The business world is being disrupted by the combined effects of growing emerging economies, shifts in global demographics, ubiquity of technology and accountability regulation. Infosys believes that to compete in the flat world, businesses must shift their operational priorities.

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January 31, 2007

We’ll need more than one planet to live together

This year the debate at Davos was clearly about climate change and sustainability. But as is common with such complex topics there is as much confusion as clarity. At Davos there was a consensus that developmental models impacting the environment need to be rethought in the context of global development, especially in the case of India and China. Today, 70% of the world’s carbon emissions originate from the US and Europe. Carbon emission per capita in the US is 24 tons per annum, whereas it is 4 tons in China and 2 tons in India. Everyone agrees that if India and China achieve the same standard of living as the US, we will need more than one planet for all of us to live together.

Given the fact that 70% of the world’s carbon emissions are from the US and Europe and people of India and China want a better standard of living, we cannot then deny them development. So, it is very clear that we have to fashion a new kind of development model, which is less injurious on the environment. While there is agreement on this, the question is who does what and who pays for what? It is also clear that there is a role for government and there is a role for business. For governments, there are basically five responsibilities.

The first is to create regulations to encourage the right kind of behavior. For example, having fuel emission standards for automobiles or mandating that x percent of petrol should be bio fuel and so forth.

The second way that governments can make a difference is by creating global grading systems for different kinds of emissions so that less efficient organizations pay more. This essentially puts a price on environmental degradation.

The third way governments can achieve this is by having taxes on those forms of activities that they believe are harmful to the environment.

The fourth role of government is to give subsidies to those forms of behavior which they think is good for the environment.

Finally, governments have to support technological development so that new innovative ways come up to develop carbon efficient technologies.

Companies in turn have to work to become more innovative, more efficient, more environmentally friendly, and have to reduce their consumption of energy, water, plastic, etc.  They have to make more things biodegradable and so forth.  This is up to companies to do.

So there is a role for companies, there is a role for government, and often in the conversation the lines are blurred as to who does what.

The other issue is who pays for all this? Developing nations believe that they should not retard their growth because of a problem created by someone else. They want adequate compensation for the cost of inventing and implementing sustainable growth.

So the key issue at Davos was: "Out of all this, Will we be able to create a framework for not only what needs to be done but who does which part of it and most importantly who pays for it?"

January 27, 2007

Banking the Unbanked, by Ashok Vemuri

One more post from Ashok Vemuri from Davos:

"As Davos 2007 heads into the final straight, there are fresh issues popping up every minute that are provoking fierce debates.  Yesterday, I attended a session on ‘banking the unbanked’ which generated some interesting discussions about the huge population out there who are currently unbanked - not just in the developing world but in regions where we’d never expect this to be a problem.

"Reasons for the lack of credit available in the less developed part of the world are pretty self explanatory.  Poorer people represent a higher risk and lower return on investment for banks and financial institutions and as a result they’re reluctant to get involved in these regions.  Different regions are responding in different ways however many are reliant on non-government organisations to help with funding.

"What amazed me, however, was to hear that some fifty million people in the United States are also unbanked.  This is a startling fact for a country with such a developed economy however it boils down to the same reason – some individuals just represent too high a credit risk.

"A number of financial executives I spoke to agreed that technology could be a great enabler in giving banks a return on their investment and making it a risk worth taking.  An effective use of technology can reduce the cost of transactions and there is a great opportunity for large financial institutions to participate in the development of these financial economies creating a tailored range of products and services.  Time will tell as to what degree this opportunity is embraced."

Read more

January 25, 2007

"It's time to refocus on the employee," says B.G. Srinivas

B.G. Srinivas, SVP and Head of Infosys Europe, Middle East & Africa Business Unit, had this to share from his meetings in Davos (reproduced with permission from WEF blog):

The other challenge in the developed world is how top leadership is coming under increased scrutiny. ... While talent management per se is the key issue businesses grapple with, organizations are made by people. Irrespective of the fantastic systems and processes that organizations build, it is the individuals who make it happen.

We will have to refocus on the employee as we also refocus on customers. Employees will be the key in this world where information is becoming ubiquitous, technology is making information access in real time. All of it is going to have an impact on the kind of talent you want to nurture, the kind of talent and skills you need to build internally within the organization, and the kind of talent you need to attract in different parts of the world.

How do you plan for the future, how do you identify the skill gap in the changed environment, how do you start refocusing on training, mentoring and giving real life experiences to the same talent pool and keep them excited to operate in such a challenging environment is one part of focusing on the talent.

The second part is, how do you embrace multiculturalism, how do you ensure that you create an environment within the enterprise for people from different communities to work in a homogenous manner. At the same time, you need to invoke innovation and excitement among people while you lay a strong foundation of values and culture, which people from different parts of the world would embrace.

