US Congress has voted-out bailout package. It sends clear signals that US congress has little trust in Mr. Henry Paulson, who as chief of Goldman Sachs two years back, was a staunch advocate of lax regulatory practices. The opposing members see Mr. Henry Paulson's deal making tactics and drive for exorbitant profits responsible for current crisis as a leader on wall street at that point in time. I may be incorrect, however, timing of crisis and bailout could not have been worse when US is going to vote for next president.

If we take few steps back and look at USA, now it is time for congress to look at all expenditures and especially their defence expenditure where billions of dollars are being drained on war against terror. I don't know what is positive outcome, but it has certainly managed to bring Pakistan closer to Iraq. The time has arrived when USA should look at their own backyard and invest precious resources in their own country.

The US congress also believes that fundamentals of bailout package are flawed. A problem created by market should be solved by market. If we say regulators are participants of market in a way, then regulators should take moral responsibility and offer to tender their resignations. My guess is US congress is expecting more bad blood to come out before any medicine can take considerable effect to ensure survival.

The US congress also qustioned rational behind hurry shown in AIG bailout and they believe primary reason was 20% of Goldman Sachs liabilities with AIG. Clearly, AIG failure would have created similar conditions under which Lehman went for chapter 11. It may have also resurfaced mess created by CEOs and one of which happens to be current US finance secretary. It is also a case of conflicted interest. When situation turns from bad-worse-worst and wall street may force Oxford university to coin next word after 'worst', the parliament has a right to look into every step taken with sceptism and take a decision based not on short term relief but also on long term stability.

This whole debate has revised definition of capitalism and socialism. Does current crisis indicate that capitalism is nothing but human greed and can't survive on its own? Finally all capitalist are trying to hide under socialism cover from government. The crisis will host many brilliant debates in many parliaments and we may see world over financial framework being adjusted to accommodate capitalism under socialism. There is little difference between efficiency and milking out human element when sun promises to rise everyday. As darkness spreads, we ultimately find the balance between two was tilted in favor of later far too much as much as it can be fatal for not only market but whole economy.

We may find a detailed bailout package and not a blanket package proposed this time. US congress may also nominate few people to share responsibility with Fed Chief to prepare a bailout package. The package should provide quick relief on case by case basis keeping long term interests in mind. It should focus to relieve common man and this should be central point to bail-out financial institutions.

However, one question about extent of government control on markets remains open. At present, it may not be suitable to have a neutral debate on the topic because the current turmoil will pull more weight towards government control. One thing is certain - All financial risk analysis guidelines must be reviewed and re-written to evolve a robust risk model in future with an incentive process to adhere to it (There is potential business for Indian IT companies). It is truly surprising that top USA financial institutions, at the brink of failure, didn't even adhere to BASEL II norms and it certainly raises serious questions on current regulatory set-up. All the firms have not more than 3.0% Capital Adequacy Ratio.

I will not be going overboard if I recommend best financial minds in USA to seek inputs from Indian Banking regulation system which has kept a fine balance between regulatory bodies and market forces to keep an economy afloat for last 2 decades (I count period post 1991 budget) with minimum risk.

Green Computing - But its not about saving enviornment

When you are going to hear that an Indian company opened its data centre in Himachal Pradesh? I think time is not far when government has allowed private players to install captive power plants and generate their own energy. The private players may choose to sell extra energy through state electricity board and so, government is encouraging power trading exchange to facilitate energy trading. However, the government is mulling on cap the power prices which I think is incorrect and it should be market driven. If the government caps power prices, it would not be driven by market dynamics and may not encourage players to install more power generating capacity but it is a separate discussion all together.

I was writing this piece on green computing when I learnt the news that Google has built its latest data centre on the Columbia River in Oregon so it can tap cheap hydroelectric power.

Green computing is one of the latest fads in the digital domain. Often, it’s dressed up as corporate responsibility and used as a marketing tool. Corporate computer-users may talk about reducing their carbon footprint to slow global warming, but what they really mean is finding ways to slash their electricity bills.

The fact is IT departments—especially those with data centres the size of aircraft hangars—have become huge consumers of electricity. Microsoft has done much the same in Washington state, and HSBC just built a data centre next to Niagara Falls.

