Archive for July, 2007

Investing in Equities – Basics

Monday, July 30th, 2007

As a practice, making the right investments requires the nack of picking the right options that the market has to offer. In one of my my earlier posts, I have spoken about the various options one can look at cialis price for investments in India.

When it comes to equity investments, I have seen people with various lines of thoughts. Many have lost a lot to the stock market while others have gained from it. Some call it a big gamble while others feel it’s the place to build long term capital. It is important to draw a line on how much you want to invest in equities and with what purpose.

Few prefer short term investments based on their research about the market.

Others go for long term capital appreciation and are willing to hold on to their investments for years together. And then there are people who go for intraday trading (typically are the one who loose as they often fail to time the market). There are few who would follow the ‘Hybrid’ approach by putting majority of the stock in the long term investments bucket and few in the short term profit making bucket. It all comes down to how much money you have at your disposal to invest and how much risk you want to take with it. Risk again needs to be defined. Investing in a poor performing company based on tips and hoping to give good return is a bad decision and not risk appetite.

Here are a few points that have helped me in my journey in the stock market in the past few months

    • Telecom – biggest players are Reliance Communication and Bharati Airtel with established track record and are growing.
    • Infrastructure – GMR, IVRCL, L&T, Nagarjuna Constructions are a few good names in this arena.
    • Banking – The biggest players are ICICI Bank and SBI. However many other players are also doing good like Yes Bank, HDFC Bank, Centurion Bank of Punjab and many more.
    • IT / Software – Infosys and TCS are bigger players. The recent rise in rupee and fall in dollar have given a test to many companies including Satyam, Wipro and many more.
  • Identify the sectors that you want to focus on and then identify the winning player. Now, this is easier said than done. You can get sector-wise reports in sites like myiris.com and indiaearnings.com. Next, we need to pick the growing and proven companies in each sector and then invest. Some of the sectors and top stocks are mentioned below:

 

  • Pick the performing companies with proven track record: This requires some time to do research. Some of the sites that I found useful are Indiaearnings.com, poweryourtrade.com, moneycontrol.com, myiris.com and kotaksecurities.com

  • Broker advice / market tips are good to know but not to be followed blindly. If you have a tip on a company, check its performance and see if it is convincing. No one in the world can tell you the price of a stock one month in advance. Whoever is doing so, is also taking a calculated or random guess based on his/her research and may not be correct. I typically avoid tips as they always point to short term / intraday trading.
  • Number of shares / amount invested paradox: Lot of people say that a given share is expensive as it is priced high (say Rs 1500). It is a myth, it does not matter how many shares you hold (numbers), what would matter is how much you have invested and what return you have received. Buying 1000 shares of Rs 10 versus buying 20 shares of Rs. 500 should not make a difference in your decision making. End of the day you would invest Rs.10,000 and would look forward to good returns.

  • While there are many other points to be considered, I have tried to keep this short and simple. Do share your comments and views.

Recruitment in IT industry – The Dark Side …

Friday, July 6th, 2007

The recruitment function is the most important function in an IT organization as they are the entry gate for people to enter the organization. Of course, technical interviews happen, but at the end of the day, the options that a technical panel has, would be limited to what the recruiter presents. The current pace at which IT industry is growing in India, the pressure to recruit the ‘best’ in the industry and that too in few weeks (days in some cases) creates a lot of internal pressure on recruiting manager/executive.

The external scenario is equally challenging as the entire IT industry is seeing a resource crunch and people can today afford to choose the company they want to join. Typically the candidates/recruits would bargain for both role and money.Normally, the recruitment department is responsible to recruit the person with desired skills. Once the person has  joined , he/she would be assigned to a resourcing manager or project team where he would work. The recruiter has NO clue of the actual work the person does. However, till the recruitment cycle is over, recruiter is the most important person who can decide not to hire and can potentially give any HR reasons.

A typical recruiter would find talent in the outside world through online portals ( naukri.com, monster.com, dice.com … ), internal reference, external agencies, would talk to the candidates, see their willingness to move from their existing job, lot of times motivating people to quit and join. Mostly the focus is on finding new talent and then motivating candidates to join after they have cleared the technical round. The so-called ‘HR round’ most of the times ends up becoming a formality and salary negotiation round. After painful discussions with the management or compensation team on salary, the recruitment team would be able to satisfy the salary needs of the candidate and hands over the associate to the resource management group after they have joined. At this point the responsibility of the recruitment team is assumed to be over. Resource management group based on the demand forecasted and current needs starts looking for projects in the company where the associate can be assigned.

So far as the model is concerned, it works for most of the IT organizations today. As it clearly identifies the exit criteria for the recruitment team which is getting the person on board.

How things go wrong

The recruiter’s view

  • The hiring manager is crazy, how am I supposed to find a person with the given skills and that too in 3 weeks time?
  • Joining time of 4 weeks is not possible to deal with. Let me offer a heavy joining bonus to attract the guy.
  • Let me advice him to join without experience letter from the previous company to meet the joining time needs. I know it would be bad for the candidate in the long run but I have to meet the deadline.
  • I had to show the candidate lot of future in the organization although I know there is not much for him/her here.
  • I need to do my job (perceived to be the motivating and convincing the candidate), I don’t care if there are no projects for him here.
  • I would bargain with the candidate to show that I can get the best talent at least price from the market. After the candidate is in the company, he might find-out that that he is paid less, but that’s none of my problems.
  • Where can I get more resumes from?

In the pressure, recruiter ends up doing lot of things which are not correct and also ends-up playing with other people’s career. Also the internal pressure from the project manager to meet the project deadline and revenue targets is a killer. This results in bigger challenges to everyone else in the organization after the candidate has joined.

In this whole situation, the original purpose of hiring good talent and good people becomes a challenge. The responsibility lies in the hands of Management and the Senior people to keep a close check on the kind of people who are being recruited. Senior Management needs to provide some protection to the recruitment team from the ‘blame’ game and equip the recruitment team with some technical knowledge and management view on ‘what’ the organization is looking for. The hiring of people for the recruitment team should be most closely monitored and controlled as they are the entry gates for people to enter. A good and matured recruitment team can make or break a company.

The views expressed above are based on my experience in recruitment and resource management in small (900 people) and mid sized (7000 people) companies. The issues that I have seen, made me move out of that job profile as I felt that I am not doing any good to the people and to myself. However, you can contradict me or share your suggestions and experiences as this is just my point of view.