IT Outsourcing - Options

IT matters! Most conglomerates are tech savvy and use IT (Information Technology) to gain a competitive advantage. Most companies are spending a substantial amount of their revenue on building IT capabilities. Big Indian IT companies termed as SWITCH (Satyam, Wipro, Infosys, TCS, Cognizant, HCL) are the “cost efficient experts” in low cost countries. These companies excelled in delivering state of the art IT solutions at low cost. However, there have been numerous changes in this industry over last few years and the business environment has become challenging. Some of the changes are:

1. Indian IT biggies looking to move up the value chain.
2. Global IT consulting companies like Accenture now  offer end-to-end solutions by operating in India.
3. There is a high demand of IT professionals while the supply of labour is low. This has increased the wages dramatically and the labour arbitrage is slowly diminishing.
4. Low availability of skilled labour has caused companies to compromise on quality.
5. High competition has led to pressures on billing rates and the margins are decreasing even further.
6. Companies unable to manage high growth leading to quality and security related issues.

Within buyers of IT services, there is an ongoing debate on whether to outsource or instead go the captive centre route. While outsourcing is cheaper and usually a necessary step to retain a competitive edge, there is no discretion in team selection and no visibility into the Software Development Life Cycle processes. Captive units on the other hand negate most of these disadvantages but most companies fear making the high investment commitment required to set up a captive unit in a new country. A case in point is Apple’s development centre in India, which was closed a month after it opened.

The captive unit business model will become a big threat to SWITCH companies. Most of the critical work will get assigned to the captive units and vendors will be used to compensate for spikes in business or for delivering the less critical and lower margin tasks. To compete in this changing environment, SWITCH companies should take the lead in establishing a new business model.

To accomplish its IT business, there are various options that any company can use. There are obvious advantages and disadvantages of each option. While accomplishing IT work in own premises might be most beneficial, it might not be the most optimum option. With the emergence of knowledge centers like India, which provide the similar or better services at a much lower cost, outsourcing and offshoring are becoming extremely important in any CIO’s agenda. Following are the options that a company can use to accomplish its IT business.

1. In-house IT department
   1. Onshore Captive Unit
   2. Offshore Captive Unit
2. Third Party Out-sourcing
   1. Near-Sourcing – location is near to incumbent’s location.
   2. Far-sourcing – location is far (e.g. American company outsourcing to India).

Within the offshoring strategy there are various options in which the IT business can be structured and accomplished. There are essentially six different offshore models. The two models at the extreme are:

1. Captive Center – Completely owned by the company for its own use.
2. Supplier Direct – Completely owned by a third party offshore supplier.

There are also a few more models which are lesser known but slowly and surely gaining importance. These are:

1. Dedicated Center
2. Joint Venture
3. Third Party Transparent
4. Build-Operate-Transfer

Captive Center: Under this model the company sets up its own offshore captive center. It starts from ground up, sometimes, in a totally new country where it has no earlier presence or outsourcing relationship.

Supplier Direct: In this model, the work is outsourced to a third party who provides both low cost advantage and special skills, while allowing the company itself to focus on its core business.

Dedicated Center: A dedicated center is a further extension to Supplier Direct model. This is also operated by an offshore supplier, but the staff, equipment and facilities are all exclusively dedicated to the company. This model has some shared processes, shared risk and shared ownership.

Joint Venture: In this model generally a company partners with an offshore supplier in a joint venture relationship and they share the revenue. A joint venture can also be between two or more global companies, with or without local partners, to build an offshore center with multiple owners. This way they share the cost and risk.

Third Party Transparent: In this model a third party builds and maintains the offshore presence.

Build-Operate-Transfer: In this model, a third party builds the captive center ground up, and transfers it to the company once it is operational. The time for which the third party maintains it can vary.

SWITCH companies currently operate in the Supplier Direct Model. This model became popular because of labor arbitrage available in India. With it huge pool of English speaking skilled population available at low wage rates, this model was highly successful. Most companies used Supplier Direct model to outsource their IT services work while some use hybrid models like having both a captive center and outsourcing some work to third party IT vendors.

In the long term, any company needs to invest in what it considers the core. If some work is clearly not the core and hence not of long term value it should be outsourced if it makes economic sense. On the other hand, if the work is strategic for the longer term then the continuity of the work and the people (after all, it is a knowledge economy) is required and investments have to be made. With this reasoning, some companies operate their own captive centers and outsource the low value work to third party vendors in low cost countries.

