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FT: India’s IT outsourcers face increasing costs

    India’s IT outsourcers face increasing costs

By Joe Leahy in Mumbai

Published: December 27 2007 22:53 | Last updated: December 27 2007 22:53

India’s information technology outsourcing sector is heading for crunch time next year, as a rising currency and increasing wage and real estate costs force the industry to rethink how it does business.

Multinationals continue to view the country as one of the most viable outsourcing destinations, but competitive pressures are making other countries look attractive.

EDITOR’S CHOICE

Cisco to network whole cities - Dec-23

DreamWorks in India studio deal - Dec-21

China and India keep building on success - Dec-17

IBM in $1.6bn emerging markets drive - Dec-12

TCS takes outsourcing centres to US - Oct-16

Vineet Nayyar, chief executive of Tech Mahindra , described as “horrible” the impact on IT margins of a 12 per cent appreciation of the rupee against the dollar this year.

“All your emerging sectors are going to have major problems because of the currency adjustment,” Mr Nayyar said.

India’s IT outsourcing companies have been among the worst performing on the stock market this year. The sector has underperformed the MSCI India index by 47 per cent.

Much of the negative sentiment concerns the stronger rupee, which hit Rs39.16 against the dollar last month, its strongest level since March 1998.

Indian IT outsourcing companies earn most of their revenue in foreign currencies, particularly dollars, but they incur most of their costs in rupees.

The leading companies, such as Infosys Technologies and Tata Consultancy Services, have so far largely maintained their margins. Measures they have used to keep margins up include moving more work onshore and hiring cheaper graduates from disciplines other than engineering. They have also employed hedging.

Analysts believe, however, that a longer-term shift in strategy is necessary if India’s IT companies are to prevent more work going overseas to emerging centres such as Vietnam, China and Brazil.

Gartner, the research group, in a study of outsourcing destinations, found that India accounted for 28 per cent of the estimated workforce available globally for offshore work. That makes the country the largest such labour pool in the world.

But the study also found that costs were rising fast. Salaries are climbing an average 14.5 per cent a year, almost double the rate in China and the Philippines, and the rate of attrition is 20 per cent to 25 per cent.

“The attrition [rate] leads to the challenge of consistency and therefore of quality for buyers of these services,” said Ian Marriott, research vice-president at Gartner. “And so the whole appeal of India is starting to just lose a little bit of the gloss.

“It’s still very appealing for a whole variety of reasons but it’s starting to get people thinking: should we investigate other locations as well, probably not as an alternative necessarily but in addition to India.”

Indian companies needed to move away from thinking that more demand meant more hiring and extracting greater productivity out of existing workforces, Mr Marriott said.

While the larger companies were also trying to become more global and were setting up centres in other offshoring locations, this was not an option for the small and medium-sized outsourcers, he said.

These smaller companies had to become more specialised. “They’ve got to be very niche by design and very focused on specific markets, specific services, specific kinds of customers,” Mr Marriott said.

Copyright The Financial Times Limited 2007

NY Times: Innovative Minds Don’t Think Alike

Bright Ideas

Innovative Minds Don’t Think Alike

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By JANET RAE-DUPREE

Published: December 30, 2007

 

IT’S a pickle of a paradox: As our knowledge and expertise increase, our creativity and ability to innovate tend to taper off. Why? Because the walls of the proverbial box in which we think are thickening along with our experience.

Skip to next paragraph      

Igor Kopelnitsky

 

     

Andrew S. Grove, the co-founder of Intel, put it well in 2005 when he told an interviewer from Fortune, “When everybody knows that something is so, it means that nobody knows nothin’.” In other words, it becomes nearly impossible to look beyond what you know and think outside the box you’ve built around yourself.

This so-called curse of knowledge, a phrase used in a 1989 paper in The Journal of Political Economy, means that once you’ve become an expert in a particular subject, it’s hard to imagine not knowing what you do. Your conversations with others in the field are peppered with catch phrases and jargon that are foreign to the uninitiated. When it’s time to accomplish a task — open a store, build a house, buy new cash registers, sell insurance — those in the know get it done the way it has always been done, stifling innovation as they barrel along the well-worn path.

