Bangalore South - whom to vote for devil OR the deep sea?

Yesterday night saw Rajdeep Sardesai interview a bunch of folks in Bangalore South constituency. Most of them said they will vote BJP (Ananth Kumar) , few Congress (Nandan Nilekani) and none AAP (Nina Nayak).  I could see each of the people interviewed extremely convinced that their vote will change India. It sounded Deja Vu.  Before the last election every one was convinced India's destiny will change if Manmohan Singh is given another term with a larger majority. I was the senile guy who advocated why not Manmohan (read my blog dated 31st March 2009 at http://wiseinforesight.blogspot.in/2009/03/dilemma-whom-to-vote-for-so-many.html )

You can see this mail also on my blog.

Bangalore South is a landmark constituency. We as inhabitants of the most well educated constituency need to lead the change in system. We have a tryst with destiny tomorrow - 17th April. Before we vote - let us remember as a nation we got it all wrong in 2009 and may be we are repeating our follies in 2014. God let my fellow constituency men awaken.

Why not Nandan?

• Nandan says he is ideologically aligned to Congress since childhood. He could not be more right. Where I differ from him is that he promises to "change the system" when "he is actually the system".
• In India if we wine or dine a person and get a contract - it is corruption, in US it is lobbying. Nandan believe in putting systems like lobbying in place. Let me give an examples - he claims he was instrumental brain behind NASSCOM, an industry lobby which ensured IT got tax breaks under STPI and then SEZ rules. These tax breaks have left us poorer by over Rupees 1,50,000 crores - and this is a conservative figure. Infosys has distributed dividend to the tune of Rs 13,000 crores and TCS amounts are equally staggering. I fail to understand why companies of the size of Infosys, TCS, Reliance need tax breaks while small companies which are struggling need to pay more taxes than them (as a percentage of revenues). Net net he will bring sophisticated ways and systems using which rich can get richer 
• Nandan is inhuman and may be instrumental for (attempted) suicides in Infosys. This is not a baseless accusation. Pick up annual reports of Infosys during Nandan's reign of Infosys and you will see a very high involuntary attrition in trainee levels. Essentially trainees who failed to clear Infosys training were let go. So yours truly met Infosys and said why do they not make the process rigorous. The answer was it is more expensive to make selection process rigorous and cheaper to let people go. Now the question is how does it result in suicides? So there were these trainees from lower middle class or middle class background, many of whose family had stretched their finances to pay for engineers. They suddenly found themselves in posh Mysore campus of Infosys. Their parents came visiting and clicked photographs and flaunted them to relatives. Then few of the trainees realised that they are going to be laid off for not clearing training tests. The fear of  how will they and their parents face the world sets in - resulting in suicide attempts, few successful but most not. 
• Nandan gets tens of crores in dividend while lots of employees loose their job every year at Infosys because they failed to grow and do justice to their next level where they were promoted to. This sounds logical to all of us who are capitalistic - but is that what he is going to implement as a policy maker - my mind shudders at the thought of possibilities - lower strata of women who are raped not being provided justice for their inability to afford good lawyers, people with special needs left to die etc. If Nandan throws figures of the charity he has done to disprove my point - my only answer is charity begins at home. The people who served Infy for 3-4 years and did not grow to occupy the next level - they are special needs - accommodate them and tell them their salaries will not grow and they will be at same level. Why fire them ?
• Last but not the least his victory would mean that a party can hope to misrule for 5 years and then put some "renowned" candidates like Nandan (remember Govinda in Mumbai) , win elections and again misrule. We need to tell our politicians we are smart. 

Why not Ananth?