With no distinction between any two third-party IT services vendors, cost became the only distinguishing criteria. As competition heated up, there was a huge pressure on prices and the billing rates reduced dramatically. At the same time, some of the IT consulting companies like IBM and Accenture also expanded to low cost countries to make use of labor arbitrage and provide end to end services to their clients. This forced the IT biggies to rethink their strategy as the current strategy was clearly not sustainable. The Indian companies aligned their businesses along verticals and put a strong emphasis on building domain knowledge so that they could move up the value chain.

The IT businesses have expanded at a dramatic pace and some companies have not got enough time to adapt themselves to their explosive growth. The demand for labor has gone up multifold, while the supply has been more or less constant. This has affected the quality of labor and therefore the quality of work delivered. There have been a few instances of security breaches in handling sensitive data. Most companies now believe that their India strategy is very important and a lot of time is spent of formulating this strategy. IT biggies are facing a new competition from increased number of captive units being started. As more captive units come up, these companies would start losing their clients and moving up the value chain strategy would remain incomplete. There is also an additional risk of big captive centers like GE building capacity and competency to service other clients from their captive centers.

In this highly dynamic market, a new wave of IT evolution has to gain momentum. IT vendors need to rethink their strategy to survive and excel in the future. This scenario presents SWITCH companies with both an opportunity and a threat. I believe that to compete in this changing environment, the business need for these companies is to adapt quickly to this new wave and position themselves to take maximum advantage of this opportunity. In Thomas Friedman words the situation can be summarized by the lines, “Do it before it gets done to you. The change itself is inevitable”.

 

Funny Video

This is not to suggest anything...it's plain funny...

Solstice

We had the 5th Solstice this weekend. Solstice is the annual ISB Alumni Reunion. It was a good chance for the current students to meet with alums given there is no overlap of two batches this being a one year course. It was also a good chance for alums to meet their own batch mates. This weekend was full of masti, partying and networking - last and most important alum gyan sessions.

On the party front, the new events lounge was inaugurated. We also had a concert by Indian Ocean. To be frank, I had not heard of this band earlier, but I liked the music yesterday. I think I am going to follow this band in the future. Some of the songs were really cool.

Met with a few alums and got a lot of gyan. I think it will help. It came right in time for placements. I could get the resume reviewed, get tips on prep and how to approach companies. Overall, a fun filled experience this weekend. However, now I need to catch up with my schedule and prepare for the exams coming up in 6 days

Leaving you with a picture of Indian Ocean.

Interesting Link on Global Consumption and Wastage

Story of Stuff

Marketing Notes - Should you reduce prices to counter competition?

Let's take a scenario where you join a new firm and are asked to manage a brand. The brand is not doing well right now and you need to prove that you made an impact. You obviously have a limited marketing budget. After a lot of introspection you come out with two choices:

1. Spend budget on advertising

2. Spend budget on price promotion.

What would you choose?

You evaluate the two options and here is the analysis:

1. Price promotion because it will introduce trial.

2. Price promotion because it will attract switchers.

3. Price promotion because it is offensive strategy while advertising is a defensive strategy.

4. Price promotion because big impact expected immediately while advertising will be a long term investment.

5. Advertising because it will influence perception.

6. Advertising because it will create loyalists.

7. Advertising because it increases perception of quality.

8. Advertising because it will build brand image.

Now you also know that in the short run even you don't advertise for a month your sales might not be affected much. e.g. say if coca-cola stopped advertising today, would you stop drinking coke?

I am sure you will go the price promotion route. This is what most managers will do. It seems sensible. However, there is a pitfall in this strategy. It leads you to a vicious cycle.

As you drop prices, you are at par with the other low price products. There are more low price products that high price products. So, the consideration set for the consumers increases. Given a larger consideration set, the consumer becomes more sensitive to price as there is very little differentiation. The product becomes a commodity and you end up with lower margins. Lower margins mean, less cash available for advertising or adding product differentiation by virtue of R&D. So, how do you sell more product - Reduce Prices. And you are back to where you started with. The path of no return!

Here comes another bubble

A hilarious video I found...

Marketing Notes - Slow Death of the Brand

Disclaimer: The end of the story is very grim. This real story can cause you to get a feeling of déjà vu.

This story starts in a happy world. Our Brand, called "Hit", is a high quality, high price brand in a growing market with over 30% market share. There is another competitor, with slightly inferior product and about the same market share, and the rest 40% divided between some 100 small competitors, with inferior products. Our brand was enjoying good premiums and everyone in the firm was happy.

