There is a mad rush towards online social networking space. Every second person wants to get on the bandwagon with his own social networking website with a silly-sounding name. In my opinion, most of these sites are just a fad and are not built on strong fundamentals in terms of a) revenue sources and b) the problem they solve.

What is online networking, btw?

The purpose of a social networking website is to help you keep in touch with your existing contacts and to generate more contacts! In case of social networking, the contacts are friends or prospective friends, whereas In case of business networking, the contacts are business associates or prospective business associates.

Now, answer this question - How much time and money are you willing you spend to keep in touch with your: a) friends and b) business associates. It is important to know this fact. Online market may be different, but it is closely related to offline consumer behaviour. Online business model can help in extending the product composition with new innovation and format of delivery. It is important to know if people are willing to pay for a given convinience. And if they are not willing to pay for the convinience, what alternate source of revenue do we have?

So how do you keep in touch with your friends?

In real life, you spend nothing to keep in touch with your friends. You call them up when you want to hang out with them, you give them a shout on their mobile phones or drop in to kill some time! If you are tech-savvy and love to announce a great news, you send them emails. Why will you like to send a scrap to someone (when you can simply send a short email or catch up on various instant messengers)? And why will you like to create such huge volume of personal content and share with millions of people on the Internet who are not even known to me.

Though you may have build friendship /relationship on social networking websites, they are generally not for long. And the long ones actually use the social networking as only the contact point and then evolves and flourishes offline.

What about business associates?

However, business networking sites will keep evolving, since it adds value to businesses. It help people refer / recommend a vendor or buyer to other people in a networked environment as a recommendation network. It has been very successful, when it comes to executive search and generating new business.

Again, the formal nature of relationship and privicy factor makes business networking websites a great place to get connected and exchange notes.

So, the conclusion is:

So, as on today, given the trend, I can say that social networking is a fad, which is getting saturated and is not supported by a proper revenue model. Online advertising cannot be considered a decent revenue model for a site where people come to kill time! However business networking is here to stay. Corporate intranets having social communities may stay. 

I have already written the orbituary of Facebook, My Space, Bebo and social networking platforms. These are evolving as a fad and will vapourize in the same way in years to come. I wish these trillion dollar valuations to be true, but my mind says otherwise. And I am not the only person saying this. Steve Rubel of Micro Persuation feels the same way to a great extent (may be for different reasons).

What do you think? 

IMHO, online candidate search is a great service. I currently use two such websites and shell out almost $5000 per annum for the same. I always do a solid cost / benefit analysis and I have found that I am saving almost $15-$20K on my recruitment cost alone.

We manage to find decent candidates. However there are few limitations that you must keep in mind:

1) Candidates you get through online database search are more prone to attrition compared to those who are through a consultant. This happens because they have an active profile online and they continue to get offers from various companies.

2) You will get quality resumes for people with experience range of 0-8 years. People who are more qualified or experienced and hold important position in companies generally do not post their resumes to such sites.

3) Verification / validation of employees who come through these sites need to be done rigorously at your end. Like every online transaction, there is a probability of fraud in terms of forged resumes.

BTW, I found a very nice concept. Please check out www.yellojobs.com/ to see the new model of personal reference network for hiring. Its a mix between sites like linkedin.com and pure resume database sites like monster.com and naukri.com.

Abhishek

Department of Information Technology, Government of West Bengal (www.itwb.org) is doing a remarkable work in supporting and nurturing IT industry in the state of West Bengal. Their investor-friendly approach and innovative action-oriented leadership has changed West Bengal over last five years. I am fortunate to be doing business in this state in such exciting times!

They have put up their vision as:

• To Rank among top-3 IT States of India by 2010
• Contribute 15% - 20% of the country’s total IT revenues
• Create leadership position in executing high value-added IT work - developed through intellectual leadership and supported by Government initiatives

Their solid track record might just enable them to pull up and meet these targets. However, I seriously doubt that this position can be achieved and / or sustainable in long term. There are two core issues, which if not checked immediately will result in serious decline in the position that has been created with the initial efforts.

