The Bridge that connects globalization and localization

The IT-led globalization, which has been propelling India's growth, has certainly taken a beating owing to recession in US. Did we see it coming? Of course we did. How do we get out of the rut then? Well, before we actually delve into possible solutions for future course, let's see how we benefited from the onset of IT-led globalization? At the outset, the low-wage workers entered the global economy -- initially through their involvement in export production and eventually evolving as a new class of consumers.  Secondly, the proposition benefited rich nations of the developed world -- where consumers expanded their standard of living by buying low-cost, high-quality goods from poor countries and where workers were to gain from being involved in the production of more sophisticated products exported to increasingly prosperous developing economies. 

The first benefit is hard to dispute. India's standard of living, for example, has more than doubled during the past 15 years. The problem is with the second benefit. A sense of economic insecurity is creeping rapidly up the occupational hierarchy -- from software programmers and engineers to medical and legal professionals -- a palpable sense of shock is spreading rapidly into the knowledge-worker occupations that have long been shielded from economic adversity. This loss of confidence in the second benefit of globalization has led countries to swing from the theoretical promises of globalization to the self-interest of individual countries -- in essence, "localization."

What India is witnessing today is perhaps a result of the onslaught of localization. Wages could go up and corporate profits could come under pressure.  Moreover, localization could also spell heightened risks of protectionism -- especially if the global economy slows and unemployment starts to rise. In this scenario, localization could ultimately give rise to accelerating inflation, higher interest rates, greater volatility in financial market etc.  And, of course, the protectionist ramifications of localization could prove equally challenging for the beneficiaries of globalization's first win -- dynamic new companies in the developing world and the employment growth they generate.

No wonder then that we see companies making local announcements on the lines of investing in India for India. With a huge population of youth, India is a promising market and global companies don't want India to slip into a protectionist mode. Consider this, Generic Electric announced its focus on localized medical equipment for India; Philips stressed on localized products for India; IBM said it will lower center of gravity in India. An increasing number of companies are focusing on responding to local needs, languages and cultures to deliver variety of high quality goods and services, thus offering consumers more choices and better quality. For these companies, localization is not an option, it is an imperative. An examination of the revenues of just 2006 Global Fortune 500 companies that is known to be actively localizing their products or services yields annual total revenues of approximately $5.9 trillion (with profits of $365 billion).

Huh! So, what is in store for us? For starters, the phenomenon opens a window of opportunity for India as a country. As a leading CEO of a global PR consultancy puts it, transnationals need to make their brands relevant in ways that are faithful to the core attributes of the brand, yet flexible enough to accommodate diverse trading patterns, differing consumer tastes and behavior, and a variety of businesses, media and political cultures. The real challenge for PR is to help organizations bridge that which is global and that which is local. Unfortunately, there is no magic template for doing this. What there is, instead, is a steadily growing body of wisdom that comes from doing it, day in and day out, in numerous markets around the world.

People like us have been involved in doing such things day in and day out and the potential for us is enormous. Let's work towards building more bridges…

Digitization and globalization

When I see the world from a technology perspective - am tempted to ask - is globalization a result of digitization? Well, that's not really what I would want to write about though as am sure several management luminaries would have shed enough light on the same. Not many organizations have an innovation DNA and not many of us have the adaptability DNA. And, this has become an imperative in today's digitized, globalized world. An increasing number of organizations are focusing on faster-innovation-to-market so as to generate competitive advantage. And, as these organizations propel themselves forward, employees unable to adapt to the changing landscape are left behind. What's also true is that in most cases it's the key resources that would be left behind leading to what management experts call reverse salient. It's upon the employees and more importantly the organizations to seamlessly move together. If any one fails, the growth of the organization would be at the expense of losing key resources that provide ammunition at regular intervals – like a rocket launch.

India win T20; enable globalization of cricket

Pakistan was on the verge of a sensational victory and Misbah-Ul-Haq, an unlikely hero. Alas, he didn't know there is a malayali in every corner of the world. The T20 tournament couldn't have been better what with the grand finale seeing two arch rivals battling it out in and out of the field. The brief version is set to take on the cricketing world by storm with a slew of leagues on the anvil. The first of its tournament had all the necessary embellishments - dance, music and masti. Countries vying to host the next one will certainly include more add-ons, package it effectively for a wider audience including non-cricket playing nations as well. After all, T20 is set to feature in Olympics.