Good time do not last forever, and enter a new competitor. The person feels there is a vacuum in the market and there is a place for a Low Price Brand. He positions his product in a low but acceptable quality and low price. This brand gains 1% market share. Hit is still enjoying life and doesn't care about a newbie. Time passed and the new brand keeps gaining the market share continuously. People start seeing the value for a low price brand the brand reaches a 10% market share. Now Mr.Hit take notice and after hours of meeting come out with a killer strategy. They can not reduce price because the brand premium will go away. So, to compete with the new product, they launch a new product called Mr. Fighter, a flanker brand. This is a neat strategy. The brand image or Mr. Hit will not be hit and the firm will be able to capture additional market share from the competitor.

Mr. Fighter does a good job and takes share from other 100 competitors and some from Mr. Hit and some from the new competitor. Now the competitor has to make the next move. Competitor already had lowest prices, wafer thin margins, so he obviously can not cut prices further. So, it decides to go to the retailers and gives them the proposition to go private label. Retailers will be happy to do that. They can squeeze the manufacturer further. Now, the ball is back to Mr.Hit's court.

Mr. Hit, now thinks that they can either let competition take the market share, because the retailer owns the shelf space, or go private label themselves. Now, Mr.Hit is both manufacturing private label and also providing trade incentives to the retailer for shelf space for the flagship brand. The margins goes down. So, Mr.Hit outsources the manufacturing and designing and is left with only the brand name.

Retailers are happy by squeezing both the hit brand and competitor. The private label products are gaining popularity because people are slowly realizing that its the same product after all and at a lower cost. In the whole value chain, retailer has the highest margins. Now, our dear Mr.Hit has also lost the design capability. The ODMs (Original Design Manufacturers) on the other hand give a proposal to retailers to manufacture multiple brands for them. They don't have their own brand to begin with and their main capability is manufacturing and operations.

So, now the retailer has high margins and also a good, better, best strategy to have various brands at all levels, i.e. entry level low quality - low price product, middle level medium quality - medium price product and also a premium brand positioned next to Mr.Hit's brand commanding high price for the high quality. With brand being the only thing left and no margins to innovate, the demise of Mr.Hit is evident. It's only a matter of how long can it take the losses, while the retailer makes merry!

That's the end of Mr.Hit! Now, the question arises that while this story is so distressing yet so true, what could have Mr.Hit done differently to stop this eminent death? While there are no straight answers to this question, one thing is clear - Mr.Hit can be saved only by differentiation and by being ahead of competition ALWAYS! It has to constantly innovate if it has to remain alive. It has to create a pull from the customers forcing the retailers to provide shelf space to this product.

IT Outsourcing

This is the continuation of my previous post about IT. To get the IT work done, a company has following choices:

1. Do it internally, or

2. Outsource it.

If the company plans to get done everything internally, then it can either:

1. Do it in a captive unit at its main location

2. Open a new captive centre in a low cost country like India.

If the company plans to get done everything externally, then it can either:

1. Go for near-sourcing (e.g. Capgemini for a company in Europe)

2. Go for far-sourcing (e.g. Infosys for a company in US)

There are advantages and disadvantages of all formats.

Indian companies operate under outsource and off-shore space. They provide the dual benefit of low cost and quality work. You would then think why would not every company go for outsourcing and offshoring? Well, it is because there are a few disadvantages too. e.g. there is a lack of control in case of outsourcing to a third party vendor. A company has no visibility into project schedules, quality of people, safety of sensitive data and risk of key employees leaving and company having no control on retaining them. The business secrets may also get lost as vendor employees move from one client to another.

To connect this thought with the one presented in the previous post, companies could spend the staying in the race or to some extent winning the race budgets in outsourcing and offshoring. The third party companies have already developed expertise in such work and there is not much strategy involved, so the risk is lesser. The innovation part of budget can be spent in-house.

Information Technology

I have been reading a lot of articles on IT off-late. Here is a summary of those articles. None of the stuff here in my research. It is all the knowledge that I borrowed by reading different articles.

In any company IT has three distinct uses:

1. Reduce operating costs by automation, reducing manpower requirement or increasing efficiency (called as "Lets you stay in the race" by some specialists). You have to do it because others have done it, and if you don't you will lose.

2. Give a strategic advantage over competition by doing something first. Also called as "Lets you win the race" by specialists. This is similar to first point, except you always pre-empt the competition and get advantage over them by capturing market share or increasing margins by improving efficiency.

3. The third and most important use of IT is to come out with innovative products, reduce time to market for those products and create such an activity system such that the competition can not find a unique factor for your success.

Most companies today spend in point 1, while some in point 2 and rare companies in point 3. The classic examples of companies spending in point 3 are Dell, WalMart etc.

