Investment in equity market ........

Saturday, February 28, 2009

How wise is it to invest in Equity Market for an small investor, is it worth?

This is the question in every one mind... If you look at any Indian money magazines, it would always advice you to invest you in equity market considering your age and risk taking abilities. It would say, if you are young your equity exposure(share) should be more compared to debt (bank deposits). But then consider this before investing..

  • Share market now adays not just depend on home economic alone. Global economy drives the market. Something bad happens in the western or eastern market, the very next day, India market feels the heat, the reason being panic sets into the market as there are now large number of foriegn players in the Indian stock market. How do you predict world economy is good at any point of time? or how do you predict how the market would be in 3 years down the line.
  • The general advice is that a small investor should be wise enough to read the financial statement of the company before investing in the company. How do you know the financial statment produced are true (even if it is an audited report for example Satyam case)?. Audit is an activity, which generally verifies document produced by the company, it doess not validate whether the transaction really happened. For example, a bank FD may not be validated with the corresponding bank.
  • FII, had invested and took the sensex to range of 21,000 in Jan 2008, before sucking out their money(your money too??) from the market.
  • It is generally said, considering inflation, FD would not even satisfy the inflation factor. But, at the same time I would say for small investor would be sure that on such a day next year he would get 'X' amount if he had put in FD. The same thing cannot be said with equity market.

If you are young, have time, money and risk taking ability , then I believe the best bet would be to have your own entreprise otherwise bank FD might be much safer bet, though interest earned has to be taxed....

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Postive thinking.......

Some of the positive quotes which I came across....

* Spend so much time improving yourself that you have no time left to criticize others

* Any fact facing us is not important, as our attitude towards it, for that determines our success or failure.

* A smooth Sea never made a skillful mariner.

* The common man seeks security, whereas the uncommon man seeks opportunity.

* Whatever the mind of man can concieve and believe, the mind can achieve.

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Recession News

Tuesday, February 24, 2009

To read more about recession news click here
Courtesy Bloomberg website
Request you to predict and participate in my recession end poll - down right.

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Evolution & Challenges in Outsourcing....Part 2

Friday, February 20, 2009

Fresh on a Saturday morning, I was wondering the Growth TOP IT services companies in India, and will it be able to continue to Grow the same way?. Considering the current economic scenario it going to be an "uphill" task. IT services and Outsourcing were quite innovative concept for a decade, now there is strong feeling instead of just totally depending on IT services they need to diversify and be more innovative .

  • The top 10 revenue earning IT services companies are sitting on a huge pile of cash (why am I bothered, its not public tax payer money nor am I share holder in this company, but then, was wondering as what could be the likely plan of IT services companies and how they are going to use it?, keeping just as deposit might not be great idea for an enterprise) Hence probably, utilize it to multiply it many times.
  • Set up "Venture Capital" fund and look of for a viable investment options
  • They need to look at product space, companies like Infosys have Banking product to their credit but the revenue earning percentage against IT services, might be pretty less.
  • Ramalinga Raju did it right, to diversify into Infra structure development, unfortunately he commited the grave mistake of fudging the account and cheating the shareholder. This is where he went wrong.
  • The IT services company invest on quality ascepts like CMMi, ISO etc. But, at same time there is not much of investment in R&D or product space. Also look at the Value add the CMMi and ISO provides.

These just my opinion, each one might have their own. Time to introspect......not only the companies, but even those who are involved in IT sectors like employees, contractors and vendors whether the business outsource model is going to be same or is it going to change ?

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Dearth of Indian Technology Product Companies.....

Thursday, February 19, 2009

While scanning through a Sramanamitra's blog, I found an interesting discussion about dearth of product manager from India,

I am re-posting the comments, I had posted in the Blog.

More than Product Managers, generally India does not have any major technology product in the world market and that may be the reason for dearth of Product Manager.

