Professional Approach – Call Centres

The nuisance calls on cell phone have not ceased completely.

Though I had chosen only certain categories of calls to be permitted on my cell phone via the national “do not disturb” registry, after a while the calls somehow started off again. Since one does not wish to shut off “financial institutions-related” calls and text messages, there are now increased number of calls coming in from such institutions trying to sell some or the other financial product, offer loans at low interest rates, offer a new credit card, etc., etc.,

The messy thing in such calls is that these calls come in at any time, and can affect business transactions. Further, the caller from a bank’s call centre cannot speak proper English (usually) and indulges in chaste Hindi or sometimes Marathi, making an invalid assumption that the other side would understand. If you insist that any such conversation needs to be conducted only in English, the caller quickly switches off.

Such behaviour gives me the impression that even reputed banks (and other financial institutions) do not really ensure that their call centre employees are bilingual. I am also not sure if they really train these folks on how to engage in a conversation properly with customers, instead of opening the call with a question “would you be interested in our new product” ? I will rate the call centre employees below 5 on a scale of 1 to 10 when it comes to conducting a conversation in English.

This is not the case with the Credit Card Centre employees of many banks – they are well equipped, well prepared to handle any customer or situation, ready with the data, etc., May be because they are actually running a credit operation, the bank invests in better quality employees !

I have put off many a caller, sometimes rudely, especially when I am in the middle of something. The caller will then insist to get an alternate date/time to call, and almost invariably not call if you do provide such an alternate timing. So unprofessional, and that’s why I do not believe in the efficacy of customer service rendered via ordinary call centres (mostly outsourced).

Couple of call centre operations which are highly professional come to mind at this juncture – one is Dell and the others are HDFC Bank / Standard Chartered Bank. Excellent trained employees operate these call centres and give a feeling that you are indeed talking to the company or institution directly. Service is very good and prompt.

Overall, the disturbance which emanates via one’s cell phone can be done away with almost entirely, but for the proof of certain banking and credit card transactions which give comfort feeling. Otherwise, the cell phone is to be used only for important calls and messages which are to be expected rather than abrupt ones which disturb one’s equilibrium oftentimes.

The key thing for success in customer handling via call centre operation is a solid professional approach with knowledge of the customer and his problems. Someway to go to attain that situation………..

Cheers,

Vijay Srinivasan

20th May 2012

Mumbai

 

Drain on Taxpayers

Indian Taxpayers do not get accountability from the government on all actions which the government takes to deploy the tax receipts fruitfully for the development of the country.

Yes, yes, I understand that the Finance Minister presents his annual budget this month (every February) to the Parliament, and the budget has to be balanced. And the fact is that the Finance Ministry mandarins and accountants are now working very hard indeed to prepare the budget, and they have to follow accounting rules, of course.

But, does the government explains the rationale of its expenditures in great detail, except hundreds of pages of the usual speech through which the citizens are expected to wade through and obtain an intellectual enlightenment as to how their funds are getting used by the government ministries. Not really. One has to depend on consultants to explain the mumbo jumbo in easy terms.

The point is that there are two major areas which continue to drain government tax receipts (both income taxes and corporate taxes are what I am referring to here – there are other incomes of course) into unprofitable public sector investments and subsidies. If the government of the day continues with this heritage philosophy of funding the unfundable, then it also has the responsibility of specifically explaining its actions to the citizens.

Let us look at investments and equity infusion into unprofitable public sector companies. Take the example of the national airline, Air India (now called just as “Indian”). This airline is plagued by many issues for the past decade or so – it has a poor safety record, it invested heavily into new planes which it never could afford, it is run badly, has had the privilege of being managed by a series of bad managers at the top, it has the privilege of continual governmental interference, it gives away many free tickets to the undeserving, its pilots are undisciplined, it has poor quality of service on board, and on and on………it is an endless list of complaints. Should it be run by the government at all ? Should it get funded for bad performance ? Given that the funds are coming from tax payers.

The government of India just approved a funding of nearly USD 1.5B for rescuing Air India, which could not even pay salaries to its employees, and could not service its debt. It could not pay for jet fuel even. This is terrible performance which is getting an infusion of taxpayer funds.

