Inside the mind and heart of Venkatesh Sridhar

Just came across this article today on The Economic Times. I was stunned, the GoI is planning to provide free broadband access with access speeds of 2Mbps. This is on the lines of the free municipal bonds that exist in the US. So, what does this mean for the ISPs, how are they going to survive? We will have to wait and watch the reaction of ISPs to this decision.

Since BSNL and MTNL will be the ones providing this service it will surely affect their business as well. But, I think that this will come with the usual caveat of data transfer limit that will be imposed. So, MTNL and BSNL will not earn revenue from its lowest spectrum of subscribers who subscribe to those data transfer limit plans.

Today, I was just browsing the Times of India website and I came across their editorial page titled “DEVIL’S ADVOCATE: Bye-Bye Tata” by Sauvik Chakraverti, I was intrigued by the title and I clicked on the link to further read it and I found this article by Sauvik was about the recent land acquisition controversies in Singur. As I read on, I was shocked and appaled and I decided to let Sauvik know why, click on more to see what I wrote to him.

The placement seasons have started in the Indian b-schools and the buzzword on campuses is about who is coming on campus, how much they are giving and what is the kind of profile that one is being offered. In this blog, I am going to look at what I think is going to be one of the biggest problems faced by Indian companies today, in fact anyone who is hiring or planning to hire out of India. I will trace this over a two part blog.

In this first part, I am going to try and trace the reasons for what I believe is the failure of the Indian higher educational system.

India is facing a talent crunch. You may wonder, that how can a nation of 1.1 Billion people with roughly 54% (594 Million) of them being in the active work force face a talent crunch. Well, it is surprising yet it is true that the reason for the spike in salaries offered across the board is due to the ‘artificial’ talent crunch in India. Now, why do I call it an artificial phenomenon, it is simply because this talent crunch is due to the ineptness that is prevalent in our educational system today.

I would like to point out that I am going to talk primarily about employability and not the number of people who can be employed. So, here is what I think….. 

There has been so much noise being made about the introduction of 3G into India, right from the battle for spectrum amongst the CDMA and GSM providers and then it changed to that of a battle between Ratan Tata and others. Ratan Tata was willing to pay upto Rs. 1,500 crores for the additional spectrum required to commence 3G services. So, I decided to pen down what 3g stands for, my views on what the operators can do with it (that’s the second article)

What is 3G?

3G stands for Third Generation of Mobile communications. The services associated with 3G provide the ability to transfer simultaneously both voice data (a telephone call) and non-voice data (such as downloading information, exchanging email, and instant messaging). In marketing 3G services, video telephony has often been used as the killer application for 3G.

What does spectrum have to do with 3G services etc?

Since mobiles rely on the radio frequency for the communication, a spectrum is necessary for usage of mobiles and that is the reason why licenses where required in the first place to start a mobile service and it is the same case in India. You will now ask, why do they need additional spectrum when they already have spectrum to provide services since our mobile operators are providing services. This is primarily because majority of networks in India is either 2G or 2.5G. 2.5G is a stepping stone between 2G and 3G cellular wireless technologies. The term “second and a half generation” is used to describe 2G-systems that have implemented a packet switched domain in addition to the circuit switched domain. It does not necessarily provide faster services because bundling of timeslots is used for circuit switched data services (HSCSD) as well.

While the terms “2G” and “3G” are officially defined, “2.5G” is not. It was invented for marketing purposes only.

Hi guys,
I hope you did go through my report on the Broadband industry in India. I had suggested that broadband companies in India introduce unlimited plans and voila BSNL seems to pay have paid heed to my advice and have now offered an unlimited connection at 256 kbps for Rs. 900 per month or Rs. 9000 p.a. You can read more about the new plan here.

I think MTNL will follow BSNL’s footsteps and will introduce an unlimited plan of its own too. This is great news for all broadband users in India. Only thing being that the costs should be further brought down which I believe will as soon as competition wakes up and realised that these two incumbent telecom operators will run away with the entire broadband market if they do not change their offerings and the quality of their offerings.

