The Cost of Onsite Hiring Just Went Down

The US Southwest Border Bill imposes an increased application fee of an additional $2000 for every H1B and L1 employee on a few Indian Offshore Services companies. Much has already been said about it by politicians, Indian companies and NASSCOM. [NY Times, Hindu]

In early July I had written a piece on the challenges of Local Hiring or onsite hiring. In it I wrote

Also, there is the issue of optics. Can you do X billion dollars of business in a country, with tens of thousands of employees in the country and hire just a handful from the local market? The law may allow it, but you have to do much more in the court of public opinion.

Little did I know that Senator Schumer was actually planning to change the law itself.

But perhaps this will be the turning point for onsite hiring. There are other good reasons to increase onsite hiring. Again, from my post

Going forward, local hiring will become more important. Winning business is now less about technical expertise, which is assumed. It is about domain expertise – do you understand my business process well enough? It is going to be pretty tough to build domain expertise organically – through the work the company does for clients. Hiring industry expertise into the company either from industry or from other consulting companies will become necessary to compete.

Indian Balance of Payments and Offshore Services

The RBI is concerned about India’s Balance of Payments. One of the reasons ascribed to the growing problem is the slow down in the Indian Offshore Services industry. From today’s FT

One reason, the central bank said, for the deterioration in the balance of payments was a decline in an “invisibles surplus”, caused in part by falling revenues to India’s prized outsourcing sector.

For my book I crunched some data from the RBI website. As you can see, on the Current Account, India depends a whole lot on the Offshore industry.

Without the Offshore industry being where it is today, the import regime could not have been as easy as it is today.

But I am a little confused on the timing of this. Given that last quarter was very good for most of the top companies, isn’t this now no longer a concern? Or is it that RBI data gathering and analysis lags public companies announcing their results by a quarter?

Real estate prices in India and California

Real estate in India looks really inflated to me. Two data points – one in Mumbai on very expensive flat in South Mumbai and another on a more modest flat in the Chennai. The annual rent on both is between 1.5 and 2% of the price of the flat. Yields on Indian government 10 year notes, is currently close to 8%.

One can draw two conclusions from this:

– It is far, far better to rent than to buy real estate in India. On a 2 cr. apartment the difference between buy vs rent is 12 lakhs per annum (and the peace of mind that GoI bonds give you)

– People who buy real estate at these prices are counting on capital appreciation and definitely not rental income. How much higher can it get?

On the other hand, in So Cal, a friend who thinks it is a good time to buy real estate in California, is making 8-10% just on rent (after costs).

Maybe those Mumbai fat cats should think about investing in California real estate. A much better long term bet, good rental yields and easy to manage long-distance.

I wonder if there is the makings of a business in channeling this investment from emerging markets with super high real estate prices to developed economies where post the financial crisis, real estate is quite depressed.

Indian Traffic – An Illustrated Guide

You break it, you buy the farm

Breaking these rules have a high probability of death or serious injury to self or car

1/ Stop at a red light, especially when there is cross traffic.

Dangerous, but it will never happen to me

Breaking these rules can cause death or serious injury but the event carries a low probability

2/ Wearing a seat belt in the front seat
3/ Not driving on the wrong side of a divided highway even if the U turn is more than 20 m. away

Dangerous to others (but not to self, although a car wash may be necessary)

4/ Stopping at Stop signs
5/ Stopping at pedestrian crossings (instead of speeding up) even when some pedestrians start sprinting across

Who’s going to catch me?

Pesky rules that are unnecessary. Break them if you can get away with it.

6/ Not using your cellphone without handsfree, especially when a cop is present.

These rules are a nuisance! (thank God there is no enforcement!)

7/ Using your horn only when necessary

Much of Driver Behaviour is not governed by Traffic Rules. But even there there is behavior that is rational, and behavior that is not.

8/ Praying to the gods to keep you safe before (or while) breaking rules 2 to 6.
9/ Leaning on your horn a few seconds before the light turns green.

Twitter Weekly Updates for 2010-08-22

  • Today in a line at the airport. I looked away to sneeze and somebody took my turn! When I confronted him he said "Oh! I didn't notice!" #
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  • It's Back: Totally Unnecessary And Damaging Fashion Copyright Bill Reintroduced | Techdirt http://bit.ly/9WwAIT #
  • Ajay Shah strikes a cautious tone on the India growth story http://bit.ly/bSAzLE #
  • Open source vs SaaS | When to Use Open Source in a Cloudy World http://bit.ly/9iLUSw #

Of Leaking Electricity

My Dad's wiring!
Have you noticed how in India if you visit your friends or family, you always need their help to turn the TV or computer on in the morning? Why? Because it is too darned complicated. For instance, to turn on the computer you may need to switch on some or all of the following:

– Wall socket
– UPS
– Power strip
– Second wall socket (because the power strip doesn’t have enough outlets)
– Computer
– Monitor

Yesterday I was being brave at my parents’ house and decided to try turning on the computer myself. I went down the checklist and turned on the computer, but the broadband modem wouldn’t turn on. After many minutes of jiggling wires and testing for loose connections I finally discovered this small button on the back panel of the modem – another switch – and of course it had been switched off.