You need to take into account that not all of them would think alike, not all of them would have the same background. There will be sensitivities around what you want to set out in terms of culture and values.

Read full post

Setting the Security Standards, by Ashok Vemuri

It is day 2 in Davos, and here are some thoughts from Ashok Vemuri, reproduced with permission from the WEF blog:

It’s day one proper at Davos and a sea of lively debates are raging throughout the summit.  Often, the informal conversations you have over coffee are far more valuable than the public forums and one of the more interesting themes that came up amongst those I spoke to today was security.  I’ve attended several meetings since my arrival and been involved in a number of discussions with banking institutions and business executives about the threats they’re currently facing.

Phishing, phreaking and pharming are now everyday terms and the kind of attacks that are having a massive impact on customer confidence driving the demand for some kind of security governing body.  There is a definite feeling amongst delegates that trust is slowly dissolving amongst customers who are getting increasingly disillusioned about the safety of their information with their bank. 

I had several fascinating statistics thrown at me in conversation.  Whilst three years ago 90 percent of hacker attacks were benign with little dollar impact, 90 percent of hacking nowadays is malicious designed to disrupt data or steal information.  One of the newest concepts I heard about earlier was ‘data-kidnapping’ – where hackers break into business systems and block a company from using its data, effectively holding them to ransom. 

This provoked fierce debate about accountability amongst many of my fellow delegates.  If an online banking customer has his account details stolen and loses money, who is responsible?  Is it the user for not keeping his identity secure or is it the bank whose security may have been compromised?  Doubtless, this is set to be the biggest driver behind the calls for regulation and standards with banks crying out for guidance from a governing body.

It makes sense.  If we have regulators for the Internet, telecommunications and accounting then surely we should have some standards in place for security?  Someone to turn to so there is no doubt over where the responsibilities lie or what actions should be taken when a security breach happens.

Technology can be a great enabler in combating the security issues these businesses are facing however it can’t operate in isolation.  The responsibility for security needs to be spread between multiple parties and it’s down to regulators, vendors, banks and customers to put their shoulders to the wheel and fight this battle.

I’m sure the security discussions will continue as this week goes on but I’ve noticed that, as anticipated, media coverage around Davos has so far been very much dominated by the issue of climate change.  I have an Infosys breakfast debate at 7 tomorrow morning where I’m sure green issues will return to the fore.

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January 24, 2007

"Green Davos", says Ashok Vemuri

In his post "Green Davos" from WEF, Ashok Vemuri, SVP and Head of Infosys Banking and Capital Markets Business Unit, says:

"Many of the delegates I spoke to seem to appreciate that a few token gestures to convince customers they are being green will no longer suffice. People are talking about how they can make wholesale changes to the way their businesses work from both a technological and sociological point of view. These changes will no doubt include investments in newer, greener technology in addition to ensuring that their business expansion and investments are not having an adverse affect on climate change."

That's an interesting observation.  More and more customers are voting with their wallets -- choosing their brands and vendors based on social/environmental issues.  Businesses are also waking up to this fact.

In fact, in one of his blog posts in August last year, Nandan Nilekani also said something similar:

"It is clear that the world cannot have every person with the lifestyle of an SUV owner. The environmental stress and the energy cost of that will be unviable. Hence in a broader view of the Flat World, environmental sustainability and energy efficiency will be just as critical. The good news is that this is on the radar screen of companies like Infosys."

Infosys, through its Ozone initiative, sets and achieves specific targets for reduction in water, paper, energy consumption. Google and Microsoft already use solar panels to power some of the electricity for their office campuses.  Wal-Mart has been reported to be looking at the same.  It remains to be seen what kinds of initiatives other companies take up.

 Read full post by Ashok Vemuri from Davos.

January 22, 2007

Telcos must transform their operations not just their networks

Subhash Dhar, VP and Head of Infosys Communications Service Provider Unit says that communications service providers must supplement their service-enabling business and network transformation with an operational transformation of their customer service and network operations.

“In the world of Convergence, the new business model for a telecom service provider also needs a new operating model to support it. How fast you transform the operating model will determine the success of the new business model.”

"To rollout its next generation IP network, a global telco is embracing a strategy made famous by Amazon, eBay and Google -- publishing APIs of network management interfaces to the core network. The company aims to increase the speed of new service creation by an order of magniture in the first year alone, with hundreds of services thereafter."

Read more.

January 20, 2007

Can Innovation be "Offshored"?

Yes, says Mohan Babu of Infosys on his blog: 

"One gentleman was curious about how 'innovation' could be offshored. We started debating on the 'processes' involved in innovation and how most of it is an evolutionary process-of-improvement rather than a revolutionary 'eureka' moment. The research that leads to innovations in processes and adopting new tools and techniques involves scanning the landscape analysing published research, benchmarking other best-practices..."

