"Inglish"

An email from India's largest private bank:

Dear Customer,

We inform that the request was not processed, as wrongly initiated.

Further, we have initiated a fresh Service Request XXXXXXXX for up gradation of credit card.

The request will be processed within 7 working days.

We regret the incontinence caused.

Sincerely,

Mohammed Vilayath Hussain
Account Manager
ICICI Bank Limited

The bank suffers from incontinence?

The evolution of IT Services pricing

Outcome based pricing seems to be the latest buzzword in the in the IT services space. Being radically different from what has been the industry norm in pricing models so far, it involves a lot of risk for the vendor. At the time when I write this, I don't see many vendors in the Indian IT services space that would partake in such pricing models. But for a few pioneers, I doubt whether the top players (in terms of market share) would consider it. They may fall in when it comes to a matter of survival, but not yet.

While companies still talk about output based pricing which is akin to transaction pricing where customers have to pay per transaction, outcome based pricing is an evolution where the customer would be charged only for successful transactions.

So, what is the difference between output and outcome based pricing?

Instead of having to pay for every transaction being processed, the customer would pay for every successful transaction processed. If we consider the example of a credit card company as the customer, they would have to pay not for any credit card application processed, but for every credit card issued!

IT services vendors that can offer a robust technology platform and efficient operations combined with a strong requirements management framework can capitalise on their strengths and offer such innovative pricing models that appear to be the next wave in IT services offering.

It is undeniable that efficiency plays a key role here. The value add that comes along is the agility and quick adaptability to changes in the business environment when technology and operations are integrated. Factors that affect the technology platform necessitate changes in operations & training and must be handled seamlessly so that the end customer does not suffer.

Reference: http://www.igate.com/iblog/?p=55

Rediff blooper !

My heart skipped a beat when I looked at the the Rediff Markets Homepage this afternoon. Look at the Sensex:

I wish ...

Elections 2009

The Great Indian Tamasha is finally over.

More than the IPL, it is the run up to the elections that has been entertaining me and many others whom I know. News, Analysis, Talk shows, Rallies – what action!

At workplace, it has given a great opportunity for networking. Whenever there is a discussion between two people about elections, others generously joined and contributed to the dialogue.

Apart from listening to leaders speak; it has been interesting to follow the so called predictions made by some self proclaimed astrologers.

I am already looking forward to the next elections :D

No email for me !

For the last two hours, this is what Gmail says when I try to login:

Bangalore - jinxed ?

So, here's someone fulfilling his election promise

When Obama made a point in his campaign that he would cut tax breaks given to companies that outsource, Indian CEOs ridiculed and played it down by saying that they are not aware any tax breaks that are given in the first place and called it an "election rhetoric" .

And today we are seeing it in action. Whether it succeeds or not is something that we have to wait to see.

In any case, NASSCOM still believes that it is aimed only at American companies that ship jobs outside and should not affect Indian companies.

The future of Software pricing

Value based pricing appears to be the road that IT product vendors will have to take in the near future.

Up until now, when it comes to pricing, software product companies have been calling the shots. With the global meltdown taking its toll, customers have gone into a full fledged cost optimisation exercise. Vendors no longer command the pricing that they once used to. So far, the cost of a software product cannot be fully quantified (or maybe I don't know how!). The software is developed once. The marginal cost of delivering it to multiple customers is zilch (Oh yes, there is the marketing and sales cost). I am not getting into the nitty-gritty of the ROI yet. This gives enough leeway for software companies to price their products however they wish and more than enough flexibility in negotiation. Seventy percent margins are not unheard of! Customers are now questioning the value of what they pay.

With major software vendors like IBM and Microsoft are experimenting subscription based pricing and rental pricing, it is only reinforcing that things are changing fast.

If a customer is going to use only 30% of a $1 million product, then why pay so much? Or rather if only a portion of the workforce would use it at any given time, then why pay for additional licenses?

In the world of value based pricing, customers ask vendors to “throw more meat into the game”. For example, instead of a fixed license cost, a dynamic license cost based on usage at any given time. A call centre running a 100 seat operation during the day and a 50 seat operation during the night will only pay for 50 licenses that it uses during the night and not a flat 100 license fee.

It will be interesting to watch how the story unfolds moving forward…