Tuesday, June 12, 2007

BPO --> KPO --> EPO

Yes - now a new one ;-) Engineering Process Outsourcing (EPO)!! Outsourcing engineering services to India holds enormous potential. With a large number of labor driven and repetitive tasks, it fits the outsourcing bill to perfection. The labor-intensive engineering processes that can be outsourced are structural drafting and detailing, conversion services, cost estimations and a lot more.

Government of India has undertaken a survey on the scope of Engineering Process Outsourcing (EPO) for Indian companies, the Engineering Export Promotion Council (EEPC) has conducted the study and it claims that EPO business would grow by 10 times in the next seven years and will touch $30 billion.

Tall claim? I don’t know. But they certainly are talking figures.
EPO is expected to keep the Indian BPO story rolling.

Read on....

Saturday, June 9, 2007

The KPO Compass

When the service industry in India started, everyone spoke of "Call Centers" (apart from software development of course). That is because, by and large, it really was nothing more than voice calls (inbound and outgoing). Then, companies started adding "non-voice processes" which gave birth to a new term - "ITES or IT Enabled Services". Time went by, and these things were called "BPO - Business Process Outsourcing". And then came KPO which broadly means the outsourcing of various kinds of "knowledge work".

Knowledge Process Outsourcing has definite connotation and can not be used for all kinds of the outsourcing activities. Broadly speaking, KPO involves the following activities:

  • LPO
LPO stands for legal process outsourcing. LPO a breadth of legal processes, such as patent application drafting, legal research, advising clients, writing software licensing agreements and drafting distribution agreements.
  • RPO

Kiran Mazumdar Shaw coined this term. RPO means Research Process Outsourcing. Clients outsource their R&D work and RPO is most popular in the biotech industry.

  • HRO

HRO stands for Human Resource Outsourcing. HRO comprises activities such as, payroll management, training, staffing, retirement and benefits planning, risk management, compensation consulting, etc. These activities are outsourced by which the client can concentrate on their core competency.

  • MBPO
MBPO stands for Medical Business Process Outsourcing. Medical transcription, billing, claim processing, etc. are the chief activities of MBPO.

As time goes by, processes mature, and new players try to carve out new niche areas and lay claim to it, new terms are coined. But at the end of the day, it's all the same idea, just a different domain.....

Thursday, June 7, 2007


Tuesday, June 5, 2007

Why Outsource to India?

The answer is simple. Outosurcing to India cut costs by about 50% ;-) Outsource to India for technological agility, quality, flexibility, cost control, time-to-market and competitive advantage.

Here are some interesting facts I found on IndiaWebDevelopers relating to outsourcing:
  • India exports software to 95 countries around the world: outsource expertise in global methodologies
  • 82% of the US companies ranked India as their first choice for software outsourcing
  • Bill Clinton applauds India 's brainpower: says Indian-Americans run more than 750 companies in America 's Silicon Valley . "You liberated your markets and now you have one of the 10 fastest growing economies in the world," said President Clinton.
  • Bill Gates says India is an IT superpower: strikes strategic alliances with Wipro and Infosys to develop applications on the .Net platform
  • Outsource to a mature industry with world-class systems, systems and quality. Of the 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian. India will soon have the highest number of ISO-9000 software companies in the world, according to Nasscom
  • IT is one of the Government of India's top five priorities.

Saturday, June 2, 2007

Web 2.0: What Is It Really?

According to my pal Wiki, "Web 2.0", a phrase coined by O'Reilly Media in 2003, refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis and folksonomies — that facilitate collaboration and sharing between users. Though the term suggests a new version of the World Wide Web, it does not refer to an update to Web technical specifications, but to changes in the ways systems developers have used the web platform.

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As the name suggests, Web 2.0 describes a set of next-generation Internet technologies. It's about social networking, user-generated content, glowing drop-shadowed logos, blogs, AJAX, mashups, and tagging. It's the next revolution on the Web!" These protocols and tools make it easier to create online applications that behave dynamically, much like traditional PC-based software. They're also highly social, encouraging users to manipulate and interact with content in new ways. Web 2.0 pushes computing power off the desktop and onto the Internet, which means less time and money spent on PC software administration. As a general rule, Web 2.0 tools are also less expensive than traditional software — and many are even free. Because they're Web-based, all you need to get started is an up-to-date browser.

People aren't happy with just a site anymore. Now they want it sprinkled with magic fairy Web 2.0 pixie dust before they're happy ;-) But the fact is that NOBODY has any idea what it really is! Ask a dozen tech pundits to describe Web 2.0 and you're likely to get two dozen explanations as to what it is. According to Tim O'Reilly, "Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform." The precise definition remains open to debate.

Friday, June 1, 2007


Finally! I feel like a free bird ;-) Time flies when you are buried under a workload which would crush two or three demigods! Anyway, the good news is that I am back to full time blogging. So keep visiting :-) Take care all you folks!

Monday, May 7, 2007

Virtual Appliances - The Good, The Bad & The Ugly

I was going through Dan Kusnetzky's blog and came across this interesting piece of writing on virtual appliances. Read on.

Every now and then, a supplier of an IT application or tool tells me about their plans to encapsulate their product into a virtual machine and deliver it to the market. Although this seems to be a great idea, this approach isn't always the best way to approach software distribution.

  • The Good — an encapsulated application or tool is easy to install. All that's necessary is to copy the virtual machine file and virtual machine "Player" to the target system and away you go. All of the chores involved with installing the operating environment, database software, application framework software and the application itself have already been done. If the application or tool is difficult to install properly, the vendor might be motivated to offer it as a virtual image rather than requiring its customers to go through a painful process.
  • The Bad — virtual machine files have a tendency to be large. If the supplier's intention is that organizations acquire this software by a download process, it may take quite some time and consume quite a bit of network resources from the time the button was clicked to the time the software has actually arrived safely. If the organization is in a region known for unreliable network service, this process may be a major obstacle. Since one size won't always fit everyone, the organization would be well advised to know how the virtual image differs from the software that is delivered in another way. It would also be wise to learn what steps are necessary to tune or optimize this software.
  • The Ugly — software licensing can rear its interesting head and make the organization adopting this software into a villain! Since an entire operating system, database software, application framework and application software may be part of this virtual machine image, it may bring along with it a licensing conundrum. It's very easy to make and run multiple copies of this virtual machine. It is also very easy to share this virtual image with partners and customers. A few key questions to consider are:
    • Does the organization need to acquire (and pay for) software licenses for each layer of software in each virtual machine that is stored or used on their network?
    • Does it have the right to share this software?
    • Does it have the right to modify this virtual image in any way before deploying it?

If all of this software is protected by an open source software license, the organization may not face additional charges or restrictions. If the company has a site license from each of the vendors of each of the layers of technology in the virtual machine image, if may be able to run multiple copies within the ways of their own facilities but not share the image with others.

It would be very wise for the organization's IT department to find out what licensing applies to a virtual image. It would be much better if the terms and conditions of use are known and the appropriate operational and administrative procedures defined before a virtual image is unleashed on the network.

Some suppliers of operating systems, database management software and application frameworks have such a complicated and confusing set of licenses for their products that the answers to these questions might be hard to find.

Is your organization using virtual appliances? What tasks are they performing? Has your IT department learned something that others should also know?

Saturday, May 5, 2007

A Virtual Appliance Powers Wiki!

MediaWiki is a virtual appliance that powers Wikipedia. It is a darn nice piece of software, well proven given the enormous community of use it sustains over at Wikipedia - and many, many other smaller sites. This appliance contains all the necessary software, including operating system, database and MediaWiki, to run a wiki installation as a "black box".

