Why we give in to Temptation

I fail every day to my temptations of sorts. Getting up early and doing exercise would give me a healthy body but I give in to the temptation to be in the bed. Doing deep meditation everyday would give me great focus for my day ahead; I give in to temptation of day dreaming and distractions. Taking my work seriously in office would do wonders to my declining and stagnant career graph; I give in to the temptation of taking it easy. If I become stingy; I can get rid of all my loans and build a small fortune; I always give in to my temptations to spend.

I am not alone in my weakness against temptations. Sreeshanth allegedly gave in to temptation of making quick bucks in betting and so did Kundra, Shilpa Shetty and our beloved Vindu Dara Singh! Phaneesh gave in to temptation of carnal kind and the list is endless.

I close my eyes and try to imagine a world where humanity has control over its temptation. I open my eyes with shock. Imagine what would happen to world economy if citizens could not be tempted by the corporate? There would be no cigarettes, liquor, high end fashion outlets, coke, pepsi, smart phone wars on the high street. You would come across only life saving drug stores, organic unprocessed food stores and khadi outlets in city centre.
Temptation is probably nature's best tool to keep the wheel of samsara rolling. . If everyone starts waking up early; do exercise, meditation, have controlled and good diet and lead a very disciplined life; perhaps the life expectancy of the world would rise to 200 years. How would mother earth provide to this ever increasing population? If all the successful people never get distracted by temptation; would the underprivileged stand any chance to excel and succeed in this world? If the citizens of prosperous and well heeled countries do not become distracted by their comfort; would the third world countries ever get a chance to progress? Nature recycles the limited resources judiciously by the necessary evil, temptation.

What will it prove if NRN succeeds in his second stint with Infosys

Majority of the Infosys employees have breathed a sigh of relief at the news. While the actual outcome of this move is to be seen in times to come; it has brightened the moods like the pre monsoon showers in Bangalore. We live in an era of instant gratification. Eggs are counted before they are hatched. It is not very difficult to imagine that Infosys stocks will reach highs in coming week (unless and until counter balancing news of some US federal rulings about visa usage irregularity by India based Software service providers hit the news headline).

NRN’s return to Infosys draws comparison with some other famous comebacks like that of Steve Jobs to Apple or Pele’s return to Brazil’s national squad for 1970 world cup though he had announced retirement post 1966 world cup. The 7.5 Billion Dollar question is; “Will he be equally successful at that?”

There are critics and skeptics within and without the organization. I have heard the arguments that success of Infosys can also be attributed a large extent to the timing rather than the pure brilliance and talent of founders. TCS, Infosys, Wipro, Satyam, HCL, Mahindra BT; almost every India based IT companies grew handsomely in the first 25 years of their existence (1980 – 2005 era). Government showered the IT industry with ample tax holidays, there was no backlash in US, Europe for outsourcing jobs; recession was yet to hit West in the way it has been hitting in the recent times.  There was untapped market and Indian companies reaped the first arriver’s award. The test of the true mettle is going to be the next 25 years (2006 – 2030). What attributes have got the Indian companies to this status in last 25 years doesn’t guarantee the same trajectory in next 25 years. Everyone needs to reinvent, adapt and innovate to avoid dinosaurs’ fate.

Irrespective of the changed industry dynamics; NRN as an individual, commands respect. He is and will remain one of most admired entrepreneurs in India. He has led by example when it comes to imbibing the values of sharing credit, sharing fortune, not letting success get into the head, non-attachment to position of power, building successors, leading a controversy free life and what could be loosely termed as compassionate capitalism. He put his integrity and transparency above everything else. Some values that have really defined the character of the company, Infosys. One can only admire the decisions of Infosys like not bidding for any work for National UID scheme launched by Government of India when Nandan was chosen to lead the project; or not to make any attempt to gobble any of the assignments being executed by Satyam when it went bust.

It pains me to see that a man has been forced out of his well-earned retirement as the successors faltered. He is 67 years old now and has taken up the role for next 5 years! Perhaps it is not a burden for him as I see it. After all Infosys has been his middle baby. I wish him good luck as I wait and watch out for his magic touching my life one more time. J

Throw your stone at Phaneesh Murthy

Phaneesh Murthy has a knack for 2 things; he makes his employer and his secretary rich. The man who joins Infosys at the age of 27 years and in next 10 years plays a key role in taking its worth from $2 Million to $750 million; falters. For the same reason that Adam was thrown out of heaven; Phaneesh is shown the doors of Infosys. Somebody walks away with $3 Million in out of court settlement.

