IIPM B School

Wednesday, May 11, 2011

TAKING ON COMPETITION, ONE ‘CHOP’ AT A TIME!

In the midst of recession, indian it firms made radical transformations in their business models. now it’s time to do the same for their brands

By the time you read this, the chop shop fiasco and the resulting outrage would probably have sobered down. But reasons to doubt American intentions on being a responsible trade partner with India have only become stronger. A well chosen terminology and a smartly chosen target (if Infosys is a chop shop, it essentially can be interpreted to mean the entire Indian IT industry) has given Senator Charles Schumer the ‘15 minutes of fame’ he was looking for.

Such statements have more to do with American frustration over their current situation rather than the Indian IT sector’s credentials. But from the perspective of Indian companies, improving brand image and value proposition is definitely an issue for introspection. This is not about making the Schumers eat their words, scoring points, or ‘15 minutes of fame’. As discussed in a previous issue of 4Ps B&M, the cost competitiveness factor in the global IT sector is fast getting elusive with rapid commoditisation, and it would take some doing to ensure that these companies get back to the growth rates they once enjoyed.

Firstly, it makes sense to analyse the vantage point on which the ‘Made in India’ brand stands today. Nitin Khanapurkar, Executive Director, KPMG Advisory Services, comments, “They are no longer just low cost service providers or support functions. They are perceived to manage IT effectively and allowing businesses to concentrate on their core strengths.” Over time, these companies have moved from being application developers to developing strong vertical expertise, efficient India-centric delivery systems and of course low cost. More importantly, these companies have stood tall on standards of transparency, ethics and credibility, apart from the Satyam debacle.

Sreedhar Ramanujam, CEO, brand-comm, particularly admires how Infosys took that leap, “Infosys and its founder NR Narayana Murthy in particular kept talking about “ethics” and the way they handled the sexual harassment case gave credence to that.” Besides, Infosys led the way in showing that PR was more effective as compared to advertising. JP Singh, former MD, Bausch & Lomb India & now management consultant, comments, “PR can have high sanctity. User testimonials & key messages through PR can provide a complementary ‘surround’ effect.”

It was expected that the recession would seriously challenge the Indian IT players and expose the chinks in their armour; particularly the dependence on verticals and geographies. Indeed, when you look at the figures, the industry aggregated $73.1 billion in 2009-10., growing by 5.3% yoy (NASSCOM). This is quite subdued in comparison to a growth rate of 30.1% in FY 2007-08 (and NASSCOM also includes Indian subsidiaries of foreign companies like IBM, Accenture, et al). And yet, India remains an integral part of the offshoring strategy for around 51% of the addressable global market and plans to hire 90,000 more people in this year. Their approach to the recessionary phase has been to better serve their clients by improving operational flexibility, adopting radical pricing models, deepening client relationships and building new ones as well as getting adept at delivery through emerging technologies like cloud computing, virtualization and Service Oriented Architecture. Dinesh Sampath Rangaraj, Head, Business Marketing, MindTree Limited (which relied on traditional business models earlier), comments to 4Ps B&M on the shift, “Now, we’re creating business value through market-ready products, services and solutions with a non-linear business model (FP, risk-reward, based on output rather than input).”

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM B-School Detail
IIPM makes business education truly global
IIPM’s Management Consulting Arm - Planman Consulting
Arindam Chaudhuri (IIPM Dean) – ‘Every human being is a diamond’
Arindam Chaudhuri – Everything is not in our hands
Planman Technologies – IT Solutions at your finger tips
Planman Consulting
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine

IIPM B-School
Arindam Chaudhuri
Rajita Chaudhuri
Planman Consulting

IIPM Proves Its Mettle Once Again....

Tuesday, January 11, 2011

Cover Feature - 4Ps Business & Marketing

A study conducted by Interbrand also shows that a strong corporate brand could add 5-7% to a company’s stock price in a bull market, and mitigate losses in a down market. Debashish Mitra, Head-Marketing, Mercedes-Benz India gives us a similar view when he talks to 4Ps B&M, “Investing in a firm from just financials point-of-view is nothing but looking for short-to-mid term gains. It’s always the brand that is the long term asset for a company and subsequently for an investor,” he tells 4Ps B&M. His industry colleague, Sandeep Singh, Deputy MD, Toyota Kiloskar agrees with him and feels that brand reputation and market returns go hand-in-hand. According to him, if there is a hit on the brand, a company could lose grip on the market and vice-versa. He recalls when Toyota posted a loss in the last fiscal, its share prices too went down at the bourses. But it was brand Toyota that quickly managed to regain the lost investor sentiment.