Visit the MediaWiki Project Page for more details. You may even download MediaWiki to create and manage content collaboratively.

Wednesday, May 2, 2007

Virtual Appliances

What exactly are virtual appliances? I am confronted with this question more often than not. This is how Wiki answers the question:
A virtual appliance is a minimalist virtual machine image designed to run under VMware, Xen, Microsoft Virtual PC, QEMU, Usermode Linux, CoLinux, Virtual Iron or other PC virtualization technology, providing network applications like firewalls or webservers. Virtual appliances are a subset of the broader class of software appliances. Like software appliances, virtual appliances are aimed to eliminate the installation, configuration and maintenance costs associated with running complex stacks of software. A key concept that differentiates a virtual appliance from a virtual machine is that a virtual appliance is a fully pre-installed and pre-configured application and operating system environment whereas a virtual machine is, by itself, without application software.

The VMware Technology Network (or the VMTN) draws an interesting analogy between computing appliances and virtual appliances. A computing appliance is a class of computer product which is designed with a specific function in mind and has limits on the ability to be configured beyond that specific function. Generally, the reason devices are called appliances is that they share some characteristics with more traditional household appliances. In that regard, computing appliances tend to be:
  • Designed to provide a specific set of functionality
  • Limited to specific vendor provided configurations
  • Closed and sealed devices
  • Not repairable or upgradable by the owner
  • Simple with a limited user interface
  • Intended for plug-and-play installation and setup
A virtual appliance is similar to a 'traditional' computing appliance and is designed with a specific function in mind. The major difference is that instead of being built on a physical computing device, a virtual appliance is built using virtual machine and can be run on any virtual platform. A virtual appliance starts with a pre-installed and pre-configured operating system. In addition to the base operating system, a virtual appliance contains a pre-installed and pre-configured application. The application may have multiple components and services to provide the required functionality.

The key benefit to building virtual appliances is that developers/vendors no longer need to build, test, and ship physical hardware devices while they still maintain the benefits of providing a ‘sealed’, purpose-built solution. The key benefits to users of virtual appliances focus around simplicity. Virtual appliances can be deployed in a user's environment quickly and easily with very little interaction.

Friday, April 27, 2007

Aim High!

"Shoot for the moon, and even if you miss, you'll land among the stars."
I have found this to be true time and again. When I aim high, I don't always achieve the level of success I am shooting for, but I always achieve a far greater level of success than I'd previously imagined possible. For example, I applied to a couple of investment banking firms for a summer project. They did not offer me any decent project [aah...the impediments of being an undergraduate :-( ] but I got a call from MDI, Gurgaon! I will be the first ever undergraduate to do a summer project at a premier Indian B-school. So although I missed the moon, I landed among the stars.

The power of setting goals....the power of aiming high is tremendous. The sky really is the limit!

Wednesday, April 25, 2007

Financial Values for Kids!

I happened to read an article (Raise a money-smart kid) which reiterates the fact that the process of relating to our money begins from a very young age. Like all other things, how we see our parents relate to money will have an effect on how we relate to it. All parents want their children to appreciate the value of money and to understand it from a young age, so that as they grow older, they make better finance related decisions.
Here are some tips from the article:
  • When children ask for something that you do not want to purchase, don’t just say no or tell them we don’t have money. Explain to them why you are choosing not to spend your money on that particular item.
  • Give an allowance and create a spending plan with their money. For example, a portion of the money goes into a savings jar, a portion goes into a spend jar and a portion goes into a giving jar.
  • Invite kids into the account balancing activities.
  • Teach kids how much things cost.
  • When you find yourself making an impulsive purchase, explain that to your kids.
  • Have open communications at home regarding money. Being secretive and stressed will be passed on to children

PS: This is not a parenting blog ;-) Just happened to like this article.

Tuesday, April 24, 2007

Microsoft Silverlight - Flash Killer?

Microsoft Silverlight is a cross-browser, cross-platform plug-in for delivering the next generation of media experiences and rich interactive applications (RIAs) for the Web. It integrates with existing Web applications and, of course, almost all Web technologies you are already using like Ajax.NET Professional or ASP.NET in common.

Read this article by Tim for more info.

And here's what the critics have to say -
Flash killer my ass ;-) I'm sure it'll have a few neat and useful features, a bunch of poorly implemented features, and a whole bunch of half-assed Flash rip-offs. Bottom line, it'll find a place with .NET guys who don't have a Flash background and probably a few other groups of people. But a Flash killer? Come on.... And that's not a comment aimed at your use of the term Flash Killer, Aaron. I know that's a term that's been thrown around about this since the world got wind of it. It's such a Microsoft idea. Replace rather than do something that hasn't been done. Like I said, it'll have it's place but to think any of us are going to switch over...

Monday, April 23, 2007

XP --> Vista --> Vienna ?

Windows Vista may well be on its way out. Reports from PCWorld suggest that Vista's successor, Vienna, is due in 2009 (just two years from now!). Actually, Vista was expected to release by 2003, but that didn’t happen. Microsoft was forced to put more work on developing Windows XP SP2 rather than giving time to Vista. Finally, Vista ended up losing features like WinFS, native HD DVD, FireWire-B support, enhanced speech recognition and PC-to-PC sync. Vienna will hae it all and it might just include a brand new file system and a new user interface which eliminates start menu and toolbars.

I believe the probability of Vienna releasing in '09 is very low. If it is really true, then upgrading to Vista doesn’t make any sense to me.

Friday, April 20, 2007

Smart Investment Questions

Continuing with our series of "Investment Thinking", here's a list of questions that you should ask yourself before making an investment:

1. Do you believe in the business the company is in?

2. Does the sector have growth potential?

3. Are you sure you want to be part of it?

4. Are you willing to stay in for the long haul?

5. Are you willing to not get perturbed by temporary price setbacks?

If you have answered yes to all the questions, you are on your way to making a smart investment!


Just when I thought I knew all of Life's answers.........They changed all the questions..

Thursday, April 19, 2007

"The Travails of Single South Indian Men"

A great piece on why typical South Indian men don't get any girls in town. Itz zimblee Hilarious ;-)

Yet another action packed weekend in Mumbai, full of fun, frolic and introspection. I have learnt many things. For example having money when none of your friends have any is as good as not having any. And after spending much time in movie theatres, cafes and restaurants I have gathered many insights into the endless monotony that is the love life of south Indian men. What I have unearthed is most disheartening. Disheartening because comprehension of these truths will not change our status anytime soon. However there is also cause for joy. We never stood a chance anyway. What loads the dice against virile, gallant, well educated, good looking, sincere mallus and tams? (Kandus were once among us, but Bangalore has changed all that.

Our futures are shot to hell as soon as our parents bestow upon us names that are anything but alluring. I cannot imagine a more foolproof way of making sure the child remains single till classified advertisements or that maternal uncle in San Francisco thinks otherwise. Name him "Parthasarathy Venkatachalapthy" and his inherent capability to combat celibacy is obliterated before he could even talk. He will grow to be known as Partha. Before he knows, his smart, seductively named northy classmates start calling him Paratha. No woman in their right minds will go anyway near poor Parthasarathy. His investment banking job doesn't help either. His employer loves him though. He has no personal life you see. By this time the Sanjay Singhs and Bobby Khans from his class have small businesses of their own and spend 60% of their lives in discos and pubs. The remaining 40% is spent coochicooing with leather and denim clad muses in their penthouse flats on Nepean Sea Road. Business is safely in the hands of the Mallu manager. After all with a name like Blossom Babykutty he cant use his 30000 salary anywhere. Blossom gave up on society when in school they automatically enrolled him for Cookery Classes. Along with all the girls.