Towards better valuation

"Whether a brand identity lasts or not, what we relentlessly pursue is better valuation" - statement from a brand definer, which when tweaked up a little made relevance to the human endeavor - quest for prominence. Guess, it has a lot to do with the increasingly flatenning world. The result of such an endeavor slowly unravelled when I flipped through the Business Standard today. India Inc gained momentum in M&As - signing two deals a day on an average. A whopping 62 M&A deals valued at $3.37 bn were announced in August, against 59 deals worth about $0.94 bn in July, according to data compiled by Grant Thornton. Well, a collective effort of a nation towards development, pursuing better valuation.

Cut to the FMCG sector in India. AC Nielsen has identified 24 categories in the personal grooming space growing at a rapid pace. The 'feel good' category, which include perfumes, body washes, perfumes, after shave lotion is experiencing high double digit growth. Companies like HUL, Dabur and Marico are making a killing with young Indians increasingly investing in looking good. With the competition in every field increasing, unique differentiator is an imperative. While organizations in India are pursuing competitive differentiators, even individuals are working towards the same - a distinct fragrance, to begin with.

Step up PR efforts for India

India's image building exercise seem to be not as far reaching as it should be with the enormous success the country has had in offshoring of IT Services. People from Spain, France, Italy and Denmark thought India topped the list of poor countries whereas Sigaporeans and Japanese perceived India as a modern nation, high on development and technology. This is according to a study by Synovate, an international research agency. Interestingly the study doesn't feature perception from America or for that matter England. Well, these are markets where Indian companies have made a mark when it comes to visibility. With competition increasingly becoming intense in US and UK, companies are slowly developing marketing strategies for other markets that include Spain, Italy and France - all developed nations. Hopefully, the perception will change remarkably in the days to come when the manufacturing and IT firms from India spread their presence.

It would also be interesting to delve into the respondents profile of this particular survey. Any business savvy profesional or for that matter anyone aspiring to be succesful in this increasingly flat world will know the potential about India and its promise. The positive take away is that there are two brands (if I may call them so) strongly associated with India - The Taj and Mahathma Gandhi. India could leverage the success of these two brands to build its image across the world.

Threat of backward integration

Ras Weigner is a happy man today. Bangalored two years back, Weigner clawed back into the IT world with the conviction of ousting offshore outsourcers. The 29 year old has now equipped himself with a business degree to supplement his IT skills and 5 years of experience. An analyst with the IT department of a large corporation, Weigner’s task is to offset the onslaught of offshore workers, especially their move beyond the IT department.

Weigner might be a sole warrior but he is certainly masterminding a disruption. The information technology industry is set to witness watershed events in the near future. As in every industry, disruption will shake up the hitherto stable and continuously growing phenomenon, offshore outsourcing. With the vast majority of companies involved in offshoring focused on initiatives primarily aimed at sustaining current business, mostly by venturing into new niches and markets, the impending threat of backward integration from the customer is overlooked.

A recent report in CIO.com stated a non-profit organization, involved in sending work offshore, now gearing up to compete with Indian offshorers in all spheres viz., cost, efficiency, responsiveness, productivity and quality. The said organization is reportedly targeting a CMMI level certification, which will enable it to showcase clearly the quality, responsiveness and productivity of the in-house IT department to the business heads, thereby offering enough parameters for comparisons with offshore outsourcers. What have they done? A project management team to coordinate all midsize and large development projects to improve on-time performance plus an architecture group to standardize systems and applications to reduce costs and increase productivity. In short, all that an offshore outsourcing firm offers.

Businesses are now more aware of offshoring and its impact. With the market perhaps at a certain level of maturity, companies are emphasizing on managing outcomes than managing operations, they are stressing on realizing business value than cost. Makes perfect sense for IT professionals in India – well, who doesn’t want to move up the value chain? With IT getting closer to the business person (than the CIO/CTO), the need for professionals with business and technology acumen is increasingly becoming an imperative. And, a large chunk of the work will have to be executed onsite for want of thorough market knowledge and understanding of business processes. While the Indian companies are initiating this transition by leveraging the now established coding skills and entrenched relationship with customers, the CIOs on the other side are fortifying their department to compete with the offshorers.