Elizabeth Newton, a psychologist, conducted an experiment on the curse of knowledge while working on her doctorate at Stanford in 1990. She gave one set of people, called “tappers,” a list of commonly known songs from which to choose. Their task was to rap their knuckles on a tabletop to the rhythm of the chosen tune as they thought about it in their heads. A second set of people, called “listeners,” were asked to name the songs.

Before the experiment began, the tappers were asked how often they believed that the listeners would name the songs correctly. On average, tappers expected listeners to get it right about half the time. In the end, however, listeners guessed only 3 of 120 songs tapped out, or 2.5 percent.

The tappers were astounded. The song was so clear in their minds; how could the listeners not “hear” it in their taps?

That’s a common reaction when experts set out to share their ideas in the business world, too, says Chip Heath, who with his brother, Dan, was a co-author of the 2007 book “Made to Stick: Why Some Ideas Survive and Others Die.” It’s why engineers design products ultimately useful only to other engineers. It’s why managers have trouble convincing the rank and file to adopt new processes. And it’s why the advertising world struggles to convey commercial messages to consumers.

“I HAVE a DVD remote control with 52 buttons on it, and every one of them is there because some engineer along the line knew how to use that button and believed I would want to use it, too,” Mr. Heath says. “People who design products are experts cursed by their knowledge, and they can’t imagine what it’s like to be as ignorant as the rest of us.”

But there are proven ways to exorcise the curse.

In their book, the Heath brothers outline six “hooks” that they say are guaranteed to communicate a new idea clearly by transforming it into what they call a Simple Unexpected Concrete Credentialed Emotional Story. Each of the letters in the resulting acronym, Succes, refers to a different hook. (“S,” for example, suggests simplifying the message.) Although the hooks of “Made to Stick” focus on the art of communication, there are ways to fashion them around fostering innovation.

To innovate, Mr. Heath says, you have to bring together people with a variety of skills. If those people can’t communicate clearly with one another, innovation gets bogged down in the abstract language of specialization and expertise. “It’s kind of like the ugly American tourist trying to get across an idea in another country by speaking English slowly and more loudly,” he says. “You’ve got to find the common connections.”

In her 2006 book, “Innovation Killer: How What We Know Limits What We Can Imagine — and What Smart Companies Are Doing About It,” Cynthia Barton Rabe proposes bringing in outsiders whom she calls zero-gravity thinkers to keep creativity and innovation on track.

When experts have to slow down and go back to basics to bring an outsider up to speed, she says, “it forces them to look at their world differently and, as a result, they come up with new solutions to old problems.”

She cites as an example the work of a colleague at Ralston Purina who moved to Eveready in the mid-1980s when Ralston bought that company. At the time, Eveready had become a household name because of its sales since the 1950s of inexpensive red plastic and metal flashlights. But by the mid-1980s, the flashlight business, which had been aimed solely at men shopping at hardware stores, was foundering.

While Ms. Rabe’s colleague had no experience with flashlights, she did have plenty of experience in consumer packaging and marketing from her years at Ralston Purina. She proceeded to revamp the flashlight product line to include colors like pink, baby blue and light green — colors that would appeal to women — and began distributing them through grocery store chains.

“It was not incredibly popular as a decision amongst the old guard at Eveready,” Ms. Rabe says. But after the changes, she says, “the flashlight business took off and was wildly successful for many years after that.”

MS. RABE herself experienced similar problems while working as a transient “zero-gravity thinker” at Intel.

“I would ask my very, very basic questions,” she said, noting that it frustrated some of the people who didn’t know her. Once they got past that point, however, “it always turned out that we could come up with some terrific ideas,” she said.

While Ms. Rabe usually worked inside the companies she discussed in her book, she said outside consultants could also serve the zero-gravity role, but only if their expertise was not identical to that of the group already working on the project.

“Look for people with renaissance-thinker tendencies, who’ve done work in a related area but not in your specific field,” she says. “Make it possible for someone who doesn’t report directly to that area to come in and say the emperor has no clothes.”

