Sunday, September 5, 2010
IT SECTOR: STPI EXTENSION: Way past their vacation time!
The tax holiday provided to Indian IT companies at the dawn of this century was historic and path breaking, as it enabled the industry to reach the enviable stature that it enjoys today. But retaining this tax holiday doesn’t make sense from a futuristic perspective by Ashutosh Harbola
It was one of the few instances when the Indian government actually played a key role as an enabler for business. The tax holiday given under the Sunset Clause u/s 10A and 10B of the Income Tax Act for companies operating under Software Technology Parks of India (STPI), which provided massive exemptions for the IT industry in India, was launched in the heydays of the dotcom boom in 2000-01. The incentives were available for providing software and IT enabled services for 100% exports including exports of physical services and included exemption in custom & excise duty, reimbursement of Central Sales Tax and exemption in corporate tax on 90% of export turnover (applicable for a 10-year period).
The dotcom boom fizzled out, but the tax holiday has been a major component of India’s success as a global outsourcing hub, making more than 8000-odd IT units more competitive. In 1990, the Indian IT industry generated a mere $150 million in software and computer-related services. In FY 2008-09, the Indian IT-BPO sector had reached $71.7 billion in aggregate revenue. Software and services exports (includes exports of IT services, BPO, Engineering Services and R&D and Software products) reached $47 billion, contributing nearly 66% to the overall IT-BPO revenue aggregate.
Ever since the golden decade came to an end in 2009, a debate has been raging on whether it needs to end at all. IT companies pressed for an extension by three years, but were granted only one. In the 2010 budget session, Finance Minister Pranab Mukherjee declared that the holiday will not be extended. Industry association NASSCOM and a number of players feel this will seriously hamper India’s competitiveness. Arvind Goyal , Director-Finance, Pitney Bowes India Pvt. Ltd. cautions that this will also reduce India’s attractiveness as he says, “Local duties and tax structure do play a. vital role in swaying decisions of global IT players in favor or against of setting up captive center in one of the countries.” Infosys Chief Mentor Narayana Murthy however feels that the extension isn’t needed from Infosys’ perspective.
It’s been almost 20 years since the sector has been awarded some or the other kind of benefits. These benefits made sense when the industry was at a nascent stage. In 2009, IT services alone have grown up from $13.5 billion to $35.2 billion since 2005 with exports contributing 76% (CAGR of 32% in 2000-2009 period). Direct employment in Indian IT-BPO sector crossed the 2.2 million mark, an increase of about 226,000 professionals over FY 2008 and indirect job creation is estimated at about 8 million. As a proportion of national GDP, the sector’s revenues have grown from 1.2% in FY1998 to an estimated 5.8% in FY2009. Net value-added by this sector, to the economy, is estimated at 3.5-4.1% for FY 2009.
Understandably, the government’s point of view is that the sector is self sustaining and its time to provide incentives to other sectors that need them more. The total revenues foregone by the government due to tax holidays for the IT and ITES Sector are `269.76 billion for the fiscal year 2009-10 while overall revenues foregone on account of corporate and non-corporate tax concessions are estimated to be `842.97 billion. After all, the government needs to scale up its budget size, cut down expenditure on interest payments and invest in agriculture and other unorganized sectors, which constitute 90% of the workforce in India.
Still the IT industry is moving to the SEZ’s now to grab tax benefits. But small and mid -sized companies will never be able to make it there because of high land cost and higher tax rates. BPOs will have to look for newer destinations as it will be a tough survival call for them indeed. Companies who deal in volumes are moving to the special economic zone. Praveen Bhadada, Manager-Consulting, Zinnov Management Consulting Pvt. Ltd. feels the impact is minimal at around 2-3% as he says, “Cost savings that the companies are able to generate operating out of India are far greater as compared to the tax burden that this withdrawal may result in.” Moreover, Indian IT companies need to urgently move up the value chain and provide lines of business and executive management related offerings. This decision against extending the tax holiday could actually push the fitter ones to make the inevitable evolution. So it does appear that the IT industry is raising unnecessary alarm on the issue; though it may be argued that smaller players may need protection. Goyal of Pitney bowes India agrees, “Indian industry should be able to reap the dividends of the reference architecture they have created by early mover advantage.”
Financial subvention for weak industries is logical and desirable, so that they may achieve their potential. But after these industries reach a certain scale, it enters the realm of protectionism, which helps no one. The Indian IT sector must take several key steps to take the next leap forward. In our view, pushing for STPI extension isn’t one of them.
Ashutosh Harbola
Friday, August 20, 2010
Six Sigma A Fad......... By Ashutosh Harbola
It’s one of the most ultimate management jargons of all time, thanks to its initiation by Motorola and subsequent promotion by Jack Welch! But over the turn 0f the century, companies that swore by this concept have been caught in an abyss. Is the practice worth it any more? by Ashutosh Harbola
In those famed and now cherished Jack Welch years, the GE Way was pretty much the epitome of what every business aspired to achieve, be it in terms of products, processes, market positions or management practices. Six Sigma was touted to have been Welch’s Jedi weapon in this thunderous progress, a claim that led to Six Sigma concept getting popularised globally to legendary levels, and even led companies like Motorola (the true pioneers of the concept) to attain iconic cult status amongst Six Sigma fanatics specifically and in the global management world in general.
To its credit, Six Sigma did benefit Motorola to a large extent – at least initially. When one of Motorola’s Quasar TV set producing factories was acquired by a Japanese company in 1970, the former saw dramatic changes under the Japanese management, in particular that the defects were lowered by 95% and costs were brought down as well. Motorola’s then Chairman & CEO Robert Galvin was intrigued by the Japanese firm’s eccentric and fanatic orientation towards reducing defects, and after an exhaustive analysis, decided to make Motorola take the full plunge in implementing Six Sigma!
Bill Smith, popularised as the father of Six Sigma, would never have imagined that his formulation – which talked about reducing defects to less than 3.4 per million processes/products – would change the context of business in the 1990s as it did. Companies like 3M, Sun, Allianz, and many more were adopting Six Sigma hook, line and sinker. After GE adopted Six Sigma, over a quarter of the Fortune 200 followed suit. It seemed Six Sigma possibly could not go wrong.
And then suddenly, the house collapsed in one go! And one after the other, Six Sigma practising firms started churning out pathetic performances and business results. While initially, theorists blamed disconnected factors, over time, the coincidences became too hard to ignore statistically. In a report from Qualpro, founder and principal Charles Holland analysed that out of 58 large companies that announced Six Sigma programs, 91% have trailed the S&P 500 list in the first half of this decade. In one critical case, since announcing the adoption of Six Sigma on July 1, 2001, Home Depot shares went down by 8.3% compared with a 16% rise in the S&P 500 over the same period. This at a time when competitor Lowe’s stock had almost doubled. Home Depot’s stock rose more than 2% on the NYSE to $41.07, after the resignation of CEO Robert Nardelli (ex-GE and a disciple of the Welch way). Nardelli was responsible for implementing Six Sigma at Home Depot fanatically! He joined Chrysler (which too collapsed), and got kicked out again. Same has been the case with other Six Sigma firms like Honeywell, 3M, Lockheed, Ford and Xerox.