CIOs are nurturing a new breed of programmers. These are teams proficient in dexterously troubleshooting information related inefficiencies in order to enable senior managers to substitute automated monitoring for direct control. Usually, such jobs are not outsourced and even if it is, IT department has the competitive advantage over outsourcers on costs (assuming work’s done by a local person onsite because the nature of work is such), know-how (how does it work internally? Consultants rarely know) and motivation (the passion to go the extra mile is absent).

By creating a set of standard methodologies across the organization to increase productivity, enhance delivery times and to improve quality coupled with a team equipped with analysis, design and collaboration capabilities, the CIOs have begun a new game. Reduced to mere implementers of air-tight projects, offshorers are precariously positioned and gradually will be gobbled up by organizations outsourcing.

Well, it isn’t cricket in the US anymore. Offshorers better learn baseball and American Football.

Basic Instinct

Kevin Pett strolled into one of the busiest malls in Bangalore with a two fold objective. One, to buy a sherwani for the impending wedding of his sister-in-law, and two, to check out "god's creative marvels" that's loitering the mall. Turning to his left once inside the mall, he followed his instincts to check the "creative marvels." His brain knew his quest for the beautiful creatures and constantly send signals to his body to turn at the right places and park itself wherever appropriate - like retrieving right information from the right server at the right time. Information on Demand, in short. Well, when it came to spotting, sieving and savouring the beauties, all Kevin had to do was follow the signals emitted by the brain.

What if the shop selling Sherwani knew Kevin's taste or his instincts? Intriguing, it may sound, but it's possible now. With an integrated supply chain they can get really early indications of consumer trends. They can do real-time trend analysis, data analysis on what customers are shopping for. The analysis gives them up-to-the-minute insight into buying trends. For instance, it can discover people's color preferences for clothes earlier than it could by just looking at data from a few specific stores. Consumers' buying behaviors over all the stores are tracked in real time, and the data is analyzed to predict future trends. In essence, the store can deliver what Kevin want before he knew he wanted it.

Reverse Salient to impede India’s progress in IT

Reverse Salient to impede India’s progress in IT

IT’s happening

Post the opening of its markets several years ago, India has progressed from being an outsourcing destination with a business model primarily based on cheap labour to one based on intellectual arbitrage. Along with the burgeoning IT outsourcing market came the rapid strides of development in telecom, healthcare, education and manufacturing. Today, India isn’t just about cheap coders; it is an integral part of the global supply chains. While the IT Services sector has been expanding its footprints at a scorching pace, it has also caused a ripple effect of growth in other sectors as well leading to the emergence of a consumer class that is larger than the total population of US. The substantial investments pouring into the country towards various sectors reflect how bullish the world market is towards India.
Sustaining the growth
Milestone growth in FDI inflows during 2006-07. As of April-October, FDI flows touched $6.1 billion compared to $2.6 billion during the first eight months of the previous fiscal.The days have been bright hitherto. However, the unprecedented and unmatched growth seems to have overtaken India’s developmental process. India, as several reports suggests is bursting in its seams as issues pertaining to infrastructure and availability of quality human resources increase by the day. There was a time, in the distant past, when development took simple forms – tractors replacing bullock-carts, mobile phones reaching more people than land phones, cable television over satellite, e-mails gaining prominence etc. But development gets more complicated as it advances. The simple forms become more elaborate, and they begin to merge into ever more complex systems. Today, a lot of the developments undertaken form components of such large and complex systems, and its success can hinge as much on other components of the systems as on their own specific developmental qualities.Today, it has become imperative to not only understand the systems but develop foresight on how they're likely to evolve and how such an evolution can be leveraged to gain advantage.
Well, it is certainly difficult to develop foresight. However, the concept of “reverse salient,” can be effectively put to use to understand developments, the various components forming the developmental process, the larger ecosystem under which the development takes place and the repercussions of the ecosystem formation. The concept of “reverse salient,” is borrowed from military jargon, where it refers to a section of an advancing force that falls behind the front and hence slows the progress of the attack. All developments evolve in a similar fashion with advancement hampered by reverse salient that occurs in the developmental process, some components of it or in the larger ecosystem.

