IT’s Diffusion in India

Professor Sadagopan writes how IT will move away from the Indian metros into smaller towns:

ITES (IT-enabled Services) industry has been growing fast; today it employs nearly quarter million professionals; it is expected to grow into two million jobs in the next five years. The jobs are moving to India because of our size (ability to produce so many graduates), English language and their relatively low wages (compared to International wages). Cost is the key driver for the jobs to shift to India; over the years our own costs will increase – wage increase for senior people); real estate costs are not going down either; transportation costs (particularly because of timeliness at odd hours) are already a major component of the costs. With our urban infrastructure falling apart already, any further over-crowding can hurt the Metros. Unlike software services industry, engineering services industry or R & D services industry, ITES does not need technical manpower; good graduates with English speaking skills are available in plenty in the secondary towns.

the communication infrastructure has improved dramatically; fiber links are there all over; we get much larger bandwidths from satellite links these days; mobile infrastructure is there too. Real estate prices are significantly lower in these towns; you can retain people much better in these town with the same wages or even lower wages compared to Metros; there will be no need to bus around people; even if done, the distances will be in kilometers in place of hundreds of kilometers that call centers in Metros have to reckon with today. With lower communication costs, real estate prices and reduced transportation costs, Indian call centers can demonstrate further cost competitiveness! That would be the sure way to keep and grow the ITES business which might go away to other low cot countries like Philippines and Vietnam.

Data Mining Email

Phil Wolff writes:

Email has juice. Only telephones are used more.

40% of a company’s knowledge is stored in its email boxes, hidden from intranet search engines, locked away on desktops. Email is rich with:

  • social information (who is asked about what, who redistributes information to whom),
  • time signatures (sent, received, read, forwarded, printed),
  • threading and propagation clues (A sent it to B who replied while copying it C who forwarded it to…),
  • urls pointing to the web,
  • enclosures passed along, and
  • entry points, from mobile devices to robots to business software.

  • Phil also differentiates between Yahoo and Google:

    Where Yahoo sells communication, Google sells context. Where Yahoo brings integration, Google leads with relevance. Where Yahoo! lets you type up a “buddy list”, watch Google tweak your orkut social network with clues from your mailing behavior, and vice versa.

    Where Yahoo uses their toolbar to access their many services/properties, Google’s toolbar will observe your browser experiences. And that includes now sending and reading email, surfing, news watching, reading and writing weblogs, following and posting to usenet, and shopping. With email, orkut and your toolbar, they now can create a compound profile of your interests.

    Context, relevance, experience. Tough to beat.

    On a related note, O’Reilly Network has an article on mining email that resides in a Mozilla mailbox.

    Haque Formula for Funding Startups

    The latest issue of Business Today has a story on Pramod Haque of Norwest Venture Partners. He has been ranked by Forbesas the No. 1 VC, ahead of Vinod Khosla. The article has a sidebar entitled “The Haque Formula” – how he decides if a company is worth funding. Key points:

    – The problem being addressed must be a difficult one to solve.
    – The market addressed must be large enough.
    – Prospective customers must be interested in the solution.
    – It must be a young idea, with few others in the space.
    – There must be large entry barriers.
    – The solution must have a long shelf life.
    – The founders must have credibility and management experience.
    – There must be a sound operational plan.
    – The egos of the founders must be in control – they must be open to external inputs.

    Hydrogen Power

    CNN writes:

    Researchers say they have produced hydrogen from ethanol in a prototype reactor small enough and efficient enough to heat small homes and power cars. The development could help open the way for cleaner-burning technology at home and on the road. Current methods of producing hydrogen from ethanol require large refineries and copious amounts of fossil fuels, the University of Minnesota researchers said.

    The reactor is a relatively tiny 2-foot-high apparatus of tubes and wires that creates hydrogen from corn-based ethanol. A fuel cell, which acts like a battery, then generates power. “This points to a way to make renewable hydrogen that may be economical and available,” said Lanny Schmidt, a chemical engineer who led the study.

    Hydrogen is expensive to make and uses fossil fuels. The researchers say their reactor will produce hydrogen exclusively from ethanol and do it cheaply enough so people can buy hydrogen fuel cells for personal use. They also believe their technology could be used to convert ethanol to hydrogen at fuel stations when cars that run solely on hydrogen enter the mass market. Hydrogen does not emit any pollution or greenhouse gases. But unlike oil or coal, hydrogen must be produced — there are no natural stores of it waiting to be pumped or dug out of the ground.

    TECH TALK: As India Develops: Distribution Hubs (Part 3)

    Continuing from the RISC paper by Atanu Dey and Vinod Khosla:

    Economic development is both a cause and consequence of urbanization. RISC achieves the urbanization of the rural population without requiring the massive and unsustainable rural-urban migration. It brings urbanization to the rural population by making available to them the full set of services and amenities that are normally available only in urban locations. It works within the constraints of limited resources by concentrating them in specific locations to obtain economies of scale, scope, and agglomeration. It helps lift the population out of a development trap by making available to them the benefits of technological advances and the increased access to local and national markets, when and as it becomes economically justified..

    Conceptually and operationally, a RISC has two levels: the lower one is the infrastructure level (henceforth, the I-level) which consists of power, broadband telecommunications, and the physical plant (building, water, air-conditioning, sanitation, security); and above that the user services level (henceforth, the S-level) which consists of all services that are relevant to rural economic activity such as market making, credit, financial intermediation, education and library, health, social services, governmental services, and so on.

    The I-level provides a reliable, standardized, competitively-priced infrastructure platform. This is achieved by the coordinated and cooperative actions of firms that specialize in the component activities, whether they be private, public, NGO or governmental. Ongoing investment gets a higher rate of return through better economic use. Co-located on the S-level are all kinds of firms and individuals that provide user services. The presence of the I-level, the economic scale of activity and hence competition, as well as better information and knowledge reduces the cost of products and services and therefore the prices that the users face, while at the same time increasing the diversity of products, services and providers. Economies of scope and agglomeration are obtained by the presence of a critical mass of consumers. Fundamentally the notion says small cities within a bicycle commute of most rural Indians are a better investment than making the same infrastructure and services investment in each village, even for the villagers themselves as it generates a higher rate of return for their benefit. The highest economic use of resources based on economic justification of each use, shared use of resources to increase capital efficiency, an agglomeration of consumers and diversity of services (to enable an autocatalytic economy and hence increased rates of growth) increases the rate of return and hence rural wealth for any given level of investment.

    RISC is not an attempt at social engineering through centralized planning. Neither is it another model of internet kiosk or telecenter. It aims to solve a problem by appealing to the profit motives of all participants, be they private sector, NGOs, or the public sector, mostly by creating and facilitating efficient market mechanisms and resources. The good that will surely come out of it can only be attributed to Adam Smiths invisible hand. The model does not require additional investment by the government, but rather proposes mechanisms for better economic use of the money currently being spent. The model minimizes the social dislocation being caused by the rural-urban migration and gives most rural Indians access to facilities and infrastructure that they have an economic use for. We argue that todays paradigm of power, health, education, communication and other services in every home in every village is misguided investment, uneconomic and not in the best interest of the villagers. Their share of the National money is being channeled into lower return investments. A more sustainable and regenerative avenue for the investment is possible and will better serve the rural population.

    Tomorrow: Distribution Hubs (continued)

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