Enabling ICT for Rural India

While looking at the proceedings of FIRe (Future in Review), found the web-page for Rafiq Dossani who is doing ground-breaking research on IT as it relates to South Asia, and India in particular. Here is an excerpt from the Executive Summary of the project Enabling ICT for Rural India:

Some findings from the review were expected, such as poor infrastructure, high deployment and maintenance costs and the lack of content for eGovernance. Some less expected findings are that eGovernance services are overwhelmingly the most needed; that content is largely irrelevant to needs (itself indicative of wider problems of user and operator capabilities); but that user interest rises significantly when services can be delivered regularly and efficiently; that NGOs play a key role in understanding user needs and increasing awareness; and, finally, that rural capacity is not being enhanced through ICT.

Some problems exist because the strengths of the different stakeholders are not being used optimally. Thus, NGOs, which are strongest in understanding user needs and in increasing awareness, have diverted considerable resources to accessing bandwidth and paying for kiosk infrastructure. Organizations that are village-focused have missed the opportunity of maximizing coverage through Internet-based provision. All providers must deal with infrastructure problems outside their control, such as power problems. Partnerships in content provision are rare though greatly needed.

Our proposal for a new ICT model is based on separating the infrastructure from content provision and recommending that deployment of the infrastructure upto the block level be provided by technology specialists using universal service obligation (USO) funds. We also recommend the establishment of a data center at the state level in order to use content more efficiently. These approaches recognize the public-good character of the technology infrastructure. The Ministry of Rural Development and Panchayati Raj Institutions should create a framework of rules to enable state management of this process.


Finance outsourcing in the high-tech and electronics industries

Key Findings of an Accenture-sponsored survey conducted by the EIU looking into trends, risks and opportunities associated with finance outsourcing in the high-tech and electronics industries:

  • Finance is among the most outsourced functions.
  • Finance being outsourced by small and large firms at differing rates.
  • Executives are satisfied with outsourcing arrangements.
  • Barriers to increased finance outsourcing exist.

What are the primary benefits / objectives of outsourcing the Finance function?

  • sharper focus on core competencies
  • lower costs.

If you do not outsource finance and accounting functions but you do outsource in other areas of your business, please indicate why the finance function has not yet shifted to this model.
The finance functions are considered too critical tobe outsourced (54%)

What will be the primary drivers behind the increasing use of finance outsourcing in your industry?

  • Improved quality of service from outsourcing providers (46%)
  • Pressure on costs (49%)

In your own organisation, what are the barriers that stand in the way of a decision to outsource finance functions?

  • Desire for greater direct control of finance functions (68%)
  • Cultural resistance to change (42%)

In your view, what are the 3 primary risks associated with finance outsourcing?

  • Risk that quality of service is inadequate (63%)
  • Risk that in-house knowledge and expertise erodes beyond repair (42%)
  • Risk of breaches of data security (41%)

Shaping digital convergence through mergers & acquisitions

Useful EIU / PwC survey findings and report on the opportunities and the pitfalls involved in digital convergence and mergers and acquisitions (M&A). This is an exhaustive survey of 149 executives supplemented with over 30 in-depth interviews of industry veterans. Key takeaways:

  • According to Dow Jones CEO Richard Zannino, “I’ve done 20 or 30 M&A deals, and one thing I’ve learned is never to rely on revenue synergies, because they never seem to materialise. No matter how great the brands, no matter how great the match, you’re going to lose some revenue in the process.” For this reason, says Zannino, “I put more weight on cost synergies, and that’s what makes up for the lost revenue.”
  • Many executives prefer partnerships and alliances as a less risky way to explore unfamiliar terrain. But there are shortcomings, including an inability to control relationships, either with customers or even with other parties in the alliance or partnership. And risk aside, alliances and partnerships may also move too slowly to capitalise on fast-moving opportunities. By failing to place a significant bet, executives realise, their companies may fail to maximise the convergence payoff.
  • But for those organisations choosing the M&A path, the warnings from the research are clear. Be certain you’re pursuing a realistic strategy-and then compare the value of that strategy versus the acquisition price. Markets today are heating up and few if any strategies in the history of business have been pursued successfully at any price.
  • Which sectors do technology, media and telecom executives believe will become the overall winners in digital convergence?
    1. Entertainment content developers (42% respondents)
    2. Consumer electronics manufacturers (36%)
    3. Wireless operators and related service providers (30%)
  • As for the role of mergers and acquisitions amid the many likely success stories, the last word goes to a CFO from a large, US-based high-technology company: “We know a lot of companies are going to stumble badly, but a lot more are going to do really well. I’d have to say strategy is important, but in the end, it’s all in the execution. A great strategy, poorly executed, is a waste of everyone’s time and cash. But a decent acquisition, well executed, with loads of cost synergies, can generate enormous returns. So in M&A, all you need is a good idea-not even a great idea but a good one-coupled with great execution and you can achieve amazing results.”

