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).
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.
-Brian Carvalho
DOGFIGHT
Flight Attendants
High-altitude lobbying puts Airbus ahead in
a AI-IA deal.
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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.
-Suveen K. Sinha & Venkatesha Babu
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.
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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.
-Suveen K. Sinha
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.
-Seema Shukla
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