Subba’s Serendipitous moments

May 15, 2009

President Obama’s tax plan — A retrograde step

Filed under: Business,Leadership,Strategy — Subbaraman Iyer @ 4:09 pm
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President Barack Obama announced a plan that seeks to close loopholes used by companies and individuals to avoid paying taxes. In particular, the President Obama wants to make companies pay the proper tax rate on overseas profits.The goal, he said, is to end a “tax scam” by shutting down overseas tax havens that let U.S. multinational corporations and some individual taxpayers avoid paying U.S. taxes while ordinary Americans take up the slack.

Payments by US companies who create jobs overseas are treated as normal expenditures – but the new law (if passed by both Houses of Congress) will entail companies to pay tax on these expenditures as well (increase of almost 50%).
The White House says that some jobs go abroad because American companies are lured there by tax loopholes which, if closed, would bring the jobs home. This is just marginally true.

This and the related tax proposals are often referred to as “Say No to Bangalore, yes to Buffalo”.

At one level, this protectionist policy will do little to change the job losses in the US. It may hurt the US more than India. While Bangalore got mentioned, I am sure the theme applies to China as well which has been a dominant supplier to the US.

Now, if indeed it is the differential tax rates that President Obama is trying to fix, the gains would be marginal as US companies pay a tax of 33% in India as against 35% in the U.S.

Outsourcing boom was all about better quality at lower cost; I don’t think the US can provide either for many sectors including outsourcing.  Most of the big companies save 75% of their cost by outsourcing and the number goes higher for high-end BPOs.

In my view, it is simple rhetoric and grandstanding.

November 7, 2008

President Obama exploits social networking

Barrack Obama’s huge victory in the recently concluded U.S Presidential elections will be analyzed for years to come. It has been one of the most successful campaigns from a relatively unknown senator to the White House.

One of the lesser known strategies that he embarked upon was how he built a very innovation mechanism using the Internet technology and more specifically the social networking model, which his opponent John McCain failed to exploit.

At each rally, his organizers collected the email, zip code and telephone numbers of all the attendees. These people received regular news and updates, thus paving the way for building a community.

The next step was building the community into a social networking site called MyBo with half a million members and 35000 affinity groups who went on a grass root campaign creating over 150,000 campaign related events over the course of the campaign. Every constituency– from professors and pastors to union organizers were roped into the campaign and fund raising. This bottom up approach was in stark contrast to the campaigns run by both Hillary Clinton and John McCain who led top-down campaigns. It even developed  the iPhone and iTouch applications that enabled owners to mobilize their friends and contacts in battleground states through the Apple devices.

The results clearly attest to the success of the effort. More than 3 million people donated for Obama, almost twice as any other presidential candidate in history. He collected $639 million the largest fund raising effort in the history of the US Presidential elections, and most of it came through small donations through online donation.

Further, Obama dominated the social media activity and was the first to exploit them and in a far better manner than his opponent. Statistics bear this out:

Obama: 2,379,102 supporters
McCain: 620,359 supporters

Obama has 380% more supporters than McCain. (In the 18 days before Nov. 4, Mr. Obama’s online fan base grew at a rate of more than 10,000 per day)

Obama: Friends: 833,161
McCain: Friends: 217,811

Obama has 380% more supporters than McCain

Obama: 1792 videos uploaded since Nov 2006, Subscribers: 114,559 (uploads about 4 a day), Channel Views: 18,413,110
McCain: 329 videos uploaded since Feb 2007 (uploads about 2 a day), Subscribers: 28,419, Channel Views: 2,032,993

Obama has 403% more subscribers than McCain
Obama has 905% more viewers than McCain

Obama: @barackobama has 112,474 followers
McCain: @JohnMcCain (is it real?) 4,603 followers

Obama has 240 times more followers in Twitter than McCain


With such a huge advantage in the social media sector, is it any surprise that the young voted for him overwhelmingly.

The Obama victory has conclusively proven that technology has a vital role to play in any  election campaigns. I can’t help but recall how President Estrada of Philippines lost power in 2001 due to the smart mob. A million residents in Manila organized and coordinated their actions through text messaging. More recently, Malaysian Prime Minister Abdul Badawi said that he regrets that his governing party ignored alternative media like SMS in the recent elections. He said “It was a serious misjudgment. We made the biggest mistake in thinking that it was not important. We thought that the newspapers, the print media, the television was supposed to be important, but the young people were looking at SMS and blogs.” The use of SMS and alternative media is largely credited with helping the opposition party to dramatically increase its seats in the Parliament. The ruling BN party in 2008 won just over 60% of the federal parliament seats, significantly less than the 90% of the seats that they won in the 2004 elections.

If in Philippines in 2001 people united through their cell phones both the Malaysian elections and the US elections, supporters united through the social networking platform and social media.

It only goes to prove the significance of new technology mediums both in developing economies and in mature democracies

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