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SOFTWARE INDUSTRY Shopping for a niche Missed the first software boat? No problem. Some stock and cash will airdrop you aboard some boat already sailing in international waters. At least that's what some 30-odd small software companies in India seem to believe. For, in the past 18 months, over 25 overseas acquisitions have been made by tier two software companies, and the trend only promises to snowball. Consider: In July, 2000, computer education company Aptech acquired the US-based Specsoft for $10 million in cash; DSQ Software, an ambitious Chennai-based software firm, snagged San Vision in the US in an all-stock deal; and Maars Software acquired three European firms (See Global Moves). So, what's behind all this deal-making? Points out Arjun Sethi, 27, Associate, A.T. Kearney India: ''Acquisitions are necessary for the Indian software industry's survival.'' In other words, acquisitions are critical to climb up the value-chain. Last year, 60 per cent of the industry's export earnings came from ''time and material contracts''-essentially, grunt work that does not pay as good as other high-end jobs. To sustain rates of growth in revenue and profits, companies will need to target the exploding segment of Net-enabling technologies. Acquiring an existing foreign company helps in two ways: One, it gives access to highly-skilled manpower, and two, offers a relatively more acceptable brand under which to market a product. Agrees Rajiv Gupta, 40, Executive Vice-President (M&A), DSP Merrill Lynch: ''Such acquisitions will help Indian companies command their own prices.'' It is surprising, then, that the industry biggies like Tata Consultancy Services, Infosys, and Wipro aren't making any global acquisitions. One reason could be that these companies already have a well-established brandname and, therefore, graduating to higher skill levels should be relatively easy. Infosys, for instance, has made a strategic investment in M-Commerce Ventures of Singapore. And Wipro's Azim Premji has announced plans for overseas buys. Another reason could be the impact of an acquisition on earnings. In the short-term, diluting equity would tend to lower profits per share. That, in turn, could pull the company's market capitalisation down. Says Gupta of Merrill Lynch: ''Bridging the cultural gap and ensuring a sound management are other challenges any takeover faces.'' But those are bumps the Indian software juggernaut seems to be willing to negotiate. By Bhaswati Chakravorty HR
PRACTICES
There was a time when it may have smacked of nepotism. But in today's talent-scarce world, companies are paying their employees to turn their go-getter friends, siblings, relatives, neighbours, even trespassers, into colleagues. Welcome to the world of employee-referrals-the hottest, and possibly the cheapest, hiring tool in the hr arsenal today. The way a referral works is simple: if a job opening is advertised, an employee could recommend a friend or an ex-colleague. If the candidate is hired, the referring employee gets a reward. Citibank, for instance, doles out a cool Rs 50,000; Hewlett-Packard pays a flat fee of Rs 4,000 and in some cases, upto 30 per cent of the employee's gross annual salary; and Hughes Software, Rs 5,000 to Rs 15,000. Says Pradeep Mukerjee, 41, director (hr), Citibank: ''We encourage referrals, as it gives us the best cultural and professional fit.'' Indeed, referrals aren't a tool for the lazy hr manager. They yield solid benefits. The recommended candidate is likely to have a set of attributes that companies value. Top on the list: an impressive track-record. At Baxter India, a health-care start-up, the entire senior management was recruited through referrals. Says Sanjiv Verma, 45, country manager, Baxter India: ''Each member of our team had a track-record that was endorsed by an existing member. Doing so brought us rich dividend in the quality of manpower.'' Also, a referred candidate is more likely to stay on. Affirms Sameer Wadhawan, 35, hr manager, hp (India) : ''Referrals make for higher comfort levels-for the organisation and the new manager.'' The cost? With the average charge of a consultant at 8 to 33 per cent of a candidate's gross annual salary, a referral is cheaper. Concurs Sudir Kapur, 40, vice-president (HR), Siemens Public Communications, which endorses referrals: ''Cost alone has made referrals a focus area for us, not to mention the better quality of recruitment and lower turnaround time.'' Do referrals work in every case? For CEO-level positions or jobs requiring very specialised skill baskets, a customised search could still be more effective. Points out Vinay Batra, 46, director, A.F. Ferguson: ''Referrals work better at junior or middle levels.'' In other words, refer to the referrals while hiring, but do so with caution. By Paroma Roy Choudhury INTERNET It was the primitive man's preferred mode of transaction. And if the initial trend is any indication, it could be the next big wave to hit the Net world. e-Barter is fast emerging as a solution to the problems of electronic payment. Silicon Valley watchers reckon that e-bartering could well spawn a parallel digital economy of monstrous size. Already there are seven c2c barter sites, and at least two b2b exchanges. These sites do what an exchange does in real life: bring a buyer and seller together. The only difference is that there are no cash transactions. The parties either swap similar value products or use a virtual currency offered by the site itself. Despite the similarity in concept, most of these sites have been able to achieve