Desicritics Category: BizTech: Money

The Website Ad Placement Heat Map

Ashish — Sun, 17 Aug 2008 07:27:38 EDT

One of the most important points to consider when trying to make money from ads on web pages is the proper placement of ads. If you have done some studies in this area, you could have come across many people trying to sell their secrets of Ad placement or how to make more money from properly placing Ads. However, the basis of many secrets of ad placement is how the human eye perceives ads, how they fit into the page, and whether people notice the ads or ignore them. And the basis for much of this is something called the 'Heat Map'. The Heat Map specifies positions on the page that are much more likely to catch user attention, and other places where users are likely to ignore the ads.

The Google page for the Heat Map specifies more details: Certain locations tend to be more successful than others. This "heat map" illustrates the ideal placing on a sample page layout. The colors fade from dark orange (strongest performance) to light yellow (weakest performance). All other things being equal, ads located above the fold tend to perform better than those below the fold. Ads placed near rich content and navigational aids usually do well because users are focused on those areas of a page.

Keep in mind that while the Heat Map is a good starting point, you need to spend more time on trying to figure out how your users read your page, and the amount of ads and their placement such that they earn the maximum money for you. This will not be a one-time activity, but something that is likely to take several iterations before you reach a higher level of earnings.

Toll Gates Inside Cities - Are They Fair?

enidhi — Mon, 4 Aug 2008 14:52:58 EDT

Many of you have might have noticed the toll gates on highways which collect a fee from each vehicle that passes through. Probably you’re irked because despite paying road tax you’ve to pay extra to these robbers, or maybe you’ve got used to it thinking, since the road is nice and we can cruise it is OK to pay.

The idea of collecting toll fee on highways was justified on the grounds that vehicles will be able to reach their destination faster, with better fuel economy and lesser maintenance expenditure. Many of us were annoyed earlier about paying this toll fee, now everyone has got accustomed to it.

So far the toll gates have only been on highways, on the roads connecting big cities. (You get four toll gates between Chennai and Bangalore) What I don’t like is that the Tamil Nadu government is bringing these toll gates right inside the city, for a small stretch of 20 kilometers. Two main toll gates are being erected near Perungudi and Siruseru in Chennai on the IT corridor, the Old Mahabalipuram Road (OMR) and another five satellite toll gates on the connecting roads to ensure that no one escapes unpaid.

Soon commuters will have to cough up extra money if they wish to cross these points, but for no or little extra benefits as such. That includes an expected Rs 6 for autos, Rs 17 for cars, Rs 44 for buses and so on -- one way -- totaling nearly Rs 1000 per month under normal usage for a car user. On top of that comes administrative charges of Rs 1000 per year for On Bosrd Units (OBU), which will be irrespective of usage, equaling Rs 13,000 per year, per car.

The project is being commissioned on a BOT (Build, Operate, Transfer) basis by IT Expressway Limited, a subsidiary of TNRDC. The IT corridor project as such looked quite promising and roads today are far better than what they were two years ago. No questioning that, but I have a few concerns about the idea of paying at toll gates even for city driving.

If I am wrong somewhere/misinformed correct me, else let me know your views.

Taking A Toll On Drivers

Toll gates on highways would affect only those traveling to other cities and that usually will be a once-in-a-while expense. But toll gates within a city mean paying extra every day, an additional burden amounting to several thousands of rupees each year. Can’t the TN government fund a Rs 300 crore project? Is collecting toll fees the only option? A small cess on petrol and diesel will earn this amount in a few months. Also, I feel it not quite viable to have toll roads in the heart of the city and even if built and commissioned, motorists won’t derive many benefits out of it.

It has been learned that the government is making a list of local residents around this toll road (Kottivakkam, Perungudi, Sholingnallur and so on) and will be giving them free passes, so that they won’t have to pay every day. Though that is a small relief to local residents, what about those who hail from elsewhere but stay in these localities?

On highways usually vehicles will travel inter-city, and would use the entire stretch of toll road. That may not be the case in cities. People are forced to pay, just to cross the toll gate, not necessarily to use the road. If my destination is just 100 meters on the other side of the toll gate, why should I pay the full fee? I should have an option of paying a proportional fee. Do they have that provision?

Someone having his office and residence both within the toll road will use the road all his life but will never pay a penny, because he is not required to pass through the toll gate. Already we need to pay at the ECR toll gate just to go to Mayajaal / MGM or other places that are just a few kilometers on the other side.

Where's the Fuel Economy?

On highways, the number of vehicles will be less and if the road is good cars can cruise at higher speeds to save time and achieve fuel economy. In city limits, even if the roads are improved, there will not be any time or fuel advantage due to the following reasons:

• Unlike the elevated expressway in Bangalore, which facilitates non-stop movement from Madiwala to Electronic city, Chennai’s IT corridor project is on ground level and with offices located across the road, vehicles will be changing lanes either to take an exit or to make a U- turn, forcing other vehicles behind to slow down.

• I've learned that buses will drive on right-most lane. If that is so, they will have to cut two lanes to move to left-most lane and stop at bus stops

• No ban on bullock carts, manual carts and carts powered by 50 cc TVS engine. Because the road falls within a city banning these vehicles is not viable as that will affect the livelihood of many people. These vehicles will haunt the drivers all the way. It seems one lane will be reserved for these non-motorized vehicles, but lane just means a white line. I don’t think those driving these vehicles have slightest idea what a lane is and moreover we all know how lane disciplined Indians are.

• When carriage roads like this are commissioned, one will have to go several kilometers before finding a U-turn. Many of us hate this and prefer to drive across the edge of the wrong side of the road instead. So of the 3 lanes, 1 lane will be used up by those driving in the wrong direction, one other by slow-moving vehicles and the last one by buses. Cars can struggle in between.

• On inter-city highways 2- and 3-wheelers will be almost negligible in number, as few people travel intercity on a bike. Within city limits the 2- and 3-wheeler count will be significant and with their zig zag driving, they are capable of causing nightmares to other road users.

• The IT corridor was supposed to be 3 lanes all the way-but at places it converges into 2 lanes, due to non availability of space. If the third lane goes missing at multiple places it will create bottlenecks and slow down the traffic further.