Today, the industry finds that for every kilowatt of power it uses to drive a server, another kilowatt is needed to cool it. A decade ago, IT departments spent less than 20 cents out of every dollar of their budgets on powering and cooling their servers. That now absorbs about 50 cents per dollar. By 2010, the figure is expected to reach 70 cents.

That’s why you hear so much these days about “virtualisation”—an old trick for making one computer do the work of many. A number of “virtual machines” can coexist in separate partitions on a single server’s hard-drive, each as a software emulation of another server running its own operating system and software applications.

So, once SBI completes automation of all its branches across India, we may find then finance minister or finance secretary inaugurating SBI data Centre on a river with hydroelectricity potential.

- I read the news in The Economist magazine.

New Season New Thoughts

Indian cricket fans are looking forward to new season, commencing from 24th September with Irani Trophy. The Champion Trophy was cancelled and rightly so because when Pakistan can't guarantee safety of its own citizens, how it can guarantee safety of International players. Pakistan's condition is worsening day-by-day and probably god only knows who is running Pakistan.

So, selectors came up with news that will keep cricket lovers, followers and journalists occupied for next fortnight. Yes, it is about Mr. Saurav Ganguly. It is clear that selectors have dropped him after taking a comprehensive view of fab-four otherwise it would have been Dravid first to go.


A fighter like Ganguly will not go down silently. Ganguly will perform, make a come back and then retire on his own terms. Thats what I feel. When Steve Waugh was going through a bad patch, Australia chief selector spoke to him after second test and very clearly told," Steve, if we don't see improvement from here, the fifth test match of the series may be your last match test." Steve Waugh scored half centuries in third and fourth test match and a century in fifth test match to secure his place. It happened in 2002-2003. And then he quit cricket in 2004 on his own terms.

But this is Australian way of motivation, transparency and communication. When Greg Chappel tried it, Ganguly came up in media and made emotional statements to stir-up controversy. Ultimately it turned out to be worst battle between a captain and coach in which captain lost.

The more interesting part for me is how Tendulkar, Dravid and Laxman wash Mendis agony against Australians. Let’s accept Australian bowling attack is weak and if Brett lee is not able to solve his personal issues in next one week, it may be weaken further. You can't expect more from God as a Indian test match batsman. Score tons of runs and that too against Australia and you are in for next ten test matches. Also, Indian public remembers performance in home matches for a longer time. So, more ads, more contracts and life secured for next 1 year at least.

My player for next season is Virat Kohli. He is cut above the rest and he will find place in one day squad last playing 11. Now Dhoni has to think whom Virat will replace.

*I must tell you a story about this lad's dedication. Virat was batting against Karnataka at 40 odd runs in a domestic match and his father was critical. Virat went home after day's game was over and his father expired. He had option to not resume his batting but to complete last duty as son. But no, this lad came back to match on time, batted and scored some 90 odd runs because Delhi was struggling against Karnataka. He was not out but declared out by umpire. Then he went home and completed his duties. If nothing else, it definitely speaks about mental make-up of Virat Kohli. He will certainly go a long way.

Mohd. Kaif has received manna from God. But he has to perform out of his skin to cash this opportunity. And I think Kaif realizes it. He is a limited strokes player, but he has mental toughness to graft an innings. His critical success factor would be to play as sub-ordinate of Laxman and stitch partnerships.

Rohit Sharma may have to warm the bench if both, Shehwag and Tendulkar make a come back in ODI team. I can see another Mark Ram Prakash in Rohit Sharma and I don't see him travelling very far. He and Yuvi may finally become permanent member of India 20-20 team. Sachin Tendulkar has been included in ICC ODI 11 and if he retires at this juncture, it will benefit both, him as well as a budding youngster. I am not sure if Tendulkar too misses to read selector's mind like Viv Richards did and opted for retirement after being dropped.

My score line for India Australia test series would be 2-1 in favor of India. I think India-England series would be more exciting than India-Australia series in this season.

* - I heard Virat Kohli story from former test cricketer, Mr. Rakesh Shukla.

