle and senior executives, reveals the survey.

Hewitt surveyed 150 companies, analysing information across nine primary industries, including BFSI (banking, finance, security and insurance), retail and IT/ITES sectors, among others. It measured actual and projected salary increases, and compensation practices for six specific job categories from top executive to manual workforce.

As many as 42 per cent of the companies said that they would have lower salary increases, bringing in a greater correlation between performance and pay, while 28 per cent stated that they would hire fewer staff. Meanwhile, 30 per cent have increased performance linkages to counter fixed pay hikes. None of the organisations surveyed are expecting a salary freeze for 2009.

Sandeep Chaudhary, leader of Hewitt’s Rewards Consulting Practice in India, said: “There hasn’t been any dramatic move in salary cuts. Instead, companies are looking at innovative ways to cut other costs like travel and recreation without compromising on employee salaries or learning and development. This is a sign of a growing and mature economy.”

The average salary increases across levels continues to be led by middle and junior management.

 

INFORMATION TECHNOLOGY CAN IMPROVE HEALTHCARE DELIVERY

Kolkata
Business Standard

There was a need to make the healthcare sector more IT-oriented, opined experts at a seminar on healthcare organised by the Confederation of Indian Industries (CII).

According to Rajarshi Sengupta, executive director, Deloitte & Touche Consulting, there was urgent need to integrate the back office operations of hospitals by use of technology.

Apart from few hospitals in south India, no hospital in the country had tried to integrate the back office operations.

Speaking on the occasion, Hemant Kumar, director, health solutions group, India, Microsoft Corporation, said the aggregate revenue of the mid-sized hospitals in the country was expected to be $10 billion by 2010-11. This would be possible because of the unique combination of low cost and high standard of healthcare services in India.

In India, the success rate of bypass surgery was 98.7 percent, against, 97.5 percent in the US. In India, the cost of the surgery was one-tenth of that in the US. However, still 60 percent of the patient's time in a hospital is spend on furnishing information to the doctors.

Experience shows that a patient's time in his stay at the hospital could be reduced by 39 percent by improved IT structure, Kumar said.

V V Varma, managing director, Lazarus Hospital, said, studies show that PPP partnership in Singapore resulted in increase in life expectancy, which 78.4 percent in Singapore, against 63 years in India.

 

THE ROAD TO SMB IT NIRVANA

Express Computer

Project management is something of a Black Art. Change Management is a topic that deserves far more attention that it usually gets. The IT manager in the average SMB lacks the kind of extensive resources that a CIO/CTO in a large company can tap. So what is the SMB IT manager to do? There are some basic principles that, when applied diligently, can spell the difference between the success and failure of IT at an SMB.

- Communicate, communicate, and communicate: Do not leave your users hanging dry on the line. You have to communicate any major change before it you make it. Maintain a database of cell phone numbers of all HODs and SMS details of any proposed change to them before you make any substantial change to an existing system, particularly if the system in question is an essential one (think messaging, file & print, ERP etc.).

- Pick an appropriate solution: An enterprise-class solution may or may not work for a medium business. It definitely will be no good for a small business. There are SMB-specific solutions out there. Give them preference over enterprise solutions that have been jury-rigged to fit your needs. Exchange and Notes are wonderful solutions for large companies with thousands of users or even for IT-savvy organizations with a smaller user base. However, for a small company or even a medium business that does not have an IT team with sufficient skill sets they can mean a messaging system that is slow, unwieldy, underpowered and doesn’t scale when user’s needs grow. This is no reflection on the enterprise software. It is, however, exactly what happens when an SMB is unable to invest sufficiently in hardware and bandwidth to provide a decent messaging experience to end-users. Overall, an SMB is better off opting for a hosted e-mail solution from Google or Rediff rather than going in for a do-it-yourself approach.

- Listen to your users: When things go wrong it is all too easy to shoot the messenger. Instead, listen to your users and work with them to find solutions when things go wrong even if you feel that the problems are silly. From the user’s perspective, they are probably game changing.

- Big Bang/Steady State: The choice of how you go about upgrading and introducing new systems lies between the ‘rip off the plaster in one quick jerk as it’ll hurt less’ also known as the Big Bang and the ‘let’s do things incrementally’ or Steady State model. Each has its plusses and minuses. Take a call based on the situation. If you must put in a new SFA application as sales are languishing thanks to lack of timely information or lack of sharing of information between sales staff, then you need a Big Bang. If you have users complaining about slow response time and overflowing mailboxes on your e-mail system an incremental approach where you pinpoint the heavy users and determine if their needs are real in conjunction with business heads and then roll out upgrades for those users first might work better in such a case.

There is no magic wand to wave and chase the IT blues away but the above principles can help foster a healthy working relationship between the IT team and the rest of the organization.