What went wrong? Vijay Govindarajan, Professor of International Business at Tuck School of Business, comments to B&E, “Six Sigma is about continuous improvement whereas radical innovation is discontinuous change. So they conflict.” Eugene C. Reyes, VP-Business Development North America, BPO International, Inc. gives a scathing critique of the concept to B&E, “Six Sigma, TQM and even ISOs can stifle areas of business where innovation is key.” Quality has merit, but can have a self-limiting effect when it comes to innovation. In a 2003 study, Nitin Nohria (current Dean of HBS), W. Joyce and B. Robertson found that there was “no direct causal relationship” between some specific management techniques (including Six Sigma) and “superior business performance.”
Then how did Jack Welch succeed in implementing Six Sigma and ensuring fantastic success for GE (earnings grew 13% in just two years of implementation)? That was because Jack, despite targeting outstanding improvement in quality, was never fanatical about achieving the “3.4 defects per million” impossible target. His prime rule for any manager implementing Six Sigma was that the manager should “understand Six Sigma is all about customers winning in their marketplace and GE’s bottom line.” In other words, Jack cancelled any Six Sigma programme that had a chance of eating into the earnings – “Six Sigma should just be selectively applied,” were his key words in the Welch Way. Strangely, CEOs of most other Six Sigma companies never realised this necessary connection; as a matter of fact, Jack Welch never let them on to it since the very end of his tenure. But empirical evidence cannot be ignored, and as much as we may not want it, Six Sigma is on a sure path to a silent demise.
Dr. Chris Trimble of Tuck School of Business suggests to B&E, “The solution is not to kill Six Sigma, but to create ‘safe havens’ where a company can pursue disciplined experiments – while simultaneously striving for excellence in day-to-day business.” Chris, we suspect even that point is long gone...
In those famed and now cherished Jack Welch years, the GE Way was pretty much the epitome of what every business aspired to achieve, be it in terms of products, processes, market positions or management practices. Six Sigma was touted to have been Welch’s Jedi weapon in this thunderous progress, a claim that led to Six Sigma concept getting popularised globally to legendary levels, and even led companies like Motorola (the true pioneers of the concept) to attain iconic cult status amongst Six Sigma fanatics specifically and in the global management world in general.
To its credit, Six Sigma did benefit Motorola to a large extent – at least initially. When one of Motorola’s Quasar TV set producing factories was acquired by a Japanese company in 1970, the former saw dramatic changes under the Japanese management, in particular that the defects were lowered by 95% and costs were brought down as well. Motorola’s then Chairman & CEO Robert Galvin was intrigued by the Japanese firm’s eccentric and fanatic orientation towards reducing defects, and after an exhaustive analysis, decided to make Motorola take the full plunge in implementing Six Sigma!
Bill Smith, popularised as the father of Six Sigma, would never have imagined that his formulation – which talked about reducing defects to less than 3.4 per million processes/products – would change the context of business in the 1990s as it did. Companies like 3M, Sun, Allianz, and many more were adopting Six Sigma hook, line and sinker. After GE adopted Six Sigma, over a quarter of the Fortune 200 followed suit. It seemed Six Sigma possibly could not go wrong.
And then suddenly, the house collapsed in one go! And one after the other, Six Sigma practising firms started churning out pathetic performances and business results. While initially, theorists blamed disconnected factors, over time, the coincidences became too hard to ignore statistically. In a report from Qualpro, founder and principal Charles Holland analysed that out of 58 large companies that announced Six Sigma programs, 91% have trailed the S&P 500 list in the first half of this decade. In one critical case, since announcing the adoption of Six Sigma on July 1, 2001, Home Depot shares went down by 8.3% compared with a 16% rise in the S&P 500 over the same period. This at a time when competitor Lowe’s stock had almost doubled. Home Depot’s stock rose more than 2% on the NYSE to $41.07, after the resignation of CEO Robert Nardelli (ex-GE and a disciple of the Welch way). Nardelli was responsible for implementing Six Sigma at Home Depot fanatically! He joined Chrysler (which too collapsed), and got kicked out again. Same has been the case with other Six Sigma firms like Honeywell, 3M, Lockheed, Ford and Xerox.
What went wrong? Vijay Govindarajan, Professor of International Business at Tuck School of Business, comments to B&E, “Six Sigma is about continuous improvement whereas radical innovation is discontinuous change. So they conflict.” Eugene C. Reyes, VP-Business Development North America, BPO International, Inc. gives a scathing critique of the concept to B&E, “Six Sigma, TQM and even ISOs can stifle areas of business where innovation is key.” Quality has merit, but can have a self-limiting effect when it comes to innovation. In a 2003 study, Nitin Nohria (current Dean of HBS), W. Joyce and B. Robertson found that there was “no direct causal relationship” between some specific management techniques (including Six Sigma) and “superior business performance.”
Then how did Jack Welch succeed in implementing Six Sigma and ensuring fantastic success for GE (earnings grew 13% in just two years of implementation)? That was because Jack, despite targeting outstanding improvement in quality, was never fanatical about achieving the “3.4 defects per million” impossible target. His prime rule for any manager implementing Six Sigma was that the manager should “understand Six Sigma is all about customers winning in their marketplace and GE’s bottom line.” In other words, Jack cancelled any Six Sigma programme that had a chance of eating into the earnings – “Six Sigma should just be selectively applied,” were his key words in the Welch Way. Strangely, CEOs of most other Six Sigma companies never realised this necessary connection; as a matter of fact, Jack Welch never let them on to it since the very end of his tenure. But empirical evidence cannot be ignored, and as much as we may not want it, Six Sigma is on a sure path to a silent demise.
Dr. Chris Trimble of Tuck School of Business suggests to B&E, “The solution is not to kill Six Sigma, but to create ‘safe havens’ where a company can pursue disciplined experiments – while simultaneously striving for excellence in day-to-day business.” Chris, we suspect even that point is long gone...
Sunday, July 18, 2010
Why Marketing Has Become Important For B- Schools
Zen practitioners seemed to understand much before Philip Kotler that a great product was just the beginning of marketing bliss. They used to ask the question, “If a tree falls in the forest and no one is there to hear, does it make a sound?”
Being a noble endeavour for society that is viewed with immense respect, the education business has traditionally been out of the ambit of large scale advertising in India. But as the lopsided supply-demand situation leads to a flux of public and private investments in the sector, marketing has acquired an unputdownable importance, as Vishal Deep Dhillon, Regional Director – Asia (Sales and Service Delivery) at CSC, Singapore tells 4Ps B&M, “In a world where there is a glut of B-schools with varying degrees of quality of education, some good B-schools get lost in the crowd due to the lack of branding. Targeted marketing of B-schools via ‘appropriate mediums’ (online, mobile, cable & TV, print media, hoardings, even direct sales) is of paramount importance.” Is he exaggerating?
“Not at all,” says Prasoon Majumdar, all India Dean Academics at the Indian Institute of Planning and Management (IIPM), “B-schools in India became the talk of the town post liberalization in 1991, as the need for managers skyrocketed in all business arenas. This was the period from where B-schools started to make a smooth entrance into the education system of the country. At that time, some private B-schools realised the need for branding themselves, mostly in order to close the public perception gap between them and those B-schools that had traditionally grown on huge government funding and support, which anyway had mostly been wasted irreverently by these so-called ‘nationalised’ B-schools.”