The broadband sector is getting hotter and I hope that we as consumers of broadband enjoy a better, faster and affordable to us. Let us see what happens and I am sure that the other operators are going to do the same as broadband is the axis around which the Triple Play strategy will work.

So, here is wishing that many of us get great offers as customers in broadband.

Venky

Hi all,
I recently compiled a report as part of my course at S P Jain and I decided to upload it here for all of you to see. Please do go through it and post your comments here…

My project has been uploaded here Edit: I have lost the report both online and offline hence the link is dead. Sorry.

The project was initially in the .doc format and I converted it using PdfOnline.com

Venky

A friend of mine recommended me a link to a news site.

The article was on how a student took on Microsoft in a legal battle and won. His name is David Zamos. He was stunned when one day, Cleveland lawyers Robert Chudakoff and Edward Simms, along with San Francisco lawyers Roy Bartlett and Cameron Alston, allege that the sale cost Microsoft hundreds of thousands of dollars in “irreparable damage.” They demanded that Zamos hand over his eBay profits ($143.50) and cover the company’s court costs and legal fees.

You may wonder wat was Zamos’s fault he sold 2 unopened packs of Microsoft products. For further info you ….
can see the link.
The point I am making is the fact that when you find cases like these you are amazed that even in this materialistic times, justice is served and that there are principled people who are willing to take a stand and stick by their principles.

I cannot believe how in the world does Microsoft do all such crazy stuff like go and sue a student? Have they lost it or has money blinded them that even a lousy 60$ means a huge hit to their revenues of about 38 billion $???

Isn’t this what the Indian consumer always wanted. Cheaper air fares more competition and better service (hopefully) due to the intense competition brewing in the Indian Civil Aviation sector for quite some time now. Air Deccan came and announced unbelievable fares @ Rs. 700 inclusive of taxes though for a limited no. of seats. But, the blow had been stuck. Jet Airways, Air Sahara and Indian Airlines had already been hard pressed due to Apex fares scheme which though enabled them to have higher capacity but the revenues were strained. Though in it’s filing of the Red Herring Prospectus Jet Airways revenues have increased on a CAGR of around 50 %.

The Indian Govt. under Mr. Praful Patel, the Civil Aviation Minister announced an ‘Open Sky Policy’ which means that the Indian Skies are finally opening up to competition. So how ‘open’ will Indian skies will become is a big question mark as of now as there are too many nitty gritty yet to be worked upon. The biggest question is are domestic airlines capable of taking on competition from foreign airlines. It’s a different ball game to be the dominant player in a market where you can count your competitors on one hand. But with many business houses now keen to jump onto the no frills low cost airlines business the heat is going to be intense and also the fact that now even foreign airlines will be able to compete makes for an interesting scenario in the Indian Civil Aviation sector.