• Since the toll road falls in a dense civilian population, the number of people walking across the road will be very very high. Will I be permitted to knock them down? Few Foot Over bridges are being built, but many find it more convenient to jump over the barricade and cross the road -- nevermind the risk involved. The probability of cattle and stray dogs coming in the way of speeding vehicles is equally high.

• Work is incomplete at some places and service roads do not exist at all. When construction work is in progress it will add to the inconvenience and in the absence of service roads, those supposed to be using them will use the main carriage road.

Given the above conditions, I am pretty sure it is near impossible to have any time or fuel advantages by using this IT Expressway. During peak hours, given the number of vehicles involved and above factors, I doubt if anyone will ever be able to cruise on this road. Just pay and crawl.

Traffic Congestion And Other Problems

Imagine the number of vehicles that would accumulate near toll gates during peak hours. Even if each vehicle needs to spend 20-30 seconds max (to slow down, stop, pay/swipe, and move on) that will result in the accumulation of 100s of vehicles near toll gates. What is the convenience?

I understand that the idea of On Board Units is being pushed through. Those vehicles that have them installed will be automatically debited and they can zip through. Will these OBUs be free? What number of drivers will opt for this is something yet to be seen. Anticipating the rush as much as 10 gates are being built, still it might be tough during peak hours.

Government is trying to pose as if they are willing to go soft on private vehicles (by issuing smart cards, etc.) and will primarily target commercial vehicles. Commercial vehicle owners won’t do any charity - they will pass on the entire fee (maybe even more) to the commuters who hire those vehicles, eventually burdening the common man.

Rs 17 one way for cars is just too much. Probably one of the highest per km. Between Chennai and Hosur a car driver pays Rs 140 for about 320 kms = 45 paisa per km (That's more expensive than a general class train ticket). Even at that rate it shouldn’t be more than 8 Rs for the 20-km road. Further, I don’t think those manning the toll gates care to keep change. If the car driver doesn’t carry exact change he will be forced to pay Rs 20 on the excuse of "change illai."

The original idea was to complete the project, with service roads and landscaping, and then start collecting money. The current statement is “we’ll build service roads and other things as money starts flowing in." Why should I pay in advance? What if they don’t complete the work on time with promised quality? Will the money be refunded? Governments change and priorities may change - leading to compromise on the project's execution, but this daylight robbery of money collection will continue. When the money is collected from vehicle owners by promising certain services, vehicle owners should be in a position to question ITEL in consumer forums and demand compensation if what is promised is not delivered.

Why is the cost of OBUs and administrative charges passed on to road users? It's government that wants to collect money - let them bear the cost. None of the existing smart card mechanisms (like Petro card of BPCL, iMint card, etc.) charge any maintenance charge to its consumers, except a onetime fee. Administrative charges of Rs 1,000 per OBU will be charged annually irrespective of usage. Even if the owner goes abroad or for other reasons doesn’t use the toll gate for say six months, he will be forced to pay admin charges. Unfair.

Problems Will Spread

This may look like a problem to those living in Chennai only, to those regularly using this particular stretch of road. But this can happen anywhere. Soon other states and cities will catch up with this idea of bringing more and more roads under a “pay and use” scheme and in a few years we might be required to shell out money just to hit the main road in front of our homes.

Opposition does the ritual of holding protests every time there is a hike in fuel prices (after a day they will settle down, though) Why is the opposition is keeping quite in this matter?

I very much understand the need to have good roads. The money needed to build these roads comes from nowhere else but citizens. In other words, governments have to collect the money from its people, one way or the other, and a toll gate is one of them. Still, erecting a toll gate in the middle of the city and troubling everyone — there has to be a better alternative to ensure development.

Philanthropy - Giving it All Away

Shantanu Dutta — Tue, 10 Jun 2008 00:29:46 EDT

Those who work in the charity sector have a lot to do with donors and typically one comes across one of two types: the obnoxious kind who makes it very clear from the first encounter that they see the charity worker and his agency as nothing more than a glorified beggar. Often this kind is usually not even dealing or handing out his own money. He or she is more likely to be some technical minion for a face less multi lateral or bilateral entity but looking at the airs that the workers put on, one could be excused for assuming that that they are actually reaching into their pockets and purses and making grants.

The other kind is the old style philanthropist – the one who actually gives out his own cash and sees himself as a partner in the whole exercise. Such donors see themselves as partners and catalysts in a much larger vision in which the agency is on the ground is the pivotal player and all others including themselves as ancillary services supporting the hard work on the ground. The first kind of donor may be more professional in their approach, but perhaps it is the second kind who invests a charitable entity with passion, zest and energy that bureaucratic processes can never deliver, no matter how efficient the number crunching. This piece is a sketch of one such philanthropist and how it made a difference and whether we in India will get to the point where philanthropy not only becomes a way of life and people no longer flaunt their wealth but create examples that are worthy of emulation.

Tom White is a devout Catholic and a World War II veteran who returned from the war to inherit his father’s heavy machinery and construction business in the United States and over time made a lot of money. That was in the late 40s.

Since then over the next 55 years, Tom White has given away $75 million, pretty much all of his assets. At 84, the construction millionaire has given away his fortune. If he has his way, he'll be down to his last quarter when he draws his last breath. He has supported more than 100 causes over the years, but his biggest gift by far has gone to Partners in Health, the program made famous last year with the publication of Tracy Kidder's book "Mountains Beyond Mountains." As Time Magazine which declared him as the philanthropist of the year in 2001, what set Tom White apart from the other givers like Warren Buffet or Bill Gates or the others is that most” big givers don't start redistributing their loot until they have made a pile, and many generous magnates, like Turner and Bill Gates, remain very rich even after they have made headlines for their charity.”