differentiation. For example, swap.com targets non-adult members; swaprat.com prefers to deal in items that can be catalogued, such as books, CDs and videos; Intel libarter.com offers members tips on how to barter in collector's items. How do the barter sites make money? One of three ways: by charging a transaction fee-ranging from a few cents to a few dollars; waiving the transaction fee, but charging for shipping and handling; and selling advertising space. But it isn't just your old Khalil Gibran, mp3 player or Nikon Camera that are getting e-swapped. Barter Trust.com and Ubarter.com allow swapping of professional services. Will the Net never cease surprising? By R. Sridharan MARKETING on a Sunday morning recently, readers of a leading daily woke up to a rather unusual-looking front page of the Sunday supplement. Stuck to the top-right corner of the half-page ad was a sample sanitary napkin. If the advertiser's idea was to create a shock impact, then it more than just succeeded. But, then, household goods major Procter & Gamble has never been the one to pussyfoot about its Whisper Ultra sanitary napkins, which are thinner than ordinary napkins and 10 times more absorbent. Ever since the brand was launched on the first day of this calendar, P&G has put the product through one unorthodox campaign after another. For instance, the newspaper ad was preceded by an equally unconventional campaign, which saw the company launch the product at a college (in this case, the Xavier Institute of Communications, Mumbai). The launch was followed by the Ultra Ambassadors Brigade, where a convoy of 300 employees and agency partners-all dressed in bright blue T-shirt-covered 110 routes across Mumbai. To be sure, this is one way of creating a ripple effect, since-studies indicate-people respond to positive social reference. However, P&G's is not entirely a novel idea. Other marketers have tried the sampling technique in a much more targeted manner for products including anti-dandruff hair oil, cassettes, and hair dyes that have been packed with women-related and film magazines. Says Madhukar Kamath, 45, CEO, Bates India: ''These are times of integrated communication. The brand has to resonate at different levels.'' The company already has pole position in the women's hygiene market, with its Whisper Regular, Whisper with Wings, Whisper Wrap-and-Throw, and Whisper Ultra controlling 46 per cent of the market in terms of value. Its biggest competitor, Johnson&Johnson, has a close 43.7 per cent share. The rest of the market is distributed among other brands including Kotex and Comfit. According to P&G, it is already present in 300 towns all over India. Yet, sanitary napkins aren't too popular with Indian women. Rural India, for example, is virtually untouched by the product. Even in urban and semi urban markets, only 2 out of every 10 women use them. P&G is trying to rope in more users. The shock-campaign, then, appears targeted at new-age females between 15 and 35. But not all are sure if the nifty campaign will translate into numbers. Asks Shivjeet Kullar, 37, Creative Director, The Joint: ''Certainly, the idea of bringing sanitary napkins out of the closet onto the broadstage is rather shocking to most middle-class homes. They would certainly remember it, but will they buy it?'' They just might, given P&G's sheer clout in the market. In any case, as P&G has proved, it doesn't lack in marketing chutzpah. By Shamni Pande RETAILING Almost every Sunday, 12,000 people walk in and out of Shoppers' Stop's store in Delhi. Most of them don't buy. But just the same, all of them have to be treated with a warm smile and untiring promptness. For the shop's frontline team of 40, it means having to handle 300 customers each. That's just one easy part of the story, though. The real challenge for a retailer like Shoppers' Stop lies in what its customers rarely to get see-the back-end. At any point in time, Shoppers' Stop stocks 1,50,000 space-keeping units (SKUs). There are six stores spanning 2 lakh sq. ft in six cities to be monitored, 270 suppliers to be managed, and replenishment decisions to be made every day. The store itself is mapped on a planogram with excruciatingly minute details: the number of shirts to be put on display, the nature of display, the shelving system, the lighting, the racks, and product presentation. Add to that special gestures such as offering things like wheel-chairs for the handicapped or old, a mother's room to tend babies in, and playpen for children. Says B.S. Nagesh, 41, Managing Director, Shoppers' Stop: ''Our aim is to provide a complete shopping experience for the customer.'' What makes the task even tougher for the retailer is that it primarily sells clothes, and clothes change with fashion. Since inventory is the biggest cost item for a retailer, sale and stock replenishment are managed entirely by an Enterprise Resource Management (ERP) system. Says Neeraj Garg, 28, associate, A.T. Kearney: ''ERP helps streamline information across the stores and manage inventory better.'' To enable quick replenishments, Shoppers' Stop maintains regional warehouses. The one in Delhi, for instance, caters to both Delhi and Jaipur. If a product is not selling, its price is marked down within a specified period. Which products to mark down is again told by the computerised system. And there's an in-house marketing team that thinks up in-store promotions to sustain customer interest. Even the air-conditioning is maintained at a standard 21 degree Celsius. And you thought that shopping was all about bargains. By Vinod Mahanta |
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