The Bench at the BOP and what a great potential for Innovation and Wealth Creation! I want a new Career, Head – Bench
Loading ...Bench in the BOP and a great Competitive Advantage for Indian Services companies! Innovation 2.0?
“Fortune at the Bottom of the Pyramid is a great opportunity and we are sitting on it!!! So when CK Prahalad wrote his book he also meant people who live in these opportunities whether societies, companies or countries.
http://www.amazon.com/Fortune-Bottom-Pyramid-Eradicating-Poverty/dp/0131467506
Some key headlines and notes worth reading…that make a business case to leverage
Indian services Industry in software needs to move up the value chain…a topic for the last 15 years and still being actively debated.
http://www.atimes.com/reports/BL07Ai01.html
http://www.ilo.org/public/english/bureau/inst/papers/1997/dp96/ch2.htm
http://blog.nasscom.in/emerge/2007/12/04/nasscom-hosts-india%E2%80%99s-first-product-conclave/
http://www.nasscom.in/Nasscom/templates/ILFNormalPage.aspx?id=53519
www.rscbrc.ac.in/LRDSS_2005/NASSCOM.ppt
http://www.rediff.com/money/2007/feb/22bud21.htm
Core challenge. “It’s all about the culture of people (read Human Capital) that drives everything including the processes.
Is an engineering degree enough?
A recent study by Nasscom suggests that only a fourth of the 400,000 students graduating every year in the country are employable…”
http://www.rediff.com/getahead/2007/jun/14engg.htm
Top 5 IT firms spend $438 mn on training
http://www.livemint.com/2007/11/12001337/Top-5-IT-firms-spend-438-mn-o.html
The India Skills Gap
http://www.simple-talk.com/opinion/opinion-pieces/the-india-skills-gap/
India’s engineer shortage
http://neweconomist.blogs.com/new_economist/2006/10/somini_sengupta.html
A headstart on lesson 101
http://www.outlookbusiness.com/inner.aspx?articleid=243&editionid=15&catgid=9&subcatgid=513
India Inc is reeling under a severe manpower shortage and companies are leaving no stone unturned to fill the void in employable talent
http://www.outlookbusiness.com/inner.aspx?articleid=243&editionid=15&catgid=9&subcatgid=513
“Service industry in India spends an average 2% revenues on training. The corporate expenditure on training equals one month’s salary at the entry level …….Take, for example, this recent joint study by information technology industry lobby Nasscom and global management consulting giant McKinsey, on the training needs of India’s booming IT sector. The study has pegged the possible shortfall in the sector at 500,000 within the next three years. For an industry where only 30% of the graduating fraternity each year is “employable,” that number is a huge deficit”
Infosys incurred a capex of Rs 1,600 crore on its Mysore facility”- Mohandas Pai Director, HR & Member, Infosys Board…”
Can Indian Software Firms Compete with the Global Giants?
http://www.computer.org/portal/site/computer/menuitem.5d61c1d591162e4b0ef1bd108bcd45f3/index.jsp?&pName=computer_level1_article&TheCat=1005&path=computer/homepage/0706&file=cover2.xml&xsl=article.xsl
Q&A: Nasscom’s Kiran Karnik on India wage hikes, talent-pool shortage He says education and additional IT training are key
http://www.computerworld.com/careertopics/careers/story/0,10801,108227,00.htmlhttp://www.thehindubusinessline.com/2007/04/18/stories/2007041805490100.htm http://timesofindia.indiatimes.com/articleshow/1490678.cms
Why is not being complacent important? Tectonic shifts are continuous.
