Archive for the 'Offshoring' Category
Inauguration by Kiran Shaw of “Teleradiology Solutions” (Bangalore)
Yesterday in Bangalore I felt honoured to attend a function of my friend and fellow EO -member Dr. Arjun Kalyanpur and his wife Dr. Sunita Maheshwari. Arjun is a radiologist, his wife Sunita a pediatric cardiologist. Five years ago, without having an M.B.A. or financial backing, this doctor-couple started a company out of their living room: Teleradiology Solutions. A medical service provider which delivers radiology-reports from Bangalore to the world. Or like Sunita explained: “A brown company in a white space.” Today the company boasts 160 employees and sits in the reputed technology-district of Whitefield in outer Bangalore. This is the building with the chaotic Indian reality to the left, and the highly performing Indian reality to the right. (All the pictures from the function are here in my Flickr-Set ).
Teleradiology Solutions’ value proposition is very straightforward: Enhance the capacity of radiologists to hospitals in the U.S., Singapore and India by a remote service, including a cost-advantage, where radiologists in India would receive digital scans via broadband. In their speciality “emergency cases”, these tele-doctors would submit their diagnosis back as fast as 30 minutes. The company is the only provider outside of Singapore which has been granted the necessary approval by the Singapore Health Ministry to do so and is currently making inroads to Europe as well.
The reason for yesterday’s function at 5 pm for High Tea was the next consequential step to enable the company’s further growth. Hence, a state-of-the-art training facility under the Sanskrit name of “Rad Gurunkel” has been inaugurated. The guest of honour to do so was Ms. Kiran Mazumdar Shaw, founder and Chairman of Biocon Ltd . Ms Shaw, besides being the richest woman in India, is highly respected across the entire country and often quoted as a role-model for women to reach highest achievements in a predominantly male-dominated society. Ms. Shaw is here with the candle lighting the lamp, Arjun to the right in the black suit.
The speeches of Ms. Shaw, Arjun and Sunita reflected pretty much the key-challenge for knowledge-driven companies like Biocon and Teleradiology Solutions: Scale. Getting the right people on board, bringing them to the required level of skills, and retaining them by growing these skills. Likewise, Infosys has recently invested US-$ 300 mn into an entire campus in Mysore. Being an entrepreneur myself, I felt amazed by the level of meticulous detail how Arjun’s company has artfully crafted processes which would be able to replicate quality of a radiology diagnosis 8,000 km such as if the doctor was right sitting beside his patient. There is for instance one FTE (full time employee) only taking care that the regulatory requirements from the U.S. are met and audited accordingly.
Constant training of medical, technical and administrative staff has according to Arjun in the past proved the most important factor in attaining that quality along with a very low defect-rate in this not very error-tolerant area. In order to be able to take the company to the next level, the new training facility will be able to scale and institutionalize the various training programmes. Here is Arjun on the right (still in the black suit, not in a white lab coat :-) and me to the left.
I wish Arjun and Sunita and all the fantastic people I met in their company yesterday all the best for their future aspirations which are constantly bolstered by hard work, dedication and honesty. In that respect, I felt deeply moved by a quotation which Sunita brought forward from the great Mahatma Gandhi: “Learn as if you will live forever, live as if you will die tomorrow.”
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Smoothing Climate in the Indian IT-Industry
Yesterday it was raining like mad in Bangalore, with the usual effect that the temperature drops immediately and significantly. What happens then is that the sewers can't take all the water. The resulting effect is that the shit (or what has turned into a liquid from that feed material) is being flushed from the canalization-system onto the surface. Hence, my Sunday afternoon-walk through Bangalore received an unexpected layer of olfactory enrichment. Yet, on the pictures, one can't tell.
Here a view on the Empire Hotel on the crossroad of Brigade/Museum-Road.
That's my coffee-break in Coffee Day on Richmond Road in my neighbourhood.
The entire picture set (19 photographs) is here on Flickr .
Similarly, the IT-industry in India has been facing some smoothing and soothing as well lately – if not outright shit. The drop of the dollar has created some major headache as it puts margins under tremendous pressure. Undoubtedly, in such a scenario, the vulnerability of the entire business model becomes obvious: As the major reasons for most companies in the west is clearly still cost saving, the ability of Indian companies to raise prices to compensate for the decline revenues (after exchanging them into the home-currency Rupee) is very limited. Economically, speaking prices in this sector are relatively elastic.