Does Air India deserve this funding ? Absolutely not. I cannot make a prescription of what the government should do. I can only say what they should not be doing, and that is exactly what they are doing.

Now let us look at subsidies. Subsidies might be a political necessity, and no government in the history of independent India could escape from continuing to provide sometimes unjustifiable subsidies to various segments of the society. I am not against subsidies per se, but I believe it is important to tie the subsidies to a timeline for termination eventually. People have to accept that government subsidizes certain things for the benefit of the poorer sections of the society or to help farmers, but everything should have an eventual expiry date.

One can argue that elected governments have the power to do what they wish to do in their own interest. The only solution is to defeat the party which runs the government in the next elections, this is the only possibility in a democracy. So, the taxpayers have to decipher government’s actions and motives via the budget speech, rather than just look at the pure numbers. If the government cannot sustain its policies, then taxpayers have to take cognizance of the same.

Think about it !

Cheers,

Vijay Srinivasan
11th February 2012
Mumbai

A Comparison with Michigan

I met one of my classmates from old times yesterday.

We spent sometime discussing the current economic situation in India and what is happening in the U.S. My friend runs a specialized software company in Michigan, U.S.A.

It was very surprising when he pointed out that he pays a real estate rental cost of just USD 1,600 per month for some 6,000 Sq Ft of decent office space in the U.S. That works out to something like INR 15 per Sq Ft per month, which is an incredibly low figure, compared to anywhere between INR 60 and INR 125 in Mumbai or Chennai. Even if I take a figure of INR 25 for the Michigan real estate, India is more than twice that figure for comparable buildings with good facilities.

My friend did say that while the costs in the U.S. are going up by some 2 to 3% per annum (I thought it would be higher), the reason for the big difference is that the Indian costs have risen rapidly over the past few years. I know for sure that high quality real estate for office buildings in Mumbai cost around INR 200 or more per Sq Ft per month. So things do seem to be out of control in terms of costing in India.

The reasons could be manifold, but it is really the matter of supply and demand. Demand for high quality real estate in India has far outstripped the supply for quite a long time now, though the supply is catching up. But costs should have come down by now. Though the market is really “soft” now, the costs are not coming down. This shows the artificial nature of real estate market in India.

I was further surprised when my friend said that he hardly purchases anything in India these days, despite the fact that the USD is ruling high at more than INR 52 per dollar. I asked him why, as I thought it would be the most appropriate time for non-resident Indians to spend their dollars in India.

But he said that even a simple good quality office shirt costs something like USD 40 in India (from Zodiac), whereas he can get a decent one in the U.S. for somewhere between USD 10 to 15. Even a better quality shirt in the U.S. costs half of what unsuspecting folks pay in a “poor” country like India.

He felt that prices of most items in shopping malls in India are ridiculously high, and he would not spend his money here but rather reserve the same for spending in the U.S.

That is not encouraging for India.

We should look at the U.S. for buying our textiles (!) but we can do nothing about real estate !!

Wishing You all a Merry Christmas (we are approaching 25th December in just about an hour from now in India),

Cheers,

Vijay Srinivasan
24th December 2011
Mumbai

Embedded Non-Transparency

India is full of transactions spawned at higher valuations by strongly embedded non-transparency.

What could have costed someone X is sold at 1.5X to him because the market operators and intermediaries are well versed in the art of moving the valuations upwards and ensuring that the market participant gains when he is a seller and loses when he is a buyer. They create artificial demand/supply gap by manipulating the market mechanisms. They create an illusion of high demand and limited supply of a particular variety which you are looking for as a buyer.

As a result, the buyer gets a sense there is an increased level of activity in the market place when the reality is actually different. The buyer tends to “price” up his offer in anticipation of closing the hard-sought deal, when the deal is rarely having a competitive offer from another buyer.

The seller gets emboldened by the broker as he really is not at the venue of the transaction and depends on the broker to assess the demand and ascertain the quoted price. He makes a wrong judgement that indeed the market is thriving and there are many buyers asking for his property or asset, so he tends to raise the asking price.

This leads to an artificially created inflation of prices when the prices should actually be tending downwards in an ideal market place. So, this is how the market operates in most interest areas of buying/selling in India.

