News and analyst reports

In good old days we used consider news reporters as reliable source of information assuming that these guys must have done their homework before broadcasting anything to the general public. They shape public opinion or significantly influence the same. So one would expect that they would be aware of their responsibility that goes with the power they have. But unfortunately there are too many channels resulting in too much competition and as the saying goes “everything is fair in love and war” and competition in any field has become akin to war. So instead of reporting news at times they create news or at least sensationalize it without any consideration of ethics, truth and fairness.

This was very well depicted in the movie “Mumbai Meri Jaan”. This movie besides other things has brought out well this aspect of our current society. This movie reminded me of an interview by a TV reporter just after the Tsunami. This reporter was interviewing a lady on live TV who had come to Thiruventhapuram along with her husband and son. This was their first trip in the last 25 years and it was extremely unfortunate that she had lost both of them in the tsunami that took the whole nation by surprise. The reporter was asking her if she would remember this day for the rest of her life. It was so disgusting and sickening. Another incident was the bomb blast in the local trains of Mumbai. One lady who is a very senior member of a TV channel was proclaiming that this was huge and you could see from her face that she was pretty excited perhaps because they had got something to report about for next 24 hours or may be more.

Satyam episode actually opened my eyes to the possibility of unreliability and falsehood in reporting by newspapers, TV channels and analysts. I was very surprised to see The Economic Times resorting to such reporting day after day. I read in one of the blogs that Infosys has holding in this group and hence it didn’t flinch away from reporting lies and damn lies. I am not sure whether Infosys has any holding in Times group or not but possibility of some hidden agenda can’t be ruled out. Now there is an analyst who felt that there might not be any bidder for Satyam and his latest claim is that Satyam is overstaffed by more than 18000 employees. I don’t know how these figures are arrived at. Once you mention a specific number it is very tempting to assume that the concerned person must have done his analysis and to take the figure for granted.

Let us do some simple calculations and let us take Infosys which is considered to be the best in the Indian industry as the reference. Infosys declared its result yesterday and its annual revenue is USD 4.66 billion and its current manpower stands at 105000. If we discount the manipulation that was done by Raju Satyam’s revenue should have been USD 1.8 billion. After his shocking confession in January quite a few clients have cancelled their contracts and currently the revenue is USD 1.5 billion. More such cancellations are expected that may bring down the revenue to USD 1.3 billion. The current manpower at Satyam is 43500. Rest 4500 includes subsidiaries, contract and subcontracts. I hope that the number given by Infosys doesn’t include contracts and subcontracts. Taking a simple proportion the number works out to be 40550, 33800, and 29300 respectively. If we allow some margin for economy of scale that Infosys enjoys and also the fact that it has higher billing rate then number could be 35000 as things stand today or 32000 in the worst case scenario. So the excess resources using Infosys as reference is only 11000 to 12000.

However, we still need news-reporting and analyst reports, but there is a need to use our own judgment or cross check its veracity. Ignorance may not be bliss but believing in something that is not true can also be dangerous.