Business Today 2020-07-26

Hindujas: The Can An Economic Strike
businesstoday.in Battle Within Against China Work?
OC
July 26, 2020 `100
TECHNOVATION
2020
TECHNOLOGY IS AT THE HEART OF
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From the Editor
http://www.businesstoday.in
China: Do Barriers Work?

Editor-in-Chief: Aroon Purie
Group Editorial Director: Raj Chengappa
Editor: Rajeev Dubey

Group Creative Editor: Nilanjan Das
R
Group Photo Editor: Bandeep Singh
Executive Editor: Anand Adhikari
epeated, unexpected strikes on Chinese economic interests in Deputy Editors: Ajita Shashidhar,
Naveen Kumar (Money Today)
India since March may have caught the dragon by surprise, but retalia-
SPECIAL PROJECTS AND EVENTS
tion is inevitable. In fact, the lack of any retaliatory move so far is build- Senior Editor: Anup Jayaram
ing up more intense anticipation. While it may have come to a head in the past
CORRESPONDENTS
few months — mostly fuelled by the rise of nationalism following the Chinese Senior Editors: P.B. Jayakumar, Nevin John,
Joe C. Mathew, E. Kumar Sharma,
incursions and fatal face-offs — India has been erecting tariff and non-tariff Dipak Mondal, Manu Kaushik, Sumant Banerji
barriers to reduce import dependence since 2017, when it had imposed anti- Associate Editor: Nidhi Singal,
Senior Assistant Editor: Sonal Khetarpal
dumping duties on 93 Chinese products around the time the forces of the two
RESEARCH
counries were facing off each other in Doklam. With China+Hong Kong being Principal Research Analysts: Niti Kiran, Shivani Sharma
India’s biggest trading partner, it hurts them the most. Particularly, when the COPY DESK
duo together enjoys a $54.6 billion trade surplus against India. Tariffs have been Senior Editor: Mahesh Jagota
Associate Editor: Samali Basu Guha
raised on 3,465 items in the past 36 months with 92 anti-dumping measures in Chief Copy Editor: Gadadhar Padhy
Copy Editor: Aprajita Sharma
place against China, while investigations are on for another 11. Among non-
tariff barriers, India is setting higher quality standards for imports to eliminate PHOTOGRAPHY
Deputy Chief Photographers: Shekhar Ghosh,
inferior quality products from the market such as toys, chemicals and fertilisers, Rachit Goswami, Yasir Iqbal
Principal Photographer: Rajwant Singh Rawat
steel, air-conditioners, pressure cookers, electric cables, even plugs and sockets
and aluminium foil. The move is targeted at making imports less attractive. In- ART
Deputy Art Director: Amit Sharma
arguably, Indo-Chinese trade has shrunk 7 per cent in FY20. Joe C. Mathew ex- Assistant Art Director: Raj Verma
plains where India’s measures are succeeding — and where they are failing. PRODUCTION
Meanwhile, cracks have surfaced in the tradition-oriented, religious and Chief of Production: Harish Aggarwal
Senior Production Coordinator: Narendra Singh
always-together Hinduja family after the eldest of the four brothers, Srichand, Associate Chief Coordinator: Rajesh Verma
84, has been ill with a severe case of dementia for the past three years. His two LIBRARY
daughters, Shanu and Vinoo, have staked claim to Switzerland-based Hinduja Assistant Librarian: Satbir Singh
Bank on behalf of their father. They have asked the courts to nullify a 2014 letter Publishing Director: Manoj Sharma
Associate Publisher (Impact): Anil Fernandes
which states that assets held by one brother belong to all. Their sole claim to the
IMPACT TEAM
bank is hotly contested by the other three brothers — Gopichand, 80, Prakash, Senior General Manager: Jitendra Lad (West)
75 and Ashok, 70. While the brothers — the second generation of the group General Managers: Upendra Singh (Bangalore)
Kaushiky Gangulie (East)
founded by Parmanand Deepchand Hinduja more than 100 years ago — held the
Marketing: Vivek Malhotra, Group Chief Marketing Officer
$12.9 billion group together for decades, the next generation is finding it hard to
work together. Differences have been brewing. As recently as last year, a board Newsstand Sales: Deepak Bhatt, Senior General Manager
(National Sales); Vipin Bagga, General Manager (Operations);
battle for management control between Srichand’s daughters and Prakash’s son Rajeev Gandhi, Deputy General Manager (North),
Syed Asif Saleem, Regional Sales Manager (West),
Ramkrishan on Hinduja Global Solutions resulted in both sides resigning from S. Paramasivam, Deputy Regional Sales Manager (South),
the board in the interest of the company. Piyush Ranjan Das, Senior Sales Manager (East)
But with tempers flying, what makes this dispute particularly volatile is the
lack of a family constitution. As next-gen comes on board, most families opt for Vol. 29, No. 15, for the fortnight July 13 to July 26, 2020.
Released on July 13, 2020.
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aged by a family parliament called the JK Organisation. But the Hindujas didn’t 033-22825398, 033-22827726, 033-22821922; Fax: 033-22827254; Hyderabad: 6-3-885/7/B,
Raj Bhawan Road, Somajiguda, Hyderabad-500082; Tel: 040-23401657, 040-23400479;
plan it. Nevin John explores what that means for the Hinduja family dispute. Ahmedabad: 2nd Floor, 2C, Surya Rath Building, Behind White House, Panchwati, Off: C.G.
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fascinating stories on how that’s playing out in financial services, agriculture, Sales: General Manager Sales, Living Media India Ltd, C-9, Sector 10,
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July 26, 2020 Cover by NILANJAN DAS
Volume 29, Number 15
T E C H N O L O G Y
S P E C I A L
NEW BIZ
MODELS
Businesses are
increasingly adopting
safer and smarter ways
of manufacturing and
delivering services
30
Quantum Leap Digital Kiranas Big Bang 2.0 Smart Buying Coin Flipping
Pg. 36 Pg. 51 Pg. 60 Pg. 76 Time Pg. 84
Intelligent Time For Wheels of Firms Must Test Recessions are

Farming Pg. 40 Hyperscale Edge Change Pg. 67 Cyber Resilience The Mothers of
Data Centres Plans, Policies IT Invention
Pg. 58 Pg. 82 Pg. 88
Telecom 2.0 Online Lessons
Pg. 46 Pg. 72
ILLUSTRATION BY RAJ VERMA

14
Vehicle Registrations
Fall 88.9% in May
After nil sales in April, May
is turning out to be only
slightly better for the auto
sector; overall vehicle
registrations fell 88.9 per
cent during the month
The Point 16 20
Hole in the Pocket
Finances of households, a big source
Policy Corporate
of funds for other sectors of the
economy, are worsening Tough Fight Cracks in The Hinduja
Economic measures against Undivided Family
China — where they work, Hinduja family seems headed for
where they don't a split. Why a family constitution
may have helped
10
India’s Stimulus Way

Behind Most
The `21 lakh crore package is 10.5%
of GDP, less that what a number of
other nations have announced
11
Industrial Production
More Than Halves
Industrial output fell 55 per cent in
April as against 16.7 per cent
dip in March
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26 July 2020 Business Today 7

The Point
HOLE
IN THE
POCKET
Finances of households, a big
source of funds for other sectors of
the economy, are worsening
By Shivani Sharma
Graphics by Tanmoy Chakraborty
GROSS FINANCIAL …THOUGH NET

SAVINGS TOUCH SAVINGS RISE A BIT
THREE-YEAR LOW… IN Q4
13.2
% of GDP % of GDP
10.6
12
11.1
9.6
7.5
7.1
6.5
6.1
4.4
4.9
Lakh Crore Lakh Crore

21.2
21.6
20.6
6.56
5.09
3.68
3.48
3.36
2.76
2.13
2.2
FY18
Q1 2020
FY19
FY20
Q1 2019
Q2 2019
Q2 2020
Q3 2020
Q4 2020
Q3 2019
Q4 2019
* Net financial assets are gross

financial assets less financial liabilities
8 Business Today 26 July 2020

NET FINANCIAL …WHILE GROSS
LIABILITIES RISE FINANCIAL LIABILITIES
SHARPLY IN Q4… FALL IN FY20
% of GDP
% of GDP
5.6
5.5
4.2
4.2
3.9
2.9
2.9
2.8
1.8
-0.4
`Lakh Crore `Lakh Crore
7.5
7.31
6.01
2.64
2.75
2.53
2.16
1.38
1.38
0.83
-0.18
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
FY18
FY19
FY20
HOUSEHOLDS PARK BANK LOANS
MOST ASSETS IN ACCOUNT FOR
DEPOSITS AND LIFE A BIG CHUNK OF
INSURANCE LIABILITIES
Outstanding Position (at Outstanding Position (At
end-March 2020) % Share end-March 2020) % Share
13. 1 0. 2
.2 4 7
Commercial
23
Commercial
.2
Banks Banks
7
Housing Finance
4.9
Life Insurance
3.8
Funds Companies
Currency Financial
Corporations
Mutual Funds
Co-operative Banks
Co-operative & Credit Societies
Banks
Others
1.8
52.6 75.9
100
DEPOSITS
RISE FASTER
THAN BANK 80
BORROWINGS
IN Q4 60
Deposits and
Borrowings of
Households 40
(`Lakh Cr)
Bank Deposits 20
Bank Borrowings
2018 2019 2020

The Point
INDIA’S STIMULUS
WAY BEHIND MOST
Ô The Central government has come out with a
`21 lakh crore package to help the economy get out of the
coronavirus-induced slump, which is 10.5 per cent of GDP
Ô Packages announced by a large number of countries
exceed India’s by a fair margin
Ô Italy’s package, for instance, is 44.5 per cent of its GDP
Germany
COVID SUPPORT UK
PACKAGE France
(% OF CY19 GDP)
Source: Spain 37.1
26.1 23.9 China
Motilal Oswal
Italy 12.8 5.2 South

Korea
6.4
44.5
Japan
10.3
Hong
Kong
10
40.4
Philippines
Canada
8.9
11.3
US
13.1 13 Australia
Brazil
15.8
4 Indonesia
South
Africa 10.5 18.3 Singapore
12.2 17.3
India
Thailand Malaysia

Infrastructure INDUSTRIAL
Spend to Fall PRODUCTION
MORE THAN
Further HALVES
Manufacturing
Ô Infrastructure spending as percentage of GDP
Electricity
Ô Industrial output
has been falling after FY17 due to slowdown and fell 55 per cent in
Mining
limited spending capacity of the government April as against
Ô The number is expected to fall steeply in FY21 16.7 per cent dip in
IIP
as coronavirus brings economy to a standstill, March
says a CRISIL report
0
Ô While
Ô Infrastructure companies are expected to log a manufacturing
-6.8
13-17 per cent fall in revenue in FY21 declined 64.3
per cent, power
-16.7
generation
-20.6
-22.6
INFRASTRUCTURE contracted 22.6 per
-27.4
INVESTMENT
cent, and mining
(as % of GDP)
27.4 per cent
5 Ô Basic metals, non-
4 metallic minerals,
3 rubber & plastics,
2
-55.5
and chemicals &
1 pharmaceuticals
-64.3
0 contracted more
-1 than 50 per cent
-2
-3
-4 March 2020
*Estimate
-5 April 2020
FY14 FY21* GROWTH
Source : MOSPI (% YOY)
Source: Motilal Oswal
Cement
CHANGE IN VOLUMES
(Y-o-Y %)
25
Volumes See 20
Sharp Fall 15
Ô Cement volumes fell 13 per cent in 10

Q4 of FY20
5
Ô Volumes in Q1 of FY21 are likely
to decline 40 per cent, according to FY18 FY19 FY20
0
estimates by CARE Ratings
Ô April volumes fell 86 per cent (as -5
per core industry data released by
the Office of the Economic Advisor of -10
India). May was somewhat better with
decline of 10-15 per cent
-15
Source: CARE Ratings

The Point
Household Incomes 40
HOUSEHOLDS WITH INCOME
Crash Despite Mini 35
30
Surge in Jobs 25
20
Ô In April, 49.3 per cent per cent of households said
households surveyed by that their incomes were
15
the CMIE reported income higher than a year ago
contraction compared to a Better than a year ago (%)
Ô Only 3.8 per cent 10
year ago
believed they would be Better a year ahead (%)
Ô In May 2020, things better off a year later 5
worsened, in spite of
Ô A high 68.2 per cent said
some improvement in 0
they would be worse off the
employment; a measly 3.6 June May
next year
2017 Source: CMIE 2020
MF Assets Rise June FII Inflows

2.6% M-o-M Highest Since
as Markets November 19
Recover a Bit Ô After withdrawing a massive $8.4 billion
in March, FIIs have invested $4.5 billion in
Indian markets since April
Ô Assets under management (AUMs) of
mutual funds rose 2.6 per cent month-on- Ô Of that, $1.7 billion was invested in May
month to `24.5 lakh crore in May and $2.8 billion in June (till the 19th)
Ô One trigger was partial stock market
recovery in April and May after steep losses
in March
Ô However, the AUM fell 5.4 per cent
compared with May 2019. This translates
into a `1.4 lakh crore reduction in assets 4
30 2
0
28
-2
26
-4
24
-6
AUM OF INDIAN MF
INDUSTRY FII INFLOWS ($billion)
22 -8
(`lakh crore)
20 -10
May 2019 May 2020 May 2019 June 2020*
Source: AMFI Source: DIPP (Till June 19)

The Point
INDIA INC. STEPS CSR

SPENDERS
`4,316 cr
PM CARES Fund
UP COVID FIGHT FOR COVID

FIGHT
No. of
TOTAL
`7,537
crore
Ô A total of 113 companies out of 130 (87 per companies
cent) which responded to a Nielsen survey have `3,221 cr
supported India’s fight against Covid Others
Amount
Ô Of these 113, 84 have made cash 56 spent
contributions totalling `7,537 crore, which can Private sector
be classified as CSR spend; of this, 57 per cent
TOTAL
was contributed to the PM CARES Fund
84 `5,112 cr
Ô The remaining 29 either contributed to other 24 Private sector
funds (`373 crore), and/or facilitated voluntary Public
sector
employee donations (`84 crore) that cannot
be classified as CSR spend, or donated in `2,229 cr
kind (food and masks), for which assigning a 4 Public
Private `186 cr
monetary value is difficult sector
(foreign) Private
sector (foreign)
Source: Nielsen sector
Vehicle Registrations 51,430

THREE
WHEELER
Fall 88.9% in May 1,881

(-96%)
COMMERCIAL
VEHICLE 80,392
TWO-WHEELER
14,19,842 2,711
(-97%)
TRACTOR
34,053
PASSENGER
VEHICLE
2,35,933 8,317
(-76%)
30,749
(-87%)
May 2019 Ô After nil sales in April, Ô At the end of May, out
May 2020 1,59,039 May is turning out to be of 26,500 outlets, only 60
only slightly better for the per cent showrooms and
Source: Federation (-89%) auto sector; overall vehicle 80 per cent workshops
of Automobile
Dealers registrations fell 88.9 per were operational in the
Associations cent during the month country

Tough Fight
Economic measures against
China — where they
work, where they don't
BY JOE C. MATHEW & SUMANT BANERJI
CAUSE AND
EFFECT
POLICY: Between POLICY: To pro-

2014 and 2016, In- tect domestic in-
dia reduced import dustry, safeguard
duties on many and anti-dumping
electronic items duties imposed on
and machinery steel from China
between 2015 and
EFFECT: Imports 2016
from China
increased sig- EFFECT: Steel
nificantly between imports from
2013 and 2018 for mainland China
electronic goods, and Hong Kong
solar panels/ peaked in 2014/15;
modules and other they have declined
machinery since then
M
umbai-based Vu Technologies is a relatively new
entrant in India’s fast-growing smart TV space. But it has
managed to hold its own against established rivals like Sam-
sung, LG and Sony as well as a slew of Chinese companies
like Xiaomi, Oppo and One Plus. The `1,000 crore company
claims to be the largest maker of 4K TVs in India and a seg-
ment leader in India’s online marketplace. The company has
not been impacted by India’s decision to discourage sourc-
ing of electronic components from its second-biggest bilat-
eral trade partner, China, through higher tariffs, but is not
too happy about the frequent changes in tariffs and policies
in the country. This, it says, prevents manufacturers from
committing funding to build own manufacturing capacities.
“From my perspective, the big challenge in government pol-
icy is that there is not much consistency. Every day, you read
the papers, and suddenly the active duty is 20 per cent, and
then 10 per cent. The point is, whether it’s 10 per cent or 20
per cent or whatever, don't change the policy for five years,”
says Devita Saraf, Co-founder and CEO, Vu Technologies.
“When you do that, it’s very harmful for entrepreneurs who
take risk and set up manufacturing and then find that, sud-
denly, there’s a political meeting and the policy is changed.”
Vu has a factory in Bhiwandi, though most of the large TVs it
sells in India are assembled in China and have parts sourced
from all over the world.
POLICY: India starts IN STORE FOR

increasing import duties THE FUTURE:
on mobile phones, LED On June 23, India
and CRT TVs, computers, imposed anti-
etc, from Budget 2016/17, dumping duty
and more significantly, in on some grades
2017/18 and 2018/19 of steel from
China, Vietnam
EFFECT: Import of elec- and Korea for five
tronic items, machinery years. It is the
and solar equipment, clearest indication
which peaked in 2017/18, yet of what may
began declining after follow in other
that. It coincided with sectors
a downturn in India’s
economy
Policy – China
The Trade War
25 per cent From August, basic Safeguard duty Between 2017 and The domestic steel
safeguard duty on customs duty of on import of some 2018, India also industry has sought
steel imposed from 20-25 per cent is grades of Chinese imposed anti- a flat 25 per cent
July 30, 2018, to proposed on solar steel imposed dumping duty on safeguard duty on
July 29, 2019. modules in first year from September certain grades of steel imports,
This was lowered and 40 per cent in 2015 till March steel from China. primarily from
to 20 per cent from subsequent years. On 2018. The duty On June 23, it China, to protect
July 30, 2019, to solar panels, a duty was staggered again imposed local players;
January 29, 2020, of 10-15 per cent has between 20 anti-dumping duty this has come at a
and 15 per cent been proposed from per cent at the on some grades of time the industry
fromJanuary August, which will start and steel from China, is hurting
30, 2020, to rise to 30-40 per cent 10 per cent Vietnam and Korea due to low
July 29, 2020 in subsequent years at the end for five years overall demand
For all the talk of promoting locally made Anti-dumping not just through Hong Kong, but also several
goods, be it in government contracts or house- measures taken South East nations like Singapore, Indonesia
hold appliances, from a policy perspective, against China and Vietnam. This has caused a dip in import
India’s push for a self-reliant economy is fairly In force: figures from mainland China, without a cor-
recent. The framework of the first two an- responding reduction in import dependence.
nual budgets of the Modi government after 91 The absence of clear classification of goods
2014 was to the contrary. Import duties were Initiated: (HS Codes) also plays a role as goods on which
slashed on a host of products and their compo- there is higher tariff or anti-dumping duty are
nents such as LED/LCD TV panels, microwave 11 often imported under different tariff lines or
ovens, solar equipment and laptops/desktops. simply under the “others” category. The gov-
It was only in FY17 and afterwards that duties ernment is attempting to plug most of these
on all these products were either partially re- Countervailing duty loopholes but the impact of its steps will be
stored or increased. In force: visible only in the medium term. The decline
The trend of imports from mainland Chi-
na and Hong Kong follows roughly the same
5 in value of goods imported from China and
Hong Kong should thus be seen as the result of
trajectory. For example, imports of electrical Initiated: a combination of factors of which protection-
machinery from the region rose from $14.81
billion in FY14 and peaked at $29.87 billion in 1 ist measures are just one part.
Import of solar panels and modules is
FY18, before falling in last two fiscals. In case perhaps the best example. Imposition of safe-
of other machinery, where focus of policymak- guard duties in mid-2018 to check import of
ers has been less intense so far, there is no de- solar panels from China has had little impact.
cline yet. Imports were $9.61 billion in FY14, rose for a cou- Further, India’s efforts to have 100 GW solar power by
ple of years and stagnated around $14.67 billion after that. 2022 largely depend on Chinese equipment as the country
The slowdown, or stagnation, in imports is in tune with accounts for nearly 80 per cent of India’s solar panel and
global trade trends. A decline in global demand will auto- module imports. This cannot be substituted by local pro-
matically impact import of raw materials to produce goods duction in a hurry. Any ban on Chinese imports or substan-
for exports. Growth in India’s overall exports and imports tial increase in duties is only likely to harm domestic power
had been declining long before Covid-19 disrupted sup- producers in the short term. “There was an attempt to curb
ply chains and muted domestic demand. India’s efforts to imports from China with safeguard duties but it was not
make imports from China expensive have led to re-routing, very successful. We are not in a position to self-sustain. Chi-

The Barriers
Imports of key goods from China and Hong Kong ($bn)
29.87 29.29
Electronics and electrical machinery
27.80
Nuclear reactors, boilers, machiney &
mechanical parts 23.08
Iron & steel
20.76
Solar panels and modules
Source: Commerce Ministry 17.41
14.81
14.67
14.51 13.68 14.67
11.24
10.32 10.70
9.61
10.11
4.11 3.53 2.64 3.18 3.34

