In 2002 a accident happens. In 2015 Salman Khan finally gives his statement that he is innocent. It took 13 years for our system to bring him to the court of law and still the proceeding are going on. This is not a civil case but a criminal one..
Some of questions that haunts me..
Isn't delay best way to hamper the law. Keep waiting and nothing will happen, you will loose faith in such a system. Why ?
The legal system is for the rich ? Would it take same amount of time if one of the celebrity gets hurt or killed in a drunk and drive case ? I am not sure. Some of the things in this country are not fair.
Does money works like lubricant in the system. Is it a true democracy where people do not enjoy equal legal rights in some sense. God save this country.
Modi ji speaks about problem faced by business man, one of the major issue is non payment by customers. The laws are there but enforcement is too slow. Section 138 does allow for criminal proceeding against the defaults but system can be made too slow by defaulters. Filling of the case takes a lot of time, after which defaulters will not come to hearing 2-3 times, then they will ask for extension of dates.. finally a long time is passed and during the process the businessman may not even survive as cash flow management becomes difficult and even good business plans falls flat. Judicial reforms are a big need of this country. I am waiting for the ache din ..
Crude Oil prices are falling at a very fast pace. The prices have eroded by 50% in past one year which is causing a lot of disruption in global economy. Some of the countries like India who are dependent on imported crude are benefitting out of it and producers like Iran and Russia are bleeding due to reduced prices.
There may be multiple reasons for the fall in crude oil prices. Some of the reasons which I feel may affect the pricing are below stated but the real reason may be very different.
Theory X
Reduced Oil Demand in Future: The current price is the reflection of the future demand which has reduced due to poor health of global economy. The reduction in demand is may be result of cooling of Chinese economy, uncertain Europe and other countries. At the time when anticipated demand was reducing US opened flood gates of the Shale Oil. The prices started falling as soon as the US Shale Oil production started to increase and it started competing with crude oil from the crude oil supply from OPEC.
The theory fails to explain why the prices will fall as much as 50% as conditions are still better than what the world has already seen. Infact when US is growing at 3.5%, the size of US growth can provide fillip to the international demand and can absorb some of the supply. Why OPEC didn't reduce its production when the demand was seen to be lower like it usually do to support the price in the market ?
Theory Y
USA counter strategy for Iran and Russia: Both Iran and Russia who do not share very good relations with USA are largely dependent on the sale of crude oil to sustain its economy. The price reduction will hurt them the worst. It also suggests that wars between the country will increasingly be more economic than traditional. The theory has its merit and demerits, the shale oil production is largely held private in US and works based on economies. So it may not be the government who is driving the production. OPEC could also have reduced the production but it never went for it.
Likely Reason
Technology: For years together the world has been dependent on crude oil and coal for its energy need. There may be some new technology which is about to enter the market which both USA and OPEC is aware. The technology can be Solar or other rewnable energy which can even change the pecking order of the economic strength of the countries. Once such a technology comes, the oil fields will be worthless and it makes sense both for USA and OPEC to pump out as much oil as possible without worrying about prices till such a thing happens.
Although I do not follow much of Cricket nowadays but World Cup (WC) is special, once in a four year event does attract even people like me who seldom watch Cricket.
When I was looking at the format of WC 2015 it was quite baffling but at the same time it makes commercial sense for ICC.
In WC 2015, the teams are divided in a pool of 7 team each. Out of 7 teams four teams from each of the pools will qualify for the Quarter final (QF) stage. From the QF stage the format of the tournament will be knock out.
Now if we look at each of the pools, their are 3 team in each of the pool which hardly stand any chance to qualify for the next stage and it will be mostly 8 test playing nation who will qualify for the knock out stages. In some way the first 42 pool matches are not of much consequence unless there is a major upset like Ireland beating West Indies.
In the nutshell, the WC is nothing but 4 QF, 2 Semi Final (SF) and 1 final. The most promising or consistent team may not end up being a winner but someone who is lucky and wins the last 3 matches will win. The format does not make any sense as 42 pool matches out of total 49 WC matches are of not much significance.
