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MAY 6, 2007
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Web Censors
Internet censorship is on the rise worldwide. As many as two dozen countries are blocking content using a variety of techniques. Distressingly, the most censor-heavy countries such as China, Iran, Saudi Arabia, Myanmar and Uzbekistan seem to be passing on their technologically sophisticated techniques to other countries of the world. Some examples of censorship: China's blocking of Wikipedia and Pakistan's ban on Google's blogging service.


Temping Trend
Of late, temporary staffing has become a trend in India Inc. In industries such as retail and logistics, temporary hiring has become a business strategy as it enables them to quickly ramp up teams. It is becoming increasingly important for the survival of Indian firms, given the growth rates and talent shortage. Although the salary gap between temporary and permanent jobs is narrowing, temporary staff in India earn lower salaries than permanent ones, which is contrary to the global trend.
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Business Today,  April 22, 2007

 
 
Opportunity In Adversity
 
At a discount: Rising interest rates could hit consumption

The intensity of government intervention in the money markets has never been this severe in the recent past-hikes in interest rates by a cumulative 3 percentage points and a slew of measures to reduce the prices of primary products. Given the extent of deregulation of the economy, there are few other controls left to tinker with. Inflation, a measure of rising consumer prices, is abating, but at a snail's pace. Not surprisingly, the government is mulling increased regulation of capital flows into the country, like external commercial borrowings by Indian companies and FII-issued Participatory Notes.

Rather than adopt this regressive route, the government, to begin with, ought to step back and comprehend the outlook presented by the various agencies. The worst case scenario emanates from IMF at 7.8 per cent during calendar 2008. Rather than propitiating the rain gods to deliver good monsoons and meet the RBI estimate of 8.4-8.5 per cent, the government should aggressively go about attacking issues that hold up growth in the infrastructure sector-roads, ports and power sector. That little has happened on the ground is only corroborated by the recent industrial production figures-power generation has grown by a mere 3.3 per cent during the month of February.

The i-factor, if one might call it, takes significance for a couple of reasons. The instruments used by the government to combat inflation also inflict considerable injury on the manufacturing sector. This, since the instruments target the demand side of the market-reduce liquidity in the market, raise interest rates and, consequently, moderate the buying power of the consumer. But the problem originally began on the supply side, with increased global commodity prices and a lower projected consumption by the US, the world's highest consuming nation.

There is no better time to effect substantive measures that will improve the competitiveness of the manufacturing sector-reduce power costs, and improve access to consumption centres. This will enable companies to hold their prices, consequently, help in containing inflation. What this requires is political will that is not lost to the whims of the regional parties, who by virtue of being allies of the ruling party, control several infrastructure ministries.

Evidently, the lowering of government controls over the years cuts both ways. Yes, we are no longer insulated from even the potential threat of a global slowdown. That said, we have margins to improve upon, that can mitigate the ill effects. Time for the right measures.


What They Don't Teach You…

Budding managers: Should practise transparency early on

For several years now, business today has been publishing an annual survey of placements at top Indian B-schools. Unfortunately, with every passing year, it has become increasingly difficult to source accurate information on salaries offered to newly-minted MBAs. Why? Most B-schools just don't want to reveal the numbers. No doubt, there's excessive media interest in just one aspect of B-school placements: salary offers. And perhaps understandably so. There's a lot of vicarious pleasure that readers get from knowing that some 20-something walked away with a Rs 1 crore per annum offer (the highest domestic offer at IIM Ahmedabad this year), when most jobs in India fetch a fraction of that. Sometimes, all the media attention can be too much for the students and their families. Last year, for instance, two IIM Bangalore students who received the highest offers requested the institute to not disclose their salary details to the media. The institute obliged, and this year too, it (and IMM Lucknow) has not disclosed any placement figures to the media.

But the question is, are institutes such as IIM Bangalore right in maintaining a shroud of secrecy over placements? Especially now that the Right to Information Act is applicable to government departments, and the IIMs are government institutions that come under the direct purview of the Ministry of HRD. More importantly, simply as a matter of philosophy, transparency is something the IIMs should be practising, and not merely teaching to their students of business management. To say that compensation is a matter strictly between the student and the employer is not good enough.

Take the American B-schools by contrast. Log on to the Harvard Business School website and you can get just about any information on placements. Talking specifically of salaries, the school not just posts online salary details, but slices and dices them by industry, function, and location. The only thing schools like HBS don't do is reveal salary offers by company.

No one has yet tried to use the RTI Act to force the IIMs to divulge salary details, but it is quite conceivable that some aggressive reporters may want to resort to it some day. However, it will be a pity if the institutes part with information only under duress. They owe it to the public, which includes prospective students and recruiters, to share placement data as transparently as possible. Just as B-school placements are a non-event in the US-the American media takes note of it only when there's bad news-India too will soon cease to be amazed by top-dollar salaries. But in the interim, transparency will help.


Populist Ploy

Not fair play: BCCI's Sharad Pawar (L) and Rahul Dravid

Pity the BCCI missed the woods for the trees-again. True, the Men in Blue had turned in a dismal performance at the World Cup. Somebody had to bite the bullet and take a few hard decisions to put Indian cricket back on track. But some of the pronouncements by the BCCI Working Committee defy logic. Examples: the decision to limit the number of products a cricketer can endorse; and the stipulation that sponsors can sign on only two players at any given point in time. At the time of going to press, there are indications that these two issues are being reconsidered; but that's the point we're making-these, and several others, were ill-considered decisions that should not have been taken in the first place.

The board seems to have overlooked the simple fact that sponsors court successful sports stars. So if companies fall over each other to woo a Sachin Tendulkar or a Rahul Dravid, there are sound commercial reasons for this. Globally, sports stars earn staggering amounts from endorsement deals. Tiger Woods, Michael Jordan and Maria Sharapova are just three examples of sportspersons who have cashed in on their celebrity status and raked in millions of dollars from sponsorship deals. In 2006, Woods earned nearly $99 million (Rs 445.5 crore then); of this, $87 million (Rs 391.5 crore then) came from endorsements. Such deals have not distracted these players from their sport. If anything, they act as incentives for them to scale greater heights.

Then again, cricketers were denied natural justice when two of them (Tendulkar and Yuvraj Singh) were served show-cause notices for reacting to Greg Chappell's leaks to the media. But in a glaring inconsistency, the coach wasn't asked to explain the series of sensitive team-related news that he is alleged to have shared with mediapersons during his 22-month tenure.

The BCCI, led as it is by one of India's canniest politicians, perhaps sensed that the public wanted blood and used the opportunity presented by India's dismal show in the World Cup to cut the players down to size. This seems to have gone down fairly well with an emotional Indian public. But what almost no one is asking is: what about the systemic flaws in the BCCI itself? There's no move to professionalise this supposedly "honourary" set-up; there has been no announcement of any plan to improve cricket at the grassroots level; and office-bearers are still not accountable for the thousands of crores of money that Indian cricket now generates every year.

These are the key issues that need to be addressed. Unfortunately, though, populism seems to have won the day over performance.

 

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