McKinsey interview with Narayana Murthy

The Quarterly: But the boom in offshoring has also inspired US-based services companies such as Accenture to open up operations in India—essentially to compete with you on your own terms in your own backyard. What will this mean for Infosys?

Narayana Murthy: I think we’re well positioned against the big multinational IT services companies, such as Accenture, IBM Global Services, and EDS. Their customers now have a greater awareness that Indian companies can offer very high-quality application-development and IT-consulting services at much lower cost.

But their coming here doesn’t change the basic economic difference between their businesses and ours. Typically, in the application-development work we would do for an average client, about 70 percent of the effort is done in India or another cost-competitive country. Our general and administrative expenses are centered primarily in India and are about 7.5 percent of revenues today. By contrast, the US companies that are our competitors, despite a strong presence in a country like India, by and large have the majority of their workforce in the United States or in the local market. It is not easy to let go of that workforce. So the economics differ.

Also, it’s not easy for the multinationals to create a workforce equal to ours in a country like India. The multinationals have to compete here for the talent and then train the people. There are many processes that have to be built up over a period of time to do that effectively. And of course, just having talented employees trained to deliver services is not enough.

It’s not just a question of renting a building and hiring a few people and then saying to customers, “The shop is open.


Advantage of Job Board

There are plenty of job boards taking shape like TechCrunch’s CrunchBorad, and 37signals and India’s own Will these Job Board survive in the face of big competition from The Monster 🙂 I think Monster is a big player having all the muscle to compete on a larger scale and also they are working on a volume based market segment whereas job boards are primarily niche market segment like publishing jobs which are very much technology professionals, key positions, startup jobs, etc. Therefore job board and the job portal(monster and all) are for different market segments.

What are the advantages :-

When a company puts job advertisement, the same gets hidden inside big ocean but if use job board it is going to be live for many days and visible to million of visitors.

Some job board also have blogging features enabled (like in allows community participation, there is a disadvantage to wrong publicity but if managed well community can guide career opportunity seeker to the employer.

Job Boards are on top edge of the technology, so as technology introduce new ways, Job Boards will be the first to pick it up and provide that leading advantage.

Some Job Board give facility like subscribing to certain type of jobs through feed readers, for example “send me all java jobs” or “send me all start up jobs”, these create a community of follower of the job board and creates cross referral of the jobs.
Any other advantage ? kindly suggest.

Software is heading towards Automation? So soon?

My company Adipt’s  chief technologist had pointed us to a new Java framework, Cognition framework

He has written in company blog

Congintion framework tool generates quite good amount of code and a nice web page without a single line of code!! Amazing guys, this is perfectly way towards automaiton, machine is bound to take over we human programmers  We will be still masters (designer and architect) but nitty-gritty code/development/programming will be trivial. Atleast that’s what I felt after seeing the demo.

Web 2.0 : Industry Life Cycle

Web2.0 is the latest driving force for new innovation in the web, every day we see many new social media, products, solutions claiming to be web 2.0!! What is web2.0, who are the true web 2.0, can web 2.0 sustain longer “Industry life cycle”, what are the lessons thet we can learn and apply to build a successful web 2.0 product solution. This article explores the above questions in the following section.

Web 2.0 : As Wikipedia defines : Web2.0 is the second generation of internet based services that let people collaborate and share information online in a new way – such as social networking sites, wikis, communication tools and folksonomies.

Some of the web2.0 principles :

  • Web as platform, reach out to the entire web not just the center.
  • Harnessing collective intelligence, turning the web into a kind of global brain.
  • Data is the next Intel inside.
  • End of Software release cycle, i.e. Operations must become a core competency and Users must be treated as co-developers, in a reflection of open source development practices.
  • Lightweight programming models to build loosely coupled systems and allow syndication.
  • Software above the level of a single device i.e. not limited to any specific platform, technology and devices.
  • Rich user experience i.e. enabling user to use web as a medium to collaborate, classify and editing,etc.

Core Competencies of Web 2.0 Companies:

  • Services, not packaged software, with cost-effective scalability.
  • Control over unique, hard-to-recreate data sources that get richer as more people use them.
  • Trusting users as co-developers.
  • Harnessing collective intelligence.
  • Leveraging the long tail through customer self-service.
  • Software above the level of a single device.
  • Lightweight user interfaces, development models, AND business models.

Some of web 2.0 companies:
Google, Flickr, Wikipedia, Yahoo, YouTube …many others

Let’s apply the “Industry Life Cycle” stages to web2.0.