I had an interesting conversation with a friend who is working in a HR-position at one of the successful mid-tier companies in Bangalore. Internally, cost are being cut. Where the HR-team used to fly to some other Indian town for recruiting and stayed in 5-star hotels, they are back to 3-star and occasionally even the Indian Railway System. Yet, on the labour market, interestingly, the unidirectional spiralling-up of wages has changed its momentum. Top performers, especially in some sought-after technologies and industry-verticals are still commanding high and higher salaries.
However, that's the surprising news, some companies have fired staff, something which has been unheard of since the collapse of the "New Economy"-bubble in 2002. Again, having a closer look to what happens, it reveals a more differentiated picture. As companies can't really afford to forego growth by not getting talent on board (otherwise their competitors will snatch them away), they are still hiring. At the same time they are sacking the "bottom of the pyramid" which they felt they could carry around in fat times, but can't when the belt needs to be tightened. That, in turn, has led to a re-shuffling of the labour-market where the increase in supply has broadened hiring options at reasonable rates.
Sounds like an interesting case-study for aficionados of price-volume phenomenons with a pinch of game-theory in competitive environments … :-)
Global Citizenship on the Rise
Driving yesterday evening though Bangalore, I wondered from a journalistic angle what is really new, what is worth mentioning that hasn’t been covered yet. Globalization is there, it’s a done thing, in spite of critics claiming the opposite or worse some conspirational “there-will-be-a-backlash-at-some-point-in-time”-claims. Then, Bangalore City is growing like hell; driving through Cunningham Road, I almost didn’t recognize this street compared to when I was sitting in Audrey D’Souza’s office from the Indo-German Chamber of Commerce for the first time in 2003. The road, which had the typical functional look and worn down structures, nowadays boasts of shining shopping malls, one McDonald’s, a Reliance electronic store and some more. Amazing, the speed of transformation towards progress, whilst Germany as a developed country is facing backward steps with a political drift to the left. Well, true, but not too new.
When I arrived at my destination, the house of Moritz & Nadine for their farewell party, a couple who has met in Bangalore and who have become very dear friends of mine, I realized how big the expat community has emerged. How organized and at the same time scattered it is. And how luckily inevitable it is to become somehow socialized by the environment you get exposed to. Finally, what scale of magnitude the exchange into both directions has grown: This week, I got to know that on any given daily Lufthansa-flight between Frankfurt and Bangalore (LH 754) and back (LH 755) 20 seats would be occupied by staff from the software giant SAP. Indian engineers being trained in Walldorf (Germany), but in its own right German engineers being trained by the Indian practise in Bangalore. So another very good friend of mine Ingo who runs the Indian operation of Wienerberger and me, brought together some thoughts on our way back from the party what has happed over the last years.
With a pinch of nostalgia, in 2003 when I moved to Bangalore, there was one platform for Germans to meet: the first Friday evening per month in the Goethe-Institute, then still in Lavelle Road on the upper terrace-floor of Axel Schorlemmer’s German restaurant. A tiny, little group of expats, at good days 15, at less fortunate days maybe 8, but where in fact everybody knew everybody. With Bangalore getting increasingly interesting for students for an internship, a “Bangalore Trainee Group” got started. A rather loose and fast changing mailing-list on Yahoo where stuff got posted on “where’s the next party” and “who wants to join the weekend trip to Hampi”. Needless to mention, also a good dating platform for bridging lonely evenings in the remote parallel world of South India.
The point that I want to make is the dynamics in group building with all the phenomenons that come along: group cohesion, a higher degree of organization, brand identity and the emergence of sub-groups. A good example is the Bangalore Expat Club (BEC) which was founded in 2005 by Arvind Chandra. And his story goes like this. Being an Indian (!), who had spent the last years in France, he was sent to an assignment to Bangalore. He didn’t know anybody, sat around alone in a pub and said to himself that this is an awkward situation. Hence, he founded BEC with one regular meeting once a week, same time, same place. In additional, what helped leverage the reach of his effort, his mother was in web-design and set up the BEC-website. Slowly, but steadily, this group started to build momentum, with a vast array of activities from scavenger hunt to cooking classes happening. Today, Arvind is back to France, yet the club is run with a highly active and institutionalized board who is taking their responsibility very seriously. What is more, the quantity and quality of members has grown exponentially, too, so that each member adds a lot of value by his or her network and serving as a catalyst for exciting events as well as access to companies, institutions and governmental bodies.