3.02 2.22
2.84
0.60 1.97 3.43
2.83 1.74 1.33
0.40 0.60
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
na has the full value chain for manufacturing solar panels, Bureau of Indian Standards (BIS), is bringing more prod-
modules and cells,” says Ashish Khanna, Managing Direc- ucts under compulsory quality certification. In the last six
tor, & CEO, Tata Power Solar & President, Tata Power Re- months, standards have been reviewed or introduced for
newables. “They also have the scale that makes them cost- steel, chemicals and fertilisers, air-conditioners, plugs and
effective. For us, till the time we have the full supply chain, sockets, pressure cookers, electric cables, rubber hose for
any abrupt stoppage (of imports) will harm the industry.” LPG, aluminium foil, toys, flat transparent sheet glass, etc,
He adds: “We need a concrete policy that incentivises man- all aimed at making imports from China less attractive. The
ufacturing of the full supply chain. It is capital intensive, but BIS has also notified that products such as LED modules
given the demand for renewable energy that India is pro- for general lighting, keyboard, induction stove, ATM ma-
jected to see, it is possible. Till we have the full supply chain chines, USB external hard disk drive, wireless headphone,
here, stopping imports abruptly will harm the country. earphone, USB storage devices above 256 GB, electronic
music system, etc, all mainly imported from China, will
More Measures have to undergo quality compliance from October 1. The
The iron and steel sector is an outlier here. Anti-dumping cumulative effect of these measures, Commerce Minister
duties imposed by India to curb dumping from mainland Piyush Goyal tweeted, will see the country in the "next five
China between 2014 and 2016 produced the desired results. years fulfill our aspirations, encourage entrepreneurship
Imports of iron and steel from China between 2015 and and our businesses to grow, make quality products, become
2018, which peaked in the second half of FY15, have been the global factory of the world, create new job opportuni-
declining ever since. ties and ensure a better future for every citizen of the coun-
Despite moderate success, the government seems to be try.” Incentives and protectionist measures alone may not
pinning a lot of hope on such measures as it expects high be enough to fulfill this dream. As Vu Technology's Saraf
tariffs, anti-dumping duties and mandatory standards to points out, lack of consistency in policy — like reducing and
make India less reliant on China. It has already raised tar- then restoring duties in a span of just three years — could
iffs on 3,465 items in the last three years to protect domestic reduce the appetite of industry to invest in manufacturing
industry. According to the World Trade Organization’s da- in the country. Some even believe it will be unrealistic for
tabase, India has 92 anti-dumping measures against China India to insulate itself from China and make each and every
in force, and investigations on another 11 are in progress. machine component in-house . Considering the tensions at
Similarly, it has initiated 203 sanitary and phytosanitary the borders, expect a lot of action on the trade front.
measures against WTO member countries, including Chi-
na. In addition, India's official standards setting agency, @joecmathew; sumantbanerji

From Left (Standing): Gopichand Hinduja,
Prakash Hinduja, Ashok Hinduja with
Srichand Hinduja (seated)
What the
Fight is
About
Cracks in
July 1, 2014:
The brothers
reportedly sign
an agreement
that assets held
by one brother
belong to all and
The Hinduja
appoint each
other as their
executors
Undivided 2015:
Srichand
Hinduja sought
to disavow the
agreement
signed with
Family
the other three
brothers; the
family dispute
started
Hinduja family seems headed for Sep 4 2019:

a split. Why a family constitution Hinduja Global
Solutions
may have helped board accepts
resignations
of cousins
Ramkrishan
Hinduja
BY NEVIN JOHN (chairman),
Shanu Hinduja
(co-chairperson)
and Vinoo
Hinduja
(director)
O
ver the past 50 years, the Hindujas have epitomised
bonding, as they dined, prayed and holidayed together,
even as the family expanded from the second generation
to the third and fourth generations. The business empire
June 23, 2020:
also grew as they moved headquarters from Shikarpur in Vinoo, on
Sindh province of today’s Pakistan to Tehran and then behalf of
London, though most of their businesses are headquar- Srichand, moves
tered in India. High Court
of Justice in
In fact, it was the unity of the second generation – the London seeking
four sons of patriarch Parmanand Deepchand Hinduja – separation.
Srichand (84), Gopichand (80), Prakash (75) and Ashok Wants her
(70)– that helped them sail through political controver- family to control
Hinduja Bank
sies, including the one in London in which a British cabi-
net minister lost his job, and the Bofors scandal, which
shook Indian politics in the late 80s.
PHOTOGRAPH BY UMESH GOSWAMI 26 July 2020 Business Today 21

Corporate – Hindujas
The Three
Generations
Parmanand Jamuna
Deepchand Hinduja Parmanand
Founder, Hinduja Group Hinduja
Girdhar
(Son)
(1932-1962)
Srichand Gopichand Prakash Ashok

(Son) (Son) (Son) (Son)
Renuka
(Daughter)
Shanu Vinoo Ajay Ramkrishan

(Daughter) (Daughter) (Son) (Son)
Rita
(Daughter)
Sanjay Dheeraj Shom Satya Ambika

(Son) (Son) (Son) (Daughter) (Daughter)
That was then. Today, the Hinduja Group is on the 2014 letter to take control of Hinduja Bank (Switzerland),
verge of a vertical split as the three younger brothers rally which was in Srichand's sole name, resulting in the legal
against the family of Srichand P. Hinduja, the chairman of battle. The cracks started surfacing as the third generation
the group who was instrumental in creating its financial —the children of the four brothers — started moving up the
institutions, including IndusInd Bank and Hinduja Bank ladder and holding vital positions in family businesses, say
(Switzerland). The five group companies which are listed sources in the know. “Though the brothers were close ini-
together generated revenues of `65,700 crore and profits of tially, problems cropped up between daughters of Srichand
`5,500 crore in 2018/19. and their cousins, who are on boards of group companies,”
The root of the current rift lies in 2014, when the broth- says a source from another business family.
ers signed a letter that assets held by one brother belonged Documents submitted to the High Court in England
to all. The three younger brothers allegedly tried to use the show the family dispute had started way back in 2015.

Srichand Hinduja himself sought to disavow the agreement and principles,” they said.
signed with the other three brothers on July 1, 2014. Presiding over a private hearing in the Chancery Di-
The elder Hinduja sought a meeting with his brothers in vision of the High Court, Justice Sarah Falk agreed that
2015 to discuss an exit route, but that did not work out. They Srichand Hinduja’s daughter, Vinoo, could act on her father’s
had an unpleasant discussion during a board meeting in behalf as his “litigation friend” and safeguard her father's
2018 too. By then, the family had two camps — Srichand’s interests due to his ill health. Sources close to Srichand’s
daughters Shanu and Vinoo on one side and the rest of the family say that though the initial claim is for the Swiss bank,
family on the other. Prakash Hinduja, the third brother, the matter will grow to gain control of one- fourth of the
who initially supported Srichand for nullifying the 2014 let- entire assets of the Hinduja family. Both the parties did not
ter, also switched sides, says another source in the group. comment on detailed questionnaires from BT.
The current legal battle is over ownership of Hinduja
Bank (Switzerland), though it may not stop there. New-Gen Issues
Vinoo Hinduja moved the High Court of Justice in Lon- The Hinduja Group is largely controlled by the four broth-
don, acting on behalf of her father, asking for separation. ers. But operations of most businesses – Ashok Leyland,
She wants her family to get control of Geneva-based Hin- Gulf Oil, Hinduja Renewables, GOCL, Hinduja Bank (Swit-
duja Bank (Switzerland), in which her father is chairman zerland) among others – are headed by the third generation,
emeritus and elder sister Shanu is chairperson. Shanu’s except IndusInd Bank, where professionals are in charge.
son Karam Hinduja was appointed CEO of the bank in mid- However, the promoter holding company of the bank is
June; this had added fuel in the simmering feud. controlled by youngest brother Ashok Hinduja as chairman.
Outsiders are intrigued why Srichand’s family has
No Family Constitution staked their claim only for this bank. “It
In many business families, as new gen- is likely that they are counting it as an
erations come on board, a family con- asset outside the overall family assets
stitution is framed. Family constitu- Outsiders are of the Hindujas. They will claim their
tion advocates point to recent tussles
and splits in high-profile business fami-
intrigued why portion of other businesses as well,”
says a banker in Mumbai.
lies — the Ambanis and the Bajaj fam- Srichand’s Srichand’s daughter Shanu is chair-
ily, to name just two — as a good reason
to draw such instruments. In Japan, the
family has person of Hinduja Foundation, US. Vi-
noo, who has filed the litigation against
Mitsui family constitution dates back staked its claim the uncles on behalf of her father, is
to before 1800. European business only for director of Hinduja Ventures Ltd, Hin-
families like the Mulliez family that
owns Auchan, one of France's biggest
one bank duja Group India Ltd and GOCL Cor-
poration.
retail chains, have had family constitu- Hinduja Bank (Switzerland) was
tions that go back decades. founded by Srichand Hinduja in Gene-
In India, the Dalmias, GMR Group promoters, the va in 1994. It is a small bank with assets of 343 million Swiss
Burmans of Dabur and Murugappa Group promoters francs (`2,744 crore) as of 2018. The bank offers person-
have formal family constitutions. The Singhania-run JK alised services to its high net worth customers. It also owns
Group has an elaborate family parliament called the JK close to 5 per cent in Ashok Leyland.
Organisation. Gopichand’s two sons — Sanjay and Dheeraj – are
The Hinduja battle is similar to that of the Bajaj family heading two prominent businesses in the group. However,
where also it was one brother versus the rest. Shishir Ba- daughter Rita is not in business. The management control
jaj’s family finally separated from Rahul Bajaj and cousins of the automotive business is under Dheeraj Hinduja. He
to chart out a new journey. The families of Rahul Bajaj and is chairman of the second-largest manufacturer of com-
his cousins reached a family agreement to ring-fence busi- mercial vehicles in India, Ashok Leyland. Dheeraj is also
nesses from future disputes. Management responsibilities the chairman of Hinduja Tech, the engineering and digital
have been given to qualified family members — Rajiv Bajaj technologies service provider for automotive manufac-
got the responsibility of Bajaj Auto and his younger brother turing industry, and Hinduja Leyland Finance Ltd, a non-
Sanjiv Bajaj got Bajaj Finserv — but every third generation banking financial company for vehicle financing.
family hold stakes in all businesses. It is time for Hindujas Sanjay Hinduja is chairman of Gulf Oil International
to consult the Bajaj’s. and India-listed Gulf Oil Lubricants India Ltd. Gulf Oil has
The three Hinduja brothers, who are defending the a manufacturing facility in Silvassa and over 350 distribu-
case, said in a statement that Srichand’s health has been tors and 50,000 retail counters in the country. Ashok Hin-
deteriorating for a number of years. He is suffering from duja’s son Shom is director in the Indian business. It is one
Lewy Body disease, which is a form of dementia. “It of the largest independent downstream lubricant compa-
is very unfortunate that these proceedings are taking nies in the world with sales in over 100 countries. It owns
place as they go against our founder’s and family's values blending plants in Argentina, China, India, the Philippines

Corporate – Hindujas
THE PIE
IndusInd Bank & Ashok Leyland are the
biggest assets of the family
Market Cap (in ` cr)
NXT GOCL Hinduja Gulf Oil Ashok

Digital Corporation Global Lubricants Leyland
Solutions India IndusInd
811.94 873.47 13,782.30 Bank
1,367.45 2,855.79
32,920.11
and the United Arab Emirates. Gulf Oil Lubricants India sponsibilities. Besides Hinduja Bank, Srichand also holds
posted a profit of `203 crore on a revenue of `1,644 crore in chairmanship of the entire group and the CSR arm, Hindu-
FY20. Another Hinduja group company, GOCL, acquired ja Foundation. He conceived the idea of IndusInd Bank and
US-based specialty chemicals maker Houghton Interna- executed it with contributions from the NRI community.
tional Inc. for $1.05 billion in 2012. Gopichand is co-chairman of the Hinduja group, but
Prakash Hinduja has two sons, Ajay and Ramkris- he is in charge of operations of Hinduja Automotive Ltd,
han, and a daughter, Renuka. Ajay is Chairman of GOCL UK, as chairman. The two eldest brothers, Srichand and
Corp. The second son, Ramkrishan, was vice chairman Gopichand, are based out of London. Gopichand led the
until March 2019. GOCL operates in real estate, land transformation of the group from a Indo-Middle East trad-
development, infrastructure contracts, commercial ex- ing operation into a multi-billion dollar transnational con-
plosives (through DL Explosives Ltd), detonators, min- glomerate. He also spearheaded acquisitions of Gulf Oil
ing, chemicals and accessories. The company’s realty and Ashok Leyland in the 1980s.
division is building a 40-acre IT township, ‘Ecopolis’, in The third brother, Prakash, heads Hinduja Group (Eu-
Bengaluru in association with Hinduja Realty Ventures, rope), as chairman. He joined the family business in Tehran
which is headed by Ashok Hinduja. Ajay is also on board and later moved to Geneva and took charge of the group's
of IndusInd International Holdings Ltd, the promoter of European operations. In 2008, he moved to Monaco.
IndusInd Bank. Youngest brother Ashok Hinduja, Chairman of Hinduja
Ramkrishan Hinduja was Chairman of Hinduja Global Group of Companies (India), is based out of Mumbai. From
Solutions until last year, while Shanu was co-chairperson an operational point of view, he has a bigger role among the
and Vinoo a director on the eight-member board. But the brothers. Ashok joined the family's expanding business at a
cousins left the board in September 2019 after a bitter bat- young age, looking after affairs in India. He serves as Chair-
tle. Sources said differences among family members were man of IIHL (Mauritius), the parent promoting company of
impacting the functioning of the business. The tension IndusInd Bank. He is also Chairman of Nxt Digital Ltd, the
within the family was building up for over a year. media and entertainment vertical, and Hinduja National
Ashok Hinduja has two daughters, Ambika and Satya, Power Corporation Ltd, the company that runs a 1,040 MW
and one son, Shom. Shom joined Hinduja group in 2014 af- thermal power plant. He is also Chairman Emeritus of BPO
ter working with KPMG. He is now Chairman of Hinduja firm Hinduja Global Solutions,.
Renewable Energy Private Ltd and a director on Hinduja The family holds 15 per cent in IndusInd Bank. The Hin-
National Power Corporation Ltd and Gulf Oil Lubricants dujas recently applied to the RBI for increasing their stake
India Ltd boards. Ambika Hinduja is a former Bollywood to 26 per cent, but failed to get the nod. In FY20, the bank’s
film producer who produced movies Teen Patti and Being total income rose 28.05 per cent to `35,735.50 crore. Consol-
Cyrus. She is married to producer Raman Macker. The sec- idated net profit grew 35.07 per cent to `4,458.18 crore. The
ond daughter, Satya, is a DJ and music producer. balance sheet increased 10.59 per cent to `3,07,229 crore in
Each brother has been assigned separate business re- March 2020 from `2,77,821 crore a year back.

Litigation Targets port a family arrangement are that disputes are avoided in
The Hinduja brothers had in 2014 signed on a document the family, the honour of the family is safeguarded, or var-
saying the assets held by one brother belong to all and that ious obligations, morally binding on a family, are provided
each of them will appoint others as their executors. But for, or family property is continued in the family, adds
now, family patriarch Srichand Hinduja and his daughter Vaidyanathan.
Vinoo want the letter to be declared of “no legal effect” “As far as the Hinduja brothers are concerned, their
and the family's assets be separated as per his wish. conduct in public and the manner in which their share-
Based on this, it appears that one of the key questions holding is held in their Indian businesses (no direct
here for the court is whether the 2014 document, at the ownership, all holdings through multiple promoter com-
centre of the dispute, is an informal agreement, a will or a panies) suggest that they are in it together. It was never
family arrangement, says Ramesh Vaidyanathan, Found- really known to the general public how much each brother
er and Managing Partner of Mumbai-based law firm Ad- held in these companies,” says Vaidyanathan.
vaya Legal. “If such an arrangement is entered into bona Given the Hinduja brothers’ high profile, their large
fide and terms are fair in the circumstances, the courts circle of influential friends can potentially act as me-
will readily give consent to such an arrangement than to diators. So, experts refuse to ignore the possibility of an
avoid it. A family arrangement will bind all the parties to out-of-court settlement. “If the family wants to retain
the arrangement and will preclude the brothers from re- the $13 billion fortune as joint property, they should in-
voking or challenging the same if they have taken advan- troduce a family constitution to avoid disputes. Like in
tage under the agreement,” he adds. the Bajaj group, the separation of management control
However, family arrangements are generally governed and cross-ownership of promoter families can be pos-
by principles that are not applicable to dealings between sible only through family settlement agreement,” says an
strangers. The predominant concern of the court when executive. Perhaps, the brothers may wish to go along on
deciding the rights of parties under a family arrangement similar lines.
or a claim to upset such an arrangement is the interest of
the family. Considerations that will lead a court to sup- @nevinjl
T E C H N O L O G Y S P E C I A L LEAD ESSAY
New Biz
Models
BUSINESSES ARE
INCREASINGLY
ADOPTING
SAFER AND
SMARTER WAYS OF
MANUFACTURING
AND DELIVERING
SERVICES
BY JOE C. MATHEW
the midst of the Covid-19 lockdown, Siemens India,

which makes turbines and turbo compressors, motors and
EMERGING generators, transformers and advanced medical imaging
BUSINESS equipment, had to commission some machines in far-off loca-
MODELS tions. On normal days, its engineers would have flown to each
site and got the machines up and running. With air, rail and
Smart solutions road travel not possible due to the lockdown, it had to work
in urbanisation, remotely, using a technology that wasn’t the first choice of
surveillance,
many of its clients until that moment. The Siemens engineers,
farming,
construction sitting in their homes, looked at the digital imprint of the ma-
chine which was captured real time through a 3D-glass worn
Robotics and by a person at the site. Directions were given remotely, for ex-
automation ample which wire needs to be connected where, just as the en-
gineer would have done sitting inside the machine at the site.
Digital push Installation of these machines meant savings in travel
for healthcare costs and increase in efficiency. “You begin to realise through
sector the experience of Covid that a lot can be done in a different
way. There are new business models, there are new ways of
Remote working that are emerging because people could not physi-
healthcare
cally go out,” says Sunil Mathur, CEO, Siemens India. The
Mumbai-based company provides technology solutions for
Contactless
solutions for sustainable cities, smart grids, building technologies, mobil-
smooth global ity and power distribution. “Digitalisation was always being
trade talked about, but now, it has become a reality, and I’m not

HOW THEY ARE CHANGING

LANDSCAPE
What KPMG Projects
Shift towards Digital push Move towards Building Supply chain

localisation variable cost sensing and resilience
models control tower
capabilities
WHAT NITI tele-healthcare, robots, 3D printers....” And

AAYOG many more. Over the past three months, as
MEMBER V.K. the world has been locked down, companies
SARASWAT have been constantly reimagining the way
FORESEES business is done, deploying an array of tech
tools to do things differently. In India, the
Firms repurpos-
pandemic has advanced the introduction of
ing manufactur- digital solutions across industries. Today,
ing capacity no one bats an eyelid if one talks of tele-con-
sultation, adopting artificial intelligence
Remote infra- solutions in agriculture or use of machine
structure man- learning in manufacturing.
agement Global consultancy McKinsey said in its
PHOTOGRAPH BY YASBANT NEGI
“Future of Asia” report in May that digital
Shift towards
capabilities proved to be even more criti-
GM crops in
agriculture cal in context of the pandemic as there was
talking about getting your pizza online, acceleration in digital adoption across sec-
that’s one part of it. I’m talking about indus- Smart surveil- tors. It said Asia could unlock $440-620
trial processes, I’m talking about running lance billion of economic profit by improving
power plants, I’m talking about making performance of companies and investing
energy more efficient,” he adds. This can Pre-fabricated in value-creating sectors in post-Covid
mean huge cost savings for clients. “For ex- construction years. “The corporate ecosystems operat-
ample, in cement plants, 40 per cent of the system ing in Asia will be tested by the extent of
cost is electricity. If you are able to save 10 the Covid-19 shock, which could raise com-
per cent energy costs and energy is 40 per petitive intensity but also offer new oppor-
cent of your total cost, you have saved 4 per tunities for outperformers to pull further
cent,” says Mathur. ahead,” it said, adding that “whether it’s
Siemens is not an exception. Umpteen technologies and their the emergence of digital health solutions
possibilities have proven their mettle since March after the Indian such as tele-health or productivity gains
economy went into the lockdown mode. As V.K. Saraswat, mem- of energy companies through robotics
ber of the government’s apex think-tank, Niti Aayog, says, “Post- and automation, digitisation is a key lever
Covid days will be that of smart surveillance, indoor farming, au- in all sectors.” The report covers health-
tonomous stores, telematics fleet management, digital factories, care, pharmaceutical, energy, real estate,

