MARCH 2, 2003
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Q&A: Kunio Sebata
The President and CEO of the $3.8-billion Hitachi Home and Life Solutions Inc tells BT Online about what it's like to operate independently in India, the company's past relationship with the Lalbhai Group in the air-conditioner market, its faith in joint ventures and its current plans for India.


Q&A: Eran Gartner
As Vice President (Operations), Bombardier Transportation, Eran Gartner, outlines what would make his company such a hot pick to build Bangalore's mass transit system. It isn't just about creating a network and vanishing, he claims, it's also about transferring modern technology to the local operations.

More Net Specials
Business Today,  February 16, 2003
 
 
PRUNING
Shakeout Season
Merrill Lynch has five IT vendors sharing its offshore business in India. Soon the firm will get rid of three

You've heard the good news: That the global it services market will grow from $394 billion (Rs 18,81,350 crore) in 2000 to $700 billion (Rs 33,42,500 crore) by 2005; that the average offshore spend will double by 2004. No doubt it will. Now for the not-so-nice part: Only Tier I it services players will figure on the radar screens of global clients. For instance, a few months ago Lehman Brothers identified Wipro and TCS as its two vendors of choice. Now, another Wall Street firm, Merrill Lynch, has decided to consolidate its business worth close to $75 million (Rs 358.12 crore).

Flight Attendants
(Under) Dog Fight
Dash Board
We Want More

When Merrill Lynch kicked off its offshoring initiative in June 2000-with 150 outsourced pros-it tied up with four vendors: TCS, Satyam, SSI, and Covansys. A few months ago, Merrill added a fifth: Infosys. Now, as Rahul Merchant, First Vice President and Chief Technology Officer of Merrill Lynch's Global Markets & Investment Banking business, points out, it's time to consolidate. "In the past two years we've learnt a lot. We've established scale. Now it's time to deepen the relationship with a few. We would prefer two .''

The benefits of such a rationalisation are clear: an increase in productivity and a reduction in costs. The 800 professionals outsourced were working on 200 projects, a utilisation of 3.6-3.7 per project. Merchant wants to up that figure, by building teams that work across projects. ''The uptime should be 100 per cent. Currently we have a downtime of 10-30 per cent.''

Clearly, for three of the five Merrill vendors, the loss of business will hurt, although Merchant explains that the process will be gradual in a bid to reduce the pain. The second-rung players, though, have little choice but to grin and bear it, gradual or not.


DOGFIGHT
Flight Attendants
High-altitude lobbying puts Airbus ahead in a AI-IA deal.

French Prime Minister Raffarin: Pitching it strong for Airbus

If the price is right, the big boys come out to play. Thus, no one was particularly surprised when French Prime Minister Jean-Marie Raffarin pitched for Airbus Industrie on a recent visit to India. At stake, after all, is a $20 billion (Rs 95,500 crore) deal for aircraft that Air India and Indian Airlines propose to acquire over the next 20 years.

As this magazine goes to press, Airbus seems slightly ahead of its competitor, Boeing. The last big deal cleared by the Indian Airlines board-the acquisition of 43 aircraft for $2 billion (Rs 9,550 crore) in March 2002-favoured the company. Indian Airlines has the world's largest A310 fleet; Air India, Asia's largest A 320 one-and both are aircraft manufactured by Airbus. "Indians are extremely comfortable using, operating, and maintaining aircraft from Airbus," says Airbus' India-spokesperson David Velupillai.

Boeing, however, hasn't given up hopes yet. The 2002 Indian Airlines deal is yet to be approved by parliament. And it is ready to slash prices, buy back used 747s, and do anything else in its powers to get its foot in. "We are ready to offer a better deal than Airbus," says Dinesh Keskar, Senior Vice President (Sales) and President, Aircraft Trading, Boeing. The India deal is critical to both companies-the global aviation sector is yet to recover from the aftershock of 9-11. Worse, the company left out in the cold can wave goodbye to its future chances (hence the $20 billion figure). ''A large acquisition means the carrier gets locked into a company; a shift to another manufacturer involves enormous cost," explains Cyrus Guzder, Chairman of the Confederation of Indian Industry's committee on aviation. And so, Airbus pulled out a Premier.


B-CLASS
(Under)Dog Fight
May be it's the slowdown, but laggard Air Sahara is getting an increasing share of the business traveller pie.

S. Roy: His schemes paid off

When you have little to lose, you can afford to get reckless. That's the game also-ran Air Sahara played last year when it slashed fares and introduced six new schemes, one of which actually offered a chance to win a Hyundai Sonata. But instead of getting mauled by the bigger rivals Indian Airlines and Jet Airways, the 10-fleet airline is soaring. It claims to have grown by 85 per cent in calendar 2002, selling 1.6 million tickets. In contrast, the industry as a whole grew a mere 4 per cent.

But what has Air Sahara CEO U.K. Bose preening is that half of the growth came from corporate travellers, from jet-setters in companies like General Electric, Reliance, ICICI, ITC, McKinsey, PricewaterhouseCoopers, Hindustan Lever, and Infosys Technologies. And the airline's roster of corporate clients also includes 492 more names. ''We have grabbed marketshare from both the players (Jet and Indian Airlines),'' boasts Bose.

Ticketing agents seem to bear out Bose's claim. Subhash Goyal, Chairman of Stic Travels and Head of Assocham's expert committee on aviation and tourism, says that Air Sahara's gains are due to a slew of schemes it launched last year. Called Sixer, Super Sixer, and Steal A Seat (possibly a reflection of Sahara supremo Subrato Roy's passion for cricket), the schemes-alongwith the discount fare option-account for a tenth of the airline's ticketing revenues.

Although Jet denies it, Sahara's gain should be the only other private competitor's loss. Simply because Jet has traditionally focussed on business travellers. The belt-tightening, however, may have caused corporates to want and save the Rs 1,280 extra that Jet charges its business class fliers on the Delhi-Mumbai route, compared to Sahara. Besides, says Goyal, ''Jet may have become a little complacent.'' That may not be totally correct. Unlike Sahara, Jet has refrained from getting into any fly-and-win contest, relying on the quality of its service to woo customers. But if Sahara sticks to its promise of expanding its fleet from 10 aircraft to 32 by year-end, Jet may have a lot more to worry about.


DASH BOARD

Data Access, one of India's four international long-distance telephony companies has bagged a licence to operate in the US. The company's CEO Siddhartha Ray expects to generate over $150 million (Rs 715.7 crore) this year by connecting directly to last-mile wire-line and wireless telephony companies in the US. Rival Bharti Telesonic's N Arjun says he can function just as well without a US licence but still...

First Wipro manages a gushy feature in new economy journal Fast Company. Then Fortune names Infosys' N.R. Narayana Murthy and Nandan Nilekani Asia's Businessmen of the Year. And finally, Economist devotes one complete page to a profile of Wipro Technologies' CEO Vivek Paul. Indian IT has arrived.


EXECUTIVE TRACKING
We Want More
Reliance Infocomm continues to hire.

Remember Vivek Paranjpe? you don't? Well, the man used to head H-P's HR function in India before he was made the South Asia hr Head for the company. Now, goes the buzz in recruiting circles, Reliance has enticed him from his base in Singapore to Vashi, New Mumbai, where he will head Infocomm's hr function.

Another high-profile hire, this time not by Reliance, but by Raymond is that of Lalbhai Group vet Ajay Mantagini. He will head the garments division (Color Plus, Parx, and Park Avenue). Last word: Colgate is apparently putting its house in order, sales structure first. Predictably, this has led to some exits and some entries. Watch this space.

 

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