Sub-prime criris and how it started..

Thanks to www.rediff.com for having produced such a nice cover of subprime crisis.

1. August 9, 2007
   The official date when the crisis is said to have hit global finances. But the rot had started much earlier.
2. In 2006, the US housing market started to feel the pain of high interest rates -- which, between 2004 and 2006, had risen from one per cent to 5.35 per cent -- resulting in default rates on *sub-prime loans rising to record level.
3. February 22, 2007: HSBC fires head of its US mortgage lending business as losses reach $10.5 billion.
4. March 8, 2007: Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.
5. March 12, 2007: Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.
6. March 13, 2007: Wall Street hit by sub-prime fears and on March 14, the sell-off on US and Asian markets saw the Sensex close with a loss of 453 points at 12,530.
7. March 16: US-based sub-prime firm Accredited Home Lenders Holding said it would sell $2.7 billion of its sub-prime loan book -- at a heavy discount -- in order to generate some cash.
8. April 2 2007: New Century Financial, which was once the second-largest originator of sub prime mortgages in United States files for Chapter 11 bankruptcy and lays off 3,299 people.
9. May 3, 2007: GM finance unit loses heavily on sub-prime mortgages, and UBS closes its US sub-prime lending arm, Dillon Read Capital Management.
10. June 22, 2007: Investment bank Bear Stearns revealed it had spent $3.2 billion bailing out two of its funds exposed to the sub-prime market. The bailout of the fund was the largest by a bank in almost a decade.
11. July 18, 2007: Bear Stearns rings the warning bell. It tells investors that they will get little, if any, of the money invested in two of its hedge funds after rival banks refuse to help it bail them out.
12. July 20, 2007: US Federal Reserve chairman Ben Bernanke warns that the US sub-prime crisis could cost up to $100 billion.
13. July 27, 2007: Worries about the sub-prime crisis hammered global stock markets and the main US Dow Jones stock index slipped.
14. July 31, 2007: Bear Stearns stopped clients from withdrawing cash from a third fund, saying it has been overwhelmed by redemption requests. The lender also filed for bankruptcy protection for the two funds it had to bail out earlier.
15. August 6, 2007: American Home Mortgage, one of the largest US independent home loan providers, filed for bankruptcy after laying off the majority of its staff.
16. August 9, 2007 French banking major, BNP Paribas announced that it could not fairly value the underlying assets in three funds -- Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia -- as a result of exposure to US subprime mortgage lending markets.
    Faced with potentially massive exposure, the European Central Bank immediately stepped in to ease market worries by opening lines of euro 96.8 billion (then $130 billion) in low-interest credit. The Federal Reserve, the Bank of Canada and the Bank of Japan also intervened.
17. August 16, 2007: Largest mortgage lender Countrywide draws on its entire $11.5 billion credit line as liquidity crisis looms. Australian mortgage lender Rams also admits liquidity problems.
18. August 17, 2007: The Fed cut the rate at which it lends to banks by half of a percentage point to 5.75 per cent, and once more warns of credit crunch.
19. August 21, 2007: UK sub-prime lenders begin to withdraw mortgages.
20. August 28, 2007: Leipzig, Germany based Sachsen LB Landesbank faced collapse after investing in the sub-prime market. Landesbank Baden-Wuerttemberg buys it for euro 250m. It was one of Europe's biggest victims of the credit crisis.
21. September 3, 2007 German corporate lender IKB announces a a loss of $1bn on investments linked to the US sub-prime market.
22. September 4, 2007: London Interbank Offered Rate or *Libor rate rises to 6.7975%, highest since December 1998. (*It is the rate of interest at which banks offer to lend money to one another).
    Bank of China reveals $9bn in sub-prime losses but Chinese government said its foreign exchange reserves will not be affected
23. September 14, 2007: British bank, Northern Rock, which relied heavily on the markets, rather than savers' deposits to fund its mortgage lending asked for and was granted emergency financial support from the Bank of England. The bank is now owned by the UK government.
