:::The Desi Flavor:::

NRI floats $250 million fund for India

From Rediff:

American entrepreneur Raj Vakharia has announced the launch of a private equity fund, which will invest $250 million worth of United States institutional capital into India's booming real estate market.

The former assistant state treasurer of New Jersey -- who has worked in senior positions on Wall Street and is presently the co-chairman of Uni-Mart, a former American stock exchange company and the nation's 30th largest store chain with sales in excess of $550 million annually -said the fund will aggressively capitalize on the rapid growth and opportunity in India's real estate market.

The fund will invest in a broad range of commercial and residential real estate, including hospitals, educational institutions, single-tenant properties, retail real estate, apartments and infrastructure. It will target its investment into high-growth markets throughout India like Mumbai, Bangalore, Chennai, Pune and Delhi. 

A Profitable Passage to India...

Jay Gohil

Khozem Merchant has been writing some very interesting articles about the outsourcing of jobs to India. Yesterday he had a lenghty interview with Wipro President Vivek Paul. BusinessWeek recently named Vivek Paul one of its "Best Managers of the Year."

Among the interesting passages:

Mr Paul argues his big US rivals' expensive Indian development centres "offer India to customers as a line-extension" that does not fundamentally alter the economics of their business. Instead, they should be refining their "global delivery models". Indian companies have done so by taking advantage of their large pool of skilled labour, as well as the time differences with their customers (Indian day-time is US night-time) to extend the working day and offer high productivity. "In terms of the global delivery model, I'd say our international competitors are where we were three years ago," he says.

In another three years, Mr. Paul wants to fill the holes in Wipro that have emerged from a growth strategy that has focused on research and development services for say, telecommunications equipment manufacturers - which shrank with the technology downturn - rather than for banks, traditional big spenders on IT.

In the past 18 months, Wipro has made four acquisitions totalling about $150m, although some nasty surprises turned up after it acquired NerveWire, a US company that serves the securities industry. Other integration issues arose over culture, thanks to Wipro's image as an austere word-place that lacks an equity culture and pays modestly.

Mr. Paul was an employee of GE at one point. Merchant reveals what it took to lure Paul away:

It was from GE Medical Systems that Mr Paul's boss, Azim Premji, the white-haired billionaire owner of 84 per cent of Wipro, hired Mr Paul five years ago with an improbably scintillating invitation: "Do you want to make $2m a year with GE or history with Wipro?"

60 Minutes on Outsourcing jobs to India

Jay Gohil

60 Minutes the most popular show on CBS, recently ran a segment - Out of India, discussing the outsourcing of jobs to India. Here is an excerpt:

Partha Iyengar, an analyst in India for Gartner, an American research company, says this is probably the best example of globalization.

"Absolutely. We've had globalization in the manufacturing sector with the auto industry, and Japan really emerging as a major auto power. We've had globalization in the low end manufacturing industry with China emerging as a global power," says Iyengar. "But this is the first time in the knowledge industry we have globalization impacting two countries at such a large scale -- India and the U.S."

e-Choupal....

Jay Gohil

Source: ITC

Amy Waldman writes an interesting piece about the system for the New York Times. Here is an excerpt:

E-choupal allows the farmers to check both futures prices across the globe and local prices before going to market. It gives them access to local weather conditions, soil-testing techniques and other expert knowledge that will increase their productivity.

Nonprofit organizations have tried similar initiatives but none have achieved anywhere near the scale that e-choupals have. There are now 1,700 in this state, Madhya Pradesh, and 3,000 total in India. They are serving 18,000 villages, reaching up to 1.8 million farmers.

As a result, say those who have studied the concept, the company behind e-choupals, ITC Ltd., has done as much as anyone to bridge India's vast digital divide: most of its one billion people have no access to the technology developed by some of their fellow Indians, whether in Bangalore or Silicon Valley.

E-choupals may offer a model for all developing countries.