If we look at the commercial side of it, it may be done just to have India in contention atleast till the QF stages, so in absence of series of major upset, all major test playing nation will remain in the tournament till QF and there will be hardly 3 matches ( 2 SF and 1 Final) after that stage. India providing bulk of the viewership will make sure that ICC in making a lot of money out of the event by playing atleat 8 matches in the tournament. !
So if you a hard core Indian Cricket Fan, sit back, relax, even if we loose a game or two in pool stages, its going to hardly matter, just pray that we win the last three matches.
The pace at which technology is progressing every day is really scary, there was a time when Hardware used to sell like hot cakes and there was no real value for software... IBM did this historical blunder of concentrating too much on Hardware and leaving scope for likes of Microsoft to develop a operating system , they realized there mistakes when they started incurring huge losses .. finally after many years they sold there hardware PC/Laptop division to Lenovo and now focusing on software developement...
Time has taken one more turn after few years, software programs became so important and vital that new range of hardware are designed just to accommodate certain software features... new handset with no appreciable change in designs but featuring advanced software applications like blackberries of the world took over the market by storm .. the change was so fast , within no time every one was checking there mails on Blackberry .
Now this was not enough for us , another big change , entrepreneurs are developing specialized hardware to accommodate just a few dominant websites , this is micro specialty feature and people are buying it without second thought. ,For example new mobiles which are face-book enabled are spending millions just in advertising their products , face-book might not be making any money but these new generation of Entrepreneur bring new innovation and changes in market are reaping the benefits ..
The change might be a bit easy for non paying users but is very tough for entrepreneurs and licensed users who spend lot of money in developing and marketing a application which goes off line in a flash .
When I went to watch Rocket Singh, I was not expecting much from the movie but found it unexpectedly good and a must watch for all management professional. The movie is a story of a Sales organization rather than a sales man, surprisingly a bollywood movie without any hero.
I think the way movie's promos were designed, it couldn't gave a feel of the quality of the story and looked more like a comedy to me. The promos could have been made more meaningful to pass on the real message.
The characters of sales man looked quite original, dialogs were perfect. The experienced sales man acted really well and his dialogue " Jo sales man ulta nahi pad sakta wo andha hai " was awesome.
Few of the important messages from the movie
Importance of values and ethics in a business without which the business wont survive for long.
It also teaches us the importance of customer value proposition . When for one businessman the customer meant just sales value and for another customer satisfaction was more important.
The employees/ sales force does not meant just to be exploited, pressurized for targets. Just keep your employees happy, targets will itself follow.
The best message was to all the people who are employees and think that things can be done better . Become a Entrepreneur, its not that tough. " Risk to spiderman ko bhi lena padta hai, mai to sales man hu".
Over the years life has become tougher for bowlers, I don't know how can a youngster watching Cricket nowadays will get motivated to become a bowler when a bowler is thrashed to all parts of the ground.
Mediocrity is something which can be appreciated by more number of people and this is precisely the reason why Cricket authorities are trying to woo the audience by making pitches full of runs. It might make batting look more spectacular but it comes at the cost of being unfair to bowlers.
I still remember good old days when bowlers like Wasim, Waqar, Donald, Mgraw, Ambrose, Kumble, Warne use to test batsman for their skill, there use to be a great anticipation for contest between the bat and the bowl. Are we seeing it any of it these days ? It looks like we are just watching batting and not Cricket.
Sometime I really don't understand how can someone call a dead pitch devoid of any life for bowlers as a good cricketing pitch. Making the teams score 400 runs in 50 overs might be making Business sense for the Cricket Lords now but i strongly believe that its a short term trend and eventually people will get bored out of it.
Read the book stay hungry Stay foolish , found it really motivating, interesting and a must read for all budding Entrepreneurs. I have noted down the parts I liked most.
