E-Commerce Emergence in APAC

Let me starts with a big picture – Few days ago Flipkart (India #1 online e-commerce site) announced a $1 billion fundraising and incidentally Amazon announced additional $2 billion investment into its India expansion which suggests something brewing in the India market with a growth potential similar to China, where consumers spent almost $300 billion online last year and India where consumers are widely accepting the entire ecommerce way of life. Further, the two emerging markets both have massive populations of over one billion, buoyed by a rising middle class, rapid GDP growth and challenging infrastructure. India's internet retailing sector grew 20 percent last year by value, according to Euromonitor International. Not only that the new wave of online ecommerce companies are targeting shoes, mobile, tickets, but it has also started to revolutionize the education sector in India with India’s leading e-commerce companies such as Flipkart.com, Snapdeal.com and Groupon.co.in are offering online courses and coaching materials, and are even facilitating long duration certificate or business education degrees. Even an interesting concept like Aaramshop that allows your trusted neighborhood retailers to serve their community consumers through their customized web/mobile fronts - https://www.aaramshop.com/.

Now, let me also give you an interesting figure of smart phone sales and internet penetration in APAC.  The reason of sharing the below is to suggest the potential of all these consumer who are foraying into the world of smartphone, which will allow of a percentage of it to move into exploring the world of internet and subsequently buying things online. And I am not talking years here…The tectonic shift is happening at a much faster pace. This not only suggests that consumer are embracing “onlinility or being online” but equally transacting online.   One estimate suggests that Asia-Pacific consumers will account for more than 45% of digital buyers this year and it will expected to grow by 23%.  The mentioned figures certainly endorse my argument that rise of smartphone penetration will also contribute to this retail shift. What’s more, by lowering barriers to entry and removing the need for a physical presence in remote or underdeveloped areas, online retailing will give the traditional retailers the opportunity to expand more rapidly, especially in tier 2 or 3 cities; which historically has been challenging to serve. A recent such example of Xiaomi Mobile Launch in India through flipkart and they claim that the nearly 70% of their first batch order came from tier 2/3 cities which has never been the case in mobile history of India.

  On global perspective eMarketer projections suggest that B2C e-commerce sales will grow by more than 20 percent this year to reach US$1.5 trillion, and surpass US$2.3 trillion by 2017. Forrester Research projections indicate this growth will be partly driven by five of the largest online retail markets in the Asia-Pacific region – China, Japan, South Korea, India, and Australia – which will see e-commerce sales rise from US$398 billion in 2013 to US$858 billion in 2018 at a compound annual growth rate of more than 16 percent. The below chart articulates the share growth potential which is expected in APAC.

Now even if I take the consumer expenditure and disposable income OR age demographics into consideration (as below) , it’s all suggesting one growth direction – up north

Being an Indian and have worked in APAC for man years, I certainly believe in the immense potential that the APAC market has to offer.

With all the above data I am just trying to allude to one fact that I got multiple endorsements in my recent APAC trip when I met many retails and merchants who wants an easy and relative cheap solution to sell their good(s) to a wider audience including serving tier 2 or 3 markets by jumping on the e-commerce bandwagon but don’t know where to buy the ticket or get started with. This forced me to pen this post. I would certainly encourage e-commerce vendors to look it into the opportunity that market has to offer. While, I have more proof points, however I will hold on to that for a later post.

How well is the Indian economy picking up?

Till a while back, a lot of uncertainty surrounded the rebound of the Indian economy. The June quarter saw a growth of 8.8% due to increase in private demands and investment demands. This rate of growth in expected to last the coming months. The fact that real estate rates are picking up and the car market is regaining momentum reflect this growth rate.

There are two factors that support this assumption. First, that the employment market picking up. Recruitment firm Manpower conducted an Employment Outlook Survey recently according to which the next three months would see robust hiring in India. The public administration, education and services sectors are likely to see the highest rates of hiring. The second is the huge FII inflows that India has been witnessing recently. The Indian Sensex is likely to reach the 20000 mark thanks to the large chunks of cash expected to come in. Overseas investors are showing tremendous interest in India and they would be interested in picking up local stocks.

The flipside is that a number of analysts still believe that India is not there yet when it comes to economic growth. This is primarily because India gets a huge chunk of its business from the US, UK and Japan, which are still reeling under the economic downturn. Equity analysts in particular believe that stocks are overvalued and we must expect a correction sooner or later.

Where the US, UK and Japan are still struggling to bring down unemployment levels, the next three months are likely to see heavy hiring in India. The International Monetary Fund director Dominique Strauss -Kahn has said that for the economic crisis to end, unemployment has to go down.

The challenge will be to see if India is able to maintain this growth despite the recession that the rest of the world is yet to recover from. Countries such as China and Taiwan have witnessed growth along with India. They have an advantage compared to India because of the outsourcing services that Indian economy is heavily reliant upon. The good part is that the Indian economy is growing out of outsourcing. The number of entrepreneurs is picking up and the manufacturing sector has seen a double digit growth.

