Group 87 Sophia – Why investors should bet on India

 

India’s prime minister is known for his pro-business policies, and his steady efforts to draw foreign investments could plant the seeds for a more prosperous India.

In a richly symbolic event, India put a spacecraft into orbit around Mars this week, beating Japan and China in the race and doing it at a fraction of what it cost NASA. The timing is propitious, as Indian Prime Minister Narendra Modi landed in the U.S. on Friday for his first official visit and amid highexpectations for India’s economic growth and potential.

Since he took office in May, Modi has begun to execute on the systematic reformation of India’s inefficient and bureaucratic markets to make them friendlier and more open for investors and businesses. So far, his actions seem to be working, with GDP accelerating to 5.7% in the second quarter after a period of stagnation; inflation is trending down and foreign capital is starting to come in.

Modi has also received praise for his recent deals with Japan and China, securing $33 billion of new investments from Japan; he even garnered $20 billion in infrastructure investment from China –India’s historical geopolitical adversary. These numbers may not be staggering from a Western perspective, but they are meaningful for an emerging economy like India’s, and more to the point, a sign of confidence from Asia in India’s economic prospects – a signal that the prime minister hopes to obtain from the U.S. as well.

Underpinning all this is Modi himself, who is proving to be a pragmatic leader. In addition to his loftier ambitions of easing India’s restrictive market regulations and upgrading the nation’s infrastructure, he seems intent on building India’s economic strengths from the ground up, pushing toprovide bank accounts for every Indian household across the nation, standardize banking practices to end exploitation of the poor and illiterate, provide insurance and pension plans for those with no access to them, and to promote the use of technology for education, social innovation, and business activity even in remote areas.

There are many challenges, of course. For one, there is Modi’s past as Chief Minister of the state of Gujarat, home to a notorious incident of Hindu-Muslim riots which he has been accused of mishandling. Combined with the Hindu roots of his Bharatiya Janata Party, political analysts have questioned his moral authority to govern over India’s minority Muslim population.

Another problem is that India’s labor force is skewed toward the agriculture sector, even though itshighest growth industries like information technology, telecom, healthcare, and retail are projected to require millions of new skilled workers which they may not be able to find. While Modi has called for more foreign investments in India’s manufacturing sector, his administration will first need to revamp archaic labor laws and improve education to ensure the pool of skilled labor required for long-term growth. Finally, there is a lack of women in the workforce and rampant government corruption, which the prime minister must also tackle.

Still, solving the economic and social troubles of a country as populous and complex as India isn’t easy, and what is important is that the nation finally has a leader who is willing to take on the challenge. Modi may have a tough road ahead but his disciplined style of governing and clarity of purpose could enable him to succeed.

In this spirit, as he now begins his dialogue with another great democracy and primary role model for free markets – the U.S. – there should be plenty of affinity between the two sides and opportunity to generate mutual prosperity through trade. India can certainly benefit from America’s financial resources and state of the art industrial/technological expertise to modernize its business landscape and national infrastructure, and U.S. investors can profit handsomely in the world’s most vibrant emerging market with the right foundation in place. Bilateral trade between India and the U.S. has reached $100 billion, and by some estimates, could grow to $500 billion by the end of the decade.

Historically, the relationship has been marked by crests and valleys, partly due to a disagreement over how much freedom to allow the private sector and more recently due to the stalling of a key nuclear deal over India’s unwillingness to provide end-user verification for plants and tracking of sourced fuel. The former could change with the advent of the Modi administration’s market-friendly philosophy, and the latter may have become less urgent due to India’s newly minted civil nuclear agreement withAustralia instead. What could also help India’s relations with the U.S. is raising foreign ownership limits in its defense sector from 26% to 49%, potentially creating a windfall for U.S. investors and defense contractors.

Yet another area to watch during Modi’s visit will be the contentious topic of outsourcing, which needs to be resolved in order to maximize the value of human capital in India and bolster the competitiveness of U.S. companies. The keys to success here will be the Indian government’s ability to bring its business policies closer in line with American best business practices and legal framework, and the ability of the U.S. to recognize the benefits, and even necessity, of outsourcing in an age of globalization.