Naukri.com
Don’t do it for money, Do it for your Passion!
Don’t exaggerate the cash flows, under commit and over deliver
Be generous with stake sharing.
Employ people who are smarter than you or atleast smart.
Learn the art of delegation!
Funding is important, don’t hesitate on Venture Capital Funding.
Educomp
Look for Need Gap.
The scalability of the venture.
Even if your salary is 15lpa, in 5 yrs you will earn 50 lakhs after tax , If you run a business for 5 yrs , it will be in crores very easily.
Feed Back Inc
Apni Aukat mai kaam karo , check the level of risks you can take
Adequately capitalized
A complete team , competency Mapping
Don’t bother about the peer pressure , “ Koi phikr nahi hai apna kaam kar “ ?
Mastek
If you want to keep your friendship with your college buddies for life, start a firm in a partnership.
Choose a leader not based on shareholding, age but on trust, respect and competence.
Team with trust for each other.
Implemented Balanced score card and incentive schemes very early.
Get 4-5 years of experience; learn at somebody’s cost, get a bit of feel, financial stability and savings.
Don’t just think of it, don’t just wish for it, Jump in it and do it if you are really serious.
More than synergies of skill, synergies of attitude and values is more important.
Subhiksha
Join the company where you want to operate
Work for smaller companies to get the exposure to the nuts and bolts of the company.
Shree RENUKA Sugars
The kinds of jobs which comes on Campus are not suitable for budding Entrepreneurship.
TEGA
Don’t give it up half way.
Have patience during the difficult time.
Plan to put 50% more money than you have calculated .
For midsized company, don’t spread in too many geographies as the management focus will dilute.
Eklavya School ( Sunil Handa )
Can join a company for 2-3 years
Join a company which makes you a CEO of a sick unit, and gives you power to make it profitable
Or
Join a company which provides you opportunity to work fully on a new project from planning till implementation.
Or
Executive Assistant to the CEO , Promoter
Narayan Murthy – Give capital stake to people who add value to your company, not to attract capital.
Edelweiss Capital
As human we grossly overestimate the short term and underestimate the long term.
Financial literacy is very important to run a business.
Make a person head, with slightly more equity holding, not more than 4 partners. Equal partnership is not possible.
Don’t worry about temporary loss of status, money and address.
India Infoline
Be prepared to fail, if you can’t take failures, Entrepreneurship is not for you.
Work for a good medium to big size company before jumping, It helps.
Select a leader, having 3-4 equal share partner and looking for consensus is the worst thing.
EXL
Don’t start fresh out of college, spend some time in industry.
BE conversant with Finance, VCs don’t teach you that, you should know the finance well.
Orchid Pharma
Aim to create value, lasting value, no dearth of capital in the country.
Mphasis
Diversify wherever possible, as u can’t see the future.
Not be over emotional about your company
Important Traits – Networking, Risk Appetite and Luck!
Promoter has to spend lot of time with customer; sales people cannot match yr energy and passion.
As a small company you need to very transparent, refund the money yourself if you did a bad job.
Learn about networking, cash flows, loans, negotiations before taking a plunge in entrepreneurship.
Try to tell your negatives first in power point, than come to your positives.
Take customer reference (Written) to add value to your power point.
Precious Formals
Business plan can be made by anyone, but plans are not enough.
Most of us while studying in B schools dint spent much time in studying the intricacies of human behavior and Human resource Management as a subject. Today when I work with daily issues in the company I think it is the toughest and most important element of the business .
You can have very fancy strategies, full involvement of the top management but communicating the message to all the people in the organization and motivating them to implement a particular strategy is not easy . Every man wants importance and good roles, how will you satisfy every one and yet bring them to accept a change. At times even automation which eases jobs of the people brings lot of dissatisfaction amongst the employees as they are left to do very mundane tasks which even a ordinary person can do. After every few years the best people will leave the organization and the others will be left who are not even half as good. How to cope with this issue . Providing them good incentives to stay ?
