In Search of a Lost Number

You’d think IT vendors would be pretty much on top of IS in their own enterprises. Not all are. And while many do have in-depth MIS data from ERP and other systems, that doesn’t mean we’ll get all this data for our DQ Top 20 exercises. 

Some companies, especially MNCs, cite global directives against sharing sales data. The media-shy-list grows in tighter markets. We estimate figures for many MNCs such as Intel, Microsoft, Cisco, Sun and Oracle, with IBM and Ingram Micro the more recent additions to the list. 

We spend months on verifying these. Often, “company sources” take second place to market information, channel sales figures, major deals. Comprehensive lists aren’t easy to find, so our estimates may be conservative. But there’s also the different ways of estimating revenues. 

There are few standards–or perhaps, too many. For Indian companies, things may be simpler: you look at the company’s billings and revenue inflow... And yet…one training company might raise bills and pay 70% commission to its franchisee; for another, the franchisee raises bills, and passes back 30% to the principal. Totally different top line. For hardware vendors, excise duty inclusion can be another variable.

Then, MNCs’ distributors import directly and raise invoices. The MNC may use “end-user revenue” (sampled selling prices times the numbers sold); DQ would remove 12% channel margins to get net revenue. The MNC may fully count goods imported duty-free into export zones; DQ would remove the duties.

The researcher’s holy grail is the model–a consistent, transparent, simple description. This may sometimes appear to be at the cost of accuracy, but that simple one-liner takes months of research and fine-tuning. 

Take the MNC captive services units in India who do not declare revenue, or operate as cost centers. DQ applies a per-employee average of Rs 15 lakh for software services and Rs 10 lakh for BPO. Some say this is low, or over-simplified, but our research finds this a fair estimate of remittances. Even for our software giants. They may show over Rs 20 lakh per employee, but consider that much of their work is onsite. A tally of the actual, net foreign exchange inflow is nearer our estimate. 

But here’s a tribute to those who do give us transparent data in considerable depth. And help us cross-verify other estimates and claims across the market. Some of this depth comes from distributors like Tech Pacific and Redington. Among the vendors, Compaq was traditionally the most upfront and prompt with data, and the new HP, though somewhat more constrained, has been pretty good on this front. And finally, the software giants, who are mostly very transparent.

Prasanto K Roy