An important point to note here is that companies can not choose to spend just in 1, 2 or 3. To be successful, they need to spend in all 3 categories. The experts say that companies should create a portfolio of IT spending and should manage it just like a financial portfolio. In this case, the companies should distribute their budget across the three categories, just as you would in stocks and bonds in a financial portfolio. You need some budget to maintain your usual systems like email, messaging etc, some budget to pre-empt competition and stay ahead in a game and some into innovation.

While the portfolio model sounds very simple and logical, the problem comes in the implementation part. Imagine a large conglomerate with different companies. The obvious way to maximize operational efficiency will be to have a centralized IT department, like a shared service. The problem with this model is that distance it creates between the business units and the IT staff. It also tries to commoditize IT. The workaround is to have innovation staff work closely with the business units.

On the innovation front, there are various ways in which CIOs can get new innovative ideas.

1) Work closely with venture capital firms and invest in companies where you see potential for use of technology in future.

2) Work closely with researchers, academia to get to know about the latest and cutting edge technology.

3) Form a innovation cell within the company and encourage Research and Development.

4) Pilot new technology is a small business unit and then extend it to the entire company if there is huge potential.

To consult or not!

The biggest question I have in my mind these days is whether to opt "consulting" as a career or not. Following points are in favour of choosing consulting:

1. You get to work with the top level executives.

2. You get to learn a wide variety of domains and business problems.

3. Challenging work.

4. It's a glamorous job.

5. Involves travelling world wide.

6. High chance of getting a successful career post consulting.

7. Good money.

Following points are against choosing consulting:

1. Travelling often and away from family is not something I want.

2. Very demanding job, long work hours.

3. Requires lots of networking.

4. No leverage on prior experience. Start afresh.

A tough choice to make. However, if I don't choose consulting, then the options that I have are:

1. Go back to IT

a) Delivery

b) Business development

2. Marketing Roles.

3. General Management

Again, marketing, though interesting, I am not sure if I will be a good fit. General Management sounds interesting, but factory setting doesn't. IT delivery is a very non glamorous job, while business development is no good than consulting in terms of negatives, while lacks the positives. So, consulting doesn't seem a bad choice after all. However, the travelling part still is something I have to think thoroughly and that is a decision that I will need to take collectively with my family. So, consulting, to be or not to be...

The same feeling again

Every time I attend a cultural show, especially conducted by colleagues, I get this feeling of worthlessness. The people are so talented, that they no only excel in studies, but also in activities like dance, song, dramatics etc. I initially used to think that there is a negative correlation between extracurricular activities and the basic activity like grades in college. However, that is totally wrong. I have repeatedly seen that people who excel in study also excel in extra-curricular activities. They would volunteer for any events that are taking place, perform and network effectively. This is the hallmark of a complete person. As always I have decided that I will pursue some hobby religiously now. Only time will tell if I will just be writing the same thing on the blog even after the next event that I attend.

Best day since joining

Our (D-14) group mate Vipul won a business plan competition and we all went to Barbeque Nation to celebrate. This was one of the best days since I joined ISB. We had lots of fun, mostly at the cost of Moiz. I have laughed this much for months now. Nice break from the otherwise hectic and stressful schedule. We were the last one's to leave the restaurant. If we had not left for another 10 minutes, we probably would have been thrown out! We pulled each others legs and finally everyone remembered the most memorable moment at ISB. Wow, for the first time I am thinking I am gonna miss this life. Just 120 days to go for graduation!

Job scene is looking good. Met my mentor today and he mentioned that jobs are not a problem. There is enough demand for good managers and leaders in the market today. McKinsey has posted its job postings today, and I am sure more than half of ISB will apply. It is the dream company of so many people. It's amazing how some company drives so much excitement at such a broad level.

Pictures from the outing:

I ate so much today and after a relaxing evening, I think I am gonna crash now. I will need to get back to work tomorrow morning, as the to-do list is unending right now, and I better get started. There is so much to do. To list a few things:

1. Revise core terms.
2. Case Prep for consulting interviews.
3. Read up on IT industry for tech interviews.
4. Assignments.
5. Backlog of Term 6.
6. Finish the book that I am reading right now, Information Rules by Shapiro.

I better get back to work! Was this relaxing evening a dream? It's over already :(

Best day since joining

Our (D-14) group mate Vipul won a business plan competition and we all went to Barbeque Nation to celebrate. This was one of the best days since I joined ISB. We had lots of fun, mostly at the cost of Moiz. I have laughed this much for months now. Nice break from the otherwise hectic and stressful schedule. We were the last one's to leave the restaurant. If we had not left for another 10 minutes, we probably would have been thrown out! We pulled each others legs and finally everyone remembered the most memorable moment at ISB. Wow, for the first time I am thinking I am gonna miss this life. Just 120 days to go for graduation!