Incentive structures to motivate the people can back fire. Against the popular perception, money is the least important thing for most of us. In blue collor jobs where the salary are the lowest, people are not concerned about it , they are happy in there 2 meal a day. If you provide them high incentive to improve their productivity, they might work for only 5 days and enjoy the rest 2 days. There monitary needs gets fulfilled in working just 5 days, this leads to mass absenteeism which is not good in any setup.
The great Lehman Brothers gave amazing bonuses to their top management which induced them to take more risks. The ultimate result is known to everyone . So is this fixed salary and a incentive scheme actually works ?
Down with typhoid I went to the doctor for a X Ray and while I was returning back home I went to a Fruit vendor to buy some fruits, When I enquired about the prizes , I found them astronomical high. I asked him “ Bhaiya you are quoting really high , what is the reason ? “ He immediately replied in the local language , “ The supply of fruits is reducing due to less rainfall and delayed monsoon , and as more people are falling ill the demand of fruits is increasing which is driving the rate up due to demand supply mismatch “ . I felt that half of the people even after MBA can’t give such an apt reply, what is he doing here selling fruits.
When I was returning back after buying 2 kg of fruits he added one more dimension which was even better , he told me “ As the rate of fruits increases people tends to buy them more ,as the people thing that the dearer the prices better the quality “ . Wow behavioral aspect of fruit selling business!
Outcome of general elections have changed the face of Indian Equity Markets. People who are staying away from the market are suddenly all excited about the easy money from stock markets.
Is it really the revival of great Indian bull market which is ignoring all bad news and simply concentrating on the development agenda of the newly form UPA government without the fear of LEFT parties or its just yet another short lived trend. I personally feel that there are less chances of it being a sustainable upside trend for long, reason being: -
1. 1. The earnings figure of the companies are still on the declining trend, nearly 33% of the top 1000 listed Indian companies by market capitalization have shown losses in the last Quarter. Majority of the companies are seeing a decline in the EPS growth.
2. 2. GDP increase of 5.8% might look very comforting but if look at the breakup of the GDP growth rates only the infrastructure sector has shown good growth with rest of the sectors still far from the last year’s level.
3. 3. Global recession seems far from over with heavy weights like General Motors filling for Bankruptcies and US markets still struggling for confidence.
4. 4. We are facing the challenge of large fiscal deficit and there is a high expectation for the populist budget this year which might stretch it even further. High Fiscal deficit combined with soaring current account deficit can even make a case of downgrade of India’s sovereign ratings which will increase the cost of funding for both the government and the companies of India.
5. 5. Low credit off take from banking sector clearly reflects the declining trend in the capital expenditures of the companies. It can reduce the extent of growth rates and job opportunities both in manufacturing and services sector.
6. 6. Delayed Monsoon can negatively affect the agriculture and the rural economy making it tough for recession neutral industries like Food and FMCG.
7. 7. Declining exports and increasing crude prices can even the increase the current account deficit of India and with less capital account inflows due to grim external conditions the balance of payment condition of India can denigrate although we are sitting in huge Forex reserves.
I can clearly see a classic case of retail investor’s excitement about entering the market when it’s too hot to handle. It’s very tough to predict the direction of the markets but the macro economic factors doesn’t really reflect any signs of sustainability of this rally for long time and I think it will be in interest of the small time investors to go a bit slow on their buying frenzy in a quest to become a millionaire in a month.
Yesterday my friend told me that he has heard that “Subprime crisis is over “ and it is this news which is making the Sensex go up. I was really puzzled hearing it and started laughing after that.
We all know that subprime crisis is far from over , but who will declare it once it is over , what is the methodology and procedure to actually verify if someone says its over .These financial crisis are so huge and affect so many economies , even to find the real impact of them is so tough . During Asian Financial crisis of 1997, it took many years and many declarations by prominent leaders of financial community to make the markets believe that the crisis is over.