However, as nobody is forced to join the club, and the few hundred members of BEC by far don’t reach out to all the thousands of expats in Bangalore, sub-groups have started to emerge. You might go to one party, meet lots of Germans, go to another party and meet lots of Germans again, yet the people from the two groups might not know each other. Something which was unthinkable five years ago. Maybe for those, a social network like InterNations is taking of the concept of permanent “expatriotship”, or let’s call it “global citizenship”, to the next level. Capitalizing on the flexibility of an online platform with global reach combined with natural group-anchors in various physical destinations, it combines the best of the real and the virtual world. I am convinced, looking ahead, that this is a life-model that more and more people will embark on. It has never been as easy as today.
Thanks EO Mumbai for your Hospitality
Who has ever been in event management, knows how much effort it takes to get an event for 250 people rolling, especially if it takes 4 days. And besides a perfect “organization” still make it feel natural and authentic so that everybody parts his way with a noble feeling of inspiration and enrichment. And that’s exactly what EO Bombay managed to put together in the last four days from Thursday to Sunday for the “Regional Integration Event” (RIE 2008) where all the chapters of the Entrepreneurs’ Organization meet annually. The entire picture set on Flickr is here.
One of the highlights was the “Bollywood-Night”, with a fashion show of India’s premier designer JJ Valaya. Here the video of the grand finale with the master himself briefly stepping on stage.
For the motto “Dream Big”, the speakers were absolutely outstanding and in the overall very complementary in what they had to convey. Shashi Ruia from Essar, estimated at a net worth of US-$ 10 bn made a good start, a bit like a father explaining in a very seasoned way to his children what matters, what to look for and what to avoid in business and in life generally.
Zia Mody, a prominent legal consultant and lawyer described what it takes for Indian companies to acquire companies abroad. Ms. Mody is known for her hard work and dryly began her presentation with “Sleep is for Sissies” :-) A panel discussion with industry captains from private equity have a good insight on the thought process and the nuances of the players in this field.
For the most fascinating speaker, however, was the juvenile Sunjay Reddy from the infrastructure developer GVK, the company which on the bid on reforming the notorious Bombay Airport. More information on what it will be is here.
I have never seen a person in my life who has to put up which such piles of shit in his work from a hugely complex construction project in the first place to a community of slum dwellers to be relocated, to opposing populistic politicians to the Shiv Sena for displacing a sacred statue, and so on and so on. At in spite of all this, still remaining not just a good mood, but even spreading a contagious enthusiasm up to the point where he authentically and without irony speaks about “a dream I am following”. After his 90 minutes presentation we all got up and gave him what he deserved: standing ovations.
On Saturday morning after everybody had re-assembled from the previous night’s party with bollywood film producer Karan Johar, we eagerly listened to Dr R A Mashelkar’s “lecture” on “Innovation – to make the Impossible possible”. Undoubtedly a unique source of inspiration for the gentleman being India’s most recognized scientist who is also an advisor for the Prime Minister of India.
The later afternoon ended with an exciting ride on a speed boat in east in the bay of Bombay west from the Taj Mahal Hotel. And this was my favourite, our highly esteemed fellow member Takeshi Izuka fighting the wind and Mehool Bhuva coming to his help. Yep, we did not fall short of fun at all …
So thanks again to EO Bombay, spearheaded for the event by Javed Tapia and all his other fellow-members who put all their time and heart into making this generous hospitality happen.
Platforms of a global Society
„Mother India“ has me back. After a few days in Bangalore, I just arrived in Delhi, India’s capital and the center of political gravity. Delhi breathes quite a different atmosphere than South India, it’s more hectic, occasionally more rude that Bangalore’s soft-talking “ya-ya-ya”-manners. And not to mention then climate where Bangalore is advancing towards the hot season with temperatures above 30° C while Delhi at this time of the year falls down to 6°C.