"It is a new form of liberation," C. K. Prahalad, who led a case study on e-choupals for the University of Michigan Business School, said of the transparency and access to information they give farmers.

More than two-thirds of India's people still depend on agriculture for their livelihoods. With little chance of the huge manufacturing boom that has employed many rural poor in China, the challenge is to increase farmers' productivity.
...E-choupals may offer a model for all developing countries.

"It is a new form of liberation," C. K. Prahalad, who led a case study on e-choupals for the University of Michigan Business School, said of the transparency and access to information they give farmers.

More than two-thirds of India's people still depend on agriculture for their livelihoods. With little chance of the huge manufacturing boom that has employed many rural poor in China, the challenge is to increase farmers' productivity.

E-choupals were born in 2000 from ITC's determination to capture more of the soybean crop, which it turns into oil to sell in India and into animal feed to export. In purchasing soya, it has long been dependent on a static, archaic system: Farmers sold to village traders or went to government markets, settling for whatever price was offered. ITC then had to buy from the traders or markets, with little quality control and high transaction costs.

The idea of the e-choupals was to allow the company to buy more directly from farmers; e-choupals allow farmers to check prices the night before, and then decide whether they want to sell directly to the company the next day.

The company weighed trying to deliver information through television or radio, but given the variety of Indian farms and farmers — knowledge, soil conditions and weather all vary immensely — it thought an Internet channel would allow for more tailored information.

Other related articles/cases:

: ITC e-Choupal film

: Serving the World's Poor, Profitably by Prof. C.K. Prahalad and Allen Hammond

: The ITC eChoupal Initiative - HBS Case study by Prof. David Upton and Prof. Virginia Fuller

Soybean farmers in India have traditionally sold their product through ineffective and frequently dishonest physical marketplaces (mandi). Farmers are generally poor and often illiterate and are forced to be "price-takers" after an arduous journey to the mandi. They also have very limited access to information and education on farming techniques. Describes the use of Internet technologies to reach these farmers and, in particular, examines a new system called the eChoupal, developed by the Indian conglomerate ITC. The eChoupal has reengineered the antiquated soybean export supply chain using digital technology in rural farm villages. Based on a clever understanding of technology, sociology, and the incentives of the various players involved, the eChoupal provides farmers with effective methods of price discovery, honest trading, and information sharing to the benefit of all in the channel. Discusses the achievement, opportunities, and challenges of the managers of the new supply chain.

: ITC bags award for e-Choupals

Two South Asians in 2003 Global Influential list

Jay Gohil

Indra Nooyi, President and CFO of PepsiCo and Noel Tata, Managing Director of Trent, a subsidiary of the Tata Group are the two South Asians that make up 2003 Global Influential list. Short profile of them:

Source: CNN

Indra Nooyi's bulldog determination is already the stuff of musical legend -- a friend once rewrote Black Sabbath's Iron Man in honor of the electric guitar-loving PepsiCo president and chief financial officer. ("Driving them up the wall/ Iron Woman rules them all.") Nooyi, 48, plays a mean power chord herself. In 1997 she prodded Roger Enrico, then CEO, to spin off PepsiCo's fast-food business. She later pushed Enrico to buy Quaker Oats and Tropicana, two bold acquisitions that kept the company squarely in snack foods while adding healthier fare to the mix. Strategic vision has always been her strength.

Click here for a video profile.

Source: CNN

Noel's managerial record is good. Since taking over Trent in 1999, he has expanded its chain of Westside retail stores, which stock perfume, crockery and Westside's brand of upmarket clothing. Sales were up 33 percent last year, helping his case as unofficial front runner to succeed Ratan in 2008. Noel was also recently appointed to the boards of Titan, the Tata watchmaking unit, and Voltas, an air-conditioning giant.

The Global Influential list comprises of individuals who have created a lasting influence creating industries and reshaping markets. The lists is a collaboration effort from the journalists of CNN and TIME magazine.