Janet Rae-Dupree writes about science and emerging technology in Silicon Valley.

ST - From bullet maker to defence tech giant

>> Back to the article

Dec 30, 2007

ST ENGINEERING'S 40TH ANNIVERSARY From bullet maker to defence tech giant

Singapore Technologies Engineering's transformation is recounted in a new book, Under One Sun, published to mark its 40th anniversary. Defence correspondent David Boey reports

SINGAPORE Technologies Engineering had a somewhat unfortunate beginning. The year was 1967, two years after Singapore became independent. The new nation had set up Chartered Industries of Singapore (CIS), the forerunner of ST Engineering, to make bullets for its fledgling army. A young Defence Ministry officer loaded 20 rounds into an AR-15 rifle magazine to test-fire the first batch of 5.56mm bullets. The first three shots went well but when the fourth round exploded, it sent bits of the bullet casing into the left arm of the young officer. There had been too much propellant. Luckily, he was not seriously injured. That young officer is now Mindef's chief defence scientist, Professor Lui Pao Chuen. So when he says that CIS 'nearly killed themselves' in the early days of production, he is not exaggerating. After the accident, all new ammunition would be tested with the weapon secured on a stand and fired remotely. Forty years on, the humble bullet factory sitting on a 10ha site at 249 Jalan Boon Lay has grown into a global giant. The group employs more than 18,000 workers in about 100 companies. It has offices and factories in all continents except Antarctica and chalked up sales of $4.49 billion last year. Its products include assault rifles and machine guns, armoured vehicles, stealth warships, road-paving machines and vehicle-tracking gadgets. AN EMPLOYEE at Mobile Aerospace Engineering in the United States, one of 100 companies run by ST Engineering, performing aircraft maintenance work. -- PHOTOS: COURTESY OF SINGAPORE TECHNOLOGIES View all thumbnail Photo 2 of 3 « Prev   Next » THE COMPANY MAY BE the world's biggest producer of 40mm ammunition for automatic grenade launchers. View all thumbnail Photo 3 of 3 « Prev   Next » TO SHOW HOW EASY it was to fire the Ultimax 100 light machinegun accurately, slim women in figure-hugging jumpsuits were hired to demonstrate its use   Contrast this to CIS' earliest days, when the company employed just 10 workers and its product range was a grand total of one - those 5.56mm bullets. But the importance of the bullets should not be underestimated. The then minister for the interior and defence, Dr Goh Keng Swee, reasoned that Singapore should make bullets for its own army to ensure self-sufficiency. Besides, imported ammunition would be expensive. But bullet production was not as straightforward as it seemed. Singapore's humid weather threatened to ruin ammunition production. To solve the problem, the bullets were manufactured in refrigerated rooms with dehumidification units to protect the gunpowder from humidity.   Match-grade bullets CIS learnt from the botched firing trial and went on to make such good bullets that the US gun manufacturer, Colt Industries, declared the bullets 'match grade'. This meant its bullets were as good as handmade bullets used in firing competitions. Match-grade bullets have their grains of gunpowder measured individually to ensure each bullet has the same amount of propellant. They are thus more accurate than mass-produced bullets where minute differences in propellant can result in inaccurate firing results. Prof Lui recalls proudly: 'The precision of the CIS-made rounds was so high that Colt bought CIS ammunition for their M-16 demonstrations around the world.' Colt later gave CIS the licence to make M-16 assault rifles for national servicemen. Ever the practical man, Dr Goh also got CIS to branch into minting coins in 1968. Though the two products make strange bedfellows, he said: 'There are many practical advantages in this combination for both share common facilities, for instance, in security arrangements, in metallurgy and in the tool and die workshop.' He also spearheaded the formation of a slew of defence-oriented companies to support the air, naval and land forces. The Government registered a company called Sheng-Li Holding to be the 'umbrella' holding company for these defence companies.   