Mr. Patel insists that the govt. wants to have a level playing field. But, critics are of the view that the policy favours players like Jet and Sahara as they have more than 6 years of flying experience a major criterion for getting the nod for flying out of India which is where higher revenues lie. Critics say that the PSU Airlines namely Air India and Indian Airlines have not purchased any new fleet in the last decade and this would be a major hurdle for them. It is often said that govt owned airlines are competing not only with their hands tied behind their backs but also with their shoe laces tied. They are forced to fly on unprofitable routes primarily because of the Govt.’s stake.
From liquor baron Vijay Mallya to Bombay Dyeing’s Wadias everyone wants a stake in the Indian skies. So, the question that arises in the minds is whether there is enough space in the airline industry for an influx of new airlines. The Govt. does not want a repeat of the early 90’s when except for Jet all other private airlines went kaput. Also, is the domestic airline market big enough to accommodate such a huge increase in terms of seat capacity that will soon be available. Industry analysts are of the view that the domestic market is on a high growth phase and there is time before saturation levels are reached. The biggest factor still remains the price and affordability. How low would the prices be? Whether they would be sustainable and most importantly profitable for the airlines. In a price sensitive nation like India, price would be biggest factor that would determine who emerges as the dominant player.
The other aspect of the ‘new’ Civil Aviation policy is the proposal to privatize the process of modernization of the four major airports where the management of the airports would be entrusted to private players. This is said to be a ‘priority’ for the Govt. but there has been no urgency being shown on this front. Also, the cost of landing at the airports in India is one of the most costliest in the world. There has been no mention on this. Also, the Govt. has not come up with any plans to augment the existing capacity of airports and with an increase in the number of airlines that will be flying from, into and within India the already fragile infrastructure at these airports will be strained. Already when there are more than 6 airlines landing at the Mumbai International Airport, it causes some amount of discomfort.
Despite all these negatives the biggest positive of this civil aviation policy is the fact that there will be cut-throat competition and this will certainly improve the efficiency of the industry by a certain extent and the biggest beneficiary would undoubtedly be the customers. The scenario would be extremely good for the ordinary consumer as battles will be wages over Indian skies and Indians would as the Air Deccan punchline says, can ‘Simplifly’.

Well I know it may seem a bit pessimistic … but I dont see any reason for optimism. You know the biggest difference that is between India and China is that India is democratic. A democratic nation should not be autocratic atleast in theory which is not the case in India as every one knows and the other difference is that we have an established judiciary system .. a hallmark of every democracy and an stronger banking system compared to that of China. Recently, the judiciary system was slapped in it’s face by the Govt.

In 1987, the Govt. of India and ITC went to court over a dispute on the amount of excise duty payable by the latter to the former. The GoI claimed that the ITC should pay more excise duty than it had paid as it claimed that vendors sold cigarette sticks at a higher price than the MRP printed on the pack. ITC’s contention was that it had no control over what the vendors which is not only logical but also true legally. I will explain how. ITC has no control over the pan beedi shop who are the biggest sellers of cigarettes in India. How is it logistically possible for ITC to do so, in fact it is the responsibility of the Govt., it has an inspector for all these things who is supposed to see if any goods are being sold over MRP. Now, the Govt. failed in it’s job and was trying to pull up ITC for it’s own failure.

That was the logical part here comes the legal part. According to the Contracts Act, at the point of sale the title of the goods is transferred to the buyer thus in effect, ITC has no control over the pack of cigarette it has sold. It is now the property of the panwala and what he does with it will not in any manner affect ITC as it has no legal right over that pack and thus cannot be held liable.

Isn’t that simple? Yet, it took the Indian courts 17 years… yes!!! 17 years,… can you imagine so much waste of time and money. And the Supreme Court of India finally decides on the case and awards the judgement in favour of ITC.

The Govt. has to cough up the duty it took from ITC. What should it have done? It should have returned. The verdict was passed in Oct 2004 and in January 2005, ITC moves the SC and says the Govt. hasnt coughed the cash as yet. The SC asks the Govt. to refund the money within 15 days else it would have to pay interest. Now what should the Govt. have done … paid up right?

WRONG!!! The Govt. wanted to teach ITC a lesson and it passed an ordinance with retrospective effect from 1984 in which it decreed that excise duty payable would be calculated on the selling price regardless of the MRP and then sends a notice to ITC giving it 10 days to cough some Rs. 400 cr+ amount or else interest will be charged at 15%.

The Govt. wont respect the court’s decision and that the SC of this country, which is the most respected judicial institution in this nation. And to say that we are better than China in this respect is a big sham.

I don’t have much to comment on the Indian Banking system eventhough there are plenty of loopholes and there are many banks and FI’s who cheat gullible consumers out of their hard earned money and the Govt. doesn’t have a regulation in place for all this.