Losing Edge

The proliferation of tier II and tier III IT companies in India have resulted in IT Services/ offshoring getting commoditized. With cost undercutting prevalent, Tier I IT companies are required to play the game differently and in came the strategy of scale-game. Companies are now ramping up operations by thousands of employees per week. Is India game for this? Well, a sneak-peek at the attrition levels of Tier I players reflect that all’s not well. The reverse salient here is that in a scale game, knowledge inventorying is overlooked, which will cost the company dear. With intellectual capital forming an integral part of any IT services company, retention of employees is a necessity as it enables institutionalizing processes, skills and knowledge. Hence, until and unless a company has a robust employee retention strategy in place, it is better to refrain from scaling up. Why not play the specialist?
The total direct employment in the Indian IT-ITES sector is estimated to have grown by over a million, from 284,000 in FY 1999-2000 to a projected 1,287,000 in the current fiscal (2005-06)

In addition to the nearly 1.3 million-strong workforce employed directly in the industry, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment. Indirect employment includes expenditure on vendors including telecom, power, construction, facility management, IT, transportation, catering and other services. Induced employment is driven by consumption expenditure of employees on food, clothing, utilities, recreation, health and other services.
There’s perhaps only one resource that can beat the rising oil price – an Indian engineering graduate. India produces about 3 million students from its universities each year. According to a survey by National Association of Software and Service Companies, about 25 percent of them are engineering graduates. The number seems to be not enough, at least in terms of quality. The available quality resources come at a premium and their wage increase is creating waves not just in India but across the world. Last year, according to the Global Salary Planning Report, Indian wages grew more than and other Asia-Pacific country - by 13.5%. In the IT sector wages grew by almost 20%.The advantage of cost arbitrage suddenly seems to be diminishing. Another case of reverse salient. Having witnessed enormous growth in outsourcing, shouldn’t the country have had a team ensuring seamless growth by building a robust IT ecosystem? The reverse salient here is not only unavailability of quality engineers but number of engineers to cater to the IT industry’s requirements. A report by Nasscom-McKinsey suggests that India could come up short in the global outsourcing industry by about 500,000 professionals before 2010.
With the IT outsourcing market increasingly getting commoditized, feverish campaigning is on with Indian IT majors harping on “India Moving Up the Value Chain.” This will imply the need for Indian companies to “innovate” and develop software products. Does India produce graduates who can work on innovative software products? The answer is no. Out of the 350,000 engineers spewed annually by various colleges, less than 25% are employable in IT services companies. Software product development requires intensive research, understanding of the market place and a mind that is tuned to continuous innovation and unfortunately Indian engineering graduates does not measure up to that challenge. The need to nurture talent that can innovate is the reverse salient here.

Intellectual Arbitrage

That’s the new mantra today, a transition from labour/cost arbitrage to Intellectual Arbitrage. The idea is to focus on the numerator part of businesses and not restrict offerings based on denominator. One needs to be capable to change the mindset of existing/prospective clients from “lower price” mentality to “better/efficient outcome at the same price.” Vertical knowledge coupled with horizontal know-how is essential to take such a proposition forward? Can Indians do it? Well, revisiting the reverse salients and ensuring proper investment to get rid of such salients could enable India to change the battle ground where Intellectual Arbitrage will be the decisive factor.

Shift from newspapers to TV

Deccan Herald in its edit page carried an insightful article on "The Fourth World" links. According to NRS 2006, the country's 230 million TV viewers (in 112 m TV homes) now exceed its 203.6 million newspaper readers, while the number of cinema-goers has declined from 51 million to 39 million a month. FM radio listeners now total 119 million. Indian language newspaper readership is fast growing, especially in the Hindi belt, while the comparable figure for English dailies has been stagnating around 21 million.

