This post is for all the finance graduates who are wondering about opportunities that are present for them in Indian IT industry. There is very less awareness about the roles for finance graduate in IT. It is common perception that only role available is that of business analyst who acts as domain expert for financial sector and plays key link between business and software engineers. This business analyst is expected to work from requirement gathering to testing. But this is just operational role from IT organization perspective. Of course then there are also roles which are present in any company irrespective of the industry like one of financial planning and budgeting etc. But other than these there are other exciting and upcoming areas which I guess should interest most of the finance guys and which are present in most of the companies which have attained certain IT maturity.I intend to just highlight this broad area in my post.
Assuming a finance graduate joins an investment bank/fund house; his success would depend on his ability to manage his portfolio of assets such that he provides higher returns to his clients. This requires skill-set that enables him to perform valuation of different available assets and which I believe is the one of the most difficult part of his job. So is there any opportunity for the such person in IT industry ? Is there anything which could be as challenging as this? And my answer is yes. In fact gravity of problem increases than in financial sector. There the aim is to do valuation of asset and manage portfolio of assets which are mostly tangible and quantifiable but in case of IT one must do valuation of services and manage portfolio of applications. This is certainly more difficult since its intangible. If asked to draw parallel with equity then imagine yourself trying to value equity offered by newly formed company in some very new industry with no existing comparables. Imagine if someone was asked to value google as company in say 1980’s. Yes now I guess one would understand the gravity of problem trying to value intangible service. So why is it required in IT to do valuation of services? Its answer is very simple: - for its existence. It is very common problem which many CFO and CEO face today. They unable to understand where does the money for IT go? And moreover what tangible benefits does IT provide to the company. If you put in more MBA terms how does IT help in increasing shareholders value? You may like stakeholder instead of shareholder then I am fine with it too!! The problem is more aggravated when IT is horizontal servicing different business units. No business units are able to determine financial gains from IT services and economic downturn like this certainly makes them prune their IT budgets. So it is required to determine value of the IT services. Now the next question is how. This is most difficult since there has not been any Damodaran born in the industry to help them. Though there are certain guidance provided by different governing body but literature and research is much sparse compared to one available with financial sector. So I think this is one of most challenging areas for finance guys with bit of IT knowledge and strong business fundamentals to look forward for in IT industry.
I hope I pointed to some new areas for most of you guys who are not well versed with this industry and an opportunity for 2010 graduates. I know it doesn’t look as sexy as working in investment bank but for someone like me who passed out in 2009 and was forced to join IT industry it looks really exciting. From the day I joined industry my aim was to leverage my finance knowledge and provide new perspective in IT and am atleast satisfied that in my 6-7 months I have been able to research and work on this area. This is how I have made my knowledge relevant to my company and “am trying to create value for shareholder/stakeholders and who knows I may be damodaran in making for this industry." :)
This post is also answer to lot of questions which my friends are trying to figure out like what am I doing in an IT company. In fact one of them was shocked to know that even after MBA Finance I have rejoined IT industry. He glanced at me with a look as if I was black sheep in finance community and must be stripped of my degree. For him it was demeaning of the esoteric financial knowledge by working in an IT company . I hope that this awareness will help me to salvage some pride in eyes of such guys.
Marketing lessons for political parties
This 13th October,2009 I performed the duty of responsible citizen of democratic India. I casted my vote for first time for Maharashtra state election after having missed it during last two occasions. Was I excited? Not sure about that but certainly wanted to feel the experience. So what did I discover? Nothing significant about elections but lot of lessons for political parties though. These are the various marketing lessons for them. I know I should not compare the business to election but still MBA cannot think anything other than that I guess. This post I would dedicate to my all marketing friends at B-school with whom I have fought relentless battles, that typical Finance Vs Marketing once.
Consumer behavior:-
I think political parties need to undertake this course for sure. They need to understand shelf space concept from HUL and P&G. Now what has it to do with elections? Let me explain. It is known fact that FMCG companies fight for the ideal shelf space in retail store to ensure that their products are sold more. Even in election the same principle applies. The person who is not sure about his vote would not go through entire list of 20-25 candidates. He tends to view the candidates from 3rd-4th to maybe say 9th-10th in the list. This set of candidates fall right under his eyesight by default. These candidates have more probability to being voted by undecided candidate. So I believe political parties must fight for the order of their candidate in the list.
Parties must also understand the simple concepts like person tends to favor the product whose advertisement he sees just at time of buying. It is very important marketing concepts and that is why one finds lot of advertisement by companies in shopping malls. So what should political do? They are not allowed to put posters in 100 mts or so near election center but they can cover entire area before that with their advertisements, billboards etc. I didn’t find it at all.
STP :-
I know our political parties have been very good at this. They have segmented people based on religion and have accordingly targeted them. But is this only segmentation possible? These segments were identified by British or maybe even before that. I think there is further scope to even segment each of the segments to yield better results. In fact past experience also confirms that. The success of Rahul Gandhi targeting youth in last Lok Sabha election, the success of BJP targeting middle and upper class in previous elections. In fact present demographic clearly indicates the age group 20-40 can clearly win election for any party. I believe marketers can really help in this pursuit.