At the same time, a research done by Corporate Branding Partnership LLC, a UK-based consulting firm, during the two-day stock market crash in the US in October 1997, revealed that while companies with strong brands regained their losses in just two days, companies with weaker brands failed to recover. Thomas J. Madden (from University of South Carolina), Frank Fehle (from Barclays Global Investors) and Susan Fournier (from Boston University) did a similar study (Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value through Branding) in 2006 and found that if one had invested $1,000 in August 1994 in the 111 strong-brand companies (as per the Interbrand World’s Most Valuable Brands), this investment would have more than quadrupled into $4,525 by December 2000. The same $1,000 investment in the overall stock market would have turned into $3,195 by end of the year 2000.

“Therefore, when making investment decisions, it would be completely irrational for shareholders to ignore what has an effect on the value of their investments,” says Hubert Gatignon Professor of Marketing, INSEAD.

Certainly, a company which has strong brands in its product portfolio is usually more resistant to economic stress and as such can provide a more reliable and stable forecasting in terms of revenues and profits. Given this, brands are increasingly treated as any other asset producing demonstrable results for shareholders. “One of the main pillars of a company is its brand value. Most investors while doing valuation keep it in mind. Because the higher the brand value, potentially higher is chance to book profits. It becomes even more critical in a wired world, when, one wrong report in the social media, and your brand’s value might plummet. Along with your profits,” agrees Anindya Banerjee, Senior Creative Director, Publicis India.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM B-School Detail
IIPM makes business education truly global
IIPM’s Management Consulting Arm - Planman Consulting
Arindam Chaudhuri (IIPM Dean) – ‘Every human being is a diamond’
Arindam Chaudhuri – Everything is not in our hands
Planman Technologies – IT Solutions at your finger tips
Planman Consulting
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine

IIPM ranked No 1 B-School in India
domain-b.com : IIPM ranked ahead of IIMs
IIPM: Management Education India
Prof. Rajita Chaudhuri's Website

IIPM B-School
Arindam Chaudhuri
Rajita Chaudhuri
Planman Consulting

Monday, January 3, 2011

Extra Activity - A Landmark Felicitation Ceremony

National Award winning film and stage actor Soumitra Chatterjee was awarded for his contribution to immortalise Tagore-created characters and poems through his acting and recitation respectively. Due to some personal engagements, he couldn’t attend the ceremony, but film director Anjan Das received the award on his behalf. Each of these awardees received Rs. 1,00,000 in prize money each, including a gold medal and a citation. Along with these awards, IIPM also announced the institution of three foundations (worth Rs. 10,00,000 each) in the memory of four legendary contributors, namely Shambhu Mitra (theatre), Satyajit Ray (film), Nandalal Bose & Ramkinker Baij (fine arts). The earnings from each of these funds will be utilised to honour and nurture the talents in these three fields. The ceremony ended with an expectedly inspiring speech of the Honorary Dean of IIPM, Prof. Arindam Chaudhuri. In his uniquely majestic deportment, Prof Chaudhuri took us down the memory lane of his childhood and spoke about his love for Tagore. He said, “Tagore’s vision of equitable society is still prevalent. We haven’t yet been completely successful to craft a society where humanistic values like ‘survival of the weakest’ will be a common practice. We need to imbibe Tagore’s philosophy and make our society a better place to live for the future generations.”

Tuesday, November 30, 2010

India needs to be abreast of the global environment in the banking arena;

While that may be simply, banks in today’s scenario have to manage a suite of products, which makes consistent quality of service delivery extremely critical. Hence, the measurement of service quality is an important ‘health’ vector for a bank. While we might think this is critical in consumer banking, this is as critical for corporate customers as well. The vectors that one measures and monitors might vary across customer groups but the importance of it does not.

The rural markets are not left behind in service innovation. With the quantum of market share resting in the rural areas, these segments cannot be ignored and hence both the government and banks are taking ample initiatives to cater to the rural segment. Be it biometric ATMs or prepaid cards, now even the rural customer is kept in mind while developing the products to meet his requirement. Truly, banks are coming up with innovative products and services purely with rural customers in mind.

We are seeing that regulators are playing a critical role ensuring customers do get value for money and get delivery as per banks’ promises. At the bank’s level, this is done by creating bodies like a Banking Ombudsman wherein customers can approach in case of mis-sell or delivery issues. This gets the banks to proactively measure service delivery. This is evident on the assets side as well – be it credit cards or home loan offerings to customers.

With the suite of products that banks are offering and the ever increasing competitive environment, the sector is trying to enhance tools to cater to the customer through his life cycle and hence ensuring a larger share of wallet from the customer.

Like I said already, the key to that is banks being innovative, preempting the requirements and offering products, which are better than those in the open market and ensuring smooth delivery. Well, what else could a customer ask for!