I hope my friend is right and we see a better managed financial world past subprime very soon.
Majority of our decisions are based on how others are doing it. Crowd behavior gets mostly influenced by the social network one maintains. Most of the people invest in stocks as his neighbor is investing and making money in it. Most of the people invest their hard earned money in risky trades without any knowledge of market, As Shankar Sharma of ‘First Global’ gives the analogy of a revolver with only one bullet in it, and the investor is asked that he will earn a million if he tries it on himself, few people might get richer in such games but end of the day more people shoot themselves rather than earning the money. The probability of becoming a millionaire is getting reduced by every trial and the rule of the games also keeps changing. Nobody knows if there is only one bullet in the gun.
Social networking is giving way to a regular crowd behavior pattern which is very prominent in many ways: -
Increased Information Levels: - Social networking keeps people informed about others and leads to an increasingly informed society. Such level of information might not be very useful for all.
Comparisons in Society: - Increased information about friends and peers leads way to comparison of decisions, similarity in life style and even peer pressure at times.
Peer Pressure: - (From my earlier Blog) When we talk about the art of decision making and psychology behind it, we believe that peer pressure has the most significant influence behind our decision making. We may live our own life but the rules of the life are mostly defined by the people with whom we work or study. The reason is simple, we spend a significantly high portion of our time with them and hence their personalities and reactions affect our decision making process.The more important the decision, the more is the peer pressure. Infact even the decision of selecting a job or going for higher studies is sometimes influenced by the peer pressure. People constantly fear that they will be judged by other people on the basis of their decision.
Financial Decision Making: -Financial success of peers and friends whom a person can easily associate in his network motivates other people to take similar risk or even at times more risk than a person can actually afford. Social networking thus makes you believe that you can also achieve the similar level of success in financial decision making.
Incentives and Recognition: - Social networking also prompts a person to take increased risks as the society can make a hero out of him if he succeeds in his plans and financial decision making. The improved recognition in the society acts as a big incentive in making financial choices for a person.
The recent fraud disclosure by Mr Rama Linga Raju of Satyam Fame just reminds me of one of the classic dialogues of the movie ‘A Beautiful Mind ‘where John Nash (Russel Crow) says “Terrified. Mortified, Petrified. Stupefied... by you “. It really makes me think about the possibility of a new crisis involving ‘Auditing and financial reporting’, which can be prevalent in many more listed companies?
The fraud of this nature was simply unprecedented in Indian history when a BSE 30 company has been fudging its balance sheet by reporting higher profits for years together and the system was unable to detect it. It may cast a dark shadow on the standards of accounting and auditing in India which was once seen as one of the better regulated market in the emerging world.
What was really surprising and a mystery was ‘How can Mr Raju alone do all the innovative accounting without informing or taking the senior management in confidence’ and bigger surprise was how could a company as big as Satyam operating on margins of 3% when the industry margins were hovering around 30%. The basic model of all big IT services companies is same and there is no considerable difference between the bench strength, the billing rates or the salaries of the employees.
Only the future will decide how will this lone incident affect the Indian IT companies , future of beleaguered Satyam employees , financial condition of various institutions like ICICI Prudential, Fidelity , Citi , LIC etc who have considerable equity exposure in Satyam and the confidence of FII / Mutual Fund about investing in Indian capital markets .
Bankruptcies are normally associated as terrible news, something which disturbs the whole system and causes lot of unemployment. The biggest setback a bankruptcy causes is the lost of trust, the whole credit crunch situation has arisen due to this lack of trust among financial institutions to lend to each other. Year 2008 has seen all kinds of bankruptcies; some of them like AIG were saved by the timely bailout packages announced by the state while some were not fortunate enough.
As the company were going bankrupt so were the people of USA, as per a estimate the number of people filing bankruptcies in USA has exceeded I million in 2008 .
