Author Archive for Sumedh Mungee

4 ways this recession is changing our world forever

It’s been a few years since I’ve written here, so I thought I’d start by going back and reading some of my old posts.

The following paragraph jumped out from something I wrote in 2005.

U.S. real-estate slowdown will have global consequences: Interest rates, U.S. bond prices, U.S. consumer confidence, dollar exchange rates (and hence the offshoring business), combined with the huge (and increasing) U.S. trade deficit are all pieces of a fragile domino game. This game could easily turn ugly if the U.S. real estate market accelerates its slowdown, or even worse, turns out to be a bubble. Bad news in the U.S. housing market could trigger a global recession.

(From Predictions for 2006 from an Indian perspective on VentureWoods, emphasis added)

This seems all remarkably prescient and oracle-y now, and I almost made a suitably massive upgrade to my ego. But like recent Sensex rallies my ego quickly came crashing down when I read some of my other predictions – e.g. Yahoo will start catching up with Google (Hope is eternal, and I might yet come back to gloat).

But lets get back to more important things:

There seems to be a tendency amongst many to regard a recession as a finite event, associated with a numerical reduction in GDP or stock market values. Business writers seem to compare a recession with a winter, where you hunker down (“cash is king”) and hibernate on minimal life support – after all, spring is just around the corner.

That might be a useful survival strategy, but it misses the bigger point – recessions (and especially this one) are discontinuities with totally unpredictable consequences (gosh I sound like a Nassim Taleb fanboy). To continue my useful but terribly flawed nature analogy, recessions are not like winters, but more like the Ice age that made the dinosaurs extinct. Like the Ice Age, this recession has already essentially destroyed the US Investment Bank business model.

What other changes will this Ice Age bring? I see a few possibilities:

1. Currency changes – The hegemony of the US financial industry (and the financial industry in general) is over. As I write this, the G-20 is meeting to discuss what could very well be the birth of Bretton-Woods II. A covert agreement to safely achieve a massive devaluation of the US Dollar is not out of the question (what will the Rupee do ?). Nor is it impossible to envision the emergence of an alternate reserve currency (or more likely a basket).

2. Consumer changes – We have lived, learned and grown up in a world where the world (now mostly China) manufactures and the US consumes. That world has changed. The US consumer is now on life support. She might live for a long while more, but that vitality and voracious appetite is unlikely to return. For the sake of my mental well-being I prefer to not imagine the consequences of this to the Chinese economy.

3. Fiscal policy changes – The ghost of Keynes is stirring – World governments will unleash the mother of all fiscal (deficit) spending rather than allow deflation to take hold. This sort of worldwide government stimulus is unprecedented, and its implications (or even its effectiveness) are unknown at this point. Will all the stimulus go into productive areas of the economy or will it be gambled away ?

4. Political landscape changes – The current bonhomie between nations and “global co-operation to solve the crisis” is very fragile and based on mutual fear. The Doha talks fiasco shows that developing nations are no pushovers now. There is a real chance that this “united in fear” sentiment could morph into a very ugly blame game. The parallels of the current situation to the Nixon Shock (when the French demanded gold from the US in return for dollars) are eerie and very scary.

So my question to the readership of this blog is this – does anyone see these changes too ? And more importantly, what other seismic shifts do you see occurring in our economic and business landscape ?

Why do Indian outsourcing majors not pursue open source ?

This question baffles me.

After all, selling services around open source seems to be the future for a lot of the software world. Oracle made 70% of their revenues last year based on services. There are clear arguments to be made in capturing a large mindshare by introducing quality open source products and monetizing it with services, customization and support.

And services, customization and support are areas that the Indian outsourcing industry has already mastered!

They clearly have the manpower, they must be having an insight into industry trends and needs, and they definitely have a strong story on the services side. So why not do it ?

Why didn’t Wipro, TCS or Infosys think of JBoss, Pentaho, Zimbra or zmanda ?

I have talked to many, many people on this, and I don’t buy most of the reasons I have heard – such as “their leadership is not innovative”, or “theres not enough money for them to be bothered”, or “they are too comfortable with their current business model”. Those sort of simplistic reasons dont hold much water, in my opinion.

The only plausible explanation that I have been offered by a friend of mine is this – fear.

Indian outsourcing majors do not want to antagonize any of their potential customers by releasing software that can potentially cannibalise their customers markets.

Is that what this is all about ? Do nothing that could jeopardize any relationship with any future customer ? That seems to tie up Indian companies in a strait jacket with little wiggle room, since one could argue that any product launch competes with a potential customer.

Writing for the attention starved world

From the Financial Express comes this interesting data point:

The average time spent on the internet is on a rise. From 58 minutes on weekdays in the Indian Readership Survey (which tracks media consumption) July-December 2003, it increased to 63 in IRS July-December 2005.

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While 63 minutes sounds like a lot, email and instant messaging probably take up the lions share of the time.

What is left is very little time and attention, possibly as low as 10 minutes. All content creators (including blogs) are essentially competing for this small slice of time before the Internet user “switches off” and returns to her real life.