Yes my dear reader, nomenclature is the first nail in a coffin of neglect and hormonal pandemonium. In a kinder world they would just name the poor southern male child and throw him off the balcony. "Yes appa we have named him Goundamani..." THUD. Life would have been less kinder to him anyway. If all the women the Upadhyays, Kumars, Pintos and, god forbid, the Sens and Roys in the world have met were distributed amongst the Arunkumars, Vadukuts and Chandramogans we would all be merry casanovas with 3 to 4 pretty things at each arm. But alas it is not to be. Of course the south Indian women have no such issues. They have names which are like sweet poetry to the ravenous northie hormone tanks. Picture this: "Welcome, and this is my family. This is my daughter Poorni (what a sweet name!!) and my son Ponnalagusamy (er.. hello..).." Cyanide would not be fast enough for poor Samy. Nothing Samy does will help him. He can pump iron, drive fast cars and wear snazzy clothes, but against a braindead dude called Arjun Singhania he has as much chance of getting any as a Benedictine Monk in a Saharan Seminary.

Couple this with the other failures that have plagued our existence. Any attempt at spiking hair with gel fails miserably. In an hour I have a crown of greasy, smelly fibrous mush. My night ends there. However the northy just has to scream "Wakaw!!!" and you have to peel the women off him to let him breathe. In a disco while we can manage the medium hip shake with neck curls, once the Bhangra starts pumping we are as fluid as cement and gravel in a mixer. Karan Kapoor or Jatin Thapar in the low cut jeans with chaddi strap showing and see through shirt throws his elbows perfectly, the cynosure of all attention. The women love a man who digs pasta and fondue. But why do they not see the simple pleasures of curd rice and coconut chutney? When poor Senthilnathan opens his tiffin box in the office lunch room his female coworkers just dissappear when they see the tamarind rice and poppadums. The have all rematerialised around Bobby Singh who has ordered in Pizza and Garlic bread. (And they have the gall to talk of foreign origin.

How can a man like me brought up in roomy lungis and oversized polyester shirts ever walk the walk in painted on jeans (that makes a big impression) and neon yellow rib hugging t shirts? All I can do is don my worn "comfort fit" jeans and floral shirt. Which is pretty low on the "Look at me lady" scale, just above fig leaf skirt and feather headgear a la caveman, and a mite below Khakhi Shirt over a red t shirt and baggy khakhi pants and white trainers a la Rajni in "Badsha".

Sociologically too the tam or mallu man is severely sidelined. An average tam stud stays in a house with, on average, three grandparents, three sets of uncles and aunts, and over 10 children. Not the ideal atmosphere for some intimacy and some full throated "WHOSE YOUR DADDY!!!" at the 3 in the morning. The mallu guy of course is almost always in the gulf working alone on some onshore oil rig in the desert. Rheumatic elbows me thinks.

Alas dear friends we are not just meant to set the nights on fire. We are just not built to be "The Ladies Man". The black man has hip hop, the white man has rock, the southie guy only has idlis and tomato rasam or an NRI account in South Indian Bank Ernakulam Branch. Alas as our destiny was determined in one fell swoop by our nomenclature, so will our future be. A nice arranged little love story. But the agony of course does not end there. On the first night, as the stud sits on his bed finally within touching distance and whispers his sweet desires into her delectable ear, she blushes, turns around and whispers back "But amma has said only on second saturdays..." In one last effort here we attractive young men have taken on alter egos which may interest some of you women: 1. Gautam Kumar Raja, will now be known as Joshua Perreira 2. Sidin Sunny Vadukut, henceforth will be known as Dev Chopra 3. Ashwath Venkataraman is now Vijay Desai 4. Sudarshan Ramakrishnan no more, from now he is Barath Sharma 5. Gautam Chandrasekharan will now respond to Alyque Shah Do mail me any time for a meeting with one of the above. One week notice if Italian or Chinese food is involved, or if the individual is expected to dance.

PS: Not written by me! so please dont flame me :p

Wednesday, April 18, 2007

When to Say No to an IPO

Are you planning to invest in an IPO either because you are getting the shares at par value or because the company you are investing in is sound and stable? WAIT!! Play safe and ensure you are not duped.

Par value is the face value of the share. This par value is arrived at through an accounting decision and bears no relation to either the intrinsic value of the company or how the public view the company. For example, XYZ Co. share has a par value of Rs 5, but it's market price could be around Rs 3,000 per share. When the share is traded in the stock market, however, this value may go up or down depending on the supply of and demand for the stock. If everyone wants to buy the shares, the price will go up. If nobody wants to buy them, and/ or many want to sell them, the price will fall. This price is referred to as the market price. A share with a face value of Rs 10 may be quoted at Rs 55 (market price higher than the face value) or even Rs 9 (market price lower than the face value).

The fact that you are getting shares at par value is no guarantee that the company is going to do well and you are going to rake in big bucks. Often, most companies come out with shares that are at a premium to their face value. Those that come with shares at face value seem to appear more alluring.

Some companies whose shares are already available for trading come out with a fresh lot of shares. This is referred to as a new issue or a Follow-on Public Issue (FPO). A common bait investors fall for is the fact that the price of the new issue is cheaper than the current market price. For example, the current market share may be Rs 100, while the FPO may be offered at Rs 90.

Don't let this be the only reason you buy those shares. Sometimes, the prices of the stock may get manipulated in the market to keep the prices high before a new issue is announced. So, while you think you are getting a good deal because the shares are available at a discount to the market price, the reality is that the market price has been artificially hyped up because of manipulation by brokers.

A share that is being oversubscribed does not mean it's a good investment for you. The process is that investors have to bid for shares in an IPO. When the bids exceed the number of shares, the issue is said to be oversubscribed. There could be a number of reasons why this happens.It could be that many banks and financial institutions are liberally offering loans to apply for the issue. This could result in oversubscription. Also, institutional investors (as against retail investors like you and me) don't have to put up money upfront when they make their bids. That means they can put in any amount of bids, hoping that the resulting hype about oversubscription will lure more investors.

At the same time, just because you are investing in a sound and stable company, it does not mean you have to pay a very high price for it. It would be a futile investment if the company was excellent but the price of the issue was sky high.

So think about these issues next time you go shopping (IPO shopping that is ;-) )

Monday, April 16, 2007

When to Say Yes to an IPO

When the stock market is on fire, everybody seems to be making money on IPOs. You buy an IPO for a simple reason: you get it cheaper. Often, companies come out with a cheaper issue price. An issue price is the price at which you can buy a share when you apply for an IPO. When the shares are listed on the stock exchange and are available for trading, the price generally rises.

Take, for example, the Jet Airways IPO. It had an issue price of Rs 1,100 per share. On March 14, 2005, the day it was listed and made available for trading, the price rose to a high of Rs 1,339. In just a few weeks, you would have made a profit of more than Rs 200 per share.

So, besides getting the shares cheaper, those who want to make a quick buck sell it soon after it is listed. Within a short span of a few weeks, they make a neat profit.

This is the reason why investors flock to IPOs.

It is not mandatory that the price of the stock rises on listing. There could be instances where it does not. Much depends on the timing of your sale. The price may rise on listing, but you may hold on for just a few days longer and it could slump. Those who invested in the Jet Airways IPO at Rs 1,100 per share were thrilled as the share price kept rising. Soon after listing (as we mentioned above), the price rose. On March 14, 2005, it was Rs 1,339 per share and rose to Rs 1,361 per share on June 1, 2005. However, after that, it has generally been going downhill. On December 6, 2005 it touched Rs 1,269; on January 6, 2006, it was Rs 1,148. On February 3, 2006, it was Rs 983.Those who did not sell at the initial levels would be rather dismayed.