financial services and consumer goods
sectors, pretty much echoing Niti Aayog’s
Saraswat.
Aiding Healthcare
Technology is not only helping companies
do business, it is also changing the way they
function. “Remote and virtual care solu-
tions such as tele-ICU, e-ICU and AI-based
auto-positioning tools will see an explosion
in adoption due to Covid-19 given their abil-
ity to deliver care remotely,” says Nalini-
kanth Gollagunta, President and CEO, GE
Healthcare, South Asia. In fact, on June 22,
the day he was expressing his views, All In-
dia Institute of Medical Sciences (AIIMS)
in Jhajjar was seeing deployment of Bengal-
uru-based GE Healthcare’s Centricity High
Acuity Critical Care, an e-ICU solution to
digitise and manage internal workflow of its
ICU department, comprising over 80 beds.
The hospital was thus becoming capable of “THERE ARE
tapping into clinical expertise of other AI- ra. Remedo had 400 doctors in its cus-
IMS centres, including the prestigious one
BUSINESS tomer list three months ago. Today, it
in Delhi, to deliver high-quality care. The MODELS, THERE has 3,000. The platform runs on DIS-
use of virtual care solutions is unlikely to ARE NEW WAYS OF HA (Digital Integrated Smart Health
come down even after Covid-19 is tamed as WORKING THAT Assistant), which connects doctors
governments realise the need to strengthen with patients via customised plans. Its
ARE EMERGING
the health system. Virtual care solutions are features include consultation and fol-
the only way forward given the geographi- AND HAVE low-up reminders; diet, exercise,
cal challenges and huge variations in quality EMERGED health & lifestyle tips; medical record-
of health infrastructure across states. BECAUSE PEOPLE keeping/reminders; and daily educa-
COULD NOT tional videos and images. The model is
here are more reasons why not based on the pandemic but rising
new business models are
PHYSICALLY number of patients with chronic con-
here to stay in healthcare, GO OUT” ditions in India. Nearly 25 crore Indi-
says Ruchir Mehra, CEO & Sunil Mathur ans have at least one chronic condi-
Co-founder of Noida-based CEO, Siemens India tion, he says, adding that Covid gave a
Remedo, a chronic condition management big demand push. “Our goal has
platform that helps doctors manage their changed as the market has changed.
patients. Mehra, whose platform saw a huge Earlier, our goal was to reach 3,000 doctors in a year. Now, we are
jump in user base during the lockdown, says targeting 20,000.”
the sheer number of people with chronic ail-
ments such as diabetes in India makes tech- Enhancing Security, Safety, Trust
nology-led patient management a must Enhanced safety and security is very much part of the Covid-19
once stakeholders, that is, doctors, under- prevention plan. This has triggered development of newer prod-
stand its benefits. “The last three months ucts. “Almost everything is being re-imagined because of avail-
have been a watershed for the health tech- ability of technology,” says Ujjwal Munjal, Co-founder, Hero
nology industry in terms of the sheer num- Electronix, Delhi. The company, which focuses on building prod-
ber of people who are becoming receptive to ucts and services in the connected technology value chain, has
technology in healthcare. The backbone has developed an indoor and outdoor camera with real-time mask
been telemedicine. But on top of that is detection feature. Among products and solutions developed is
chronic condition management," says Meh- a Covid-compliant automated building HVAC monitoring and

control system for commercial buildings and offices, contactless

access control and attendance management system that can also
carry out contactless body temperature check and mask wearing
compliance check with the help of image analytics. There is also
an on-the-go real time temperature monitoring solution for field
staff. “We need a roadmap for innovation as what defines a prod-
uct today is software, data and artificial intelligence,” says Munjal,
bullish about the technology-led market that is on a steady growth
path in India.
he logistics industry, which had the tough task

of operating during the lockdown, is another
sector where technology has been helping im-
mensely. “On the commercial transport vehi-
cle front, estimates put adoption of telematics
at 25-50 per cent. The sector has been growing
both at factory level (line-fitted devices) and the retrofit market
level. Due to Covid, fleet operators that intend to expand opera-
tions are being pushed into the digital realm faster than expected.
Without knowing location of a truck easily, it is hard to consider it
for loads. Trucks without telematics devices are effectively invisi-
ble to new-generation freight exchanges,” says Luke Sequeira,
Founder of Goa-based logistics monitoring platform, Numadic.
He explains that in general, telematics
and digital transportation manage-
ment application — his business focus
— allow logistics coordinators to mi- “ALMOST EVERY-
nimise driving miles and time. THING IS BEING
Telematics can also help transport RE-IMAGINED BE- says. “Discovery (choosing the right truck),
managers identify if a truck moved proof of delivery and reporting, all three are
through or stopped in an affected CAUSE OF AVAIL- now online. On-boarding is also becoming
zone. “This provides indications of ABILITY OF TECH- digital. Today, if a trucker wants to join our
potential risk of coronavirus trans- NOLOGY. WE NEED platform, he has to go through physical veri-
mission.” A ROADMAP FOR fication. Someone has to verify the papers,
Artificial intelligence-driven plat- the vehicle. Here, we are now working with
forms that digitally transform enter-
INNOVATION AS e-Mudhra and other companies to come up
prises and trucking have gained a lot WHAT DEFINES A with a digital on-boarding platform where
of acceptance during the lockdown. PRODUCT TODAY IS truckers can submit KYC documents online
Prasad Sreeram, CEO and founder of SOFTWARE, DATA without physical verification.”
Cogos Technologies, Bengaluru, says AND ARTIFICIAL Agriculture practices, at farm, supply
their attempts to get truckers and en- chain and customer delivery levels, have
terprises on to various digital technol-
INTELLIGENCE” also undergone transformation that is irre-
ogies and processes met with heavy Ujjwal Munjal versible. One example is Hyderabad-based
resistance from the market in the Co-founder, UrbanKisaan, which builds farms in city
past. “Large e-commerce clients were Hero Electronix buildings and sells the produce to consum-
also insisting on paper trail. We had ers through a subscription-based app. “Our
to collect trip sheets from drivers, get vertical farms produce 30 times more than
them stamped and sealed from their side and our side and submit conventional farms and use 95 per cent less
it physically. We had electronic proof of delivery (ePOD) for a long water and no soil. Consumers have direct
time but they were not willing to accept it. Now, they have under- access to the farms, where they can harvest
stood that the process has to be contactless. So, we generate ePOD their own produce directly, as our farms
once the job is done; customers have also started accepting them. are in the city. As a result, we do not need
This reduces workload (of both sides) and number of processes,” he any middleman and warehouse. There is no

$440-620
touch point between the farm and the con-
sumer, reducing the risk of Covid spread.
We, as a farm, work in a highly protected en-
vironment with in-built safety measures,” BILLION
says Vihari Kanukollu, the founder. “Co-
vid has positively impacted the industry as Economic profit that Asia
could unlock by improving
we have become conscious of what we eat, performance of companies
where our food comes from and how many and investing in value-creating
people are involved in the production to sectors in post-Covid years
consumption process.”
Digital World
On May 28, the United Nations Conference
on Trade and Development (UNCTAD) an-
nounced the launch of a new project to help economy released in April, global consultancy KPMG said the pan-
governments and businesses in developing demic has radically disrupted traditional patterns and networks
countries keep transport networks and bor- of economic interaction and behaviour, and after this crisis, a new
ders operational and facilitate flow of goods normal has to emerge. “We are staring at more permanent, struc-
and services while containing coronavirus. tural changes in the way we live, work and play. It will lead to a fun-
The ‘three clusters approach’ of UNCTAD damental re-evaluation of assumptions and priorities, which will
can be summarised as contactless solutions be a challenge and an opportunity,” says the report. The study proj-
and good practices, maximising seamless ects seven ways in which the business landscape can shift, not only
connectivity and collaborative solutions for in India, but around the world, and hopes that leveraging the fol-
transport, trade and logistics operations. lowing will help in navigating the economically and socially viable
The first cluster aims at implementing UN path to the next normal — Shift towards localisation, agility, sup-
conventions and standards for seamless ply chain resilience, financial prudence, variable cost models, and
electronic exchange of data in digital trans- most importantly, use of digital control towers, digital twins and
port corridors, border crossings and trade ability to process both structured and unstructured data, apart
operations, as well as developing smart from the real digital push. A digital twin is a digital representation
rail and road connectivity. The second of a physical object or system.
promotes synergies among border agen- Essentially, the world is changing, and going digital. Business-
cies through empowering of national trade es are adopting cutting-edge technologies. In agriculture, farmers
facilitation committees, improvements in are now using apps to find out when to sow and reap. Meanwhile,
customs automation and identification of telecom operators are joining hands with social media companies
non-tariff barriers. The third gives special for a suite of digital offerings. Also, local kiranas are offering prod-
attention to international transit issues, ucts online. As Satya Nadella, CEO of Microsoft, said during an
which are multilateral, and sectoral coop- earnings call, “We have seen two years’ worth of digital transfor-
eration for ports as nodes of the global mari- mation in two months.”
time shipping network, rooted in regional Over the next few pages, we bring to you how various business-
and national contexts. All three clusters es and industries are changing or have changed their operations.
build on the UN’s proven conventions, stan- Read on.
dards, tools and instruments.
In a study on impact of Covid on Indian @joecmathew
T E C H N O L O G Y S P E C I A L FINTECH
A
Quantum
Leap
THE FINANCIAL SERVICES
SECTOR IS WITNESSING
THE ADOPTION OF NEW
TECHNOLOGIES AND
BUSINESS MODEL CHANGES,
ALBEIT IN DIFFERENT AND
INNOVATIVE WAYS
BY ANAND ADHIKARI
uring demonetisation, microfinance institutions (MFIs) rower is tech-savvy, friends and relatives
and small finance banks were forced to disburse loans by de- are often stepping in to fill the digital gap
positing the amount directly in bank accounts of borrowers, through Google Pay, Paytm and other
instead of the then usual practice of handing out cash on the channels.
site. The result: Within a few months, disbursals switched com- And this is just the beginning of the
pletely to bank accounts. journey towards 100 per cent EMI col-
After three-and-a-half years, the financial services sector is lection through bank accounts for banks,
staring at a similar transformation on the loan collection (EMI) non-banking financial companies (NBF-
front. “EMI collection numbers through digital channels have Cs) and fintechs serving the micro-bor-
surprised us during the lockdown months,” says Baskar Babu rower community.
Ramachandran, Managing Director and Chief Executive Of- Even big, high-street banks are wit-
ficer, Suryoday Small Finance Bank. So, while not every bor- nessing a change in customer behaviour.

EMERGING
BUSINESS
MODELS
Onboarding of
new customers
via video KYC;
opening of sav-
ings and current
accounts in
minutes
EMI collection
or loan meet-
ings on a video
platform
Use of remote
banking tech-
nologies, work
from home
Big increase in
cloud adoption
Expansion of
digital products
beyond cards,
personal loans
“Lot of customers are now willing to go banks and NBFCs, the virus outbreak pushed them to test every
through journeys in an unassisted man- technology available to connect with employees, customers and
ner. There is now a pull factor from cus- other stakeholders to continue operations. “We will use this op-
tomers,” says Anjani Rathor, Chief Digital portunity to leverage our digital assets to offer differentiated
Officer, HDFC Bank. customer experience and enable our employees to engage with
customers effectively,” says V.V. Balaji, Head, Business Technol-
Pressing The Pedal ogy Group, ICICI Bank.
For financial institutions, the technol- “Business model changes do not happen overnight. It is a
ogy was there even pre-Covid. But for journey for all of us,” says the CEO of a public sector bank. In
customers, privacy concerns remained. fact, the first big change started happening after the global fi-
“Many of these myths were broken dur- nancial crisis, when fintechs emerged as disrupters. Over the
ing the lockdown,” says one banker. For next decade, the industry saw emergence of a partnership model

T E C H N O L O G Y S P E C I A L FINTECH
HOW THEY’RE CHANGING Lesser use of

THE LANDSCAPE cash with digital
modes offering
quick money
Meeting finan- transfer
cial inclusion
objectives by New models like
reaching out P2P bringing in
to people in new sources of
remote areas money such as
from HNIs
Credit avail-
ability for dif- New, innovative
ferent types of credit products
customers such like early salary
as roadside tea (advance), small-
sellers ticket loans
and consumer
durable loans
where financial institutions and fintechs collaborated in lend- dering and other issues. The Reserve Bank
ing, payments and value-added services. The next phase will of India (RBI) has allowed video KYC.
see large banks and institutions working with technology com- Banks used it proactively during the lock-
panies to deliver more services digitally. down period to increase their customer
Banking services have gone digital in every possible way base. For new customers locked in their
during the lockdown. Be it opening accounts online, digital homes, banks, including Kotak Mahin-
lending, payments, transactions, back office or remote working, dra Bank, RBL, IndusInd and IDFC First,
digital has been the key. In fact, adoption of new technologies among others, launched the video KYC
and business model changes have spread into newer areas. facility. Kotak Bank recently came out
with its zero-contact video-based savings
or instance, customer interactions/engage- account. Hinduja group-owned IndusInd
ments at bank branches are switching to Bank launched an app which allows open-
digital modes. Private banks have integrated ing of current accounts digitally for self-
their artificial intelligence (AI)-powered employed, partnerships or even public and
chatbots or customer service platforms with private companies. Banks are using appli-
voice assistants like Google Assistant or cation programming interfaces (APIs) for
Amazon’s Alexa for checking bank balance, validation of KYC documents from sourc-
credit card transactions, etc. Banks are also integrating their es such as GST filings, MCA records and
services with WhatsApp due to the latter’s wide reach. Custom- Aadhaar database.
ers today have a range of choices to use the social media to reach
out to the bank. Challenges Remain
ICICI Bank was one of the first to leverage technology plat- IT infrastructure of a small private bank
forms such as robotic process automation and cognitive tools. is flexible, but for a large private sector
“The bank will scale it up further. This will also help us handle lender, a complete shift to digital can be
increased transaction volumes without manual intervention,” challenging. The rigidity of rules makes it
says Balaji. even harder for public sector banks. “Core
Another new area is video KYC. Until a few years ago, bank- banking technology in Indian banks, in-
ers were apprehensive that KYC regulations for account open- cluding the public sector, is very matured
ing cannot be met through digital channels due to money laun- today, but the challenge is to get the infra-

structure ready for video KYC, which in- THE DIGITAL holes,” says Harish Prasad, Head of Bank-
volves storing heavy video data and com- PUSH ing at FIS India. There are a number of re-
plex security encryption, among other mote working technologies or collabora-
things,” says Ankit Ratan, Co-founder of tion tools that global organisations with
Signzy, a customer on-boarding solutions 10 large businesses in multiple countries use
provider. CRORE to interact with one another. Rathor of
Transactions
The benefits are huge, though. Video processed by
HDFC Bank says there are platforms that
KYC has reduced the account opening time payment systems would get a good amount of flip from the
from a week to just a few minutes. In terms in India every day application side, especially contact cen-
of overheads, costs for banks have fallen tres, customer channels, and sales produc-
to `10-15 from `400-500 per account. tivity and sales optimisation units. “These
applications can take place from multiple
anks now plan to use vid- `6 locations like office, home, or even on the
eos for collection and re- LAKH CRORE move,” says head of technology of a private
covery as well. Small fi- Payments sector bank.
processed in value
nance banks, fintechs and Similarly, the Cloud is ripe for adop-
terms every day
new-age NBFCs engaged tion. In the last few years, the entire
in micro lending are set- banking industry was gradually moving
ting up infrastructure for virtual meetings. its applications on the Cloud. Covid-19
“Currently, we go to areas where dozens of
borrowers converge at one place. This can
90 has expedited the process. A lot of ap-
plications will now go on the Cloud. A lot
PER CENT
be done on a virtual platform with technol- Digital payments’ of institution will migrate to Sovereign
ogy,” says the CEO of a small finance bank. share in daily Clouds. “Cloud-based architecture will be
The proof of the pudding is in the eat- payments / the key enabler for overall strategy of the
ing. The encouraging digital numbers are transactions in bank. Information security will be a key
terms of volume
pushing banks to invest more in new tech- area with increased focus on digital chan-
nologies. Kotak Bank opened almost 74 nels, work from home and Cloud-based so-
per cent of its savings account through tab lutions,” says Balaji of ICICI Bank.
banking in the March quarter. In addition,
digital channels contributed to opening of
50 “All those perception issues like risks
or loss of control have started to change,”
PER CENT
66 per cent fixed deposits and 53 per cent Volume growth of adds Prasad of FIS India. New start-ups
new mutual fund systematic investment digital payments in or companies that have emerged over the
plans. The bank sourced 48 per cent of per- the last five years last several years are driving the change.
sonal loans and 41 per cent of credit cards “They are looking beyond the traditional
digitally during the quarter. The story is ways of working,” says Prasad. In fact, to-
no different in other private sector banks. day, one can encrypt customer data while
using the Cloud.
Remote Banking Digitisation is already changing the financial services land-
Work from home is the new normal for the scape by bringing in more people under the banking net. Small
industry, and so is remote banking. “We finance banks, for example, are reaching out to customers in
have enabled it through collaborative plat- far-flung areas and offering loans at much cheaper rates under
forms and scaling up of the IT infrastruc- the microfinance model than MFIs under the NBFC model.
ture. We have also enabled our customer Similarly, fintechs catering to the urban poor have brought a
care officials to operate from home, so large number of people under the credit net. New-age NBFCs,
that customer service is not impacted in which are geography-specific or product-specific (like SME,
any way,” says ICICI Bank’s Balaji. micro loans, consumer loans), are innovating to cater to a new
The financial services industry has class of borrowers on faster technology platforms.
always been rigid about information secu- The RBI has also been taking initiatives, like granting licenc-
rity and anything remotely related to the es to peer-to-peer players, payments banks and UPI payment
potential compromise of customer data. providers.
“The current lockdown has forced every- The shift to digital banking is, therefore, inevitable. The only
one to relook at those earlier stances. They question is the pace at which the transformation will take place.
are now revisiting every available tech-
nology that may be used to plug existing @anandadhikari

T E C H N O L O G Y S P E C I A L AGRICULTURE
Intelligent
Farming
AGRI FIRMS FIND NEW
OPPORTUNITIES IN USING AI TO
HELP FARMERS FIGHT PESTS, KEEP
SOIL HEALTHY AND
EVEN PREDICTING PRICES
OF THEIR PRODUCE
BY K.T.P. RADHIKA
Ravichandran is a fourth-generation farmer from

Poongulam village in Tamil Nadu’s Thiruvarur district. The
62-year-old owns 52 acres of land on which he grows rice, cot-
ton, pulses, sugarcane and black gram. For years, pests had
been attacking his black gram crop, and it took days, even
weeks, to consult agricultural experts. By the time he got the
remedies, the infection spread, resulting in crop loss.
Not anymore. Last year, just as he spotted shrunken leaves,
he downloaded an artificial intelligence (AI)-driven applica-
tion on his phone and uploaded photographs of the leaves. The
app, Plantix, took minutes to diagnose that the crop had crin-
kle virus infection and suggested remedies. The disease, if de-
tected early, is easily controllable by tackling aphid, small sap-
sucking insects that act as vectors for the virus. “The disease
was diagnosed in two minutes. I started remedial measures
that afternoon itself. I also used better irrigation methods and
harvested 850 kg black gram per acre, all thanks to AI,” says

EMERGING Deep-learning AI-based sensors AI-based Solutions AI-based solu-
BUSINESS algorithms to for giving hyper- diagnosis of for precision tion to predict
MODELS monitor crop/ local weather infections and irrigation/ prices of farm
soil health information, re- solutions irrigation auto- produce so that
mote sensing and mation farmers can
geo-mapping plan better

Ravichandran. The earlier output used to be 150

kg per acre.
In 2017, Maharashtra, the country’s biggest
cotton producer, was hit by its worst pest infec-
tion on cotton in recent times. More than 50 per
cent cotton farmers lost 30-60 per cent crop to
pink ball worms. In 2018, the state government
approached Wadhwani AI, a Mumbai-based AI
research institute. The institute built a smart-
phone-based AI solution to help farmers identify
the infection early. The solution, in the pilot stage,
will be rolled out next year.
AI is revolutionising Indian agriculture –
which employs almost 50 per cent of the country’s
total workforce – as tens of startups and technol-
ogy firms, including big IT ones such as IBM and
Microsoft, come up with solutions to age-old
problems faced by the agriculture sector
he Market: According to HOW THEY’RE CHANGING

Economic Survey for FY20, THE LANDSCAPE
70 per cent of India’s rural
households depend mainly Pest control Better yield and
on agriculture for livelihood. solutions can be market price infor-
Close to 82 per cent farmers implemented within mation increase
hours of identifica- income of farmers
are small and marginal. But the sector’s contribu-
tion of infection,
tion to national income was just 18.2 per cent in reducing crop loss More efficient use
FY15. It fell further to 16.5 per cent in FY20, says
of water, fertilisers
the survey, a clear signal that India’s farm sector is Data-driven insights and pesticides
highly unproductive. increase yields by
However, technology can change this. A task 30-50 per cent Information on
force set up by the Ministry of Commerce and In- packaging and stor-
dustry to explore use of AI for transforming India age reduces crop
has identified agriculture as a major area where spoilage
AI tools can increase productivity. Its report says
AI can help in all stages of farming right from pre-
dictive analysis of weather/soil to irrigation man-
agement and crop health monitoring to dissemi- $700 CAGR PROJECTED
nation of information and packaging and storage
MILLION
25.4% $3
of commodities. BILLION
Size of AI in by 2025
The global market for AI in farm sector was Agriculture Source: Grand
$700 million in 2019, according to research agen- Market in 2019 View Research
cy Prescient & Strategic Intelligence. The seg-
ment is growing at 25.4 per cent a year on average
and is expected to reach about $3 billion by 2025,
says a report by Grand View Research.
The Indian market is at a nascent stage but
that’s bound to change given the rise in popula-
80% 1.08
tion and demand for food. “AI solutions such as Proportion of HECTARES
soil and crop monitoring, predictive analytics, farmers who Average size of a farm
are small and holding, according
AI-enabled sensors for data gathering and robot- marginal to agricultural
ics are emerging, and farmers have started using census 2015/16
them,” says Jitesh Shah, Chief Revenue Officer,
CropIn, a Bangalore-based aggrotech company.