India is reaching for the stars, both figuratively and literally, with an ambitious program of modernization and free market growth that can generate wealth for itself as well as its trading partners. That is a trend worth supporting.

Source: http://fortune.com/2014/09/27/why-investors-should-bet-on-india/

 

IT offshoring goes bad ! Groupe 1 @ Paris PPMBD

It’s tempting to consider the offshoring of the IT and services in companies especially in a weak economy situation.

Offshoring doesn’t always mean economy ! We have a good example here with a comany who choose to relocate the IT and programmers to India.

For India, it comes to computer programming in which the Indian education system has specialized.

In computing, programming activity, which is the heart gradually left to this country and its low wages. Companies trying to capitalize on this market to save money but they can have bad surprises.
In fact, in our example the firm has to deal with a high level of disappointments…

The company saves money on labor but not in the costs…

The irony here is many of the programmers she just spent the last 12 months bringing up to speed will be gone by the time the first customer support calls start rolling in. Eager to leverage their new experience, they are borrowing a page from their 1990s U.S. peers and shopping résumés all over Bangalore.

The company has to pay everything for Indians programmers when they work for them such as the travel and the lodging.
Others projects get delayed because of that and of course it’s supplementary costs for the firm.

Sources :

http://www.salon.com/2004/04/06/offshoring_bad/

http://www.infoworld.com/article/2652801/outsourcing/painful-lessons-from-it-outsourcing-gone-bad.html 

 

 

GROUP 3 – MSC CFM@PARIS – Xi sees factory China and back office India as global engine

AHMEDABAD, India, Sept 17 (Reuters) – A combination the “world’s factory” and the “world’s back office” will drive global economic growth, Chinese President Xi Jinping said ahead of a rare visit to India on Wednesday, playing down mistrust that has kept the Asian giants apart.

India’s new prime minister, Narendra Modi, is determined to build closer relations with the world’s second-largest economy, whose leader arrives on Modi’s 64th birthday and comes with pledges to invest billions of dollars in railways, industrial parks and roads.

“As the two engines of the Asian economy, we need to become cooperation partners spearheading growth,” Xi wrote in a column in The Hindu newspaper.

He said China’s strong manufacturing base and India’s software and scientific skills had massive potential both as a production base and for creating a consumer market.

Modi is seeking more access for India’s IT services and pharmaceuticals to China to help balance $65 billion in annual trade that is heavily tilted in China’s favour.

They may also discuss working together on civilian nuclear programmes and seek a solution for a long-running travel visa row, Indian officials said.

Modi hopes the leaders of the world’s two most populous nations will establish a personal rapport to match the warmth he shares with Japanese Prime Minister Abe, who wished him happy returns in a phone call on Wednesday morning, Indian media reported.

But beyond the smiles and the commercial embrace, ties between nuclear-armed India and China are marked by competition for energy and regional clout as well as a festering border dispute that led to a brief war 52 years ago.

Even as officials rolled out red carpets for Xi in Gujarat’s main city, Ahmedabad, friction emerged over a Himalayan border incursion and a pact between India and Vietnam to explore for oil and gas in parts of the South China Sea claimed by Beijing.

In his column, Xi said the two sides were “properly managing problems and differences” and that they shared one of the most dynamic and promising bilateral relations of the 21st century.

In one sign that India wants the Xi visit to be a success, New Delhi asked the Tibetan spiritual leader the Dalai Lama to reschedule an event in the capital so that it would not clash with the Chinese president’s trip there on Friday.

The Dalai Lama, whom Beijing labels a separatist seeking an independent Tibet, has lived in India since fleeing across the Himalayas after a failed uprising against Chinese rule of his homeland in 1959. Police detained a small group of Tibetan protesters from outside China’s embassy in Delhi on Wednesday.

MODI’S “INTENSIVE” FOREIGN POLICY

In a little more than 100 days since he came to power, Modi has engaged in what his government describes as “an intensive state of global engagement”, reaching out to smaller neighbours and clasping Japan’s Abe in a bear hug on his first major trip outside South Asia.