The gross inequities in the distribution of wealth in the world and especially among the poor challenged Tom White, relatively less wealthy man compared to the 4 billionaires from India in the latest Forbes’ top 10 billionaires list and the 53 over all billionaires from India in the list of the word’s 1000 richest people. A lot of the social sector work that the government should be doing for its citizens does not get done because our government’s spending priorities are skewed towards national security. India's defence budget is 960 billion rupees (£12bn) compared with 150.2bn rupees (£1.9bn) for health and 330bn rupees (£4bn) for education - considerably less than the pledged 6 per cent of GDP. With the kind of wealth that now resides in Indian hands, it is embarrassing to say the least that a significant part of the money that supplements the government efforts comes from abroad. Foreign contributions and donations to scores of Indian voluntary organizations, religious groups and charitable institutions every year touch nearly Rs 5,000 crore (Rs 50 billion). Indian philanthropists are badly needed if we are to ever reduce this dependence. But do we have any Tom Whites among us ?

Attrition And New Recruits

Tanay Behera — Sun, 1 Jun 2008 10:26:44 EDT

Attrition is a growing concern for many the firms across various sectors in different corners of the world but today the pain is felt more in India. This bruise gets highlighted more in an Indian context because of the growing gap between the growing economy and the engines which are partners in this ride to deliver. Because of employee attrition few initiatives are put on the back burner. The HR managers are having a tough time locating a suitable replacement with required experience and ability, to fill up the vacancies created on account of exit of key employees.

The points that I mention here as to why employees, especially new joinees leave the firm, a little after the embryonic stage of their job career cycle are from what I have seen in the real world corporate dynamics, heard about experiences from friends and few from the learnings and readings from various articles, journals and blogposts. These points are mostly centered around those who have spent their time and energy in the industry (mostly IT/Tech/Tech Services/Engineering) from a range of one year to four years after their graduation from an engineering school or a technical institute. Even few of the points apply to those who don a much higher number of years experience hat. The points mentioned below are not in any order of significance or priority and is just a compendium of views.

1. Opportunities available: The present economy has opened up the doors of opportunities. If a person is skilled, smart and is an inventory of ideas, s/he is like an appetizing cake, waiting for the market to react. Present day progressive forward looking youth aspire to see their career advancement as well as improvement in his financial earnings in the shortest possible time. Demand for smart talent is always there, so when an individual doesn't find his/her present place of work to offer a hotfooting atmosphere, there are other avenues to explore may be in another firm, a start-up or a similar place.

Thanks to his own ambition, and to the Indian outsourcing boom, he escaped. He gained admission to the best engineering school in India, then landed a job that he could hardly have dreamed of as a child: writing software for Oracle, the U.S. technology giant.

"I fell in love," he said, recalling his first visit to Oracle's campus in Bangalore.

But Jain's zest eventually fizzled under the repetitive rigors of the Indian back office. So he did what a parade of burned-out functionaries in Bangalore have begun doing: He quit outsourcing to create his own start-up - in his case, designing cellphone software that blocks calls from telemarketers.

2. Incorrect picture painted in campus placement talks: Many global firms work as different legal entities/operating units but under one global brand umbrella in India. To make things clear, let’s take a fictitious firm 'Desicritics Corp', which has under it many legal entities such as ' Desicritics R&D Center', ' Desicritics Software Services Center', ' Desicritics Consulting Team', ' Desicritics Technologies', etc. In most campus placements, ' Desicritics' would go as a single team for hiring but the offer letters are delivered by the different groups under its canopy. To a campus recruit, who is not aware of all these internal corporate crosswords everything appears to be the same. But after working in the industry for a year or two, when s/he realizes that s/he was offered a cozen pill, looking for opportunities elsewhere is the most pragmatic option.

3. Big names don’t matter much anymore: Today big brands in job market do not draw as much awe as it used to few years back. Big names are subtly occupying increasingly lower positions in a candidate's priority list. Individuals are perfectly fine working with small and mid tier firms because it's a known fact that sometimes the biggies cannot match the salaries offered by successful second-rung companies which functions to an extent on a start up blueprint. More so many big firms have even now withdrawn ESOPs, which were the main draw a few years ago. In contrast smaller companies are able to offer profit-sharing plans, interesting projects and more responsibility at an early stage in the candidate's career. This is like a ready made dish for a candidate working in a big firm shrouded with global policies, indefinite/infinite processes, layers of politics, and most important lack of visibility in a big crowd.

In just 3 short years, the world has changed. When I wrote this column for rediff.com in June 2004, it was still a big deal to join one of the Big Five. Except, perhaps at an IIT.

With the rising aspirations of fresh grads the same jobs have lost their sheen. The net has to be spread wider and wider, to tier 2 and tier 3 colleges, which would not be on the recruitment map at all a couple of years ago.

At a lesser known college it is a matter of pride that 'Infosys picked up 6 students'. The feeling is that of having 'arrived'.

But next year when 60 join, and then 100, the same 'we are being recruited like alu and pyaaz' feeling sets in.

Bottom line is: 'Aapne kaam se maatlab raakho, yeh big brand maain rakha kya hai'.

4. Company and personal goals clash: Many of the smart recruits in many local and global firms are hired through campus placements in engineering schools during the pre-final year days. Placement talks are like major brand shows and each of the hiring firms tries to outshine others in the fray by attractive presentations in diverse formats. Company goals and visions are put forward to candidates and these tastes like the best recipes to accelerate one's career. The message that is sent is: 'With the company's goals, all measures are taken for an employee's personal development also'. I am not denying the fact that there are companies who do orchestrate company's goals and employees' personal goals but the number is less. Come to the work place, the real world is not that hunky dory. This is completely out of phase, of WYWPIWYG assurance (what-you-were-promised-is-what-you-get). In short most of the cases of attrition thrive on the thread that firms place their priorities ahead of employees' goals, without understanding the employees' basic aspirations resulting in friction.

Although their HR depts claim that they have systems which ensure a smooth induction, training and deployment onto projects that isn't quite the case for everyone.

An interesting post related to this ishere.

5. Change in mindset, among individuals and society: Gone are the days, when one stuck to a job even though it was not satisfying, solely on grounds of monetary benefits. The present young generation wants money, no doubt about that, but it's just not money, it has to be enwrapped with stimulating job assignments and responsibilities that tickles one’s tastes. More often than not, the most heard verdict among individuals is.

Besides, they soon learn, the job is not really about programming at all... One such dude sums up the average IT career path on a Pagalguy forum:

There is not much of a ladder is S/W industry as such. For most life is quite typical. One or two years in a company. Then a chance to go onsite and see some money. Then back home. Another 2 years and then one becomes an analyst and after 5-6 years, a manager. And your engineering branch is the last thing that would matter here.