The best reason to invest in an IPO is because you believe in the company and are willing to hold on to the shares for the long term. Often, companies that are going public offer their shares cheap and go on to become very successful. An IPO thus offer investors the chance to participate in the company's potential prosperity.While the chief attraction may be making a profit the moment the price of the share rises, don't let it be the only one.

Wednesday, April 11, 2007

Asset Allocation for Dummies

Asset allocation is dividing and allocating your money (or investable assets) among different asset classes. For example, asset allocation may be as simple as dividing your money equally among stock index funds and bonds or dividing it among large-caps, mid-caps, and small caps. An asset allocation plan (also known as an investment plan) is important because without an investment plan, people tend to buy what they shouldn’t buy! I know a lot of people who invest their savings in the fund that performed the best last year. The chances of that fund performing better this year are pretty slim.

The importance of asset allocation can be best understood with the help of an example. Suppose I invest in the following manner according to my asset allocation plan:

25% or Rs. 25,000 - Large-Cap fund
25% or Rs. 25,000 - Mid-Cap fund
25% or Rs. 25,000 - Small-Cap fund
25% or Rs. 25,000 - Bond fund

Let’s say the different funds had the following rates of return this year:

Year I
+10% - Large-Cap fund
+08% - Mid-Cap fund
+15% - Small-Cap fund
-02% - Bond fund

My portfolio would look like this:

The formula for calculating return for one year is:
Beginning Amount * (1 + the rate of return )
25,000 * 1.10 = 27,500 Large-Cap fund
25,000 * 1.08 = 27,000 Mid-Cap fund
25,000 * 1.15 = 28,750 Small-Cap fund
25,000 * 0.98 = 24,500 Bond fund

Total Portfolio value at end of Year I = 107,750 or a 7.75% rate of return.
Most people would probably want to sell all of their bond fund and put it all in the small-cap fund. That’s human nature. Nobody likes to hold an investment that seems to be losing money. However, suppose the next year, the fund’s returns were like this:

Year II

- 05% - Large-Cap fund
+03% - Mid-Cap fund
- 20% - Small-Cap fund
+05% - Bond fund

At the end of Year II, the portfolio would like this:

27,500 * 0.95 = 26,125 Large-Cap fund
27,000 * 1.03 = 27,810 Mid-Cap fund
53,250 * 0.80 = 42,600 Small-Cap fund

The portfolio would be worth Rs. 96,535 (one year LOSS of 10.41%!)

Finally, had this person stuck with his asset allocation plan and reallocated 25% to each of the 4 funds, he would have had a loss of only 4.25% instead of 10.41%:

26,937 * 0.95 = 25,950 Large-Cap fund
26,937 * 1.03 = 27,810 Mid-Cap fund
26,937 * 0.80 = 21,550 Small-Cap fund
26,937 * 1.05 = 28,284 Bond fund

The portfolio would be worth Rs. 103,170 (one year loss of 4.25% which is MUCH better than the 10.41% loss)

Sunday, April 8, 2007

Specialized Knowledge = Dirt Cheap

An advise - Whenever you need something done requiring specialized knowledge or skill, go to a college campus. There are thousands of students and professors who have the knowledge you seek (such as programming, web design or anything else) and will do your work for free (well...almost for free).

Just put up a poster/notice inviting students/teachers to do your work. "You will get Rs. 2000 + a valuable certificate on the spot if you do (insert specialized task here) for our company" and trust me, you will ALWAYS find a taker!

Friday, April 6, 2007

The Top Ten Lies of Entrepreneurs

Yet another exposé by Guy - the top ten lies of entrepreneurs

  • “Our projections are conservative.” An entrepreneur's projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even her most conservative projections. Generally, an entrepreneur has no idea what sales will be, so she guesses: “Too little will make my deal uninteresting; too big, and I'll look hallucinogenic.” The result is that everyone's projections are $50 million in year four. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by .1.
  • “(Big name research firm) says our market will be $50 billion in 2010.” Every entrepreneur has a few slides about how the market potential for his segment is tens of billions. It doesn't matter if the product is bar mitzah planning software or 802.11 chip sets. Venture capitalists don't believe this type of forecast because it's the fifth one of this magnitude that they've heard that day. Entrepreneurs would do themselves a favor by simply removing any reference to market size estimates from consulting firms.
  • “(Big name company) is going to sign our purchase order next week. This is the “I heard I have to show traction at a conference” lie of entrepreneurs. The funny thing is that next week, the purchase order still isn't signed. Nor the week after. The decision maker gets laid off, the CEO gets fired, there's a natural disaster, whatever. The only way to play this card if AFTER the purchase order is signed because no investor whose money you'd want will fall for this one.
  • “Key employees are set to join us as soon as we get funded.” More often than not when a venture capitalist calls these key employees who are VPs are Microsoft, Oracle, and Sun, he gets the following response, “Who said that? I recall meeting him at a Churchill Club meeting, but I certainly didn't say I would leave my cush $250,000/year job at Adobe to join his startup.” If it's true that key employees are ready to rock and roll, have them call the venture capitalist after the meeting and testify to this effect.
  • “No one is doing what we're doing.” This is a bummer of a lie because there are only two logical conclusions. First, no one else is doing this because there is no market for it. Second, the entrepreneur is so clueless that he can't even use Google to figure out he has competition. Suffice it to say that the lack of a market and cluelessness is not conducive to securing an investment. As a rule of thumb, if you have a good idea, five companies are going the same thing. If you have a great idea, fifteen companies are doing the same thing.
  • “No one can do what we're doing. If there's anything worse than the lack of a market and cluelessness, it's arrogance. No one else can do this until the first company does it, and ten others spring up in the next ninety days. Let's see, no one else ran a sub four-minute mile after Roger Bannister. (It took only a month before John Landy did). The world is a big place. There are lots of smart people in it. Entrepreneurs are kidding themselves if they think they have any kind of monopoly on knowledge. And, sure as I'm a Macintosh user, on the same day that an entrepreneur tells this lie, the venture capitalist will have met with another company that's doing the same thing.
  • “Hurry because several other venture capital firms are interested.” The good news: There are maybe one hundred entrepreneurs in the world who can make this claim. The bad news: The fact that you are reading a blog about venture capital means you're not one of them. As my mother used to say, “Never play Russian roulette with an Uzi.” For the absolute cream of the crop, there is competition for a deal, and an entrepreneur can scare other investors to make a decision. For the rest of us, don't think one can create a sense of scarcity when it's not true. Re-read the previous blog about the lies of venture capitalists, to learn how entrepreneurs are hearing “maybe” when venture capitalists are saying “no.”
  • “Oracle is too big/dumb/slow to be a threat.” Larry Ellison has his own jet. He can keep the San Jose Airport open for his late night landings. His boat is so big that it can barely get under the Golden Gate Bridge. Meanwhile, entrepreneurs are flying on Southwest out of Oakland and stealing the free peanuts. There's a reason why Larry is where he is, and entrepreneurs are where they are, and it's not that he's big, dumb, and slow. Competing with Oracle, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this lie look at best naive. You think it's bravado, but venture capitalists think it's stupidity.
  • “We have a proven management team.” Says who? Because the founder worked at Morgan Stanley for a summer? Or McKinsey for two years? Or he made sure that John Sculley's Macintosh could power on? Truly “proven” in a venture capitalist's eyes is founder of a company that returned billions to its investors. But if the entrepreneur were that proven, that he (a) probably wouldn't have to ask for money; (b) wouldn't be claiming that he's proven. (Do you think Wayne Gretzky went around saying, “I am a good hockey player”?) A better strategy is for the entrepreneur to state that (a) she has relevant industry experience; (b) she is going to do whatever it takes to succeed; (c) she is going to surround herself with directors and advisors who are proven; and (d) she'll step aside whenever it becomes necessary. This is good enough for a venture capitalist that believes in what the entrepreneur is doing.
  • “Patents make our product defensible.” The optimal number of times to use the P word in a presentation is one. Just once, say, “We have filed patents for what we are doing.” Done. The second time you say it, venture capitalists begin to suspect that you are depending too much on patents for defensibility. The third time you say it, you are holding a sign above your head that says, “I am clueless.” Sure, you should patent what you're doing--if for no other reason than to say it once in your presentation. But at the end of the patents are mostly good for impressing your parents. You won't have the time or money to sue anyone with a pocket deep enough to be worth suing.
  • “All we have to do is get 1% of the market.” (Here's a bonus since I still have battery power.) This lie is the flip side of “the market will be $50 billion.” There are two problems with this lie. First, no venture capitalist is interested in a company that is looking to get 1% or so of a market. Frankly, we want our companies to face the wrath of the anti-trust division of the Department of Justice. Second, it's also not that easy to get 1% of any market, so you look silly pretending that it is. Generally, it's much better for entrepreneurs to show a realistic appreciation of the difficulty of building a successful company.

