e4e CEO &entrepreneur Das speaks to Ross students
Rishi Modi, BBA 1
Issue date: 3/20/06 Section: News
Somshankar Das, CEO of services company e4e, spoke to RSB students Wednesday, March 15. Das, who received his masters in physics and mathematics in India, and subsequently an MBA from Stanford, spent most of his career in Silicon Valley before founding California-based e4e in 2000. Das spoke both about his own company, a services firm specializing in reengineering companies, and about the services industry, which he constantly compared to the manufacturing industry.
Das predicted that what happened with the manufacturing industry over 30 years will soon happen to the services industry within the next 10-15 years. According to Das, the manufacturing industry was very local in nature, where different geographies had different specialties, depending upon the natural resources present. Therefore, there was less fear about commoditization and competition within the manufacturing industry. Then, with falling trade barriers and vast improvements in technology, which aided logistical planning and transportation, there were rising fears of commoditization within the industry as manufacturing and its supply chain evolved into a global entity.
Das then characterized today's global manufacturing industry as very polarized, with a heavy concentration in Asia. A large part of today's services sector is also local. For example, 50 percent of India's GDP is service-based and is local, just as manufacturing was before. However, unlike manufacturing, services are relationship based and people based, with very little machinery involved.
As gross margins in manufacturing fell, it was forced to become "lean and mean" in order to protect profits. This increase in efficiency, according to Das, will happen with the services industry as well. Furthermore, within the services industry, falling tariffs, growing skill sets in other countries, and developed datacom/telecom pipes which have been laid (which, according to Das, caused the "death of distance"), have all contributed to growing competition and fears of commoditization. These are similar trends to what has already occurred in manufacturing.
Das predicted that what happened with the manufacturing industry over 30 years will soon happen to the services industry within the next 10-15 years. According to Das, the manufacturing industry was very local in nature, where different geographies had different specialties, depending upon the natural resources present. Therefore, there was less fear about commoditization and competition within the manufacturing industry. Then, with falling trade barriers and vast improvements in technology, which aided logistical planning and transportation, there were rising fears of commoditization within the industry as manufacturing and its supply chain evolved into a global entity.
Das then characterized today's global manufacturing industry as very polarized, with a heavy concentration in Asia. A large part of today's services sector is also local. For example, 50 percent of India's GDP is service-based and is local, just as manufacturing was before. However, unlike manufacturing, services are relationship based and people based, with very little machinery involved.
As gross margins in manufacturing fell, it was forced to become "lean and mean" in order to protect profits. This increase in efficiency, according to Das, will happen with the services industry as well. Furthermore, within the services industry, falling tariffs, growing skill sets in other countries, and developed datacom/telecom pipes which have been laid (which, according to Das, caused the "death of distance"), have all contributed to growing competition and fears of commoditization. These are similar trends to what has already occurred in manufacturing.