Certainly, India is going to witness an upturn. And it is going to last. How far it will take the growth story is what we’ll wait and see.

Outsourcing to India: 1998 Vs. 2008

It is a fact that the business strategies change with time. Same is the case with business tools such as offshoring. The reasons that lured the early movers to India has changed drastically. And if you still want to offshore to India for the same reasons why some of your peers did in 1998, do that at your own risk.

Though there is no single event that one can point to which can be called the beginning of BPO offshoring to India, it is in the second half of 1998 that many of the entrepreneurial start-ups in BPO were planned. Many of them actually were incorporated, and became operational in the next year, though. For that reason, many point to 1999 as the year in which India’s offshore BPO industry started. To that extent, we can say that we are entering the 10th year of the BPO revolution in India.

As someone who has followed it keenly for all these years, I thought it would be appropriate for me to look at what has changed in these 10 years. And not surprisingly, most of the factors have changed — some for better, some for worse, some we don’t know at this point of time whether better or worse. Here is a list of five such tangible changes that I believe in.

Cost as the No. 1 reason to people as the main reason: Cost efficiency is a major factor behind any business strategy in a mature market; so is it in outsourcing. However, unlike in 1998, when offshoring was a newly discovered goldmine, is now more mature. While some have discovered that a comparison like that may not be the best way to measure cost saving, after burning their fingers; some successful early movers have realized that they can do in India much more than what they initially thought they could do, thanks to the available talent. So, many of them have grown by not just doing more of the same, but a lot more new things.

The cost equation has changed: In 1998, telecom was a good 20 to 25 percent of total cost. In 2008, telecom tariffs have become less than one-tenth in India, leading to a much smaller amount of operating cost going to telecom. Thanks to the infamous wage inflation, people costs have gone up drastically, with senior managers in Indian offshore BPOs earning almost same as their counterparts in the U.S. and the U.K., though the purchasing power of that money is very different in India.

It has become a sellers’ market: In 1999 to 2000, if someone wanted to outsource some customer-service work for 200 people, almost all Indian BPO firms existing at that time would do anything to get that deal. Today, even the smaller firms will not bother, let alone the large and medium companies. Not just because they have plenty of business coming in, but also because getting people for such jobs with high attrition is not worth the effort for many.

Finding people is not easy: In the good old days of 1998 to 2002, BPO (then call center) jobs were the craze for the youth of India, with even students with best academic records opting for them. Today, it is tough finding people, even if you pay well. The reason: Indian economy is booming with lots of opportunities in the domestic business, that are more challenging and satisfying. In the offshoring area itself, a lot of high-value jobs, often called knowledge-process outsourcing, have been created, attracting better people. So, do not expect to see a long queue if you carry a two column ad in The Times of India.

India is no more Delhi, Mumbai and Bangalore: In the early years of offshore BPO, you did not know any location other than Delhi, Mumbai and Bangalore. You did not need to know. Today, if you are not evaluating Kochi, Indore or Bhubaneswar — even if you are looking at Hyderabad, Chennai and Pune — it is time to raise serious questions about your offshore consultant.
There is one underlying reason behind all these changes, except possibly better and lower cost telecom. That is: Unlike in 1998, in 2008 India is not just a delivery location. It is where the future of outsourcing gets decided. It is No. 1 for any outsourcing. That sounds arrogant. Truth sometimes is.

Courtesy - Shyamanuja Das, Global Services Media

It’s just a wake up call for the IT industry

It would be pessimist and unfair to assume that we could no longer be the greatest providers of outsourced software services for the world. The industry simply needs to evolve to grow into a bigger industry with larger targets. At the same time, the country needs to prepare as a whole to provide an appreciable environment to overseas customers.

The country is fretting over what seems to be a not-so-bright-future for the Indian IT industry. For those making the bucks, India’s fairytale story can’t seem to go bust so soon. And it might not. Yes, the IT industry is being met with serious challenges that it needs to address immediately. But the good news is there is still a chance and all we need is to prepare for the future.

On the surface, there seems to be a downturn in India’s bright and booming IT industry. To start with, there is the fluctuating rupee against the Dollar. Some time back the Indian rupee has strengthened 15% against the Dollar the last one year. But America being the primary provider of outsourced business to India’s IT companies, their dipping economy fares trouble for companies here.

Another twist to this tale is the reduced spending on IT services by American companies as their economy slows down. Not only has this caused a drop in the rate of salary hikes and hiring, American firms are also passing on and creating lesser work for Indian’s IT companies. As the bulk of work lessens, India being the largest provider of low-cost outsourced services, the impact is reflected surely and poorly.