Subsequently, and now especially, the competition to attract students is growing, with the last two years of economic slowdown being perhaps a clarion call for many new-on-the-block B-schools, most of which closed down due to lack of students. Industry players like Amarendra Kumar Shrivastava, Chairman, Asia-Pacific Institute of Management and Priyanka Ahuja, Chairperson, Academics Media, ISB&M School of Communication, acknowledge to 4Ps B&M how integrated marketing communication is being used more now by some B-schools to get the cream students. But clearly, that’s the case with only a few B-schools, as Harold D. House, President, Opus One Media (a media house that handles the branding accounts for a few B-schools) tells 4Ps B&M, “Developing a brand for a B-school is an effort that, internally, is the last of the considerations for many B-schools. They hire us to conduct the branding exercises but rarely do they either attend or get into it.”
But marketing is not just about branding. Marketing also includes convincing the prospective student and his/her parents about the quality of course contents, specialisations offered, international exposure, industry interface, long term potential, placements (national and international), financing options (given the high investment required for quality courses), and most importantly, closing the sale – ensuring that after all the marketing spin, the student signs up.
Says Deepak Kaistha, Managing Partner, Planman HR, “You’re forgetting the most important element of the whole process – finding out where the prospective student is and reaching out to him to apply to the particular B-school.” Ali Mohammed Bhayani, COO, Michigan State University, Dubai accepts the same to 4Ps B&M, “Reputation of B-schools is dependent upon the number of applications to admissions. So the B-school that is able to increase its application numbers creates a demand-supply gap.” Elements of marketing have come into the picture for the very same reason.
But another aspect, the ‘place’ in the marketing mix, is the development of a broader market base in Tier 2 and Tier 3 cities, and not just in terms of increasing advertising, but also in terms of actually opening up newer campuses and centers. This is one aspect that nationalised B-schools never come up to as they have to undergo huge bureaucratic clearances in order to open up a new campus or even to increase their students intake. Some of India’s top B-schools like the FMS Delhi, in their past interactions with us, have shared the tribulations they have undergone on such issues.
On a concluding note, just like modern day products, few institutes can have an appeal that goes across segments. The key, therefore, is to clearly define one’s competencies and market them comprehensively to a particular target market, rather than believing ad nauseum in product myopia – that if you have a great product, it has to sell. In the real world, it doesn’t!
Being a noble endeavour for society that is viewed with immense respect, the education business has traditionally been out of the ambit of large scale advertising in India. But as the lopsided supply-demand situation leads to a flux of public and private investments in the sector, marketing has acquired an unputdownable importance, as Vishal Deep Dhillon, Regional Director – Asia (Sales and Service Delivery) at CSC, Singapore tells 4Ps B&M, “In a world where there is a glut of B-schools with varying degrees of quality of education, some good B-schools get lost in the crowd due to the lack of branding. Targeted marketing of B-schools via ‘appropriate mediums’ (online, mobile, cable & TV, print media, hoardings, even direct sales) is of paramount importance.” Is he exaggerating?
“Not at all,” says Prasoon Majumdar, all India Dean Academics at the Indian Institute of Planning and Management (IIPM), “B-schools in India became the talk of the town post liberalization in 1991, as the need for managers skyrocketed in all business arenas. This was the period from where B-schools started to make a smooth entrance into the education system of the country. At that time, some private B-schools realised the need for branding themselves, mostly in order to close the public perception gap between them and those B-schools that had traditionally grown on huge government funding and support, which anyway had mostly been wasted irreverently by these so-called ‘nationalised’ B-schools.”
Subsequently, and now especially, the competition to attract students is growing, with the last two years of economic slowdown being perhaps a clarion call for many new-on-the-block B-schools, most of which closed down due to lack of students. Industry players like Amarendra Kumar Shrivastava, Chairman, Asia-Pacific Institute of Management and Priyanka Ahuja, Chairperson, Academics Media, ISB&M School of Communication, acknowledge to 4Ps B&M how integrated marketing communication is being used more now by some B-schools to get the cream students. But clearly, that’s the case with only a few B-schools, as Harold D. House, President, Opus One Media (a media house that handles the branding accounts for a few B-schools) tells 4Ps B&M, “Developing a brand for a B-school is an effort that, internally, is the last of the considerations for many B-schools. They hire us to conduct the branding exercises but rarely do they either attend or get into it.”
But marketing is not just about branding. Marketing also includes convincing the prospective student and his/her parents about the quality of course contents, specialisations offered, international exposure, industry interface, long term potential, placements (national and international), financing options (given the high investment required for quality courses), and most importantly, closing the sale – ensuring that after all the marketing spin, the student signs up.
Says Deepak Kaistha, Managing Partner, Planman HR, “You’re forgetting the most important element of the whole process – finding out where the prospective student is and reaching out to him to apply to the particular B-school.” Ali Mohammed Bhayani, COO, Michigan State University, Dubai accepts the same to 4Ps B&M, “Reputation of B-schools is dependent upon the number of applications to admissions. So the B-school that is able to increase its application numbers creates a demand-supply gap.” Elements of marketing have come into the picture for the very same reason.
But another aspect, the ‘place’ in the marketing mix, is the development of a broader market base in Tier 2 and Tier 3 cities, and not just in terms of increasing advertising, but also in terms of actually opening up newer campuses and centers. This is one aspect that nationalised B-schools never come up to as they have to undergo huge bureaucratic clearances in order to open up a new campus or even to increase their students intake. Some of India’s top B-schools like the FMS Delhi, in their past interactions with us, have shared the tribulations they have undergone on such issues.
On a concluding note, just like modern day products, few institutes can have an appeal that goes across segments. The key, therefore, is to clearly define one’s competencies and market them comprehensively to a particular target market, rather than believing ad nauseum in product myopia – that if you have a great product, it has to sell. In the real world, it doesn’t!
Saturday, June 26, 2010
Business Process O'utdated, Death of BPO
Survival of the fittest is a phrase that British polymath philosopher Herbert Spencer first used in 1864 after reading Charles Darwin’s work On the Origin of Species. Simply put, it meant ‘only the fittest organisms will prevail’; and the very definition of ‘fittest’ has also changed with time. Those who understood it did sustain and those who didn’t went into oblivion; be it in the living world or in the corporate terrain (time and again). In fact, if the latest signals are anything to go by, then the BPO industry could be one inevitable addition to the extinct list, as its cost advantage fritters away; which means it certainly doesn’t remain the fittest on that count.
A latest Nasscom report would indicate this very speculation as baseless. As per the report, the $50-billion IT-BPO industry is headed for a 13-15% growth in FY2010-11. But the recent survey by Pierre Audoin Consultants (PAC) seems to be a clarion call of sorts, since it is only the latest of a series of reports that indicate how India is moving away from being the epicentre of cheap outsourcing centres and nations like China, Vietnam, Philippines, et al, are becoming the most preferred spots to serve as offshoring centres. Only, the threat looks more real than it ever did in the past.