” The Living Company: Habits for Survival in a Turbulent Business Environment by Arie de Geus (215 Pages, Harvard Business School Press, 1997)
Mr. de Geus quotes a Dutch survey of corporate life expectancy in Japan and Europe that came up with 12.5 years as the average life expectancy of all companies. “The average life expectancy of a multinational corporation — Fortune 500 or its equivalent — is between 40 and 50 years,” he writes, noting that a third of 1970’s Fortune 500 had disappeared by 1983. (The combination of the Royal Dutch Petroleum Company and the Shell Transport and Trading Company dates to 1907, though the roots of the individual companies go back to the 1800’s.) Such endemic failure is attributed by Mr. de Geus to the focus of managers on profits and the bottom line rather than the human community that makes up their organization. In an attempt to get to the bottom of this mystery, Mr. de Geus and a number of his Shell colleagues carried out some research to identify the characteristics of corporate longevity…
“http://www.businessinnovationinsider.com/2005/11/the_lifetime_of_the_average_sp.php
The lifetime of the average S&P 500 company continues to shrinkIn a Powerpoint presentation for KM Asia 2005, John Seely Brown included a graphic (from the book Creative Destruction: Why Companies That Are Built to Last Underperform the Market–And How to Successfully Transform Them) which shows how the average lifetime of a S&P 500 company has steadily declined over the past 100 years or so. Extrapolating into the future, it’s clear from the graphic that the typical S&P 500 company is facing a lifetime of less than 15 years. The findings, which originally appeared in 2001, are still jarring almost five years later. Apparently, large S&P 500 companies still have not learned how to innovate their way to success – as a result, they are experiencing ever-shrinking lifetimes.http://www.strategy-business.com/press/16635507/18728
So how is this all an opportunity for the Indian services industry in software? An example of the business case for a service company is given below and the challenge from an ROI/ROE and Human Capital perspective. This is the opportunity. However while the scale will vary from the large services companies to the SMEs which are the majority, but the principle is the same.
· An average of 20,000 fresh undergrads join each year
· Break into teams of 10
· 2000 startups a year
· Each one can choose from a pool of startup ideas, technologies and opportunities or their own
· 1:5 mentor (read trainer, actually “Mentor”)
· Single purpose mission: Create a startup product/service company that the world needs
· Relocate team to global clusters such Silicon Valley, Silicon Vadi (Israel), Finland, Boston, China, etc. + outsource product engineering services to parent company)
· Best case: The team gets funded and company takes a stake
· Worst case: Best in class skills deployable across services opportunity
· 10% success rate i.e. 200 startups funded
· 10% survival rate i.e. 20 startups reach growth
· Every five years out of 1000 startups, 100 survive and scale, an average of IRR of 50 should have over a few billion dollars in wealth being created
· Company has a continuous investment in global startupsWhat did we just do?
· Started an engine of social-cultural-economic growth (a la Stanford)
· Based on business drivers for all participants ~ Mentors, Students, Academia and Industry
· Built on passion (not on an annual increment of 15% or another job syndrome)
· Create a Sustainable & Scalable Competitive Advantage that is not easily replicable (choosing ideas, technologies or products by both Undergrads and Mentors are key, VC/PE model. Not everyone can be Pramod Haque, Vinod Khosla or a KPCB)
· Create a company with investments in hundreds of potentially large companies of the future
· The best minds in the parent company will want to be “BENCHED”
· ROI/ROE/Human Capital model will be huge for the company
· Become the hub globally for the best talent
· Culture of collaboration
· Keep the current business scaling with few people and tremendous productivity
· Human Capital will be globally benchmarked and create greater productivity that the company will be able to leverage through new services at higher $ rates and new business models will emerge such as mutual risk (ex: Project ~ 60% of fixed costs + % of Revenue or Equity)
· Today Training is a cost structure with Inventory Turnaround time is measured, move Cost to Revenue and passion to wealth creation
· Create an industry for the next 100 years
· By product: Culture, Innovation and Engine for Wealth Creation (Socio-Economic)
Scale this to over four hundred thousand people and this is an “Annual” and “Perennial” business case.
http://blog.nasscom.in/emerge/2008/03/24/what-a-great-period-for-innovation/
http://blog.nasscom.in/emerge/2007/10/19/may-a-thousand-talpiots-and-stanfords-bloom/
This is where the new GEs, Microsofts and Googles of the world will come from. I just registered www.benchexchange.com Is this an open business plan? Yes. Not everyone can replicate it. 
Or just read Anand Mahindra’s (VC & MD, Mahindra & Mahindra) speech at Nasscom Leadership Summit on February 13th 2008 and make your own call…
http://economictimes.indiatimes.com/articleshow/msid-2782893,prtpage-1.cms
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