For me the figures reflect an unhealthy development. Why is TV viewership increasing? Does it reflect lack of investment of time in reading or is it the advancement of technology so much so that news is better viewed than read? Quite startling is the fact that readership of english dailies has been stagnating, which makes me even more skeptical about the declining reading habits.Worse, what happens when an increasing number of people shift to news on the move? Imagine the complexity of controlling messages being disseminated...

World Cup 2006

It has been over 2 weeks since Italy trounced France in the final of World Cup 2006, yet there is so much being written about it as if the greatest sporting event is still on. Well, every event will be remembered for something special. And, if there's anything negative, all the more better for it to be imprinted in ones mind. This world cup final will be remembered forever for Zizous head-butt. And, Zidane will go down memory lane as not only a great player but one who has a fiery temper. Like Mike TYson is remembered for chewing Foreman's ear...

Network Effect

The effect of "networking" is enormous.I have personally experienced the network effect through the modern communication tool - e-mail. What I have observed is that it is effective, participatory or intelligently interactive only if the topic is open and provides room for people to extend their expertise. "What should a company do to ensure effective re-branding?" The topic elicited abundance of thoughts that for a moment I thought the mail box would collapse. Remember, it's a one-line question which attracts response that gradually evolves into a 1 page document or more. HOwever, a 3 paragraph comment on "business model of IT companies" with 3-4 questions elicited limited response. The fact is that if one can initiate a topic that is simple and interesting, the attention it receives can be leveraged to plant "key messages" discretely to influence the participants. Imagine the power of planting "key messages" in a network run by the Harvard alumni. In the age of personal media, when consumers are increasingly becoming prosumers (producers and consumers), the need for PR professionals to devise intelligent campaigns that effectively influence the right audience is a challenge.

Elections sans PR strategy

The much awaited results are out. And, for a change the exit polls got it right. Yes, Karunanidhi, the 83 year old is at it, yet again. What is evident is that people are not really concerned about continuity, which will enable the State to undertake progressive measures effectively. Even more evident is the fact that the ministers aren't bothered about continuity. A sneak peek at the elections over the last couple of years will reflect 'election campaign' sans any direction or focus. What was the theme for AIADMK or DMK for this year? Except for competition bashing, there hasn't been anything concrete to take back for the citizens. With credibility hitting the trough, it has become imperative for the dravidian parties to first, establish credibility among the masses. And, in this light, portraying leadership and their track record should have been a priority. Secondly, conceptualizing a theme which is close to the masses and periodically seeding it within the masses, could be the next step. And, finally, reflecting upon the successes hitherto. The campaign has to have a professional approach, which has been conspicuously absent from the elections. The Jayalalitha government would have realized this by now and hopefully will chalk out a robust strategy to come back to power.

PR ploy in politics

"Nearly all men can stand adversity, but if you want to test a man's character, give him power," said Abraham Lincoln. We have winessed this in Indian politics, not once, but many times across various States. I can't recall any leader who had any inclination to genuinely serve the masses. The pre-election campaigning, laced with unbelievable and unachievable promises continues to reverberate in the constituencies gearing up for election. With unfullfilled manifestos glaring at wannabe leaders, the campaigning ought to be packaged differently. And yes, don't they do it in style. Let's revisit campaigning in Kerala. The UDF and LDF were running neck to neck in the race to the elections with infighting and pandemonium rocking both parties. A new twist was certainly required to gain prominence, in the media and in the minds of people. News about one of the most respected and the architect of LDF, the veteran V.S.Achuthanandan, being deprived of a ticket to election rocked the State. A clever ploy to gain significant mindshare and if the exit polls were to be believed, the strategy has paved way for the LDF.

Dance Bars' brand equity

The euphoria about legalising or shutting down dance bars has achieved one thing for sure - recognition for "dance bars." While the awareness was earlier restricted to Mumbaikars and frequent travellers to the commercial capital, the increasing number of print and electronic coverage has taken the concept of dance bars even to the conservative towns spanning India.The members at these bars who have been at the receiving end all this while will also be feeling elated remotely as their recognition would also go up to some extend. Well, am talking about the girls who would want to market/position themselves and leverage this opportunity. Many of these girls would go back to their respective home towns and get into some trade they know well. Obviously, the first priority would be to dance, where they can certainly command a premium as the "Mumbai Returned." And, even if they enter the oldest profession, the return will be a premium.