While Indian BPOs could complete an assignment at one-tenth of the compensation a few years ago as compared to their US counterparts, the difference today is marginal. The major contributor to this rising cost has been the wage inflation, which was hovering over 8% in 2009 and is expected to touch a steeper 10.9% by the end of 2010. “With time, India’s price advantage will continue to diminish; hence it needs to find a niche and continue to reinvent the business models, services and enabling technologies,” cautions Vishal Deep Dhillon, Regional Director – Asia, CSC.
Countries like China, Vietnam and Philippines are emerging as a big threat to India’s dominance in global offshoring industry. Thanks to the low cost advantage and heavy investments to promote English as a spoken language, China has witnessed a whopping 212% and 170.2% y-o-y increase in signed off shoring contracts (worth $12.69 billion) and executed contracts (worth $7.34 billion) respectively in 2009 when compared with 2008. Not only this, the dragon nation has also added an astonishing 3,287 enterprises and 5,85,000 employees to its outsourcing industry count in 2009. The Filipino BPO industry (with a growth rate of 19% in 2009) is also in a neck-to- neck competition with India. In fact, Philippines has emerged as one of the top destinations (with 15% market share) for outsourcing over the past few years; with revenues growing from $100 million in 2001 to $6.1 billion in 2008.
The threat from Vietnam cannot be undermined too. While salaries of BPO workers in Vietnam are the lowest among almost all major offshore destinations (they are 40% lower than India and China, and more than 80% lower than Singapore), tax rates, too, are at par with other emerging markets. For instance, outsourcing software development work to a Vietnamese firm can cost a company up to 50% less than what it would have cost it had it outsourced the work to India. Even outsourcing companies in the Middle-East are now giving tough competition to Indian BPOs by moving up the value chain. If industry experts are to be believed, their efforts have resulted in an annual growth of over 20%. Historically, a large talent pool has been one of India’s major strengths, but if one goes by a latest ASOCIO-KPMG report, employability of Indian graduates at present is considered to be really low, with Economist Intelligence Unit (EIU) rating India as 2 on a scale of 5 on quality of labour force. This has made multinationals hesitant in outsourcing their work to India.
The next stumbling block is the high attrition rate in the Indian BPO industry which is invariably high (35%) when compared to its Asian counterparts. The increasing cases of data breaching too are affecting outsourcing to third parties in India. Then there is the slated withdrawal of STPI scheme in FY 2011. The sunset clause u/s 10A and 10B of the Income Tax Act gives a tax holiday to IT-BPO companies operating under an STPI, where the tax rate works out to be 20% for a BPO at present. This is expected to go up to 33% if the scheme is withdrawn. In all, the future of the BPO industry doesn’t look as sunny as road mapped by Nasscom with optimism deep sunk within. So is the major job provider (2.23 million) finally heading towards the death bed or is there a way out?
One possible way out could be to take BPOs to tier 2 and tier 3 cities where rising costs could be managed as compared to high cost offerings in the metros or tier 1 cities. The challenge there will be the training gap, but the investment does have long term potential. The next way could be to innovate within long term sustainable verticals like KPO (Knowledge Process Outsourcing), LPO (Legal Process Outsourcing), et al, for which even outsourcers are ready to pay a high price as they derive utility from them. “BPO will continue to evolve, both in form and substance, from simple processes in the beginning to complex KPOs later, involving support to business decision processes and consulting for optimal performance. Business itself will begin to look like a project management process (think construction projects) compared to the familiar current business. My Asian mind tells me that BPO will re-incarnate in another form, more suitable and responsive to the shape of the global economy,” Eugene Reyes, VP – Business Development North America, BPO International, Inc. tells B&E. Even Joel Perlman, Co-founder & President, Copal Partners feels that the next big opportunity for India could be DPO (Document Process Outsourcing) “KPOs & DPOs are high growth areas and India is well positioned to become a leader here,” he tells B&E. K. M. Nanaiah, MD, Pitney Bowes too holds the same view and feels that DPOs certainly have the potential to be the next big thing in India.
No doubt, because of its sustained cost competitiveness, experienced and large labour force, India has been considered to be a favourable BPO location in the past. But not any more! With radical changes in global economic environment & growing sophistication of customer needs, it’s now inevitable to evolve further. It’s therefore imperative for all stakeholders to identify challenges and put an action plan in place to meet them and identify areas that can catalyse future growth. If they are able to do so, good enough! If not, BPO, an acronym that most Indians rejoiced in, will soon become a reason to mourn over!
A latest Nasscom report would indicate this very speculation as baseless. As per the report, the $50-billion IT-BPO industry is headed for a 13-15% growth in FY2010-11. But the recent survey by Pierre Audoin Consultants (PAC) seems to be a clarion call of sorts, since it is only the latest of a series of reports that indicate how India is moving away from being the epicentre of cheap outsourcing centres and nations like China, Vietnam, Philippines, et al, are becoming the most preferred spots to serve as offshoring centres. Only, the threat looks more real than it ever did in the past.
While Indian BPOs could complete an assignment at one-tenth of the compensation a few years ago as compared to their US counterparts, the difference today is marginal. The major contributor to this rising cost has been the wage inflation, which was hovering over 8% in 2009 and is expected to touch a steeper 10.9% by the end of 2010. “With time, India’s price advantage will continue to diminish; hence it needs to find a niche and continue to reinvent the business models, services and enabling technologies,” cautions Vishal Deep Dhillon, Regional Director – Asia, CSC.
Countries like China, Vietnam and Philippines are emerging as a big threat to India’s dominance in global offshoring industry. Thanks to the low cost advantage and heavy investments to promote English as a spoken language, China has witnessed a whopping 212% and 170.2% y-o-y increase in signed off shoring contracts (worth $12.69 billion) and executed contracts (worth $7.34 billion) respectively in 2009 when compared with 2008. Not only this, the dragon nation has also added an astonishing 3,287 enterprises and 5,85,000 employees to its outsourcing industry count in 2009. The Filipino BPO industry (with a growth rate of 19% in 2009) is also in a neck-to- neck competition with India. In fact, Philippines has emerged as one of the top destinations (with 15% market share) for outsourcing over the past few years; with revenues growing from $100 million in 2001 to $6.1 billion in 2008.
The threat from Vietnam cannot be undermined too. While salaries of BPO workers in Vietnam are the lowest among almost all major offshore destinations (they are 40% lower than India and China, and more than 80% lower than Singapore), tax rates, too, are at par with other emerging markets. For instance, outsourcing software development work to a Vietnamese firm can cost a company up to 50% less than what it would have cost it had it outsourced the work to India. Even outsourcing companies in the Middle-East are now giving tough competition to Indian BPOs by moving up the value chain. If industry experts are to be believed, their efforts have resulted in an annual growth of over 20%. Historically, a large talent pool has been one of India’s major strengths, but if one goes by a latest ASOCIO-KPMG report, employability of Indian graduates at present is considered to be really low, with Economist Intelligence Unit (EIU) rating India as 2 on a scale of 5 on quality of labour force. This has made multinationals hesitant in outsourcing their work to India.