Change of names DR GOH himself picked the name Sheng-Li, which means 'victory' in Chinese. Singapore's expertise and production capabilities in defence grew as the military added more sophisticated war machines to its arsenal. In 1989, the stable of companies under Sheng-Li embraced the Singapore Technologies brand name and logo to forge a common corporate identity. CIS was absorbed under ST Automotive, which made guns, trucks and tanks. It was later renamed ST Kinetics. Whether it was under the old or new name, the companies ventured beyond national defence to take on commercial work. They also ventured overseas. For instance, skills developed for repairing, upgrading and modifying the Republic of Singapore Air Force warplanes set the scene for ST Aerospace's move into performing such work on airliners. Mr Ho Yuen Sang, ST Aerospace's deputy president, credits its former president, Mr Quek Poh Huat, for taking on commercial work. 'Today, if we were not doing commercial work, a significant part of our business would not be there. 'That was our first strategic decision,' he said. 'The next was the decision to go overseas.' That strategy paid off handsomely. Last year, Overhaul & Maintenance magazine ranked ST Aerospace as the world's top provider of maintenance, repair and overhaul services. Such work keeps the world's airliners flying. In a similar vein, the hush-hush work pioneered by ST Electronics to maintain Singapore Armed Forces equipment used to command, control and communicate with military units saw it amass skills sought after by the commercial sector, such as the development of computer software for 'intelligent buildings' that controlled features such as power, water and security. Leveraging on experience in integrating the building information system at Changi Airport in 1981, ST Electronics won projects for installing electronic brains in Singapore skyscrapers such as Raffles City, as well as China's tallest building, the Jin Mao Building in Shanghai. Such skills came to the fore during the Sars crisis in 2003. Working with the Defence Science and Technology Agency, ST Electronics developed a portable fever scanner that could screen large numbers of people for signs of fever - an early indication of Sars infection. Time magazine picked it as one of the 'coolest' inventions of 2003. Ten years ago, the defence industries marked their 30th year with the merging of ST Aerospace, ST Electronics, ST Kinetics and ST Marine into ST Engineering. Today, ST Engineering is more than a weapons company. Commercial services such as airliner maintenance work and ship repairs account for about 70 per cent of the group's sales. Military-related sales to the SAF and customers abroad account for the remaining 30 per cent. The group has also chalked up a number of world firsts. Its battle-proven Ultimax 100 light machinegun, weighing in at 6.8kg with a drum of 100 bullets, is the world's lightest light machine gun - a record that has stood unchallenged for 20 years.   People power ALTHOUGH ST Engineering has never divulged who its customers are, the distinctive Ultimax 100 has been spotted in newsreels in battle zones from Bosnia to Sri Lanka. To market the weapon, CIS had borrowed from the commercial world and used sex appeal. It hired slim women in figure-hugging jumpsuits to show how easy it was to fire the weapon accurately. The company reckons that it is the world's biggest producer of 40mm ammunition for automatic grenade launchers - an infantry weapon that spews baseball-size grenades at a rate of up to 500 per minute, up to a distance of 2.2km. For all the heavy hardware, ST Engineering's president and chief executive officer Tan Pheng Hock is mindful of the important role that software played in the group's achievements. 'It is imperative that as we globalise and expand, we continue to harness people power. The last 40 years are years of achievements created and led by people,' he said. dboey@sph.com.sg   Copies of ST Engineering's 40th anniversary book can be found at libraries. The book is not for sale.