He is due to visit Washington and New York at the end of the month.

India has taken a tougher stance on Beijing’s practice of issuing stapled, rather than printed, visas to Indian citizens from the disputed regions of Arunachal Pradesh and Ladakh. Foreign Minister Sushma Swaraj told her Chinese counterpart she expected China to accept a “one India policy.”

“When they raised with us the issue of Tibet and Taiwan, we appreciated their sensitivities. So we also want that they should understand and appreciate our sensitivities regarding Arunachal,” she told reporters earlier this month.

India said on Tuesday it would firmly defend its 3,500-km (2,200-mile) border with China after domestic media reported a new face-off on the frontier.

“The two … have the opportunity to craft a new kind of relationship between great powers that is very different from the Western-dominated, post-World War Two model of great power ties,” said Jabin Jacob of the Institute of Chinese Studies in New Delhi.

“It remains to be seen, however, whether Modi and Xi can together summon the vision and statesmanship needed to grab the opportunity,” he wrote in a commentary before the visit.

Modi is not the only regional leader seeking strategic influence, defence partners and economic opportunities.

Earlier this month, Abe visited Bangladesh and Sri Lanka, asserting Tokyo’s interest in a region where it has ceded influence to China.

Xi followed this week with trips to the Maldives, the Indian Ocean island nation that New Delhi has long considered its area of influence, and Sri Lanka, where the two sides built on a blossoming relationship by agreeing to launch negotiations for a free trade agreement.

(Writing by John Chalmers and Frank Jack Daniel)

http://www.cnbc.com/id/102007472

Banking industry : Société Générale is actively offshoring… with success! – Group 28 @ Sophia

“We are much more focused today on operations and technology and being a low-cost provider than we would have articulated about ourselves 10 or 15 years ago,” Goldman CEO Lloyd Blankfein. Such a sentence could also have been said by Frederic Oudéa, CEO of Société Générale.

In the recent years, the banking industry has been reshaping itself on a global scale. Decades ago, offshoring was a major concern mostly for the heavy industries (automotive, steel industry) but now, it is also a strategy that banks are adopting. Countries such as India (Bangalore in particular) but also Poland, with low labor cost and relatively high education level are becoming « eldorados ». In 2013, the major 11 European and American banks have 82 000 technology jobs located out of their major business area. 
As Alan Johnson (British Labour Party politician) said, there will be “just 25% of the investment banking world’s back-office and operations workers (that) will remain in hub cities by 2024”. Société Générale, one of the major French-banker, is far away from being the exception to the rule. 
What are the outcomes?

When Société Générale first offshored its business in Bangalore in 2000 (as a 100% owned subsidiary called Société Générale Global Solution Centre), it was looking, at first, for cost reduction (labour force, tax deduction, lower real estate prices) required by the heavy competition in this industry. In addition, they were also seeking qualified workers and countries with good business and political environment. The major business units offshored are back and middle offices, IT teams, call centres and human resources. One of the main assets is that it makes them save much time (which also means money). Indeed, with 2 people on both side of earth, you can work 24h a day. Moreover, people from these countries are offered skilled jobs in one of the major Occidental bank, which enable them to gain experience, to spread SG image and be part of the global wealth distribution (see below youtube video).

Surprisingly, some world regions are also getting attractive to Société Générale. Indeed, Eastern Europe is more and more appealing for offshore solutions because it is closer geographically and SG can find talented and skilful persons (so-called “nearshore” lower-cost reduction). The closer you are, the easier it is to manage teams.

However, Société Générale is still reluctant to offshoring strategic and competitive processes that can affect its business. Indeed, if unscrupulous people are given access to information or processes, it can threaten the bank’s competitve edge in the given field. Besides, as co-workers do not share the same culture, there might be some misunderstandings that can affect its business. But despite these very few limits, Société Générale strongly kept and emphasised its strategy and is planning to offshore more and more operations along time. Nowadays among banking industry, Indian engineers are recognized for their unique programation skills (COBOL language) and SG G.S.C. is well known for its innovative and customised business solutions.