24. September 18, 2007: The US Federal Reserve cut its main interest rate by half a percentage point for the first time in four years, to 4.75 per cent, a move that resulted in a strong rally across the globe.
25. September 19, 2007: The Bank of England announces that it will auction pound 10 billion.
    October 1, 2007: Swiss bank UBS world's biggest bank announced losses of $3.4 billion from sub-prime related investments. Later investment bank chairman and chief executive officer Huw Jenkins stepped down.
    Citigroup unveils a sub-prime related loss of $3.1 billion. Two weeks later Citigroup is forced to write down a further $5.9 billion. Within six months, its losses stand at a whopping $40 billion. On November 5, its chief executive and chairman Charles Prince resigned.
26. October 5, 2007: Investment bank Merrill Lynch reveals $5.6 billion sub-prime losses.
27. October 30, Merrill Lynch chief Stan O'Neal resigned.
28. November 9, 2007: US's fourth largest lender Wachovia revealed a $1.1 billion loss due to decline in value of its mortgage debt plus $600m to cover loan losses (total $1.7 billion).
29. November 12, 2007: The three biggest US banking groups -- Citigroup, Bank of America and JPMorganChase -- agree to a $75 billion superfund to restore confidence to credit markets.
30. November 13, 2007: Bank of America writes off $3 billion in sub-prime losses.
31. November 14, 2007: Mizuho, Japan's second largest banking group, saw a 17 per cent drop in first-half net profits and cut its full-year operating profit forecast by 13 per cent, largely as a result of sub-prime-related losses at its securities arm.
32. November 15, 2007: British banking major Barclays said it had written down $2.6 billion in sub-prime losses.
33. November 20, 2007: US mortgage guarantor Freddie Mac sets aside $1.2bn to cover bad loans and reports a $2bn loss.
34. December 4, 2007: US mortgage giant Fannie Mae issues $7 billion of shares to cover losses linked to the housing market.
35. December 6, 2007: President George W Bush outlines plans to protect more than a million homeowners hit by the US housing slump. The Bank of England cut UK interest rates for the first time since 2005, amid signs that the economy is slowing.
36. December 10, 2007: Swiss bank UBS reports a further $10-billion write-down caused by bad debts in the US housing market. Lloyds TSB reveals that bad debt linked to the US sub-prime mortgage crisis will cost it pound 200 million.
37. December 11, 2007: Fed cut interest rates for a third time to 4.25 per cent to ease the credit crunch.
38. December 13, 2007: World central banks agree coordinated action to inject at least $100 billion into short-term inter-bank credit markets to restore confidence.
39. December 19, 2007: Morgan Stanley writes off $9.4bn in sub-prime losses and sells a 9.9 per cent stake in the company to the Chinese state investment company CIC for $5bn to rebuild its capital.
40. January 7, 2008: President George W Bush admits that the credit crunch could slow the US economy in 2008, but says it is still fundamentally strong.
41. January 9, 2008: Bear Stearns boss James Cayne steps down after the firm reveals $1.9 billion in sub-prime losses, the largest in its history.
42. January 15, 2008: Citigroup, the largest bank in the US, reported a $9.8 billion loss for the fourth quarter and wrote down $18 billion in sub-prime losses.
43. January 28, 2008: Belgian bank Fortis warned its losses connected to bad US mortgage debt could be as high as $1.47 billion.
44. January 29, 2008: The US Federal Bureau of Investigation launched an investigation into 14 companies involved in the sub-prime mortgage crisis.
45. January 30, 2008: The US Federal Reserve cut interest rates to 3% from 3.5%. It was the second cut in nine days. US economic growth slowed.
46. February 5, 2008: US financial firm GMAC, which owns sub-prime lender Residential Capital, said it has made a $2.3 billion loss in 2007, compared with a $2.1 billion profit the year before.
47. February 10, 2008: Leaders from the G7 group of industrialised nations said worldwide losses from the US mortgage crisis could reach $400 billion.
48. February 12, 2008: Swiss bank Credit Suisse said losses on sub-prime investments were $1.8 billion.