The Indian market place is totally and clearly non-transparent, especially in property transactions, and is aided and controlled mostly by brokers. The market intermediaries become market makers, and so the prices are entirely artificial. There is no such thing as a transparent property market in India, they will never allow transparency and ideal markets to succeed.

Given this kind of environment, is it surprising that the Mumbai real estate prices maintain their very high valuations though the number of market transactions has crashed ? No, it should not be a surprise at all. That is how the hottest real estate market in the country operated for the past hundred years and that is how it will operate for the next hundred as well.

This non-transparency mostly affects the buyers, but sometimes it could also affect the sellers and the financial institutions which provide funding to the buyer. The true value of the property becomes difficult to establish and so it is possible that the seller also could lose money sometimes, though it rarely happens as the prices would have usually doubled in approximately 4 years for the seller, and so he will be “in the money” right from year 2 in a serious way.

The economics of selling and buying is a different blog topic on which I will write soon. But what I am concerned now is this complete lack of transparency which I have encountered personally and have heard it mentioned many a time in social discussions on the topic.

Can we do something about this lack of transparency ? I haven’t seen any change or improvement, so I tend to think that there can be no action against it. Or, any effort at improvement will be squarely defeated. One way we can tackle the issue is by going online and creating an online market place. Such online efforts are growing in India driven mostly by this lack of transparency, but the results have not gone beyond identification of an asset and then going physical…….I guess it would take another 2 to 3 years of frustrations before a truly transparent online market place would develop in India.

Let us wait (or one of us have to make it happen !).

Cheers,

Vijay Srinivasan
27th November 2011
Mumbai

Safe Haven Currency

I can well understand the role of the Swiss Franc in the European economy. Of late it has partially taken on the role of a world currency as well, trying to position itself as an alternative to the beleaguered U.S. dollar.

But, what happened last week is difficult to understand.

The Federal Reserve stated that it is afraid that it would take many years for the U.S. economy to recover. That hit all the major stock market indices around the world. Understandable, correct ?

But, the U.S. dollar appreciated against most currencies last week. Even against strong currencies like the Singapore dollar. I thought people will flee the U.S. dollar, given the perilous state of the U.S. economy. But it was not to be.

The Singapore dollar depreciated to SGD 1.29 to the USD. The Indian Rupee had the steepest fall in over two years, it fell to nearly INR 50 to the USD, and is expected to fall further next week.

So, what’s going on here ?

Why would a currency under siege appreciate ? Why is the USD considered as a “safe” currency in today’s state of the American economy ?

The answer lies in the currency traders’ minds, I guess. They must have correctly guessed that most of the world and almost all of the major trading currencies will be in trouble for the next year or so, if the U.S. economy gets into almost irrecoverable status. Where would you export, if the world’s largest economy cannot absorb the exports anymore ? If the Americans simply stop importing (which they cannot do), then the Chinese, Germans, Indians and French will be in deep trouble.

One way to ensure that the U.S. continues to import is to make the imports cheaper, and that can happen if the U.S. dollar appreciates against the major trading partners of the U.S. I am not sure if this is the reason, but this could be one of several factors affecting world trade.

For service economies such as India, the export billings for software services would translate into a better bottom line as the Indian Rupee depreciates, but the Indian import bill will correspondingly rise hitting at high-consumption products such as crude oil.

It is interesting to see what is happening, but I believe that this would be a short-term phenomenon, lasting not more than 60 to 90 days at the most. In the meanwhile, hold your U.S. dollars – they might just become more valuable in the very near future !

Cheers,

Vijay Srinivasan
24th Sept 2011
Mumbai

Strangling Growth of Indian Economy

Yesterday, the RBI (Reserve Bank of India) raised its policy rate by 0.25% to 8.25%. It is the 12th such continuous interest rate hike by the RBI, which started in March 2010.

While the RBI’s action was largely expected in the light of the rising inflation (the inflation touched 9.78% in August), it was not really warranted. The global economy is in major trouble, European nations are failing, demand world-wide is shrinking, the U.S. economy is tottering, and high interest rates / inflation has dented the growth rate of the Indian economy. Given the challenges faced by India, it is high time that the RBI took a pause and let the economy stabilize.