The next stumbling block is the high attrition rate in the Indian BPO industry which is invariably high (35%) when compared to its Asian counterparts. The increasing cases of data breaching too are affecting outsourcing to third parties in India. Then there is the slated withdrawal of STPI scheme in FY 2011. The sunset clause u/s 10A and 10B of the Income Tax Act gives a tax holiday to IT-BPO companies operating under an STPI, where the tax rate works out to be 20% for a BPO at present. This is expected to go up to 33% if the scheme is withdrawn. In all, the future of the BPO industry doesn’t look as sunny as road mapped by Nasscom with optimism deep sunk within. So is the major job provider (2.23 million) finally heading towards the death bed or is there a way out?
One possible way out could be to take BPOs to tier 2 and tier 3 cities where rising costs could be managed as compared to high cost offerings in the metros or tier 1 cities. The challenge there will be the training gap, but the investment does have long term potential. The next way could be to innovate within long term sustainable verticals like KPO (Knowledge Process Outsourcing), LPO (Legal Process Outsourcing), et al, for which even outsourcers are ready to pay a high price as they derive utility from them. “BPO will continue to evolve, both in form and substance, from simple processes in the beginning to complex KPOs later, involving support to business decision processes and consulting for optimal performance. Business itself will begin to look like a project management process (think construction projects) compared to the familiar current business. My Asian mind tells me that BPO will re-incarnate in another form, more suitable and responsive to the shape of the global economy,” Eugene Reyes, VP – Business Development North America, BPO International, Inc. tells B&E. Even Joel Perlman, Co-founder & President, Copal Partners feels that the next big opportunity for India could be DPO (Document Process Outsourcing) “KPOs & DPOs are high growth areas and India is well positioned to become a leader here,” he tells B&E. K. M. Nanaiah, MD, Pitney Bowes too holds the same view and feels that DPOs certainly have the potential to be the next big thing in India.
No doubt, because of its sustained cost competitiveness, experienced and large labour force, India has been considered to be a favourable BPO location in the past. But not any more! With radical changes in global economic environment & growing sophistication of customer needs, it’s now inevitable to evolve further. It’s therefore imperative for all stakeholders to identify challenges and put an action plan in place to meet them and identify areas that can catalyse future growth. If they are able to do so, good enough! If not, BPO, an acronym that most Indians rejoiced in, will soon become a reason to mourn over!
Increased M&A activity in BPO
While 2008 was a great year for mergers and acquisitions (M&As) within the Indian BPO industry (the industry witnessed 13 M&As including Citigroup Global Services’ acquisition by TCS for $505 million, Quattro’ takeover of RSM McGladrey and Babel Media for $50 million & $125 million respectively, WNS buying Aviva Global Service for $230 million, et al), uncertain economic conditions across the globe perhaps forced several companies to hold on to their cash last year (M&A activity within the industry reduced by 55% in 2009). But the year still saw players like EXL Service Holdings acquiring Schneider National (for $40 million), Cognizant buying UBS BPO Unit (for $75 million), EXL Service Holdings purchasing Am-Ex Travel Services Captive India for $30 million and Infosys BPO taking over McCamish Systems for $38 million.
FY2010 has just started and players like Genpact and Aegis have already announced one acquisition each. While Aegis, the back office company promoted by the Essar Group, has agreed to acquire US-based education and financial service provider Sallie Mae’s customer service centre, India’s largest back-office firm Genpact is taking over US-based analytics and data management services provider Symphony Marketing Solutions. CBay Systems India and Avantha Group too have announced the acquisition of Spheris India and US-based Pyramid Healthcare Solutions respectively. So what is it that has prompted Indian BPO players to go in for the M&A option, one that comes with a huge amount of operational and value destruction risk?
The expectably positive sounding Nasscom-McKinsey report has projected the BPO space to be a $360 billion market opportunity across the globe by 2020. This is one reason why the industry continues to remain a favourite with VC & PE players who accounted for almost over 20% of all deals in 2009. Not to forget, their total investment portfolio for this industry has grown 16 times in the past eight years, at a CAGR of 42%. Even in a year weakened by recession, there has been no let-up in their interest in the BPO sector in India, with a 9% increase in total investment portfolio over 2008. And with the overall global economy recovering in 2010, that concentration is only poised to augment further.
Another thing which has prompted the shift is the fact that the Indian BPO sector has evolved significantly over the last decade, and has matured beyond the pioneer phase to enter the ‘emerging rapid growth’ phase. Players in the BPO industry can now be seen foraying into areas such as business analytics, knowledge-based services apart from transforming clients businesses through a mix of re-engineering skills, technology enabled platforms, new operating models and increased depth of services.
But then there are contrarians who feel that these M&As have nothing to add on to the growth story of Indian BPOs. As per them, it’s actually a fight for survival. Though, at present there are over 110 BPO captives operating out of India, the number is expected to reduce to just half in the next five years. “M&As in the BPO industry, particularly in the voice vertical, are an outcome of the US sub-prime mortgage crisis. It’s the crisis that has made the survival of small players really hard. These players are now allowing bigger players to acquire them as they can no more take the pressure on their balance sheets,” says Anuj Gupta, Angel Trade.
Further, there are many who feel that with time India has lost its price competitiveness that tempted multinationals to offshore their business to India. While Indian BPOs could complete an assignment at one-tenth of the compensation a few years ago as compared to their US counterparts, the difference today is becoming marginal year by year. The major contributor to this rising cost has been the wage inflation, which was hovering over 8% in 2009 and is expected to touch 10.9% by the end of 2010. “With time, India’s price advantage has diminished; it now needs to find a niche and to reinvent the business models, services and enabling technologies,” says Vishal Deep Dhillon, Regional Director-Asia, CSC, to B&E.
That countries like China, Vietnam and Philippines too are emerging as a big threat to India’s dominance in global offshoring industry, is actually old news. But now, as Gartner analyst Diptarup Chakraborty tells B&E, “Destinations like Philippines, Israel are almost coming neck-to-neck with India as they are offering cheaper rates to the outsourcers.” Then there is the slated withdrawal of STPI scheme in FY2011. The sunset clause u/s 10A and 10B of the Income Tax Act gives a tax holiday to IT-BPO companies operating under an STPI, where the tax rate works out to be 20% for a BPO at present. This is expected to go up to 33% if the scheme is withdrawn.
Considering the fact that there have been many domestic entrepreneurial ventures, not particularly backed by large scale IT organisations, that ventured into setting up BPO outfits in an attempt to become bigger simply on the basis of the boom that was, in case the government withdraws tax-holiday sops or increases the tax rates, that surely would put these newbie BPOs on the selloff block, if not immediately bankruptcy. Worse would be the case with Indian BPOs that, hoping for a sudden revival in the US economy (which accounts for clost to 60% of all global BPO projects), have attempted to invest in buying out American BPO units to leverage their physical US presence to get more BPO projects. Deeply submerged on loans and funding from financial institutions, such BPOs will have no option but to themselves be sold off to large scale buyers.
The lessons from all this is that it is inevitable that M&As in the Indian BPO sector would continue to rise; but what would also happen is that the likes of CSC, Infosys, Convergys, Accenture, Genpact, would only go on to become much larger entities than they are now.