Even parents and family members, do not evaluate much when they realize that their children are not very happy with their professions and wish to pursue something that is completely out-of-the-box and divergent to their present occupations. These parents stand as pillars supporting their individuals realize their dreams. I know of few people who have left their regular 9 to 5 jobs in tech firms to work full-time for a NGO, to practice as a freelance photographer, to run a restaurant, etc. The attrition resulting from this is miniscule but it is happening these days. This case is more like pre-caution is better than cure. So when one realizes that s/he had boarded an in-correct ship that would never reach the destination s/he had sculpted in their mind, so better get down in the initial phase before it’s too late.

6. Higher studies plan: A sizeable number of campus recruits move to the U.S. or other countries to pursue higher studies and explore more attractive career opportunities after working in the industry for a year or two after their graduation. They form a small pool of the attrition camp. Few go abroad for their Masters degree, few for their PhDs and few others stretch their stay in India to apply later for an MBA program abroad later. It's not that foreign lands are the only destinations, these days many prefer to go for a Masters program in the IISc, IITs, NITs, or even BITS in the engineering and tech stream and to the coveted IIMs and other top ranked B-Schools after clearing the CAT in the domain of business management. Even ISB with its global tag in business education along with many other private schools in India partnered with other western schools of Business Management is an irresistible destination for many who wish to put their lives on a fast track road. Every year just before the admission season, many managers wait dumbfounded to see how many of the ambitious wickets would fall.

7. Manager-employee Relationship: A smart manager is one who can understand the aspirations of his/her employee and can harness the true capabilities and potentialities to the last drop, brusquely pointing the areas of improvement among the team members. Now that appears as a picturesque and cheeky definition never to be realized in reality because a greater chunk of IT related work in India is service and maintenance oriented, which in turn is purely dependent on margins and numbers. More often than ever, a manager can't do justice to both numbers and fulfilling aspirations and finds him/her self in a Catch-22 situation. For some inflammation or misunderstanding arising at work, involving the manager and employee, mostly the bosses chalk up the tension to a personality clash. There is a tendency, according to management experts, to think that personality is the cause of organizational discord rather than perhaps an effect of it.

Ben Dattner, an associate at Dattner Consulting executive coaching firm, believes that personality conflict might be a symptom of a larger organizational issue. "When I work with my clients, I often try to get them to see how it is not just a conflict between two people. I try to get them to see that it is also potentially a conflict between two visions, two agendas, two constituencies or two visions for the future."

The most applied remedy in this case by young employees is to nip off the problem at its root, just leave the job and find a job elsewhere that suits to one's personal liking in most aspects. Quite a number of exits happen in many firms because of the above mentioned reason.

8. Team one works for: Fresh out of engineering schools, many graduates have a swelled head for being a product from a top school in India. This is very much human and expected behavioral pattern that this crowd aspires to be a part of best of the available work/assignments in any organization in the initial days of his/her career. But since most of the IT industry in India is doused in services and maintenance layer of the entire business cycle as stated in Point. 7, easy to follow processes are defined to streamline the execution segment with élan and efficiency. After doing the same work in repetitive cycles, it's no rocket science and even a normal graduate can tackle that in the most cost effective way without necessitating the presence of smart engineers who demand higher pay checks for the same job.

This air of exclusivity and clannishness lingers in the minds of many for the initial few years. Unfortunately if they happen to belong to a team that is of a different clan/tribe than their's in many vistas, they connect with their friends and settle in zones that match their bandwidth. A sizeable number of exits in many firms fall under this category.

As I mentioned here, the points stated above are my personal views and are collected from various sources. This is definitely not intended on any organization, firm, group or for that matter anybody and everybody. This is an open post and would love to hear other diverse views, if you have any.

What Goes Wrong With MLM Companies?

enidhi — Fri, 16 May 2008 12:12:45 EDT

With the Chennai Police opening investigations on QuestNet/Goldquest MLM company, operations of such companies which promise an easy wealth creation for everyone involved, are again under scanner. Hundreds of network marketing companies are operating in India, each calling itself unique, genuine and best. Each of them may have their pros and cons and while we may not have specific legal backing to term their operations illegal, caution is advised before getting associated with these companies. Why do most of these companies face trouble over a period of time?

During early stages, all goes well and it will be difficult to sense the trouble ahead. Because most of the companies will have some products to cover their money schemes, because there are no laws which declare this kind of operations illegal, because MLM promoters manage to get some high profile persons on board to show their credibility all goes well during early years. As the idea is new it spreads like wildfire and thousands of people would sign up every day. Obviously few early joinees make huge money in this process and seeing them buying luxury homes and cars only propels the greed of new joinees who start promoting the scheme with all new energy and aggression. But then, market reaches a kind of saturation and it won’t be possible to enroll new people, at the rate it was possible in the early years.

This is when the trouble begins. The concept of MLM survives on the belief that the chain continues to grow sine die in a never ending fashion and existing people do not leave. But unfortunately this won’t happen. As the saturation is neared, desperate members start resorting to unethical practices with a sheer greed of making quick money. Some examples of unethical practices are as below:

1. Empty Assurances. Telling prospects “You just invest the money, I will bring more people and enroll them under you-you don’t have to do anything” Someone who invested because of assuring words like above of their friends would feel cheated if their friend fails to recruit people under him, resulting in loss of his investment

2. Balance Transfers. “Use your credit card 1 to make payment now-after 50 days use balance transfer facility and transfer the balance to second credit card - you’ll get 3 months time this way by which you can get your money back” But in most cases the member won’t be earning his investment back within first few months. Besides losing money he’ll also end up paying hefty credit card interest and this results in direct rage against the company and his upline who suggested such an approach.

3. Members investing their own money on behalf of others. Sometime, for specific reasons, members pay on behalf of their down line (Because both legs need to be balanced or because a person thinks his friend is very much capable of signing up people or other reasons) and sign-up people for free. This kind of approaches may not give expected results adding to frustration.