• Remember there was a garden behind A2B on 16th Main of BTM. Or there was a lake next to Agara lake or most of Bagmane Tech Park was again lake bed. All of these are today concrete jungles or in case of Agara lake about to become one. 18 years as MP and for many of those BJP in power or power sharing in state - why did Ananth not raise a voice against it. Is it that he and his cronies along with some Congress leaders kith and kin are behind playing havoc with the system.
• I tried to meet Ananth Kumar for 3 months for help in recovering money from a builder who cheated me and in court is an open and shut case - just this that the lawyers are demanding 40% of the amount stuck as fees and telling that lot of these judgements are bought. Needless to say I could not meet him even once. Being an entrepreneur , from IIT and well networked - it was difficult for me. Imagine for common man :)
• Last but not the least Modi is a very bad choice (remember reading my blog above on Manmohan being a bad choice - I have never got it wrong since 1996 on my judgement of leaders). No this is not because he is communal or anti minority - but because he understands that facts can be played with, truth can be dressed up to look nice , euphoria and sloganeering works over actual work delivered. He squanders his best man to mentor future finance minister (read Jaswant Singh who actually turned around India's economy as finance minister) for petty politics and then claims he is a leader with stature :) Has a mind of his own to walk out of marriage within days but not guts enough to tell her mother he does not want to get married (sounds like a typical mama's boy). In Gujarat, officially alcohol is banned - but for right money, ample amount of it flow. So why have a ban at first place? May be to have some extra earnings :) If you are a small company ( I run one) looking at a regional office in Ahmedabad (without blessings of IIM A or its incubation center) , you face numerous harassments (I am told big houses have it easy but no verification). Take my word for it - Modi is going to be a disaster, more so because I have been BJP voter for last 4 elections and this is the first time I shall not.  

The big question is then whom to vote for - answer is AAP for lack of alternatives. They will not win elections - but every vote to them will make sure the other political parties behave. Remember in Karnataka, Yedurappa was hailed for operation Lotus where they caused defections in opposite ranks to get majority but the same BJP did not engage in horse trading in Delhi for fear of backlash in Lok Sabha elections. 

Yes my countrymen - this is time to awaken and be part of revolution. Vote for AAP. To many of you who think AAP is anarchist or dharna party , let me remind you about a guy called TN Seshan. Till he became the Chief Election Commissioner - no one in India knew EC existed as an independent body. He was always taking on the system - blaming his juniors for being sold out, anarchist , poor administrator et al. But 23 odd years later we have the best election commission in world.  We require some one to challenge the status quo and I can assure you in next 20 years we would be a great nation. 

Dilemma : Whom to vote for ? So many parties ... yet none good enough

Folks election is round the corner so his humble self has been pondering on whom to vote for. In good old days rather younger days, one just walked in and voted with heart (read pity). Still paying a huge price for having supported Congress ..... ah wish I was wise in foresight and agreed to my good old dad. He always thought Chidambaram (Chidu) and Manmohan were good students of economics and at best average managers (and of course poor leaders).

List of omissions of Congress is huge. If they have shame, they should withdraw from these elections. Shame ... ah I know I am expecting a lot from them.

First grouse - all august institutions independence was compromised in true mai baap party style. The (mis)appointment galore is stark. I am extremely ashamed to have some Pratibha Patil as first citizen. Most Indians around me had not even known she existed till she was not pushed on us. Imagine first family of India having murder charges !!! Letting go of RBI governor YV Reddy - anyone who knows little economics will agree that he saved Indian economy from catastrophe. Imagine what would have happened had he heeded to Chidu. Next SEBI chairman, Damodaran - let go because he was not submissive. Promoting a tained Election Commissioner as Chief Election Commissioner.

Financial jugglery - the less said the better. Forget about mismanagement. If corporate honchos can be held responsible for dressing up balance sheet (and be jailed like Raju brothers), why not finance minister for doing the same to India's balance sheet. Imagine hiding over 2 lakh crore of debt under shady heading "off budget items". In boom time tax collections under various heads grew 40%. This is a once in a millenium phenomena (not century). We should have been a budget surplus state. But our wise men blew all the money up and in addition managed to accumalate humungous debt. Its like winning a lottery and blowing all of it on alcohol. I dont know how we will manage in an environment where there is reduction in tax collections.... hmmm ... raid raj ... on innocent tax payers who will be portrayed as evaders. The list is long so shall leave it here. Imagine Lalu yadav doing a better job than Chidu .... atleast on the face of it .