heh

View all thumbnail	Photo 3 of 5	« Prev   Next »
PHOTO: AFP

Time: Meritocracy Is the Model - Infosys

Thursday, Dec. 13, 2007

   

Meritocracy Is the Model

By  Simon Robinson/Bangalore

 

So many big indian companies remain family-run that their board meetings might as well be held at the dinner table. Not so at Infosys. Founded in 1981 by seven engineers--none of them related--the Bangalore-based company has become not only a $3 billion-plus technology-services giant but also the epitome of the modern, professionally managed Indian firm, with a culture of meritocracy based on the idea that anyone could be boss.

 

   

S. Gopalakrishnan, Kris, CEO of Infosys and Nandan Nilekani, Co-Chairman of the Board of Directors lounge by the pool at the ITC Maurya Hotel in Delhi, India.

Michael Rubenstein / Redux for TIME

S. Gopalakrishnan, one of the founders and the current CEO, says Infosys built that culture from the ground up. "We said, If we're going to make it a success, there have to be some rules, some common values, some structure to the whole thing." That included a strict ban on nepotism and a compulsory retirement age of 60. Founding CEO N.R. Narayana Murthy, who still flies coach despite a net worth estimated at $1 billion, says the break with the past was deliberate: "We had to aspire to global standards, especially if we wanted to attract investors from abroad." When he turned 60 in 2002, Murthy stood down as CEO and moved back to his first, more modest office. His successor, co-founder Nandan Nilekani, retired as CEO in June, although he remains chairman.

But while its goals may have been global, the company was--and is--run in an unusually communal fashion. In the U.S., says Murthy, "the CEO is the emperor." At Infosys the CEO is more like a chief justice, presiding over arguments and casting a vote only when necessary. "Ultimately, I will decide," says Gopalakrishnan. "But I usually don't need to. We try to foster a much more collegial, consensus-based environment that allows the best information to come out."

That sounds so warm and fuzzy, you could almost hug it. But how does it work? A council of the top eight executives discusses all major decisions. It's rare that the entire group is in Bangalore at the same time, so the team has mastered the art of succinct e-mail for any question that comes up. Everyone weighs in with a yes or no and a line or two of reasoning. "Why waste time?" asks H.R. director T.V. Mohandas Pai. "We all know each other." And this is a company built on information. Says Murthy: "We've always thought data and facts will have to drive the company. We used to say, 'In God we trust. Everyone else brings data.'"

Infosys is one of the Big Three IT companies (along with Wipro and Tata Consultancy Services), but success is changing it. The company has doubled its workforce in the past 18 months, to about 80,000. This year alone, it will hire more than 30,000 additional employees.

Alas, recent staff surveys suggest that morale, especially in the lower ranks, has slipped.

The company has also been buffeted by external winds. India's currency has appreciated 12% against the dollar this year, hitting profits, and the subprime-mortgage crisis is forcing U.S. banks, among Infosys' biggest customers, to tighten their belts. Infosys has handled those problems by increasing salaries, boosting currency hedging and shifting its focus slightly to Europe and developing markets like South America.

But to keep growing while retaining its founding principles, Infosys decided it needed bigger changes. In late October the company announced a restructuring that will divide Infosys into industry units (e.g., banking and energy) and horizontal units focusing on issues like infrastructure that cut across industries. Infosys hopes that the new structure will drive the spirit of consensus-based decision making deeper into the company. Each division will have its own decision-making council, with at least one employee under 30, while the team at the top may eventually double. As well as sharpening Infosys' customer focus, "the restructuring is also partly about refocusing and re-energizing our staff," says Gopalakrishnan.

Those younger employees will be the ones to keep Infosys' principles going even when the five remaining founders retire, so Infosys also asks senior managers each to take half a dozen up-and-comers under their wing. "I firmly believe that a democracy will always avoid a disaster," Murthy says. But those values have to be taught. "It may not be the quickest way to do things in the world," Murthy adds, "but you'll never see a famine in a democracy." Infosys managers hope that what holds true for nations can also apply in the corporate world.

 

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Kandinsky

couple riding; moscow I; sky blue

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Sara Little Turnbull

http://www.girlhacker.com/2001_11_01_archive.html

          I first saw Sara Little Turnbull years ago on The Frugal Gourmet when this remarkable woman made a guest appearance and Jeff Smith lauded her amazing contributions to much of the very fabric of American life. As a longtime designer and consultant to the top creators and marketers of products that alter the way we live (Proctor & Gamble, 3M, Corning, Revlon) Turnbull is very likely the least known woman behind the best known ideas in household products. On Frugal Gourmet, Smith mentioned that he had once visited her at work where she was busily taking containers in and out of a strange device. He later realized she had been researching the use of the microwave oven. Turnbull created Corning Ware in the 1950s, guided women through the major cultural changes of the war and post-war era as an editor at House Beautiful, and contributed untold scads of product guidance to top companies. Sitting at the intersection of truly creative design, cultural anthropology, and commerce, she now heads The Process of Change Laboratory at Stanford and influences the next generation to design products for the way people live, not to expect people to conform to products. By teaching them to find the root cause of problems that the products need to solve, she is probably making her most important contribution to the world: more designers who will create items of true value and usefulness to our culture.
          archive location     

