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 Ten
for 2003. Nope, that's not the score of the Indian cricket team
in New Zealand. 'Tis merely the time for kicking back, consuming
prodigous quantities of methylated spirits, and, for your intrepid
columnist, an opportunity to pontificate on the year ahead.
So, in the spirit of putting valour before
discretion and recklessness before political correctness, here is
a random pick of 10 predictions for the new year.
1. More will put money into business process
outsourcing (BPO). More will suffer. Yes, yes. I am beating
the same old drum. But continue to despair at good venture money
flowing into call centres and what I call SMK (Saste Mein Karenge)
operations. My point is simple. Commodity low-value services may
be good private businesses to run. But incredibly difficult businesses
for investors to exit from.
2. Topi will be less
frequent. I am gleefully amused at the price Wipro paid for
Spectramind-but this era of "selling to the greater fool",
technically called topi daalna, will come to an end with information
technology-enabled services (ITEs) companies too. Just like there
wasn't a second Sify-Indiaworld type deal. Other buyers of call
centres will have bigger brains, so traditional investment banker
topis will not fit so easily.
3. The Dalal beats The Wall. The Bombay
Stock Exchange (BSE) will beat the pants off New York Stock Exchange
(NYSE) and Nasdaq. People waiting to list on a US exchange will
wish they had stayed closer home.
4. Time for rational exuberance. The
American bourses will return to power, but in favour of beaten-down
established players with steady cash flows and growing margins.
Not Johnny-come-lately loss-making startups.
5. Margins in the it services business will
not rise this year as well. These businesses will grow, in the
low two-digit percentage range-to be overshadowed by telecom and
more primary sector companies. But rates will stabilise at around
$15-20 (Rs 720-960) per hour-a far cry from the days when $80 (Rs
3,840) used to be the going rate. Employee costs will rise. Margins
will not. Investors will begin to look for growing earnings, not
the letters 'Info' in the name of the company.
6. 'Bio' will not replace 'info'. Much
to the disappointment of the hopeful, investors will also grow wary
of words like Biotech, Bio-informatics, Bio-graphy and the like.
Vain efforts will be made to replace it with the word 'Nano'. Immunity
to buzzworditis will rise, though.
7. We'll have better, not bigger movies.
The non-defining moment in Indian cinema last year was Madhuri
and Aishwarya lamenting about an impotent Shahrukh to each other
Dildo laa re. Bollywood tearjerker Devdas conclusively proved that
size does not matter anymore. We can expect to see smaller, but
far better performing movies. And star salaries will fall.
8. Media companies will get blockbusted.
Blockbusters will bust bank balances. Pritish Nandy, Mukta,
Balaji and iDreams will move to more but smaller productions as
the Kaantes get badly pricked. More will wish they stayed private
as their share prices get battered.
9. Antarctica will threaten Redmond. The
Linux penguin will make further headways with governments and corporates
the world over. We will see a more heterogenous world.
10. Less than half these predictions will
be wrong. By the end of 2003, it will become even harder to
pick hot sectors. Investors will move to picking companies instead
of buying into trends.
Your correspondent had done the same exercise
a year ago in a different publication-and discovered he wasn't all
that far off. That was the year the pundits called annus horribilis.
He fully realises, though, that if he's wrong this year, he runs
the risk of people removing one 'n' from that term and branding
him deservedly.
Mahesh Murthy, an angel investor, heads
Passionfund. He earlier ran Channel V and, before that, helped launch
Yahoo! and Amazon at a Valley-based interactive marketing firm.
Reach him at Mahesh@passionfund.com.
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