Feb 21, 2001|
E-comm: Can it shield Indian companies?
This time when HLL surprised the markets with better than expected results the markets rejoiced. According the company, supply chain management had played an important role in the improvement of the company’s performance by helping it cut costs. HLL is expecting a vast savings in inventory costs with the use of IT enabled supply chain management.Did not the whole software story begin with this?
The whole software frenzy began with one a single objective in the mind of corporations to improve organizational efficiencies. It started with an inward focus. Companies automated all their systems with enterprise wide softwares like Enterprise Resource Planning systems (ERP). This improved margins but it did not stop there. Then the focus then shifted to cutting costs externally. This meant using information technology to create an efficient logistics and supply chain mechanism. And the race to get e-enabled began.
All the major software companies derive a huge chunk of their revenues from e-commerce. These companies provide solutions right from consulting to technology selection to solutions to implementation. With organisations yet to be e-enabled there is a lot to be done out there.
So how do organisations behave in the wake of an economic slow down. The companies would look to cut cost to maintain their operating margins. This would mean increase in efficiency of operations. And supply chain management could be the answer the companies would be looking for. Therefore, there might be a possibility that the companies might ramp up spending in this area.
|Break up of IT spend in the US
Instinctively the companies would cut expenditure in areas that constitute a chunk of the expenditure. The other important consideration while cutting down the expenditure would be the criticality and impact of the spending. If possible get things done at a cheaper price.
Indian companies are seeing customers pushing a lot of work offshore to avail cheaper billing rates. Market research suggests that the Internet-specific investments by U.S. corporate will rise to nearly 26% of their total IT spending in 2004, up from just 15% in 2000. The total spending on Internet technologies and services was US$ 49 bn in 2000. If the tech-spend across the industry grows by just 8% in FY02 and the spending on Internet technologies increases to about 18%, the figure jumps to US$ 63 bn. Considering the fact that software exports to the US for FY01 from India are expected to be around US 1.8 bn there is a huge market for the taking.
If companies need to worry about something it is the fact that US companies have become a lot more cost conscious. Wild billing rates are just not entertained anymore. Also, with dot-coms fast disappearing software companies will be looking for business from more corporate clients who would look at more realistic billing rates. The fact remains that improved efficiencies is what companies are looking for and they will buy provided the price is right.
More Views on News
Aug 2, 2017
A better than expected turnaround in performance results in a change in view.
Jul 27, 2017
Digital services drive growth for Wipro in 1QFY18.
Jul 14, 2017
Infosys starts FY18 on an encouraging note with a stable performance.
Aug 5, 2017
How to get exclusive insider recommendations from Ankit Shah.
Jul 14, 2017
TCS starts FY18 decently despite an adverse currency impact.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407