Tuesday, April 3, 2007

The Top Ten Lies of Venture Capitalists

Here is an exposé by Guy of the top ten lies of venture capitalists.
  • “I liked your company, but my partners didn't.” In other words, “no.” What the sponsor is trying to get the entrepreneur to believe is that he's the good guy, the smart guy, the guy who gets it; the “others” didn't, so don't blame him. This is a cop out; it's not the other partners didn't like the deal as much as the sponsor wasn't a true believer. A true believer would get it done.
  • "If you get a lead, we will follow.” In other words, “no.” As the old Japanese say, “If your aunt had balls, she'd be your uncle.” Well, she doesn't have balls, so it doesn't matter. The venture capitalist is saying, “ We don't really believe, but if you can get Sequoia to lead, we'll jump on the pile.” In other words, once the entrepreneur doesn't need the money, the venture capitalist would be happy to give him some more--this is like saying, “Once you've stopped Larry Csonka cold, we'll help you tackle him.” What entrepreneurs want to hear is, “If you can't get a lead, we will.” That's a believer.
  • “Show us some traction, and we'll invest.” In other words, “no.” This lie translates to “I don't believe your story, but if you can prove it by achieving significant revenue, then you might convince me. However, I don't want to tell you 'no' because I might be wrong and by golly you may sign up a Fortune 500 customer and then I'd look like a total orifice.”
  • “We love to co-invest with other venture capitalists.” Like the sun rising and Canadians playing hockey, you can depend on the greed of venture capitalists. Greed in this business translates to “If this is a good deal, I want it all.” What entrepreneurs want to hear is, “We want the whole round. We don't want any other investors.” Then it's the entrepreneur's job to convince them why other investors can make the pie bigger as opposed to re-configuring the slices.
  • “We're investing in your team.” This is an incomplete statement. While it's true that they are investing in the team, entrepreneurs are hearing, “We won't fire you--why would we fire you if we invested because of you?” That's not what the venture capitalist is saying at all. What she is saying is, “We're investing in your team as long as things are going well, but if they go bad we will fire your ass because no one is indispensable.”
  • “I have lots of bandwidth to dedicate to your company.” Maybe the venture capitalist is talking about the T3 line into his office, but he's not talking about his personal calendar because he's already on ten boards. Counting board meetings, an entrepreneur should assume that a venture capitalist will spend between five to ten hours a month on a company. That's it. Deal with it. And make board meetings short!
  • “This is a vanilla term sheet.” There is no such thing as a vanilla term sheet. Do you think corporate finance attorneys are paid $400/hour to push out vanilla term sheets? If entrepreneurs insist on using a flavor of ice cream to describe term sheets, the only flavor that works is Rocky Road. This is why they need their own $400/hour attorney too--as opposed to Uncle Joe the divorce lawyer.
  • “We can open up doors for you at our client companies.” This is a double whammy of lie. First, a venture capitalist can't always open up doors at client companies. Frankly, he might be hated by the client company. The worst thing in the world may be a referral from him. Second, even if the venture capitalist can open the door, entrepreneurs can't seriously expect the company to commit to your product--that is, something that isn't much more than a slick (10/20/30) PowerPoint presentation.
  • “We like early-stage investing.” Venture capitalists fantasize about putting $1 million into a $2 million pre-money company and end up owning 33% of the next Google. That's early stage investing. Do you know why we all know about Google's amazing return on investment? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. If they were common, no one would write about them. If you scratch beneath the surface, venture capitalists want to invest in proven teams (eg., the founders of Cisco) with proven technology (eg., the basis of a Nobel Prize) in a proven market (eg., ecommerce). We are remarkably risk averse considering it's not even our money.

Wednesday, March 28, 2007

Management Styles

Managing people or being managed is always more successful if you can determine what type of management style is in play. Each manager is going to manage their team differently but generally most follow one of several common management styles. Typically we see two management styles that are most common in the workplace. Authoritarian or Autocratic management styles take little input from the group and merely hand out orders. The manager using an autocratic or authoritarian management style typically expects their directions to be followed with little or no discussion or questions. This style of management works best when managing large numbers of employees doing similar simple jobs. Another style of management is the participative or democratic management style. This style involves taking input from the team of employees, the manager then considers the ideas brought forth and makes the final decision. While this style is sometimes called democratic it really is not because in the end the manager makes the final decisions. Participative management is a more proper way to describe this management style. This style works great when managing a smaller team of highly skilled individuals.

Monday, March 26, 2007

Mr. Google Vs. Mr. Originality

There is a lot of hue and cry about googlization of information. When I've an assignment to do, my starting point is typically google and the end result (the report) is a potpourri of matter from different sites which sometimes makes sense and sometimes does not. Apparently google is students’ best friend, but is it not harming their growth in the long run?

Today something happened to me...something that happened to Samuel Taylor Coleridge way back in the autmn of 1797 when he conceived Kubla Khan of Xanadu in his dream (where do you think I got this date from...of course google ;-) ) I had a dream - a dream full of ideas. I woke up and tried to scribble them on paper. Now I expect something somewhat original somewhere.

The point I’m trying to make is if we give it a thought and don’t mindlessly start googling (as I do), we sure can come up with original ideas. And then may be some day....

We would build that dome in air,
That sunny dome ! those caves of ice !
And drink the milk of Paradise.


Sunday, March 25, 2007

No open source future for Virtualization?

Industry experts take Dana Blankenhorn on as he believes that there is no open source future for Virtualization. Tarry Singh, CEO Avastu Appliances, says:

I don't get it. Is it taking a jab at all other firms like Redhat, Novell, Virtual Iron and warning them not to rely too much on Xen? This summary is rather succinct and honestly does not do any justice to what the Open Source is capable of.

Alex Weeks, author of the Linux System Administrator’s Guide, says :
Like Tarry, I don’t get Dana’s point. In fact, I’m not even sure why ZDnet published this. It really lacks any point. I think he’s trying to make a point without really understanding the technology. Or any technology for that matter. I read some of his other articles, and he doesn’t seem to get any where. It’s like he’s writing inside jokes that only he understands. In his articles, he starts to go somewhere but never goes there.