But not everything is bad in bankruptcies and it is actually an integral part of the system. In case the company files bankruptcy it goes to the court of law where it is either liquidated or restructured based on the type of filing. Some companies should be allowed to go Bankrupt due to the following reasons: -
1.Survival of the fittest: - If some product or service is not required in a certain scenario, than its best to shut down the shop rather than pumping money to keep it on artificial oxygen. It gives way to better technologies, keeps the research and development department on toes to improve upon the existing products.
2.Reduces Inefficiencies: - Incorporating a company is easy but running it efficiently requires planning, implementation, technology and management. If any of it is missing, it’s better that the one who is more capable takes over. A recession actually removes lot of inefficiencies from the system which were developed due to excess demand.
3.Fights Moral Hazards: If the government just keep saving all the companies from bankruptcies, it will create a moral hazard of lax regulation and control.
4.Risk Management: - The stake holders learns a lesson of risk and return, otherwise everyone will take more risk to maximize returns. The risk management of the company should be properly thought of before taking critical decisions.
5.Lax corporate governance: - Many a time in cases of bankruptcy, the corporate governance is the major issue. The management bonuses and salaries should be in line with average and should be appropriate as per the current financial condition of the company.
Just a few years back Anchor came out with the advertising campaign which claimed that their tooth paste is vegetarian. It gave great boost to the sales of the Anchor as people assumed that the other tooth paste might not be vegetarian. This is how improved information can increase the perceived value of the products and services.
Nowadays there are all kinds of information written on the packets of different food products which ranges from the calorific values in kilo calories to the vitamin content in milligrams as the customer is educated and knows what exactly he wants.
I have always felt it time and again that some food products are more sleep inducing than others and hence if have some idea before consuming that food about the effect it will have on us we can very well avoid certain types as per our requirements. This information which I think is quite necessary to be put on the packets of eatables can be called as the soporific value of the product. Soporific value is essentially the indicator of value which informs us that X food product when consumed in Y quantity will cause Z effect on your energy levels and sleep after consumption. I don’t know if this calculation is technically possible but it surely doesn’t seem very tough to devise.
Such information would certainly help people fighting to stay awake for an important meeting or presentation after lunch or students like us who find it even tougher to stay awake in classes.
The origin of credit ratings agencies can be traced back to 1840 when agencies started rating merchant’s ability to repay their financial obligations. It was the gift of 1837 financial crisis which saw increased credit defaults and it led to the birth of credit rating agencies which can predict the interest and debt repaying abilities of the lenders. The functioning of these credit ratings have remained questionable ever since and this topic revisits itself after every financial crisis, sub-prime crisis is no exception.
The whole purpose of structural finance and financial engineering for sub prime loans was to improve the credit ratings of various financial instruments by credit enhancement and converting them into marketable securities. The underlying risk of the financial innovation and the difference between Prime AAA+ securities and sub-prime AAA+ was never contested before the whole system failed.
The biggest issue with these agencies is their financial model where they actually get there revenues from the company they rate and not from the users of credit ratings, it causes two problems,
1. The credit rating company cannot be conservative in its approach as there is high competition in the ratings business and the company may lose out on lucrative deals if it starts giving conservative ratings.
2. Most of the companies which undergoes rating process wants better credit ratings to reduce the cost of financing and no company wants to increase their cost of capital even after paying rating agencies.
If we actually compare the number of above investment grade to below investment grade ratings issued by different agencies, we will find that most of the ratings given are above investment grade. There is a need to change this financial model to make the whole structure more fundamentally strong.
The second crucial issue with rating agencies is their operating model, which relies totally on the auditor and the companies for all financial and non financial statements. It increases the risk of distorted ratings in case the auditor and the company are running a joint partnership firm which happened in case of Enron.
I feel that the world has seen enough recessions and depressions, there is an urgent need of a single world regulator who can improve the functioning of various financial markets and limit the grey areas of finance.