4. Hiding facts: Many people hide several disturbing facts while giving presentation, because their sole objective is to sign you on the spot. Some facts which are never disclosed: Both side needs to be balanced, maximum payable amount, annual charges, cancellation/refund policies, ongoing legal cases and other negative news, minimum amount of money you’re expected to bring in (by referring people under you) to get back your money, what rights you have/do not have as a member etc. Some of these facts people will discover, sooner or later and that will give a sense of betrayal.

5. Forcing people. Ideally you should tell both positive and negative aspects of the business and let the person take his own time to decide. But more often than not, prospects are given only the positive side and are often forced to sign up on the spot. Hypnotic environment conducted by the up-line and faith in their friends may make people sign up on the spot but they may repent later for that.

6. Ignoring Unethical Practices. Ideally, a company is expected to terminate membership of those who use unethical business to promote the business. But we seldom hear such news. As long as money flows in, company doesn’t really bother about the approach used. (they will have a well crafted fine print to protect themselves in case something goes wrong). Only when things go out of control (like when someone files police complaint), they look for some scapegoats.

7. Drop in company’s efficiency. Most of the companies operate promptly during initial years, by sending out checks and products in time. As members get their check and product on time they build a trust and advocate on behalf of the company to their friends. But after few years, when member base grows beyond control, some companies fail to maintain the same efficiency- Products do not reach in time and checks take forever to come. If this happens, credibility starts falling and bad words spread real fast.

8. Inducing cultism and over commitment: Gradually, up line try to exercise an influence on their down line even in areas not related to business. Some examples: Encouraging down-line to quit his main job and take MLM full time, setting targets and pressurizing them to meet the same, discouraging members from using competitor products (even when they are cheaper and better than MLM one),forcing down-line to attend meetings and seminars, humiliating those who do not show enough commitment or question things and so on

9. Ignoring early warning signs. Because of the unquestionable faith (shall I say Cultism) members develop towards their company, upline and its business model, early signs of warning, even if detected by few in time, are often suppressed and ignored. Beliefs that “That can’t happen to me” or “he failed because he didn’t work hard” or “there must have been some misunderstanding-everything is fine” or “this is a small issue-we’ll get over it” etc keep members hooked to their dream. Only when things go totally out of control they wake up to the reality. Lot of trouble can be saved if members maintain an open mind to question and verify any negative news that they come across, without any prejudice.

Note: All companies may not face all the above issues, must most of them do at some time or the other. These are general observations - some companies may take exception w.r.t. certain points.

Supreme Court Reiterates "No Goons For Collections"

Somik Raha — Thu, 15 May 2008 13:00:52 EDT

The Supreme Court in a landmark judgement on Thursday reiterated its earlier stand that banks cannot deploy musclemen for recovery of loans from defaulters thus forcing them to end their lives.

"We deem it appropriate to remind the banks and other financial institutions that we live in a civilized country and are governed by the rule of law," a bench comprising Justices Tarun Chatterjee and Dalveer Bhandari said.

This is indeed a landmark judgment. I have heard from time to time that banks have forced debtors to sell their kidneys in order to pay back their loans. While urban legends abound, the fact that the banks of India are unimaginative in their debt-collection practices is a cause of great concern.

However, there is light at the end of the tunnel. In an article that appeared in the Indian Express two years back, we learned about a company called "Adhikrut Jabti Evam Vasuli" with a website - vasuli.com. This company is headed by a team of women, and they write about their recovery operations in the following manner:

Managed by TEAM OF YOUNG WOMENS came into operation in the year 1998 and has a distinction of being first private agency of the country engaged in recovery on behalf of Govt. & Nationalized banks in structured manner. We believe firmly in Recovering Public Money remaining in four corners of LAW.

The most interesting part of their website is their transparent policy of collection:

* Dignity and Respect to customers is our Debt Collection Policy and we do not follow policies that are unduly coercive in collection of dues.
* Our Office of Adhikrut Jabti Evam Vasuli's dues-collection policy is built on courtesy, fair-treatment and persuasion.

By customers, they mean the customers of the banks who have defaulted. They will first contact these customers while maintaining their privacy and try ordinary means of communication to resolve the situation. When customers have closed all doors of communication, then they use unique methods to shame them. For example, a restaurant owner who had defaulted and refused to pay back saw people sitting with placards outside his restaurant informing customers that he was a defaulter. He settled that evening.

Perhaps it had to be a team of women entrepreneurs who wouldn't think like men to be able to come up with a humane and intelligent mechanism of debt collection. I would give my kudos to Vasuli for showing that we don't need bullies and violence to get the job done - a little imagination and sensitivity goes a long way. And I applaud the Supreme Court for coming down heavily on banks that cannot think beyond violence in debt-collection. ICICI Bank would do well to hire Vasuli for their services if they want to keep the trust of the people they serve.

Microfinance - Money, Money, Money

Shantanu Dutta — Mon, 12 May 2008 12:44:18 EDT

Ever since Muhammad Yunus won the Nobel Peace Prize for his initiatives in micro finance, the sector has been attention that had hitherto been denied it. The Professor himself has been toasted around quite a bit and the Grameen Bank has now been invited to set up shop in Assam. But the success and spread of micro-finance in India has been patchy and mostly confined to the South Indian states where there has been a long history of thrift and credit societies and then subsequently of Self Help Groups. Typically micro finance programs have had three common characteristics in India at least –a) they have been women-centric, b) They have had an NGO non profit mindset, which has meant that business viability has been undermined) They have had a rural focus.

“Experience shows that microfinance can help the poor to increase income, build viable businesses, and reduce their vulnerability to external shocks. It can also be a powerful instrument for self-empowerment by enabling the poor, especially women, to become economic agents of change.”

But micro credit has had a very limited audience to play to. In the highly patriarchal societies of North India, where women rarely are allowed out to step out of their houses, let alone assemble in groups; the gender skewed methodology of first forming groups of women and then offering loans would not work. Neither would they typically work in highly urban societies which lack the homogeneity of rural communities and the system of trust and honor on which the foundations of repayment and low defaults are built. But to scale up and really make a difference to those outside the normal banking channels, microfinance institutions need to innovate.