Eventually, offshore centres have become part of the global strategy and these are promoting SG strategic development and brand image around the world: Figures never lie and as one can see, SG’s last results prove that it may have been a (very) good choice.

http://www.socgensolutions.com

http://news.efinancialcareers.com/fr-fr/134803/banks-offshore-as-many-tech-jobs-as-apple-employs/

http://www.businessweek.com/globalbiz/content/oct2009/gb20091014_163749.htm

The video cannot be shown at the moment. Please try again later.

 

Group108@Sophia Success Story : Bharti Airtel

How an Indian Telecommunication leader reshaped the ecosystem in Africa

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Of course, offshoring is a great global trend since the 1990s, developed countries offshore to reach new markets with high potential or to benefit from the low costs of labor in developing countries. But what about the internationalization of emerging market firms? The Indian telecommunication leader Bharti Airtel is a great example of a successful international strategy.

In June 2010, Bharti Airtel, India’s largest mobile services operator, acquired the African assets of Bahrain-based Zain Telecom for $10.7 billion. It was the largest cross-border deal ever seen in emerging markets. The firm had decided to replicate the business model it had developed in India in Africa. The executives thought at that time that they could become the largest telecom provider in Africa thanks to the lessons they had learn in the Indian market.

Although the idea seemed brilliant at the beginning, Bharti’s executives soon faced challenges they did not expect : differences between Indian and African employees, poorer infrastructure than they had expected with higher-than-anticipated costs, a monopolistic distribution network, strong competitors, a weak partner ecosystem, and a market that was unresponsive to tariff cuts while Bharti’s strategy consisted in high-volume low-cost telecom model.

In 2012, the company understood they could not run their business in Africa as easily as they thought and changed its business model : customer service operations and IT were outsourced and a unified, culturally integrated brand was launched. By the end of that year, Bharti Airtel provided 189,416,000 GSM mobile in India & South Asia and accounted 61,687,000 GSM mobile customers in Africa with a presence in 18 countries in this continent.

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Profit margins and market share keep on growing and both India and Africa took the benefit of this internationalization operation : Bharti entered a new market with high potential while Africa got its entire telecom ecosystem reshaped. On September 12th 2014, the company launched its 16th 3G network in Africa contributing again in the development of this area. It was even able to make economies of scale through selling more than 3,500 of its mobile phone masts to Eaton Towers, an African telecom tower company that will take care of the maintenance.

This success story is a great example to show us that emerging market firms are also able to internationalize and to become global actors thanks to their innovation and the lessons they learnt in their home countries.
Sources:

  • Case Study, Bharti Airtel in Africa by Krishna G. Palepu, Tanya Bijlani (Harvard Business School)
  • http://www.airtel.com/
  • http://articles.economictimes.indiatimes.com/2014-09-12/news/53851224_1_bharti-airtel-3g-network-3g-service
  • http://www.reuters.com/article/2014/09/08/us-bharti-airtel-africa-towers-idUSKBN0H30B220140908

Group 52 @ Sophia-Antipolis : How will robotic surgery help Indians failed by basic healthcare in the country?

http://www.dw.de/how-will-robotic-surgery-help-indians-failed-by-basic-healthcare-in-the-country/a-17894682

Be it life expectancy or infant mortality, Indian healthcare ranks way below that in other BRICs nations like China and Brazil, but even Bangladesh. And yet India is a pioneer in robotic surgery.

Indian Institute of Robotic Surgery

Many of India’s billion-plus people struggle with a public healthcare system that is overburdened in cities and virtually nonexistent in villages.

Be it life expectancy, or infant mortality, Indian healthcare ranks way below many other countries, such as China, Brazil, Sri Lanka and even Bangladesh.

Many people are unable to access – or cannot afford – modern healthcare services.

So it’s perhaps ironic that at the other end of the spectrum robotic surgery is gaining popularity in India, and has even broken new ground.