Fortunately, this is not the end of the story. So far, Indian companies have been providing peripheral work to foreign firms. But times are a changing and any IT firm that wants to keep evolving at the same rate will have to grow to be able to provide higher margin work like consulting.

As Infosys Chief Mentor and Non-Executive Chairman Narayan Murthy has constantly pointed out, another bottleneck the Indian IT space faces is India’s clogged infrastructure. Any foreigner, who steps down at the Indira Gandhi International Airport in Delhi or the Bengaluru International Airport for the first time, will not get the best first impression. For a country that opened its doors for other countries almost a decade back, there is poor development.

Our airports need serious makeovers. Let’s hope the new ones will provide the extraordinary experience that a visitor deserves. If you walk down the road from Bangalore’s airport to the city’s best-known hotel Leela, the traffic and pollution are stifling. Similarly, if you land at Delhi or Mumbai’s international airports, there is nothing welcoming about them yet. The efforts are on, but it needs speed and urgency. Or we are bound to lose work to competitors like China, eastern Europe and Russia, who not only provide low-cost services but also better propriety.

Competitors are another major threat to Indian’s IT industry. While the industry might not be as organized in countries like Russia and China, they are on their way. And they are also producing quality engineers, comparable to India. Even countries in central Europe are not very far from achieving what we have been bloating over.

India needs to stabilize the way IT firms are working. The talent is there but we still fall short of the demand. If we want to continue supplying work to firms abroad, we need sufficient talent within the nation to meet the demand. Engineers don’t simply need to provide outsourced services that mainly involve testing services. If the industry wants to survive, it will need to train professionals to do substantial tasks that will help firms move up the value chain.

Even companies that are outsourcing work to us now want to pass on more evolved work to India. Besides, the kind of outsourcing services we are providing right now might become redundant very soon. They will soon be automated and we will be forced to take on other work. We need to prepare our systems and professionals for a future that involves different work like developing systems and solutions for foreign clients. Companies like TCS and Infosys have taken the clue and are already undertaking work that will help them grow from a service provider to a policy enhancer.

At the same time, despite what the scenario looks like, salaries are being hiked at tremendous rates. Salaries of those higher up in the ranks is soon likely to match of those in the United States. This is not a positive sign for the low-wage advantage that we currently offer.

With annual growth rates of nearly 30% in the past ten years, Indian IT industry has been resting in peace. We have provided a bulk of talent and spearheaded some of the greatest software development any country has provided. But it’s time to gear up. If we don’t change, and fast, we could very well be headed for a fall.

Offshoring: Today and Tomorrow

Plenty has changed in the field of offshore outsourcing, and plenty of change lies ahead. The following are some of the more noticeable developments fueling the global practice's new phase.

During the 2004 U.S. presidential elections, offshore outsourcing was a hotly contested issue. The 2008 election? Not so much. Offshoring doesn't seem to have made the shortlist of points being debated by would-be leaders this year.

What happened?

For one thing, even conservative companies now are willing to experiment with going offshore to gain a competitive edge. It may simply be a sign of how deeply ingrained the concept of globalization has become in the fabric of today’s business.

Plenty has changed in the field of offshore outsourcing, which has evolved from a little-used practice to a mature industry in less than a decade. And plenty of change lies ahead.

Here are some noticeable key developments in the global practice of offshoring.

Use of Collaborative Tools
Greater communication capability via the Internet was the initial driver of the offshoring trend, according to the Forrester report. As the use of collaborative tools is burgeoning, Web chatting, Lotus Notes, virtual-whiteboard interaction between client organizations and suppliers all are aiding new collaboration in automation and technology. With such remote networking techniques now coming into play, according to CFO.com, “there is a movement away from manual and travel-intensive processes.”

Risky Business
More companies are relying on offshore entities for core business processes. Regulatory developments have increased exposure to liability for malfeasance or misfeasance. Piracy, security breaches and theft of information can erode brand value, intellectual property and other intangible assets. A volatile political environment or infrastructure limitations in some popular offshore locations can preclude effective and efficient operations. Outsourcing relationships often morph into de facto partnerships, albeit without the analysis, reporting, visibility and control that typically characterize true partnerships. All of these, according to Deloitte, have increased outsourcing and offshoring risks.

India Remains No. 1
India continues to lead the way as an offshore destination, ranking at the top of A.T. Kearney’s 2007 Global Services Location Index and claiming an estimated 11.5 percent share of the global market, according to estimates from research firm XMG. India’s advantages remain its talent pool, English-speaking population and government support.

However, its usually low cost of doing business is getting unusually high, which is leading India to lose its lure for many...

India’s Appeal Fading
The reason U.S. companies went to India in the first place was to save money. Over the past year, though, the value of the dollar dropped notably in relation to the Indian rupee. As that has happened, some offshore providers have felt compelled to raise prices, which negates the cost savings U.S. companies expect when offshoring work to India. Significant wage increases in India have further shaved the cost advantage.