49. February 13, 2008: Britain's Bradford & Bingley cut the value of its sub-prime mortgage-related investments by $284.5 million. Japan's financial watchdog said Japanese banks suffered losses of $5.6 billion by the end of 2007.
50. February 14, 2008: Commerzbank, Germany's second-biggest bank, cut $1.1 billion off the value of investments linked to the sub-prime mortgage crisis and warned its losses could worsen.
51. March 7, 2008: The former bosses of Merrill Lynch and Citigroup were questioned by a Congressional panel over their bumper pay -- despite huge, sub-prime related bosses at their banks.
52. March 11, 2008: Central banks made another coordinated attempt to ease conditions in the credit markets, by announcing $200 billion of new emergency lending for banks.
53. March 14, 2008: Investment fund Carlyle Capital failed as the credit crisis spreads from sub-prime related products to other mortgage-backed investments.
    Bear Stearns received emergency funding, after its exposure to mortgage-backed investments undermined confidence in the bank.
54. March 17, 2008: Wall Street investment bank Bear Stearns was acquired by JPMorgan Chase for $240m, a fraction of its share price, in deal backed by $30 billion in Fed loans.
55. March 18, 2008: Wall Street investment banks Goldman Sachs and Lehman Brothers revealed that their first quarter profits have been halved by the credit crunch.
    March 31, 2008: US Treasury announced major package to reform regulation of US financial markets and prevent future financial crises.
56. May 22, 2008: Swiss bank UBS, one of the worst affected by the credit crunch, launches a $15.5bn rights issue to cover some of the $37bn it lost on assets linked to US mortgage debt.
57. June 19, 2008: The FBI arrests 406 people, including brokers and housing developers, as part of a crackdown on alleged mortgage frauds worth $1 billion.
    Separately, two former Bear Stearns workers faced criminal charges related to the collapse of two hedge funds linked to sub-prime mortgages. It is alleged they knew of the funds' problems but did not disclose them to investors, who lost a total of $1.4 billion.
58. July 13, 2008: US mortgage lender IndyMac collapsed -- the second-biggest bank in US history to fail.
59. July 14, 2008: Financial authorities step in to assist America's two largest lenders, Fannie Mae and Freddie Mac. As guarantors of $5 trillion worth of home loans, they are crucial to the US housing market and authorities agreed they could not be allowed to fail.
60. September 7, 2008: Mortgage lenders Fannie Mae and Freddie Mac -- which account for nearly half of the outstanding mortgages in the US -- were rescued by the US government in one of the largest bailouts in US history.
61. September 10, 2008: Wall Street bank Lehman Brothers posted a loss of $3.9 billion (?2.2 billion) for the three months to August.
62. September 15, 2008: After days of searching frantically for a buyer, Lehman Brothers filed for Chapter 11 bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.
    US bank Merrill Lynch agreed to be taken over by Bank of America for $50 billion.
63. September 17, 2008: Insurer American International Group apparently was too big to fail. The mammoth insurer, which had been pushed to the brink of bankruptcy by problems originating in the US mortgage crisis, is being bailed out by the Federal Reserve.
    The Fed will extend a 24-month bridge loan of $85.0 billion to the insurer, in return for an unprecedented acquisition of a 79.9 per cent stake in the firm by the central bank.
    Barclays announces that it will buy Lehman US units for $1.75 billion.
64. September 19, 2008: The US government proposed to create a $700-billion rescue fund for the American financial sector.
    The fund will be used to buy back bad debt from ailing US banks and other financial institutions.
    President George W Bush urged the Congress to endorse his plan as soon as possible. Congress is expected to take a decision in the coming days.
    The move increased the US public debt to $11.3 trillion.
    The President said: "This is a big package because it was a big problem." He argued that the drastic measures were necessary to keep the economy going. The president admitted that the plan would be funded with tax money, but added that "over time, we're going to get a lot of the money back."
65. Story continues...Climax is yet to come.....
    