Job scene is looking good. Met my mentor today and he mentioned that jobs are not a problem. There is enough demand for good managers and leaders in the market today. McKinsey has posted its job postings today, and I am sure more than half of ISB will apply. It is the dream company of so many people. It's amazing how some company drives so much excitement at such a broad level.

I ate so much today and after a relaxing evening, I think I am gonna crash now. I will need to get back to work tomorrow morning, as the to-do list is unending right now, and I better get started. There is so much to do. To list a few things:

1. Revise core terms.
2. Case Prep for consulting interviews.
3. Read up on IT industry for tech interviews.
4. Assignments.
5. Backlog of Term 6.
6. Finish the book that I am reading right now, Information Rules by Shapiro.

I better get back to work! Was this relaxing evening a dream? It's over already :(

Should a customer be fired?

There was a very nice debate in our Customer and Market Performance Management class whether a customer should be fired or not. In this case the customer was very demanding and was bleeding the client. On top of that, because the internal processes were not right, the client offered discount to the customer. The case conclusion was fire the customer. It seems in realty also the customer was fired. However, I do not subscribe to this view. In my view, you should explain the customer that we had our internal process wrong and we need to change the way we bill you. If after that the customer wants to walk away, let him. But give him a chance to continue the relationship and be a strategic partner. What say?

How to Manage Multiple Tasks?

I am still wondering that MBA has not taught us anything on how to manage multiple tasks and priorities at the same time. Although MBA does expose you to prioritising your tasks, but that is not as a teaching but as a side effect. I think this should be the first course in term 1 that should be taught in MBA. How can one manage multiple tasks and set priorities. Just a thought!

Did I really pay so much to get this life?

We all keep discussing if we really took this decision to pay 17 lakhs and ask for this torturous life? Amazing! It's 3 AM and the assignment is still on. Then there is morning 8 AM class to attend. Quiz in 10:15 Class and then another assignment tomorrow. In between, 5 PM class also needs to be attended. Phew!

Day 20: The last day of the term 1

Section-D with Prof Bruce Allen

Section-D with Prof Richard Waterman

So, the final day arrived. We had the last classes for Marketing and Accounting. In Marketing we discussed the Vistakon case and the way Prof Piyush Kumar handled the case was just amazing. He has put so much structure to the case, that one can not go wrong. He also set the context for the Marketing course in next term, which is Marketing and Decision Making. In Accounting we covered the annuities and accounting for marketable securities. At end of the class, we gave a big applause to the profs. It was really an experience of a life time to be taught by the best in the business. You develop new notions about the subject when you view it through an expert's eye and then you realize that no phenomenon in this world is boring. You may feel some subject is boring because you have not been exposed it from the right perspective.

The last weekend before the final terms is here and the pressure can be seen all around. The normal activity around the campus is minimal, though there was an expection yesterday evening. We had our Accounting project due Friday midnight and and most of the groups including mine, struggled to complete it in time. At 11:30 PM we fired the print and went to collect it at the printer. We were welcomed by a panicy crowd, telling that there is no paper in the printer and there is a large queue of pending prints. Then it was a race against time, to run back to our rooms, fire a print to the printer in the library, run to the library to get it, sign it and drop it in the box 5 minutes before the deadline. There was a huge crowd and everyone was relieved to have made it in time! We took a few pictures of our killing! I will post them soon. For today I have a picture from the class.

Day 19 and Farewells...

Today was 19th Day of classes. It was the 10th and final class for both Statistics and Economics. Both these classes were being taught by two of the most amazing professors. The right mix of humor and keeping the interest up was the main strength for both the profs. These were among best classes I have ever attended in my life.

In Statistics we continued our discussion on multi level categorical variables. In the last part we studied about the log transformations. In Economics we studied about the expected utilities in case of bonus compensation by the companies as well as in the insurance sector. The problems were quite practical and interesting. Jargon for the day was asymmetrical information.

Tomorrow will be the last classes for Term 1. Monday the D-Day is coming. It's going to be a few long nights before Monday.

In the mean time I met a colleague who is a CA and comes from banking background. Got some gyan from him about the banking industry. It seems my interest lies more in the financial world. But it still seems to be figured out how easy or difficult will it be for me to switch. I have to start building these competencies and probably I should aim at getting an A in Financial Accounting.

On the ISB Radio there was an interview of Prof Piyush Kumar. It was a nice interview and learnt a few good things about the prof. He has keen interest in Comedy and is infact writing a script for a movie! In his message for the students, he asks the students to be good managers rather than being good students. He wants us to be doers and know knowers. He says, doers hire knowers. An interesting thought!!

Day 18 and Selling the gun...