Not long ago, Apple Inc. withdrew its plans to build a captive center in India that was expected to employ 3,000 workers. While Apple did not publicly discuss its reasons for the decision, BusinessWeek reported it was likely cost-driven, with wages for software engineers and IT managers soaring. Other factors may have included India’s high rate of turnover and competition for quality employees, according to Business Facilities. Whereas India used to be seen as the perfect offshore research and development hub, engineers trained in basic research are harder to find, says R&D consulting firm Zinnov (via IndustryWeek).

Onshore and Nearshore: U.S.
In 2007, Wipro Technologies, India’s third-largest outsourcer, set up its first U.S. — or onshore — development center in Atlanta, Ga., where it will work with the University System of Georgia to educate and train nearly 500 employees. The Banglalore-based firm also established a near-shore location in Monterrey, Mexico. Mumbai-based Hexaware has also selected Mexico for a nearshore location. Among the drivers for locating facilities closer to U.S. borders is a more mature client base looking for alternatives to India and hoping to invest in outsourcing contracts in locations with a greater cultural affinity with the U.S., according to CIO Today.

The nearshoring trend is not unique to the U.S. Indian service providers are also looking to establish centers in Eastern Europe, which could provide the cost benefits, as well as overcome language barriers, for customers in the United Kingdom, France, Germany and other European countries because of cultural and geographical proximity.

Blended Contracts
The creation of outsourcing facilities closer to home does not mean U.S. companies will stop sending work overseas to India. “More likely,” says CIO Today, “U.S. clients will engage in blended contracts in which the customer-facing processes or services are outsourced to a nearshore location while back-office functions continue to be sent to India.”

Atlanta-based Xpanxion, a global software engineering company and an early adopter of combining U.S. and Indian centers for outsourcing operations, moved its software testing and quality assurance operations from India to Nebraska in 2006. “The company, which still maintains some operations in Pune [India], refers to its business model as ‘cross-sourcing,’ a combination of offshore, onshore and local outsourcing,” reports Business Facilities. The company believes that having multiple geographic locations reduces risks and gives clients more cost-efficient services and better support.

Nipping at India’s Heals
Indeed, geographies are changing as the space matures. Behind India in the offshoring race is China, with an estimated $13.1 billion in offshoring revenue at year-end 2007, according to XMG. There’s also new interest in Latin America, specifically Mexico, Brazil and Argentina, which are seeing an inflow of invoice processing, travel-and-entertainment expense processing and accounts-receivable work, notes CFO.com. Russia and eastern European countries are increasingly providing credible alternatives, too, according to recent research from Gartner Inc. (via Business Line).

More offshore work will likely go to Latin America, China, Eastern Europe and other low-cost locations as India struggles to deal with its rising costs and tightening talent pool. Offshoring experts have also recently cited Africa and the Middle East as up-and-coming hot spots, although those regions — like Latin America — still have outsourcing-related issues to work out before they trump the juggernaut that is India.

For A.T. Kearney’s list of the top 50 locations, see its 2007 Global Services Location Index.

Copyright Thomas Publishing Company LLC, David R. Butcher

Retailers, get ready for the magic of CRM

International giants entering India in a big way was an impending trend only waiting to happen. If you haven’t prepared for the tussle yet, this is your chance. Indian retailers are set to impress customers and increase their bottom-line with the aid of the right CRM

By Shiraz Datta

It’s ironic that while the retail sector in India is estimated at US$350 billion, organised retail is estimated barely at US$8 billion. The upside is the expected growth rate. By 2010, organised retail is expected to grow up to US$22 billion, an estimated 40 percent compounded annual growth of return over the next few years.

Numerous international retail giants from Australia, the United Kingdom and the United States are entering the Indian market with enormous hope and investments. Retailers in India so far only prefer to increase the number of outlets within a city or to other regions as a part of their expansion drive. But they will now need to fight the burgeoning retail space with many new shopping centres and growing new markets like the kids’ retail revolution in apparel. To manage the tremendous volume of transactions and to beat international competition, Indian retailers have an immediate need for Customer Relationship Management (CRM) tools.

CRM will happen. It’s simply a question of how long it will take and in how many ways retailers will benefit. Customer Relationship Management is important, especially for your repeat customers and for them to feel camaraderie with the retailer. A good CRM will provide the right framework to retailers so that they can personalize merchandise purchases, services and responses across all communication channels for the customer’s satisfaction and for increased sales.

Low cost, high value

But before retailers embark on any CRM software, they need to ensure it comes at optimal cost, with minimal risk, high value, and a higher return on investment (ROI). It should install quickly, interface readily with existing systems, be easy to learn and to use, and deliver uncompromising performance.

Driven by changing lifestyles, strong income growth and favourable demographic patterns, the Indian retail market is growing at compounded annual rate of five percent and expected revenues of US$320 billion in 2007, according to a report by AT Kearney and the Confederation of Indian Industry. And big international and domestic retailers have realized this growth.