“AI ensures efficient farming and rise in Companies are also using deep-learning algorithms to pro-
yield while quickly solving problems.” cess data captured by drones, sensors or phones to monitor crop
What about small and marginal farmers? and soil health. Azure, for instance, has built an AI-based solution
“According to agricultural census 2015/16, that can provide soil-level data. Instead of a network of sensors, it
the average size of a farm holding is as small uses a smartphone’s Wi-Fi chipset to beam signals to the ground
as 1.08 hectares. This means farm-size in- and detect soil moisture/conductivity. The analysis gives insights
formation for benefiting small and marginal into how much water and fertilisers should be used. “Farmers get
farmer needs micro-level data at the farm- their phone close to the ground or put it on a tractor or a bicycle and
gate level as well as sophisticated AI tech- drive around, generating huge data related to their fields. This data
nology,” says Jayashree Balasubramanian, is analysed to get insights that can drive decisions,” says Chandra.
Director, Communication and Stakeholder The team is developing the technology further so that small farm-
ers can also afford it.
Weather Forecast/Pest Control

One big area where AI is being used is prediction of weather. “IBM’s
Watson Decision Platform provides accurate weather data with the
help of AI using satellite images of the farm and historical weather
data,” says Himanshu Goyal, India Business Leader, The Weather
Company, IBM. “Last year saw extended monsoon till November.
We could tell farmers that rains will be continuous and they must
plan for covering their crops or harvest in a certain manner. The
predictions helped them prevent short-term losses,” he says.
Tata Coffee, one of India’s largest integrated coffee cultivators,
uses IBM’s Watson Decision Platform
for Agriculture to receive weather fore-
casts and information about soil mois-
“AI-BASED HYPER- ture and temperature at coffee estates.
LOCAL WEATHER IBM has also tied up with Niti Aayog to
deploy its AI-based precision agricul-
Engagement, MS Swaminathan Research
INFORMATION ture solution in 10 districts of Madhya
Foundation (MSSRF), Chennai. HELPED FARMERS Pradesh, Gujarat and Maharashtra.
AVOID SHORT-TERM AI tools can also forecast prices that
Precision Agriculture LOSSES ” the crop will fetch in the market. For
A lot of farming involves guesswork. “Most instance, IBM has developed AI-based
decisions, including when to sow, irrigate, Himanshu Goyal price solutions for Karnataka for three
add fertilisers, pesticides, nutrients, and India Business Leader, The major tomato-growing districts of Ko-
Weather Company, IBM
when to harvest, anchor on guesswork and lar, Chikkaballapur and Belgavi and
instinct,” says Ranveer Chandra, Chief Sci- two maize-producing districts of Da-
entist, Azure Global, Microsoft. “However, if vangere and Haveri.
a farmer uses his traditional knowledge with AI tools are also helping farmers in irrigation. Most Indian farm-
data and data-driven information, agricul- ers still rely on rainfall or use flood irrigation. This lowers yields and
ture can be more productive, cost-efficient also leads to huge water wastage. Only 20-25 per cent farmers with
and environmentally friendly,” he says. access to irrigation use micro-irrigation techniques such as drips or
Microsoft, along with International sprinklers. AI tools can tell farmers the exact water needed to grow
Crops Research Institute for the Semi-Arid a crop. For example, Bangalore-based Avanijal Agri Automation has
Tropics, has developed an AI-based sow- launched an irrigation automation system to help farmers config-
ing app powered by its Cortana Intelligence ure and monitor irrigation systems remotely. “AI provides recom-
Suite that includes machine learning tools. mendations on how much irrigation should be done a day based
The app sends sowing advisories. It was on climate and soil moisture,” says H.S. Vijayeendra, Co-founder
rolled out in Andhra Pradesh in 2017 and is and Director at Avanijal Agri Automation. “This is done by using AI
being tried in other states too. The develop- to process satellite images. AI-based irrigation systems also help
ment of the app involved handling 30 years farmers minimise labour costs. “The in-house AI-based mobile ap-
of climate data with the help of AI for calcu- plication to control the irrigation system has reduced our labour re-
lating the Moisture Adequacy Index. quirement by 1/6th,” says Sudhir Devkar, a hydroponic farmer from

Maharashtra and founder of Kryzen Biotech. The company has

also developed an AI system to track prices of more than 50 crops
in Mumbai, Pune and Bangalore markets daily. “This gives us flex-
ibility to project market trends, requirements and prices to decide
crop cycles and expected return,” says Devkar.
Pest identification is another area where AI is working won-
ders. “Earlier, when changes occurred in leaves, we used to make
assessments using our experience and intuition,” says Ravichan-
dran. “I used to take the leaves to the Krishi Vigyan Kendra more
than 80 km from my field. By the time I reached, the leaves would
become dry, making it difficult to diag-
nose the disease. AI and machine learn-
ing changed this.”
Various states have also developed “TRADITIONAL
AI-based advisory solutions for crop KNOWLEDGE COU-
monitoring and pest control in local PLED WITH DATA
languages. For instance, Tamil Nadu’s AND DATA-DRIVEN
‘Uzhavan app’, released in November Another issue is reach. According to
INFORMATION
2019, identifies pests and offers rem- Rajesh Jain, Senior Director Programs,
edies in Tamil. A farmer has to upload a MAKES AGRICUL- Wadhwani AI, building technology is one
photo of the infection on the app. “It has TURE PRODUCTIVE, part of the problem. It is not possible for
reached more than five lakh farmers,” COST-EFFICIENT technology companies to directly reach
says Santosh K. Misra, CEO of Tamil AND ENVIRONMEN- out to farmers, especially the small and
Nadu e-Governance Agency, which has marginal ones. “To deliver and reach out to
developed the app.
TALLY FRIENDLY” farmers is difficult. Digital literacy is low,
Ranveer Chandra especially among small and marginal farm-
Business Model Chief Scientist, Azure ers. To solve this, we have big partners like
Most technology firms that offer these Global, Microsoft state and central governments and vari-
tools are not expecting marginal farm- ous farmer programmes,” he says. Also, AI
ers to pay for their solutions. That is tools are not foolproof. “They may be 95 per
why they are working on a B2B model. For instance, CropIn, which cent accurate. We have to educate farmers
was initially a B2C company, realised that the model was expensive to watch out for the remaining 5 per cent
for farmers and shifted to the B2B space. “We work with enterpris- and use their judgement too. It is a diffi-
es that have access to farmers, for instance, companies that are into cult exercise,” says Jain. AI tools also have
contract farming, fertiliser companies and financial institutions to be affordable and adaptable. If they rely
such as banks,” says Shah. on costly sensors, and are difficult to adopt,
IBM works with governments, banks, insurers and companies they won't be scalable, say experts. Another
in the agriculture sector. “Usually, costing for IBM's Watson Deci- challenge is comfort level of farmers with
sion Platform for Agriculture is calculated based on acreage and technology. “Many farmers prefer infor-
portfolio of our weather data services that are subscribed to,” says mation from other farmers. Technology
Goyal of IBM. remains a dispensable tool for them. Many
small farmers are not comfortable using
ack of Data/Awareness: Building AI tools is technology,” says Jayashree of MSSRF.
not easy, say experts. One big problem area is Still, with more intervention from the
lack of clean data. “AI needs data. In India, there government and affordable tools becom-
is not enough agriculture sector data. We have to ing popular, AI can turn around farming
start generating data on factors such as soil and make it profitable. “The real income for
moisture, irrigation quantity advised, irrigation farmers should come from farms and not
quantity achieved, weather, pests/diseases, crop yields and many government subsidies or freebies,” says Rav-
more in digitised form for every farm,” says Vijayeendra of Avani- ichandran. “For that, scientific tools such as
jal. More data will help processing of information with accuracy. AI can help farmers immensely in the com-
“Local knowledge is very important for AI. We gather a lot of data ing years,” he says.
from farmers and that is the learning cycle for AI engines,” says K.T.P Radhika is a freelance
Goyal of IBM. writer based in Chennai

T E C H N O L O G Y S P E C I A L TELECOM
TELECOM
TELECOM COMPANIES
ARE BUILDING DIGITAL
REVENUE STREAMS
TO JUMP INTO THE
GLOBAL FRAY
BY MANU KAUSHIK
et’s just accept it. Telecom is no longer exciting, the way it used
to be about 20 years ago, when mobile telephony was just picking
up in India and call rates were so high that only high networth in-
dividuals and senior executives could afford them. Free incoming
calls, which started in 2003, unleashed market potential the way
Reliance Jio has changed the data market by bringing down the per-
gigabyte cost to dirt-cheap level.
If one were to divide the history of the telecom sector accord-
ing to its landmark moments, the 1999 New Telecom Policy, the
2012 Supreme Court verdict in the 2G case and the 2016 entry of Jio
would stand out. Now, there’s another big trend under way which
has the potential to change the face of telecom forever.
The makeover of pure-play telecom service providers into digi-
tal companies is here. At the centre of this shift is the ongoing fight
between telcos and OTT (over-the-top) players, the large untapped
potential of digital services in India and the huge valuation upside
of becoming a digital player.
All leading telcos have taken the plunge. Each is taking a differ-
ent path to tap the trillion-dollar opportunity. As per the Ministry
of Electronics & IT estimates, half the potential $1 trillion value in

EMERGING Vodafone Idea
BUSINESS has launched
MODELS a business
continuity plan
to ensure its
Giving enter- enterprise cus-
prise solutions. tomers do not
Jio has tied up face disruption
with Microsoft in services
to bring Azure
cloud on its
network Leveraging
targeting SMEs cloud, AI,
automation and
blockchain. Jio
Partnerships bought Haptik
with industries last year to chal-
such as health- lenge Amazon
care, education, Alexa and
entertainment. Google Assistant
Airtel is selling in IoT market
HDFC & Bharti
AXA insurance
plans As connected
devices and
drones pick up,
and automated
cars become
reality, all telcos
are building
capabilities to
serve these
large markets

2025 will come from digital ecosystems HOW THEY’RE

such as financial services, agriculture, CHANGING THE
healthcare, logistics, jobs/skills mar- LANDSCAPE
ket and e-governance. “With need for
digitalisation across industries grow-
ing rapidly, the telecom sector had to
move from being a network provider
to one that offers customised digital
services,” says Karthikeyan Natarajan,
President and COO at tech solutions
firm Cyient.
The Next Big Leap

For long, telcos were providing the
connectivity layer, and anybody could
use that layer to provide services.
Despite investing heavily in build-
ing networks, they missed the chance
to run their own content. As a result,
they were compared to infrastructure
companies – with comparable valua-
tions – offering dumb pipes. Content
companies such as YouTube, What-
sApp and Facebook, which used telcos’
networks, made billions of dollars us-
ing the latter’s backbone. “The digiti-
sation-led disruption is threatening for
telcos as it puts their capex under pres- Jio has a suite Bernstein says Airtel is part- Vodafone
sure. Telcos have to deal with competi- of applications Jio-Facebook nering with Idea is build-
tion from tech firms like Google, Mi- and technolo- deal has the po- third parties to ing exper-
gies like IoT, AI, tential to unlock monetise its tise on the
crosoft, Amazon, Netflix and Apple to big data that $2 trillion mar- digital assets enterprises
redefine their operational landscape,” can increase ket opportunity side to de-
says a telecom consultant. its non-tele- by 2025 liver digital
Rajan S. Mathews, Director Gen- com revenues products
eral of COAI (Cellular Operators As- substantially
over the next
sociation of India), says if telcos had got
few years
their strategy right from the beginning,
they could have developed strong con-
tent apps and monetised network in-
vestments better. But, he says, all is not
lost yet. “We need licences, others don’t. We pay huge fees (licence For instance, in May, Jio apps (TV, Cinema,
fee, SUC); OTT players don’t. We can use our position to offer not Saavn) had 35.5 per cent market share in
just connectivity but much more. There’s nothing stopping telcos monthly active users as compared to 30.3
from offering search engines like Google or apps like YouTube and per cent for Disney+Hotstar, 14.8 per cent for
WhatsApp,” says Mathews. Amazon Prime, 9.2 per cent for Netflix and
Even as he seems over-excited about the potential of telcos, he 5.5 per cent for Airtel TV.
acknowledges that they have lost out on the consumer side of the For telcos, the share of non-telecom rev-
digital play and can make up for that with the work they are doing enues is still not significant but the growth
on the enterprises side. “Telcos are late in the game when it comes potential of digital revenues can be assessed
to building killer apps. They have lost that market to others. The from the recent investments in Jio’s hold-
only way to catch up is to tap the enterprises market, which is now ing company Jio Platforms. In less than two
beginning to grow,” he says. months to June, it received `1.16 lakh crore
That might not be entirely true. Surprisingly, as per Apptopia, by selling 24.7 per cent stake to 10 inves-
the share of Jio suite of apps is highest among all OTT players. tors. Interestingly, the stake sale didn’t take

VALUE OF GLOBAL TELECOM ECOSYSTEM
16 23 13 12 12 24
32 19 8 5 9 27
Voice/SMS Data IoT and M2M Content and Advertising Enterprise

VIdeo and Cloud
Figures in per cent; Source: EY
Total Value
$1.67 trillion 2015 $2.36 trillion 2020
250
CORE GROWTH AREAS AND OPPORTUNITIES

170
Figures in $ billion; Source: McKinsey
130
115 Value in Potential
90 2019 value by
70 70 2025
50 45 55
35 30
1 10 1 1 1 3 1 15 10
1 1 1
IT Business Electronic Agriculture Digital Retail Energy

Process Manufacturing Communications
Management Services
Financial Business Education Jobs & Skills Logistics Healthcare

Services Digitisation
(incl IoT)
place in Jio, which is one of the biggest pieces dreams of RIL that its Chairman Mukesh Ambani has envisaged.
among all Reliance Industries’ (RIL) assets. For instance, the majority stake in Embibe will allow RIL to
Global investors, led by Facebook, saw offer personalised digital education across segments such as K-12,
potential in combined digital assets of RIL higher education, professional skilling and vernacular languages.
housed under Jio Platforms. Over the past Close on Jio’s heels, Airtel has build a separate team of 1,200
two years, the platform entity has made people managing its digital assets. Airtel hopes it can generate
dozen-odd investments in areas like online meaningful revenue from its digital assets over the next 12 months,
music, AI, cloud, robotics, AR/VR and on- and once this vertical gains scale, hive it off.
line news services. As per brokerage Bern-
stein, Jio Platforms has spent `11,236 crore The Digital Race
in acquiring partial or majority stakes in Telcos have understood that their digital services have takers
Saavn, Haptik, Embibe, Asteria Aerospace, across the board – consumers, large enterprises, small and medium
Radisys and seven other companies. These businesses (SMEs), merchants, farmers. All three telcos – Jio, Vo-
tech investments can help realise the digital dafone Idea and Airtel – have taken the partnership route to garner

digital revenues.
Jio, for example, has announced a 10-year deal with Microsoft $2
to build large data centres across the country. Microsoft will de- TRILLION
ploy its Azure cloud to target large corporates and SMEs. India has Total available market for
over 50 million SMEs, accounting for 37.5 per cent of the country’s India's digital economy by
GDP. Jio could not only digitise SMEs but also offer them lending 2025, according to Bernstein
support through its financial services products. Jio already holds
a payments bank licence (with SBI) that can be leveraged to offer
SMEs and merchants a bouquet of services around loans, insur-
ance and mutual funds. set up professional responsive websites),
Then, the recent Facebook tie-up will help Jio on two fronts: apart from an advanced business e-mail
monetise data of its 388-million users and use Facebook’s What- system. “Vodafone Idea is also providing
sApp to digitise small merchants with its online-to-offline venture IoT solutions to Maruti Suzuki, Hyundai,
JioMart. “We expect RIL-FB to become a core platform for India’s and KIA. We are working on a GPS-based
digital economy. As more consumers and small businesses move tracking system for the logistics sector,” says
online, we see expansion of India’s digital TAM [total available a Vodafone Idea spokesperson.
market] and expect to reach $2 trillion by 2025,” Bernstein said in Digital transformation of telecom firms
its June 10 report. is surely not an India-specific trend. In the
UK, for instance, Vodafone is offering enter-
uch like Jio, Vodafone Idea and Airtel have prise IoT solutions around connected cars
announced a slew of partnerships over and automotive insurance. Telstra has also
the past two years. Take Airtel. In June forayed into cybersecurity, digital market-
2017, it began the digital journey by rolling ing solutions and IoT monitoring and track-
out a digital platform to serve SMEs and ing solutions. Likewise, in the US, Verizon
start-ups for their growing connectivity, offers cybersecurity, business communica-
communication and collaboration requirements. This was fol- tion and telematics (logistics, fleet manage-
lowed by launch of Airtel Xstream, a digital entertainment service, ment, dashcams for auto insurance). AT&T
last September. has expanded into media and entertainment
Of late, the Sunil Mittal-controlled telco has put the pedal to through the acquisition of Time Warner.
the metal with a series of tie-ups. It has partnered with Bharti AXA Sprint (US), Rogers, Telus, and Bell (Cana-
and HDFC to sell insurance products to its subscribers. It claims to da) are also expanding into digital services.
be one of the largest sellers of life insurance policies. On consum- So, even if every telco is providing al-
ers’ business side, Airtel is leveraging its platform to drive growth most the same kind of digital services, their
for Zee, Star, Netflix, Amazon, Eros and others. scale is likely to be different in India, and
“With our [digital] platform, we have been a partner of choice that will also be determined by their current
for several companies. On the business-to-business (B2B) side, we financial conditions. On the content side,
have leveraged our platform to drive new revenue streams. We have telcos might have lost the game to global big-
built partnerships in the work-from-home area – in cyber-security gies, but they can make up for the loss with
services, delivering managed networks, IoT (internet of things) and specialised solutions on the enterprises
delivering cloud services. Our partners here include Cisco, Google, side where competition is lesser. “In a world
Zoom, Microsoft, Palo Alto Networks and Symantec,” Airtel CEO which is increasingly getting digitised, one
Gopal Vittal said during the FY20 earnings call in May. Covid has shown that if not connected, even
The company plans to step up the digital game with more part- a small kirana store can lose business. Think
nerships in domains like education, content and financial services. of the need for large enterprises and SMEs to
Airtel will earn commission on transactions. “Airtel’s connectivity keep their business going,” says the telecom
layer and its potential to harness its vast subscriber data will bring consultant quoted above.
in new revenue streams for the telco,” says a telecom expert. As telcos shift gears to tap the vast
Vodafone Idea is not too far behind its rivals, at least in enter- digital space, their solid foundation, a large
prises sweepstakes. Its enterprise vertical – Vodafone Idea Busi- subscriber base (over a billion), and wide-
ness Services – is selling digital solutions to corporates, public sec- spread network infrastructure (towers, fi-
tor, government bodies, SMEs and start-ups through tie-ups with ber), will give them a definite edge over ex-
Google and Microsoft. Its WebBuddy, a suite of online presence isting tech firms.
tools for SMEs, enables integration with e-commerce platforms
to sell products, and provides a Do-it-Yourself website builder (to @manukaushik

T E C H N O L O G Y S P E C I A L KIRANA STORES
Digital
Kiranas
A LOT OF LOCAL STORES ARE GOING
ONLINE WITH HELP FROM TECH START-UPS
AND A CLUTCH OF FMCG MAJORS
BY AJITA SHASHIDHAR
PHOTOGRAPH BY SHEKHAR GHOSH

DIGITALLY SAVVY
HUL, through its Suvidha app, has

been encouraging kirana stores
to order inventory online. Its
Apna Store initiative helps kiranas
create their own online store
Reliance Retail enables kiranas

to put inventory online through
its PoS device. It also helps them
manage inventory and billing.
It wants to get over five-million
kirana retailers into its fold
The coronavirus pandemic has

forced kirana stores to think
about building a digital presence
agadwala Store is a household name in residential complexes of
Marol in suburban Mumbai. Just a call away, the kirana store deliv- To begin with, a large segment of
kirana retailers have started using
ers anything from a loaf of bread and eggs to monthly grocery list WhatsApp to accept orders and
at a speed no ecommerce major can match. During the initial days even put up inventory
of the lockdown, its owner, Samir Wagadwala, was the messiah of
Marol. When most nearby stores downed shutters due to lack of The stores are signing up with
supplies, he went from distributor to distributor to ensure that his independent distribution compa-
store was well-stocked. He also continued home delivery. nies such as ShopX and Udaan
and ordering inventory online
Wagadwala has a new feather in his cap, and he can’t stop talk-
ing about it. His online grocery platform, Wagadwala.com, went
A bulk of kirana digitisation solu-
live two months ago. It has been taking 25-30 orders per day. “I can
tion providers are start-ups such
see my entire inventory online, and when I run out of certain prod- as Near.Store, Snapbizz, Khata-
ucts, say Ashirvaad atta or Saffola oil, the website alerts me. It also book and StoreSe
notifies my customer when I get fresh stock. The online solution
also has a billing facility,” he says. Ecommerce retailers such as
Wagadwala Store may represent a fraction of the 15 million Amazon, Flipkart and Grofers are
neighbourhood kirana store network (88 per cent of the $800 bil- using kirana stores as last-mile
delivery agents
lion Indian grocery retail market) which has online presence, but
supply and distribution glitches due to the lockdown have com-
pelled a large segment of such stores to look at new revenue streams
via digital presence. This includes ordering inventory digitally.
The effort is being enabled by little-known startups from Snap-
Bizz and Store Se to Near.Store, Khatabook and Max Wholesale. Bangalore who has been forced to order over
SnapBizz, in business for six years, is funded by Ratan Tata and 30 per cent of her inventory on digital apps
market research firm Nielsen. Ashish Kumar, CEO and Co-Found- of Metro Cash & Carry and BigBasket. “I had
er, Near.Store, says his company got over 80 calls from kirana store no option but to order through an app dur-
owners in a couple of hours of posting an ad on Instagram. Prem ing the lockdown, but I am finding it conve-
Kumar, Founder and CEO of SnapBizz, says there has been an ex- nient,” she says. Kumari has also started tak-
ponential increase in digital appetite of kirana stores after the lock- ing orders on WhatsApp; she fulfills 20-30
down. The 8,000-merchant strong SnapBizz has onboarded an ad- WhatsApp orders a day.
ditional 1,800 merchants in the last 45-60 days. “We have achieved Arvind Mediratta, CEO, Metro Cash &
more than what we were able to in the last 12-18 months,” says Ku- Carry, says the once digital-averse kirana
mar. “Through our platform, their sales have gone up by 40-50 per stores are beginning to lap up technology.
cent in the last two months. The median basket has gone up from Metro rolled out its digital app on April 11
`600 to `900, and they have acquired 18-20 per cent new custom- and has seen a five-six times increase in on-
ers,” he says. line orders from kiranas. “The growth over
Ask Radha Kumari, owner of Baideshwara Stores in suburban the last few days has been like a hockey stick.