Monetary policy acts with considerable delay as is widely known. The economy is just reacting to the previous interest rate hikes. GDP growth has fallen for the first quarter of this year (April to June 2011) to less than 8%, the first time it did in the past six quarters. Instead of letting the economy stabilize and take a breather, inflationary concerns seem to be dominating RBI’s thinking.

If accelerating demand is the main force driving up the inflation, then that thinking may be right. But India has supply side constraints affecting the economy and the inflation, rather than galloping demand. So, how is it reasonable for a group of economists to make a decision without consulting the stakeholders in the larger economy ? Of course, one can argue that the monetary policy of a nation cannot be influenced by vested interests. But, here a nation of 1.2B people is getting seriously impacted by dropping economic growth rate, caused mostly by the rising interest rates which is affecting manufacturing and all productive efforts.

While the banks are flush with liquidity, they are not able to find borrowers. Lending activity is shrinking, both for the productive aspects of the economy and at the retail consumer level. Citizens are increasingly becoming wary of investing in capital assets. You cannot blame them when they have to borrow at more than 12% interest rate. Manufacturing companies are also in the same situation. Capex investments will continue to suffer, and it is no wonder Indian industrialists are looking to invest overseas where the situation is conducive for their investments.

In a nutshell, it was not necessary for the RBI to engage in another round of interest rate hike, in the hope of reining in inflation, which is not going to happen anyway. They should have taken a breather and waited for another 45 days, before taking a final call.

I am not an economist, so may be I am not qualified to critique RBI’s action. However, from the perspective of a ring side view of the economy, may be all citizens should take a view of all governmental and institutional actions which could affect them, their lives and the health of the economy as such. There should be a mechanism to convert these citizens’ views into something concrete as a public opinion on policies which affect them.

The Indian economy is now going to be impacted more seriously than ever. It is critical to use a combination of policies rather than just the monetary policy as a tool to control inflation and demand-led growth.

Let us think carefully again whether this interest rate hike was really seriously warranted.

Cheers,

Vijay Srinivasan
17th Sept 2011
Mumbai

Mumbai Home Prices

When the economy seems to be needing some crutches, it is surprising to see the resilience of home prices in Mumbai. The GDP growth rate of India for Q1 slowed to 7.7%, which is the slowest growth rate in the past 6 quarters. But the slowing of the economy is not reflected on the ground where consumers seem to be focused on generating more demand than what the Government or the Reserve Bank of India would desire it to be.

Demand for real estate in Mumbai is soaring (as always) due to the fact that supply was limited – I say “was” since that is the real fact. Supply is no longer limited with over 30K apartments remaining unsold. Supply is available but the demand cannot be met.

Have you encountered such a situation ? It is possible of course.

Supply is available at a price which keeps rising every month in Mumbai. Demand is perceived to be strong, and the holding capacity of the bigger players in real estate is pretty strong. So, you have a combination of factors in which supply seems to be deciding the price – more the supply, higher the price. What kind of economic logic is this ?

The actual fact on the ground is that demand has fallen significantly as reflected by the drop in new apartment registrations by over one-third (or more). So, actually the demand is weak, given the high prices charged by the builders and the very high interest rates of some 11 to 12%. The EMIs (equated monthly instalments) payable by the loan-takers has risen substantially over the past 6 months due to repeated rises in interest rates by banks.

So, why are the builders not loosening up and capitalizing on the pent-up demand by reducing prices ? They can easily drop the prices by some 30% and still make significant gains, and their exposure to banks will come down by more sales realizations.

But that is not happening either.

All in all, we are at a dead end in Mumbai. No buyers, no sales, high interest rates leading to higher EMIs (some 40 to 50% of disposable incomes for most families), and so there you have it – a housing recession. Yes, that is what is happening in Mumbai of late.

This is just ridiculous. Everyone is waiting and watching for someone else to blink.

Who is going to blink first ?

I guess that this time it will have to be the builders.

The average capital rate per square foot for good quality apartments in the Western suburbs of Mumbai has now more than doubled in less than 2 years. Given that the Mumbai builders take the buyers for a solid ride by charging for the common areas of the apartment block, one can expect to pay not less than INR 10K to INR 25K per sq ft in the Western suburbs.