And then compare the Chinese determination to be the world’s largest economy with India’s Vision 2020. We want to be a developed nation by 2020 and what steps are we taking towards it…. NONE!! Instead now in the recent requests made by the Communist parties have gone and requested the Finance Minister to increase the tax rate and also for them a 9.5% rate of interest is not enough for the Provision Fund. What does Left think of itself? In trying to be the so called ‘MESSIAH OF THE POOR AND UNDERPRIVILEGED’ they are actually on the way to destroy our economy. What I hate about the Left is it’s hypocrisy. Sitaram Yechury gave a speech about how the poor people have not benefited of globalisation and all that and then sits into a very posh car ( could not see the model on tv ) and he is talking about globalisation not reaching the downtrodden?

So, net net I think China stands a better chance than India. What do you say?

Here is a report done by my friend

Sumit Mukerji on

How India and the Indian Corporate can tap the emerging global healthcare market.

Please do post your comments here or click on Sumit Mukerji’s name send him a
mail.

How India and the Indian
Corporate can tap the emerging global healthcare market.

The Indian
pharmaceutical sector has come a long way, being almost non-existent before 1970
to a prominent provider of healthcare products, meeting almost 95% of the
country’s pharmaceuticals needs.
The face of global
healthcare is changing and presenting new challenges for governments,
corporations and industry professionals. Increasing longevity in
the developed world places additional strain on healthcare budgets.
Pharmaceutical companies are facing challenges not previously encountered as
governments invoke emergency laws to override patents and consumer sentiment
encourages companies to introduce new pricing initiatives. Medical professionals
around the world are seeking to provide integrated medical and social solutions
to their patients and communities.

India is well
positioned to tap the top end of the $3 trillion global healthcare industry
because of the facilities and services it offers by leveraging the brand equity
of Indian healthcare professionals across the globe.

The domestic
pharmaceutical sales have increased from Rs.4 billion in 1970-71 to over Rs.200
billion in 2002, at a CAGR of 13.7% per annum. The total Indian production
constitutes about 1.3% of the world market in value terms and, 8% in volume
terms. The per capita consumption of drugs in India, stands at US$3, is amongst
the lowest in the world, as compared to Japan- US$412, Germany- US$222 and USA-
US$191. India spends 5.2 percent of its GDP on healthcare, which is comparable
with most other developing countries, which spend between five and seven percent
of their GDP on healthcare. These numbers indicate the enormous scope of the
healthcare industry open to India only to be tapped primarily because of the
skill set and talent of Indian professionals.

Indian pharmaceutical
industry is mounting up the value chain. From being a pure reverse engineering
industry focused on the domestic market, the industry is moving towards basic
research driven, export oriented global presence, providing wide range of value
added quality products and services. Government policies will play an important
role in defining the future of the pharmaceutical industry. The product patent
regime coming into effect from January 2005 will lead to long-term growth for
the future.

In the present
scenario, the growth of a domestic pharmaceutical company is critically
dependent on its therapeutic presence. The old and mature categories like anti-infectives,
vitamins, analgesics are de-growing while, new lifestyle categories like
Cardiovascular, Central Nervous System (CNS), and Anti Diabetic are expanding at
double-digit growth rates. Increased generic penetration, intense competition,
fragmentation of the industry has negatively impacted the overall value growth
of the domestic pharmaceutical market. In this scenario, to grow in the domestic
market, pharmaceutical companies have to constantly eye for innovation,
introduction of new value added products, product life cycle management and
enlarging their market reach. Indian companies are getting their act together to
tap the generic drugs markets in the regulated high margin markets of the
developed countries. The US market will remain the most lucrative market for the
Indian companies led by its market size and the intensity of blockbuster drugs
going off patent. An estimated US$45bn of drugs expected to go off patent by
2007 in US alone. Outsourcing in the fields of R&D and manufacturing is the next
best event in the pharmaceutical industry. Spiraling cost, expiring patents, low
R&D cost and market dynamics are driving the MNCs to outsource both
manufacturing and research activities. India with its apt chemistry skills and
low cost advantages, both in research and manufacturing coupled with skilled
manpower will attract a lot of business in the days to come.