Its almost as if we revel in taking something simple like switching on the TV and and making a sacred ritual out of it – a complicated series of actions which cannot be executed without rigorous training and is designed to obfuscate outsiders.

I used to find this exasperating until I got interested in clean tech last year. It turns out that the Indian approach to turning off power to appliances that are idle actually does save electricity. It probably also extends the life of the appliances, though I haven’t read any research on that.

In the US on the other hand, there is almost no attention paid to what is called “standby power” – the power consumption by appliances, especially modern, intelligent electronic appliances, when they are idle but not turned off. Standby power is a big source of lost energy. Lawrence Berkeley Labs has a website dedicated to educating the public about standby power. According to them, a typical American home spends as much as 10% of its power consumption on standby power.

Typical American attitudes to switching off stuff are that they a) don’t want to be bothered about it and b) find it funny when someone does it. As far back as 1933, James Thurber, in one of my favorite funny books, My Life and Hard Times, describes his mother’s paranoia

… mother lived the latter years of her life in the horrible suspicion that electricity was dripping invisibly all over the house.

because of which she would go around turning switches off all over the house even if there was nothing plugged into them.

I suspect most Indians won’t find this funny. Switching off stuff comes naturally to them. And if a good percentage of them don’t know that electric current doesn’t flow unless the circuit is completed, that’s natural. The other thing that is “piped” into the home is water and that drips all the time.

On the other hand, I don’t know if too many Americans find this funny either. If two thirds of them believe that Obama is a Muslim and a whole bunch of others hold these kooky beliefs I think there must be a lot of people like Thurber’s mother out there.

Android India

For the last two quarters Android has outsold iPhones in the US. It has real momentum behind it. All carriers in the US offer multiple Android smartphones and the rate at which new ones are being introduced can be only described as a frenzy.

I think Android can conquer the Indian smartphone market. There are many, many things going in its favor. Android is supported by Google but is open source and free. India is a price sensitive market. Apple’s options are fairly limited with the price of an iPhone being what it is. You’ll find corporate bigwigs and finance types carrying an iPhone but really, with a $500+ price tag without a contract, it is just too expensive. So unless Apple introduces an “emerging market” iPhone model it has no hope.

And I don’t think that will happen. They’ll be too concerned about reverse flow of cheap, unlocked iPhones back into developed markets. In any case, Apple is used to being the BMW/Mercedes of consumer tech. They can’t play the emerging markets game. Also, they have no or little support infrastructure in India.

The only potential problem I can foresee is if the hardware spec for running Android becomes too expensive. As an OS matures it gathers features and bloats. But Google seems to have thought of that. Froyo, which is the latest version, is supposed to be highly performance-tuned and could even run on the first generation G1 hardware (I am considering it for my G1). Spice announced their Android phone range today. The entry level Mi 300 is priced at Rs. 10,000. That is a very nice starting point. Expect prices to go down from there.

So if you have a mobile apps strategy in India, better start thinking Android. And Nokia should see the writing on the wall and go Android.

Twitter Weekly Updates for 2010-08-15

  • Sitting at Coffee Day in Blore. Logging on to Ozone WiFi took me 24 minutes. This is not free WiFi, mind you. Usability, help totally sucks #
  • Overeating in India. My logic: since I am jet lagged and short on sleep I need to eat more to keep the body's defences up 😉 #
  • Spoke to Jet Airways call center. Didn't have to spell out my last name! Pulled myself back before I started off with my P for Peter routine #

Another Perfect Notebook

I went to Odyssey in Chennai last week. I like to go to the stationery section in the book store. You never know what you’ll find.

This time I found a handy little notebook. I like notebooks. I know people who will take notes in a meeting on their laptops, some even on their handhelds. I just can’t. So I always carry a notebook around. This one is from a company called Kaapy (couldn’t locate the website). It has about 80 pages of good quality paper. The hard cover has a nice distinctive, monochrome graphic on it. Not too flashy, but not too plain either. The best thing about it is that it is light weight and just the right size to fit into your pocket.

It costs Rs. 36. I know this price can’t last, so I bought 6 of them.

A few years ago I wrote about another notebook from Rubberband. Strangely, that slim, stylish notebook was not carried by Odyssey. Instead they had a fat, ugly looking notebook which seemed to be a special edition notebook in collaboration with some movie. It cost some godawful amount that I can’t recall. Why would Rubberband do this and who are the people who buy this one, escapes me.

I guess notebooks are a little like companies. With success, they bloat and raise their prices.

Twitter Weekly Updates for 2010-08-08

  • Naren Pradhan's experience with an Olive Ridley turtle | Karuna’s Story « http://bit.ly/aqWN8J #
  • Aliens' deduction from watching Hollywood movies – Computer mkt share on earth: Apple 95%, Minority Report style computers 4%, Windows 1% #
  • Yipee! | Facebook Gains an Android Facelift http://bit.ly/aLAO8J #
  • Matthew Yglesias » Hard to Avoid Boosting Outsourcing http://bit.ly/au75sx #
  • The original Fanta was a Nazi product. http://bit.ly/cAU1dr #
  • Technology that doesn't travel well: Proximity sensors on a Mercedes in Indian traffic. #
  • RT @newsweek Fareed Zakaria: Build the Ground Zero Mosque – Newsweek http://bit.ly/aNmHli #