Terrorrist Attacks : Gandhian Philosophy at the best

India today is truely following Gandhian philosophy. Today there were again terrorist attacks in New Delhi, right under the nose of the national govt. This is after a series of smilar attacks in Jairpur, Banglore and Ahmedabad. We did not learn anything from previous three attacks. Securities agency could have been alert to prevent this. But probably govt. at centre, which is Congress-led, is following Gandhi's philosophy, that if someone slaps you on your one chick, put forth the other chick as well. Congress-led central govt. went farther than that by giving fourth chance to the terrorists.
Prabably govt. is thinking at best how many such attacks will terrorist carry out. After they have done one such attack in each of cities in India, they will themselves stop. Why to worry and why put intelligence agency staffs with unncessary burden? Govt.'s thinking is after all cities are attacked once, terrorist will stop and eternal piece will prevail all over India.
God save India.

Coming housing bubble in India

The housing bubble is imminnet upon us in India if we still consider the media reports, that this will not happen, to be true. Media is still feeding us the news that the buying a house at this moment is still a good option and one should buy a house now otherwise one would never be able to do so.
What they are doing is that they are either following ostrich's policy or working for builder's lobby to further its interest.
But we can see the signs clearly in India.

1. sky-rocket growth of property prices in last 2-3 years
2. Interest rates have been rising,
3. Rising inflations; inflation has been highest in last 15 years this will definitely force RBI to either increase interest rates or hold on where they are.
4. rising oil and other commodity prices.
5. Elections are on the corner this will force govt to take policy decision which are more populist than good for economy creating more unfavourable conditions for economy and for real estate industry
6. US have already gone into recession that would dampen the sentiments (If I am not wrong it has already done so in India) and rest of the western world is following US
7. IT, the main power house for grown for last decade is showing sign for slowing down considerably, putting less money into pockets of employees.
8. stock markets showing bearish signs
9. slow overall growth in corporate earnings
10. short-sighted real estate industry, which is bent on making hay while sun shines than ensuring a steady and long term growth for industry. If people are not greedy enough they will not raise prices disproportionately, instead value properties rationally and realisticall so the actual users can buy. But because of the short sightedness of the industry prices have gone out of control and buyers are no more interested.

Because of these very reasons, the real estate prices would crash in India and by 2010, the price would be realistic.

Oil Price - An opportunity for India

Oil prices have been going through the roof. And irony is we can not do anything about it. As long as the Middle East controls the most of it and US is the policing state of the world.
So should we just sit by the side and watch people crying for help.
There would be scores of solutions for solve this problem but one Indian govt. should consider is about public transport.

The state of public transport in all Indian cities is pathetic and if govt. can improve this it may help reduce the oil import bill.
Private players would fall over each other to invest in public transport.

Credit Crunch to hit Indian IT? No

Most of the Indian IT companies work in supporting legacy application, application development & management, BI & data warehousing and BPO services. These are the areas, which are very essential to support the day to day running of businesses. These functions are crucial to running the businesses. So these are the areas where businesses can not afford to cut back. Because even if these are bad times they can not abandon their existing systems or cut back to support services to their employees or customers. They need continued support to run them.
Also businesses need to keep enhancing their IT systems and processes that are required by regularatory requirements like BASEL II, SOX, etc. Such requirements can not be postponed by businesses just because there is recession.
So I strongly believe that Indian IT outsourcers would keep on getting their business from international clients.
In fact during recession, businesses would be looking at cutting cost down so they would be evaluating more areas of their IT spending which could be outsourced/offshored. So it may even open up new business opportunities and increase the business for outsourcers.
It’s the high-end consulting business which may be affected in big way as businesses may not want those services and Indian IT companies have hardly any significance presence in that area.

Emerging IT hotspots in world and competition to Indian IT

A lot is being made out of Chinese threat to Indian IT industry and also threat from other emerging cheap IT labour markets like Eastern Europe (Hungary, Poland, Czech Republic), Latin America (Brazil, Argentina), China, East Asian Countries (Malaysia, Philippines), Russia, etc. But I don’t think any threat from any of these countries at least in next 10 years.
The reason why I think so is because the Outsourcing industry in the world is flourishing because of following three reasons:

• Cheap IT/ Engineering labour,
• English speaking skills and
• Easy and quick Scalability.