This leads to the following rules for creating web content:

1. Be pithy! – No one has time to read/watch/listen to long anything any more.

2. Keep it simple – Busy pages are a turn off for Internet users, as surely as a long queue is a turn off for a traveller or a shopper.

3. Dont make the user register for free content – “Free registration” is not really free because it makes the user give up his most precious asset – time!

4. Be easy on the eye – Use easy to read fonts and pleasing color schemes – make sure your ads comply to the same guidelines.

5. Summarize, organize and itemize – Make your content easy to skim through, because thats all you are going to get anyhow.

I am sure many of these rules are fairly obvious – but I am continually amazed by the number of websites that dont get it.

Predictions for 2006 from an Indian perspective

It is the season to be jolly – but for those of us who compulsively seek out the next big thing, it is the season to ponder on the future and plan our strategy.

So, in no particular order, here are some of my predictions for 2006.

1. The Web 2.0 bubble will burst: This will happen due to two reasons. Firstly, it will become clear that most, if not all Web 2.0 sites have been unable to reach out beyond the very limited geek-dominated market of early adopters (illustration: even the supposedly wildly popular service has just 300,000 users. An anecdotal review of the popular links on will reveal this as well). Secondly, the acquisition spree seen in 2005 will slow as the big players digest their acquisitions of 2005 and re-evaluate some of their more outlandish purchases (Skype comes to mind). This time though the bubble will burst quietly with websites getting shut down quietly without much buzz. Not too many employees will be displaced as Web2.0 startups have hired very sparingly.

2. Yahoo will continue upswing: Yahoo will continue to make mindshare inroads into Google’s territory because of Yahoo’s superior partnering strategies (e.g. its recent partnership with Six Apart for MovableType) and also the fact that Yahoo “gets” content much more than Google does (also see prediction #8 below). Towards the end of 2006, Yahoo will start to emerge as a bigger threat to Microsoft than Google.

3. Outsourcing: A shortage of good tech workers, an unsustainable spree of pay hikes and continuing competition from companies like Accenture and IBM will start impacting the major Indian outsourcing companies. Also, 2005 has seen a trickle of good engineers leaving big Indian IT companies to join startup technology companies. 2006 will see a flood. Startups in India will have a good hiring year.

4. The blogosphere expands and consolidates: Professional, political and passionate bloggers will continue to see a fast growth in their readership. Overall the blogosphere will start to consolidate attention and resources into a relatively few trusted blogs. “me-too” bloggers will start to drop off the blogosphere, as the novelty of blogging wears off. With the decline of me-too bloggers, advertising-driven blogging sites will start to see a decline in growth rate. The absolute number of bloggers will still see a sharp increase over 2005 (the number of blogs could possibly reach 150 million)

5. Resurgence of newspapers: 2006 will be the year newspapers make a big comeback. This comeback will be led by a few simple but powerful trends. Firstly, newspapers will increasingly recruit subject specialist bloggers and hyperlocal bloggers over more generalist journalists. This will allow them to replace boring newspeak with much more insightful articles from writers whom people already know and trust. Secondly, a readership already weary with the tedium of keeping track of too many blogs will return to the relative comfort of reading newspapers (albeit online). Whether newspapers can successfully monetize this new interest will be the next big question.

6. Consumer storage will be hot: As the average consumer continues to amass gigabytes of data, the storage, backup and disaster recovery problem will be hot. 2006 will see several technologies that were hitherto reserved for mission-critical IT networks retargetted towards individual users and small businesses.

7. Major breakthrough in the attention problem: As companies and individuals slowly start to realize that they are losing productivity because of too many interrupts (email, IM, phone calls, …), a major breakthrough technology will alleviate the problem to a large extent.

8. Content will become more valuable: Due to several factors (such as Google’s algorithm-driven approach to ranking relevancy and the Web2.0 bubble), content in 2005 is being treated as a mere commodity. 2006 will start to see a reversal of this trend, as content creators (e.g. bloggers, photographers and musicians) get a more equitable share of online advertising revenues. This trend will be driven by a simple consumer behavior – consumers prefer better content over better technology or delivery mechanisms. This inherently means that content needs to be valued higher than it currently is.

9. U.S. real-estate slowdown will have global consequences: Interest rates, U.S. bond prices, U.S. consumer confidence, dollar exchange rates (and hence the offshoring business), combined with the huge (and increasing) U.S. trade deficit are all pieces of a fragile domino game. This game could easily turn ugly if the U.S. real estate market accelerates its slowdown, or even worse, turns out to be a bubble. Bad news in the U.S. housing market could trigger a global recession.

10. Uncertainty in China will cause investors to hedge bets: The risk of social unrest will weigh on the minds of investors in China. The heavy handed approach of the Chinese government might provide stability in the short term, but it still risks the chaos of a possible widespread unrest in the medium term. Whether India will gain from this is unclear. Investors might look at even safer bets such as eastern europe, south america and south africa.

Predictions can never be objective – they are heavily biased by an individual’s perspective, his network of advisors and his mental model of the world around him. I’d love to get your feedback on these predictions.

Lastly, thanks to Alok Mittal for inviting me to post on VentureWoods.

(Cross-posted from