One or two small holes

Early one morning, at the in New Delhi, we meet 19-year-old Shivani Kumari, as she is wheeled into the operation theatre for the removal of her thymus gland.

Because of its central location in the upper body – and its proximity to the heart – the thymus presents specific challenges for surgery.

But Shivani Kumari looks happy and knows what’s in store.

“I feel ok and not at all nervous,” Kumari says. “I have heard about this technique and it [leaves no scar]. I will be going through only one or two small incisions, and that too during anesthetic period, and it will be painless. Nobody wants to make a big scar on his or her body.”

Indian Institute of Robotic Surgery

Shivani Kumari being wheeled for her thymus operation, using robotic surgery in New Delhi

Dr Arvind Kumar, director of the Institute of Robotic Surgery sits at a special console, which provides a high resolution three-dimensional image of Shivani’s thymus gland.

He begins the operation after Shivani is administered anesthesia.

He controls the robot by maneuvering levers, pedals and buttons on the console with his arms, feet, fingers and wrists.

Kumar is the first surgeon to do robotic chest surgery in India. His center handles over 400 major chest cases every year.

Infant technology

“A robot with the ability to have vision on the other side because of the angulations it provides, allows us to go to the other side with equal accuracy. It’s a magnificent development as far as achieving complete radical removal of the gland by just three small holes on one side. I think it is almost a revolution,” says Dr Kumar.

Although robotic surgery is considered to be in its infancy in India, with over 30 multi-purpose hospitals offering robotic surgical procedures it is gaining ground.

Dr Belal Bin Asaf, a thoracic surgeon in the capital’s Ganga Ram Hospital vouches for the method’s increasing recognition.

Indian Institute of Robotic Surgery

The robotic arms do all the work

“Yes, this will definitely expand,” Dr Asaf says. “Currently in India we have a lot of corporate and multi-speciality hospitals coming up. When more and more people realize the potential of this beautiful machine, I guess more and more people will buy it. The current limiting factor is the initial costs involved, which in due course and with increased usage, will come down in time.”

The surgical robotic system is offered in the areas of urology, gynecology, cardiology, gastrointestinal surgery, obesity, and is even used to treat some sleep disorders.

Dr Kumar says India has made great strides in the last couple of years.

“We are the only center in Asia Pacific and one of the very few centers in the world doing a procedure called complete robotic aortobifemoral bypass. In layman’s terms, the heart blood vessels get choked in a disease called atherosclerosis. The same way the main blood vessel that takes the blood to the two limbs also gets blocked. And as the disease advances, you may have a danger to the limb and it may even become gangrenous,” says Dr Kumar.

Indian Institute of Robotic Surgery

A high resolution screen allows doctors to follow the procedure exactly

A major reason why robotic surgery in India has not progressed at a faster rate is its cost.

The system sells for over million euros. The added costs of annual maintenance and the disposable supplies that are needed push the system beyond the reach of many institutions and health care institutions.

Homegrown alternative

Dr Kumar says work is underway on a cost effective, efficient, and homegrown alternative. Indian innovation is a growth industry.

“There is nothing complex about these instruments,” says Dr Kumar. “They are very simple instruments. It is just that as of today they are patented, but at some time the patents will expire. And after that we should make this technology available to our patients at a much cheaper price and provide a wider range of instruments than what we have today.”

Indian Institute of Robotic Surgery

Dr Arvind Kumar: behind every successful robot stands (or sits) a surgeon

Robots have already had an impact on the delivery of healthcare in a way that few technologies have in the history of surgery. For instance, in the United States, over 500 robots are in use in surgery, and it’s an upward trend.

As for India, Dr Kumar says robotics will help Indian’s healthcare system touch parts of the country that are currently out of reach.

“We are a huge country and it would be impossible for any system to be able to provide super specialists at all places across the country,” says Dr Kumar. “I look forward to a situation where super specialists will be located at certain centers and there will be satellite centers… that is what will offer the true value of this revolutionary technology and that is what is going to allow every citizen to have access to state of the art technology.”