Previously, Naina Lal Kidwai, first Indian woman to graduate from Harvard Business school in 1982 and now the Investment Banking guru at HSBC was part of the 2002 Global Influential list. 2001 Global Influential list also included one South Asian - N.R. Murthy, co founder of Infosys.

Outsourcing Jobs

Jay Gohil

Here's one of the few decent articles I've read about outsourcing in a long time.

India's Tech King...

Jay Gohil

Business Week reports an interesting profile of Wipro's Azim Premji. Premji owns 84% of Wipro, "that makes him the richest person in India - and one of the wealthiest on the planet." The article goes on to document his "fastidiously frugal" habits and legendary business skills.

Noting Wipro's recent success and aggressive expansion:

For the growing number of white-collar workers from Silicon Valley to Sydney worried about losing their jobs to low-wage software experts in India, the ambitious billionaire is a serious threat. Yet this IT mogul faces the challenge of being too successful. With the U.S. caught in a jobless recovery, the issue of outsourcing to low-cost destinations is becoming ever-more controversial. American politicians are calling for restrictions designed to make it harder for companies like Wipro to win business...Yet Premji isn't scaling back his plans. His goal is to turn Wipro into one of the Top 10 IT-service companies in the world.

Dot-com experiencies - view from India

Jay Gohil

The Business Standard recently interviewed nine former Internet entrepreneur for their insights and experiences in building dot-com businesses during the boom era.

Rajesh Jain believes that...

... entrepreneurs (including me) work not with maps, but with compasses — you know the direction, but do not have the territory charted out.

Manish Chandra cautions,

With the Internet, one can change the way business can be done. But it has to complement the old economy and has to be based on sound business models.

Advertising gaffe...

Jay Gohil

When Sharwoods launched its latest product range earlier this month, it promised the "deliciously rich" sauces based on a traditional northern Indian method of cooking would "change the way consumers make curry". So confident was Sharwoods that its new Bundh sauces would be a hit that it backed the launch with a huge £6m television advertising campaign created by Labour's advertising agency, TBWA.

What it failed to foresee was that "bundh" in Punjabi has an altogether less savoury meaning - the nearest English translation being, to put it bluntly, "arse".

That's embarrasing. Read it all here. Click here for a list of other advertising gaffes.

Update: Last August the Indian division of Cadbury-Schweppes ran an ad comparing it's Tempations chocolate to the war-torn region of Kashmir. The ad tagline: "I'm good. I'm tempting. I'm too good to share. What am I? Cadbury's Temptations or Kashmir?”. Click here for the rest of the piece from the Economist.

Google expands operation to India

Jay Gohil

Source: Search Engine Lowdown

Google plans to open an R&D center in Bangalore:

"We just want more, really great engineers," Wayne Rosing, Google vice president of engineering, told the Journal. "It's clear there are a significant number of really talented computer scientists in India."

He said Google hopes to hire about 100 engineers for its Bangalore center.

Apparently,

One of Google Inc.’s frontline engineering minds is in fact from India, and he will be going to Bangalore to help start the India operations. New Delhi-born Krishna Bharat, an IIT Chennai alumnus who is Principal Scientist at Google Inc, and who started Google News, will move to Bangalore with other R&D folks to hire new engineering talent there. Krishna has a Ph.D in computer science from Georgia Tech and worked at DEC Systems Research Center before joining Google Inc in 1999.

Google is a great company to work for and the move is definitely not motivated by cost savings but to take advantage of the India's enormous engineering and technical talent.

India's high-tech labor costs and scalability are the two tangibles that even China cannot beat. The first global technology company to set up an development operation in India was Texas Instruments and that was done nearly two decades ago. The company has reaped benefits in the form of 225 US patents awarded to it's Indian operation.

India definitely has the talent and the infrastructure, but the major problem lies in branding; convincing the rest of the world to see India as a destination for cutting edge R&D work.