• Industry Speaker

Monday, 1 July 2013

A quarter ends

The first quarter of the Financial Year 2013-14 has ended on a note of more uncertainty than when the year began. Global economies continue to be sluggish, the tapering off of QE 3  ( Quantitative Easing or the Bond Buying program in the US ) has caused occasional tremors in the US markets and flight of capital from emerging economies like India.

The resultant rapid depreciation of the rupee ( it even touched  60 briefly last week ) is bad for the Indian economy which is already plagued with sluggish economic growth. However it could be good in the short term for exporters and I am sure many results this quarter will show that impact.

However there are dark clouds over Indian IT too. The passage of the Immigration Bill in the Senate is causing some trepidation since this will at a minimum increase visa costs and in the extreme case cause a fundamental change in the employee mix and the business models of Indian companies in our main market.

There is still time - a more sensible version of the Bill is likely to pass the House of Representatives and the real action will start when the two bill versions have to be reconciled before the House and Senate clear them again and the President signs it into Law !

Interesting times lie ahead for all of us !


Monday, 3 June 2013

The problem of being Narayana Murthy

If you are NR Narayana Murthy you need to have the Midas touch. A company you created with a bunch of friends and built with vision and values has fallen a little out of step with the world of IT and lost out in the pace of change to competitors like TCS Cognizant and even HCL.

The problem today is that the world has changed. The SMAC ( Social Media Mobility Analytics & Cloud ) revolution has changed motivations though it hasnt resulted in big contracts yet. And you need a deep understanding of the new world and yet retain the capabilities in traditional areas to succeed.

Can Murthy do it - of course he can ! How long will it take him - only time will tell. But here's wishing him al the best !

Monday, 29 April 2013

India Summit – many questions, some revelations!

The Economist is arguably the finest magazine in the world with its outstanding coverage of world events and commentaries on the economy, politics and every aspect of the dynamics of the world we live in. And the India Summit held in Delhi end April not only lived up to the hype but met most expectations of the hundreds of CEOs, academicians and thinkers assembled to understand the state of our nation – India !

The biggest note of confidence was struck at the inauguration itself by none other than Finance Minister P.Chidambaram, whose confidence that the fiscal deficit would be contained to about 4.7 % by the end of the current financial year quickly caught the attention of tweeters and the hordes of electronic media assembled in the room. The current account deficit continues to be a worry though the recent decline in oil and gold prices and the slew of initiatives to boost exports should provide some relief. The FM’s confidence that the GST would receive a thumbs up from the states and there was a seventy percent chance of it being implemented in the current term of the Government and his downplaying the impact of the new land bill and the absence of labour reforms ended the session with the feeling that it was only political grandstanding by the opposition that could come in the way of India’s climb back to six percent plus growth in the current year.

A note of caution was immediately struck by former Chief Economic Advisor to the Government, Shankar Acharya who accused the Government of completely losing control of the macro-economy after 2008 with its increase of subsidies from 1.5 to 2.5 % of GDP and the warning that the political grandstanding combined with poor pace of land and labour reforms would put the economy in a cul de sac! The weak infrastructure with its resultant impact on manufacturing was stressed by FICCI President and HSBC CEO Naina Lal Kidwai while the Chairman of the Economic Advisory Council to the Prime Minister C.Rangarajan put on a brave face and downplayed the impact weak supply side responses could have on inflation once economic growth picked up again.

Two successive industry panels, on Education with Rajendra Pawar of NIIT and Shantanu Prakash of Educomp and Industry with Sunil Munjal of Hero group and Malvinder Singh of Fortis failed deliver any answers to the questions raised by the economists as well as many of us the CEO participants during the day and it was left to Shashi Tharoor in his inimitable style to add a touch of class to the proceedings with his positive comments on India’s role in the world. He did add a word of caution though by stating that youth in 165 out of 625 districts in the country were already frustrated with the lack of job creation and “falling prey to the blandishments of the gun”. A timely warning that economic growth must lead to job creation and enough skills initiatives must proliferate to avoid the disintegration of the demographic dividend into a demographic nightmare for the country!

If there was one complaint one could have about the summit, it was the absence of political leadership from the opposition and the lack of focus on the services industries, but overall the sessions were excellent and it was a day well spent in the national capital! The Indian economy is at a crossroads and while there are signs that the economy has bottomed out and will grow again, albeit slowly, there is much that has to be done to return to the heady years of eight percent growth on a consistent basis!