Came across an interesting report by Tanzeel Merchant,which reflects the risk-averse investment preference of Indians. Quite startling that only about 1.4 per cent of retail assets are in equities or related instruments. The average Indian invests the remaining 98.6 per cent of assets predominantly in fixed income instruments, life insurance, real estate, gold etc.While the fixed income assets yield only about 6% returns, the high returns possible through equities seems to have very few takers. Look at countries like Japan & US, Investors there have a significantly higher ratio of their assets invested in equities, either directly through the purchase of stocks and mutual funds, or indirectly through pension plans. Equities as an investment option are well accepted in these markets and their ownership widespread.A look at some of the companies by m-cap throws some interesting facts - the avg Indian owned very few shares.Be it TCS, Wipro, HLL, ITC or Reliance.

Can PR play a role here? Guess, the awareness levels amongst young Indians commanding high disposable income will have to significantly go up. Your thoughts...

Finally, the media seem to be turning in favour of PR. A meeting with the Bureau Chief of a leading business daily witnessed watershed events in the PR/media fraternity. In the Chief's words,"We have finally come to terms with this growing profession, PR."With competition looming large and pressure to produce breaking stories, relationship building seems to be the only way out for journalists. Yet another development noteworthy is the new initiative by leading US dailies to produce one news to the world. Yes, they are doing away with the hitherto strong strategy of creating separate content for print and online media. The challenge for PR pros is simply going to sky rocket what with the need to extend exclusive news for several journalists spanning diverse media platforms.

"PR is still in a nascent state." Well, when is it expected to mature? I've been hearing this for over 6 years now and given the rapid progress that the country is witnessing, one can be confident in pointing out the enormous contribution made by PR. Many PR practitioners still flay journalists, getting back the same from them. They belittle clients and the point of contact. Why does this repeatedly happen? I had the privilege of working with a veteran marketing wizard who once told me that,"you create what you think." I think, it holds true for PR as well. No, I don't think but it is indeed true. Indian PR practitioners try and target only one application, and that's invariably the media - print media, 99.9%. They (ideate, conceptualize) dissect client organization and it's departments for possible news stories getting 1-30 clips of print. Is it a one time effort? Do they broadly think of setting of a campaign. The answer is no. Most of the practitioners try and work out one month or one day PR solution - be it a launch or corporate results. There is absolutely no objective behind any exercises.

I think, practitioners of this trade will have to come out of the "media" coccoon and weave their networking strength to encompass "word of mouth" and new technology application. Consider the mobile phone, blogs, movies, matches,competitions etc. Can't PR play a role in reaching directly to the TA? As long as the practitioners depend solely on journalists, they'll continue to receive brickbats.

Quite intriguing! can money entice journalists to pen down reports that will transform their own nation into pits? Well, it certainly seems so going by the recent events that shook America. One of the prominent newspapers there has reported US govt funding a PR agency to plant favourtable reports in Iraqi newspapers. The PR agency reportedly paid journalists to write about US funding and rebuilding initiatives in the country. If money can buy anything,PR can create anything.

Picture this, how would Ford sell a million cars in India without planned promotion, i.e, sans ads, PR,DMs and other below the line marketing activities. How about Oracle and SAP? Well, the world would have been genuine. Technology will sell for what it is worth and not for its brand value. People will get hired for demonstrated success and not based on pfaff.
Well, am not crazy to come out with weird imaginations and then sending it out to even weird readers. The other day, while speaking to some Oracle professionals, I gathered that an Oracle Apps suite is available for 75 lakhs(it could also be in crores). However, another colleague brought me a letter where the same application was "hard-sold" for 20 lakhs. Well, if I delve further, am pretty confident of getting the same at rock-bottom prices. How is this possible? Well, it is how cleverly you package your product and present it to a particular target audience. In this case, a corporate was charged nearly 4 times more for the same "cd" than an SME. Delve a little further and you'll see how cleverly the communication professional enabled Oracle to package a "cd" and earn 4 times more.