As Vikram Akula of SKS Micro Finance puts it, the three key issues that a micro finance institution usually faces are lack of capital, the lack of capacity and the high cost of transaction. Ahuja, who started life as a Field Officer for an NGO driven microfinance program has the answers - answers which prompted him to start his own micro finance company with an entirely different set of paradigms than the one he was first coached in.

Vikram Akula talks the language of business - of generating capital by earning profits for investors, of not being content with a couple of thousands of clients, but in terms of millions of customers as any good sized business would have and in terns of using automation and technology to manage the high cost of several tiny sized transactions. He is currently doing a pilot using mobile phone technology to manage transactions. The penetration of mobile phones among SKS’s clients is adequate enough for Vikram Akula for it to be a viable option.

Does speaking the language mean that a microfinance institution has to forsake its social obligations? Not so. Shikhar Development Services is a newly formed microfinance entity that is trying to combine sound business practices with socially relevant innovative projects. Working in an urban environment with its own particular challenges, they recently conducted a survey which revealed that many parents with school going children had a significant cash outflow in the months of April – May when the school academic year started. Often the parents would not have the cash necessary to make the pay out and the child would drop out of school. Appalled at the finding, the company is now looking at the feasibility of developing a loan product that would enable parents to meet this predictable yet unaffordable financial need.

MFIs might have entered the picture with the aim to bank with the “unbankable” and often received societal support because they were perceived as removing the scourge of the money lenders. But today they attract a fair bit of criticism too and many feel that some microfinance institutions are blurring the line between constructive microfinance and exploitative money lending. There is also criticism that easy access to credit doesn't seem to have made any perceptible change in the lifestyle and livelihoods of the rural poor and that at the cost of the poor a large number of MFIs have benefited; banks have found a convenient route to increase lending; and corporations have got a growing consumer market to target.

As more and more microfinance institutions enter the market, they would need to be ready to respond to such criticism and innovations and social responsiveness would become more and more necessary, both to compete and to stay socially relevant. Unlike the typical banks – brick and mortar structures where customers have to visit to access products; micro finance institutions have people on the ground close to their client base to listen, reflect and constantly innovate; a luxury that the typical banking institution does not have. Compared to Bangladesh, where the market as well as the clientèle has become more discerning; India is a relatively nascent market. Many will be waiting to watch to see if MFIs become hand maidens to established commercial banks working towards “financial inclusiveness” or manage to retain their independence and their soul.

Recovery Agent : Evolution of the Gentleman Goon

Shantanu Dutta — Wed, 30 Apr 2008 03:23:55 EDT

In India, the term recovery agent or debt collector throws up chilling images of unnerving phone calls, bounces landing up at the door, goons intercepting your car at a traffic signal and throwing you off as they repossess in mid traffic and all of that. So unsavory have the tactics been that the courts have often been asked to intervene and codes of conduct have been laid out as to how banks will go about the business of collecting bad debts.

But according to the New York Times, India’ s “ability” to recover debts is some thing that attracts American companies very much and it might b the next big thing, that might be out sourced to India. It seems according to the NYT report that in recession hit USA, consumers are finding it hard to keep up their payments on time and this is exactly the scenario, where India’s famed recovery agents are just equipped to step in and ring in the coins.

“India will be the only place we grow this year,” said J. Brandon Black, the chief executive of the Encore Capital Group, a debt collection company based in San Diego. India is the company’s largest operating area, with about half the company’s collection force of more than 300. Although the stereotype of a collector may be “some guy with chains and a cut-off shirt,” Mr. Black said, collectors in India are “very polite, very respectful, and they don’t raise their voice.” He added, “People respond to that.”

Of course those in dialogue with India’s debt collectors would be best placed to respond to The Encore CEO’s comments that Indian debt collectors are very polite, very respectful and don’t raise their voice. Possibly he is right and the collectors don’t need to. Who ever said that a deep, coarse and gravelly voice was necessary to send your spine tingling and your mind twirling!

So are debt collectors going to be India’s latest export? It would seem to be so, though it does not look that the business model that the US companies are adopting would see them sponsoring Indian recovery agents for an H1B visa just yet. But the ubiquitous call center executive is swiftly evolving to perform one more function - the sweet talking tele caller who will coax and cajole though not threaten delinquent customers into agreeing to pay at least a minimum amount an earn bonuses for managing to do so.

Given that the call center based recovery agents would not have the luxury of dropping into some body’s house and bull dozing them into payment promises – both for geographical reasons as well as legal, the collection agents’ methodology is dependant very heavily on through study and home work of the clients’ profile and behavior patterns. Encore is for instance coaching its staff bout the intricacies of the IRS refunds- the refund season beginning in May and the caller might know based on their study and research, just how much refund a particular lien is likely to get.

One thing to ponder here is that in this system, although there is a lot of psychological pressure and implied threats of “further action” –meaning law suits, there is no physical violence involved. The tele recovery agents essentially depend on their wits and the eventual might of law suits to get the reticent clients to pay up. Does this mean any thing for India? Will these global best practices in debt recovery which Indians are using to service debt across the oceans get adopted in their own country or the Indian experience will continue to be that of hoodlums and goons and people howling in newspaper columns and consumer courts? Let us wait and see and in the meanwhile, not wanting to take any chances, not run up any unpaid debt at all!

Why Neither India nor Pakistan Should Rely on America: Part I - Who Really Runs America?

Ruvy — Mon, 28 Apr 2008 15:02:57 EDT

This series of articles is written as an object lesson for you as to why you cannot trust the United States government as any kind of partner. This is as true for Pakistanis as it is for Indians, Sri Lankans, Nepalis, Bangladeshis or any other residents of the Indian sub-continent.

The series has three parts.

This article examines how the United States got to the apex it did. The second uses Israel as an example of American duplicity regarding its supposed "friends" or "allies". The third views what might have happened and how the world would be different if indeed the United States supported the State of Israel as one-sidedly as so many charge.

These articles is not written in an attempt to "inform" you of events in Israel, the Levantine or the Arab world. Unless you have relatives or business interests here, you probably have no reason to care.

The point of this series is to allow you to apply the sad lesson we provide of how a great power double-crosses a small one. There are many such examples of this, but I can speak as a resident of the victim. Indeed, not only Jews in Israel have been victims of this double-cross, but Arabs as well.

