Archives for January 2007

On a recent trip to India I found out that a low-level daily-wage worker will make about 150 rupees per day. This is about $3 in American currency PER DAY for sometimes back-breaking work.

For this reason, it’s very common to see these people setup small micro-businesses which could easily earn them more money…..or the same amount of money but with less work.

These people don’t build Web 2.0 applications, seek venture funding or build their business for the sole purpose of being bought out…..they simply use the basic foundation of business: Buy low, sell higher.

If you haven’t got much money, a big setback to running your own business is getting a license to sell….so a lot of the micro-vendors simply don’t have them. Another way to get around this is by bribing the cops if you get caught (supposing you have enough money).

So lets say you want to make some extra money in India, what to do?

A very common sight is selling some sort of fruit on the road. My favorite is the coconut stand. I LOVE coconuts, and had at least two per day. These are the fresh, green coconuts with delicious water and malay on the inside. No matter how hot it is, the water always feels cold because of the thick husk around it, and the insides of the coconut are scooped out and eaten. The only drawback to the coconut is it’s EXTREMELY difficult to open unless you’ve got the technique…..and a big knife. The process is pretty simple:

1.) You order which kind of coconut you want: Water only / Thin malay / Thick malay.
2.) The guy starts slicing the coconut into a cone shape at the top. Once down to the core of the coconut, he gives it a few hard strikes and pops it open.
3.) He hands it to you with a straw and you stand by the coconut stand until you finish the water.
4.) Once finished with the water, you hand the coconut back and the guy will slice a piece off the coconut and make a little “spoon” to scoop out the malay for you.
5.) Eat malay, pay (usually 10-25 rupees), done.

Most of these guys selling coconuts either just have a big stack of coconuts somewhere along the road, or have a rolling cart which they can easily relocate. A lot of people buy coconuts for a quick refreshment.

Another common way of making a little money is selling a few products in your own little portable store front. This “store front” is basically a suitcase or bundle which you can lay out quickly, and pack up even quicker for when the tax collectors come to check your license.

This vendor was selling just cargo shorts and shirts in a very busy area:

If you’re interested in his wares, he will quickly measure you, give you the right size, haggle out a price and you’re on your way. What this guy does is find a high traffic area and plops down his shop. If the tax collectors come by to check his license….he’s gone before they even know he’s there.

A slightly more illegal (although certainly not enforced) way of making some money is by selling counterfeit software on the streets. If you don’t know how to download copyrighted software, DVD’s or audio CD’s, you can simply buy it on the streets for a small charge (usually between $1 – $3).

There are big counterfeit rings which duplicate CD’s, print out the CD labels, package them to look real and then sell them on the street. You can get any software/music/DVD for very cheap all in broad daylight.

Another thing which is almost common as a coconut stand is a sugarcane juice stand. These guys keep a bunch of sugarcane sticks, which are very durable and look like bamboo, but have lots of sugary liquid on the inside.

These guys need a basic machine that squeezes the juice out of the sugarcane, as it would be very difficult to do by hand. They pass the sugarcane through this pressing machine, and the juice falls into a cup, which you then drink.

Sugarcane juice is very sweet and quite delicious, and is therefore a pretty popular street-side refreshment.

These micro-businesses provide incomes to millions of people across India, one of the reasons the Grameen Bank won the Nobel Peace Prize. The bank provides micro-loans and micro-credit to poor people who have the ability to run a business, but have no money.

I’m back from India, had lots of fun, made lots of observations, saw lots of crazy things, and even got my name in the newspapers.

In the U.S. it’s no secret that the Indian and Chinese economies are doing very well, but experiencing it first hand is always better. After spending nearly a month in India with people from different classes of society, I can definitely say the economy there is booming like crazy, and will continue to grow for quite some time.

DEVELOPMENT OF THE MIDDLE CLASS
The BEST part about the growth in India is the strikingly similar pattern India is following compared to the growth the U.S. underwent in the 1950’s. This can be extremely profitable because you can easily predict the future of India’s growth by studying the history of the U.S. and other developed countries after they started developing a large middle class.

India was primarily a labor-based country with an extremely large poor population, a small middle class and small upper class. It’s now starting to develop a large middle class, much of which was just VERY recently developed by the dramatic increase in IT jobs available.

Just like the 1950’s in America, people started making more money, the economy was great and a large middle class emerged. These people no longer looked only for functionality of a product, but also stylish design, brand names and prestige of owning that product. Indian people are becoming extremely brand conscious now and the consumer market is growing very quickly. There are TONS of shopping malls already built and still more are being built, this mall craze only started recently. Housing is also booming like no other to accommodate all these newly middle class people and their families.

IT WORK
On a trip to one of India’s IT hotspots Hyderabad (Also now known as “Cyberabad”), showed that a MASSIVE amount of young people are employed there, mainly by overseas companies. I believe I heard that over 270 multi-national companies had large installations there, and many more using services provided by those facilities. Since India is already a very educated country, large companies are flocking here for relatively low cost talent.