To sustain competition from the giants, Indian retailers must differentiate or brand their business. Customers expect retailers to do this is by personalizing products and services. And this is where a rightly implemented CRM comes into play.

Growing Communication Channels

India has more than 129 million mobile communication subscribers and the number is expected to go up to 300 million in 2008. This is a strong marketing channel retailers cannot afford to miss. “Truly loyal customers can’t imagine doing business with anyone else. They are your best means of advertising because they’ve become advocates for your company. They bore their friends with stories of how great you are,” write Shaun Smith and Joe Wheeler, authors of Managing the Customer Experience.

To implement the right CRM, retailers need to analyze customer preferences and trends, and then merge analysis with inbound and outbound calling via CRM technology so that customers can communicate with the retail chain by fax, phone, web, SMS and the like. The CRM framework links and integrates these channels to individualize the customer’s experience and ensure satisfaction.

Similarly, competition must be kept under a check. If a retailer offers volume discounts, its competitors must likewise offer comparable value to the customers. If a retailer has tools to reach more customers with personalized purchase offers, or to process orders faster, or with fewer errors, or more efficiently, other vendors must adapt or gradually surrender market share.

But unfortunately, only 30 percent of companies worldwide have actually implemented a commercial CRM software package. And most of these are only a year old. Of this minority, 54 percent have implemented just one part of CRM. With so much room for improvement in meeting customer demands, CRM can only help.

Contact centres form an integral part of CRM because they directly impact how customers feel about the retailer’s products, services and business. With an efficient system at the contact centre, retailers can help customers buy what they want and need. For instance, retailers are yet to utilize the opportunity of selling daily needs to a population that is using the latest technology to purchase almost everything.

If you are looking at moving to customer-centric marketing, this means that all customer functions are subject to CRM’s analytical processes. This helps retailers understand both how the customer base is presently segmented and, for the future, according to what retailing values. Other analyses identify new services, evaluate their ROI, shift focus from less to more profitable customers, etc. The outcome from CRM analytics is better service, improved planning and profitability, and more appropriate pricing.

Customer Analysis

CRM analysis can help retailers make a smooth shift to a customer-focused enterprise by allowing processes like differentiating customers into segments, discovering precise needs of customers and redesigning compensation and rewards to effect behavioural changes. This process establishes the context that stimulates the customer to shop and buy. Hardcore marketers make their own analytical understandings with the help of a CRM to evaluate what their customers need.

Improved Sales

Better services imply the customer’s improved ability to make purchases. They will make informed decisions and be happy with their purchase. Such efficient shopping will only mean a patronizing customer. For the retailers, this means higher transaction rate, increased revenues, and a wider profit margin.

Smart retailers are looking up new and critical CRM tools like the unified agent desktop that allows customer service agents to respond faster and with greater accuracy and consistency every time a customer picks up the phone, accesses e-mails or chats. The unified agent desktop brings the customer into focus at the desktop and turns the agent’s screen into a hub that can access all enterprise applications and databases necessary to respond rapidly to the customer.

The result is increased quality and decreased operating costs, leading to one of the most handsome ROIs in the industry. It also eliminates data redundancy like repeating customers with the same requests or relying on agents to recall the correct systems to enter a new customer record or service request.

Questions to ask about any CRM Framework:

• Does it allow the supervisor or manager to access and process analytical data online? Preferably through a web portal?
• Does it use just one screen to manage all customer channels – e-mail, voice, chat, fax, web self service – so that agents stay productive and don’t get lost in the transaction?
• Does it offer a universal view of your retail CRM data on a single screen – contact information, history of recent activity, knowledge base, workflow interaction, resource management?
• Does it make efficient use of your and the customer’s time by minimizing clicks so that managers and agents don’t have to toggle to other screens or other applications while the customer waits impatiently?

IDC: India, China to drive IT spend

IT spending in India is set to grow the fastest in the world in 2008, says global research firm IDC. And as the information & communications technology market in Asia-Pacific reaches $154 billion in 2008, it says India and China will contribute half the total IT spend by next year.

The Asia-Pacific region (excluding Japan) is likely to register a growth rate of 10% in 2008 over 2007, and India and China will be the drivers of this growth, as their GDPs are forecasted to expand by between 9% and 10% during the year.

In both the countries, growth will be led by small & medium businesses, which are increasingly adopting more IT solutions as a strategic business differentiator. Moreover, government spending is increasing as they deploy technologies to bridge the digital divide.

IDC also predicts the combined IT spending in Asean will exceed that of India, and become an important market for future investment. For emerging South Asian markets such as Bangladesh, Pakistan and Sri Lanka, the year looks promising despite political risks as governments seek to improve the business environment and attract foreign investment.