Today 90% if the classes for Term 1 got over. The final term exams are coming closer and so is the time to visit home after almost 2 months. Today the much awaited Stats scores were declared. The max was 100 (yes, a perfect score). The mean was 70 with SD 13. I scored 66.67. This was in line with what I was expecting. I had screwed up my stats prep and exam badly. This has led to some depression today and I am quite demotivated. I hope I recuperate asap and get back to my final term exams prep and hope to do well there.

The first class today was the marketing class and I liked today's class the most among all Maketing classes. The topic was distribution channels and I got a lot of insights. One important learning from today's class was that the organized retail is killing the brands. The manufacturer of national brand not only faces competition from other national brand manufacturer, but also from retailers. Why? Because more and more retailers in organized retail are coming out with private label products which are as good as branded products but come cheaper to the consumers. These are placed strategically next to the national brands and the consumer can easily compare the two products. The reference price for the consumer comes down immediately and hence driving him away from the branded good. The private label market is high margin market for the retailer. The national brand manufacturer would ideally want to pursue pull demand marketing so that he doesn't have to do trade promotions. This would contract the margins for the label. By killing the brands, the retailer forces the manufactuer to pursue push marketing and hence swelling the margins for the retailer. This seems a win-win scenario for the retailer and of course for the end customer. But the highlight of today's class was professors remark on manufacturers offering to manufacture for the private label brands too and someone asking why would the manufacturer do that. The professor's remark was "If you are getting killed anyway, why not as well sell the gun to them!". The whole class burst into laughter.

The second class today was the accouting class and we learnt about lease accouting, Capital Lease Accouting vs Operating Leases. The topic was interesting. There was also a learning on calculating the EMI for loans. Two facts got clarified for me today, why the interest payment is more in the beginning when you pay EMIs and why are zero coupon bonds so called.

Day 17 and Auctions...

Today was the day of classes 9 for Economics and Statistics. In Statistics, we covered the multi level categorical variables. A very interesting example discussed was about an allegation that female employees were paid less, as a result of a survey. The results looked credible, because the mean salary for men was almost 4000 more than mean salary for women. However, if we analyzed the issue further, we saw that given a particular designation and years of experience, the women were in fact being paid more. The averages were high because men had spent more years in the company or were at higher designation. Salary was directly related to designation and number of years of experience. While the example was relevant from Statistics perspective, it was a great learning for me in general. Without this knowledge, I would have been persuaded easily my the magazine and newspaper surveys that keep publishing such results. I have learnt the plain mean and standard deviation and probably are least useful statistics. I learnt that a look at statistics should be in a perspective. We should not jump on conclusions without reasoning the information being provided. On analysis, the result was totally opposite of what was being alleged. I also learnt about the "Practical Importance" aspect of statistics today.

The economics class was as hilarious as it was informative. Prof Bruce Allen took it to another level today with his tit-bits and the jokes. It proved very helpful to be awake in an otherwise morphean environment. Post lunch classes in the summers are a perfect recipe for afternoon siesta. The weather was good today for a change. We different jargon learnt today are dutch auction, modified dutch auction, English auction, the winner's curse, law of large numbers, expected utility, bid discount and risk pooling.

With the final term exams on next Monday the last leg of first term journey has started. Things were not even under control and I was still struggling to figure out the things, and the term end is here. There are a lot of club meetings, sessions, election soap boxes, radio shows and movie screenings going on. People are active in these forums. I am not attending anything and still struggling with the study. Either people have given up on study or are super smart. Time will tell, until then I will continue my struggle valiantly.

Day 16 and the happy hour...

Today was the 16th day of classes. A weekend is here and along comes a series of assignments and projects to be finished. Today we effectively completed 8 classses for each subject. Two more classes for each subject to go in this term and we will be 12.5% MBA. Wow!

In the Marketing class, I studied about the Reference Points of pricing and some great practical concepts like "Why care about a couple of cents per minute for great quality- AT&T" vs "Why waste $100" concept. Prof Piyush Kumar makes a lot of sense and I have started developing some interest in Marketing course finally.

In the Accounting class, I studied about the Inventory accounting. It was a normal topic. Didn't find anything interesting in today's class.

A colleague had come out with an idea of a "Happy hour" where everyone from ISB - current students, faculty and alums meet on Thursday evening for an hour. This is more of a networking platform and to unwind after a grueling week and get ready for even more grueling weekend. Today was the first Happy Hour and it was a phenominal success. Lot's of people turned out, as I was expecting. What would surprise me is if the numbers remain the same as time progresses. I met a couple of new people today, so it did help with the networking. There was light music, live music, and drinks and snacks to buy. Overall had a nice time. Only thing that it was happy two and half hours and not just one hour.