All of these three skills or differentiators are equally important for a country to be a real outsourcer and a real threat to India. Because if you have engineers and they are not cheap no point (case is Russia), or you have cheap engineers and also in abundance but no English (China) no point and you have English speaking engineers but not in abundance (Latin America, East Europe and East Asia) then again no point. And all these three above criteria are satisfied by India only.
A lot is being made of China that China will be able to teach English skills to all its engineers in no time and it'll be a threat. But teaching English is no child's play, it take years to be comfortable wit it. The biggest Chinese IT outsourcing company's turnover is not more than $300m in 2006 and that is no match for TCS and Infosys of India. Also most of Chinese companies’ work is domestic.
Another thing IT project management skills (5+ year experience) are costly in China than in India. So the so-called cost advantage of China over India is just a mirage not reality. Also China mainly caters to Japanese market because Dalian area in China provides Japanese speaking resources. There is hardly any work being done for non-Asian market in China. Similarly other countries like Russia, Brazil, Philippines, etc. can not provide scalability which is required in any service industry. Outsourcing jobs requires huge numbers of engineers which are not available in these countries.But all these countries can be very good partners for Indian companies. Indians can utilise these countries by setting their operations in these countries and can tap their local market. So I feel there are more opportunities for Indian IT companies in these countries then threats. Like Indian can open centre in Russia for high end IT work and product development work because of the excellent talent there. Latin America and Eastern Europe could be used to cater for non-English clients. China and Eastern Asia can be used for servicing local and Japanese market. So emergence of these new hotspots should excite India rather intimidate.

China a Threat to India in IT? Not at least for now!

In last 4-5 years if anyone has said that China could be a major competitor to India in IT outsourcing & BPO business, it would have definitely sent shocking waves among big IT players and even among IT professionals (they stand to loose jobs).
Media, especially the research firms like IDC, Gartner & Forrester had been proclaiming from perch top that China was going to be a big powerhouse very soon in IT outsourcing and India should worry about dragon. They were predicting for this to come true as early as by 2007. Everyone was saying so looking at the way China had been making strides in manufacturing and the way it was improving its hard infrastructure. And for us as well there was no way but to believe because if Chinese think of doing something they would make that happen at any cost. That’s the kind of reputation they have got.
But nothing significant in IT outsourcing industry has happened so far in China and I don’t see this happening for at least another 7-8 years. That’s when it may be starting to emerge a contender for competitor, still it would not be a competitor. That would still take few more years from there if Chinese are prepared.
Today there is not a single IT vendor in China worth its salt. There are many outsourcers like Objectiva, Bleum, etc. but they are just fringe players who would either never become serious players or would have to try too hard to become one.
Here are some of the reasons why China can not just become a serious IT player in IT outsourcing business:

1. There are no big IT companies comparable in scale to Indian giants like TCS, Infosys. Today to bag a big outsourcing contract you have to show scale. Otherwise you can just become a body-shopper.
2. Project management experience is one thing which you can not learn in an institute or college that comes only from work experience and India has that in abundance. Indians have been working in IT industry for decades now and so they have built formidable skills in this area which is their selling point and also huge differentiator.
3. Even though the IT industry is so small there in China still attrition in China is more than 20% as against 15% in India. Not so goon signs at the inception.
4. The experienced IT resources in China are 50-70% costlier than in India. Even the entry level resources are not very cheap in India and those are also not English speaking so the cost factor is hardly an advantage.
5. Patent and IP protection is biggest problem in China and IT being such an important and sensitive area for customers they would think twice (or more?) before sending work to China.
6. Should we mention English as one of the reasons? Can Chinese learn English in few years to become strong contender? Most of the business world over happens in English, even in non-English speaking countries.
7. Nothing works in China without guang-xi i.e. connections, so for an outsider if they have to set up shop they either have to tie-up with local partner just for guang-xi or wait for years to grow whereas in IT you have to be very fast and nimble. International players like IBM, EDS, and TCS may not find it easy to grow there as they have grown in India.
8. IBM, Accenture and EDS have been in China for 15-20 years still their service staff is minuscule that tells what the current IT environment there is.
9. Indian IT is not because of government support or any institutional support but because of entrepreneurship of some individuals. In China it’s government that is pushing, but govt. can set up manufacturing companies not IT. It’s a people business. Better the people, more is success.
10. China’s one child policy hampers employee movement between different Chinese cities as people normally are hesitant to leave their parents and grant parents.
    