The healthcare
industry employs over four million people, which makes it one of the largest
service sectors in the economy of our country. As medical costs skyrocket in the
developed world, countries like India have immense potential for what is called
“Medical Tourism”. India, with outstanding human resource talent and the setting
up of world class medical facilities, is now poised to take leadership in the
fast emerging arena of healthcare management which is witnessing the first signs
of globalization.

The healthcare
outsourcing market can be primarily divided into four major blocks of providers
(hospitals and physician groups), payers (healthcare insurance companies, third
party administration, etc), drug manufacturers (clinical research and bulk drug
outsourcing) and pharmacy chains.

New role
of diagnostic centres

In the changing scenario, the scope of diagnostic centres is expanding to
include new functions and address the needs of different clientele.

· Outsourcing
of diagnostic services is expanding to services including ambulatory/outpatient
surgery, women’s services, emergency care, rehabilitation therapy, clinical
laboratory services, and industrial medicine.

· Clientele
include hospitals, long-term care facilities, physicians’ offices and clinics.

The impetus for this arose from cost containment pressures in the healthcare
industry. Providers increasingly turned to outsourcing clinical services in
order to reduce overhead costs, ease administrative burdens and to obtain access
to current technology, clinical support, departmental management services and
allied healthcare personnel.

Diagnostic Service centres have the option of being

· Joint
partners with hospitals to operate diagnostic out-patient departments

· Non
hospital based diagnostic centres offering integrated services

· High
profile specialised diagnostic clinics in specific areas such as women’s
diseases, osteoporosis clinics, orthopaedic clinics.

The once much hyped
medical transcription is looking down, but outsourcing in imaging, disease
management and claim processing are the new areas to look out for. Estimates
show that the revenue of medical transcription industry in India is expected to
drop from $38 million in 2002 to $26 million in 2006, a nine per cent loss per
annum. But according to the National Association of Software and Services
Companies, by year 2005, the Indian BPO companies will be able to grab business
worth $800 million from the US healthcare companies alone. Significant
opportunity awaits Indian outsourcing service providers in this field thanks to
growing competitive business environment and technological and legislative
changes that are taking place worldwide

However, the recent customer demand for new
products and services, increase in competition and a real-time business
environment are making BPO an important toll for achieving success for
healthcare majors, a NASSCOM report says.

With the global healthcare industry
increasingly under pressure due to regulations and the need for cutting cost,
there is a huge potential for Indian IT companies to tap this market,
particularly in the more advanced areas of healthcare such as imaging, disease
management and claims processing. India’s inherent strength is the quality of
our human resource pool. We have the analytical thought process that is required
to develop complex applications and manage complex process, which is of utmost
importance for the healthcare BPO particularly. Also, the Indian companies have
an edge as they can offer a large number of value added services like diagnostic
analysis by highly qualified medical professionals at a much cheaper cost.

Several Indian
companies are presently providing solutions such as customer management systems,
maintenance of electronic medical record services, etc. to healthcare service
providers, health insurance companies and life sciences and medical equipment
firms.

On the opportunity for Indian BPO companies
in the healthcare sector most Indian companies have not yet evolved in terms of
developing a global outlook. Customers are today looking for service providers
who can give them multiple options like a multi-shore model to deliver to any
need from applications to consulting and from processes to managing the
infrastructure. Unless we have the ability to service these multiple needs, a
BPO provider would not be viewed as adding value and Indian BPO companies would
come of age only when they build these capabilities.

Other areas which the Indian companies can
tap relate to clinical research organisations that conduct various pathology
test on patients of new drug development. Companies are also getting their
facilities accredited by the College of American Pathology, the global standard
for pathological governance.

A model which is being well
recognized by the world healthcare market is of lot of significance to India.