The future looks bright for the India BPO sector, too, because despite countries like China, Russia and Brazil providing credible alternatives, India remains the undisputed leader in offshore services, according to Gartner.

Sam Chopra, president, Business Process Industry Association of India, says the US subprime lending crisis will increase outsourcing to BPOs in India. “Anything which is price-sensitive has to be outsourced. In 2008, the supply of business to Indian BPOs is only going to increase, as it may not be economically viable for companies in the US to run call centres.”

Source - Vrishti Beniwal, Financial Express

Retailers, get ready for the magic of CRM

“International giants entering India in a big way was an impending trend only waiting to happen. If you haven’t prepared for the tussle yet, this is your chance. Indian retailers are set to impress customers and increase their bottom-line with the aid of the right CRM”

By Shiraz Datta

It’s ironic that while the retail sector in India is estimated at US$350 billion, organised retail is estimated barely at US$8 billion. The upside is the expected growth rate. By 2010, organised retail is expected to grow up to US$22 billion, an estimated 40 percent compounded annual growth of return over the next few years.

Numerous international retail giants from Australia, the United Kingdom and the United States are entering the Indian market with enormous hope and investments. Retailers in India so far only prefer to increase the number of outlets within a city or to other regions as a part of their expansion drive. But they will now need to fight the burgeoning retail space with many new shopping centres and growing new markets like the kids’ retail revolution in apparel. To manage the tremendous volume of transactions and to beat international competition, Indian retailers have an immediate need for Customer Relationship Management (CRM) tools.

CRM will happen. It’s simply a question of how long it will take and in how many ways retailers will benefit. Customer Relationship Management is important, especially for your repeat customers and for them to feel camaraderie with the retailer. A good CRM will provide the right framework to retailers so that they can personalize merchandise purchases, services and responses across all communication channels for the customer’s satisfaction and for increased sales.

Low cost, high value

But before retailers embark on any CRM software, they need to ensure it comes at optimal cost, with minimal risk, high value, and a higher return on investment (ROI). It should install quickly, interface readily with existing systems, be easy to learn and to use, and deliver uncompromising performance.

Driven by changing lifestyles, strong income growth and favourable demographic patterns, the Indian retail market is growing at compounded annual rate of five percent and expected revenues of US$320 billion in 2007, according to a report by AT Kearney and the Confederation of Indian Industry. And big international and domestic retailers have realized this growth.

To sustain competition from the giants, Indian retailers must differentiate or brand their business. Customers expect retailers to do this is by personalizing products and services. And this is where a rightly implemented CRM comes into play.

Growing Communication Channels

India has more than 129 million mobile communication subscribers and the number is expected to go up to 300 million in 2008. This is a strong marketing channel retailers cannot afford to miss. “Truly loyal customers can’t imagine doing business with anyone else. They are your best means of advertising because they’ve become advocates for your company. They bore their friends with stories of how great you are,” write Shaun Smith and Joe Wheeler, authors of Managing the Customer Experience.

To implement the right CRM, retailers need to analyze customer preferences and trends, and then merge analysis with inbound and outbound calling via CRM technology so that customers can communicate with the retail chain by fax, phone, web, SMS and the like. The CRM framework links and integrates these channels to individualize the customer’s experience and ensure satisfaction.

Similarly, competition must be kept under a check. If a retailer offers volume discounts, its competitors must likewise offer comparable value to the customers. If a retailer has tools to reach more customers with personalized purchase offers, or to process orders faster, or with fewer errors, or more efficiently, other vendors must adapt or gradually surrender market share.

But unfortunately, only 30 percent of companies worldwide have actually implemented a commercial CRM software package. And most of these are only a year old. Of this minority, 54 percent have implemented just one part of CRM. With so much room for improvement in meeting customer demands, CRM can only help.

Contact centres form an integral part of CRM because they directly impact how customers feel about the retailer’s products, services and business. With an efficient system at the contact centre, retailers can help customers buy what they want and need. For instance, retailers are yet to utilize the opportunity of selling daily needs to a population that is using the latest technology to purchase almost everything.

If you are looking at moving to customer-centric marketing, this means that all customer functions are subject to CRM’s analytical processes. This helps retailers understand both how the customer base is presently segmented and, for the future, according to what retailing values. Other analyses identify new services, evaluate their ROI, shift focus from less to more profitable customers, etc. The outcome from CRM analytics is better service, improved planning and profitability, and more appropriate pricing.

Customer Analysis

CRM analysis can help retailers make a smooth shift to a customer-focused enterprise by allowing processes like differentiating customers into segments, discovering precise needs of customers and redesigning compensation and rewards to effect behavioural changes. This process establishes the context that stimulates the customer to shop and buy. Hardcore marketers make their own analytical understandings with the help of a CRM to evaluate what their customers need.

Improved Sales

Better services imply the customer’s improved ability to make purchases. They will make informed decisions and be happy with their purchase. Such efficient shopping will only mean a patronizing customer. For the retailers, this means higher transaction rate, increased revenues, and a wider profit margin.