Nuclear deal. Ahem . I do not know if it is good or bad. But when Congress came to power, his humble self , submitted suggestions from 17 different fora (including postal) to remove all taxes on an electric car called Reva. This could remove our dependence on imported petrol. What does one hear next, taxes on petrol guzzlings cars get reduced. I also sent a letter with a vague address .... Manohar Panikker , Chief Minister of Goa .... and viola .... the car becomes sales tax free in Goa. I am not sure if it was already in offing but happened. Had chidu and manmohan given sufficient break to Reva, for all you know we could have a global automobile giant in country. Guess which country's tax breaks promote Reva the most ....... UK. Can you believe this ..... the money government spent subsidising fuel ..... would have bought 1 crore Revas (assuming Reva would have been priced the same inspite of high volumes) ..... and thats more than all cars put together on Indian roads today. Unlike lot of countries in West, India is blessed with Sun round the year. Why is Manmohan not staking his government to capitalise on it ? Why is wind energy being ignored ? Go after nuclear .... but after having tapped all our strengths.

Politics make strange bedfellows ..... could suddenly make outcaste samajwadi party ... beloved. Not thinking before buying votes ..... so much for value driven politics .... being led by ... err ... our youth political icon ..... rahul gandhi .

As for party with mai baap attitude ...... they feel neglected ... if their ministers are not crowded for favours like out of turn Gas connection etc. Imagine 7 years ago you could have off the shelf gas connection from any gas supplier in India. Today .... you need to slog your butt off (and of course bribe) to get a government gas connection.

My opinions above does not mean I support BJP. The good thing about them is that they gave us Abdul Kalam as president (hindutva party and muslim president ...!!!) , they gave us Damodaran etc and things like golden quadilateral. Still I aint gonna vote for them .... given what happened in Mangalore and then the way the a set of youngsters partying in outskirts of Bangalore was handled .... who wants talibanisation of Karnataka ?

Luck By Chance

There is no industry as lucky as the Indian IT industry. I do not mean that the folks in the industry are not visionary or that they did not work hard. But luck had an important role to play. Lets take a case in point .....

Below average political leadership

Irresponsible and incompetent political leadership is the biggest boon for Indian IT industry. By doing Satyam like accounting jugglery GOI (government of India) has hidden huge deficits (losses) behind off budget items like oil bond, fertiliser bond etc. For Rajus to transfer fortune of Satyam to Maytas is sin but the leaders have conveniently transferred fortunes of ONGC to oil marketing companies.

When the Rajus could sin no more ..... they were jailed. When GOI could sin no more .... rather cover up their sins no more ...... Rupee fell from 40 to 50.

Rupee at 50 means growth of over 20% in revenue and 25% in profits for IT Industry assuming they do not get additional business this year.

The key for Indian IT is that Indian economy at any point of time be worse managed than US. This will ensure a favourable exchange rate.

Assuming Bush is once in a century phenomenon .... I mean you cant get worse than Bush ...... hail Chidambaram & Co.... may his party be in power as long as I am in IT industry.

Imagine having erstwhile Finance Minister , Jaswant Singh at helm for last 5 years. With all his prudence and sensibile approach which he demonstrated earlier, Indian economy would have been well managed implying dollar at 35 ... curtains for Indian IT ......kinda similar to whats happening to Japanese export economy (Sony included) courtsey stronger yen ..... hmmm all I can say is ..... lucky by chance ....err luck by chance.

Slow Down : A boon part 3

We had a new product release in our company and hence been quiet for some time.

Continuing from where I left last time, the biggest beneficiary of the slow down is the Engineering education system in India.

The last decade saw mushrooming of engineering colleges all over. Parents thronged to admit their children to these colleges as long as these colleges could show placements. To accentuate the problem the colleges started thinking only reason of its existence was to help students get a job. With an easy job market, it was not a tall order. They turned into a vocational institute and had lesser esteem in student's eye than a low end trainers like NIIT.


Typical expectations from a college :- building value system of their students, helping them develop a rationale problem solving based approach, enabling a smooth transition from student to professional life etc ; were no longer talked about. Most of the colleges did not have functional play fields or basic support for extra curricular. Forget things like research or publishing papers.

To accentuate the problem, the faculty after years of experience used to earn less than starting salary of graduating student. Only the dedicated few would not get tempted by higher salary or corporate world. As a result majority of the faculty was sub par.