Before continuing further, I want to make clear several things. First; I live in Israel, in Samaria to be precise. While I reside in Israel. I am not a Zionist. The word "Zionism" was originally invented by English Christian theologians in the 17th Century; as a Jewish idea, it was originally expounded upon by rabbis from Serbia and Russia in the early 19th Century (though not called by this name), and was made palpable and real by secular Jews who wanted little to do with ritual, religion, or even with G-d. The creation of Zionism, the State of Israel, has been a success until recent years. The essential goal of Zionism, bringing the majority of Jews in the world back to the homeland, has nearly been completed. It is evident to anyone who lives here that the closer we come to that basic goal, the weaker the movement to achieve it becomes, and the weaker the apotheosis of Zionist ideology, the State, becomes as well.

Second; even though I live in Israel, I was born and raised in the United States and lived there for several decades before coming home to Israel. My field of study was political science and public administration, and I added to these subjects comparative government and linguistics. In addition, I was active in politics in the United States in both major political parties. This gave me a good grasp of the American political system and how it evolved.

Finally; I'm not slamming the people who inhabit the United States, the average folks known as Joe Sixpack. Americans, by and large, are a decent, generous and kind people, even if they are too Amero-centered for their own good. Perhaps they are too naïve at times. But the decency of the average American should never ever be in question.

The government of the United States, now in the hands of an oil and banking establishment for some eight decades, is a very different story. In this article, when talking about "America", I'm not talking about her decent inhabitants; I'm talking about her evil régime.

One last point. Credit for much of what you see in this article goes to Joel Bainerman, an Israeli investigative journalist, economist and publisher. My errors in relaying the data he has taught me and others is my responsibility alone.

And now to business.

The first three words of the American Federal Constitution of 1787 are "We the People" and if you ask most Americans, "who runs America?" that is the most likely answer you will get. The people.

If it were only true.

It isn't. It probably never was.

First of all, the United States were not designed to be a democracy at all, but a federation of states with a republican form of government. While the word "republic" comes from the Latin rex publica (one sees the root in the Russian word respublik) meaning "the people rule", and in spite of the fact that modern Greece is called Ελληνική Δημοκρατία ('Ellinikí Dhimokratía) which is translated as "the Hellenic Republic", the two words "democracy" and "republic" do not have the precise same meaning in English.

A republic connotes a form of government which is not monarchical in nature. Thus, the Republic of Florence, where Niccolo Machiavelli was a mid-level bureaucrat, was not a state where the average Florentine had a real voice in government. Only a small class of Florentines had any voice at all, and they ruled the country.

But the Principality of Florence, which succeeded the Republic upon its fall, was a monarchy, with the son supposedly succeeding the father. Machiavelli's book, De Principatus, "The Prince", was in essence, his curriculum vitae submitted to the man who had exiled him to his estate after overthrowing the republic. While the book has long outlasted the la famiglia Medici that Machiavelli was trying to impress, Machiavelli did not get his job back.

When first established in 1776, the various states restricted voting to white males only, usually only Christians who owned property. So voting was restricted somewhat for several decades. For all of this, the states that comprised the United States did move closer towards popular rule, and the American republic did edge towards democracy in the 1800's.

But a business oligarchy took the country over after its civil war in 1865, and controlled its industrialization. As the 19th Century progressed to a close, the rich men who built huge industries out of the steel plants of the Midwest, the railways, the ships, the meat packing plants and the like realized that competition was not "rational", so they bought each other out, building huge monopolies known in America as "trusts" and "rationalizing" the industries they controlled. This is the kind of stuff most American kids skip over in school, because it is so damnably boring, but it is precisely these events in America that provided the model for the concentration of wealth in the succeeding decades.

What American teachers tend to focus on is not the concentration of wealth in the hands of a few, but the efforts of the American government to combat that concentration of wealth, known as "trust busting". To make a long story short, American businessmen felt stymied in building monopolies in the States and looked out at the wide world instead, and started investing money in it in the early 1900's.

They invested all over the world; Germany, Turkey, Russia, France, as well as China, Cuba and Latin America. And when a world war broke out in 1914, the profits of many firms went right down the tubes.

This had consequences. One consequence was that rich American businessmen determined that they would not be burned again in another world war. They examined the Treaty of Versailles that crippled post-war Germany, the Russian Revolution, and the way people were buying Henry Ford's affordable "Model T" and made their moves.

Their first presumption was that there would be a rematch between Germany and Britain or the United States. They set up a triumvirate of banks - one was the Thyssen Bank in Germany, the second was the Union Bank in New York, and the third was a bank in the Netherlands. The idea was that the Netherlands would probably be neutral in this coming war, and that Germany and America would be on opposite sides. That is what had happened in the first war, and so they expected the pattern would hold.

If the Germans won this second world war, then the rich businessmen would be compensated for their losses in America through the Thyssen bank "looting" the assets of the Union Bank (and presumably others). If the Americans won the second world war, the rich businessmen would be compensated through the Union Bank "looting" the assets of the Thyssen Bank. In either case, the Dutch bank was supposed to e the intermediary.

It didn't exactly work that way, but these rich businessmen had foresight.

They also had the brains to make sure that they would have some level of control over who ran the governments. In America, they set up a "Council on Foreign Relations" to infiltrate the State, War, Navy and Commerce departments of the American government with their employees. The idea was to provide a pool of "respectable" professors and administrative types who would watch over their interests. They did the same thing in the United Kingdom. These councils still exist today, and in either the United Kingdom or the United States, if you do not have ties to the respective councils, you get nowhere fast. Note how Ron Paul was locked out of the national debate before McCain sewed up the nomination.

Investing in overseas political control was a bit trickier.

One act of these businessmen was to invest in the Soviet Union in an attempt to bring it to stability. This might have been their first act, persuading Lenin to introduce the New Economic Plan (NEP) in the early twenties; but Lenin had the temerity to die, and his successor, Joe Stalin, was a xenophobe.