Read full blog.

January 19, 2007

Cisco's flat world moves

Cisco's Chief Globalization Officer Wim Elfrink says that Cisco plans to have at least 20% of its top executives working in India in the next three to five years.

Why?  According to Business Week:

"One reason lies in the size of India's market. While Internet penetration in India stands at a mere 4.5%, the online market there is one of the fastest growing in the world and the Indian cellular market is white hot.

"The other issue is cost. Huawei can compete against Cisco on price because of its cheap talent pool. Facing those pressures, Cisco will find it hard to maintain its high margins unless it develops its own vast force of low-cost engineering talent.

"Cisco also wants to acquire the best Indian operations in its field to accelerate growth. As part of its ambitious investment plan, Cisco has set aside $100 million in a venture capital fund to buy out Indian companies. It has invested in a couple of outfits such as gaming destination Indiagames.com. (Cisco acquired Linksys, a home networking company, in 2003.)"

Read full article at businessweek.com

January 16, 2007

WEF: "The Shifting Power Equation"

This year, the theme of the WEF (World Economic Forum) Annual Meeting in Davos is "Shaping the Global Agenda: The Shifting Power Equation". 

On their website, you can find some interesting views from CEOs and Chairmen of companies, including Klaus Schwab (WEF), Walter Kielolz (Credit Suisse), E. Neville Isdell (Coca Cola) and Nandan Nilekani.

January 13, 2007

Making money 3 mints at a time!

Yesterday after a dinner at a Bangalore restaurant, my colleagues and I were offered mints: miniature packs of 3 Tic Tac mints each! 

The price on these packets for retail sale was 50paise (approximately a US penny).

I decided to do a comparison with US prices (I admit curiosity got the better of me). A Tic Tac box is available for 58 cents on Amazon if bought two dozen at a time, excluding shipping cost of course!.  If I assume that each box contains 35 mints, I come up with approximate price of 1.6 cents per mint.

Interesting isn't it?  The supplier is able to make a profit on these penny packets despite all the extra (though miniature) packaging and distribution costs.

To make the product affordable to millions of cash-flow sensitive customers, manufacturers package consumer products in single use packets -- everything from Tic Tac mints to shampoos and laundry detergent, or even a single text message sent across the country.  The trick is in how to maintain profitability even as product sizes (and therefore transaction sizes) shrink to zero.

January 9, 2007

India will open up education sector, predicts Ruth David

Ruth David of Forbes predicts that "The Indian government will allow foreign universities to enter India, setting in motion a revolution in education and helping the country meet the growing demand for an educated workforce."

This is inevitable as India copes to meet the severe talent shortage that is already one of the top business challenges. 

China will give in to temptation, says Robyn Meredith

Robyn Meredith of Forbes predicts that in 2007 "Beijing will borrow a page from Putin's Russia and gradually give in to its animal urges for stronger authoritarianism."

January 7, 2007

Latest features for $40

Motorola has recently launched its Motofone in India for Rs. 1700 (approx. US$40).  What's amazing about this phone is not only its price, but that it is not a "stripped down" version.  The phone comes fully loaded with features that people anywhere in the world would want: durability, extra long battery life, screens desgined to be sharp in daylight combined with stylish design.

This is innovation. 

Watch out, Nokia!

January 1, 2007

Making a New Year Resolution

by Nandan Nilekani, CEO and Managing Director

It is prudent to start a new year by looking back at the one gone by. At what we have achieved, and the lessons it can teach us.

2006 was a year of great promise for India. No strategic business discussion was complete without a mention of its name.

The numbers were also encouraging. In 2006, India accounted for 65% of the global offshore IT market and 46% of the BPO market. And, R&D spending grew about four times the global average.

2006 was also the year that India and China came to be spoken of in the same breath. Interestingly, at the start of the industrial revolution, India and China contributed close to 45% of the global GDP. By 1970 this figure had shrunk to 7%. Now it is on the rise again. It is expected to climb to 30% by 2040.

However, except for pockets of transformational change, infrastructure worries continue to haunt India. Increased public-private partnership promises to narrow the gap with its rivals, but it will take all of its means and more to make a truly giant leap.

In the meantime, India must play by its strengths. Its educated talent pool has been recognized globally as a desirable workforce. Its experienced managers are sought after by companies seeking to innovate. Technology developed in India is disrupting business models everywhere. India’s growing middle-class is being eyed by growth minded-companies as attractive markets.

Today, India and Indian companies hold the attention of the world’s business leaders. The ball is now in our court. In the year to come, it is up to us to deliver on that promise.

Happy New Year!