Indeed open source is important to our future and virtualization is the next big thing. Combine the two and what you get is a deadly mix!

Friday, March 23, 2007

Virtualization & Open Source in India

The Indian IT market is estimated to touch $65 billion by 2009, posting a compound annual growth rate of 21 percent. The market, on the back of strong demand over the past few years, has emerged as the fastest-growing one in the Asia Pacific region.IDC India Limited, an IT industry analyst firm, has predicted that the year 2007 will witness Indian enterprises graduate to the second level of Dynamic IT infrastructure – where IT infrastructure can effect changes fast in response to the changing business scenario. The key technology components to attain this state are virtualization, SOA and application integration. CIO India examines the impact of open source & virtualization.

.......What has caused the effective price of virtualization to head toward zero -- and how? In contrast to many who seem to feel that open source and proprietary software operate in two parallel but separate universes — that open source is used by people who can’t afford ‘real’ software, while proprietary commercial software is for organizations that need reliability, scalability, and all the other ‘abilities’ — I believe that open source is already challenging the proprietary software world.

How about a case study to test the theory? Let’s look at virtualization, something that has tremendous potential with a clear payoff: reduced costs for IT organizations, both hard (power, machines) and soft (admin and operations personnel). It evinces an undeniable fact: machines are improving so fast that they make possible a change to the traditional hardware infrastructure, breaking the bounds of the one machine, one application practice used by most IT shops....

Read on.

Tuesday, March 20, 2007

Blog Development & Thinking

Blogs.....What does an obscure format which started with computer geeks have to do with development? Quite a bit, say Tim Harford and Pablo Halkyard, co-authors of the World Bank Blog.

….the playing field is much more level than it was even a year ago. Being a big organisation counts for very little in the booming world of blogs - what counts is quick, relevant content. And if the playing field is being levelled within the developed world, just wait until the developing world starts to play the game. It’s already happening: during this summer’s Live8 campaign, some African bloggers started to complain that the concerts were irrelevant, patronising, or worse. Even just a couple of years ago, such dissenting voices from Africa would never have been heard. Huge sites, such as Harvard’s Global Voices Online, are gathering together the output of ‘bridge bloggers’ who read local blogs and comment in English. Some countries, such as Iran, have vast blogging communities; others are tiny but growing very fast.

It has never been easier for journalists to pick up voices from the developing world - or even for you and us to do so from our desks. People all over the world are talking, but only now can we hear what they’re saying....

Read the entire article here — encouraging stuff.

Sunday, March 18, 2007

Gross National Happiness (GNH) : An Inane Concept

Have you ever wondered what happiness is? Happiness is quite often equated with money. The gross domestic product, or GDP, is routinely used as shorthand for the well-being of a nation. But the tiny Himalayan kingdom of Bhutan has been toying with a completely different idea for a while. King Wangchuck has decided to make his nation’s priority not its GDP but its GNH. And believe it or not but the most unlikely place on earth for the birth of an international trend is emerging as a global leader in the promotion of this whole new concept of the 'Gross National Happiness.'

According to Wiki, Gross National Happiness (GNH) is an attempt to define quality of life in more holistic and psychological terms than GDP. The concept of GNH is based on the premise that true development of human society takes place when material and spiritual development occur side by side to complement and reinforce each other.

I am sure we all will agree that happiness is a feeling, a subjective experience. I may say “I am happy” just as I may say “I am rich.” The two statements sound similar but these statements are qualitatively different. There is an objective validity to the statement “I am rich” because my wealth can be measured. But happiness is subjective and does not allow interpersonal comparisons, while richness does. We can definitely say how A’s wealth compares to B’s wealth but cannot say how A’s happiness compares to B’s happiness.

GDP is a measure of the annual production of final goods and services in an economy denominated in monetary terms. GDP does not aggregate cows. Thus saying that the GDP does not accurately tell me anything about how many cows are in the economy is as silly as saying that GDP does not tell me whether the people in the country are happy or not!

I have never considered the GDP to be the end-all and be-all of an economy any more than I consider the monthly income to be the only relevant characteristic of a person. Those who complain that GDP is not all that matters are making a valid but rather trivial complaint. What I don’t understand is the attempt by the detractors of GDP aping a metric which they have perhaps misunderstood. They are in effect saying that GDP does not measure happiness. So we must come up with an alternate aggregate measure we will call Gross National Happiness which will be more appropriate. That is GNS - Gross National Stupidity ;-) Tomorrow they may say that GDP does not give a count of the number of cows so we should come up with some kind of Gross National Cow index!

Tuesday, March 13, 2007

Investment Banker Wisdom

This one is reeeeeally hilarious guys! (forwarded to me by one of my friends)

The investment banker was at the pier of a small coastal
Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The investment banker complimented the fisherman on the quality of his fish and asked how long it took to catch them.

The fisherman replied, only a little while.

The investment banker then asked why didn't he stay out longer and catch more fish?

The fisherman said he had enough to support his family's immediate needs.

The investment banker then asked, but what do you do with the rest of your time?

The fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, senor."

The investment banker scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You can leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise."

The fisherman asked, "But senor, how long will this all take?"

To which the American replied, "15-20 years."

But what then, senor?

The American laughed and said that's the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.

Millions, senor? Then what?

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

Investment banking for dummies

Ever heard about Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Jefferies & Co etc.? Ever thought what these guys do? Well...they make billions of dollars every year through investment banking. If you are a neophyte and new to the world of finance then you must have come across the term Investment banking. Investment banks assist public and private corporations in raising funds in the Capital Markets, as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
An organization may generate funds in two different ways through investment banking:
  • They may draw on public funds through the capital market by selling stock
  • They may seek out venture capital/private equity in exchange for a stake in their company

Investment Banks also do a large amount of consulting. Advice on mergers and acquisitions, on when to make public offerings etc. is given to the companies. The line between investment banking and other forms of banking has blurred in recent years. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable. Large financial-services conglomerates combine commercial banking and investment banking. Prominent among these are ABN Amro, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Rabobank, UBS.

Careers in IB are lucrative and most sought after in the money-market world. A career in investment banking may involve extensive traveling, grueling hours and a cut-throat lifestyle. Although IB is highly competitive and time intensive, it also offers huge financial incentives ;-)

Thursday, March 8, 2007

openQRM Virtual Appliance: Manage your Linux, Unix, Windows Virtual & Physical DataCenter!

The Avastu Team with close cooperation with the openQRM Team, has released the Virtual Appliance.

Get it on the VMTN Appliance Market Place:

NOTE 1: To download the appliances please send an email to: info[at]

NOTE 2: For requesting downloads @Avastu please do NOT use free email addresses such as, etc.

This is a "Complete Datacenter Management & Provisioning software" with

  • File system images of Fedora Core 5 AND Centos 4

  • Two diskless nodes

We can customize the product and help you deploy it in your test, development labs and even production! (We are already assisting our current client with several openQRM installations in production).

Details for Testers/Developers/Administrators:

  • user = root

  • password = sysadmin

  • File System Images: Fedora Core 5, Centos 4

  • Nodes : 2 (two) diskless nodes

  • IP address for url:

  • WebAdmin username= qrm

  • WebAdmin password = qrm

What can openQRM do?

Data center needs and problems

Growing number of commodity servers leads to:

* Increasing number of failures – furthering downtime.