The next move was to try and find someone who could be controlled in the Weimar Republic that had succeeded the German Empire. These businessmen found an ambitious young man originally from Austria, and they invested in him, building him a fancy house. This turned out to be a better investment - Adolf Hitler eventually became Reichskanzler in 1933, and continued his business ties with his American investors, attempting to use them to get some foothold in the American economy. And as these businessmen had foreseen, there was another world war, and they made sure that they were compensated for their German investments through the Dulles brothers, one of whom was an attorney on the Allied War Compensation Board set up after the war.

The final big move was to invest in a source of fuel for the "Model T" and its successors, and to lay the groundwork for a continuing fortune. This came by investing some money in the wastes of Arabia, arming the ibn Saud clan to the teeth, and supporting them as they stole Makka and Medina from the Hashemi family, its traditional guardians for centuries. The Hashemi family had to be satisfied with emirates in Mesopotamia and "Transjordan"- the eastern two thirds of the territory the British had allotted for a Jewish national home. The money wasn't a gift to the ibn Sauds. It was a deal. American and British oil companies got to control the oil under the ground. The ibn Sauds - now "Saudis" - got the sand. At least that's how it looked in the 1920's.

Thus is was that bit by bit, the oil and banking companies came to dominate America. One of the key parts of winning their dominion over America came from getting rid of trolley cars and replacing them with buses; getting rid of trains, and replacing them with trucks. These two moves guaranteed the dominion of oil over all other fuels. Gradually, the American State Department became the pliable tool of American corporations. Much of the Japanese drive for empire was a drive to control oil, and the same was true for the Germans. Americans never thought of using alcohol to fuel tanks, as did the Germans. They never had to.

With the Germans and Japanese broken and defeated by August 1945, the American oil and banking establishment bestrode the world like a colossus. And Americans, living the best lives that could be imagined at the time, never even dreamt that their country and that their democracy had been stolen from them.

Derivatives Losses in Indian Companies

Ramki — Wed, 9 Apr 2008 10:21:39 EDT

The Institute of Chartered Accountants of India (ICAI) has recently ruled that companies should disclose and provide for derivative losses in their profit and loss accounts for the financial year ended 31/Mar/2008. Prior to this, these guidelines were to be followed from 1/Apr/09 and were to be made mandatory from 1/Apr/2011. Though there is some confusion regarding applicability of the above ruling and companies decide not to disclose anything in their books of accounts, the auditors would put in a qualifier when they certify the books of accounts.

I am sure everyone has been reading in the papers of companies having big MTM (marked to market) losses due to exotic derivatives and the above guideline would essentially mean that companies would need to disclose them in their books of accounts. And some of the companies are reluctant to do so. This article is primarily to give an illustration of what is the nature of these deals and how these losses have come about.

Suppose a company (eg. ABC Ltd) has money in USD (US Dollar) due to realisation from export orders and lets say it has a stream of USD receivables for the next 3 years. The company can convert the USD to INR (Indian Rupee) at the spot rate every time they receive it (or) the company can buy a forward cover (wherein the exchange rate at which the USD would be converted to INR at a future date is fixed today) (or) the company can undertake a derivative deal.

What the companies have typically done is that they have entered into a derivative deal wherein the underlying receivables in USD are swapped (exchanged) to another currency (say Swiss Franc, symbol CHF). And the other currency that is chosen as a pair with the USD is typically CHF or JPY (Japanese Yen). And the derivative deal that is done would essentially state that if the exchange rate between these 2 currencies (USD/CHF) is between a certain range, then there would be a certain payout to the company from the bank who sells this derivative to the company. If the exchange rate is higher/lower than the range, then the company has to pay an amount to the bank. The payout amount is essentially a formula that would be the multiplication of the principal involved (the amount of underlying receivables in USD that was swapped to CHF) and the difference between the exchange rates with a multiplier thrown in. To illustrate with the example of USD/CHF derivative, the deal would be that if the exchange rate range is between 1.2 and 1.3 (ie the range is between 1USD=1.2CHF and 1USD=1.3CHF), then the bank would payout to the customer and if it is outside this range, the customer would payout to the bank. So, if the exchange rate is 1.1, then the payout would be (1.2-1.1)*Principal involved*multiplier(say 5 or 10). The multiplier magnifies the amount to be paid by the company in case the exchange rate falls outside the range.

So why do these companies execute such deals where the potential payouts are huge with a multiplier effect? If we consider the above example of a deal with the range of 1.2 and 1.3, the above range is fixed based on the actual rate history of USD/CHF where data shows that this pair was in the above range for 2-3 years prior to Nov/07. So, for the period before Nov/07, the companies were getting payouts on these derivative deals and hence they had no cause to complain. Infact, a lot of small and medium enterprises with no understanding of derivatives have done deals like this that boosted their profitability due to the payouts received from the bank.

But starting Nov/07, the exchange rates started moving out of this range and when this happened, banks started calling on these companies and asked them to pay (the current USD CHF rate is 1USD=1.005CHF). Some of the bigger corporates were hit (eg. Wockhardt, Hexaware, etc.) but the worst hit names are the small and medium enterprises where the amount that the companies needed to pay the bank was in some cases a significant percentage of the net worth of the company. And it is these companies who started reneging on their contract and started blaming banks stating that these derivatives were 'missold' to them and they do not have any liability to the bank and they have now gone to the court.

Who is to blame? I would say both the banks as well as the corporates are to blame. The banks did sell derivatives aggressively and though they are supposed to assess derivatives appropriateness and customer's understanding of derivatives before selling a derivative to him, this may not have been adhered to in all cases or may have been adhered to only in paper. And as far as the corporates are concerned, when the going was good and they were receiving payouts, they were very happy. But now that things have turned ugly, they are crying foul.

What is the way forward? There would be some cases where the corporates would not be able to pay the banks on time and those are the ones who are panicking as if they disclose their losses in the notes to accounts and if the auditors ask them to provide for the same, then their profitability would be seriously hit. Some of the corporates would approach banks to restructure the derivative to postpone cashflows. Though this is not allowed by RBI, I am sure that the banks/corporates would arrive at a structure that would beat the system. But one thing is for sure, the fact that disclosure of these losses needs to be made in the books of accounts is a welcome change and hopefully would bring about some transparency in the system.