FY2010 has just started and players like Genpact and Aegis have already announced one acquisition each. While Aegis, the back office company promoted by the Essar Group, has agreed to acquire US-based education and financial service provider Sallie Mae’s customer service centre, India’s largest back-office firm Genpact is taking over US-based analytics and data management services provider Symphony Marketing Solutions. CBay Systems India and Avantha Group too have announced the acquisition of Spheris India and US-based Pyramid Healthcare Solutions respectively. So what is it that has prompted Indian BPO players to go in for the M&A option, one that comes with a huge amount of operational and value destruction risk?
The expectably positive sounding Nasscom-McKinsey report has projected the BPO space to be a $360 billion market opportunity across the globe by 2020. This is one reason why the industry continues to remain a favourite with VC & PE players who accounted for almost over 20% of all deals in 2009. Not to forget, their total investment portfolio for this industry has grown 16 times in the past eight years, at a CAGR of 42%. Even in a year weakened by recession, there has been no let-up in their interest in the BPO sector in India, with a 9% increase in total investment portfolio over 2008. And with the overall global economy recovering in 2010, that concentration is only poised to augment further.
Another thing which has prompted the shift is the fact that the Indian BPO sector has evolved significantly over the last decade, and has matured beyond the pioneer phase to enter the ‘emerging rapid growth’ phase. Players in the BPO industry can now be seen foraying into areas such as business analytics, knowledge-based services apart from transforming clients businesses through a mix of re-engineering skills, technology enabled platforms, new operating models and increased depth of services.
But then there are contrarians who feel that these M&As have nothing to add on to the growth story of Indian BPOs. As per them, it’s actually a fight for survival. Though, at present there are over 110 BPO captives operating out of India, the number is expected to reduce to just half in the next five years. “M&As in the BPO industry, particularly in the voice vertical, are an outcome of the US sub-prime mortgage crisis. It’s the crisis that has made the survival of small players really hard. These players are now allowing bigger players to acquire them as they can no more take the pressure on their balance sheets,” says Anuj Gupta, Angel Trade.
Further, there are many who feel that with time India has lost its price competitiveness that tempted multinationals to offshore their business to India. While Indian BPOs could complete an assignment at one-tenth of the compensation a few years ago as compared to their US counterparts, the difference today is becoming marginal year by year. The major contributor to this rising cost has been the wage inflation, which was hovering over 8% in 2009 and is expected to touch 10.9% by the end of 2010. “With time, India’s price advantage has diminished; it now needs to find a niche and to reinvent the business models, services and enabling technologies,” says Vishal Deep Dhillon, Regional Director-Asia, CSC, to B&E.
That countries like China, Vietnam and Philippines too are emerging as a big threat to India’s dominance in global offshoring industry, is actually old news. But now, as Gartner analyst Diptarup Chakraborty tells B&E, “Destinations like Philippines, Israel are almost coming neck-to-neck with India as they are offering cheaper rates to the outsourcers.” Then there is the slated withdrawal of STPI scheme in FY2011. The sunset clause u/s 10A and 10B of the Income Tax Act gives a tax holiday to IT-BPO companies operating under an STPI, where the tax rate works out to be 20% for a BPO at present. This is expected to go up to 33% if the scheme is withdrawn.
Considering the fact that there have been many domestic entrepreneurial ventures, not particularly backed by large scale IT organisations, that ventured into setting up BPO outfits in an attempt to become bigger simply on the basis of the boom that was, in case the government withdraws tax-holiday sops or increases the tax rates, that surely would put these newbie BPOs on the selloff block, if not immediately bankruptcy. Worse would be the case with Indian BPOs that, hoping for a sudden revival in the US economy (which accounts for clost to 60% of all global BPO projects), have attempted to invest in buying out American BPO units to leverage their physical US presence to get more BPO projects. Deeply submerged on loans and funding from financial institutions, such BPOs will have no option but to themselves be sold off to large scale buyers.
The lessons from all this is that it is inevitable that M&As in the Indian BPO sector would continue to rise; but what would also happen is that the likes of CSC, Infosys, Convergys, Accenture, Genpact, would only go on to become much larger entities than they are now.
Thursday, February 18, 2010
COCA COLA'S NEW MARKETING CAMPAIGNS
WHY DOES A COMPANY MARKETS ITS PRODUCT , ITS ALL ABOUT SELLING,, AND SELLING TODAY IS JUST THE CORE OF BUSINESS AND THATS WHY BUSINESSES EXIST , TODAY IF U EVEEN HAVE TO CRY TO SELL UR PRODUCT AND U SELL IT ITS GREAT MARKETING. BUT A NEW TREND WHICH IS SEEN NOW A DAYS BUT HAS NOT MATURED TOO MUCH IN THE INDIAN MARKET ,, IS EMOTIONAL MARKETING,, THE TREND WAS STARTED BY JHONSON AND JHONSON WHERE IT POSITIONED ITS BABY CARE PRODUCTS TO THE CARE OF A CHILD, THE DELICATE TOUCH A CHILD NEEDS ,, IT TARGETED THE EMOTIONAL ASPECT OF EVERY MOTHER AROUND THE WORLD AND WELL APPLIED IN INDIA TOO, ITS JUST ABOUT ITS MARKETING STRATEGIES THAT IT HOLDS THE MAXIMUM NUMBER OF SHARE IN THIS SEGMENT . EVEN TODAY THESE PRODUCTS ARE THE FIRST CHOICE OF A MOTHER .
THEN CAME A TIME WHEN BAJAJ MOTORS IN INDIA TOOK A HARD COMPEITITION WITH TREMENDOUS FLOW OF MOTOR BIKES IN INDIA ,, AN INDUSTRY WHICH NEVER EXISTED BEFORE . BAJAJ COULD NOT SENSE THE FUTURE MARKET AND LOST THE OPPURTUNITY TO RULE THE NEW SEGMENT ,, THEY WERE HIT BADLY ,, BUT SUDDENLY THEIR EMOTIONAL MARKETING STRATEGY HELPED THEM TO SURVIVE IN THE INDIAN MARKET THEN,, HOPE ALL OF US REMEMBER ABOUT THE GREAT ADVERTISEMENT OF BAJAJ HAMARA BAJAJ ,BULAND BHARAT KI BULAND TASVEER (OUR BAJA, THE PRIDE OF INDIA) THE SAME AD FLASHED FOR TWO YEARS OR SO AND HELPED BAJAJ TO SUSTAIN IN THE INDIAN MARKET AND IN THE MEAN TIME GAVE THEM THE TIME TO DEVELOP THEIR TECHNOLOGY AND TO BANG IN THE INDIAN MARKET , WITH BAJAJ PULSAR. THE PRIDE OF A NATION WAS INDUCED IN THE BUYING NATURE OF THE CUSTOMER. AND YES THEY WERE SUCCESSFUL
THEN CAME A TIME IN INDIA WHEN CHOCOLATES WERE STRUGGLING TO FIND A POSSIBLE WAY IN THE INDIAN MARKET, AGAIN EMOTIONS WERE WELL CAPTURED BY NESTLE WHICH INDUCED CHOCOLATES INTO EVERY EMOTION , BE IT HAPPINESS , SADNESS VICTORY, GLORY, FAILURE ,, INTO A WHOLE LOT OF EVERYTHING AND TODAY NESTLE MEANS EMOTION IN THE INDIAN MARKET. PEOPLE FEEL EMOTIONAL ABOUT THEIR HABIT OF EATING CHOCOLATES, AND NO DOUBTS IT SELLS
NOW COMES THE ISSUE OF COKE THE MAJOR DISCUSSION, WHICH IS SOMEWHERE AS SAME WHAT THESE COMPANIES HAVE DONE VERY EFFICIENTLY, COKE IS ALSO NOW TRYING TO ATTRACT THE SEGMENT WHICH IN ALL SENSES, IS HUGE, BY PUTTING THE FLAVOUR OF COKE INTO EMOTIONS ,ITS TRYING TO MARKET COKE WITH FEELINGS , AND WHY NOT DO IT ,ITS A VERY SUCCESSFUL WAY TO MARKET ANY PRODUCT IN SUCH A MANNER, BUT THE AREA TO LOOK IS THAT HOW MUCH THEY BECOME SUCCESSFUL BY DOING SO. I FEEL THEIR APPROACH IS EXCELLENT BUT THE WAY THESE ADVERTISEMENT ARE MADE , THEY LAG A VISION TO CREATE THAT EMOTIONAL BONDING WITH THE CUSTOMER , BUT I STRONGLY FEEL THEY WOULD COME UP WITH A BETTER PLAN TO TARGET THIS EMOTIONAL DRAMA ,, AND WHO KNOWS , THE PEPSI COKE WAR , WHICH HAS ALWAYS EXISTED ON EMOTIONS ATLEAST IN QUITE PARTS OF THE WORLD COULD BE SOON SEEN IN INDIA , WHICH I FEEL, INDIA, IS STILL NOT READY FOR MARKETING BASED ON PRIDE OR SO ATLEAST IN SOFT DRINKS ..
