What’s Important in India Business Today

IT companies moving towards revenue sharing

Source: Deepshikha Monga, TNN

NEW DELHI: Technology services firms are moving to a revenue/gain share model where they get a chunk of the client’s revenues or gains made due to increased productivity or reduction in processing time. Companies believe this ‘slice of the action’ strategy could not only be the next differentiator but also boost revenues.

For HCL Technologies, which adopted the revenue/gain share model in 2005, less than 5% of revenue currently comes from such contracts.

Part of the company’s “if we share the vision, we must share the risk” strategy, the move towards outcome-based pricing is expected to fetch returns soon. “Most of these contracts are under implementation currently. We expect to see the impact on revenue in another 18 months,” says HCL Technologies president Vineet Nayar. continued…

Goa wants to set up SEZs

PANAJI: Goa wants to develop special economic zones (SEZs), but does not know how to acquire land for them. The tiny coastal state, which wants to emulate the success of Bangalore and Hyderabad in IT, has sought permission to establish 15 economic zones, mainly catering to IT and ITES sectors. The Centre has already given in-principle approval for seven of them, but the state is yet to answer the crucial question: Who will acquire land for the economic zones?

Land is hard to come by in Goa. Nearly 40% of the state’s land fall under forest zones and, hence, cannot be used for commercial purpose. The land available for development is bound by strict rules framed during the Portuguese rule. Approval from all living family members is mandatory for purchase/sale of ancestral property in the state. This makes any land deal a complicated process. And the state may not be of help here.

State government officials say that the government’s role is only to get approval for the projects from the Centre. “Private developers will have to acquire land on their own. Our role is more of a facilitator,” said VK Jha, the state industry secretary. Continued….

India enjoys respect because of its companies

NR Narayana Murthy, chairman and chief mentor of Infosys, is one of the 15 Indians, along with Sri Sri Ravishankar and Aishwarya Rai, who were awarded the Global India Splendor awards by the UCLA School of Theatre, Film and Television on August 14 in Los Angeles. Mr Murthy, who was on board a flight from the US to Singapore on Independence Day, discussed India’s achievements since 1947, the contributions made by the corporate sector to its growth and what he thinks are the ideal qualities for a politician. Excerpts:

The Karnataka High Court has quashed proceedings against you over the National Anthem controversy. Are you happy to hear that?

I would not like to comment on that matter; I have not yet read the judgment myself. I have been on the road so far. I gave an interview to a journalist and it was misrepresented, so I do not want to say anything till I have the complete details.

Looking back on 60 years of Independence, are you satisfied with how things have shaped up in India?

There are lots of good things that India has achieved; we have produced world-class scientists, doctors and engineers. We have reduced poverty and increased literacy; we have sent rockets to space. However, the job is not fully done, we still have the largest mass of illiterates in the world and the malnutrition levels are really high. There are 150 million Indians who do not have access to drinking water and 750 million do not have decent sanitation. But today, I would like to focus on what we have achieved rather than what still remains to be done.

In your opinion, how can these gaps be filled?

Continued…

Rediff Takeover Rumors

It was just last month that Indian Internet portal Rediff (Nasdaq: REDF) was soaring on possible takeover rumors. Its stock hit a high north of $26 a share, up 44% from the $18 mark it had been floating around for the first half of the year. Not too shabby for a company that's only recently begun turning a profit.

Since then, however, as company management has had to erase thoughts of a merger, shares have tumbled going as low as $15 a stub -- over a 70% reversal of fortune. Even with first-quarter sales up 18% and earnings increasing 6.5%, the stock has barely budged out of its recent slump. But Rediff.com has improved its standing as the 122nd most-visited spot on the Internet, according to Alexa.com. So with a falling stock price and increasing visitors on the website, it sounds like the company may be beginning to look a bit more tempting. Continued…