Wednesday, 26 September 2012

A new Sholay unfolds

It has all the build-up and drama of a blockbuster Bollywood pot boiler and is reminiscent of the Sholay saga that many of us feasted on! A valiant Prime Minister supported by robust rural growth weathers the monster called the Recession of 2008 and India emerges in 2009 as the only economy to remain relatively unscathed by the economic slowdown. But after this the government has to beat back successive raids on its credibility by the dacoits of the 2G scam, the Commonwealth Games fiasco and most recently Coalgate. The Prime Minister, his reputation battered by the successive scams and the attacks on his government by critics like Team Anna, the foreign Press and even his coalition friends had seemingly lost the ability to take the fight to the opposition and one cartoonist interestingly depicted the whole economy spinning into a cesspool from which there were dim chances of recovery.
But even as the Bollywood movie Sholay saw two new heroes come into the act to support the protagonist, twenty-four hours of seemingly unconnected but highly timely acts have brought new life to this government and renewed cheer to India watchers as well as the business community in the country. The announcement of the new US Quantitative Easing programme—QE3 brought cheer to the global stock markets one Thursday evening and the raft of initiatives—rise in diesel prices, reduction of handouts and subsidies, FDI in retail and aviation and aggressive disinvestment announcements have demonstrated clear intent for fiscal consolidation.
There is also a strong expectation from India Inc that the Reserve Bank will come to the party and provide the much awaited rate cut and align the monetary policy to the growth agenda by cuts in the cash reserve ratio and other initiatives. The recently reinstated finance minister has hinted at “calibrated risks” which augur well for monetary and fiscal policy announcements that will lift the mood of industry and consumers before the Diwali spending season and pave the way for employment pickup and renewed economic growth.
However, the Sholay analogy does not end there. The heroes of this drama, the finance minister and commerce minister, having fired the first volley of economic bullets will have to be on their guard against the ability of their many opponents to damage their credibility by raising the ire of the voting public. Let us not forget that corporate or middle class India is not really the constituency that any politician looks at. The twin demons of the diesel price rise with its resultant impact on the inflation level which is already trending at much higher than predicted or desirable levels and the expected opposition to the opening up of multi-brand retail because of its likely negative impact on manufacturing as well as the neighbourhood “kirana” store will be used in street agitations and television rhetoric to threaten the downfall of the government and it will need steely resolve and a genuine “if we go down we will go down fighting” approach for the bold moves to result in actual success.
For the IT sector in India, these are interesting times and there are enough indicators to watch out for. The strongest ever single session rise for the rupee against the dollar in recent times has the potential to rain on the parade of exporters if the rupee, widely expected to touch 60 by end of the year, goes the other way and touches 50 instead. However the good news is that if both government and industry spending revives with the “feel good” factor giving a boost to market capitalisation and consumer and business to business industrial demand, the propensity to invest in productivity and better IT solutions will come back into contention.
The biggest beneficiary of a sustained economic resurgence will of course be the tens of millions of job seekers who have been despairing about the weak availability of jobs in the IT sector and the literal stoppage of recruitment in most other sectors of business and industry. Speaking at multiple seminars for human resource managers and academic institutions in the last month and more, the despair I have seen has been palpable and fundamental questions have been asked about the seesaw game that is being played between investment in people and protection of profits. In a growth economy, the people factor will provide the “lift” that is needed to build higher capabilities and increase India Inc’s competitiveness in global markets.
There has been an enthusiastic response from the CII and corporate chiefs, despite the skepticism in some quarters of the impact of these moves on the power and infrastructure sectors as well as the muscle the protagonists will show when faced with the political counter attacks of various parties. However we live in hope that India will rediscover her 8% growth in the not so distant future.

Tuesday, 4 September 2012

The logjam in Parliament

The logjam in Parliament

I spend fifteen minutes in the Rajya Sabha yesterday watching my friend and new member of Parliament Anu Aga sit on a lonely bench with a few Congress folks on the treasury benches and a dozen ot so BJP folks on the other benches. To a script , when the house commenced at 2 PM the BJP folks walked into the well of the house chanted slogans asking the PM to resign and got the adjournment.

The same farce is being repeated for two weeks and the nation has a paralysed Parliament to add to its woes of corruption, high inflation and weak economic growth. An opportunity lost ?



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