THEN CAME A TIME WHEN BAJAJ MOTORS IN INDIA TOOK A HARD COMPEITITION WITH TREMENDOUS FLOW OF MOTOR BIKES IN INDIA ,, AN INDUSTRY WHICH NEVER EXISTED BEFORE . BAJAJ COULD NOT SENSE THE FUTURE MARKET AND LOST THE OPPURTUNITY TO RULE THE NEW SEGMENT ,, THEY WERE HIT BADLY ,, BUT SUDDENLY THEIR EMOTIONAL MARKETING STRATEGY HELPED THEM TO SURVIVE IN THE INDIAN MARKET THEN,, HOPE ALL OF US REMEMBER ABOUT THE GREAT ADVERTISEMENT OF BAJAJ HAMARA BAJAJ ,BULAND BHARAT KI BULAND TASVEER (OUR BAJA, THE PRIDE OF INDIA) THE SAME AD FLASHED FOR TWO YEARS OR SO AND HELPED BAJAJ TO SUSTAIN IN THE INDIAN MARKET AND IN THE MEAN TIME GAVE THEM THE TIME TO DEVELOP THEIR TECHNOLOGY AND TO BANG IN THE INDIAN MARKET , WITH BAJAJ PULSAR. THE PRIDE OF A NATION WAS INDUCED IN THE BUYING NATURE OF THE CUSTOMER. AND YES THEY WERE SUCCESSFUL
THEN CAME A TIME IN INDIA WHEN CHOCOLATES WERE STRUGGLING TO FIND A POSSIBLE WAY IN THE INDIAN MARKET, AGAIN EMOTIONS WERE WELL CAPTURED BY NESTLE WHICH INDUCED CHOCOLATES INTO EVERY EMOTION , BE IT HAPPINESS , SADNESS VICTORY, GLORY, FAILURE ,, INTO A WHOLE LOT OF EVERYTHING AND TODAY NESTLE MEANS EMOTION IN THE INDIAN MARKET. PEOPLE FEEL EMOTIONAL ABOUT THEIR HABIT OF EATING CHOCOLATES, AND NO DOUBTS IT SELLS
NOW COMES THE ISSUE OF COKE THE MAJOR DISCUSSION, WHICH IS SOMEWHERE AS SAME WHAT THESE COMPANIES HAVE DONE VERY EFFICIENTLY, COKE IS ALSO NOW TRYING TO ATTRACT THE SEGMENT WHICH IN ALL SENSES, IS HUGE, BY PUTTING THE FLAVOUR OF COKE INTO EMOTIONS ,ITS TRYING TO MARKET COKE WITH FEELINGS , AND WHY NOT DO IT ,ITS A VERY SUCCESSFUL WAY TO MARKET ANY PRODUCT IN SUCH A MANNER, BUT THE AREA TO LOOK IS THAT HOW MUCH THEY BECOME SUCCESSFUL BY DOING SO. I FEEL THEIR APPROACH IS EXCELLENT BUT THE WAY THESE ADVERTISEMENT ARE MADE , THEY LAG A VISION TO CREATE THAT EMOTIONAL BONDING WITH THE CUSTOMER , BUT I STRONGLY FEEL THEY WOULD COME UP WITH A BETTER PLAN TO TARGET THIS EMOTIONAL DRAMA ,, AND WHO KNOWS , THE PEPSI COKE WAR , WHICH HAS ALWAYS EXISTED ON EMOTIONS ATLEAST IN QUITE PARTS OF THE WORLD COULD BE SOON SEEN IN INDIA , WHICH I FEEL, INDIA, IS STILL NOT READY FOR MARKETING BASED ON PRIDE OR SO ATLEAST IN SOFT DRINKS ..
Saturday, February 13, 2010
ITS HIGH TIME, WE NEED TO BE EDUCATED
Hi, everyone
this is my my second submission , and today i am showing a concern on a very peculiar and widely spread issue of education , in terms of
this is my my second submission , and today i am showing a concern on a very peculiar and widely spread issue of education , in terms of
Friday, February 12, 2010
COCA COLA'S NEW MARKETING CAMPAIGNS
WHY DOES A COMPANY MARKETS ITS PRODUCT , ITS ALL ABOUT SELLING,, AND SELLING TODAY IS JUST THE CORE OF BUSINESS AND THATS WHY BUSINESSES EXIST , TODAY IF U EVEEN HAVE TO CRY TO SELL UR PRODUCT AND U SELL IT ITS GREAT MARKETING. BUT A NEW TREND WHICH IS SEEN NOW A DAYS BUT HAS NOT MATURED TOO MUCH IN THE INDIAN MARKET ,, IS EMOTIONAL MARKETING,, THE TREND WAS STARTED BY JHONSON AND JHONSON WHERE IT POSITIONED ITS BABY CARE PRODUCTS TO THE CARE OF A CHILD, THE DELICATE TOUCH A CHILD NEEDS ,, IT TARGETED THE EMOTIONAL ASPECT OF EVERY MOTHER AROUND THE WORLD AND WELL APPLIED IN INDIA TOO, ITS JUST ABOUT ITS MARKETING STRATEGIES THAT IT HOLDS THE MAXIMUM NUMBER OF SHARE IN THIS SEGMENT . EVEN TODAY THESE PRODUCTS ARE THE FIRST CHOICE OF A MOTHER .