* Servers managed individually lead to:

  • greater opportunity for operator error

  • inconsistent imaging and policies applied across servers

  • over-provisioned or peak-provisioned systems

* Growing management costs – hardware and software are a small part of the price.

Bottom line: System administrators spend a significant amount of time either fighting fires or repeating multiple steps to manage a growing number of individual Linux boxes. Ultimately, the x86 data center is not always reliable, does not meet business needs, and creates inefficiencies in terms of administrative costs per server.

The Solution

Open Resource Manager addresses the needs of the modern data center by:

  • Improving reliability on the hardware and application level

  • Giving system administrators full control of the data-center

  • Provisioning servers within a few minutes

  • Consistently applying policies across servers

  • Adjusting resources based on business demands

  • Managing heterogeneous x86 hardware

Read More at openQRM site

Enjoy your virtual appliance!

Avastu Associate's Interview with BusinessWorld

Sridhar, an associate of Avastu, has setup his own firm in China and is currently working as Director, Shared Services and Offshoring, of Morgan Chambers. He gave an interview to the BusinessWorld during the Nasscom 2007 – India Leadership Forum. Chek it out here!

Wednesday, March 7, 2007

Do You Ubuntu?

Ubuntu is "the belief in a universal bond of sharing that connects all humanity." Some say Ubuntu means 'I am what I am because of what we all are' (Tarry's tagline "extended" :p). Don't worry guys, I am not thinking of becoming a poet - at least not in the near future ;-)
Well, Ubuntu is a free, open source Linux-based operating system. The choice of Ubuntu as the name for this OS reflects a deep appreciation for the supportive, cooperative collaboration that is the basis of the Open Source Software movement, the global nature of the participants in the Ubuntu project, and the rich, helpful community that is growing up around the Ubuntu distribution.

Ubuntu's DESKTOP

Ubuntu has a pretty desktop at startup. The Gnome taskbar is quite user-friendly. Look at the screenshot and speculate for yourself.

NAUTILUS (File Manager)

Nautilus is Ubuntu's file manager. It works in two modes - the browser mode and the simple mode. The simple mode is stripped down and is probably the fastest file manager in Linux. But the simple mode isn’t advisable for someone who is extremely familiar with windows. The sidebar isn’t limited to showing the folder tree only. It can be used to show information about the folder and the selected items.


Open Office is similar to MS Office. There are many added advantages too, like the built in Export to pdf tool. It includes the key desktop applications, such as a word processor, spreadsheet, presentation manager, and drawing program, with a user interface and feature set similar to other office suites.


The default browser is Firefox. You can also download and use other Gnome browsers like Galeon or Epiphany.


Rhythmbox is the default music player for Ubuntu. It does not look cool at all and has a dull interface. And it's nothing more than ordinary when compared to other media players such as the windows mp, the iTunes, winamp etc.

Ubuntu has fuelled the ongoing debate between the open source advocates and proprietary software makers & users. Can Linux offer a viable alternative to Microsoft Windows?
It can! Try it to believe it.

PS: Ian Murdock, the “ian” in “Debian”, founder of the Debian distribution uses Ubuntu on his desktop!

Monday, March 5, 2007

Inflation: Are Banks Responsible?

“That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium [paper, and now not even paper]…that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied.”

—Thomas Jefferson to Abbe Salimankis, 1810

Now this statement seems to be absolutely absurd!! After all who can dare question a bank's role in the development of any economy? I, for one, am a banking enthusiast but sometimes I ponder whether banks could be held responsible for inflation.

Over 95% of the world's population does not understand the meaning of “dividend” , “mutual fund sales” and “investment-banking fees” but thanks to these three things, the Royal Bank of Canada made record profits of 1.49 billion dollars in the first quarter—which, from a purely instinctive point-of-view, seems STUNNINGLY OUTRAGEUOS to me!

By doing nothing-productively-tangible for the world—in fact by simply creating money—are banks nothing more than an aspect of that part of the machine that endlessly drives up inflation by devaluing currency?

Sunday, March 4, 2007


Chidambaram seems to have completely gone wrong on the issue of the Fringe Benefit Tax assessment of Employee Stock Ownership Plans, or ESOPs. This could be one of the most regressive steps in the disappointing Union Budget 2007-08. FM has included ESOPs in the Fringe Benefit Taxes' ambit.

ESOPs are a capital asset. Technically speaking, an ESOP is a transfer of remuneration from the company via a capital asset. They are a wealth-creating asset and FM is taxing them like income. Which canon of economic thinking can EVER justify that?? In an interview to CNN-IBN, Chidambaram said that ESOPs are fringe benefits, so they need to be taxed. Are ESOPs really fringe benefits? ESOPs are not a like a car, or a house or gardener a company provides its employees. It's much more than that. ESOPs are a way to include the employees in the growth of an organisation. It's a participatory or an inclusive way of running an organisation. Actually, what the FM has done is to tax those professionally run companies who believe in offering ESOPs. So by including ESOPs in the FBT regime, FM is penalising such companies. It's a highly regressive step, and will kill the entrepreneurial and start-up culture. It's not too late to get the FM roll back such a measure. If the media and the industry associations like Nasscom and CII put pressure on FM, he may just roll back.

Budget 07 - Not Good, Too Bad, And Seriously Ugly!

10 years ago, a guy named Palaniappan Chidambaram rose to present a budget. People hailed it as a "Dream Budget". Now the same guy presented another budget. Forget dreams, this is a budget that is disappointing, unimaginative and seriously sad. Everything was in place for the Finance Minister to present another dream, this time though he chose to present a nightmare for us. So what actually makes the nightmare budget so nightmarish?

Instead of trying to help the so-called "aam aadmi" by reducing the taxes, the minister chose to increase the government's expenses by Rs 100,000 crore!

  • Education came first with a whopping 34.5% increase. Now that sure is a welcome step, if you decide to overlook the fact that most of this will go into providing reservations and very little will actually help the education of the "general quota". (An article on reservations - Coming soon! ;-) ) The 2% education cess has been increased to 3% and many experts believe that this is NOT going to help education at all (Read article).
  • Next came the farm sector. A proposal for Rs 2,25,000 crore for farm credit and a target to bring 5 million more farmers under farm credit. Also a promise of 100 per cent subsidy to small farmers and 50 per cent subsidy to other farmers. Dear minister, when will you realize the fact that you are putting all that money into a black hole. Agriculture in India, in its present form is unviable. Farming on tiny individual plots is never a good idea (much less an efficient way of agriculture). The minister ought to have encouraged farm consolidation, but nothing of the sort happened.
  • Rural India dominated with hiked outlays under the Rajiv Gandhi Drinking Mission, the Bharat Nirmal Housing Programme, the National Rural Health Mission. Now our dear minister seems to have forgotten that people live in urban areas too. While the cost of health services in the urban areas has been rising, our minister chose to ignore the fact. With the infrastructure crumling in our urban areas, attention to urban infrastructure would not have hurt. While its good that our minister has tried to help the rural area, the complete lack of focus on urban areas is disappointing and unfortunate.
  • The budget proposes to include any sweat equity shares allotted by a company to its existing or former employees within the ambit of fringe benefits for the purpose of taxation. So with the ESOPs now under the FBT regime, employees stand to lose (I'll write more about it in my next article).
  • Of course, the finance minister did not forget to bring IT companies under MAT or the minimum alternative tax. India’s export-oriented enterprises such as in the thriving software outsourcing industry were brought back under the tax net. Now they have to pay 11.33 percent of the adjusted book profits as MAT.