Many of Web2.0 innovations are definitely at the introduction stage.

Technology solutions like small scale CMS or Blogging application like TypePad, WordPress, Drupal, XOOPS and many others are enabling web 2.0 developments. However innovation is at its peak with various tools and technologies being introduced to take web 2.0 to its nth dimension. For instance rich internet application technology like OpenLaszlo,Flex, Google GWT, Ajax, social media are propelling web2.0.

Industry Life Cycle Introduction Stage:
During web1.0, market penetration was difficult because web1.0 companies relied too much on adding functionalities without involving the end user’s preference and participation in evolving a solution. It was built on more hype than substance.User experience was not taken into consideration.Process innovation was rarely part of solution.
With web2.0, the barrier to market entry is lowest!! If we see the success of YouTube or Flickr, they were not backed my multi-million VC fund or mega advertisement to reach to the end user. They followed the classic “allow user to participate and be co-developers of the solution and end user of the service”.
Also developing web2.0 based solution is not expensive because of availability of open source, community support software and evolving solution rather than one mammoth final solution. Web2.0 solution is designed based on principle like any user(IT savvy or not) must able to understand, participate and experience web. This makes web2.0 adaptive yet persuasive.
So are we seeing that the traditional industry life cycle “Introduction stage” principle failing here!!! I think so or the least “Introduction stage” stage has partially merged into Growth stage for basic web2.0 solutions . However if the solution has innovative process, patented ideas, I think the product will have an introduction stage.

If your idea/product has a definitive introduction stage due to innovation/patented ideas, process innovation, key differentiator, you will successfully lay out an entry barrier and continue to introduce persuasive breakthroughs in market place. Google is the leading example.

Let’s explore web2.0 in growth stage, we will take example of YouTube for this.
Growth Stage :
Accelerating market penetration
Standardized product technology
Mass market

YouTube was founded in February, 2005 by Chad Hurley, Steve Chen, and Jawed Karim, who were all early employees of PayPal.
On July 16, 2006, YouTube announced that 100 million clips are watched on YouTube every day, YouTube is currently one of the fastest-growing websites on the World Wide Web, and is ranked as the 15th most popular website on Alexa, far outpacing even MySpace’s growth.
An article in the New York Post suggested on July 23, 2006 that YouTube may be worth anywhere from $600 million to $1 billion. (References : Wikipedia)

The above snippet on YouTube proves that it has quickly transitioned to Growth stage! The question is whether YouTube’s business model has been designed(or getting designed) to penetrate market not only in Europe or USA but also extend to other parts of the world. The threat to YouTube is while it’s expanding, there are copy-cat solutions from competitors!! However as web2.0 philosophy says : Harnessing collective intelligence, turning the web into a kind of global brain, if YouTube continues to innovate and expand the community to other continents, I think it will have advantage over copy-cat solutions and will lead the market growth.
But wait! Don’t you think web2.0 also allows other copy-cat solution to create solution and penetrate market at the same speed as YouTube! It does, as we saw introduction stage has become almost negligible due to least cost to develop (due to open source software) and less entry barrier.
So welcome to world of doom unless your web2.0 solution have substantial business model to innovate, generate and continue be the market leader.

Don’t copy cat solution unless you have a business model. What is important for web2.0 is continuation of market penetration and quick expansion of solution to other parts of the world. Because unless your solution has that “innovative” angle, you will see many copy-cat solutions in record time.

Maturity stage and Decline stage, I can think Friendster which was replaced by the arrival of MySpace.(Friendster still making ways back)
Factors like knowledgeable customers, quest for technological improvements and lack of community participation nature made Friendster decline. Does this answer to the critical question we often see in Web 2.0 communities…how long before some bubble burst?
I think we are seeing high innovation and introduction of products in web, however not all of them have business plans or uniqueness which can’t be duplicated, therefore only those will remain successful who keep introducing leading advantages through technology, process, product differentiation and driving the future.

This is an attempt to apply traditional industry life cycle to web2.0 and analyse the pattern for introducing robust web2.0 solutions in market place and also continue to lead the market.
Any thoughts, kindly share.

References :
Contemporary Strategy Analysis by Robert M Gran
Strategic Alliances – HBR

Another weblog

This is my 1, 2,3,4…I think 5th blog 🙂 I have been writing in blogspot,few wordpress but nothing personal yet. Therefore I thought to create a “very personal” and “professional” blog where I can write independently and can write about any topic that I feel about.

Welcome to my blog.