Mr. Pradeep Singh
Chairman and CEO, Aditi Technologies
Standing behind a podium is restrictive. I am going to cover a bunch of ground real quickly. I will start in the self congratulatory style of the IT business. It is remarkable, one way to use a statistic is in 1993 it is a publicly available statistic TCS is not, Infosys went public. Revenues here were 5 million dollars. Their market cap was 10 million dollars. Fast forward 13 years, revenues are 500 times bigger, and the market cap is 2000 times bigger. That is just startling any way you look at it. Yes. It certainly creates a brand impact any way you look at it. There is a but…the segment that IT services competes in is ball park of 400 billion dollars in the US…about 4% of the 10 trillion dollar economy….4% of the GDP, So what we have impacted is 4% of US GDP of which we have taken 5% share which is the 20 billion dollar number. Now, we have managed to take the Oxygen out of the remaining 95%, we have changed the dynamics of the 95%. It is very hard to do business in the remaining 95% without being aware of the cost of the 5%. We are competing in the small segment in the scheme of things in the large segment.

The other way to think about it is that this phenomena has been enabled, I think we have to keep in mind, by some thing very fundamental that has happened in the technology in the last 10 years, which is that the Internet did happen, distances shrunk and telecommunications did make the world flat. We exploited that and we produced ball park, if you take NASDAQ evaluations, 50 to 70 billion dollars market cap. We did very well, but it is dwarfed by Google, Amazon, eBay, Yahoo, which are all phenomena which have a shorter life, they started in 7-8 years, exploiting the same phenomena. So we have done pretty well but there is a 300 billion dollar market cap created of the same phenomena. So as we self congratulate I think it is worth to keep in context what the accomplishment is. The accomplishment is good but constrained and it has got a bigger constraint coming-it is eventually a time and materials industry. And whenever you grow some thing at 35% to 40% a year, you depend on a notion that you got to put the labor in, skilled and qualified labor, 40% of a big number becomes a very big number, and that number is going to get bigger year after year. So that constraint is coming and there is no avoiding it. The way that curve is going to plateau out you just can’t keep the growth of the infrastructure of the educational system growing that rapidly.

In a sense I will say very quickly what I see about the service industry. Let me switch to how I assess and what I think about the product business. I came back in 1994 from Microsoft and I had an arrogance of a product boy. I want to be a technocoolie putting, hammering railroad ties in the Information highway. I want to build a competitive product for the planet, that was our mission statement, that was the reason we existed. So we built this thing called Talisman and we took it to the market. We took it to the market at the speak of the dot com madness; we were building a CRM software product to be sold to the enterprises, and it was going to be fantastic. We scored early wins, we were at Microsoft, we were at Dell, we were at New York Times, we had real run, we were doubling revenue every quarter, and we were going to go for it. We were not doing a half based commitment. We went to the market in late 1999 and by the end of 2000 we had 11 sales Offices in US, we had 4 in Europe, we had 1 in Australia, 1 in New Zealand, 1 in Hong Kong, 1 in Singapore. We had a 200 person sales organization. Isn’t that the way to play? If you want to build a product then go for it.

God, I ask it. Late 2001 the enterprise CRM market dried up. The worst recession in the history of computing. We didn’t have any competitive advantage. We were running sales and marketing business which had no structural damage. We had a clever R&D team, big deal. When 90% of your cost structure is fundamentally an overseas cost structure, what do you bring to the table? You haven’t brought anything unusual or exceptional on to the table. So that was a big lesson. Just because we want to be the product boys, we want to move up the value chain, you got to think about this game some what differently, and that means, oh I have to got to do everything differently which a global brand creator does. The reason why Samsung is a brand, creating a brand in US is because Samsung is willing to sink 5 billion dollars into creating that brand. This cost of creating a brand, and if you create a brand in the traditional mechanism…I will create sales offices, I will create distribution outlets, you will have to get above the noise levels I will get heard, you better be ready to write very broad cheques. We wrote 90 million dollars in cheques, that was not a small number, and that wasn’t enough. It was enough that there were 200 CRM companies and at the end of it there were 7 and then 1, not bad, but we have never recovered the 90 million dollars.

So in some senses, I think there are some lessons for us here. Yes. The romantic appeal of building product is great, but you have got to think through what competitive advantage you bring to the table. And in some sense, I think it that is the lesson Titan learnt it as well. Now one of things I am a firm believer in, why I admire iFlex, because iFlex is an interestingly different play. So it is alright. Wait a minute. We have got only small markets, the domestic desi market. We have a reference account with our owner Citibank. Then we will go to the low cost entry market called the mid-east. If you put 3 people there then we have as big a presence as the biggest software company in the planet. If you put 2 guys in Nigeria same things happen. So you go to small markets, you get positive cash flow, you get referensible customers, and you go to the next bigger market. You get success in the next bigger market, you go to the next bigger one, and you are still building brand in a traditional fashion, but you are building your brand in a successful mechanism after that, and that is one model.

However there is, in some senses, a more interesting market. There are 15 million merchants, on eBay today. 15 billion merchants who have no store fronts, who have no physical presence, whose sole job in life is to figure out how do I get virtual traffic? I live in a virtual landscape. There are 100,000 people, it is amazing, and who have left their jobs, and make their money by being bloggers. All they do…there is this mother who writes every morning. Her’s is the 5th largest visited site; she makes a lot of money out of Google advertisements. So there is something else fundamentally going on, and it is a way to thinking about building a brand, and say, let me break the models, and I am really talking about the cost of building brand, cost of building distribution, which is to say that I don’t need to do the traditional way I used to do it. If you think of it that way then there is another way of thinking what IT means to you. It isn’t whether IT is a brand by itself, but if you think about IT as a component of what you do? So you buy steel, you buy iron, and you build a car. Well you also buy IT, you also buy labor costs, and if you start to think about the capability that this industry provides you, it gives you a million guys who know how to write a code. It gives you a million guys who can understand what this new platform implies. Now you think of It as an enabler for the rest of you, and that becomes an interesting proposition. Thanks.

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