The new ‘hub
and spoke’ model is a means of continuing efficient and high quality provision
of specialist services in selected locations, while at the same time improving
access to general service support functions over a wide region including smaller
towns. Under this model, highly specialised service will be maintained in few
select locations known as ‘hubs’ and high volume lower complexity services will
be provided through a network of several widespread locations called ‘spokes’

Hubs

‘Hubs’ are tertiary healthcare providers that deliver specialised health care
services including same-day surgery, endoscopy, dialysis, chemotherapy,
pulmonary functions, ultrasound, radiology, mammography, CT scan, specialist
consulting suites, diagnostic service, pre-admission and post-discharge
services. These services require high technology and specialist doctors. The
objective of setting up hubs rather than specialist hospitals is to reduce the
average number of days of inpatient stay, thereby reducing number of beds
required and maximising patient turnover for specialist services.

Spokes

‘Spokes’ form the primary / secondary level of healthcare where a diagnosis is
made of patients’ illnesses and the patient is referred to ‘hubs’ for
specialised treatment of critical illnesses. Other general procedures are
performed at the ‘spokes’. These procedures require low technology, less
sophisticated equipment and general physicians’ services. ‘Spokes’ provide
services such as primary care, physician consulting services, orthopaedics, ENT,
general surgery and referral specialists. ‘Spokes’ provide improved access to
patients in all geographic locations.

Opportunity for India

There is an opportunity for hub and spoke centers to enter India in the near
future. This is due to the following:-

· The
‘spokes’ will improve accessibility to standard healthcare to the small town
populace in India who currently have inadequate health services. These will
serve as reference centers for ‘hubs’ located in highly populated metros.

· At the
‘hubs’, patients receive immediate sophisticated healthcare for critical
illnesses and do not unnecessarily pay for bed usage where same day discharge is
an option. Providers benefit due to better utilisation of high technology
equipment and lower investment on beds.

· Players
wishing to be tertiary providers offering specialized services will prefer to
set up a ‘hub and spoke’ network rather than a specialty hospital. They will
have to invest only in ‘hubs’ and can form relationships with existing players
who will act as ‘spokes’. In addition, they will be able to target a larger
customer base, thus making it easier for providers to break-even.

Diagnostic Centres

Currently, there are only few stand-alone diagnostic centres in India; most
exist as a part of a hospital. Traditional Diagnostic centres will emerge in
India in the medium to long term.

· The need
for diagnostic centres will arise when hospitals face cost containment pressures
and seek to outsource certain services.

· Diagnostic
centres may be set up in conjunction with ‘hub and spoke’ networks. A ‘spoke’
may choose to refer patients to a diagnostic centre instead of providing the
service itself.

Retail pharmacies

Currently there is only one large chain of pharmacy retail outlets in India. RPG
has entered into a joint venture with Hong Kong based retailing major ‘Dairy
Farm International’ to set up a chain of healthcare product retail stores
‘Health & Glow’ similar to drug store chains in Hong Kong, Malaysia and Taiwan.
RPG plans to set up about 75 stores in major cities in the next 5 yrs.

Large pharmacy retail outlets and chains will be prevalent in India in the near
future, since: · Pharmaceutical retail will come to be regarded as part of
healthcare service by patients following the trend in developed countries, S.E.
Asian countries. Healthcare providers will give them more importance.

· The quality
of products, nature of service, health education offered by pharmaceutical
outlets will become important. Brand value will be associated with retail
pharmaceutical outlets and chains.

· Pharmaceutical manufacturers will prefer large pharmaceutical outlets since it
will make distribution easier for them. Pharmaceutical chains will be set up for
better distribution and networking.

As the NASSCOM report puts it; while the
India was quick to plunge into ITES solutions for the healthcare industry in the
form of medical transcription, now Indian vendors have to work on improving
their know how and domain knowledge to tap into the high potential offered by
the global healthcare industry.