THEN CAME A TIME WHEN BAJAJ MOTORS IN INDIA TOOK A HARD COMPEITITION WITH TREMENDOUS FLOW OF MOTOR BIKES IN INDIA ,, AN INDUSTRY WHICH NEVER EXISTED BEFORE . BAJAJ COULD NOT SENSE THE FUTURE MARKET AND LOST THE OPPURTUNITY TO RULE THE NEW SEGMENT ,, THEY WERE HIT BADLY ,, BUT SUDDENLY THEIR EMOTIONAL MARKETING STRATEGY HELPED THEM TO SURVIVE IN THE INDIAN MARKET THEN,, HOPE ALL OF US REMEMBER ABOUT THE GREAT ADVERTISEMENT OF BAJAJ HAMARA BAJAJ ,BULAND BHARAT KI BULAND TASVEER (OUR BAJA, THE PRIDE OF INDIA) THE SAME AD FLASHED FOR TWO YEARS OR SO AND HELPED BAJAJ TO SUSTAIN IN THE INDIAN MARKET AND IN THE MEAN TIME GAVE THEM THE TIME TO DEVELOP THEIR TECHNOLOGY AND TO BANG IN THE INDIAN MARKET , WITH BAJAJ PULSAR. THE PRIDE OF A NATION WAS INDUCED IN THE BUYING NATURE OF THE CUSTOMER. AND YES THEY WERE SUCCESSFUL
THEN CAME A TIME IN INDIA WHEN CHOCOLATES WERE STRUGGLING TO FIND A POSSIBLE WAY IN THE INDIAN MARKET, AGAIN EMOTIONS WERE WELL CAPTURED BY NESTLE WHICH INDUCED CHOCOLATES INTO EVERY EMOTION , BE IT HAPPINESS , SADNESS VICTORY, GLORY, FAILURE ,, INTO A WHOLE LOT OF EVERYTHING AND TODAY NESTLE MEANS EMOTION IN THE INDIAN MARKET. PEOPLE FEEL EMOTIONAL ABOUT THEIR HABIT OF EATING CHOCOLATES, AND NO DOUBTS IT SELLS
NOW COMES THE ISSUE OF COKE THE MAJOR DISCUSSION, WHICH IS SOMEWHERE AS SAME WHAT THESE COMPANIES HAVE DONE VERY EFFICIENTLY, COKE IS ALSO NOW TRYING TO ATTRACT THE SEGMENT WHICH IN ALL SENSES, IS HUGE, BY PUTTING THE FLAVOUR OF COKE INTO EMOTIONS ,ITS TRYING TO MARKET COKE WITH FEELINGS , AND WHY NOT DO IT ,ITS A VERY SUCCESSFUL WAY TO MARKET ANY PRODUCT IN SUCH A MANNER, BUT THE AREA TO LOOK IS THAT HOW MUCH THEY BECOME SUCCESSFUL BY DOING SO. I FEEL THEIR APPROACH IS EXCELLENT BUT THE WAY THESE ADVERTISEMENT ARE MADE , THEY LAG A VISION TO CREATE THAT EMOTIONAL BONDING WITH THE CUSTOMER , BUT I STRONGLY FEEL THEY WOULD COME UP WITH A BETTER PLAN TO TARGET THIS EMOTIONAL DRAMA ,, AND WHO KNOWS , THE PEPSI COKE WAR , WHICH HAS ALWAYS EXISTED ON EMOTIONS ATLEAST IN QUITE PARTS OF THE WORLD COULD BE SOON SEEN IN INDIA , WHICH I FEEL, INDIA, IS STILL NOT READY FOR MARKETING BASED ON PRIDE OR SO ATLEAST IN SOFT DRINKS ..
THEN CAME A TIME WHEN BAJAJ MOTORS IN INDIA TOOK A HARD COMPEITITION WITH TREMENDOUS FLOW OF MOTOR BIKES IN INDIA ,, AN INDUSTRY WHICH NEVER EXISTED BEFORE . BAJAJ COULD NOT SENSE THE FUTURE MARKET AND LOST THE OPPURTUNITY TO RULE THE NEW SEGMENT ,, THEY WERE HIT BADLY ,, BUT SUDDENLY THEIR EMOTIONAL MARKETING STRATEGY HELPED THEM TO SURVIVE IN THE INDIAN MARKET THEN,, HOPE ALL OF US REMEMBER ABOUT THE GREAT ADVERTISEMENT OF BAJAJ HAMARA BAJAJ ,BULAND BHARAT KI BULAND TASVEER (OUR BAJA, THE PRIDE OF INDIA) THE SAME AD FLASHED FOR TWO YEARS OR SO AND HELPED BAJAJ TO SUSTAIN IN THE INDIAN MARKET AND IN THE MEAN TIME GAVE THEM THE TIME TO DEVELOP THEIR TECHNOLOGY AND TO BANG IN THE INDIAN MARKET , WITH BAJAJ PULSAR. THE PRIDE OF A NATION WAS INDUCED IN THE BUYING NATURE OF THE CUSTOMER. AND YES THEY WERE SUCCESSFUL
THEN CAME A TIME IN INDIA WHEN CHOCOLATES WERE STRUGGLING TO FIND A POSSIBLE WAY IN THE INDIAN MARKET, AGAIN EMOTIONS WERE WELL CAPTURED BY NESTLE WHICH INDUCED CHOCOLATES INTO EVERY EMOTION , BE IT HAPPINESS , SADNESS VICTORY, GLORY, FAILURE ,, INTO A WHOLE LOT OF EVERYTHING AND TODAY NESTLE MEANS EMOTION IN THE INDIAN MARKET. PEOPLE FEEL EMOTIONAL ABOUT THEIR HABIT OF EATING CHOCOLATES, AND NO DOUBTS IT SELLS
NOW COMES THE ISSUE OF COKE THE MAJOR DISCUSSION, WHICH IS SOMEWHERE AS SAME WHAT THESE COMPANIES HAVE DONE VERY EFFICIENTLY, COKE IS ALSO NOW TRYING TO ATTRACT THE SEGMENT WHICH IN ALL SENSES, IS HUGE, BY PUTTING THE FLAVOUR OF COKE INTO EMOTIONS ,ITS TRYING TO MARKET COKE WITH FEELINGS , AND WHY NOT DO IT ,ITS A VERY SUCCESSFUL WAY TO MARKET ANY PRODUCT IN SUCH A MANNER, BUT THE AREA TO LOOK IS THAT HOW MUCH THEY BECOME SUCCESSFUL BY DOING SO. I FEEL THEIR APPROACH IS EXCELLENT BUT THE WAY THESE ADVERTISEMENT ARE MADE , THEY LAG A VISION TO CREATE THAT EMOTIONAL BONDING WITH THE CUSTOMER , BUT I STRONGLY FEEL THEY WOULD COME UP WITH A BETTER PLAN TO TARGET THIS EMOTIONAL DRAMA ,, AND WHO KNOWS , THE PEPSI COKE WAR , WHICH HAS ALWAYS EXISTED ON EMOTIONS ATLEAST IN QUITE PARTS OF THE WORLD COULD BE SOON SEEN IN INDIA , WHICH I FEEL, INDIA, IS STILL NOT READY FOR MARKETING BASED ON PRIDE OR SO ATLEAST IN SOFT DRINKS ..
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