Customer Service

India has embarked on a consumption journey. The internal demand based growth has put the country in prosperous cycle of investment-production-consumption and we can witness it across the country. It goes without saying that this growth has left behind many millions of Indians who are or were dependent on agriculture. We can see a slum in the neighbourhood of a large housing society or apartment complex irrespective of a big-ticket growth city which reveals the ground reality. How to include these Indians in this growth cycle has and will remain a challenge for the governments until the government takes revolutionary steps with the delivery mechanism which needs a huge facelift.

Let’s start from here. We are seeing a lot of companies which are serving customers on a day-to-day basis. These include mainly telecom, consumer goods and banking. These companies are very good at marketing and brand creation/maintenance and the data in their results show it. However, I see customer service suffering regularly.
These companies are good at providing service on a regular basis though they play with words with customers. If you pick telephone bill of any company, I am not sure if you can explain all the charges or get an explanation from your telecom company.

If you look at a new product offerings from these companies, you may need a lawyer or a consultant to understand what the product means and how it will create holes in your pocket. Yes, the first thing is complexity. Sometimes I feel that these companies are thriving on complexity. Probably this is what inspired Airtel to launch a simple INR 1/- plan and this was a timely step in right direction. The same holds true for your credit card.

The telecom regulator doesn’t help customers either. I find TRAI standing with telecom companies against the customers. Let’s talk about number portability. Anybody who has worked in telecom domain will tell you that it is the simplest thing to implement. Why? You need a switch which can route your call from existing service provider to new service provider without any change in the number. The cost of the switch is $5 (approximately INR 200/-). I don’t think people would not like to pay INR 200/- to change the service operator if service operator is not able to serve properly.

The second is customer communication. I find it both ways. Many times if the customer is not urban or not educated enough, he finds it very difficult to communicate his problem and suffers indefinitely. The point I am trying to make it everybody wants these customers to change but nobody wants to change for these customers. I haven’t yet seen a customer care centre which can talk to people in their own language or help them to resolve their queries/questions. I will quote one example. One prominent private sector bank goes to villages in Rajasthan and requests villagers to have bank account with them. The villagers are charmed by the brand and open account with minimum balance of INR 5000/-. Nobody from the bank explains the customer or customer tries to understand what ‘minimum balance’ means and how it may affect them. The villager doesn’t use this account on a day-to-day basis and just checks his balance after 6 months or so. Now he finds that bank has deducted money from his account because he could not maintain minimum balance and why? Because the bank first deducted INR 200/- for debit card which made bank account having less than INR 5000/- and then penalized the account because the customer couldn’t maintain INR 5000/-. If we think about this issue, it is no less than cheating. Now the poor villager runs from pillar to post to get his remaining money back and to close the account.

The third issue is service as per the customer not the other way around. I will also take the opportunity to congratulate these companies which have made an attempt to include many people in their service domain by making their services affordable. The service has become affordable but the degree of customer service doesn’t match this affordability.

I think concerned regulator should devise a customer service index which should be published in media on a monthly basis. It will help us to set a standard level for customer service. TRAI does this exercise and evaluate telecom operators on a predefined parameter however it never publishes it in customer friendly manner.
Another aspect is do Indians have customer service attitude? I think serving customers is more of an attitude rather a skill. Off course, one need to get basic training, however, not everybody can serve the customers with same energy and enthusiasm on a daily basis. When it comes to serving customers through a faceless medium, it becomes difficult and makes this job mundane. The idea is to select the right set of people through a different process. A lot of companies are finding hard to manage attrition which adds to woes for the customers. One more thing these companies need to understand is that they need to have a different perspective on customer service. It must been seen more an investment rather than an expenditure. Sometimes I get a feeling that Indian bosses try to cut costs for this department and try to employ minimum number of people to serve maximum number of customers. Additionally, these customer service representatives are not backed by best of systems and infrastructure which adds to regular struggle with performance pressure resulting in attrition.

In addition, we are in the initial years of consumption and the companies are concentrated on capacity expansion, new customer acquisition and winning new territories. As customers become experienced and educated about these services, these companies will respond to the customer’s needs. As I think, India Inc. will witness an era when customer service will be the major competitive advantage rather than cost advantage at present.