Smart retailers are looking up new and critical CRM tools like the unified agent desktop that allows customer service agents to respond faster and with greater accuracy and consistency every time a customer picks up the phone, accesses e-mails or chats. The unified agent desktop brings the customer into focus at the desktop and turns the agent’s screen into a hub that can access all enterprise applications and databases necessary to respond rapidly to the customer.

The result is increased quality and decreased operating costs, leading to one of the most handsome ROIs in the industry. It also eliminates data redundancy like repeating customers with the same requests or relying on agents to recall the correct systems to enter a new customer record or service request.

Questions to ask about any CRM Framework:-

• Does it allow the supervisor or manager to access and process analytical data online? Preferably through a web portal?
• Does it use just one screen to manage all customer channels – e-mail, voice, chat, fax, web self service – so that agents stay productive and don’t get lost in the transaction?
• Does it offer a universal view of your retail CRM data on a single screen – contact information, history of recent activity, knowledge base, workflow interaction, resource management?
• Does it make efficient use of your and the customer’s time by minimizing clicks so that managers and agents don’t have to toggle to other screens or other applications while the customer waits impatiently?

India's Manufacturing exports to touch $ 300 b by 2015: study

Indian manufacturing export has the potential to touch $ 300 billion by 2015, growing at an annual rate of 17 per cent as against the historic growth of 11 per cent, states a study released by the Confederation of Indian Industry (CII) and McKinsey on manufacturing.

“The global trend to manufacture and source products in low-cost countries (LCCs) is likely to gather steam over the next 10 years, particularly in the skill-intensive industries, where India has a significant competitive advantage,” states the study.

The study asserts that if India could take advantage of this particular trend, it would lead to the creation of 25-30 million jobs in manufacturing by 2015 and two to three times this number in allied sectors like construction, education and entertainment due to the multiplier effect.

The aspiration, though ambitious, is attainable. The CII -McKinsey study states that India has several advantages in skill-intensive industries, such as auto components and pharmaceuticals, where the next set of offshoring opportunities will arise. Apart from low wages, these advantages include engineering skills (process, product and capital engineering), established raw material bases, a mature supply base and a growing domestic demand.

The study has also found that out of the $ 300 billion of total manufacturing exports, $ 70 billion to $ 90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products.

In apparel, global trade could grow from $ 200 billion in 2002-03 to over $ 300 billion by 2015. Of this, India could grow its exports from $ 6 billion to $ 25 to $ 30 billion by 2015. It could thus become the second largest LCC exporter with an 8 to 10 per cent share of world trade, adds the CII-McKinsey study.

The study also points out that in auto components, LCC offshoring is poised to take off and could reach $ 375 billion by 2015. “India should aspire to capture $ 20 to $ 25 billion of this by 2015 as compared to exports of just over $ 1 billion in 2003,” states the study.

In electrical and electronic products, world trade has already exceeded $ 1 trillion and countries such as China, Taiwan, Malaysia and Thailand all have a significant lead. Offshoring business from developing countries is expected to increase from $ 345 billion to at least $ 600 billion by 2015. “Of this, India should aspire to capture $ 15 to $ 18 billion, as compared to exports of $ 1.2 billion in 2002,” states the study.

India’s chemical, engineering and cost-innovation skills could also make the country one of the top two LCC exporters with a potential $ 12 to $ 15 billion in exports, the study finds.
The study, however, points out that achieving this acceleration in manufacturing exports would require that Indian players adopt a global mindset, carefully select product segments and rapidly develop India as one of the top three outsourcing hubs.

It adds that the government should also implement key reforms in taxation, infrastructure, clusters (SEZs), labour and skill development to help unlock India’s manufacturing potential.

Source - The Tribune

Retailers, get ready for the magic of CRM

International giants entering India in a big way was an impending trend only waiting to happen. If you haven’t prepared for the tussle yet, this is your chance. Indian retailers are set to impress customers and increase their bottom-line with the aid of the right CRM.

COMING SOON!

Tele-marketing: Rules of the game change

David Foulcher talks about the emerging trends in telemarketing and how vendors are leveraging technology to lure prospective customers.

Over 230 million telecom subscribers in India now have the option of opting out of tele-marketing calls and apparently more than six million, predominantly urban users, have already taken up the offer.

The new directive that allows subscribers to list their landline and mobile numbers under the National Do Not Call (NDNC) database and opt out of receiving any Unsolicited Commercial Communications (UCC), including SMS (short messaging service) has found many takers.
The Telecom Regulatory Authority of India (TRAI) has disclosed that 14,750 telemarketers having around 4,50,000 telephone lines have put in their applications for registering with the Government to comply with the National Do-Not-Call (NDNC) Registry guidelines.
Registered tele-marketers not complying will face fines and even severe punishments.
This has changed how the $240 million tele-marketing industry that generates more than 10 billion calls a year will need to engage the customer.