THE CHANGING
LANDSCAPE
Consumers placing orders on WhatsApp is

already the new norm
If a consumer goes online to search for gro-

cery products, it’s likely that the search will
throw up details of his/her neighbourhood
grocer. The consumer can go to the store’s
website, place the order and even pay online
A kirana store offering a variety of digital pay-

ment options will be the new norm
If the neighbourhood kirana store is onboarded

by Reliance Retail or Amazon, one can even
browse on kiosks set up by these companies at
the store and shop for non-grocery products,
which will be delivered by the kirana store
Our call centre helped them download the professional platform such as Amazon or BigBasket? The reasons
app and place orders. We also gave them an are simple. The consumer trusts him. Then there is the speed of
incentive of 1-1.5 per cent of the value if they delivery by virtue of being present in the vicinity of the consumer.
ordered on the app.” The kirana tech companies want to capitalise on these strengths.
On the demand side, a kirana store caters to 1,000-1,500 households
nboarding a kirana store in all. It does 200-250 sales in a day. On the supply side, about 100
and giving it a digital face- companies send him goods every week. He also works with 3-10
lift is high on the agenda wholesalers and two-three financial services players. “We are com-
of retail biggies such as bining both demand and supply sides. On the demand side, we are
Reliance Retail, Amazon helping him manage customers, get remote orders through the app
and even the country’s biggest FMCG major, and facilitating communication with consumers,” says Kumar of
Hindustan Unilever. Reliance Retail plans to SnapBizz.
get over five million stores into its fold. The With more and more consumers going for online shopping
idea is not only to make them last-mile deliv- in the Covid era, the forward-looking kirana stores (1-2 million
ery points but also help them manage inven- of the 15 million stores) are eager to have an online presence so
tory and billing through its PoS (point of that they don’t lose customers to online grocers. So, when you
sales) device. In the bargain, the stores will happen to search online for a packet of Maggi or Saffola oil, you
have to order inventory from Reliance. Simi- are likely to see the website of your neighbourhood grocer in
larly, Hindustan Unilever has the Suvidha search results with a catalogue as professional as that of an es-
App, through which it encourages retailers tablished marketplace.
to order digitally, while its Humara Store ini-
tiative is about helping kirana stores have Necessity, Mother Of Invention
online presence. The kirana store owner’s new-found digital appetite is a necessity.
As recently as January this year, he had no intention of going digi-
Smart Kiranas tal. Wagadwala says the only digital enabler in his store prior to
So, why would a consumer go online and or- Covid was a PayTM machine.
der from a kirana store and not from a more Therefore, to reach out to an audience that has largely been
ILLUSTRATION BY RAJ VERMA 26 July 2020 Business Today 53

AT A GLANCE
15
MILLION
No. Kirana Stores
$795
PHOTOGRAPH BY RACHIT GOSWAMI
BILLION
Indian Retail
Market
7-9 80
PER CENT PER CENT
Organised Unorganised
3
PER CENT
Ecommerce
“THE GROWTH OVER THE LAST FEW

DAYS HAS BEEN LIKE A HOCKEY
STICK. OUR CALL CENTRE HELPED
THEM DOWNLOAD THE APP AND pain point for most retailers,” says Naresh.
PLACE ORDERS." Khatabook has added 80 lakh active custom-
ers in the first 18 months of its existence. Na-
Arvind Mediratta, CEO, Metro Cash & Carry
resh hopes to touch 20 million in 12 months.
n SnapBizz, the merchant

averse to any digital intervention, the solution providers are has to download an id, and
trying to make things as simple as possible. Near.Store is giving an automatic link goes to
store owners a dongle at a monthly rental of `300 which they have his customers. When the
to plug into their billing machines. “Our dongle uploads all the customer clicks on the
products they sell to the website we make for them. The website link, the app is downloaded on her phone,
is in their name. If it is Patel Store, the website will say Near.Store/ and she can place an order, set delivery time,
Patel, so that the customer deals directly with the store owner, and pay through the app or opt for cash on
buys products from him, and also pays him directly,” says Kumar delivery. The app also optimises the supply
of Near.Store. Apart from the `300 a month that Near.Store earns chain by sending alerts to the distributor in
from a store, its main revenue comes from improving the store’s case the retailer is likely to run out of a par-
performance. “We take a convenience fee (which is 2-3 per cent of ticular product in the next few days.
the overall bill),” says Kumar. Online presence helped many kirana
Similarly, Khatabook is digitising shopkeepers’ accounts reg- stores aggregate orders from particular resi-
ister. From recording day-to-day cash dealings to keeping track of dential complexes and fulfil them at one go
credit dues, Ravish Naresh, Co-Founder and CEO of Khatabook, during the lockdown. In fact, a lot of stores
says his venture can reduce a shopkeeper’s cash problems by al- also started using WhatsApp. Abhinav
most half. “At the time of billing, the shopkeeper attaches a photo of Pathak, CEO and Co-Founder, Store Se, says
the bill to the app, and we send messages to his customers remind- a large part of kirana commerce will move to
ing them that they need to settle his dues. Cash flow is the biggest WhatsApp. He says most kirana store own-

“THROUGH OUR PLATFORM, THEIR
SALES HAVE GONE UP BY 40-50 PER
CENT IN THE LAST TWO MONTHS.
THEY HAVE ACQUIRED 18-20 PER CENT
NEW CUSTOMERS"
Prem Kumar, Founder & CEO, Snapbizz
ers are not open to conversations around

improving efficiency. “If you give them a
proposition through which you can drive
footfalls or revenue, they are happy to try it
out. WhatsApp is digital, drives revenue and
is easy to use. They also don’t need to down-
load an additional app. Most kiranas are tak-
ing 20-50 orders on WhatsApp per day. They
have also started charging people a conve- they believe they won’t be able to work with traditional distribu-
nience premium of `15-20. People are happy tors. Even we tried getting into PoS, and quickly realised it’s not
to pay,” says Pathak. StoreSe is working on going to work. We now just have a B2B business, which has grown
a model that will enable kirana stores to up- exponentially during the lockdown.”
date their inventory on different platforms, “On the one hand, many big retailers are telling kiranas that
including their own, through WhatsApp. they want to partner with them, while on the other hand, they
“They chat with our inventory pods and are competing with them. There is a trust deficit,” says Medi-
keep updating their inventory,” says Pathak. ratta of Metro.
Though companies such as SnapBizz and others are hoping to
he Sceptics: Dinesh onboard 3,000-5000 stores, one needs to remember that these
Patel, who owns a kirana will be restricted to the top 10-15 cities. “To de-risk their supply
store in suburban Mum- chain, they will increase their wallet share on platforms such as
bai, has been approached ours. Till yesterday, if they were buying 10-15 per cent of their in-
by Reliance Retail sever- ventory (from digital channels), they will increase it to 20-25 per
al times in the past. Reli- cent,” says BigBasket’s Choudhari.
ance offered to help Patel manage inventory, Kumar of SnapBizz agrees that the ecosystem will not change
billing and offered a host of other incentives dramatically. “The traditional distributors are not going to van-
through its PoS machine. The 60-year-old ish,” he says. “If you take any company which has 400-500 prod-
store owner has been refusing to join. He ucts, only 20 per cent have natural velocity. A Rin soap will find its
says he doesn’t understand Reliance’s way of way to the shop, but who is going to sell the long tail into that store?
doing business. “My cousin, who runs a store That’s what the distributor does. He goes and sells and cajoles the
in Thane, partnered with them and now retailer, gives him longer credit. If you take the distributor out of
seems to have been reduced to a delivery boy. the system, a company will be selling only 30 per cent of its prod-
His loyal customers place their orders di- ucts. While things will get better and more optimised, I am not a
rectly on the Reliance app,” says Patel. believer that things will be disrupted. Operating efficiencies may
While coronavirus disruptions forced get disrupted. For example, today you have 80-90 distributors vis-
kirana retailers to rethink plans to partner iting a shop and booking an order and making deliveries. The deliv-
with the big retailers, a large segment is eries may get consolidated, transportation may get consolidated,
sceptical that the retail biggies only want to but not visits to merchants and servicing of merchants.”
use their customer data and relationships. The store owners, however, are much more open to digitisation
Abhinay Choudhari, Co-Founder, BigBas- than ever before. They have started leapfrogging from a humble
ket, agrees that the bulk of kirana retailers calculator to the cloud.
are sceptical about joining hands with large
companies. “Most are scared of the PoS as @ajitashashidhar

T E C H N O L O G Y S P E C I A L COLUMN
Time For
Hyperscale Edge
Data Centres
AROUND 75 PER CENT OF DATA RESIDES
OUTSIDE INDIA. PUSH FOR LOCALISATION BY ANAND AGARWAL
REQUIRES DATA TO BE STORED WITHIN
THE COUNTRY
echnology has radically transformed the world we live in to this change. We are already seeing this
today. A borderless world is now a reality — with more than 4.6 happen — organisations like TCS, Twitter
billion people — 59 per cent of the world population — now con- and Optus announcing permanent shift to
nected through the Internet. India is rapidly picking up pace, work from home and collaborative tools
with more than 500 million people, almost 40 per cent of the like Blue Jeans, Slack, Zoom, and WebEx
population, having access to the Internet. We have come a long becoming the new mode of communica-
way with technology adoption, and yet this is just the beginning. tion. Every member of the family now
needs a dedicated Internet connection, it’s
Adapting to the New Order a basic necessity to perform daily tasks.
The global pandemic has made the shift to digital permanent. All of this is leading to a sudden upsurge in
For the majority of organisations across the globe, digital dis- traffic to home networks, but today’s net-
ruption is the new normal. As the world adapts to these changes, work is barely able to manage this demand.
we are seeing substantial shifts in usage patterns and traffic in
five key ways: a) from predominantly entertainment to enter- Going Beyond Telecom
prises and cloud-use cases, b) from download only to symmet- In the past two decades, Telecom has had
ric uploads and downloads — boosted by video conferencing, a good run. With only one application —
c) from asynchronous to real-time use cases, requiring instan- voice, telcos were concerned only with
taneous response time, and d) from office networks to ever-in- connectivity and one asset — spectrum.
creasing home networks usage e) increase in traffic by 60-70 per With digital, the paradigm has shifted.
cent in the past few months. These shifts are permanent — peo- In digital, there are multitude of applica-
ple behaviour, lifestyle and business models will have to adapt tions, ranging from video conferencing,
58 Business Today 26 July 2020 ILLUSTRATION BY RAJ VERMA

to online education, to cloud-based col- FOR THE MAJOR- centres are a must. High computation
laboration and real-time gaming. This is ITY OF ORGANISA- and storage, resilient networking-in-
only a start with future applications based TIONS ACROSS THE frastructure and optimised power us-
on deep learning, asynchronous driv- GLOBE, DIGITAL age are critical elements of hyperscale
ing etc. In this new paradigm, the digital DISRUPTION IS Edge data centres. These new-age data
service providers host, manages and ser- THE NEW NORMAL centres will need to be close to the us-
vices these applications to the consumer. POST THE VIRUS ers, and hence a large number will be
Beyond only connectivity, it is about data OUTBREAK required in every city, in addition to
compute, storage and transfer. And, in the master hyperscale centres. The
digital, the converged infrastructure of Edge data centres will become 5G ra-
fibre and wireless, of compute and con- dio locations, which provide compute
nectivity becomes ubiquitous. In this new and storage along with connectivity,
phase of digital, service providers like Jio and will become the core fulcrum of Artificial Intelligence and
Platforms, are changing focus to content, cloud enterprise applications, while being secure and localised.
data and applications, while tower and fi- Our government’s digitisation drive and development of
bre infrastructure become a separate firm Smart Cities are fuelling demand for Edge data centres in the
that shares its infrastructure with other country. In the coming few years, we will continue to see a huge
providers. acceptance of Edge data centres as data is analysed and pro-
cessed near the location where it is generated. We are set to be-
The Network Architecture come one of the largest global destinations for colocation data
A whole new architecture for the next centre set-ups by leveraging cloud computing architecture.
phase is evolving — the New Digital Net-
work. It is converged and fibre-rich, and ore investments in digital
offers ubiquitous connectivity. It is soft- infrastructure
ware-driven and disaggregated, where The top four economies — the US, Chi-
virtual network functions replace single- na, Japan and Germany — are investing
function network hardware. These vir- 1-2 per cent of GDP each year on digital
tual functions allow for centralised cloud- infrastructure while India is investing at
based control, with decentralised storage, a much lower rate. Amidst Covid-19, the need for Digital Infra-
compute and memory. They allow the digi- structure and Data Centres has become essential — finding its
tal network to dynamically transform to place with necessities like food, education and healthcare.
needs of the end-users. They also become Digital infra development and data centre set-up will con-
more accessible as they use simpler open- tinue to require sustained investment by the government and
source hardware and software elements, private players. There are many ways to drive this digital infra-
which can be made available by an ecosys- structure creation. The recommended model would be one that
tem of integrated network specialists and has the best of government leadership and private entities’ ex-
technology leaders. This new, Next-Gen pertise. This model would enable speedy planning and decision
Digital Network will empower an afford- making, initial allocation of budget and deliver tangible results
able network for everyone. much faster. The desired final output — time-bound creation of
digital infrastructure — is fibre-based tower backhaul, local-
Data Localisation And Data Centres ised data centres and fibre-to-the-home (FTTH) and enterprise
With all experiences becoming digital, data along with rural broadband connectivity.
security and seamless digital experience
are becoming critical. Data localisation is Opportunity for India toBuild an Edge
crucial for this to happen. It is also a cata- India has started adopting digital infrastructure, but now the
lyst for data centre adoption in India. In- time has come to speed up the process and aggressively invest in
dia's push for data localisation requires cer- building digital infrastructure and data centres that are future-
tain data to be stored within the country. ready. This is the time for India to leapfrog. We are blessed with
Around 75 per cent of this data resides out- the world’s largest democracy and with more than 500 million
side the country, and to localise this data, people connected online, we are poised to become a global tech-
we need to build a strong digital infrastruc- nology powerhouse.
ture. With growing digital consumption Now is an opportunity of a lifetime for us — to lead the way by
patterns like social media, online gaming, transforming and reinventing as the shift to digital is permanent.
streaming, e-commerce, online education, (The writer is Group CEO and Whole-Time Director,
total Internet hits, hyperscale Edge data Sterlite Technologies Ltd. )

T E C H N O L O G Y S P E C I A L IT INFRASTRUCTURE
Big
Bang 2.0
AGILE DELIVERY MODELS TO ACCELERATED
DIGITISATION, AUTOMATION IS REDEFINING
THE IT INDUSTRY
BY RUKMINI RAO
the middle of the pandemic in April, Tata Consultancy Servic-

es (TCS), India’s largest IT services company, announced a deal
with US-based Amway to transform the latter’s information
technology infrastructure and operations and its global service
desk. Just a few weeks ago, Wipro had bagged a strategic, multi-
year deal from European firm E.ON for infrastructure moderni-
sation and digital transformation services.
The Indian IT industry passed the stress test when the world
was grappling with the pandemic. For companies, this meant
not only equipping the huge workforce to continue servicing
clients from home, but also realigning businesses. As cost takes
centrestage both on the demand as well as on the supply side,

EMERGING Stress on
BUSINESS creating remote
MODELS capabilities
More focus Reduced onsite,

on digital and increased
automation offshore, work
New operating, Vendor

delivery models consolidation

organisations are embracing changes like never before. From HOW THEY’RE
agile, flexible operating and delivery models to reimagining the CHANGING THE
workforce mix and accelerated digitisation, automation is rede- LANDSCAPE
fining ways of doing business in the medium-to-long term.
Cost pressures are pushing
educed Onsite, Increased Offshore clients to renegotiate service
Within just a few days of the virus outbreak, contracts and focus on an agile
IT firms moved computers and laptops to opex model (money spent on a
day-to-day basis for a business)
homes of their employees, provided them of IT infrastructure for faster
data cards and wi-fi routers, and in some innovation
cases even invertors, to ensure business
continuity and minimum disruption for clients. Around 90 per Stress on user experience, cloud
cent of IT employees are still working from home (WFH). strategy, virtual network, cyber
Pre-Covid, no company had tested the possibility of re- security and increased automa-
mote working at such a large scale. Even clients were not too tion likely to increase digital
revenues for companies
convinced about security, productivity and the possibility of
a distributed workforce. The pandemic changed all that. With
Move to reduce delivery costs,
clients endorsing the resilience, IT firms are now proactively engage more gig/temporary
pitching for resource-mix models — from having a certain per- workers through remote capa-
centage of employees work from home for a particular project to bilities will create more virtual,
increasing offshore work to help clients reduce costs and raising offshore delivery services
the proportion of gig/ temporary staff.
Two years ago, TCS had started the experiment, ‘Open Ag- Traditional time and material
(T&M) deals are making way for
ile Workspaces’, where clients on specific innovation projects
a mix of fixed and variable and
could collaborate with location-agnostic teams. As lockdown risk-sharing deal structures
intensified across the country, the company quickly scaled up
learning from ‘Open Agile’ to implement the ‘Secure Borderless Large clients are looking to
Workspaces’ (SBWS) model — work done without the confines replace small vendors as cost
of geographical locations. In a recent letter to shareholders, pressures force companies to
CEO Rajesh Gopinathan said the outcomes of the new ways of look at consolidation and
end-to-end solutions
learning have been impressive, and the company aims to con-
tinue SBWS as an integral part of its functioning going ahead.
“There are even pockets where we have witnessed improved ve-
locity, throughput and productivity,” Gopinathan had said. TCS
is looking to have only 25 per cent of its staff in office by 2025.
Apart from normalising remote working, companies are
also looking at tweaking the onshore-offsite model to optimise
costs and improve profitability. For Indian IT firms, onsite,
or employees working overseas, is normally 22–29 per cent of their
workforce. However, in the past two-three years, Tier-1 compa-
nies have increased localisation efforts, especially in the US,
the biggest market of IT firms, as a goodwill gesture, though
the cost of hiring locally is higher. But with added concerns over
immigration issues in America and visa restrictions in other
geographies, most companies are now stressing on offshore re-
sources due to the cost advantage.
The signs of this changing composition of workforce are vis-
ible in the adoption rate of cloud computing in the form of how
“CLOUD ADOPTION IN THE
service concepts such as As-a, are evolving, says Feroz Khan, IT SERVICES INDUSTRY HAS
Partner and Leader, Digital and Emerging Technologies, KPMG ALWAYS BEEN HIGH... BUT
India. “On a medium-to-long-term range, we can expect on- UNTIL NOW, IT WASN'T A
shore to offshore ratio moving towards a 20:80 figure, which
BIG BURNING ISSUE”
means that going forward, most of the resourcing in IT will hap-
pen offshore,” he adds. Pradeep Nair, VP & MD, VMware India

WHAT THE GROWTH
NUMBERS SHOW BOOSTERS
Indian IT services
grew 6.7% y-o-y to
$191 $96.6 billion in FY20
led by a shift from
BILLION legacy services to
Overall revenue digital, and more
IT SERVICES ER&D*, automation
of technology
companies in $97 PRODUCTS
FY20 BILLION $40 IT exports expected
BILLION to grow 7% this year
*Engineering, There has been an

BPM** R&D services incremental addition
$38 ** Business
Process of $18.1 billion in IT
BILLION HARDWARE Management exports in the last
$16 Source: Nasscom report – The
five years
BILLION Technology Sector in India:
Strategic Review 2020
As part of the new cycle, companies are Subramaniam, Chief Operating Officer, TCS, said in several
also looking at increasing the digital work- large deals signed in FY20, the company had undertaken core
force (use of bots, automation of repetitive transformation work by using this method of delivery to bring
task). This could free-up nearly 10-15 per changes to customers’ IT operations.
cent of the human workforce when de-
ployed at scale (handling large volumes), 0ipro calls its new way of IT services
and the resources can then be used for delivery, ‘Proteus Stack’. Shifting
other projects, resulting in an increase in away from the traditional delivery
the overall revenue-per-employee metric. style, this new robust working mod-
Then there is the increase in gig or el combines the best of work-from-
temporary staff. “Our research shows that office, remote working and crowdsourcing along with innova-
what used to be anywhere between a 2 to tive methods that deconstruct work.
10 per cent mix, could now increase to 20 As companies find newer ways of delivering services to
to 25 per cent” says Nitin Bhatt, EY Global suit the changing needs of clients, traditional time and mate-
Advisory Risk Transformation Leader, rial (T&M) deals are slowly making way for a mix of fixed and
and India Technology Sector Leader. variable and risk-sharing deal structures. For instance, in a deal
related to data analytics, the client may want the vendor to cre-
Changing Deal Structures ate an entire technology platform, and then run a few use cases
The distributed workforce has also paved and measure the outcome of those cases. A variable fee is then
the way for IT companies to explore inno- structured based on the outcome. “For large deals, companies
vative ways of offering products and ser- are preferring a mix of fixed fees and variable model,” says
vices. With a fundamental shift towards KPMG India’s Khan. For IT firms venturing into e-commerce,
reducing delivery costs, companies are the specific task is not just technology implementation, but the
not just integrating analytics, artificial in- outcome and success of the platform as well, measured in terms
telligence (AI) and deep automation, but of revenue and EBITDA increase, he adds.
also crowdsourcing solutions for superior Also, with clients renegotiating terms and obligations in
and faster outcomes. For instance, TCS’s contracts, and companies seeing lots of discounting and pay-
Machine First Delivery Model (MFDM) ment deferrals, deals could see newer risk-sharing templates,
uses intelligent automation and AI to according to experts. However, this kind of deal structuring
solve complex business problems and would also largely depend on the vendor-client rapport. “If a
also enables cognitive decision-making, company has had a long-standing partnership, there would be a
which enables systems to self-manage more honest handshake on newer risk-sharing models that will
themselves and defend against risks. NG become a win–win situation for both,” says EY’s Bhatt.

