Companies are now beginning to talk about cost reduction



In a high growth market like India, unlike the mature markets in the West,
isnt it difficult to convince businesses to put emphasis on cost reduction?
Yes. Western Europe is growing at 2%, the US probably at 3%, while India is
growing at 8-10%. Some good Indian companies are even growing at 20-30%. So it
is difficult to make them think about cost reduction. Not that they do not, but
I am talking of cost reduction being the top two-three priorities. But at the
same time, in some markets with more mature management thinking, such as India,
we see many forward looking companies realize that the situation is not always
likely to be this way (high growth). These are people who think long-term. They
realize that they have to look at it today.

Daryl Rolley, senior VP
and GM, North American and Asian operations, Ariba

Which industries have taken the lead? Is there a difference between how
that looks in the West as compared to India?
To answer the second question first, not really. The automotive industry has
taken the lead everywhere. In India, too, this industry has led the way with
Tata Motors being a pioneer. The others are diversified manufacturing groups,
cement, FMCG, and, of late, retail. Interestingly, companies are now beginning
to talk about cost reduction. A top executive in a top private bank told in one
of our conferences that cost reduction is among the top three priorities for his
company this year.

The Indian economy has moved from agriculture to services very fast. The
ratio of services to manufacturing is one of the highest. Traditionally,
manufacturing companies have been the users of your solution. Will it be
different in India?
Yes, manufacturing has always been the first adopter. But, as I told you,
BFSI is emerging as a serious segment. Look at telecom. Today, you have new
operators coming in. Some of them have got licenses in multiple circles. Now
they are looking at what differentiation they could offer. In fact, a few
companies approached us and asked how they could use cost as a differentiator by
reducing cost of operations. This is not a US company looking at immediate cost
reduction. This is a new company looking at growth through cost differentiation.
That is the difference.

Shyamanuja Das
shyamanujad@cybermedia.co.in

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