Just one week back the whole auto industry breathed a sigh of relief when the federal government approved more than $17 billion dollars as bailout package for likes of Ford, Chrysler and General Motors. Due to expectation of unfavorable economic conditions people are actually delaying their plans to buy new car. The reduced sale of new cars is leading to increases inventories and losses for all major Auto and auto ancillaries companies in the world.
Everyone knows that last one year has not been the best of the year for Tata Motors (TTM). The average four wheeler sales growth rates have also reduced from preceding year and has turned negative which has caused TTM to cut down the production and give paid holidays to its employees . TTM is suffering hugely due to losses suffered in Singur which is in excess of $100 million, the untimely buyout of JLR had caused huge cash outflows and they are paying huge interests to cover the deal. The rights issue launched to pay a part of the deal was also not fully subscribed and was financed by Tata Sons. The Tata-owned Jaguar and Land Rover continues to lobby the UK government for a £1bn tax-payer bailout when they are actually bailing out likes of Ferrari.
When the companies are conserving cash which can save themselves from future trouble, it’s very tough to understand the Tata’s logic to sponsor Ferrari for Formula One car racing championship. The question now is about surviving next two years rather than expansion for new phase of growth.
There might be a long term vision or strategy behind such move but I as a person am unable to comprehend the logic of such spending when you need to set your house in order first.
Getting good food is a big issue around NMIMS. Our canteen does not serve very good menu most of the days and most of the people have to go to likes of Cooper Hospital , Rasraaj or Dena Bank Canteen for lunch . I mostly go to dena Bank canteen where Madhav’s canteen food taste seems more palatable and the place is easily accessible as it is just opposite to our Campus in JVPD.
When I today stopped for tea after lunch near Dena Bank, I met Govind , he has been selling tea there from past 18 years , he is a very silent middle aged person who generally don’t talk much with the customers . I just talked with him about how the business is going and what kind of issues he faces regularly in the business and I found that his replies were quite interesting.
He told me that getting a place to setup a tea stall is very tough in Mumbai as most of them are illegal and the other hawkers want to grab the space where they can do good business. He regularly has to fight with other people ‘ Bhai’s ‘ who want to get that place but since he is there for around 18 years now, the tussles have reduced. Surprisingly the tension due to internal fights for space among hawkers is much more than that of the threat from Bombay Municipal Corporation (BMC) for illegal encroachment of space.
The business risk of these kind of setups are completely different from regular legal business .It cannot be easily evaluated by doing sensitivity analysis in the excel sheets. For example as NM has closed the main entrance for students from last few months, his business has reduced by nearly 50% as students don’t want to travel too far for tea. Again if less people start preferring Dena Bank canteen food, his business will again be impacted. These are some of the risks which are completely beyond his control. Although his tea tastes best in that area but there are very few students seen around his shop nowadays.
Govind misses the previous batches of NM, as per him those students were much more closer to him. They used to sit around his shop for long hours. Even now when they come to that area for some work they don’t forget to land at his place for a tea. He has lost the taste in business now as student nowadays does not interact much with him.
IT companies are the major recruiters from Indian Engineering colleges and are one of the most attractive career destination for the students in engineering colleges. Some of the major IT services companies recruits thousands of people every quarter and are well respected in all the campuses.
If we actually see the reality of the matter these companies are simply sucking life out of their employees, these companies are hiding their inefficiencies by hugely underpaying their employees. As a matter of fact the starting salary of a fresh graduate is nearly 12000 to 15000 in most of the Services companies, after 1-3 months of training most of people gets billable and work for nearly 8.5 hours a day which has now been increased to 9.5 hours a day in many companies. The billing rate for a fresh engineer is nearly 20$/hour here in India compared to 80-100$/hour in US which is one of the most important factor which brings work to India is this cost arbitrage. For 20 working days a month, the companies are making a pretax income of nearly 3800 $/month/Employee and paying just 240-300 $/month/Employee. In this business the companies are having a contribution margin of nearly 93% which is huge comparing to the other businesses. For working 9.5 hours on job a person has to stay for nearly 11 hours a day in office. If we include the traveling time too, nearly half day is gone in doing office duties itself the employees does not have any motivation left for other recreation activities.