Economist: Watching as you shop

           

     
Watching as you shop

Dec 6th 2007
From The Economist print edition

newscast

Retailing: Big shops are using elaborate technology to monitor and influence the behaviour of their customers

IN A recent British television commercial, John McEnroe, a veteran tennis star, is seen racing his long-time rival Bjorn Borg around a Tesco supermarket. After arriving in the checkout queue just ahead of his opponent, Mr McEnroe is distraught to see an employee appear and open another till, giving Mr Borg the upper hand. The advertisment ends with a reference to Tesco's “one in front” initiative, which aims to reduce waiting times by opening additional tills whenever there is more than one customer waiting at a checkout. This scheme has been running for many years, but Tesco recently updated it by investing in customer-monitoring technology supplied by Irisys, a British company.

The system, called Smartlane, has two elements: sensors by the doors count the number of people entering and leaving the shop, and sensors by the tills work out how fast the queues are moving and how many “shopping units”—groups of people, such as families or couples, who will make one transaction between them—are standing in each queue. (Shopping units are identified using an infra-red sensor that tracks the trajectory and behaviour of “hot blobs” when they enter its field of vision; this approach is 95% accurate, says Chris Precious of Irisys.) All this information can then be used to predict how many tills will be needed up to an hour in advance and monitor average waiting times and queue lengths. In Tesco's case, a line longer than one shopping unit triggers the opening of another till. Sir Terry Leahy, Tesco's boss, said last year that the monitoring system had reduced waiting time for customers and helped to boost the firm's profits.

Tesco is not the only retailer using technology to keep tabs on people in its stores. Mr Precious says Price Chopper, an American grocery chain, is in the process of introducing Smartlane; and Marks & Spencer, a British shopping chain, uses Irisys's infra-red sensors, as does Abercrombie & Fitch, an American fashion chain. Brickstream, a supplier of customer-monitoring systems based on dual-lens cameras, which are more accurate than single-lens cameras in tracking and counting applications, counts big retail chains including Toys “R” Us, Office Depot and Walgreens among its clients.

Rather than monitoring queue lengths, however, Brickstream's system, called BehaviorIQ, is used by retailers to gather data on where their customers go, where and how long they stop, and how they react to different products. This information can then be compared with the store's transaction log to determine the effectiveness of store layout, product fixtures and other variables. In-store designs and marketing campaigns that work can be identified and improved upon, and those that do not can be replaced with something more profitable. Retailers, it seems, are buying the idea that by watching customers while they shop—what might be called “retail surveillance”—and redesigning their shops accordingly, they can get people to spend more.

On the shop floor

One of the largest customer-monitoring projects undertaken so far is PRISM (or “Pioneering Research for an In-Store Metric”), a collaboration between Nielsen Media, a market-research firm, the In-store Marketing Institute, based in Chicago, and a consortium of consumer-goods manufacturers and retailers including Coca-Cola, Procter & Gamble and Wal-Mart. The project, which completed its first big trial in September, involved the use of sensors at the entrance and exits and in some of the aisles of 160 stores across America. These sensors recorded data on customer-traffic patterns, to which was added further information recorded by human observers. By comparing the resulting data with sales information, it was then possible to gain insight into shoppers' behaviour.

Preliminary results from the PRISM programme included the finding that two-thirds of shoppers who made a visit to the salty-snacks aisle made a purchase, but the people visiting the dairy aisle were far less likely to buy something. When observational data on the number of children present during a shopping trip was taken into account, the results were even more detailed: the PRISM results showed that although children took part in only 13% of food-shopping trips, shoppers bought more when children were with them. Purchase of seasonal items was two and a half times more likely with children in tow, but surprisingly there was no correlation found between the presence of children on a shopping trip and higher spending on sweets.