Branding:-
Let us compare our election with American Presidential election and you would clearly note the difference in this aspect. Obama’s slogan “We can” and his brand was very strong which made Americans vote for him. Did we notice anything like that in this election? Certainly not. Parties still persisted with old icons and old slogans. They didn’t even package old stuff in new wrapper. At some places ‘gas’ really works.
Analytics :-
This has become integral part of marketing and political should fast catch up with this. There is some level of win-loss analysis being done but analytics would help to solve most of their problems. No efforts are being made in this direction.
I know this post would not go in national interest and I am not sure whether these suggestions are ethical to be implemented. Further they would not have any bearing if citizen has firm belief on particular candidate. But I believe there are good numbers of people who go to vote without being strongly aligned to any party and this suggestion can certainly influence them. I have identified need of marketers in political parties and it’s up to these marketing graduates who are searching for job to create demand for them in this altogether new industry.
This post is one more evidences about the way management studies have shaped my thinking. I could not have gained these insights without the help of the marketing courses undertaken by me during my course of study. The fact is that I am also shocked that pro-Finance guy like me also can write so much gas.
Consumer behavior:-
I think political parties need to undertake this course for sure. They need to understand shelf space concept from HUL and P&G. Now what has it to do with elections? Let me explain. It is known fact that FMCG companies fight for the ideal shelf space in retail store to ensure that their products are sold more. Even in election the same principle applies. The person who is not sure about his vote would not go through entire list of 20-25 candidates. He tends to view the candidates from 3rd-4th to maybe say 9th-10th in the list. This set of candidates fall right under his eyesight by default. These candidates have more probability to being voted by undecided candidate. So I believe political parties must fight for the order of their candidate in the list.
Parties must also understand the simple concepts like person tends to favor the product whose advertisement he sees just at time of buying. It is very important marketing concepts and that is why one finds lot of advertisement by companies in shopping malls. So what should political do? They are not allowed to put posters in 100 mts or so near election center but they can cover entire area before that with their advertisements, billboards etc. I didn’t find it at all.
STP :-
I know our political parties have been very good at this. They have segmented people based on religion and have accordingly targeted them. But is this only segmentation possible? These segments were identified by British or maybe even before that. I think there is further scope to even segment each of the segments to yield better results. In fact past experience also confirms that. The success of Rahul Gandhi targeting youth in last Lok Sabha election, the success of BJP targeting middle and upper class in previous elections. In fact present demographic clearly indicates the age group 20-40 can clearly win election for any party. I believe marketers can really help in this pursuit.
Branding:-
Let us compare our election with American Presidential election and you would clearly note the difference in this aspect. Obama’s slogan “We can” and his brand was very strong which made Americans vote for him. Did we notice anything like that in this election? Certainly not. Parties still persisted with old icons and old slogans. They didn’t even package old stuff in new wrapper. At some places ‘gas’ really works.
Analytics :-
This has become integral part of marketing and political should fast catch up with this. There is some level of win-loss analysis being done but analytics would help to solve most of their problems. No efforts are being made in this direction.
I know this post would not go in national interest and I am not sure whether these suggestions are ethical to be implemented. Further they would not have any bearing if citizen has firm belief on particular candidate. But I believe there are good numbers of people who go to vote without being strongly aligned to any party and this suggestion can certainly influence them. I have identified need of marketers in political parties and it’s up to these marketing graduates who are searching for job to create demand for them in this altogether new industry.
This post is one more evidences about the way management studies have shaped my thinking. I could not have gained these insights without the help of the marketing courses undertaken by me during my course of study. The fact is that I am also shocked that pro-Finance guy like me also can write so much gas.
Is the Crisis finally over???
One more blog post on crises trying to answer same question which every newspaper writes about or every economy guru debates or discusses on various channels on television. So it’s obvious for you guys to believe that this blog would be nothing but copy pasted material from different sources on web. What else can fresh management graduate do other than, the very skill acquired (CTRL-C & CTRL –V) and now being groomed by corporate world? I believe it would have been same if it had no impact on my career but like other 2009 graduates my career has been one of biggest casualty of the crisis and so I do have fair amount of opinion at least on this topic. But at same time I can obviously not resist temptation of copying so like Mba assignments sources would be quoted.
‘Big Banks cannot fail’- It is believed by lot of people the part of the financial crisis was due to this assumption. But the crisis has proved this assumption to be wrong. It has also proved that if such banks fail it could lead to system failure. So what has action has been taken? No banks are allowed to act as investment banker like before on Wall Street. So did it have any impact? Have we ensured that we don’t create such huge banks whose greed can affect entire world? I have attached image below and it’s up to you to see and come to your own conclusion
.
We have ended up with bigger and fewer banks. Some would say that it was survival of fittest and the better players have survived and it’s good for everyone. But it concerns me even more. Just imagine impact of these even more larger banks failing in future years. Any lack of prudence and responsibility by these banks can lead to even bigger crisis and I doubt world would be able tackle the same.