Some questions that came to my mind while listening to the boring and unimaginative budget:

  • While I appreciate the focus on rural development, the fact is that people live in urban areas too, and they too need infrastructure. Btw, do you think the urban middle class is just about a hundred people or so? (the complete disregard of the urban middle class in your budget makes me think that someone told you so)
  • While IT too should be taxed like any other industry, don’t you think its too early?What in the world makes you think that 11.33% MAT would hardly make any difference to the IT companies?? Sir, it can push a lot of small companies (already with razor thin margins) into loss making units?
  • What the hell is this FBT thing? Yeah, I know it was introduced in the last budget because someone went brain dead but continued writing the budget. Don’t you think it should have been scrapped?
  • And hey, all this cess and surcharge needs to be done away with. You ALREADY collect taxes for doing things that the government is supposed to do - like building roads, providing basic education etc. Why the hell do you have a road cess (on petrol) and an education cess (on all taxes)??

Has the dream merchant stopped daring to dream?

Friday, March 2, 2007

Avastu White Paper: Indian Market Research

I have written a white paper for Avastu. The research was conducted while keeping the North Indian Market in mind.

To download the White Paper please send an email to info[at]avastu[dot]com.

How to Calculate Your Server TCO?

With the current focus on fiscal responsibility and due diligence, CIO’s and IT executives have indicated that more than 80% of current IT purchases require financial analysis for justification. In an effort to to justify the use of server virtualization platforms, I devised a model for assessing the 'Total Cost of Ownership' (TCO) of any production (server) environment. TCO analysis for the server park should ideally be done for a period of 4 years since the estimated lifetime of a server is 4 years. Yearly / monthly TCO can thus be obtained to get a fair idea of how much is being spent yearly / monthly. Following are the major points on which the TCO calculations are based:

Hardware Costs

  • Cost of physical servers
  • Cost of processor/RAM upgrade
  • Cost of extra storage devices
  • Cost of SAN
  • Cabling cost
  • Cost of racks

Software Costs

  • Cost of OS
  • Cost of anti-virus s/w
  • Cost of backup s/w
  • Cost of server management software (NetIQ etc.)
  • Cost of other softwares

Vendor Support

  • Cost of service agreements
  • Cost of warranties

Setup & Maintenance

  • Cost of setup of servers
  • Cost of installation
  • Cost of maintenance
  • Cost of training
  • Cost of consultancy

Facility Costs

  • Power & cooling costs
  • Flooring costs

The TCO thus calculated may then be used to model typical data center strategies and best practices of specific alternative server and operating system solutions. The calculations should be performed using comparable competitive scenarios.

Thursday, March 1, 2007

Why Virtualize?

Are your IT costs getting out of control, as multiple desktops, platforms, applications, and software versions proliferate across your organization? Do you know how much you’re really spending throughout the IT lifecycle? How can you reduce these IT costs? How can you lower your TCO? Why should you go ahead with (server) virtualization?

In 2006, I spent an entire month calculating, analyzing and assessing the TCO of the server park of one of the largest universities in the Netherlands - the Hanze University. They have over a hundred and twenty servers in their production environment. I, along with the IT managers, concluded that virtualization is imperative for any IT organization facing the aforementioned problems on account of the following:

  • Underutilized x86 boxes – Average CPU utilization rate of 5-10 % has become a norm rather than an exception
  • Repeatable Admin tasks – Installation of various softwares is done over and again for each and every physical server and thus, a lot of time and money is spent on repeatable tasks.
  • Floor Space – A lot of costly floor space is being used by the astronomical number of physical servers in the production environment.
  • Hardware / Support Costs – The servers and the service agreements cost a lot. Appropriate measures have to be taken to contain these costs before it’s too late.
  • Power / Cooling Charges – The ever increasing number of physical servers consume a lot of energy and you end up getting huge bills for the electricity charges.
  • No time / money left for R&D

Tuesday, February 13, 2007

Why Total Cost of Ownership Matters

How are you going to react if I tell you that you'll end up spending 75 thousand bucks over 4 years on that li'l PC you bought a couple of days back for 30k? According to Gartner, nearly 80% of total costs occur AFTER the purchase of the unit! The decision to buy a computer may result in the following TCO analysis: the greater initial price of a high-end computer is to be balanced by adding likely repair costs and earlier replacement to the purchase cost of the cheaper bargain brand, among other factors. The initial price becomes just the beginning of the life cycle of costs. For more than 15 years, Gartner has counseled its business community clients to consider all costs associated with computing when making management decisions about computer acquisitions,upgrades, support and administration. As enterprises have begun to address the significant and rising costs devoted to computing infrastructure, the message has gained wide acceptance among technology users.

Total cost of ownership (TCO) is a financial estimate designed to help consumers and enterprise managers assess direct and indirect costs related to the purchase of any capital investment, such as computer software or hardware.

A TCO assessment ideally offers a final statement reflecting not only the cost of purchase but all aspects in the further use and maintenance of the equipment, device, or system considered. This includes the costs of training support personnel and the users of the system, costs associated with failure or outage (planned and unplanned), diminished performance incidents (i.e. if users are kept waiting), costs of security breaches (in loss of reputation and recovery costs), costs of disaster preparedness and recovery, floor space, electricity, development expenses, testing infrastructure and expenses, quality assurance, incremental growth, decommissioning, and more. TCO is a good metric for comparing the different operating system and server infrastructure choices which organizations face. A good TCO analysis should fit the business plan and identify the best solution to match the business goals.

Monday, February 5, 2007

Just what is a versatilist?

Those Swiss army knives are the versatilists.

Almost a year back, when I was all set to embark upon my maiden voyage to the Netherlands for an internship, the term "versatilist" first became known to me. I was reading my supervisor's blog and came across an enthralling article on versatilists. Tarry, my internship supervisor (presently, the top boss of Avastu, a friend & mentor) who himself is a true versatilist, says that Aristotle, Plato and the likes were true versatilists. But those were the good old days. They had all the time in the world. He adds -

"And then we have you. A regular IT Joe/Jane. A true specialist and even proudly touting as a generalist. But is it enough for you to stay afloat? Enough for you to keep your job? Enough for you to advice your kids to take up a Sysadmin job as a profession?Answer = NO!

How are you going to cope with the ever changing scenario and at the same time stay competitive. Its hard to stay motivated with the rapid globalisation, massive outsourcing, new technologies sweeping you off your feet and constantly feeling like a lost zombie when suddenly being exposed to some 17 year old who has done a lot of work like yours just for fun!!!"

Wikipedia would describe a versatilist as someone who can be a specialist for a particular discipline, while at the same time be able to change to another role with the same ease. The term "versatilist" was first coined in an article from Gartner, where it states: "Versatilists are able to apply a depth of skill to a progressively widening scope of situations and experiences, equally at ease with technical issues as with business strategy."

It is to the advantage of an organization to employ versatilist because an enterprise will be able to easily redeploy this type of employee based on changes in business requirements or strategy. To illustrate this using a math term, the versatilist has a higher area under the curve rating. Think of a person having some level of knowledge/experience in 15 knowledge areas. That person may have a very high competency (score 5) in 3 areas, a medium level of competency (score 3) in 5 areas an introductory level of competency (score 1) in 4 areas and no competency (score 0) in 3 areas. This creates an area under the curve of 34. This is different from a specialist who may score very high in 1 area and have no competency in others. This breadth of knowledge and experience is what enables faster changes to other roles.

The future IT worker will not be a technology guru but rather a versatilist. He will have technical aptitude, local knowledge, knowledge of industry processes and leadership ability. A wise investment for large firms would be to hire this guy to fuel business value.
So what are you guys waiting for? It's time for you to practice the principles of versatilism!