This might lead to a slightly different question, as why does India do not have Technology products? well, following could be some of the reasons......

i) Society : As Kids(till we finished our college) we grew up in a protective environment with all our needs taken care by our parents /elders. We rarely experimented as kids and we were never allowed to be failed. Failure is a disgrace in our society. If you ask final year student, Entreprenuership will be his/her last option. Hence, it depends on the family influence as well

ii) Attitude : Generally, we are also not agressive or assertive in nature to market products. We are more than happy, if we get a well paid Job. When campared to 1980's & 90's , in the last 6 to 8 years salary increase has been phenomenal in MNC, so people are quite happy to get into MNC job.

iii)Environment : There is lot of bureaucracy invoved in setting up a basic entreprise in India. For example, before the advent of MNC bank, opening a bank account with Public sector bank was a tedious process.

iv) Cost of capital : If you are a startup, if you are not able to get venture capital funding and if you are opting to fund you project through Debt financing then the rate of interest is killing, the interest rate are around 15 to 18% with Banks. Its diffucult to survive even for an established small scale company survive.

But, again its passion to achieve which drive an entreprenuer....Sometimes Opportunity cost equation is not in favourable of the indian Technology entrepenuer,hence the end up taking some kind of assignment in an MNC....

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Evolution & Challenges in Outsourcing....Part1

Saturday, February 14, 2009

Would anybody thought or predicted in 1990 that in less than 2 decade, Indian IT service sector will rule the world? The evolution of Indian IT sector was mind blowing.

In 1990's, software service sector was at nascent stage in India, if you had asked any engineering graduate about software companies then, he would have mentioned CMC (A govt sector company taken over by Tata's), TCS and Wipro alone. It was only cream of engineers who made it into these companies and yearly intake was about few hundereds. Then came Clinton's Era around mid 90's, as US corporate were looking for cost effective computing solution and hence flood gates where opened for H1 Visa . The concept of 'body shopping' was born, Indian American and the American influenced by cost effective solution started poaching young Indian brains with American dream and processed their H1 to be taken into US as "programmer". Internet usage become aggressive in later /end of 90's even basic graduate with some knowledge of HTML were brought into US to create/maintain website. This was followed mild recession which led to 'Dot Com' burst which rendered many of these programmers job less. Again cost effective solution were looked upon by American corporates, with availability of internet through which you can connect to computer across world, 'offshoring' was though as a cost effective solution. Hence, since early 2000 to till date tier 1 and tier 2 companies recruited in 1000's and quarter after quarter, year after year the offshoring companies where able to achieve 20 to 30 percent growth and even most of the time beat the expectations. Above all, consultants were offered promotions & huge salary increase, which directly fueled the inflation.

Year 2007 gave warning signals about the subprime crisis in US and later in year 2008 bankruptcy of Lehman brothers signalled the start of recession with Job cut happening across the Globe. The Indian IT sector which was going strong till had to think about freezing new recruitment and growth. To every one surprise, came the disclosure of Ramalinga Raju, this triggered the Indian Govt to step in the avoid further fall of the booming IT sector.

So now comes the million dollar question as whether the Indian IT sector can sustain the same amount of growth it has shown over the years or can it maintain the same resource bases?. Some of the IT services companies has expressed difficulty in this quarter.

Some quotes from tierI & tier 2 companies

  • The IT clients have delayed allocation of budget and this is likely impact our earning in the current quarter.
  • We are putting certain precentage of our employees under "performance scanner".
  • Our IT clients are facing challenges, hence they want to reduce our billing rates.
  • We are putting certain percentage of resources on "Virtual Bench".
  • We will go in for Just-in-Time hiring.

In certain companies, they were not able to absorb freshers who had been provided with offer letter about a year back.

This shows all is not well in this sector .... couple of bad quarter results can be catastrophic. Rather than competing against themself on just IT services, its time for the IT services sector to be more creative and innovative to survive and overcome this recession. Will it...?

Later, I would like to write, as what could be the options available with IT Services sectors...till then have a nice time....

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