The second point of distress is the quality of work which is being given to Indian software engineers , nearly 80% of the work in all top services firm is either application maintenance , Testing or doing minor changes in the old code which can be done even by a 12th class student . Infact in USA most of the work of this kind is being done by far less skilled people. Due to this skill mismatch the Engineer dont use their knowledge and the whole creativity and education gets wasted. The effects of the whole process are clearly evident as even after so many years India has not developed any great software product , the entrepreneur here lack the risk appetite to invest in research , they are simply too happy in earning through revenue contracts with assured returns by underpaying their employees.
The third issue which is often ignored is the lack of efficiency and the abundance of middle managers in Indian IT companies. In any company it’s the engineers who are doing the real work of developing of maintaining the code but we have huge number of managers who don’t add any tangible value to the company.
One issue which has been highlighted off late is the affect of large bench size on the efficiency of the company .Nearly 25-35% of Indian engineers are always sitting on bench due to improper demand supply estimation which impacts the earning of rest 70% of the people who are working 9.5 hours a day. This inefficiency, which is very high in India compared to western companies. It is not a healthy sign for the Indian software industry as working engineers have to compensate for it in the form of low wages. The coordination between Marketing and HR teams is under a big question mark here as they are not able to forecast the requirement of the human resource and the flow of services projects.
Nowadays the IT companies are not giving joining dates to the fresh graduates and causing lot of problems to them. Many of the new engineers have been assured of joining only in 2010. This kind of treatment when a company has once assured the person of a job and is not making good the contract is a very biased tool which makes life of a common man tough . In most of the engineering colleges students are not allowed to apply for other companies once one gets placed in a company. The student’s suffering starts after the end of the course when he has to just keep waiting for the joining letter from the HR offices.
So are the IT companies really caring for their employees ?
The economic slowdown has engulfed the whole world in a matter of just 6-8 months. It has created a cause of concern among students passing out this year from engineering and business schools . The scenario which was looking very conducive just a year back has totally changed today. Many of my friends here, who have come leaving their high paying jobs in search of better career opportunities and now are in threat of getting reduced salaries even after 2 years of hard work and training. The recessionary scenario which has caused huge layoffs is giving sleepless nights to thousands of people.
I think this scenario is not a threat to the young professional but a great opportunity. There is a old saying that when God closes one door he opens several other doors for us. One of the best opportunity available now for young ambitious graduates is to start their own venture. Making their own dream a reality. Its like becoming the lord of our own destiny. In the internet enabled world today it is much easy to start a venture than it used to be 5-10 years before. But the Indian mindset makes us thinks of going for secured jobs rather than thinking about taking calculated risks .Lot of people think that there are lot of hassles and risks involved in this kind of initiative. You can lose the high paying job , the capital invested and even your reputation . I think these are all just lame excuses , The truth is that it does not require money , it does not need a great brain and it does not even require a great idea to be a Entrepreneur , what it needs is shear GUTS . The risk taking ability and the degree of passion defines any Entrepreneur. When someone asked Mr. Sunil Handa, Professor of IIMA that he is not getting good ideas about the business venture he wants to start, he said “Quit your job and sit for 10 days at your home and than see how the ideas starts hitting you “. Even in the bestselling book ‘Rich Dad Poor Dad ‘ Robert Kiyosaki says “A job is only a short-term solution to a long-term problem “ . The message is loud and clear, it is just the test of our nerves , patience and willpower.
As per my understanding this is the ideal time to start a venture as the opportunity cost is very low. The salaries and job profiles are already on decline, a person is not loosing much when he quits his job. Infact we can make a mental excuse of it that the job is not good enough for us to devote our time. The credit crunch might reduce the financing options for the Entrepreneur but it is better than the scenarios before . Its just a matter of decision to take on the next challenge … I mean the next opportunity.