Also, a useful side-bar on “How to make a strategic alliance work” on pg.21.

Can India Overtake China?

In response to a comment on an earlier post on China vs. India, I was doing some research on this topic. There is no doubt that China outperforms India currently, as visible in the macro-economic indicators in China & India: A visual essay by Deutsche Bank Research.

However check out the Foreign Policy article “Can India Overtake China?” where the authors write:

“… statistics tell only part of the story—the macroeconomic story. At the micro level, things look quite different. There, India displays every bit as much dynamism as China. Indeed, by relying primarily on organic growth, India is making fuller use of its resources and has chosen a path that may well deliver more sustainable progress than China’s FDI-driven approach. “Can India surpass China?” is no longer a silly question, and, if it turns out that India has indeed made the wiser bet, the implications—for China’s future growth and for how policy experts think about economic development generally—could be enormous… In a survey of 25 emerging market economies conducted in 2000 by Credit Lyonnais Securities Asia, India ranked sixth in corporate governance, China 19th.”

Also worthy of attention are some fundamental weaknesses in Chinese policies/actions which will manifest themselves in the longer term, as brought about by Jared Diamond in his book Collapse and summarised by the CIA Factbook:

“One demographic consequence of the “one child” policy is that China is now one of the most rapidly aging countries in the world. Another long-term threat to growth is the deterioration in the environment – notably air pollution, soil erosion, and the steady fall of the water table, especially in the north.”

Finally the best approach for both economies would be not to compete but collaborate and gain on each other’s strengths, as aptly pointed out by Stephen S. Roach in Morgan Stanley’s Global Economic Forum:

“Interestingly enough, as both of developing Asia’s largest economies look to the future, they do so with an eye toward emulating the other.

India currently has over 25 world-class companies, well-developed capital markets, a modern banking system, and a deeply entrenched rule of law. China is lacking in all of those key respects, and very much wants to move in those directions.

At the same time, India very much aspires to match China’s progress on the manufacturing front.”

How to play the market in oil and energy?

As a follow-up to my post from yesterday, let us see how we can play the market in light of the new developments in crude and alternative energy. Investing in crude oil futures / options is highly risk-prone because of the vast fluctuations and the global drive to reduce reliance on these energy sources. A better option to play the energy markets is mutual funds that invest in companies that not only mine and process crude oil but also in companies on the frontiers of exploration and that provide related goods and services.

First, we head over to Yahoo Finance’s list of the top performers in the Specialty – Natural Resources category. Our preference is for funds that have consistently shown great performance i.e. funds that show up in as many of the different lists – 3 month, 1 year, 3 year and 5 year – as possible. Here it is easy to see that Jennison Natural Resources has been a consistent top performer since it appears in all 4 lists. The only close competitor is U.S. Global Investors Global Res (PSPFX) which is ranked first in 3 of the 4 lists. Both these funds are rated 4 stars by Morningstar representing an almost similar risk / reward ratio. The 2 significant differences are in the minimum investment amount – $5,000 for US Global and $2,500 for Jennison – and in the expense ratio which is higher for Jennison (1.97%) as compared to US Global (1.30%). So the choice is apparent: if you have 5K or higher to invest and are willing to put it in one basket, go for US Global. If you’re like me and want to put smaller chunks of money in different investments, go for Jennison (PNRCX).

PNRCX also meets the requirements discussed earlier – if you see its holdings it has substantial (lucrative) investments in companies like GlobalSantaFe, Suncor Energy, National-Oilwell, etc. and no great exposures to the big oil majors like Chevron, BP, etc.

Interesting new additions to Google Labs

Google Notebook [via Free Hogg] attaches to your browser toolbar allowing you to:

  • Clip and collect information as you surf the web.
  • Organize your notes from the web page you’re on.
  • Access your notes from anywhere.
  • Make your notes public.

Google Trends [via orgtheory.net] analyzes a portion of Google web searches to compute how many searches have been done for the term you enter relative to the total number of searches done on Google over time. Also, when it detects a spike in the volume of news stories for that term, it labels the graph and displays the headline of an automatically selected Google News story written near the time of that spike. It also displays the top cities, regions, and languages for the term. Interesting tool for researchers!