After this, I attended the photographic club meeting and learnt some interesting facts about digital photography like take photos from an angle for a subject like flowers, how to focus to get the effects, how to hold the camera etc. It was quite enlightening.

This week I have a Accounting Quiz and Economics Quiz to compelte, apart from the Accounting Project. I have not seen the project yet, but I have heard it is huge - 200 pages!! So, this weekend is going to be busy. And the fact that this is the last weekend before the final exam weekend, lot's of study to do. I have big plans but it remains to be seen, how many of these materialize.

Day 11, 12, 13, 14, 15 and something imp in between

The study group after dunking Vipul. Birthday boy in pink.

The study group all dressed up!


And another time with some style!

Had no choice but to miss blogging for the last few days. There was a mid-term exam on Friday, 18th May. It was to test two subjects Stats and Economics. I was prepared for Stats as I had finished reading a couple of books on Stats. Then two days before the exam I tried the 2005 paper and got screwed up. It really stressed me out and I had to work hard. Slept at 3:00 AM. Tried to solve the paper and get the answers. Finally, on the exam day, I think I did reasonally well in stats, i.e. I met everyone else. It seems everyone I met, had done better than I did...:-(...post lunch was Eco exam and I again felt I had done reasonably well. Eco grades came out today. Avg of 25/38 with a standard deviation of 5. I scored 28. Which is slightly above avg, but not what I want. I needed to score around 32 to be competitive. Stats result is still expected but I am not counting on it much.

In the mean time, in Economics I studied the Game Theory, pricing strategies, Oligopoly and all these topics are very intesting. The way Prof Allen teaches is just awesome. He is fast, but his sense of humour is just fantastic! And I can't complain about the pace, because this is expected in the 1 year MBA course.

In Statistics, we are studying Multiple Regression. And I have to say that Prof Waterman is probably the best in the world as teacher for Stats. The way he structures his lecture and explains the concept is just excellent. If I were to rate all my profs in ISB I have been exposed to, Prof Waterman will be rated the best. I have talked to people around and they concur with me.

In Marketing, worked on a case on Virgin Mobile USA. Worked for two consecutive nights until 4:00 AM to complete the case and submit the report a couple of hours before deadline. In the class, studied about the pricing strategy - different from ideal scenario as told in Economics class and about the global brands.

In Accounting class, studied about accounting for Account Receivables that we do not expect to receive and the number of frauds that could be done in this case...:-) I also got my answer to the McAfee scandal too. Learnt about channel stuffing and how coca cola and Bauch and Lomb used it to inflate their revenues at financial period ends.

Stats results are expected sometime this week and I am keeping my fingers crossed. BTW, it was Vipul's birthday today. He is my study group mate. We went to dunk him at mid-night and took the much needed break from marketing assignment. Yesterday, we also had the CAS photo shoot, i.e. photos were taken for putting them into the student profile book. Here are some glimpses in the pictures attached.

Day 10 Frauds...

Today was the 10th Day of classes. And now theoratically, my 1st term is 50% over. Yahoo!!! More than the excitement is brings, the fear of mid-term is catching on. Just 2 more days to go now and so much to do...:-(

In the marketing class, I studied about the advertisements. How should the sellers sell to the consumers and different strategies they adopt. The prof mentioned that there is a whole course on advertising, so what we covered today was more like the tip of the ice-berg. With this Prof Samu's designated 5 classes are over and we bid him a farewell. From Thursday Prof Piyush Kumar will take the remaining 5 marketing classes.

The accounting class was fun as usual. We studied about the Stock Options and the Cash Flow statements. The prof mentioned that he had initially planned 20 minutes for Stock Options but taking cue from the previous classes, we spent about 1 hour on this topic. What was interesting was the recent stock options related frauds. Learnt about Spring Loading, Bullet Didging and Backdating methods of stock option frauds. I didn't understand these news with the Apple news as recent as 1 month old. Today, everything was clear. I also learnt about the interesting website about stock options expensing www.expensingisbadaccounting.com.

Tomorrow, a new day and two new profs. Stats will now be taken by Prof Waterman from Wharton (http://www-stat.wharton.upenn.edu/~waterman/homepage.html) and the Managerial Economics class will be taken by Prof Bruce Allen from Wharton (http://www.wharton.upenn.edu/faculty/allen.html)

Plan: Finish stats study for exam by Wednesday end of day. Thursday work on Economics. Forget preread for next two days.