How are things changing? With fewer jobs, college managements are forced to be progressive. This includes encouraging the faculty to persue post graduate and doctoral programs. Next given the poor job market ample amount of experienced professionals are now available to do faculty jobs. Last but not the least: - with fewer jobs, students are trying to take their studies seriously.

Signing off with a hope that we shall soon see a golden dawn for India

Slow Down : A boon part 2

I received three cute emails in follow up to my previous article, wondering who were the other beneficiaries of slow down. Hence I am breaking away from blogging only on weekends.

This is the SME sector of India. I spoke to handful of folks who own a manufacturing companies / units. These are very progressive folks. They believe in leveraging technology. However they had a problem while the boom was on, any respectable vendor was prohibitively expensive. Rightly so. Why should a company of the league of Infosys look at sub $2000 realization per man month in domestic business. To complicate it further, most of the work being outsourced from US was pretty low end and hence easy to deliver. The Indian SME segment would have wanted solutions built grounds up and require competence. Its human nature to take the path of least resistance and hence most of the companies worth their salt focused on international business.

The slow down has brought sea change. Suddenly companies like TCS is big on SAAS model and Infosys licensing its IP to Airtel DTH. Everyone is looking at domestic market. The refrain that Indian market is tough and dirty is gone. For lot of medium sized software companies India is suddenly a focus market.

Hence we have a sweet spot where in Indian manufacturing segment is becoming efficient and on the other end Indian software companies are moving up the value chain.

Will soon write on next beneficiary ... India's engineering education system

Slow down : A Boon for India??

I just came back from a marriage in Delhi. No one really cared about slow down. But in Bangalore it is big. Whether its media or whether a chance meeting with an old pal (ex colleague), slow down is the topic. Everyone thinks its bad for Indian IT. Let me introduce you to few folks. They gave me a different perspective. They rather have slowdown every now and then (though not permanently).

I met Rohit a passionate co-founder of a technology company. He is big on IT products targeted at SMEs. Their service offering is both SAAS and the conventional ownership model. Rohit loves the slow down. He could hire six youngsters whom he thought were excellent. He had not got to interview a reasonable guy in the last 2 years of boom (since co-founding the company ).

I had a brief chat with them. All of them were freshers (2008 batch engg graduates). They were extremely happy. Each one had a campus offer from "large companies". In a regular boom year, their parents and peer pressure would have forced them to join these companies. They took advantage of uncertain market conditions to convince all around to join this start up. Today when they exchange notes with their seniors working in the "large companies", they can only pity them because of extremely poor work content of their seniors.

However the curious side of me asked Rohit why did he not choose to recruit laterals when so many of them are available. He said, most of the laterals at 2-4 years experience level were one trick ponies who just knew how to perform a single job well repetitively. They were wasted and were no use in an environment where they need to provide solution every day.

Any nation in world becomes rich when backed by inventions (intellectual properties or IPs) of its citizens. Most of the Indian IT is not creating IPs but just doing repetitive low end work. This model can work only if exchange rate favours the dollars. That can happen only if US keeps creating new things and India keeps supporting the old ones. That is as a nation we are condemned to being stooge of outsourcing nation.

Given the nature of business and its history, an offshore service provider can easily out compete an innovation driven but domestic market focused company (for talent). Slow down is ensuring talent availability for IP driven companies (typically small). They are the ones which will get India leadership. Outsourcing industry can survive only if India is a step behind.

My second take away (though on a very small sample set of 6 freshers) is that some of the bright freshers are not going to waste their life being with one of the top IT services company which have only flashy offices to show for.

Will soon writen on the other beneficiaries of slow down .....

Satyam gone..... Wipro next

Satyam will not exist ... the question was never if but always when. Only the suddenness and the reason of demise caught people by surprise. It was given that consolidation will happen in IT industry. Everyone concurred on Satyam not making it.

I differ with the masses on the second name amongst big 5 - Infy, TCS, Wipro, Satyam and HCL. People think its HCL but my vote is for Wipro.