                Next 10 years, the man works in sheath to grow another company to 4 times its original size at the time of his joining. In the process, buying Patni Computers, the organization where the 4 founders of Infosys started their careers. Probably a symbolic defiance to his mentors and previous employers.
When everything was looking like a second dream run; the man does it again. He is named and shamed and fired again. Same weakness gets him down on two occasions. Will he rise one more time?

At least one man is wishing him good luck and success. The lawyer who filed the law suit against him twice.

Solution to the acute water shortage in India

Since our childhood we have been warned of the ever depleting natural resources and most importantly drinking water. Unplanned urbanization; exploding population and consumerism are certainly taking their toll. I remember my early childhood in Patna, taking cloth bags or jhola to the local grocery shops for buying vegetables, sugar, salt, masala and biscuits were the norm rather than an ecological fad. The provisions would be weighed and packed in paper bags made from old newspaper and books. Polythene was unheard of and unseen till some point in my growing up when it just became ubiquitous.
We would sell our old newspaper, books, plastic bottles, glass jars, nonfunctioning tube-lights and electric bulbs to scavenger boys who would collect the old articles door to door. Tight fitting piece of clothing would be passed on to the younger lot in the family; old clothes would be used as sleeping suits and finally would be spoilt and torn apart during Holi, the festival of colours. The torn clothes would serve as mop for a very long time in the household. We recycled everything. I would have taken my old rubber slippers to the cobbler at least 5 times before discarding them. Same would be true for my shoes.
These extreme conservation practices were not necessarily out of our consciousness about the environment; love for our mother earth or any of those traits from responsible citizen charter but affordability. Average household could not afford to be wasteful with their limited means. Thanks to the liberalization and capitalism; households which once used to be content with a gross income of 5000 rupees per month, find it a struggle to manage with an income of 5000 rupees per day!
We call it inflation; we say that the value for money has gone down; the purchasing power of rupee has gone south. We were able to buy a lot in those good old days. All this is true along with the fact that if I start having a lifestyle that I had in my childhood; I would probably be able to live on a tenth of my monthly expenditures.
There is another aspect to it. If I stop longing for those gadgets; changing that watch, upgrading that smartphone; going for bigger, sleeker HD Flat screen TV  or changing furniture and upholstery of my house every six months; probably the big companies will go into slump; they will bring down the markets; economy will fall apart; people employed in these luxury industries would lose employment; They will pull out India’s name from BRICS; we will be out of the league of progressive countries. Probably America and China will attack India vent out their frustration and disgust for India being such a pull-down. We pay the price of modernization. Capitalism looks like riding a running lion with no way to step down.
Anyways; the purpose of me writing this blog is a question that sprung in my mind while watching these news channels and knowing of the worsening water crisis we are facing in most of the big cities in India. Mainly the two cities close to my heart; Delhi and Bengaluru.
Is the water crisis really that hard to crack? We are surrounded on 3 sides by water still we do not have access to portable water.  I read reports about new economic corridors being built between Mumbai and Delhi. Is it not possible that we lay big water pipeline along Mumbai-Delhi highway? It should be something like the oil pipelines we lay for transporting oil; albeit much cheaper and simple. Pump the sea water from Mumbai in this pipe all the way to Delhi! Identify naturally occurring rocky reservoirs on the way and reinforce them appropriately so that they can be used for storing water. Fill all these open tanks and lakes on the way from Mumbai to Delhi. This should result in lots of evaporation of the sea water filled in lakes and tanks and hopefully should increase the rainfall in the area. The rain water would be fresh distilled water and not salty. This will increase the water table in the area and also increase the green cover. Spread these water pipes to the deserts of Rajasthan. Have very robust arrangement for rain harvesting and make sure that the rain water doesn’t drain back in the sea water containing lakes. These sea water reservoirs should be land locked like Dead sea and should not have any connection with water source. In 5-10 years of time; when our rain harvested tanks get filled with sweet water; the sea water reservoirs can be allowed to be emptied by evaporation (and no replenishment by pumping sea water). We probably would be able to extract the salt by scrapping the bottom of these reservoirs commercially.
If the Dutch can claim land from sea by building dykes; why cannot we reclaim fertile land and forests from Thar desert?
This could be applied to Bangalore with much less effort. Bangalore is just 150 km from Sea! And maybe we will put an end to the acute fresh water crisis that India is facing for good. It might have a ROI period of 30 years; but this should definetly deliver.

Tell me guys am I missing a point here?