I am staying at the Taj Palace in the Diplomatic Enclave where the otherwise improvised Indian reality all of a sudden becomes so overly-perfect. The reason being here is the upcoming EO University which is about to commence tomorrow with friends and fellow-entrepreneurs from all over the world, some whom I met at the respective universities in Tokyo and Berlin, new ones who are eager to get inspired of what the country to offer. Just wanted to share my personal observation that the pace of globalization and hence economic integration is accelerating with a few examples I have come across recently:
- Apparantly, there is a magazine in India “At a Glance” focusing on the target group of Expats. The magazine also runs a website which is somehow stuck in the online stone-age with just an IP-address instead of a proper URL. Well, that’s in the irony, a perfect example of the masala from aspirations, a hands-on culture, yet running at different paces at the same time for getting a market vs. caring for quality.
- Then there is a yet-another-social network, this one connecting expats around the world InterNations whose site-structure looks like a straightforward copy-cat of XING. But certainly another catalyst to propel a concept of “global citizenship”, a model which I am convinced is strongly on the rise.
- All major consultancies of the world have a distinct set-up to facilitate their clients in their international expansions. From my perception of e.g. Ernst & Young at the DLD Conference, they seem to run on the customer-facing side a 2-dimensional matrix: One for the industry, the other for geography. So if I was a German media company interested in India, I could speak to Gerhard Müller , head of the tech, media & entertainment-practise of the firm, who would then join hands with his Indian counterpart Farokh Balsara. To mention the efforts of another consultancy, KPMG publishes an excellent quarterly magazine about “Emerging Markets”. It’s in German language and I just read the 4/2007 in the flight from Bangalore to Delhi. What is more, some of the many studies like e.g. “Mobile Payments in Asia-Pacific” are also available in English and available for download via PDF.
- Today I got an e-mail invitation from Stefan Graf, Consul General of Germany in Chennai to a attend a panel discussion with Germany's Foreign Minister Frank-Walter Steinmeier in Bangalore on February 26th about "New Concepts for Sustainable Urban Development". The topic is very hot as the trend to the supercity is gaining momentum as Richard Wurman's 192021-initiative shows: That we are about to have 19 cities in which more than 20 mn people live in the 20th century. And there is a lot of common questions to be asked how so many people with diverse backgrounds and intentions are going to form a purposeful habitat.
And here on YouTube I stumbled-upon two videos from the India-Panel I was moderating two weeks ago in Munich which cover altogether 20 of the 30 minutes from the session:
Virtual Personal Assistant in India
It's funny to see how journalists copy & paste topics from each other. I realized that when I was featured in the SPIEGEL some 15 months ago and a flood of interview requests followed up. Similarly appears to me a current interest in virtual PAs (personal assistants) from India in the German media. I have read myself quite a few articles about e.g. GetFriday or YourManIndia in the last weeks. But I guess the issue both as a journalistic topic and a service worthwhile to consider has been magnified by the success of Tomothy Ferriss' "The 4-Hour Work Week". The book is all about efficiency by outsourcing as much as possible into a self-functioning and self-healing personal eco-system. Hereby, such a personal assistant in India at reasonable cost can help booking travels, doing research, online shopping etc.
Funnily, in the aftermath of the media coverage a few German friends asked me if such a service would make sense for the German market. My take on that: Certainly, one could create demand for it, I don't see the Germans in that respect different from US-Americans where the service has gained traction. However, I rather see a supply side problem with German skills in India. To put it quite narrow: As soon as German language is required to get a task successfully done, I see significant quality issues. The number of Indians who are so fluent in German is not that high and those who are up to the level will easily get a job in an ever higher-valued and hence higher-paid job. So early on, one will get into nasty operational, quality and especially scaling issues.
So if I had to make a call as an entrepreneur or investor, I would make a pass on such a business proposal. Yet, if the task can be narrowly reduced to pure English skills, well, then the world is flat and the service can be targeted anywhere.
Inspiring DLD Conference in Munich
Even after returning from "down under" in Australia, I was a bit "down under" with my blogging. But today is a good opportunity to come back to light after an amazing 3 day DLD-Conference in Munich which ended yesterday. On the eLAB-Blog, I wrote a bit more on it, especially about 23andMe, a "Web 2.0 genetics" company which was showcased. The mix of the panels and participants was phenomenal which such high-calibres like Craig Venter, Paolo Coelho, Martha Steward or Marissa Meyer being around. Lots of extremely networking opportunity by talking to a whole lot of extremely smart, positive and energetic people. My photo-set of the event is here.