This cannot last, as the buyers are now running away. The pool of buyers who can shell out USD 400K for a 1,200 sq ft apartment (which actually provides only 800 sq ft) is shrinking rapidly at a higher interest rate of 12% on a 20 year loan………this apartment is just a 2 BHK (2x Bedrooms, Hall and Kitchen). If you wish to have a 4 BHK apartment, expect to pay close to USD 1M in the suburbs – forget the island city, wherein the prices are atleast twice of that.

So, Mumbai is headed for a rapid housing recession very soon.

Buyers should wait. Don’t believe what your read in the newspaper supplements which encourage you to invest immediately. That would be real stupid in the current environment.

Cheers,

Vijay Srinivasan
3rd Sep 2011
Mumbai

Credit Rating Politics

I am no expert on credit rating or the global economy.

But I am quite annoyed with the thoughtless degradation of the U.S. credit rating by Standard & Poor’s. Please see the Standard & Poor’s Full Report:
“Research Update:
United States of America Long-Term
Rating Lowered To ‘AA+’ On
Political Risks And Rising Debt
Burden; Outlook Negative”

The impact on the global equity and bond markets was huge and dramatic. Investors’ wealth was wiped out in huge goblets – something which was not required, as the Standard & Poor’s credit-rating downgrade was entirely based on the controversy emanating from Washington to raise the debt limit of the U.S. Government. The actual facts give a different perspective, and the action was not entirely warranted.

The negative impact on the beleaguered U.S. economy is so huge that it is now almost certain that President Obama would lose the re-election battle to Republicans, who have done a better job of portraying what is essentially a pro-rich approach as something which is good for all of America. Sounds ridiculous, and it is outlandish and ridiculous, but in politics everything is fair and even. How can anyone blame the GOP and the Tea Party members ?

If there is someone that needs to be blamed, it is President Obama and his lackadaisical approach to serious politics and his abandonment of his own Democratic Party ideals. He has given up on revenue increases and let the Republicans win on cost reductions. And when he dares to cut defence spending, Republicans will be sure to raise their heckles and point out aggressively that President Obama is sacrificing U.S. security in the altar of partisan politics !

Well, that is politics and I do not appreciate Standard & Poor’s helping the downfall of the government and exacerbating the economic troubles of people around the world when they are in deep suffering already.

What is the need anyway ? The U.S. deserves to keep and maintain its AAA rating. No other credit rating agency has followed suit, why ?

Cheers,

Vijay Srinivasan
14th August 2011
Mumbai

Wealth Disparity and Societal Effects

The number of dollar millionaires (net worth > INR 5 Crores or approximately USD 1.1M) is increasing at a rapid rate, and is showing the highest growth rate amongst all developing countries today.

This is the result of the Indian economy growing rapidly at a clip of > 8% annual GDP growth rate over the past few years, and the entrepreneurial flexibility of Indian businessmen and industrialists, apart from the fast-growing Indian IT/BPO sector. The fact that there are more billionaires in India than in South or North-East Asia is another indication of India’s growing economic clout. There is no Hong Kong or Mainland China billionaire in the top 10 billionaires in the world, but there are 3 Indians in that top 10 as of data from 2009-10 from the Forbes magazine research.

Of course, just having many billionaires and millionaires is nothing to be proud of, when 60% of the countrymen are living a hand to mouth existence with less than USD 2 per day. We are here talking about some 700M people. These people are characterized by the government as “BPL” folks – people who are below the poverty line.

While in the Eastern societies, wealth is revered as something sacrosanct and to be praised, in Indian society wealth is just respected and not deified. There is equanimity which exists in the people of India, which helps them to take things in their stride, rather than worry about making the next million or billion, and this concept applies all the way up to the top echelons of the society as well (including most of the millionaires we talked about earlier in this post). There is a tomorrow and it cannot be precisely predicted, and there is an “after world” which one does not know about. One can only pray for the best in this life and the next.

It is not the same philosophy elsewhere in the world. The simplistic view of the Indian world is now getting a bit damaged at the edges by materialistic influences coming from all over, especially from the West. India has always been an open society with flexibility to absorb the positive influences and ignore the negatives for a rather long time. However, now things are different, as the demographics of India is distinctly in favour of people less than 25 years old, who haven’t possibly felt the pains of their parents or the previous generations. So, now the younger generation is racing fast towards a materialistic adoption which would drive more money-making efforts and a thoughtless race towards fleeting pleasures.