 

SOFTWARE PRODUCT EARNINGS TO RISE 10-FOLD

Bangalore
Business Standard | The Economic Times | The Hindu Business Line | The Financial Express | The Times of India | 

The Indian software product sector is expected to register a 10-fold increase in revenues over the next seven years. Revenues may range between $9.5 billion and $12 billion by FY15, from the current $1.4 billion, according to a new Nasscom-Zinnov study.

However, these Indian companies are yet to reach out vigorously to the developed markets such as the US and Japan and remain confined to the domestic market. Of the existing 371 software product in India, over two-thirds were launched in the past three years.

Over 100 companies started their operations in 2007. The top 10 companies still dominate the software product development market, accounting for 84 percent of the segment revenues from India.

"We have taken a conscious decision to focus on India and some emerging markets where the risk is lower. We are looking at markets where we find it easier to enter, experiment faster, and where the market tolerance is higher," explains Bharat Goenka, MD, Tally Solutions. Even after 21 years of its existence, Tally is primarily focussed on India, apart from some emerging markets such as West Asia and Africa.

Vishnu Tambi, co-founder of Nagpur-based Excellon Software, concurs, "We introduced our first product – AutoSol – in 2006, and so far our customers are largely Indian. We believe that India is a very good market to test a product, and then go out. We are now preparing ourselves to enter into some emerging markets such as Malaysia, Thailand, the Philippines and Cambodia."

On its part, the Nasscom-Zinnov analysis reveals that the size of the domestic software product market in FY08 was $2.3 billion, of which, the Indian software product companies cornered about $460 million and the global software product companies garnering $1.84 billion. In return, the Indian software product companies sold about $960 million worth of products outside India – mostly in emerging markets.

Pari Natarajan, CEO, Zinnov, asserts, "We very strongly feel that by 2015, Indian software product business revenues would be more evenly balanced between domestic and export-based sales, and the share of revenues from the domestic market would increase from 32 percent in FY08 to an average of 41 percent by FY15 to reach $4-5 billion."

He adds that the key parameters – such as proximity of Indian software product businesses to the local market requirements, excellent understanding on localisation requirements, and ease of adopting customised and targeted sales approach – would fuel this growth.

The study also states that over the past three years, the annual revenue aggregate of the Indian software product businesses has grown at a CAGR of 44 percent. Leading Indian software product firms have strengthened their product portfolio through steady investments in organic growth as well as through overseas acquisitions.

However, industry leaders believe that the Indian software product industry is already late in trying for a success in a much larger market such as the US, which was the strong forte for the Indian IT services company. To take the products to markets such as these, requires a higher marketing investment and greater understanding of the market requirements.

The fact that most of the Indian product companies, while devising their plans, think specifically about the domestic market, makes their products unattractive to established markets abroad.

"We are already late in tapping opportunities in the US market. There is a history of services' companies going to the US, but not the product companies.

This is the reason why most Indian product companies should look at non-traditional markets such as India and China which are scaling up first, and where the demand is very high in areas such as security, retail, online gaming and mobile space," opines Sudhir Sethi, chairman & MD, IDG Ventures.

 

INDIA ALL SET TO RULE SOFTWARE TESTING MARKET

Durba Ghosh, New Delhi
The Economic Times

India is all set to become a leader in the software testing market with an increasing number of software development companies outsourcing their software testing work here. Industry analyst firm Gartner has pegged the worldwide software testing market at $13 billion and the global market for outsourced testing services to be around $6.1 billion, of which India is expected to corner a 70% share.

Software testing implies checking any IT system prior to implementation for multiple aspects like functionality, reliability, usability, security, compliance and performance. Market players like Hexaware and AppLabs believe that the need for outsourcing software testing has grown due to the high level of complexity and multiple intersection points in modern software.

“The winning combination of cost, communication, exposure to various domains, testing principles and test tools gives a clear edge to India in software testing,” said Hexaware Technologies global delivery head and chief software architect Ramanan RV. While software services are growing at an average of about 10-12% globally, testing is growing at over 50% every year. The market opportunity for Indian offshore testing companies is seen at around $8 billion by year-end, from $2-3 billion a year ago.

“Indian businesses have matured in terms of making IT central to all business processes. Hence, there is a very high level of business dependence on error-free software code,” said AppLabs president and CEO Makarand Teje.

A global case in point is eBay, which experienced a 22-hour outage of its website in 1999 due to software flaws. It cost eBay $5 million in revenue and an 11% drop in share price. The outage affected 1.2 million customers who were either trying to sell or buy something on the website.

Along with the growth witnessed in offshoring of software testing to India, the average deal size of such projects is also on the rise. A few years ago, the average deal size for an outsourced testing project was about $50,000-60,000, requiring a few testers. That has now grown to about $2-4 million per project.

According to Gartner, India will require around 18,000 testing professionals every year over the next three years to fulfill the demand seen in the software testing market.