The Venture Intelligence Blog

Red Herring's December event to feature Offshore Outsourcing "Outsourcing in India and elsewhere" features prominently among the topics listed for the Red Herring Fall conference, an invitation-only event to be organized by the newly relaunched technology and entrepreneurship publication Red Herring . Other topics to be covered include restructuring of the venture capital industry, 3G and other wireless technologies, China, and the digital home. Sachio Semmoto of eAccess, Guy Gecht of EFI, Lawrence Calcano of Goldman Sachs, Guerrino De Luca of Logitech, Craig Conway of PeopleSoft, Thomas Weisel of Thomas Weisel Partners, Stratton Sclavos of VeriSign, and Gary Bloom of Veritas are listed among the speakers at the conference. Event Details Location: Monterey, California, USA Venue: Monterey Plaza Hotel Date: December 8-10, 2003 Click Here for more information about the event.

SEBI's Venture Capital advisory committee submits report The Advisory Committee on Venture Capital has submitted its report to India's capital market regulator, SEBI. The committee, under the Chairmanship of Dr. Ashok Lahiri, Chief Economic Advisor, Ministry of Finance, was set up to advise SEBI in matters relating to the development and regulation of the VC industry in the country. The report has been placed on the SEBI website for public comments. Some of the key recommendations of the report include: * Removal of the requirement of lock-in of shares post the listing of their investee companies. (At present, the VC funds are subjected to a lock-in for a period of one year after listing.) * Allowing venture capital funds to invest upto a third of their corpus in listed companies (against 25% of their corpus allowed currently) . The report has however said VC funds will not be given any special exemption from the clauses governing the takeover code. * Introduction...

Manish Sabharwal's interview to Knowledge@Wharton In a fascinating interview to Knowledge@Wharton, Manish Sabharwal, Founder & Managing Director of pioneering HR BPO firm, India Life Hewitt, provides both solid and witty insights into a range of industry issues: how he started out, why he sold out, why he focused on India as a market, etc. Some extracts: Business schools as venture incubators I think VCs who started incubators got it wrong; business schools like Wharton are the best incubators in the world. I milked the school's ecosystem. India Life was my final project in six classes. Many professors helped me think things through, and I had a group of first-year students do a field application project. I used the summer between the two years to travel to India and refine the plan, and then moved back to India straight after school. I guess it would make a better story if I said all my professors gave me bad grades for my business plan. But they didnÂ’t; they...

Products and services businesses require completely different DNA: Infosys sales chief "(When) someone asks me why my company (Infosys Technologies) isn't being more aggressive with products, I will just put it down to misplaced national pride. They want India to be known for great software products. It should. But India is already well known for its services companies. And that's something to be proud of," says Basab Pradhan, Infy's Senior Vice President and Head - Worldwide Sales & Retail (North America), in a column for Rediff.com. Some extracts: * The products and services businesses are so different, that the odds against a company with a dual strategy are fairly high. * Indian IT services companies Infosys and Cognizant both show far better margins and growth compared to leading software product companies Siebel and PeopleSoft. (Pradhan substantiates this statement with a table containing actual figures.) * It is true that in the last two y...

"Venture Capital is not available for start-ups" "Today, there are no true start-up VCs. Investments are happening in companies which have made cash profits and are looking for funds for the second phase of growth." says venture capitalist Vishal Nevatia of GW Capital in an interview to Economic Times. GW Capital is focussed on mid-sized companies in the media & entertainment, retailing, and BPO sectors. Around 60% of the fund's Rs.150 crore corpus has been invested in these sectors, Nevatia said. Click Here to read the full interview.

Selecting an offshore software development partner The McKinsey Quarterly recently published a primer on offshore software development with an aim to help US companies identify which projects they should outsource to an offshore vendor and to whom. Some extracts: * Only companies with fairly large IT staffs—more than 50 in-house employees focusing on software development or maintenance—should consider offshore software partnerships, since much time and substantial resources are required to negotiate them and to oversee the work and the integration of development teams. Furthermore, a company that outsources software development shouldn't have a taste for "bleeding-edge" technology, which ought to be created in-house since it requires a high number of design-code test-redesign feedback loops. * Offshore outsourcing is a particularly important option for maintaining legacy systems—often a large and onerous part of an IT organization's workload and one that...

What's slowing India's economic growth? A recent study by global consulting firm McKinsey found three main barriers to faster growth in India: the multiplicity of regulations governing product markets, distortions in the market for land, and widespread government ownership of businesses. "We calculate that these three barriers together inhibit GDP growth by more than 4 percent a year. Removing them would free India’s economy to grow as fast as China’s, at 10 percent a year. Some 75 million new jobs would be created outside agriculture--enough not only to absorb the rapidly growing workforce but also to reabsorb the majority of workers displaced by productivity improvements," the report says. Click Here for more information about this report. (Free registration required).