Vandana Alagh Khanna, Head – Service Assurance, IndusInd Bank

Monday, November 15, 2010

TUG OF WAR

Generally, business family disputes are known to be between brothers. But there have been cases when sons have ousted their fathers as well (Parvinder Singh versus Bhai Mohan Singh in Ranbaxy, Omkar Kanwar versus Raunaq Singh in Apollo Tyres). Another verbal tug of war that has recently hit the headlines is between the patriarch of the Bajaj group, Rahul Bajaj and his son Rajiv Bajaj. Rajiv’s decision to drop the name ‘Bajaj’ from Bajaj’s motorcycle models and to promote the bikes as independent, stand-alone brands has not gone down well with his father. The father-son duo have had their share of differences in the past over Rajiv’s decision to quit the scooter market and the highly publicised Renault-Nissan deal. On the surface, Rajiv’s plan has some mettle as Bajaj motorcycles have already created their individual brand names. Bajaj will now focus on three main brands – Boxer, Pulsar & Discover and phase out the rest of the other brand labels. This brand strategy may help its foray into passenger cars and mini truck segment by 2012. Rajiv Bajaj plans to develop such motorcycles by 2012 that would be three times ahead of the technology that is being used today. If all goes as per plan for Rajiv – be it his new strategy or be it his differences with his dad – Bajaj will gain back the lost ground in multi segments soon.

Monday, October 25, 2010

WHAT’S BUZZING THE BUZZ?!

The latest product and gadget launches that garnered the biggest brownie points with respect to the interest they generated in the market

AIRCEL PEEK

TECHNICAL SPECIFICATIONS:
• Full qwerty keypad
• 2.5 inch QVGA high contrast screen
• Price: Rs.2999
Mailing at its peek: This new handset under the Aircel brand is not only easy on pocket but is also a boon for the ones who type long e-mails on their mobiles. The handset offers features like a full QWERTY keypad coupled with additional features that makes the tough task of sending long e-mails a cakewalk. An e-mailer’s delight indeed!

Monday, October 18, 2010

BIG LEAGUE OR NO LEAGUE

Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!

Anyway, talent is no more a geographically-focussed phenomenon. There is an increasing need to have a globalised talent pool to be able to service the needs of clients; more so as Indian companies move to more diverse markets. A spokesperson from Infosys told 4Ps B&M, “We have hired a fair number in the US for this quarter and we believe that the overall mood of overseas hiring is on the positive side. Moreover, most of our global delivery centers recruit local talent because of their familiarity in their linguistic and cultural skills. For instance, our Brazil and Mexico development centers have more of local talent to cater to the needs of clients in and around Latin America.” Salaries are naturally moving up in tandem with this phenomenon. Also an emerging trend like cloud computing threatens to further erode the arbitrage (as explained in box) and has to be viewed in the right perspective.

HOW DO WE MOVE UP?

Before the 21st century dawned upon us, Indian IT players were quite comfortable managing coding and software development. Post the Y2K and the IT bubble, there was an increasing focus on accountability and delivery systems. As there was evolution globally in the realm of IT infrastructure and converged hardware became a trend, Indian players started occupying larger and larger shares in their focus areas and became low cost vendors (for they lacked the depth of capabilities that the leaders had; and therefore, they could not hike prices). So the first leg of moving up the value chain is based on filling these capability gaps. One area is engineering solutions, where we have seen Indian interests growing, with the HCL-Airbus deal and the Cognizant-Invensys partnership. Admittedly, delivery models of Indian IT companies are already up there in terms of global benchmarks, an instance being Cognizant’s C2.O. The only issue there, according to Sahni of IDC Asia Pacific, is that the “the investment made by Indian ITSPs into their custom delivery tools and processes needs to be assessed from a ROI perspective, which very few companies have visibility into.” Cognizant, for instance, has 350 agents working on that tool. Even at an average compensation of $10 per hour, the annual cost goes rather high; plus the hardware, software et al involved.

Secondly, the business component of IT is growing, and this is where Indian IT companies have a lot to account for. Though companies are touting their consulting skills, analysts in general are quick to point out that this is a very small portion of their revenues, and isn’t growing significantly fast enough either. As Apte says, “Ask Indian IT players what their fastest growing lines are, and they will say testing, infrastructure, BPO. No one says that my fastest growing line is consulting/high end systems in consulting space. India as a location is about volume, industrialization and delivering something via methodology and those things suit for testing, application maintenance and infrastructure services.” He wonders where Indian companies are moving up, when the shift has really happened only from a $70-80K annual salary level job to $60,000 infrastructure management or a $45,000 tester or a $35,000 a year accounting clerk profile.