This year, I was not just a participant, but felt very honoured when Rupert Schäfer , die producer of the DLD; asked me if I wanted to moderate the India-Panel on Monday morning. I guess it was a real sucess with my two guests Farokh Balsara, partner at Ernst & Young India, and Vishal Gondal , founder & CEO of Indiagames and a friend whom I've known for 2 years by now. Here a picture of us two after the panel.
We had a good conversation about the major differences in India compared to "the west" in terms of demographics, media consumption, pick-up of mobile usage and on the other hand some insights how to enter the Indian market in the role of an entrepreneur or a manager in charge. Both guests had lots to say especiall as they were coming from quite a complementary background. Here is also a brief video with the first 2 minutes about this India panel.
From the feedback I got the audience really liked it and I feel India should be way more promoted in Europe. Thus, I also talked to Loic LeMeur and we found it a good idea to work on an India panel at his conference LeWeb in December. Let's keep the fingers crossed that it works out, would be really cool.
Half around the World in 20 Hours: India & Web 2.0
After 20 hours onboard 2 turbulent flights I just made it from San Francisco to Bangalore. The good thing is always that temperatures never disappoint here in South-India. 22 degrees at midnight is something not to take for granted. So I feel like bringing the good vibes with me which I had the last week in the U.S. and especially I was till yesterday noon enjoying sunny California at Pier 39 in San Francisco with a beautiful view on Alcatraz and the Golden Gate Bridge.
Having plenty of time on the flight I reviewed parts my notes and documents from the Web 2.0 Summit and thought how the latest learnings relate to India.
- India is growing strongly in terms of internet usage, like whole Asia is as this slide from Morgan Stanley shows (entire presentation for download here). The country has even moved up one place and lies now ahead of the U.K.
- All big VC-firms from the Valley have already made inroads, either by setting up shop like Kleiner Perkins who are invested in Naukri or like Sequoia who made the so far unsual move in the industry to acquire Westbridge Capital from KP Balaraj, a fellow EO member of mine in Bangalore, and renamed it, well, Sequioa India .
- However, from rather anecdotal evidence than from profound research, Indian online users have broadly populated services like Facebook or GMail. Given the the non-existent language barrier for the current online-population this does not come by big surprise. It will be interesting to see what sort of web applications come for those Indians who are not in the (minority) 140 mn English-speaking bracket of a 1.05 bn nation.
- Even more so when it comes to accessing the web via the more 200+ mn mobile handsets (growing at a rate of 5 mn per month!) and see the usage explode on a scale of unprecedented magnitude.
- At the same time, to be straighforward, the nature of homegrown Web 2.0-services in India is not overly sophisticated. The high-end concepts of particularly usability have not yet percolated through the domestic community of internet entrepreneurs and developers.
- Sometimes I get requests from German companies with respect to my company Level 360 to outsource development in Web 2.0 domain in the start-up phase. With my next question "How many people do you need?" and the subsequent answer "2-3" I can happily bury the plan after 30 seconds. For an offshoring assignment to India such a headcount is entirely, completely and uttely sub-scale. I wrote about this phenomenon already here. Also, given my last point, it is not just a matter of missing quantity which makes the plan unviable, but also a lack of quality where a product responsible dearly requires input on the concept-level though the technical lense.
The last thing in an internet start-up you want to do is document each and every tiny little function on the hightest level of abstraction. This will kill you and take out any momentum which is critical in the initial stage. Hence, my clear recommendation: Develop at home, hire a good CTO who sets the course and who can manage e.g. capable software engineering-students at equally reasonable rates. When your company got traction and you need a bunch of at least 8 people, come back to me and I will happily help find the right partner.
I hope to observe the Indian market a bit more in the future and come up with more posts on that exciting subject where my bets are clearly geared towards this huge mobile opportunity.
