1 The global economic environment looks promising with the US showing good growth, followed by Japan and Europe. China has been an engine of growth and has propelled the commodity market. The threat of China cooling down is bringing in a note of caution in scenario planning.
For us, the turn in the US economy and prospects of growth in Europe is a good sign. We have a liquid balance sheet with adequate cash resources and, as such, we have no plans for raising any capital. Moreover, we have a flexible cost structure that helps us to better weather rapid market changes. However, rising interest rates could lower growth prospects in our market.
2 Hybrid capital has become very attractive because of low yield expectations and prospects of growth. I find it an interesting proposition for corporates, although managing interest rate risk on redemption needs to be factored in before anybody takes a decision.
3 Offshoring is essentially a strategic decision to enhance structural flexibility, access high quality capabilities, increase time to market, as well as strengthening economic value. The benefits of high flexibility, predictable high quality and time to market substantially enhance the value of offshoring.
Offshoring needs to be planned properly if it is to realise its full potential. Initially there is an educational period when the customer understands the processes and changed operating dynamics behind offshoring. Once teething and familiarisation issues are overcome – process efficiencies can commence and value realisation gets under way. Key to this is a management’s commitment to realising benefits and the solution provider it chooses to go with.
Infosys, which pioneered the Global Delivery Model (GDM) over 20 years ago, continues to innovate to enhance and broad-base its GDM with a view to minimising the risk perceptions associated with offshoring.
There has been much debate about the impending backlash but with strong economic growth in the US, the intensity of the debate has lessened. In the UK, offshoring is accepted by most mainstream corporates and there seems to be an agreement among opinion makers that greater investment in education and training is a better solution than any regulatory reaction.