Buying lists from service providers or anyone else will not have the same charm. No longer can a caller just try his luck with a random number hoping it would be his lucky break. It’s a totally different ballgame that promises to separate the men from the boys.

The following possibilities may emerge:

Use of contextual marketing and sophisticated modeling
Technology is likely to play a very important role in understanding whom to target at what time. Customer databases will be constantly mined and tracked to figure this out. For e.g. If a bank is able to monitor a salary hike at the beginning of the financial year, it will be able to target it new mutual fund increasing the odds of sale significantly. If a retailer gauges the monthly purchase pattern of a loyalty customer, he could use that information to specifically market substitute high-margin products. If a marketer can mine credit card customer data and on realizing that the customer spends more than 80% on restaurants in a particular area could specifically market another restaurant in the vicinity. A telecom company could even profile its customers based on their caller tunes and could target specific messages to them—lets say even marketing a rock show.

This will push organizations to cross-sell, up-sell and those that make cold calls to consumers to resort to contextual marketing and sophisticated modeling and analytical tools to give the consumer the right product at the right time. Those that are in an enviable position with this data are banks, credit card companies, retailers and telecom companies.

Evolution of the tele-marketer
Say goodbye to the conventional tele-marketer that you knew. The tele-marketing agent will be compelled to take on the role of a more frequently engaging concerned service provider and not just a commission-driven aggressive (and sometimes insensitive) salesperson.
So now, many calls that will need to be initiated to the customer will now have to be a service call—i.e. the caller will need to update or discuss an issue that a customer is already facing. Only on the successful resolution of the same will the customer give him time to push the caller’s sales agenda further. This is significant as, especially in India, a prospect is hounded till he gives the tele-marketing organization business but the same organization becomes incommunicado when the customer has a service query. Ineffective automated channels, lengthy protocols and red-tape are deployed to discourage the consumer from following up. How long would a customer follow-up for

Rs. 50 incorrectly charged to his bank account or telephone bill? Fifty rupees for an individual are not worth the bother but multiply it with 200 million customers and one can appreciate the commercials involved.

Pay customers to receive your message
Another possibility is the emergence of services equivalent to Boxbe in the Internet world. Those are willing to receive tele-marketing message may actually get paid to do so. So if you are willing to receive a call, you may actually be able to subscribe to a service that gives you an alternate telephone number where people can reach you for the pure purpose of selling their wares. You will need to submit a detailed profile of yourself to the service provider. The service provider will, in turn, hand over your data (or at least the part you permit him to) to the seller. Since the seller is now paying to get you to hear, he will automatically attempt to sell you a relevant product as he is paying for every minute of your time. For the seller it would mean your undivided attention and you can raise some money for your local charity.

Temporary telephone numbers
On the flip side, tele-marketers may innovate to have calls emanating from outside India (or what might seem to be from outside India) thereby limiting the ability for such calls to be tracked. Additionally, again taking a parallel from the Internet, a service equivalent to Guerrilla mail or disposable/dynamic telephone numbers will be used to call the unsuspecting customer. With perpetually changing numbers this tele-marketer will get an advantage. While larger players may not attempt such stunts, as it would be detrimental to the brands in the long run, one can expect such attempts till such time the market matures.

There may be many more innovations to target the customer and get the sale done. Maybe tele-marketers are just about reeling from the shock right now. Let’s wait for them to catch their breath and see how they attempt to conquer unchartered territory.

The author is the Regional Director of Cincom India dfoulcher@cincom.com

SOFTWARE INC NOW GETS A ROYAL POUND-INGC

By Chitti Pantulu, HyderabadDNA

While attention has been focused on the impact of a strong rupee vis-à-vis the greenback, going into the third quarter earnings season, the sudden and steep weakening of the British pound is set to emerge as a new concern for the Indian IT industry. Till September-end, the rupee strengthened almost 11% against the dollar but only 6% against the pound. But since early October, it has shored up a further 4% while holding steady against the dollar.

The weakening of the pound comes at a time when Indian IT vendors are grappling with strategies to derisk against the dollar by invoicing in euro and pound. But the sudden spurt in the rupee against the pound complicates this exercise. This could hit the quarterly results differently, CLSA analysts Bhavtosh Vajpayee and Nimish Joshi pointed out in a insightful report on Wednesday.

The hardest hit could be Tech Mahindra, which has 72% of its invoices denominated in the British currency, and Mastek, with 65%. Among the large caps, HCL Tech has 25% exposure to the pound, followed by TCS at about 16%. Satyam has the lowest exposure to the pound, at 9%. “We have a strong hedging position of $2.6 billion against a basket of currencies which is dynamically monitored and adjusted by a 10-man strong treasury department,” said a TCS spokesperson.