I quickly realized that 80%+ of the high-tech jobs were NOT call centers. Major IT companies like Microsoft have massive facilities in India that do much of the same work like their U.S. counterparts. These jobs have more normal hours and also pay extremely well. The pay difference for an employee in the U.S. vs. India is DRASTIC. An entry level job for a college grad in U.S. could fetch $30-50,000/year, while in India an equally good pay would be roughly 35,000 Rupees a month.

Just 6-10 years ago that pay would be EXCELLENT, but now it’s becoming a standard for young people.

MULTI-NATIONAL BRANDS
I see why all these large companies keep talking about “Expansion in China and India”….people are loving the brand names here. Food is especially growing here. The three most prominent food chains I saw were McDonalds, Pizza Hut and Baskin Robbins (yea, I thought that was a little out of place too). KFC was also making a decent appearance and Starbucks is about to start there (I predict Starbucks is going to be a phenomenal hit in India).
As the big chains try to build their brands oversees, they build very nice restaurants at first. Some of the fast food restaurants were MUCH nicer than we have in the U.S. A few Pizza Huts I went to were more like upper scale restaurants than a fast food joint. Same with the two-storied luxury KFC I saw. The food also generally tasted better since Indians have a stronger tolerance for spicy foods, and every fast food place had a much larger selection of vegetarian foods to accommodate the many vegetarians there.

CALL CENTERS
As for the call-centers I always hear about in the headlines over here in the United States, those rumors have been put to rest. Only about 20% of the high tech jobs here are in call centers, and those are generally considered to be boring or dead-end jobs. The hours are very odd (usually all night shifts), and the work is rather dull and monotonous, however the pay is excellent.

What was interesting about the call center jobs is all the other benefits employees get. Many of these benefits apply to the regular jobs also:

In Hyderabad there were massive complexes around the IT area which I thought were offices, but were actually apartments. Since the call center people work such weird hours to accommodate high-traffic times in the U.S. and other countries, it’s sometimes dangerous or inconvenient for people to travel to-and-from home at those hours. Therefore many people can live right next door to work in a luxury apartment for very little money! Free transportation is also provided for all employees in case they want to go anywhere. You also get all the insurance and savings account benefits as most people in the U.S. receive.

INFRASTRUCTURE
If one thing holds back India from becoming a fully developed country, it will be infrastructure problems. All the rapid growth taking place is doing so without properly fortifying the backend public facilities such as power, water, waste and transportation. It’s slowly improving, but the pace is falling very quickly behind development. Even in many large cities, most places have only a few hours of running water, frequent power outages, extremely congested streets and lots of trash lying around.

DRIVING
Although I’ve been to India several times before, I always forget how scary the driving is compared with the U.S.. Essentially there are no rules…and if there is a rule, no one follows it. Those nice striped lines that people drive within in the U.S. basically mean nothing over there. If you have space to move forward, use it. Driving over there can be described as “one big close call.” The roads are for the most part very old, very small and extremely congested. They are also crowded by people, cars, trucks, bicycles, carriages, rickshaws, dogs, cows, cattle and an occasional camel or elephant.

It takes about one week to get accustomed to the driving there. Till then, your heart will stop many times on a simple drive. Yet somehow the chaotic flow of driving seems to work.

TRAFFIC
Traffic is terrible. The larger cities are starting to literally choke on themselves, as growth has been sprinting along, but infrastructure has taken a back seat. During peak hours, going only a few kilometers away by car can sometimes take more than an hour. In that time you mainly sit and wait. The traffic is often so compacted that even bicycles cannot pass through the cracks. I’d say of all the cities, Hyderabad had the worst traffic.

There are TONS AND TONS of motorcycles and scooters on the roads because a car is such a hassle. Let’s not even start talking about trying to find parking.

CORRUPTION
Just like the last time I went, corruption is still very rampant on all scales. If you need a permit or any government approval, the way to get it done quickly is by bribing the right people….otherwise your approval will take forever. Police officer pulled you over for running a red light? Just slip him some money along with you driver’s license and you’re off the hook!

THE BAD FUTURE
Like all things which grow too fast, they are followed by a downfall. While everyone is reveling in the great economy and how fast India is growing…like everything, it will be followed by some sort of downturn. It will then stabilize and grow again, but this time more cautiously. Just like in the 1950’s, people started spending much more than they earned thanks to credit and loans. I see the same thing starting to happen there.

THE GOOD FUTURE
India still has a long way to go. Over the next 15 to 20 years I see their economy doing great things, but not without bumps along the way. As their middle class rapidly increases, the demand for more consumer goods, services and entertainment will drastically increase. With such a massive population, more and more people will continue to enter the middle class.

I’ll post some interesting ways of doing business in India later.