Day 9 - Transience in life

Today the third week of classes started. Also 14th May is exactly one month after I landed in ISB. Though now it seems it's already a month passed out of 12 months course, but on a different note, it also seems that I have been at ISB since a loooooong time. For Statistics and Economics, these were last classes by Prof Bob Stine and Prof Amit Bubna. The classes for Stats are divided 5 each between Prof Stine and Prof Waterman, while Eco is divided between Prof Bubna and Prof Bruce Alen.

At end of the class, while it felt good that I was half way through in the 1st Term for these two subjects, the parting note from the profs didn't feel as good. It is strange how you develop a strong bonding with the things around you. I didn't talk to any of these profs at one to one level, still I was feeling bad that there would be no more association with them in term of classes. It also shows that transience of everything in life. Before starting it seemed a long one year of separation from family and job, while now it's already a month past, and we feel we are going through the teething at ISB.

Mid-Term exams are approaching. Friday is the D-Day. Classes until Thursday evening. This is so different from Engineering, where one day before exam I used to call up my mates and ask them about the syllabus, take a xerox of notes and stuff your mind. Next day puke everything in the exam, and net result, empty mind. No learning!! I was been studying quite regularly here and still I feel the void and the peer pressure. Everyone around seems to be working hard as well as having fun, while I seem to be doing neither. Hope things will change as time progresses and I get acclimatized in this environment.

Day 8 of classes followed by parties...

Day 8:

We had the marketing and the financial accounting classes today. In marketing, we studied about the branding. We had a product "Vacuum Cleaner - which does both wet and dry cleaning". We studied the class in this product's context. There was one section where we had to create a slogan to sell this brand...My group came up with "Dry or Wet - The best you can get." I liked this a lot. Another hilarious slogan shared in the class was "It sucks big time!".

The accouting class was very good as usual. We studied about a few financial ratios and about the income and cash statements. We are learning a lot about the accouting frauds in these classes. And today itself I read an article on rediff about an accounting scandal by McAfee and the article made sense. Earlier I would have just ignored this article.

Post classes, we had a section D party. The theme was Govinda-ala-re. It was fun. Met a few new people. Came back around 12 when the mass dunking in the pool started. Wasn't too keen on getting dunked.

On returning found another party happening in my SV. The speakers were placed right inftont on my window. So, couldn't sleep or study. We all 4 quadies talked until 2 AM. Then we hit the bed. I don't know when the music stopped.

Image is the group after the dunkings...(I am not there in the image, had left by then...)

Day 7 of classes...

We are into 2nd week in our 1st core term. Just to give you an update, we have 8 terms of 6 weeks each. First 4 terms are called core terms and the last four as elective terms. We have following four subjects in 1st core term:

1. Managerial Economics or MGEC
2. Statistical Methods for Management Decisions or SMMD
3. Marketing Management or MKTG
4. Financial Accounting in Decision Making or FADM

We have 2 classes of 2 hours each day for 4 days in a week. Which makes it 4 hours of classes each day, 1 class each for 2 subjects everyday. Friday, Saturday and Sunday are off days.

Today my section (there are 6 sections of 70 people) had classes for MGEC and SMMD. SMMD classes are taken by Prof Robert Stine from Wharton while MGEC is taken by Prof Amit Bubna from ISB. In SMMD I have had 4 classes including today's class. Before today we covered Statistics concepts like measures of central tendency and dispersion, probability, discrete probability distribution and continous probability distributions. Then we covered Hypothesis testing. Yesterday we studied correlation and applied the concepts to Portfolio construction. In today's class we took the concept further to find out the optimal portfolio provided the history data of stocks. We ended the class with understanding of financial/statistical terms like alpha, beta, R-squared and RMSD. These terms are also applied to Mutual Fund portfolios. Today finding out how these parameters are actually calculated and what insight it gives was very enligntening. In fact, I also learnt that most of the statistical research is done for Finance industry and the concepts that we learnt today actually fetched a Nobel prize 2 years back for an Economist (don't remember the name). I also got some clarity on how the Lippers and Morningstars of the world compute data.

Economics class we studied about the Demand-Supply and finding out the prices given the demand and supply elasticity.

Both the classes were quite informative. I think at this stage, the enthu level of students is coming down. There were lot less questions and students were less vocal.

My plan for today (and until the classes tomorrow which would start at 2:15 PM):

Options:
1. Pre-Read on tomorrow's marketing class.
2. Pre-Read and last week review on Accounting class.
3. Review today's statistics concepts.
4. Review today's economics concepts.
5. Solve economics sample problems.
6. Solve Statistics sample problems.

Decision:
1. Review today's statistics concepts and solve some sample problems (today)
2. Pre-read marketing class material.
3. Pre-Read accounting class material.

More as it happens.