igital Adoption Drivers

In its recent report on the IT sector,
Edelweiss Securities has said that pre-
Covid high growth rate in digital ser-
vices (25-30 per cent) could further
increase due to two reasons. One, con-
sumers are moving to online channels,
and two, marketshare gains made by digital business models
over traditional ones.
For Indian IT services companies, ‘digital’ has been a fairly
new journey. It’s only in the past two or three years that most of
them have been calling out for revenue split between traditional
and digital businesses. While legacy business is still a signifi-
cant revenue earner, the growing push for digital adoption has
resulted in over a third of the total revenues of Tier-1 IT compa-
nies coming from such offerings. “WE HAVE BEEN BUSIER
According to a Nasscom report, in 2019, the market witnessed
IN THE LAST THREE
a shift from traditional services to digital technologies, DevOps,
and As-a cloud computing service models. “If you ask me what is MONTHS THAN WE
happening in the last three months, we have been busier than we HAVE BEEN IN THE LAST
have been in the last three years” says Anand Birje, Senior Vice THREE YEARS”
President and Head, Digital and Analytics, HCL.
With clients rethinking every component of their busi- Anand Birje, Senior
VP & Head, Digital and Analytics, HCL
nesses — from customer engagement to operation — the bud-
geting cycle has turned more flexible, where clients are looking
at a spending window of two-three months to scale up the digi-
tal side of the business. During a recent investor meet, Cogni-
zant CEO Brian Humphries said though the company was on a ultimately lead to changes in policy and
course correction in its workforce pyramid, digital is being pro- process.
tected at all costs. “We have a separate bench policy for digital
resources because we do not want to lose those even if there is a Consolidating Vendors
demand-supply imbalance at the moment,” he had said. Even as service providers push to cross-
According to Pradeep Nair, Vice President and Managing sell and upsell digital offerings to existing
Director, VMware India, Cloud adoption in the IT services in- clients along with new deals, there is also
dustry has always been high. While the main reason for enter- an emerging trend of enterprises look-
prises to move their customers, web and employee applications ing to consolidate vendors. The reasons
to the Cloud is because it is easy to scale up and down accord- are multiple — from cost optics to better
ing to one’s requirement, the pandemic added a whole new di- security and superior integration by re-
mension. During the lockdown, companies faced difficulties moving multiple touchpoints. Through
in accessing data centres, simply because people movement most part of last year and even now, HCL
was restricted. “Until now it wasn’t such a big burning issue,” has been seeing some bit of consolidation
says Nair. But now, companies preponed the two-to-three-year among clients. “Enterprises working with
timeline to enhance their Cloud adoption to ensure seamless small boutique firms to solve one part of
business continuity, he adds. the problem are realising that they can’t
So, the focus has shifted from doing digital for clients to provide end-to-end solutions,” says Birje.
actually being digital. IT services companies are adopting new As clients look at end-to-end global
models such as digital sales pitches through interactive tech- vendors of scale to solve their tech prob-
nologies, application of internal functions, and training and lems, large players such as TCS, Cog-
learning. Infosys recently came up with iEngage for improving nizant, Infosys and HCL stand a good
engagement between employees and unit leaderships. A man- chance of cashing in on the opportunity at
ager or leader can use the app to schedule meetings/events, in- the cost of smaller firms.
vite employees and follow up. Data generated is used to measure
employee sentiment and identify key concern areas that can @rukminirao

T E C H N O L O G Y S P E C I A L LOGISTICS
WHEELS OF
CHANGE
START-UPS ARE CONSOLIDATING FREIGHT
OPERATIONS VIA DIGITAL MAKETPLACES AND USING
TECH FOR BETTER WAREHOUSE MANAGEMENT
BY NIRBHAY KUMAR

EMERGING
BUSINESS MODELS
Three types of start-ups are

coming up —those offering
a freight e-market place and
connecting shippers and
carriers; those focussing on
intra-city parcel delivery;
and those offering SaaS-
based platform for logistics
services
Warehouse space is being

digitised on a single plat-
form for optimal utilisation
of assets
Both carriers and shippers

are moving to a freight
aggregating platform, lead-
ing to consolidation in the
sector
Established players are

building tech capabilities
either in-house or by invest-
ing in new-age firms
iddharth Agarwal, Chief Strategist at seven-year-old logistics Companies are entering

into more stringent service
start-up Ecom Express can bet anyone to name a street or even a
level agreements and devel-
paan (betel leaf) shop in the congested lane of a small town where oping capabilities to meet
his firm cannot deliver a packet. If someone were to name Jhumri requirements
Telaiya or Pulwama to put Agarwal in a spot, he is going to lose the
bet. The start-up covers over 26,000 pin codes in the country.
Most start-ups have been growing at breakneck speed, multi-
plying their revenues year-on-year. The common factor is that they
all leverage technology to achieve scale and efficiency, issues that 6
have been plaguing the highly-fragmented logistics sector for de- PER CENT
cades.
"As you move into the future there would be even more invest- Proportion of inven-
tory as a component
ments in technology. There will be newer channels and ways of of GDP in logistics. It is
delivery. If I talk about last-mile delivery, although it is still at an 2-3 per cent globally
experimental stage there are countries like China which are trying
to leverage drones," Agarwal said.
Agrees Ashim Sharma, Principal and Division Head, Business
Performance Improvement (Auto, Engineering and Logistics),
Nomura Research Institute Consulting & Solutions. "Compared
to developed markets, technology application is still at a nascent Delhivery, Rivigo, Ecom Express, BlackBuck
stage in India. These start-ups have realised that this is the gap in and GoBolt are set to drive consolidation in
the logistics sector. Each one of them is focussing on technology the $200-billion logistics sector.
solutions. That forms the backbone of the logistics sector,” he says.
With gaps in the supply chain offering business opportunities The Tech Fix
to start-ups, private equity and venture capital have chased them. The sector is a laggard when it comes to
Around $3 billion has been invested in tech start-ups and third-par- adopting new technology, and this gives the
ty logistics (3PL) service providers in the last five years. newbies an edge over incumbents. The road
Flushed with cash, tech-powered logistics start-ups such as transport sector, the main freight mover, is

HOW THEY'RE CHANGING THE
LANDSCAPE
The shift towards The cost of There are expecta- Advanced tech- Use of robotics
tech-based start- logistics is ex- tions that a few nologies such as and investment
ups has raised pected to come large players would fleet visualisation, in conveyor
service levels in down by 10 per be offering the geo-coding and systems are ex-
terms of tracking cent, benefit- whole range of IoT are making pected to make
of consignments ting end-users services. Start-ups logistics more warehousing
are developing efficient and contactless
technologically competitive
scalable systems to
corner old players
nated by small players, the freight market has had a large number
of middlemen connecting shippers with carriers. Start-ups such
as BlackBuck, Rivigo and FR8 are fast eliminating the role of such
agents through the freight e-marketplace. More participants on
the platform ensures competitive pricing for shipments, while real-
time updates on apps improve services and help avoid empty run by
truckers. Not surprisingly therefore, BlackBuck, launched in 2015,
has on-boarded almost 400,000 trucks to date.
hese start-ups use technology for predictive

analysis, performance monitoring, real-time
cargo monitoring and smart automation to im-
prove efficiency and reduce costs. There is ap-
“THE COST OF LOGISTICS plication of blockchain for error-free tracing,
CAN FURTHER REDUCE while big data analytics is being used to derive
insights out of complex and large data sets. App-based freight ser-
BY 10 PER CENT WITH vice providers such as 4TiGO, Vaahika and FarEye have already im-
IMPROVEMENTS IN MOTOR proved asset utilisation for transporters, while raising their earn-
TRANSPORT LAWS” ings.
"We have planned to deliver 30-40 per cent cost savings for
Amit Agarwal, CFO, Delhivery
some of our customers. On an average we have achieved 15-20 per
cent efficiency in terms of warehousing, operations and transpor-
tation costs. We bring efficiency at every level,” says Sumit Sharma,
dominated by mom and pop truckers, with Co-founder of GoBolt.
almost 80 per cent operators having a fleet Machine learning and artificial intelligence (AI) are being used
of less than five trucks. to manage fleet and warehouses. With growing fleet size and ship-
Even top logistics players such as Trans- ment volume, there is a growing need for advanced technologies to
port Corporation of India (TCI) and Ma- deal with the challenge. For example, AI is widely used for route op-
hindra Logistics have annual gross revenue timisation. Given that trucks cover long journeys, normally more
of less than $1 billion, suggesting scope for than a week, there is a need to know the time taken to cover various
consolidation in the market. stretches. AI matches earlier data with the current traffic situation
Since the transport sector is domi- to give an estimated time of arrival. This also helps in increasing

fuel efficiency.
At warehouses, especially large ones
$200 follow a platform approach to the business in
creating efficiency in operations and better
BILLION
spread over a few lakh square feet, advanced The size of the utilisation of assets. The future of logistics
IT systems help in sorting out various items domestic logistics will be technology enabled," says Moham-
and their placements. It also alerts operators sector mad Athar, Partner, Infrastructure and Ur-
to replenish stocks. Warehouse managers ban Transport, PwC India.
can plan loading and unloading by tracking Tech start-up Delhivery sees scope for
real-time movement of trucks, which has
been an issue for long. It leads to better man-
13-14 further efficiency in the logistics sector,
considering India spends 13-14 per cent of
PER CENT
agement of inventory through optimal use Proportion of GDP its GDP on goods movement, compared to
of space, like placing a particular item on a that India spends 8-10 per cent globally. About 75 per cent of
certain shelf. on movement of goods vehicles in the country are 2-axle (two
"There will be ever more investments goods. It is 8-10 wheels in the front axle and four wheels in
per cent globally
in operations centres to mechanise them to the rear), with an average capacity of 9 met-
handle more volumes. If the degree of auto- ric tonnes (MT). In European countries,
mation is x per cent currently, it will be 2x, 3x bulk of the goods trucks are 5-axle, with av-
in the future to ensure that the turnaround 80 erage load capacity of 40 MT.
time, from the moment a parcel enters the PER CENT “The cost of logistics can further reduce
facility and when it exits, is the least," says Operators with a by 10 per cent with improvements in motor
fleet of less than
Ecom Express's Agarwal. transport laws that will enable businesses
five trucks. The
So, adoption of technology has not only road transport to invest in high-capacity trailers, which are
reduced freight movement costs in real sector is domi- more cost-effective,” says Amit Agarwal,
terms, but has also helped to track consign- nated by mom and Chief Financial Officer, Delhivery.
ments better. pop truckers Since the last four to five years, these
Due to the e-commerce boom and a rise start-ups have been doing a lot of data
in post-order service levels, customer ex- mapping — regarding routes, average
pectations have already been growing. The
new-age tech start-ups are in a better posi-
$3 speed, consumer behaviour and costs.
Now, established players are also taking
BILLION
tion to address these concerns. Investments in note. "We always thought that the services
“Over the next three to five years, we tech start-ups we are providing are good. But when new
believe end-users would be a lot more de- and third party players came, we felt the need to invest
manding regarding service level agreements logistics (3PL)
a lot more in data analytics. So, I think
service providers
(SLAs), and would look for service providers in the last five that it has accelerated digital transforma-
who can provide end-to-end logistics ser- years tion," says TCI Managing Director Vineet
vices (from plants to customers),” says Sid- Agarwal.
dharth Jain, Partner, AT Kearney. These companies are also building their
Logistics service providers are de- tech capabilities either in-house or by in-
veloping capabilities to meet customer vesting in new-age firms. TCI has invested
requirements. Those able to provide end-to-end services will in some start-ups to ensure that it has access
emerge as winners. to new-age technology.
The Road So Far und Flow From

The start-ups' growth in revenue and reach has largely followed Investors
the e-commerce expansion. Over the past few years, they have “Investors are very excited
emerged as the leading players across categories, especially in about logistics for a vari-
short-distance distribution of parcels, followed by bulk cargo ety of reasons — changing
on longer routes offering full truck load (FTL) and less than truck- landscape post-GST im-
load (LTL). plementation paving the way for the creation
Powered by advanced technologies, these start-ups have cor- of large-scale supply chain service provid-
nered a big share of the pie, challenging traditional players. "The ers, predictable unit economics, formalised
logistics sector in India has been fragmented. We see consolida- job creation, and overall cost of goods com-
tion happening in the near future. Whether there would be 20 big ing down with high-quality logistics,” says
players catering to the majority of the market, only time will tell. Delhivery’s Agarwal.
But what is certain is that consolidation will happen. Players will While most industry veterans remain

with stock counting and truckloads of items
coming into warehouses and exiting.
But application of robotics and ad-
“WHEN NEW PLAY- vanced conveyor systems can reduce the
ERS CAME, WE FELT time significantly. Warehouse managers
are now relying on automation to reduce
WE NEED TO INVEST downtime. Products are bar-coded so even
A LOT MORE ON before trucks enter the gates bar-code
DATA ANALYTICS. IT scanners can identify the goods. Signifi-
HAS ACCELERATED cantly, inventory is a major component of
DIGITAL TRANS- logistics and at 6 per cent of GDP it is higher
compared to developed countries (2-3 per
FORMATION." cent). The assets on the storage side of lo-
Vineet Agarwal, MD, TCI gistics are considered highly unutilised
since they are not on a common platform
and visible to those who need to lease them.
bullish on start-ups and their ability to at- As technology gets widely used in warehousing, there is a possi-
tract funds, there is also apprehension that bility of tech companies aggregating demand and supply on one
the number of deals could be limited in the platform. Digitisation of warehousing is also set to bring down
short-run due to Covid. costs through optimisation of available space. Use of robotics and
Sandeep Upadhyay, Managing Director investments in conveyor systems is expected to make warehous-
(Infrastructure Advisory), Centrum Capi- ing contactless. Companies are also looking to stock inventories
tal, said the mobility and logistics space has in multiple or alternative locations to avoid the risk of the inven-
historically witnessed bloated valuations, tory getting stuck at one place in case of a problem.
but one expects this to correct to more rea- “Warehousing companies need to start thinking differently.
sonable levels. “Post-Covid, I foresee all that To take advantage of this shift in strategy and attract new custom-
flab will go away and valuations would be ers, they should use technology to lease and utilise space more ef-
more realistic and sustainable. In terms of ficiently," says Juzar Mustan, a logistics industry veteran.
the availability of capital, there may be some "Today, majority of warehouses are letting out space to their
reluctance in the near future, but investors own limited set of customers. I think technology can help in this
are likely to be back in the reckoning over the area. Digitising available warehouse space on a single platform
next six to nine months as the impact of Co- is needed. This will increase visibility of available space and al-
vid subsides,” he adds. low faster and flexible contracting. The outcomes will be less idle
"Physical retail will suffer, at least for the space, lower costs and lower risk for all partners,” he adds.
next 12 months. As a result, we expect the ex-
press logistics market to grow significantly he Challenges
over the next couple of years owing to the The biggest problem is that the logistics sector is
rapid adoption of e-commerce," says Saahil very fragmented and therefore it has been difficult
Goel, CEO and Co-founder of Shiprocket, to bring in scale and efficiency. Small players run
which has managed to raise a total of $26 their businesses the old way and the general appre-
million so far. hension is that the adoption of technology is an expensive propo-
Adds Ratnesh Varma, Founder of last- sition. Transport firms also face shortage of trained manpower,
mile logistics service provider Pidge, "In- which is a big hurdle in adopting technology. So, even if the trans-
vestments follow opportunities and returns. porter brings all kinds of systems to optimise routes and monitor
If the opportunity is great, returns are good fuel efficiency, the truck driver still has to control it.
and fundamentals are good, investments "India’s logistics market is highly sub-scale, and hence the com-
will follow.” petition, while intense, is low quality. The largest 3PL company in
the US is about 180 times larger than India’s largest 3PL, while the
Efficient Warehouses US economy is only about seven times larger than ours," says Del-
Other than express logistics, industry veter- hivery’s Agarwal.
ans see the next big innovation happening in One thing is certain. The logistics sector is looking at a major
the warehousing space. Warehouse opera- shake-up ahead.
tors have largely managed their spaces us-
ing Excel. This kind of data entry takes time, @nirbhaykumar

T E C H N O L O G Y S P E C I A L ED-TECH
ONLINE
LESSONS
AS CLOSURE OF SCHOOLS, COLLEGES
BRINGS NEW STUDENTS INTO THEIR
FOLD, ED-TECH FIRMS LOOK FOR
INNOVATIVE WAYS TO MONETISE
THEIR NEW USER BASE
BY SONAL KHETARPAL
Vedantu, Toppr, Unacademy, White Hat

Jr, Great Learning and Coursera, all of
whom are seeing phenomenal growth.
With schools and colleges shut during the
lockdown and around 320 million stu-
dents facing the heat, ed-tech platforms
made their offerings free for students. The
result: Prospects of fresh revenue streams
emerging from new business models.
Vedantu saw a 220 per cent increase
in the number of registered students —
from 2.5 lakh to 8 lakh — in the last three
months, compared to the regular growth
rate of 25-30 per cent per quarter. Byjus’
revenue doubled from what it was before
hile browsing through online tutoring platform Vedantu, the lockdown. Toppr saw a 150 per cent
22-year-old Natasha came across a live class on ‘How to write growth in new, paid users in April and
Marvel-style comic books’. There were quizzes and interac- May, and is still adding 1 million users ev-
tive games, including some ‘fastest fingers first’ questions that ery month even though exams are over.
would give anyone an adrenaline rush. The class of 584 did not WhiteHat Jr, which teaches coding to kids
feel a bit overcrowded. Students could send in their comments between 6 and 14 years, was growing at 40
on the ‘public chat’ forum option. The instructor addressed all per cent month-on-month over the last
queries, and even welcomed ‘late joiners’. Natasha had fun pos- one year, the lockdown boosted it to 100
ing as a 15- year-old, and the acknowledgement served as an in- per cent. Board Infinity, a career and ed-
centive to finish the lesson. tech start-up, clocked a revenue growth of
India’s ed-tech space is dominated by players such as Byju’s, 400 per cent in FY2020 against the previ-

EMERGING
BUSINESS
MODELS
Increasing
number of
LIVE classes
Free access to
more learning
material
Personalised,
one-to-one
coaching
More lessons
in vernacular
languages
New technol-
ogy platforms
ous fiscal. In fact, it recorded its highest yju’s, India’s second-most valuable start-up,
growth rate of 30 per cent in monthly rev- which focuses on educational content in the
enue during the lockdown period (April K–12 segment, has made all its content free on
and May), compared to March. Coursera the learning app. The result: It added 15 mil-
added over 2.6 million learners in India in lion new students in the last three months. It
the last five months, against 1.4 million in clocked `375 crore in revenue in May and is
all of 2019. looking at `500 crore in June. “Our revenue is double of what it
“While ed-tech has been there for over was before the lockdown. Given the positive response, we are
a decade, Covid has increased awareness looking at revising our yearly target on the higher side,” says Co-
about the category,” says Vamsi Krishna, founder Divya Gokulnath. Byju’s has over 57 million registered
CEO and Co-founder, Vedantu. In fact, students, of which 3.5 million are paid subscribers, with an an-
while earlier 85 per cent of its students were nual renewal rate of 85 per cent.
from tier 2 and tier 3 cities, post-Covid they Blume Ventures estimates by 2025, the ed-tech market in In-
are seeing traction from metros as well. dia should grow 5x to $4 billion, from the current $750 million.