Comparison of Infosys and TCS in light of Q2FY13 results

Infosys and TCS have announced their Q2 results for FY13 and it is a good time to compare the two and see where Infosys stands in comparison to TCS. This quarter has been important for Infosys, who in recent times has lost some of its reputation as being the industry bell-weather. Last few quarters have been in tough for Infosys and the peers have performed much better. TCS on the other hand has only consolidated its position as undisputed market leader.
In the analysis of the data below; we will try to see the signs of recovery and possibilities for Infosys.

INFY Vs TCS (comparison of size)

Parameters	INFY	TCS
Q2F13 Revenue (Million US$)	1797	2852.6
Quarter on Quarter Growth (%)	2.6	4.6
Operating Profit Margin (%)	26.3	26.7
Net staff	153761	254076
Attrition Rate (%)	15	11.4
Net staff addition in Q2F13	2610	10531
% Utilization	67.5	72.8
Revenue per staff per month in US$	3895.656	3742.44

TCS has done a sterling performance when in comes to quarter on quarter growth and curbing the attrition rate (amongst the lowest in the industry). What is remarkable is that it has overtaken Infosys on Operating margin as well!
The takeaway for Infosys here is that it has shown flexibility to reduce its margin. The revenue per staff for Infosys is higher than that of TCS though it has a lower utilization figure (67.5%). In fact if Infosys was able to increase the utilization to TCS level (72.8%); additional 43.5 MUS$ could have been generated in the quarter (theoretical). This could have pushed the QoQ growth to 5.5 from current 2.6.

Revenue from Verticals

Some of the observations are:

1.       Banking and Finance contribute the most for TCS while MFG contributes the least.

2.       In Infosys, the spread is more even with ECS being the smallest of all the verticals.

Note** For simplification; I have consolidated the verticals in TCS to match Infosys nomenclature

·         ECS = Telecom, Energy & utility and media & entertainment

·         RCL = Retail & Distribution, Hi Tech, Life Sciences & Healthcare, Travel & Hospitality and others

·         MFG = Manufacturing

·         Finance = Banking, Financial Services, Insurance

Geographic Breakup of revenue

Infosys has a much bigger exposure to North America and smaller exposure to Europe and India compared to TCS. This can be seen as a risk. Incidentally Infosys has just announced that it has completed the ground work for Infosys 3.0 strategy. As part of that strategy; Infosys has a vision to have a spread of revenues coming 40% from North America (and Canada); 40% from Europe (and UK) and 20% from rest of the world. Infosys also aspires to get even revenue; i.e.; 1/3 revenue from Transformation; 1/3 revenue from Optimization and 1/3 revenue from Innovation. (Interestingly that will not be by reducing the current revenues from high contributing area but by increasing the revenues from low contributing area. Talk of human ambitions!) New focus area like Sustainability, Engineering, Cloud, Products & Platform have been included. Infosys also aspire to do atleast 15% local hiring abroad to build a truly global company image. Infosys 3.0 is aiming at balancing the portfolio; strengthening the core and growing new business area. Incidently the credo for Infosys 3.0 is "Building Tomorrow's Enterprise". The credo for Infosys 2.0 was "Win in the Flat World" and that for Infosys 1.0 was "Powered by intellect; driven by values". How effective has been the implementation of Infosys 3.0 is to be seen in the times to come.

Top Contributing clients

Million Dollar Clients	INFY	TCS
>US$ 1M < US$ 5M	413	538
>US$ 5M < US$10M	205	269
>US$ 10M < US$ 20M	134	182
>US$20M < US$ 50M	195	108
>US$ 50M < US$ 100M	127	45
>US$100M	14	14

Infosys seems to have a significantly higher number of clients contributing revenue between 20 to 100 Million US$. This looks favorable considering that a smaller percentage of overhead cost (compared to revenue)will be incurred to serve a smaller number of high end clients . 

Conclusion

Infosys seems to be moving in the right direction. If the Infosys3.0 strategy is to click and bear fruits; we will see Infosys regaining its bell-weather tag. Acquisition of Loadstone; announcing salary hike for employees and keeping a low profile and cautious approach to the future might just work well for Infosys. TCS on the other hand is at the peak of its success and the expectations have already gone through the roof with its shares valuated at more than 14 times premium. Will be interesting to watch out for the last 2 quarters of the FY 13.

Note: The opinion expressed on the blog are my personal views. The data for the analysis has been sourced from the quarterly results published by both the companies on their websites.

Book Review by Anuradha Goyal

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Book Review on the Vault of Books

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