Lets examine weakness of Wipro

1. Exceptional leader at helm -
Mr. Azim Premji is best amongst all top IT CEOs. I am a big fan of his. I do not idolize anyone more than him in IT industry (minus FC Kohli). It took 6 exceptional people to do the equivalent in Infy what he did single handed in Wipro (TCS had still larger management bandwidth). To execute his vision would require exceptional leaders like Vivek Paul. Its very difficult to be lucky two times over. So we have a situation where in there will be a significant skill gap between number 1 and number 2. I have learnt things the hard way in life and this can be lethal even for a small organization , forget a giant like Wipro.

2. Succession planning
We never knew who after Ashok Soota or after Vivek Paul. The problem runs down the ladder. Most of the senior people give me an impression that their growth into a role or their passing on the baton was never planned. Most of the time progressions are rewards for previous job well done rather than ability to execute the new assignment. Last but not the least who after Azim Premji.

3. HR loosing imagination
For me Wipro's senior HR constitutes of folks who would do very well in an MNC. These are folks who could impress you in a short meeting but shall not be able to steer their organization to leadership. I could go on forever writing about the shortcomings. A glaring example would be that a friend of mine in Infy has 40% variable component in salary while his contemporaries in Wipro have just 20% variable.

4. Loosing out in campus recruitment / wrong philosophy in entry level hirings
Wipro does not get premier slots in engineering campus viz a viz its competitors. There are geographies where it even looses out to lower rung players like Cognizant. Its lower compensation than its competitors does not help. To make matters worse, entry level guy is not hired predominantly on potential but ability to answer questions which require rote.

5. Weak entry level training program
TCS and Infy have dedicated centers for training their entry level. Wipro significantly outsources the same. Also training is more vocational where in focus is on teaching individuals tools rather than fundamentals (however their WASE program for BSc folks is an exception). I know it will be strongly objected to by Wipro folks but I suggest they do a quick poll . This constraints them in hiring students from few engineering streams (Comp Sc/ Electronics etc).

6. Not walking the talk
Mr. Azim Premji ... no doubt is a very strong proponent of ethics. I have no doubt about Wipro's commitment to ethics. But down the ladder I feel there could be a disconnect. While bad apples are always there, the key question is when cornered are these principles the governing corner stones for people holding positions of responsibility. My personal opinion based on very limited datapoints is no. Besides I have heard of instances of team not being fair to new recruits (I suspect that it could be because recruiters get a better review if they are able to man a position at lower salary). I know of folks in mid management of Wipro who were not given a fair deal at time of joining few years ago and are today paying a price (slower than deserved career growth). Are they highly motivated .... answer is no. Ironically they have huge admiration for Wipro. So you have people about to move into leadership positions who are not going to quit because they like Wipro but are demotivated. The other glaring example dates back few years. There were a set of people I had interviewed and figured out in first 5 minutes that they had faked up their CV. Next I know they land up in Wipro. The recruitment could be a genuine error or just short cut to meeting target number of 2yrs experienced hires. I would not want to speculate but the scale and frequency of it in Wipro makes me asks "Is it systematic?".

7 . High stock ownership of Azim Premji
This according to me is a very positive point (and even for any investor). But lot of employees see any cost optimisation technique benefiting Mr. Premji rather than making the business (Wipro) competitive. I know lesser mortals will have limited thinking but unfortunately lesser mortals constitute 99% of any company.

Compare this with HCL. Shiv Nadar has found Vineet Nayar. As long as the marriage lasts its a deadly combination. HCL is overhauling its HR (has done leaps and bounds on that count). They have done huge internal PR on how they are not firing people. No recent exodus of senior management. However their campus program is managed by a guy who is very average (comes with disclaimer that I could be wrong on this count). But this is insignificant and transient. Its sad that in an industry where your biggest differentiator is manpower and campus the largest source of acquiring it, best folks are not put in charge of campus recruitment (across majority of IT services companies).

The last question is when do I expect Wipro to fall. In October 08 I was speaking to CFO of a semi conductor company who had previously worked with Wipro. He was shocked at my prediction of Satyam and Wipro. I gave it 2 years for Satyam and 4 years for Wipro. I was wrong on Satyam ... lets see how Wipro shapes out ....

As an investor, the best value I would get for Wipro is 2 quarters into the recovery.

Disclaimer : At no point of time I have worked with Wipro. My opinions are based on my experience including interacting with hundreds of individuals who have been (or are) part of Wipro. entire opinion is limited software services (export) business.