So, I cannot say what would happen going forward. My worry is more about the impact that wealth is having on the rural folks, who have till now, well, remained poor. That is changing with better farm prices, improved infrastructure, access to credit, etc., While the wealth disparity is stark, the drive towards a better standard of living is going to create or is already creating issues in the country side. Society is changing, and may not always be for the better, as improvement in living standards may not be accompanied by human understanding of the needs of the poorer souls.

So, India is in transition. An economic as well as a societal transition of huge magnitudes, and in this respect is clearly comparable to China, where everything appears to be controlled and emotions are getting bottled up. May not be good for China in the medium term, forget the long term impact. It is wiser for both China and India to analyze the issues in the transformation of their respective societies and come up with social solutions for handling the wealth disparity, one of which could be equal access to wealth creation mechanisms.

Well, I can write on and on, but it is fascinating to see what is going on in India. The Westerners will do well to partake in this journey of discovery and should help India apply some of their learnings from their own societies.

Cheers,

Vijay Srinivasan
24th July 2011
Mumbai

Income Tax Portals: Taxsmile Vs Taxspanner

I evaluated a few online portals for income tax submission in India.

This post is not about a detailed analysis of the pros and cons of various portals, which have come a long way in the complicated Indian context of confusing and arcane tax laws and regulations. While the income tax code is getting simplified, it is not done fully as yet. The government e-filing mechanism is still based on excel spreadsheets from their website, and is difficult to use in this modern world of advanced interactive web.

However, the government has made it simple for e-citizens to file e-filing of taxes via various intermediaries. In India, like in other areas of human endeavour, the intermediaries take advantage of the complexity and confusion to offer solutions to citizens and make some money.This process continues vigourously with many online tax portals offering services mushrooming all over India.

So, I decided to compare Taxsmile (which I have been using for the past 2 years, this being the third year of use) with Taxspanner, which came with some good recommendations in a financial newspaper article. I had already completed my tax work via Taxsmile and today I thought it would not be a bad idea to just try out Taxspanner before going ahead with my e-filing.

Conclusion: I threw out Taxspanner, and would not recommend it.

Couple of reasons:

1. After painstakingly entering all the personal and tax data, I took a break of just 5 minutes to talk to someone on the phone. I did not even move away from my laptop. But after I finished the call, I touched my mouse and the Taxspanner site went to its login page ! With bated breath, I keyed in my username and password, and voila, I was inside the site, no problem there. I even saw my incomplete tax filing waiting for me to edit further, so I clicked on the same.

What did I find ? Nothing. NOTHING. No data was saved by Taxspanner. Even while entering the data, I was looking for the save button, and it was not there, so I assumed that the site must be saving my work constantly. That was not a good assumption. Look at Taxsmile on the other hand. They have a save button at the end of each section, and since we see it there, we do click it to save the precious work that we have done on that section ! It is simple and it works !!

So, my data was lost on Taxspanner. And, that was just nothing short of ridiculous and a complete waste of my precious time.

2. I found that Taxsmile was more intuitive in the way they have designed the data capture system, which more or less accurately mimics the way we would have done the tax filing in the manual world. Taxspanner is unfortunately not designed that way. It does not compute the income and taxes automatically when the data has been entered, and I do not know when they actually show the computed data, as I was thrown out of their system. They had greyed out many of the number boxes confusing the user, stating the data is not required, but at the same time they do not show what should be shown as a result of the data entry done so far at a particular stage.

3. Taxspanner also has not updated their system in line with income tax policy changes. One simple example is the 10% surcharge on the basic income tax which has been abolished by the government last year. Only the education cess of 3% is now payable on top of the computed income tax. But the Taxspanner system still shows the surcharge !

I am sure that if I dig more, I can find more such stuff not only with Taxspanner but with other sites as well. May be there is a portal which is better than Taxsmile, but I am yet to be guided towards it.

But Taxspanner failed my tests. Be careful folks !

Cheers,

Vijay Srinivasan
23rd July 2011
Mumbai