T E C H N O L O G Y S P E C I A L ED-TECH
“The market is highly segmented, but the biggest opportunity

lies in the unregulated space,” says Sajith Pai, Director, Blume
Ventures. According to Pai, the ed-tech market can be divided
into two broad categories: firms that operate in the regulated
space (where accreditation, curriculum, fees etc is regulated by
the government), and those that are outside its purview such as
online tuitions, test prep portals etc. While regulations in the
formal sector make it difficult to start an online business, ancil-
lary education offers the biggest opportunity. According to Pai,
HOW THEY’RE CHANGING
online tutoring and test prep is set to be a $1.5-billion opportu- THE LANDSCAPE
nity in India by 2025.
ew launches BYJU’S added 15 Design, BML Munjal

Ed-tech firms are foraying into new verticals million users in the University are being
to address demand. For instance, in addition last three months offered online
to the usual course-based classes, Vedantu
has launched Vedantu Superkids, which con- Till date, it has over
57 million registered
GREAT
ducts live classes for students on coding. students LEARNING, an ed-
Byju’s, too, is offering personalised online coaching and tech firm for working
venturing deeper into vernaculars. “Since students were miss- professionals, is
In June, it raised offering its online
ing a schedule in their learning, we introduced LIVE classes to an undisclosed learning platform,
bring scheduled engagement to students' everyday learning amount from Bond, Olympus, to
routine,” says Byju’s Gokulnath. These are scheduled classes for an investment firm higher education
doubt solving, where students get one-on-one guidance. They co-founded by Mary institutes; around
Meeker, at a valuation 120 universities are
have also started teaching new subjects such as history, civics of $10.5 billion in different stages of
and geography, and are working to launch lessons in other ver-
trying it out
nacular languages as well. Currently, the learning material is
available in English and Hindi. VEDANTU’S
number of registered It will launch a
Ed-tech firm Great Learning, which focuses on professional three-year online
students increased
learning has ventured into two spaces — SaaS service and core by 220 per cent to 8 undergraduate
education. The seven-year-old Gurugram-based company will lakh in the last three course in technology,
launch a three-year online undergraduate programme in the months commerce and
digital
next two-three months in partnership with other universities.
“The partnership will be with progressive and like-minded uni-
COURSERA has NEXT
versities that are ready to take the leap,” says Co-founder and made its offering, EDUCATION is
CEO Mohan Lakhamraju. The firm is adding 10,000 students Coursera for looking to reach out
every two days. Campus, free till to 1,000 schools by
These will be three-year programmes and will be offered July 31 the end of FY21 with
online only or through the blended model (a combination of on- its SaaS platform,
line lectures and classroom teaching). The percentage of online Around 3,765 called the Next
programmes across Learning Platform, for
and offline will depend on the nature of the programme, says
universities like schools
Lakhamraju. The firm first plans to launch courses in ‘hard’ dis- Symbiosis Institute
ciplines such as business, finance, commerce, maths, econom- of Technology,
ics and technology-related undergraduate degree programmes, World University of
and then follow it up with programmes in allied health science,
law and humanities.
The Changing Scenario $4 $1.5

“I don’t expect things to go 100 per cent online or offline. With BILLION BILLION
teachers now understanding the advantages of online learning Estimated size of Estimated
the ed-tech market market size
tools, we will see tech-enabled learning gain importance even
in India by 2025, of the online
in a classroom setting. The ‘Classrooms of Tomorrow’ will have according to Blume tutoring and
technology at its core, empowering students to cross over from Ventures, from the test prep seg-
passive to active learning —from the traditional one-to-many current $750 million ment by 2025

WHILE ED-TECH firms are seeing customers, Upgrad is offering its
soaring demand from students and LESS DEMAND services free of cost for firms in June,
universities, the case is different FROM July and August. The idea, says Kumar,
for companies. Everytime there is a COMPANIES is to get them onboard and figure out
slowdown, it is not just marketing monetisation later. There is no change
spends, but learning budgets get in their existing client base.
trimmed as well. Companies look to Raghav Gupta, Managing Director,
conduct training sessions without India and APAC, Coursera, says two
spending, some promote their in- conflicting things are happening.
house online learning platforms or While people have more free time
tap into their talent pool. "More than and are willing to upskill, businesses
100 universities have come on board are under pressure and want to
with us, but corporates are meeting conserve cash. While companies
their learning and development have completely stopped classroom
needs internally. They are not taking training, many are conducting only
to the external ecosystem to spend online learning, he adds. He, however,
on training,” says Mayank Kumar, says there is no dramatic shift in the
Co-founder, UpGrad. To acquire new number of corporate customers.
approach to blended one-on-one learning planning to preparing marksheets and certificates, tracking at-
experiences,” says Byju’s Gokulnath. tendance and recording student feedback. Through Olympus,
This is where the next big opportu- Great Learning has already delivered 25 million hours of learn-
nity is. Firms are now offering their digital ing for 100,000-plus learners from 80 countries.
platforms or online content to traditional Schools, too, are looking for similar solutions where they can
universities. In March, Coursera granted move seamlessly between physical and digital learning. Toppr
free access (till July 31) to its 3,800 courses CEO Zishaan Hayath says they have been getting frequent que-
and 400 specialisations for all universi- ries from schools on technology platforms for learning and will
ties and colleges through its ‘Coursera for be offering the SaaS product soon.
Campus’ offering. By January, 30 univer-
sities entered into paid partnerships with ccording to Beas Dev Ralhan, Founder-CEO
Coursera. of Next Education, the company is focussing
Since March 12, says Raghav Gupta, on its Next Learning Platform, so that
Managing Director, India and APAC, schools can move seamlessly between of-
Coursera, “We have received over 10,900 fline and online learning. The platform will
requests and 3,765 programmes have help digitise offline classes and live stream content for remote
been activated across campuses.” Some learners. Ralhan says while they had launched the platform last
of those include Symbiosis Institute of year, schools would buy only parts of the product. “We are now
Technology, World University of Design, getting inquiries for the full platform as it has become a matter
BML Munjal University, National Rail and of continuity and existence for schools.” The firm plans to on-
Transportation Institute. board 1,000 schools by FY21 end.
Great Learning, too, turned to a SaaS No wonder then while most sectors are planning their re-
firm by opening up its technology plat- vival strategies, ed-tech is raising venture capital investments.
form, Olympus Digital Campus, to uni- In June 2020 Byju’s announced a new investment from Silicon
versities and institutions on a subscrip- Valley investor Mary Meeker’s fund, Bond, at a valuation of
tion basis. The platform is not just about $10.5 billion, making the online learning company India’s sec-
delivering live lectures, but bringing the ond-most valuable start-up after Paytm. In February 2020, Un-
entire institution online. It supports live academy, which focusses on preparing students for competitive
learning, proctored exams, smart time- exams online, raised $110 million from Facebook and private
tables, assessments, grading, peer col- equity firm General Atlantic, at a valuation of $510 million.
laborations, content development, stu- The next move for these ed-tech firms would be to retain
dent progress tracking / engagement, and consumers and convert them into paying subscribers.
faculty feedback. It offers administration
management — from course and batch @sonalkhetarpal7

T E C H N O L O G Y S P E C I A L CONSUMER TECH
Smart
Buying CONSUMER INSIGHT-
DRIVEN LAUNCHES, DIGITAL
AFTER-SALES SERVICE
AND AUTOMATION OF
PRODUCTION & LOGISTICS
ARE REDEFINING THE
CONSUMER DURABLES
INDUSTRY
BY NIDHI SINGAL
all it dahi in the north, or thayir in the south, if there is

one food item that unites all of India, it has to be curd. Be it
soft or thick, what matters is getting the consistency right
every time. That, of course, is not easily achieved. It is this
challenge of preparing curd day-after-day with the right
consistency that South Korea’s Samsung has addressed
with its Curd Maestro refrigerator.
Launched in January, it has been designed keeping in
mind consumer insights.
Not surprisingly, Curd Maestro — that prepares fresh
curd in six-seven hours — has emerged as an instant hit in
Indian households. After all, curd is not just an essential
food item, but is considered auspicious — curd with sugar
— to have before important events.
“Our Make for India innovation, Curd Maestro refrig-
erator that we launched at the beginning of this year, has
seen very strong pan-India demand. It was launched af-

EMERGING
BUSINESS
MODELS
Online-offline
connect
Social media
communications
Consumer
insight-driven
product
launches
Video-assisted
sales and after-
sales services
Automated
manufacturing,
logistics

ter extensive consumer research. In a research we did before come with superior audio quality powered
the launch, we found that there was strong preference among by JBL’s sound programme, as Flipkart’s
25-40 year olds across cities for a refrigerator that makes curd consumer insights had found that poor
and that is what played out for demand when the refrigerator sound quality and experience is a major
was launched. Curd Maestro addresses this insight by enabling concern for customers while purchasing
people to make ‘healthy and hygienic’ curd at home,” says Raju televisions.
Pullan, Senior Vice President, Consumer Electronics Business, Apprehending consumer demand
Samsung India. for designing new products is one of the
Samsung is among a number of companies leveraging tech- many verticals where brands are deploy-
nology to gather deep insights on consumer needs and launch ing technology. According to IBEF, India’s
HOW THEY’RE CHANGING

THE LANDSCAPE
Offline retail- Social media Technology is Video-assisted Automation is

ers are building promotions are helping in gar- demos and after- aiding social
online stores to being used for nering consumer sales services distancing,
sell to nearby influencing insights for prod- are increasing streamlining
customers purchases uct designing customer loyalty manufacturing
feature-rich products. Home-grown e-commerce company `76,400-crore consumer durable industry

Flipkart has designed an in-house, algorithm-based tool that (2019) is expected to double by 2030 on the
analyses thousands of reviews customers leave on the platform back of rising disposable incomes and easy
daily. This Review Analyser tool pulls out major pain points and credit access. The Covid-19 outbreak and
desires articulated by customers, which Flipkart uses to iden- the nationwide lockdown has temporar-
tify a potential space in the market where one of the private ily dampened growth. While the lockdown
brands will fit. starting March impacted close to 30 per
cent of the industry’s annual sales, brands
hen we developed this tool in have been quick to adopt technologies,
2017, the first thing we noticed helping them revive lost sales.
was that this treasure trove of “Digital and emerging technology
customer feedback had one big adoption have helped solve various use
message — some products and cases related to revenue upliftment and
features that customers were EBITDA improvement for consumer du-
looking for simply didn’t exist rable companies. Most companies have
in India,” says Jeyandran Venugopal, Chief Product and Tech- used digital to streamline secondary sales
nology Officer, Flipkart. operations in the form of order booking,
Flipkart has been engaging and sharing customer feedback inventory visibility and stock fulfillment
with brand partners. by using mobile platform enabled Distribu-
The same insights led Nokia and Motorola to enter the Smart tor Management System (DMS) solutions,
TV space last year, with products designed keeping the diverse and have increased their salesforce pro-
consumer requirements in mind. The Nokia branded Smart TVs ductivity through proper route planning

company has been able to sell successfully to consumers across
branches and stores.
Similarly, after-sales service, which is often considered a
pain point, has been overhauled almost overnight. Due to the
lockdown, when brands could not schedule engineer visits,
they came up with do-it-yourself videos, assisting customers
to carry out basic services in case of air conditioners, and basic
self-checks and repairs for damaged or non-working products.
This is followed by video-consultation for examining faults and
initiating repairs in the best possible way. UK-based Dyson has,
for example, been helping customers identify what went wrong
with the vacuum cleaner and is shipping spare parts to the cus-
tomer that he can plug with guidance over a call. “Although
priced on the higher side, Dyson’s service team helped in fixing
my vacuum cleaner. Rather than just selling the product, it is
the complete experience, including service, that counts,” says
Bombay-based Geetu Gambhir, who swears by Dyson products.
VU Televisions, too, adopted a similar approach. Owing to the
logistics constrains during lockdown, VU was quick to replace
TVs that could not be repaired at home. Industry experts be-
lieve the trust instilled in the customer during times like these
goes a long way in building a loyal
customer base.
“WE MAKE EF- Offline-Online Connect

FORTS TO CON- The advent of e-commerce in India
and optimisation powered with the under- STANTLY ENGAGE has opened a new vertical for opti-
lying AI-based analytical platform,” says mising sales of consumer durables.
Feroz Khan, Partner & Leader, Digital and
WITH CONSUMERS While it took some time to build
Emerging Technologies, KPMG in India. THROUGH OUR trust, e-commerce soon became
MULTIPLE SOCIAL a preferred mode of shopping in
Building Brand Loyalty MEDIA HANDLES metros and Tier-II cities. Although
Just designing a right product won’t suf- LIKE TWITTER, FA- brands have been thinking of om-
fice today. Companies are exploring inno- nichannel solutions, there has been
vative strategies to reach out to prospec- CEBOOK, LINKED- a distinct divide between offline and
tive customers using digital technology. IN, YOUTUBE online. However, the outbreak of the
The mix comprises video-assisted demos, AND INSTAGRAM pandemic and the nationwide lock-
facilitating purchase from home with AMONG OTHERS” down have got brands to think out-
quick and safe delivery, and addressing of-the-box and upgrade their offline
after-sales requests virtually. Raghu Reddy retailers online. Brands have been
While augmented reality and virtual Chief Business Officer, taking initiatives for quick product
Xiaomi India
reality product demos have existed for a discovery solutions at the nearest
while, it is video-assisted demos that are local store and even facilitating pur-
becoming popular among buyers. Godrej chases using technology.
has made arrangements to help consum- As consumer behaviour changes across India, it has become
ers buy appliances through video-assisted even more crucial to opt for digital transformation. Brands in-
remote selling initiatives. Here, custom- tend to make it a win-win situation for trade partners and con-
ers are being provided with the option of sumers. “Trade partners are a company’s key interface with
scheduled live demo through a video call the customer and help them get business online also. Over and
with the brand’s store-based advisors, above having a strong digital presence via websites, e-stores
where queries are answered. This is fol- and in e-commerce, we are exploring new-age digital means to
lowed by flexible payment options as per connect with consumers and have recently undertaken some
the customer’s preference. This initiative concrete steps towards the same,” says Kamal Nandi, Business
is already seeing signs of acceptance as the Head and Executive Vice President, Godrej Appliances.

Godrej, apart from assisting trade part- THE ONLINE cleaners and dishwashers. Industry sourc-
ners to come aboard on Google My Busi- ENDEAVOUR es state big consumer durables brands
ness, is enabling each of its 25,000 offline are now driving 10-30 per cent of average
retailers build a digital presence by creat-
ing a Facebook Business Page by June-end. `76,400 sales from online stores.
CRORE
“Of this, 2,500 are already on board and Market size of the Social Media Influence
counting. This will help consumers access appliances and With research and online purchase be-
product information and purchase a Godrej consumer elec- ing the new mantra, consumer durable
appliance from local retailers. This allows tronics segment brands have been actively using digital
them to link up with consumers through in FY19, according and social media platforms for market-
to IBEF
WhatsApp also to discuss, negotiate and ing. It is less expensive compared to tra-
conclude the sale,” says Nandi. ditional mediums, including TV commer-
Others, including Samsung, Panasonic cials, print advertisements and more. All
and Xiaomi, too, are bringing offline re- `32,000 leading brands now use digital platforms
tailers online. Some industry leaders have CRORE for brand building, business, after-sales
partnered with Benow, the digital pay- Contribution from support and reputation management.
ments platform, to facilitate offline retail- domestic Xiaomi, which started as an online-only
manufacturers
ers to sell consumer electronics products brand in India, was initially promoting
online. The endeavour is to get the entire everything on social media. The reduced
ecosystem transformed digitally. Without marketing cost meant aggressive product
any upfront investment, it will allow local 28 pricing, resulting in volume sales.
retailers to create their online catalogue PER CENT “We make efforts to constantly engage
and share it with prospective customers, Of consumer dura- with consumers through our multiple so-
who can select products and place orders ble sales
cial media handles like Twitter, Facebook,
are digitally
using the online link. Payments can be influenced, ac- LinkedIn, YouTube and Instagram. We
made online. cording to a BCG- have used digital platforms from time to
“We are training retail partners to on- Google report time to connect with and educate users.
board and help them understand the new Our Mi Fans are connected to the brand
platform for seamless transaction. We ex- through Mi Community, the community
pect this will make the sales process easier
and faster for not only customers but also
63 forum built to connect with fans for regu-
lar engagement and feedback on our prod-
PER CENT
retailers. We plan to extend this to all dis- Of sales are likely ucts, which directly or indirectly enable
tribution partners such as multi-brand to be digitally us to better our products and elevate our
outlets, national and regional retail outlets influenced by consumer experience,” says Raghu Reddy,
and sub-dealers, in the coming months,” 2023 Chief Business Officer, Xiaomi India.
says, Jialal Koundal, Group Head, Trade According to a report released by Bos-
Marketing, Panasonic India. ton Consulting Group and Google India in
July last year, 28 per cent of consumer du-
ome brands are registering their exclusive rable sales today are digitally influenced.
stores and outlets on e-commerce platforms This is estimated to reach 63 per cent of to-
such as Amazon to leverage the digital wave. tal sales, amounting to $23 billion by 2023.
“Even consumer companies have started a Around $10 billion will be online sales.
new segment of the business model by us- In price-sensitive India, all strategies
ing the digital channel through e-commerce now revolve around content consump-
platform with brand.com and marketplace tion patterns of consumers. It varies but
penetration. They are now able to bring their traditional retail almost 70 per cent of digital investments
and online retail at the same level by using omnichannel tech- are linked to ROI (return on investment).
nology platform which helps them enhance sales and profit Campaigns are meant for driving business.
margin,” adds Khan. Facebook, Instagram, YouTube, Twitter,
The initiatives seem to be working as demand for consumer or even TikTok apart from Google, is be-
durables have picked up significantly post easing of the lock- ing opted for depending what performs
down. Laptops, TVs, smartphones, air conditioners, washing best for the category.
machines, vacuum cleaners and dishwashers are in demand. “Unlike traditional marketing, brands
There is now a waiting period of close to 15 days for vacuum can easily track sales on digital platforms.

“DIGITAL AND EMERGING
TECHNOLOGY ADOPTION HAVE
HELPED SOLVE VARIOUS USE CASES
RELATED TO REVENUE UPLIFTMENT
AND EBITDA IMPROVEMENT FOR
CONSUMER DURABLE COMPANIES.”
Feroz Khan, Partner & Leader, Digital and
Emerging Technologies, KPMG India
“UNLIKE TRADITIONAL
MARKETING, BRANDS CAN
EASILY TRACK SALES ON DIGITAL
PLATFORMS. THE THUMB RULE IS
TO TARGET PLATFORMS WHERE
CONSUMERS ARE SPENDING
MAXIMUM TIME.”
Honey Singh, Co-founder, #ARM Worldwide
The thumb rule is to target platforms bile phones has been automated for certain aspects like use of
where consumers are spending maximum multimedia for long periods. Even improvements have been
time. Google and Facebook are leaders in made in packaging and scanning lines as well with the introduc-
driving direct revenue,” explains, Honey tion of automation in inventory tracking.
Singh, Co-founder, #ARM Worldwide. Product development, consumer centricity and digitisation
via technology are the top priorities going forward for the Voltas
Operations And Manufacturing group. “We are capitalising on technology not only in ramping
As of FY20, domestic manufacturing at up manufacturing prowess, but also at the front end with regard
`32,200 crore ($4.61 billion), accounted to supply chain, warehouse management systems and consum-
for 42 per cent of the the Indian appliance er engagement,” says Pradeep Bakshi, MD and CEO, Voltas Ltd.
and consumer electronics (ACE) market. Adoption of Industry 4.0, which integrates IT in manufac-
With the government focus on developing turing with real-time data on production and maintenance, is
an electronic components manufacturing on the rise. Godrej has already implemented such solutions that
base and encouraging exports, the indus- have helped in quick resolution of problems. It aims to enhance
try is witnessing investments. Managing manufacturing efficiency with the introduction of cobots (col-
large-scale manufacturing with a distrib- laborative robots) with advanced safety features, wherein hu-
uted supply chain has its own challenges, mans and robots work alongside to deliver higher productivity.
which companies are overcoming with While technology adoption has been on the rise, the
technology. Covid crisis has indeed sped up the process and presented the
In production, automation is coming industry with an opportunity for revaluation, innovation, and
to the rescue, since it not just improves transformation.
production, but speeds up the cycle as
well. At the Xiaomi factory, testing of mo- @nidhisingal

Firms Must Test

Cyber Resilience
Plans, Policies BY WENDI WHITMORE
FEAR, UNCERTAINTY AND RAPID
BUSINESS SHIFTS HAVE CREATED THE
PERFECT STORM FOR CYBERCRIMINALS
TO CAPITALISE ON
the world of cybersecurity, security defenders have to er scale and speed. Now is a critical time
look far ahead to outpace the speed of business, technology, and for organisations to re-evaluate security
cybercrime innovations while also keeping active threats at bay. strategies to ensure they have visibility
In a year that has seen the most dramatic changes to business across their IT infrastructure, understand
operations in recent memory, maintaining a strong cybersecu- and prioritise the most critical threats,
rity posture is no easy feat. and have comprehensive plans on how
These changes are mostly driven by a rapid shift to work- they respond to cyberattacks in a way that
from-home models, which are truly testing companies’ toler- works for today’s new normal.
ance for risk. Businesses of all shapes and sizes are now leaning
on technology more heavily than ever before. Unfortunately, Protecting New Tech Frontier
many of the security guardrails normally in place have fallen by As new technologies are being adopted at
the wayside in the process — and criminals are waiting in the a breakneck pace, the traditional IT land-
wings to take advantage. scape that security teams are charged with
In fact, times of chaos and uncertainty are when cyber- protecting has grown exponentially more
criminals thrive the most — from attempts to trick individuals complex and dispersed. There’s no ques-
working under stress into clicking malicious links, to looking tion that the future of business operations
for open doors into companies’ networks introduced during the is digital — and increasingly, cloud-based
rapid deployment of new tools for remote work and operations. apps and infrastructure are the founda-
Today, businesses are facing many of the same challenges tion of that shift. Companies spent $31 bil-
that they’ve been addressing for the last decade — just at great- lion on cloud computing services between