TiE to organize India tour in February for Silicon Valley professionals "At TiE (The Indus Entrepreneurs), one of the things we do is help the movers and shakers in the valley -- the lawyers, venture capitalists, accountants -- build relationships with their counterparts in India. We're conducting a tour in February to help build their Roledexes in India," Raj Jaswa, a senior member of TiE (and founder of Selectica Inc.) said in an interview to Silicon Valley Biz Ink. "People do business with people they are comfortable with, feel an attachment to. The movers and shakers here need to have the ability to figure out a cost to a company to go into Hyderabad, for example. Or they need to know what to do in order to recruit managers and engineers. They will now have contacts they feel comfortable with," Jaswa added. Click Here to read the full interview. Click Here to visit the TiE web site.

New research counters anti-outsourcing lobby At last, there is some research to counter the huge negative press generated by the "3.3 million US jobs to be lost due to offshoring" report put out by Forrestor Research. The Indian software industry and BPO industry association, Nassom, in combination with BPO firm Evalueserve, has published a report--backed with numbers--that makes the case that outsourcing (including offshoring) benefits the US economy in the long-term. Here are some extracts: Outsourcing is being understood today as a win-win partnership between Indian and US companies. Both are expected to benefit, with the gains spilling over to the overall economies and domestic markets of the two nations. The Evalueserve-NASSCOM research projects the following benefits for the US economy as a result of outsourcing: * The US economy can expect net savings of billions of dollars due to offshoring over the period 2002-2010. This is over and above the positi...

The Economist profiles travel BPO firm Tecnovate and its UK parent ebookers New Delhi-based Tecnovate, the Indian BPO subsidiary of UK-based leisure travel firm, ebookers plc, recently raised $10 million at a valuation of $160 million. The company which has so far catered to the needs of ebookers' European subsidiaries, now plans to use the new funds in expanding its services to third-party clients. In a recent profile in The Economist, ebookers Founder & CEO, Dinesh Dhamija, explains why Technovate is very important to ebookers' competitiveness. According to Dhamija, Technovate saved his company £1.5m in the quarter ending June 30. “If there is a market share battle, then it will be the company that keeps costs lowest that will be the last standing,” Dhamija says in the article. An interesting extract from The Economist article: Delhi helps provide a round-the-clock service along with offices in Europe. But what about local knowledge or language skills? That w...

Knowledge@Wharton's interviews with BPO experts Ravi Aron, a Wharton business school professor, interviewed a range of experts to obtain different perspectives on the latest trends in the BPO industry. The interviews were published in the latest issue of Knowledge@Wharton. As a sample, I'm posting below some extracts that I found to be especially interesting. Extracts from the interview with Rebecca S. Scholl, principal analyst at Gartner Research: Aron: Is the decision to migrate or outsource a process seen as a strategic (as opposed to tactical or operational) decision? Who makes this decision within the firm? CEOs, CFOs or CTOs? Scholl: Key decision-makers for domestic BPO are the CFOs and the CEOS (in large enterprises the CFO plays a larger role and in smaller enterprises the CEO plays a larger role). CIOs and CTOs are rarely involved in the initial decision to outsource and typically get involved during the provider selection process. Most offshore BPO is...

Why searching for The Next Big Thing is a waste of time What's going to be "The Next Big Thing" (or its variation the "next killer app")? Reams and reams of newsprint, web pages, conferences, and even oh-so-precious TV air time, is devoted to this topic--especially now that the "Internet wave" has subsided a bit (or rather, become more "mainstream"). Tim Oren, a Silicon Valley veteran (currently Managing Director of VC firm, Pacifica Fund ), has made a great post at his web log explaining why looking out--or listening to the "punditocracy"--for the NBT is a waste of time. "The Next Big Thing is a narrative we lay on top of the events after they happen..... (it generally) sneaks up from behind while you're trying to do your work, kicks your ass, walks over you, and either rifles your pockets or drops gold into your hands," Oren says. "Anyone tells you different, you're talking to a liar." Oren go...

Red Herring relaunches online as past and present heads take digs at each other French entrepreneur Alex Vieux, who acquired the Red Herring brandname, has relaunched the technology and entrepreurship magazine in an online format. (The new owners of the Red Herring brand cannot bring out a print magazine until September 2004 as required by Time Warner--publishers of tech business magazine Business 2.0--which bought the old RH's subscriber list.) Vieux has hired former Business 2.0 editor James Daly to head the new RH editorial team. In an interview to San Jose Mercury News, Vieux has attacked RH's founder and original editor-in-chief, Tony Perkins, calling the old version of the magazine "hype-ridden". According to the Mercury News profile, Vieux, who served as a US correspondent for the French newspaper Le Monde, launched business conference company Dasar in 1990. The conference business "put him in touch with the tech elite", the profile says, ad...

Bio-tech investing: the risks and rewards At a time when VC investments in bio-tech companies (both in the US and India) is on the uptick, a recent Knowledge@Wharton article covered a conference titled “Value Creation and Destruction in Emerging Technologies: Lessons for the Biosciences” provides some insights and background. Click Here to read the article.