The flatter World
Since yesterday being back in Bangalore, the “capital of globalization”, a few inspirational thoughts on what has changed in the last 2 years since Thomas Friedman coined the term of a “Flat World“. Let’s start with the simple statement: The speed of change has remained the same. However, the absolute delta of that change are bigger than anything we would have imagined in our lifetimes. With “we” I allowed myself to bluntly simplify people like me and my peer group who are in their mid 30s, born and brought up in Europe, reasonably well educated, relatively independent. And here the drama starts: This type of “we” is an endangered species, extinction not directly imminent, but in relative terms clearly in decline – as this graphic of the world population puts forward (courtesy to Rohit Talwar).
In the light of this huge demographic macro-trend it is no wonder that successful companies have left the shores of their homelands to set up shop elsewhere, in particular Asia. This is so far nothing new. What stunned me however, was an article in the German Spiegel about SAP, a software company. Although SAP has been a pioneer early on in India, by now the underlying paradigms have started to shift. Previously, it was clear that SAP’s headquarter in a small and boring German town called “Walldorf” was the centre of the universe. This is about to blur, not without the dismay of the German employees. Previously, India was the cost-effective programming bench delivering to Walldorf, by now some German staff has to report to the Bangalore. Here, the Indian entity has taken the lead at the front-end design for the new A1S, a system targeted at small- and mid-size companies.
By the same token, the great and respected Indian companies are by far no longer purely Indian. How else could we put today’s news into proper context, that Wipro has decided to hire 100 people in Mexico. Thus, the really global players no longer flow towards the force of labor arbitrage, but are clearly about to establish a global “value network”.
Overall, the transformational impact on the world order coming due to Asia’s rise must not be underestimated. Besides the pure demographics, where the Spiegel article rightly points out that the likelihood of finding strong talent is higher just based on the sheer number of people, also the economic growth will re-allocate the gravitational centres: In 15 years China will produce the world’s biggest GDP (normalized for Purchase Power Parity (PPP)), in another 30 years the same will hold true in absolute terms.
The biggest challenge in these hyper-dynamic economies is and will be talent, as “The Economist” recently pointed out.
Technical skills, particularly in information technology, are lacking in many parts of the region, even India. One of the main concerns is that there are not enough skilled graduates to fill all the jobs being created in a vibrant sector. Nasscom, which represents India’s software companies, has estimated that there could be a shortfall of 500,000 IT professionals by 2010. This means companies recruiting at job fairs in India are having to make lucrative offers to capture the most promising students.
Indeed, from my own professional experience in India, the top IT-firms are nowadays accepting candidates whose resumé would have landed in the trash-bin two years ago. The hook: These freshers undergo a 12-months training internally before they can be put on the job, get productive and especially get billed. Until then, they add significantly to the cost base of the company. I would call this the broadening on the “bottom of the pyramid” to keep these companies doing what they need to do: scale, scale and scale. On top of the pyramid, in a kind of radical top-down cascading of skills, the air is becoming increasingly thinner, as the the same article continues to explain:
Pay rates for senior staff in many parts of Asia already exceed those for similar staff in much of Europe. The going rate for a human-resources director working for a medium-to-large multinational in Shanghai is now $250,000 a year, and that is for “someone who has probably never even left China,” says Vanessa Moriel, the managing partner of Human Capital Partners, a Shanghai-based consulting firm. The chief executive of an international business based in India can expect to earn $400,000-500,000, with many earning well over $750,000, according to Korn/Ferry, a consultancy.
The other cost of labor comes in a different shade: attrition. People leaving fast and even worse, unexpectedly, being gone and away usually a few days after resigning. For a a western manager, where comparable labor-markets possess rather negotiating power from the demand (=employers’)-side, such behavior can come by surprise. Thus, the necessity to create a tremendously robust HR-framework from the beginning is of fundamental essence: sifting through tens of thousand of applications, coming up with the right retention plan, considering 20 % attrition per year as good and hedging against knowledge-loss via systemic processes.
Asia is booming, everbody wants a piece of the pie. Yet, who wants to succeed must truly adopt HSBC’s slogan: “Never underestimate the Power of local Knowledge.”
Outsourcing to India: Simpson’sTake on it
The humour of “The Simpsons” is anyway hard to beat. Just came back to “Mother India” last night, where I am happily enjoying the hot temperatures as a nice contrast to Germany’s 7 degrees, clouds and rain. A friend passed along this video to me. It’s hilarious, 7 minutes, and it plays with so many clichées about India and the U.S. surrounding outsourcing in a very funny way.
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