January and March of this year, up 34 ery plans in place — yet many companies have still not evolved
per cent compared with the same period their security response plans to account for this breed of attack.
in 2019.
The ease at which new cloud tools edesigning Policies For The New Normal
and resources can be deployed can create It’s clear the business world looks significantly
a wild west of broad and distributed re- different than it did six months ago, companies
sources, which can be harder to centrally need to take a hard look at security policies,
monitor and secure. Individual employ- training, and attack response plans they have
ees introduce the element of human error previously developed to protect themselves in this new climate.
into the equation, and as new cloud-based To deal with an increasingly dispersed technology land-
apps and infrastructure become easier for scape, companies have adopted an overload of security point-
anyone to deploy, opportunities for mis- products, which are disconnected and only add complexity to
configuration or introducing vulnerable the response process — using nearly 20 tools to respond to a
applications become a major concern. single incident on average. Using tools that are interoperable, as
Overall, 86 per cent of records compro- well as leveraging automation to help streamline the response
mised last year were due to misconfigured process, is one way to alleviate this burden.
cloud servers and other improperly con- Planning and policies are foundational elements of any se-
figured systems — that’s nearly 7 billion curity strategy and remain essential in today’s fast-changing
records exposed due to common mistakes, landscape. Companies must re-evaluate how employees are
which often could be avoided through fol- now using their devices, accessing sensitive customer data, and
lowing proper policies and checkpoints. meeting regulatory requirements under new, increasingly re-
With employees now working from mote work models. Retraining for staff on security policies and
home — often from personal devices or handling of customer personal identifiable data to meet appli-
without new security policies or technolo- cable privacy regulations is in order for many companies.
gies in place — the opportunity for attack- The security planning that companies undertake must also
ers to take advantage of human error is go beyond attempting to prevent incidents, but also prescriptive
more present than ever. plans on how they will effectively respond to the various securi-
ty attack scenarios they are facing on a daily basis. Playbooks for
Staying Ahead the most common attack types are needed — but most compa-
of Emerging Threats nies are still lacking formal incident response plans. Companies
Cybercriminals have never been known must also frequently test the plans to
to let a crisis go waste — and the fear, un- ensure they are still effective under
certainty, and rapid business shifts tak- current operating procedures. Even
ing place during the pandemic created the THE TRADITIONAL amongst companies with formal
perfect storm for attackers to capitalise IT LANDSCAPE THAT plans in place, more than half of them
on. Phishing attempts, which lure individ- SECURITY TEAMS ARE have either never tested their plan or
uals into clicking malicious links to steal CHARGED WITH PRO- have no set schedule for testing them.
work credentials, are the primary way at- TECTING HAS GROWN An effective and comprehensive
tackers gain initial access to systems. MORE COMPLEX security response plan, testing of that
Beyond just leveraging the latest crisis plan, and having the right response
as a guide for phishing, cybercriminals are team in place can have one of the
also constantly evolving their techniques greatest overall effects on how much
to target emerging technologies and to damage companies will incur from an
avoid security defences. Ransomware is attack — saving around $1.2 million on the cost of a data breach
an attack vector that has grown around 70 on average.
per cent in recent years, and these attack- Now is the time for companies to update and test their cy-
ers are innovating new ways to break into ber resilience plans, re-evaluate their security policies and
networks and hold critical company sys- strategies, and make sure their employees are equipped with
tems hostage. Ransomware is an industry the right tools and training to operate in the new normal. By
agnostic threat, impacting everyone from understanding current threats, prioritising top risks, and plan-
local governments to retailers, financial ning ahead, companies can significantly reduce downtime and
services, and critical infrastructure sup- limit financial and reputational impact of the security incidents
pliers. To defend against these attacks, it’s they’re facing.
essential to have the right data and recov- (The writer is Vice President, IBM X-Force Threat Intelligence)

Coin
Flipping
SOME
CRYPTO
BUSINESS
MODELS
Time
Token
Development
& Exchange
Bitcoin Wallet
Service
Stablecoin
as a Service
Cryptocurrency/
Bitcoin Trading
& Exchange
Model
Blockchain
Development
Solutions and
Services

AS CENTRAL BANKS LOOK AT DIGITAL
CURRENCIES, THIS EMERGING TECHNOLOGY
WILL SOON BE HARD TO IGNORE
BY E. KUMAR SHARMA
years. But it also said that numerous central banks are “actively
evaluating CBDCs, publishing in-depth reports on issues looking
at financial stability, financial market infrastructure and macro-
economic implication.”
A large number of central banks, including in India, may not
be in a hurry to launch digital currencies, but the fast-evolving
he Central Banking Journal, which ecosystem of technologies around them – and their various uses
has leading former central bankers on its and benefits – will be hard for countries to ignore in the years
editorial advisory board — including for- to come.
mer Reserve Bank of India (RBI) Governor Apart from being issued by central banks, digital currencies
Y.V. Reddy —published a survey on digital can also exist in other forms, not recognised by a central bank and
currency in its May issue. Sharing the re- in a somewhat unregulated fashion, in which case these are called
sults of the Central Bank Digital Currency virtual currencies. Cryptocurrencies, being largely unregulated,
(CBDC) Survey, conducted in February, it are also virtual currencies, but their defining characteristic is use
cautioned that a lot of the attention being of cryptography to secure and verify transactions and manage
given to digital currencies is overdone and creation of new units. The basis of all digital currencies is distrib-
that very few central banks plan to issue uted ledger technology (DLT), a database that is synchronised
CBDCs, in any form, within the next five and accessible across geographies by multiple participants. One
HOW Token Devel- Bitcoin wallet Stablecoin as Cryptocur- Blockchain

THEY’RE opment & service is a service is rency/Bit- solutions/
CHANGING Exchange has gaining greater bring primarily coin Trading services are
THE brought in merchant used for utility & Exchange being used
LANDSCAPE institutional acceptance payments Model is to develop
validation to as service gaining applications
what used to be providers enrol acceptance to make busi-
an entrepreneur- more and more among nesses more
issued coin merchants people efficient

T E C H N O L O G Y S P E C I A L VIRTUAL CURRENCIES
DECODING DIGITAL CURRENCIES
Central Bank Issued Cryptocurrencies such STABLECOIN:

Digital Currencies as Bitcoin & Ripple New Class of
Cryptocurrencies such
These are centralised, with a Can be used for efficient cross- as Libra proposed by
single authority border settlements Facebook or Tether by
Tether Ltd
Transactions reversible No central monitoring authority
Value of most is linked to an
Value linked to national Transaction is added to the underlying asset, say, US dollar
currency blockchain and is, therefore, or gold.
irreversible
Used as a monetary unit Transcend beyond a region
Traded as an asset/commodity
Do not transcend beyond a A single issuing authority but in
region easily Several uses in blockchain private domain
software applications
Private entity can be regulated
Potentially volatile by a financial regulatory
authority
example is blockchain, a distributed ledger that uses blocks of ers often find KYC as the most duplicated
information to carry out end-to-end digital transactions (some effort in the financial sector.
digital currencies such as bitcoin have blockchain in their DNA).
The ecosystem is fast evolving and India, with its immense What About India?
governance challenges, will have to sooner or later join the global “Digital currency is clearly an important
effort, both by governments (for things such as digitising records emerging technology, specifically for India,
and ensuring ease of payments) and private players such as Face- considering that it should have a compara-
book (it plans to take its proposed digital currency Libra global), tive advantage in this area due to the large
in exploring more and more use cases of DLT. G. Padmanabhan, number of talented software engineers in
Non-executive Chairman of Bank of India and former Executive the country,” says New York University
Director, RBI, who has looked at the subject closely, says, “When- Professor David Yermack, who teaches a
ever people talk about DLT and blockchain, they immediately course on the subject. India has a “desper-
connect it with bitcoins. Yes, bitcoins use blockchain, but this ate need for a more modern payment sys-
technology has its own use. For example, you could talk of a block- tem to meet the needs of the vast numbers
chain-led KYC (know your customer) process that could do away of unbanked and under-banked residents.
with duplication of KYC by several entities, though I personally On both supply and demand side, this tech-
think that this is a few years away (in India).” There are already nology should be thriving in India,” he says.
reports of the Japanese banking system working on projects that But it’s easier said than done. The tricki-
seek to build a KYC platform using blockchain technology. Bank- est part is lack of clarity about the nature of

the technology and its output. For instance, is that the central bank has acted to protect the legacy banking
despite the soaring popularity of bitcoins a system from disruptive competition from shadow banks that
few years ago, nobody was sure if it was cur- would rely on this new technology,” says Professor Yermack.
rency or commodity (considering the manic
speculation that led to spectacular rise in its The Way Ahead
price). Bitcoins, launched in 2009 globally Many experts agree about the benefits of DLT and virtual cur-
in response to debasing of the global mon- rency. Singapore-based economist Rajeev Malik, who runs con-
etary system by central banks’ massive cur- sultancy firm Macroshanti Pte, says: “The digital alternatives are
rency printing after the 2008/09 financial easier to maintain, more convenient to handle and are more eco-
crisis, started becoming popular in 2013. As nomical than cash as no special high-security paper is needed.”
prices began to surge, the RBI responded What about safety? “They offer greater privacy. Absence of inter-
in December 2013 by cautioning “users, mediaries means transactions are typically instantaneous with
holders and traders of virtual currencies, negligible or no fee. Finally, the new digital alternatives have the
including bitcoins, of the potential finan- potential of providing the unbanked population easier access to
cial, operational, legal customer protection financial infrastructure,” he says. The Bitcoin wallet service is
and security risks that they are exposing already gaining acceptance as service providers enrol more and
themselves to.” The attention subsided for more merchants
some time but in 2017 and early 2018, there Of late, a new cryptocurrency, called stablecoin, has become
was a huge rally in bitcoin prices. In April popular, mainly because it is seen as more stable than other
2018, the RBI banned banks from facilitat- crypto assets such as bitcoin. “This is because its value is linked
ing buying and selling of virtual currencies or collateralised to an underlying asset such as the US dollar, a
and issued a notification prohibiting com- commodity such as gold, or other cryptocurrencies. There are
mercial/cooperative banks, payment banks, non-collateralised stablecoins as well; these are not backed by
small finance banks, NBFCs and payment any asset but use algorithms to manage supply and keep prices
system providers from dealing in virtual stable. However, lack of collateral is a major risk in case of a mar-
currencies. The ban covered all financial ket crash,” says Malik. Facebook-initiated Libra is a much-antici-
institutions under its regulation. Those in pated stablecoin awaiting nod from regulators. Another example
the industry saw this as an indirect ban as of stablecoin is Tether, issued by Tether Ltd.
key infrastructure support was removed
but digital currencies/bitcoins were not de- sha Thorat, former Deputy Governor of the
clared illegal per se. RBI and former director of Centre for Ad-
In November 2017, the RBI released a vanced Financial Research and Learning,
report of a working group on fintech and shares slides of her work in this space with
digital banking that recommended a regu- apparent flair of a nerd rather than a dyed-
latory sandbox for financial innovations. in-the-wool banker. “A blockchain is a
Subsequently, around April 2018, there growing list of records called blocks, which
were news reports of the government and are linked using cryptography. Each block contains a cryptograph-
the RBI looking at the possibility of launch- ic of the previous block, a time stamp and transaction data.” She
ing a fiat cryptocurrency named Lakshmi adds: “The blockchain technology has the potential to replace cen-
(the Hindu Goddess of wealth), though tralised settlements in payment and settlement systems. The oth-
there was no official note or statement an- er uses of blockchain technology could be for safe and low-cost
nouncing the name or other details. Final- commercial transactions. These uses should be explored.”
ly, in March 2020, the Supreme Court lifted There are different models that have emerged globally. Rajesh
the curbs earlier imposed by the RBI. The Dhuddu, Global Practice Leader, Blockchain, Tech Mahindra,
current status, says Jaideep Reddy, Leader, says: “The future of cryptocurrency is a peer-to-peer business
Technology Law at Nishith Desai Associ- model in terms of micro transactions being carried out. It in-
ates, is that “it is now legally permissible for creases transparency and enhances customer experience. From
crypto exchanges to operate and procure an enterprise perspective, this is aligned to the growing trend of
a bank account. Other laws like the Con- organisations moving towards digital transformation.”
sumer Protection Act and the Indian Penal Whatever stand the regulators take, it is clear that govern-
Code will continue to apply and protect ments and private enterprises can ill-afford to ignore this emerg-
consumers to a fair extent.” Nishith Desai ing technology.
Associates has been advising industry on
the matter since 2013. “My personal belief @EKumarSharma

Recessions are
The Mothers of
IT Invention
AS IT IS TRANSITIONING FROM A SUPPORT BY MALCOLM FRANK
FUNCTION TO BECOMING THE BUSINESS

ITSELF, GREAT FORTUNES WILL BE MADE
AND LOST IN THE NEXT HALF DECADE
he next five years will prove decisive in our industry, as In Infosys’ 2006 Annual Report, Narayana
massive change produced by the Covid-19 recession will drive re- Murthy titled his letter “On Entering Adult-
newed double-digit growth for certain firms and send others to hood.” The firm and the entire sector cer-
irrelevance. This dynamic has occurred during the three prior re- tainly had grown up. Global delivery had
cessions, and early indicators are this downturn will be the most become a phenomenon.
consequential by far. The pattern repeated itself again a de-
When I started my career in the late 1980s, one could not over- cade later with the 2008 credit crisis. Head-
TUBUFUIFEPNJOBODFPG*#.BOE%JHJUBM&RVJQNFOU$PSQPSBUJPO ing into that recession, cloud computing was
%&$
*#.BDDPVOUFEGPSBTUBHHFSJOHQFSDFOUPGUIFDVNVMBUJWF viewed as an interesting but risky concept.
value of the S&P 500. And the press would gush over the ascent of Five years later, Amazon Web Services and
DEC, with its CEO Ken Olsen being referred to as “the most suc- Microsoft Azure growth rates were between
cessful entrepreneur in the history of American business.” 40 per cent and 80 per cent, became the de-
After the recession of 1991, these two venerable firms had fault solution for much of enterprise IT, and
ceded industry leadership to a new cohort of upstarts: Microsoft, have now generated over $1 trillion in mar-
Oracle, SAP, EMC and Cisco. The client/server movement had be- ket value combined.
come a phenomenon. Today the pattern continues, and this
The pattern occurred again a decade later with the Dot-Com time around, the prize is larger than ever. IT
– 9/11 recession. Entering that recession, the IT services sector was is transitioning from being a support func-
dominated by multinationals. Yet five years later TCS, Infosys, tion for industrial business models to be-
Wipro, Cognizant and HCL were mainstream providers, had col- coming the business itself. Great fortunes
lectively quadrupled in size, and proved that the world was flat. will be made and lost in the next half decade.

Clients Lead The Way Virtual Marketing Operations: Every company must now
Three months into this recession, what are build one-to-one customer relationships with software. And they
the clues to this new future? From a client must greatly increase their sales through online channels.
perspective, they’re emerging with clarity. Cloud Acceleration: Cloud enablement will accelerate as leaders
First, clients, regardless of industry or seek to move even more to providers like AWS, Azure, and Google,
location, are reacting to the new normal in while maintaining hybrid and "on-prem" processing power.
three inter-related dimensions: Safe Buildings: The pandemic has forced a complete re-evalua-
Virtualisation: Anything that is currently tion of our physical plants, and even the definition of a building it-
“on prem” that can go virtual will be the self. Large facilities from corporate offices to distribution centres,
workforce, the customer experience, core shopping malls, airports, concert halls and sports arenas all need
processes, core computing power and risk. to be transformed into safe buildings as companies must ensure all
Variablisation: Shifting fixed costs (cap- occupants are fever-free and are maintaining social distancing.
tive centres, physical spaces, equipment) to
more variable, as-a-service, cost structures The implication For Digital Services
is becoming the norm. Our industry is a large one, and yet the vast majority of our collec-
Anti-Fragility: Transitioning to a net- tive work has been tucked into the 3 per cent of revenue that the
worked business model that is more resilient, average Fortune 500 company spends on IT. Post-recession, the
NPSF BOUJGSBHJMF #VTJOFTT NPEFMT NVTU SMAC model (of social, mobile, analytics and cloud) will be applied
now move from linear supply chain models at scale to cost of goods sold (COGS) at the heart of a client’s busi-
to more networked approaches, which have ness. This represents over 60 per cent of client spend in the Fortune
inherent fault-tolerance and resiliency. 500; a massive leap in the addressable market for IT services pro-
viders. Such solution areas represent massive growth opportuni-
Second, with this context, several new solu- ties but they also require new competencies, including:
tion areas have emerged, including: t $SFBUJWJUZ XJUI UFDIOPMPHZ -FBEJOH EJHJUBM TFSWJDFT GJSNT EF-
Virtual Workforce: Firms like Zoom, liver innovation at scale, and must have depth in design thinking
Slack and Microsoft Teams have initially and the associated agile methodologies, which can quickly turn
benefited from this move. However, the client ideas into software-driven businesses.
more interesting and valuable work will t *OEVTUSZEFQUI-POHHPOFBSFUIFEBZTXIFO*5TFSWJDFTQMBZFST
come from digital service providers who could provide horizontal capabilities with a smattering of verti-
can virtualise core processes (think a trad- cal expertise. Digital services providers must now have a level of
ing desk in a bank, claims processing at an industry insight, which not only matches, but surpasses, that of
insurance firm) by integrating collaboration the client.
platforms with core enterprise applications. t $IBOHF .BOBHFNFOU DIPQT #Z EFGJOJUJPO FWFSZ TDBMF EJHJUBM
Data Modernisation: Today’s crisis has initiative in a 100-year-old company is a significant change man-
exposed the cracks in how nearly every com- agement exercise. Processes, people, incentives, and cultures
pany manages data. Modernising data mak- will all undergo dramatic transformation. Lack of change man-
ing it accessible, integrated, real-time, trust- agement is the Achilles heel for most digital initiatives, and the
worthy, and valuable delivers near-term cost services firms with strong change management capabilities will
savings and also lays the foundation of a distinguish themselves.
truly digital business. t 5FDIOPMPHZ FDPTZTUFN TUSFOHUI $MJFOUT OFFE BTTJTUBODF JO
Application Modernisation: The vast making sense of the new technology landscape and applying the
majority of today’s enterprise apps were SMAC Stack at scale. No client can do this on their own, and thus
designed for "on-prem" consumption. Mod- they will rely heavily on digital services providers who can make
ernising the application estate which starts sense of the technology architectures and associated vendor
by determining which apps should be shut landscape.
down, migrated, re-engineered or simply As history has proven, the winners
EVERY FIRM MUST
left alone will lower cost and increase pro- that will emerge from this recession
NOW BUILD ONE-
ductivity along every value chain. are currently hiding in plain sight. We
TO-ONE CUSTOMER
Virtual Agile SW Development: DevOps already know most of their names. The
RELATIONSHIPS
and Agile methods are central to building scale and growth prospects of the digi-
WITH SOFTWARE
the digital enterprise, but in a post-Covid tal services market are unprecedented,
AND INCREASE
world, they must be delivered virtually. A and the next two years will prove deci-
THEIR SALES VIA
Virtual Agile software engineering model sive. Game on.
ONLINE CHANNELS
allows a global model to deliver software (The writer is President, Cognizant
products at speed. Digital Business)

“REMAIN HUNGRY FOR GROWTH AND
CHALLENGE THE STATUS QUO”
RAJIV BHALLA, MANAGING DIRECTOR, BARCO INDIA
Q: What was the problem that you were

grappling with?
A: I joined Barco in May 2016, following stints
in Intel, NEC and Microsoft. The company was
in the midst of consolidating its position in the
market and the focus was on enabling growth and
boosting sales. I realised that despite Barco being
a leader in visualisation technologies, and India
being a great centre of excellence, we were facing
a challenge in terms of sales and the teams were
not able to fully leverage on-site capabilities.
There was a need to turn around this situation.
Q: Who did you approach and why?

A: While trying to resolve this issue, I sought
inspiration from the experience and learnings
acquired during my stint at Microsoft India. I am
greatly inspired by the ex-chairman of Microsoft
India, Ravi Venkatesan, and his advice on what it
takes to succeed in India. It helped me navigate
the situation that we were facing at Barco India.
Q: What was the best advice you ever

received?
A: The best advice I ever received was to remain
hungry for growth and challenge the status quo. I
realised that some of the obstacles we face on our
path to success are of our own making. To reach
our potential, we must learn to overcome them.
Often, after achieving success, we sometimes
become our own enemies. To realise our poten-
tial, we must learn to get out of our own way.
Q: How effective was it in resolving

your problem?
A: The first in my list of priorities was to drive
exponential sales growth. We put to action the
‘In Country for Country’ philosophy, which
involves India-specific value definitions, price
points, products and go-to-market strategy. We
localised our product offerings, price points
and go-to-market approaches to target consum-
ers and this helped us double our sales in three
years.
90 Vol. 29, No. 15 for the fortnight July 13 to July 26, 2020. Released on July 13, 2020. Total number of pages 92 (including cover)

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Hindujas: The Can An Economic Strike

businesstoday.in Battle Within Against China Work?

China: Do Barriers Work?

Editor: Rajeev Dubey

For reprint rights and syndication enquiries, contact

Intelligent Time For Wheels of Firms Must Test Recessions are

ILLUSTRATION BY RAJ VERMA

India’s Stimulus Way

STAY CONNECTED WITH US ON

26 July 2020 Business Today 7

GROSS FINANCIAL …THOUGH NET

Lakh Crore Lakh Crore

* Net financial assets are gross

8 Business Today 26 July 2020

26 July 2020 Business Today 9

Italy 12.8 5.2 South

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Ô Cement volumes fell 13 per cent in 10

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Crash Despite Mini 35

MF Assets Rise June FII Inflows

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INDIA INC. STEPS CSR

UP COVID FIGHT FOR COVID

Vehicle Registrations 51,430

Fall 88.9% in May 1,881

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POLICY: Between POLICY: To pro-

POLICY: India starts IN STORE FOR

The Trade War

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4.11 3.53 2.64 3.18 3.34

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

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Hinduja family seems headed for Sep 4 2019:

PHOTOGRAPH BY UMESH GOSWAMI 26 July 2020 Business Today 21

Srichand Gopichand Prakash Ashok

Shanu Vinoo Ajay Ramkrishan

Sanjay Dheeraj Shom Satya Ambika

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NXT GOCL Hinduja Gulf Oil Ashok

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the midst of the Covid-19 lockdown, Siemens India,

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HOW THEY ARE CHANGING

What KPMG Projects

Shift towards Digital push Move towards Building Supply chain

WHAT NITI tele-healthcare, robots, 3D printers....” And

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control system for commercial buildings and offices, contactless

he logistics industry, which had the tough task

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HOW THEY’RE CHANGING Lesser use of

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26 July 2020 Business Today 39