    This is not to say that China can never become a serious IT player and Indian IT should also not become complacent. I’d hope China to come up fast in IT so India also improve its quality and there is overall improvement.

How a leader change the course of an organisation.

The role of an able leader in the development of any organisation is as important as the oxizen to our body. It's just one leader who can make or mar an organisation. There are plenty of examples scattered around us to support this.
When India was born and Nehru became the first prime minister, his aim was to make India a country worthy for her people. He along with others created a democratic and secular government, created public institutions with broader purpose of serving the people of nation, gave people of the country equal opportunity, created equality among people of various religions and social strata among other things. He set out in creating a modern India by building dams, core-industries, higher education institute, etc. which were clearly meant to take India into league of leading nations of the world. Nehru had long term vision with which he acted for india. That is where the foundation for today's vibrant India was laid. Had he went the otherway of fulfilling his own short term gains, India would not be in position where it's now. Here the leadership of a single person Nehru was very important for india to follow either the path of peace and prosperity or the path of chaos like many other countries.
Similarly Tata group was just languishing and stumbling along in early nineties when Ratan Tata took over it. At that time hardly anyone would have thought that Tata group would be so globalised that it'll take over companies around the world. But it was sheer leadership and the vision of Ratan Tata that Tata group is where it is today. It's one of the most globally diversified and most ambitious diversified group from India. This success is again simply due to the vision of a single leader Ratan Tata.
Obviously, in all this we can not deny the fact that every leader needs to have an able and supporting team which can turn the vision of a leader into reallity. But here again it's the leader who selects his team.

Advantages of Offshoring

Apart from obvious advantage of saving money, there are huge benefits for entire world, some of them are listed here:

1. The first and obvious is benefits of lower cost for the business offshoring the work to cheaper locations like India, China, etc.
2. Improve the quality of their work by taking advantage of excellent and quality oriented workforce of India.
3. Saving huge time and tension to the Client top management which would have been spent in interviewing a lot of prospect to fill a few posts. To adress urgent requirement for people, they have to spend time which can be cut when they engage offshorer who can supply people fast, saving opportunity cost as well.
4. Assemble teams and projects much faster than possible as offshorers already have people of all skills on bench ready for deployment.
5. Huge profits for banks like HSBC, Barclays as they save more by cutting cost.
   They save lot in cost-cut. The US healthcare costs have dropped by 30% since all the data is processed in low-cost locations. And these profits definitely benefits local by way of either dividend distribution or by creating more job, or by investing in new R & D, etc.
6. More opportunities are generated for UK / US business like more sales for airlines, Microsoft, IBM in hardware and software sales. As countries like countries grow demand for UK/US’s high end product grows so UK/US. American products and services are highly regarded and popular among this new breed of Indians creating growth opportunities for US businesses in many spheres. Similarly more businesses for food chains, sport accessories chains as more spendable money in hands of Indians
7. More stability in Indian region as job keeps people busy making world a peaceful place.
8. Ripple effect to Indian economy improving entire economy.
9. More lean and mean UK/US corporations so more values for shareholders
10. More profits so more new innovations and more high end job creation in US
11. Better services to customers, as without offshoring all services would not have been possible due to higher cost.
12. Lower cost so cheaper services and products to consumers
13. Lower jobs go to India so people in developed nations have to go for higher education to remain employable and improve overall education level in developed world.
14. Higher education so more entrepreneurial public creating more jobs in newer areas.
15. It’s more a tool to increase growth and boost efficiency than just pure cost saving exercise.
16. Companies have cut down time to market by more than half and also reduced their investment in product development as it shares the same with outsourcers.
17. It helps corporate clients meet their tech needs without worrying about h/w or s/w trends
18. These create local jobs also, recruiting local skills which are not available in India, setting up office.
19. Offshorers also create local jobs and employ local people.
20. new skills sets like handling offshore team, etc. come up in local markets
21. Vendors, having worked with several customers in same area, can provide a lot consulting advice from their experiences, share the experiences of other organizations and their use of particular solutions. This knowledge would not have been possible to corporations otherwise. It's like learning by others' mistakes so save time, money and stress.
22. Can be used by all areas of business, from software development to claims processing, HR administration, and accounting and finance, reasearch, legal, any service you can think of.
23. Thirty years ago, electronics companies such as Motorola, Texas Instruments, and Intel sent manufacturing overseas to cut operating costs and speed product development by taking advantage of wage gaps and time zone differences. Without global resources, these companies couldn't cost-effectively develop the hundreds of new product designs needed each year.
24. Studies have shown that with globalization, gross domestic product figures have gone up for all participants in the global economy, both in emerging and developed regions.
25. automation brought a host of new conveniences and capabilities to American companies,
    the species that survives is the one that is "most adaptable to change."
26. by having design teams working in multiple time-zones companies can reduce time to market, so save cost and also remain first to market winning more market share.
27. Indian software industry association, Nasscom, figures that each new worker in the info tech sector creates seven indirect positions, from janitors to security guards. it's a virtuous economic development model.
28. the labor savings from global sourcing can still be substantial. But it's peanuts compared to the enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent.
29. If we want to recruit a great engineer in Silicon Valley, our lead time is three months and in India it is just 2-3 days.
30. Clean, well-paying service jobs boost demand for educated workers, an impetus to improving schools and training. And the high-level skills learned "spill out to the economy as a whole,"
31. Other industry advantage: Over 60% of the commercial real estate in India in the last 3 years was leased to the IT and BPO industry players. The automobile, hotel, airline, catering, computer, telecom and construction material industries and many professional services industries like legal, recruiting and accounting get a major boost from the IT and BPO growth.
32. the most optimal use of global resources and challenges the benefits of trade based on comparative advantage.
33. faster service X-rays that are taken at night in a U.S. hospital when the radiologists are not on duty are e-mailed to foreign doctors in another time zone who analyze the x-rays and either e-mail the diagnosis to their American counterparts or call them back to discuss the results.
34. Products are broken down so that their respective parts are simultaneously manufactured in the U.S. and abroad -- all with close collaboration among the manufacturers. The finished product, when all of its parts are ready, is then assembled at the most convenient and economical location, faster time to market.
35. Due to globalisation, inflation remain arrested that creates a stabilizing factor in society.
36. Things become cheaper so that more people can afford things improving overall lifestyle and prosperity and bringing more homogeneity in society.

IT Services Vs. IT Product

Indian IT industry and IT players have often been criticised by so-called 'arm chair critics' for being service oriented and not being product oriented. They often criticise companies like TCS and Infosys for not investing much in creating products instead looking for quick money by going after service market where money in relatively easy to be made.
But I see nothing wrong in this. It's with this same service industry that entire India got the confidence which it enthuse today. Before the birth of same the IT industry, hardly any industry was confident enough to stand up on it's own feet forget about going into the world arena but today many players from other industries like steel, automobiles, FMGC, electronics ect. are becoming global thanks to the path shown this IT service industry.
Critics forget this. They forget that to reach to the top one has to take small steps. You can not simply spring to the top but you have to take small baby steps initially then take faster steps and once confident you go into fast lane. That's what IT industry has been doing. Now we are even seeing some product companies in India as well. I will not say that we'll displace US just tomorrow in product space, that will again take time. Moutains can not be moved just overnight, they take their own time. So we'll also take time to build IT product industry.
Critics compare that TCS was even born before Microsoft and they say look where Microsoft is, but they turn blind eye to the environment each of these companies born in. Where India was when TCS was born, that was not the market supportive of any kind of industry. India was a bleeding ground for freed enterprises before 90s whereas US have been breeding ground.
So you can not compare a poor's son with that of a King's when comparing their lives and achievements. But with the kind of environment created by these giant IT service players, not the ground is set for product companies to take birth.