Liquidity game – Let’s go back to history and understand the lessons from previous crises. The end of Great Depression had seen lot of tough policy changes, socio-economic changes etc. but do we see such drastic changes today? I really doubt. It was dotcom burst at start of 2000-2001 which had created huge recession scare. So how was that avoided? By increasing liquidity in markets, pushing federal rates close to 0%. But did it achieve its purpose? Yes and No. In short term it avoided recession but in long term it led to this housing bubble. So what have we done this time? Nothing different the same policy has been followed by all the central banks across the world. The interest rates brought to lowest level, huge borrowing was allowed for banks and bad loans were restructured for longer duration to ease liquidity pressure and avoid bankruptcy. I believe there was no other option to stop the “run on the banks”. So if I use same deduction reasoning then would I be wrong to believe that the recovery is nothing but temporary bubble or perception due to excessive liquidity in the markets?
US-China duopoly - Isn’t this crisis an indication that correction is required here? In any markets, fundamental theory believes that asset attains its true value then for how long do we have to wait for correction for US economy which has huge fiscal deficit and China which has huge surplus. Both of them have avoided this correction for too long I believe. China is throwing its huge surplus in its local markets to fuel consumerism and get rid of this huge surplus. But this can lead to nothing but one more local bubble. Won’t we have to face similar financial crisis when this correction occurs? Everyone believes world economic order is set to change but it’s time we are trying to buy with this temporary recovery. Maybe to be ready to handle the bigger crisis better!! I still haven’t considered the demographic factors like ageing population and its distribution across the world. It looks scary. Just go through recent Mckinsey report which indicated the year when China’s population would be aged and their conclusions.
I do believe this crisis hasn’t changed the world much. Our inertia to avoid changes and inclination for short term gains or maybe our short sightedness has led to same state as we were before the crisis. When markets plummeted people believed it was correction and now again we are reaching sky crappers so was that correction not correct? No one in the world is isolated in this globalised economy so there can be no India story without considering these macroeconomic factors. So guys pour in your comments on this pessimistic blog of mine. I would be more than happy to be proved wrong though.
‘Big Banks cannot fail’- It is believed by lot of people the part of the financial crisis was due to this assumption. But the crisis has proved this assumption to be wrong. It has also proved that if such banks fail it could lead to system failure. So what has action has been taken? No banks are allowed to act as investment banker like before on Wall Street. So did it have any impact? Have we ensured that we don’t create such huge banks whose greed can affect entire world? I have attached image below and it’s up to you to see and come to your own conclusion
.
We have ended up with bigger and fewer banks. Some would say that it was survival of fittest and the better players have survived and it’s good for everyone. But it concerns me even more. Just imagine impact of these even more larger banks failing in future years. Any lack of prudence and responsibility by these banks can lead to even bigger crisis and I doubt world would be able tackle the same.
Liquidity game – Let’s go back to history and understand the lessons from previous crises. The end of Great Depression had seen lot of tough policy changes, socio-economic changes etc. but do we see such drastic changes today? I really doubt. It was dotcom burst at start of 2000-2001 which had created huge recession scare. So how was that avoided? By increasing liquidity in markets, pushing federal rates close to 0%. But did it achieve its purpose? Yes and No. In short term it avoided recession but in long term it led to this housing bubble. So what have we done this time? Nothing different the same policy has been followed by all the central banks across the world. The interest rates brought to lowest level, huge borrowing was allowed for banks and bad loans were restructured for longer duration to ease liquidity pressure and avoid bankruptcy. I believe there was no other option to stop the “run on the banks”. So if I use same deduction reasoning then would I be wrong to believe that the recovery is nothing but temporary bubble or perception due to excessive liquidity in the markets?
US-China duopoly - Isn’t this crisis an indication that correction is required here? In any markets, fundamental theory believes that asset attains its true value then for how long do we have to wait for correction for US economy which has huge fiscal deficit and China which has huge surplus. Both of them have avoided this correction for too long I believe. China is throwing its huge surplus in its local markets to fuel consumerism and get rid of this huge surplus. But this can lead to nothing but one more local bubble. Won’t we have to face similar financial crisis when this correction occurs? Everyone believes world economic order is set to change but it’s time we are trying to buy with this temporary recovery. Maybe to be ready to handle the bigger crisis better!! I still haven’t considered the demographic factors like ageing population and its distribution across the world. It looks scary. Just go through recent Mckinsey report which indicated the year when China’s population would be aged and their conclusions.
I do believe this crisis hasn’t changed the world much. Our inertia to avoid changes and inclination for short term gains or maybe our short sightedness has led to same state as we were before the crisis. When markets plummeted people believed it was correction and now again we are reaching sky crappers so was that correction not correct? No one in the world is isolated in this globalised economy so there can be no India story without considering these macroeconomic factors. So guys pour in your comments on this pessimistic blog of mine. I would be more than happy to be proved wrong though.