With this kind of fine-grained data, says George Wishart, the head of Nielsen's in-store division, retailers can adjust store layouts and staffing levels accordingly. Although retailers think they know how to position products in a way that will maximise sales, says Peter Hoyt of the In-store Marketing Institute, “the science of adjacency is not a science.” With PRISM, he says, the gut feeling that peanut butter should be placed on a shelf next to jam in order to increase the likelihood of a combination purchase can be tested directly against sales data.

“Shoppers are not just being monitored by cameras and sensors—sometimes speech is recorded, too.”

Best Buy, a big American consumer-electronics chain, takes this a step further. It uses Brickstream's BehaviorIQ cameras to collect data on its customers' behaviour patterns and has used this information to divide them into five customer types—young technology enthusiasts, suburban mothers, affluent early adopters, family men and small-business owners—who want different things. Each group is then provided with an area of the shop designed to meet their needs.

As the technology improves, it is getting easier for other retailers to do the same sort of thing. VideoMining, for example, a spin-out from Pennsylvania State University, uses a combination of video cameras and software to capture and analyse thousands of hours of footage of customer behaviour. As well as providing information about customer behaviour, the firm's software can also determine each shopper's sex, age range and ethnic group with an accuracy of around 80%, says Jeff Hershey of VideoMining. The result is an “activity map” which can help retailers to identify the factors that drive higher sales. The system can even be programmed to detect the characteristic behaviour of shoplifters.

Inevitably, all this raises concerns about privacy. Counting customers with motion sensors as they enter a supermarket is one thing, but sorting them into social or racial groups using video analysis is another. Mr Hershey responds that none of the footage or information about individual shoppers is stored. Besides, says John Greening of the Medill School at Northwestern University, customers are generally willing to give up some personal information if they feel they are getting some benefit in return. Rather than seeing customer monitoring as an invasion of privacy, he considers it a means of making shopping a more pleasant experience for “time-compressed” (ie, busy) consumers. These systems, he says, are “not a matter of Big Brother”, but rather a means of gaining insight and “understanding motives”.

Listening in

Shoppers are not just being monitored by cameras and heat sensors, however; sometimes their speech is being recorded, too. Recordant, an in-store monitoring company based in Atlanta, provides shop assistants with digital-audio recorders, to be worn around their necks, which record all their conversations with shoppers. At the end of each day the recording devices are plugged into special docking stations and the recordings are uploaded to Recordant's headquarters for analysis. Its software trawls the recorded dialogue for particular words or phrases without the need for any human input in order to provide accurate information on employee performance and customer behaviour.

Brickstream

Brickstream maps a supermarket's hot spots

Recordant says that trials in 40 locations have proved the value of the technology: one retailer was able to show that there was a 300% increase in sales of products recommended by shop assistants to customers. By providing precise measurements of this kind, the technology allows retailers to refine their training programmes and evaluate the effectiveness of promotions. They can even collect “competitive intelligence” by programming the system to search for the names of rival retailers, says Chris Etter, the chief executive of Recordant.

Unlike systems based on video cameras or sensors, Recordant's technology is required to notify customers explicitly that their conversations are being recorded. To this end, the recording devices include a small video screen which displays a message informing shoppers what is going on. Mr Etter admits that both employees and customers have expressed worries about privacy and have shown some resistance to the devices. But he likens this to the initial disquiet over the recording of customer-service telephone calls, something that is now widely accepted. Besides, he says, the system can provide protection for employees who get involved in disputes with fractious customers.

As useful as customer-tracking systems may be for exonerating harassed staff or minimising shoplifting, however, their primary objectives are clear. In an age when traditional “bricks and mortar” retailers face stiff competition from online merchants, any means they can use to get customers into their shops and buying as much as possible is seen as a worthwhile investment. Long before the advent of e-commerce, Wal-Mart's founder Sam Walton set out his vision for a successful retail operation: “We let folks know we're interested in them and that they're vital to us—’cause they are,” he said. Customer-monitoring systems are underlining just how interested, and just how vital.

Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.

ST: Come save with POSB but pay $4.50 to deposit coins

negative example

==

Home > ST Forum > Story
Dec 6, 2007
Come save with POSB but pay $4.50 to deposit coins
MY SON was happy to receive a piggy bank in the form of a can from POSB a few months ago. It was distributed in his school, together with a booklet, to encourage young children to put aside some money daily. It took him a while to fill the 11cm-tall can to the brim. I took him to the bank on Tuesday to deposit his savings but found out to our dismay that a charge would be imposed on the 500-plus coins which amounted to $86.60. Except for the first 200 coins, there was a charge of $1.50 for every 100 coins, and $4.50 was deducted from his POSB account promptly. To adults, $4.50 may seem insignificant but to a young child it is a lot. If a child receives $1 per school day, the most he could save is 10-30 cents and he would need between 15 and 45 days to save $4.50. It would also take him a long time to recoup that amount in the form of interest on his savings account. My son was clearly upset. It demoralised him to know that he would be charged for making deposits in coins should he continue saving money. I hope POSB will relook the charge and not contradict itself by first providing piggy banks to encourage savings and then charging the children for depositing their coins. Tan Sok Hwa (Mdm)   Latest comments This cost/penalty/sorry-of-an-excuse "admin charges" has been in place for a long while now. Are there any other banks, which offers savings accounts for children/students, do not impose such regulations? I would most definetly encourage my young charges to switch to that bank. But, we also must be aware of "minimum balance" amount stipulated by such banks too. :) Posted by: 18DragonPalm at Thu Dec 06 09:47:57 SGT 2007 Not to mentioned branch closures. Singapore is so densely populated and the whole housing estate like Bishan has only one branch.....Save more money = more bonuses.... Posted by: rayfelice at Thu Dec 06 09:38:33 SGT 2007 POSB is not the Post Office Savings Bank anymore. Before merger with DBS, there were queue number system for customers to take the queue ticket and sat on the seats provided to wait for our turn. Now we have to stand for long time in the queue for counter service. I am getting old, I dread the days when I have to go to the counter to do transactions which could not be done through ATM as signature is required. So much for our People's bank. Posted by: singaporeboleh at Thu Dec 06 08:04:25 SGT 2007 Since the marriage of POSB and DBS, there is no more sentimental talk. All talk is $dollars$ and cents. Banks will give you a umbrella during sunny days and take it away during rainy days. We must always remember this. Posted by: hock9343 at Thu Dec 06 07:58:18 SGT 2007 An irrational, poorly designed savings scheme. Must have been thought out by a committee, which proverbially will produce a giraffe when asked to design a horse. Posted by: cyberavatar at Thu Dec 06 06:30:33 SGT 2007

Lime in the Coconut, Coke

http://www.youtube.com/watch?v=3D8V3R6D5Ps

Brother bought a coconut, he bought it for a dime
His sister had another, she paid it for a lime.
She put the lime in the coconut, and drank them both up
She put the lime in the coconut, and drank them both up
She put the lime in the coconut,
Called the doctor, woke him up, and said,
"Doctor, ain't there nothin' I can take,
I say, Doctor, to relieve this belly ache?
I say, Doctor, ain't there nothin' I can take,
I say, Doctor, to relieve this belly ache?"

"Now let me get this straight;
You put the lime in the coconut, you drank them both up
You put the lime in the coconut, you drank them both up
You put the lime in the coconut,
called your doctor, woke him up, and said,
'Doctor, ain't there nothing I can take,
I say, Doctor, to relieve this belly ache?
I say, Doctor, ain't there nothin' I can take,
I say, Doctor, to relieve this belly ache?'

You put the lime in the coconut, and drink them both down,
You put the lime in the cocount, you're such a silly woman!
Put the lime in the coconut, and drink them both together,
Put the lime in the coconut, and call me in the morning."

The coke commercial song goes-
You put the lime in the coke you nut and drink them both up.