1. The poor quality of education
2. Indifferent attitude towards homegrown small and medium sized IT companies

Poor quality of education

Knowledge industry needs top quality human resource that are well educated, thoroughly knowledgeable and well groomed. Unfortunately our education system is inadequate and we are not creating employable talent.

• IT education has become a low paid job and is mostly taken up by individuals who are unable to make it to the professional ranks in IT companies.
• The education system is still based on text-books and spoon-fed course materials. Reading outside the prescribed text-books is hardly encouraged and/or practiced. This has resulted in a huge pool of IT resource pool with no individuality and poor problem solving capabilities.
• Quality education has become privilege of an elite few who go to the top ranking institutions and comprise less than 1% of the total resource pool. It is unfortunate that most of these individuals decide to join companies outside India for better pay-packages draining away one-million-per-student from taxpayers money!
• IT education has been limited to "programming"! I have spoken to thousands of It graduates and they have no idea that there are career opportunities in fields like testing, publishing, project management, etc.
• Current education system revolves around imparting IQ and not EQ, which is most important for success
• The current education system is biased towards commercially successful companies and their technologies like Microsoft and Sun. Low cost and easy-to-implement open source frameworks are ignored and are positioned as "alien" technologies which "does not have any career opportunities" to the students.
• The general attitude, that has been built up among youngsters who are going for a job is to find a safe-secure job in a reputed stable company. They are not encouraged to take risk and help grow new leaders for the economy. It is very important to have a general "rough it out" attitude to make a place a hot destination for growing great companies. This is the reason some locations are very successful in creating great companies, while others lack far behind.

Indifferent attitude towards homegrown small and medium sized IT companies

I have personally felt that the state government has an indifferent attitude towards homegrown small and medium sized IT companies. It seems that their action plan clearly talks about getting external investment from successful IT companies worldwide. In short term this looks like a very good solution as it will get major investment in a short period of time and they will find their graph moving towards their projected figures. However in long term, it is very difficult to achieve sustainable and long term growth without tapping into the local entrepreneurial capabilities.

If you see the IT industry in Kolkata, you will hardly find a homegrown IT company who features among the top software exporters from West Bengal. In fact most of the home grown companies collectively do not employ even 25% IT workforce of Kolkata. We do not have any national hero or brand, which has made a mark on the national / global platform. When we go to global expositions like IndiaSoft and CeBIT, you do not see any company from West Bengal competing against the national players in the global marketplace.

Some basic reasons I can see are:

• There is no affordable workspace for small and medium sized IT companies except SDF Building and a couple other locations built and operated by government or a government agency like Webel. There is major discrepancy in allocation of office space and land to small and medium sized businesses.
• The law and order system is not up to the mark and in tune with possible cyber crimes. 90% of the police stations do not have any idea about cyber crime. If they land up investigating one, they will try to get rid of the same by harassing you to an extent that you will give up. Most of the police workforce is either not trained about white collar crime or they pretend not to know the subject. It is a known fact that crime rate is highest in small and medium sized enterprises, and most of them go unnoticed.
• We get to deal with government official everyday, who does not know their own work. They come from different departments and confuse you to such an extent that you see no other option, but to bribe them and satisfy them!
• Government is more interested in job creation than value creation. They are less interested in the quality and sustainability of jobs that are being created. Also, there is lesser emphasis on profitability of companies that exist. The economic eco-system works on value creation, which leads of job creation. This is not the other way around.  
• Small and medium sized IT companies are not communicated the benefits they are entitled to! This results in a scenario that all the benefits are enjoyed by a select few.
• The benefit claim process is very cumbersome and an IT business which needs a level of agility to perform optimally will not be able to claim the benefits they are entitled to, unless they put in considerable amount of effort behind the same or forge the paperwork!

Again, I personally believe that it is not the responsibility of educational institutions and government to push a business. However, for economic growth of a state which has been lying at the bottom of the economic chart for last thirty years, there needs to be initiative to creative a conductive environment.

Without most of these issues addressed, I do not see any long term sustainable growth of IT industry in West Bengal.

I wish I am wrong.

Abhishek