Also in this letter:
■ Ajit Mohan to join Snap after stepping down as Meta India chief
■ Taiwan looks to deepen manufacturing ties with India
■ Indian Web3 firms form new lobby months after IAMAI crypto unit closure
Google-Facebook duopoly in digital ad market continues
The Google-Facebook duopoly in the fast-growing Indian digital advertising market is as strong as ever, with their local units — Google India Pvt Ltd (GIPL) and Facebook India Online Services — garnering ad sales of Rs 41,115 crore between them in 2021-22.
Tax tells the story: A good indicator of their dominance in attracting marketers to their platforms is the equalisation levy the two companies pay tax authorities in the country.
The equalisation levy is a 6% tax on global companies that generate online advertisements from Indian residents or non-resident companies with a permanent establishment (PE) in India.
The two firms combined paid Rs 2,277 crore out of the total Rs 3,900 crore that the revenue department collected in FY22 as equalisation levy, accounting for nearly 58.4% of the total.
Google and Facebook combined posted a 77% year-on-year jump in their ad sales last fiscal while the equalisation levy they paid soared 82%, as per their RoC (Registrars of Companies) filings sourced from Altinfo.
In 2020-21, the two firms had together gathered advertising worth Rs 23,212 crore from Indian advertisers and paid an equalisation levy of Rs 1,254 crore.
Competition: While Google and Facebook are expected to continue dominating the digital advertising space in the country, industry experts believe other digital players such as Amazon could eat into their share going forward.
“It’s our belief that the new threat to Google or Facebook will come from a marketplace like Amazon,” said Amit Tripathi, managing director of digital-first marketing agency IdeateLabs.
Ajit Mohan to join Snap after stepping down as Meta India chief
Meta India vice-president and Facebook India managing director Ajit Mohan has stepped down from his role, the company’s vice president of global business group Nicola Mendelsohn said in a statement on Thursday.
Mohan, who joined Facebook from Hotstar in 2019, has been responsible for managing the growth of Meta’s flagship products – Facebook, Instagram and WhatsApp.
Snapped up: Sources told us that Mohan is set to join Snap as president of its Asia-Pacific business.
He joins Snap at a time when the company’s photo-sharing application Snap is looking to shore up revenue in India, which is home to almost a third of its active users.
Mohan will join Snap in February and lead the company’s cross-functional efforts across India, Australia & New Zealand, China, Japan, Singapore, Malaysia, Indonesia and South Korea, founder and CEO Evan Spiegel, wrote in an internal memo on Thursday.
India push: We reported on Tuesday that Snap is leveraging the popularity of its app in tier 2 and tier 3 cities to create a pool of content. It is tying up with agencies to identify regional creators who are yet to break into the big league, and turn them into stars on Snapchat.
Snap’s popularity has been soaring in India, especially among Gen Z users — people born between 1997 and 2012. In October 2021, Snap’s cofounder Evan Spiegel told us that the app had crossed 100 million monthly users in the country, representing almost a third of its global user base of 363 million (as of Q3, 2022).
ET Ecommerce Index
We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.
Taiwan looks to deepen manufacturing ties with India
Taiwan has renewed its thrust to deepen manufacturing ties with India amid heightened tensions with China and a US-driven effort to find alternatives to Beijing for setting up factories.
Driving the news: A Taiwanese delegation led by its deputy economic affairs minister Chern-Chyi Chen arrived in Delhi on Wednesday; and is “expected to go to important cities, including Chennai,” a ministry official aware of the tour plan of the delegation said.
The delegation also has members from Taiwan’s trade body Chinese National Federation of Industries.
Addressing a meeting of Indian and Taiwanese industrialists in Delhi on Thursday, Chen said Taiwan was looking to partner with India with a renewed focus.
Tensions: Tensions between China and Taiwan are at an all-time high. The friction peaked after the People’s Liberation Army (PLA) conducted military drills following the recent visit of Nancy Pelosi, the Speaker of the US House of Representatives, to Taiwan, which China views as a breakaway province.
TWEET OF THE DAY
Indian Web3 firms form new lobby months after IAMAI crypto unit closure
Just over three months after the flagship trade body representing blockchain and crypto players in the country was dissolved, companies in the space have formed a new one.
The new body is called Bharat Web3 Association (BWA) and its members include WazirX, Hike, CoinSwitch Kuber, CoinDCX, Coinbase and Polygon.
The goal: BWA will focus on “driving awareness through research to help keep pace with this evolving technology; promoting dialogue between key stakeholders; setting standardised principles in the Web3 industry; encouraging and promoting Web3 and blockchain innovation; and nurturing India’s talent pool,” the newly formed association said in a statement.
Predecessor: In July, the Internet and Mobile Association of India (IAMAI) had wound up the Blockchain and Crypto Assets Council (BACC), a unit that was created in 2018, citing regulatory uncertainty.
It said it was “forced to take the decision in light of the fact that a resolution of the regulatory environment for the industry is still very uncertain”.
Utilisation benefits on margin to take two more quarters for IT services
Top IT service providers are betting on higher utilisation to sustain margins through the ongoing fiscal year, but an influx of freshers may impede the plan, analysts said.
Utilisation refers to the percentage of overall workforce employed in billable projects.
By the numbers: IT leaders have reported a 30-40-basis-point improvement in margins in the July-September quarter, helped by better utilisation metrics. One basis point is one-hundredth of a percentage point.
Analysts, however, expect a further 50-100 basis point dip in margins in the remainder of the fiscal year as freshers cannot be put on projects straightaway due to their lack of experience.
Over the past year, TCS, Infosys, Wipro, HCLTech and Tech Mahindra have reported a 5-8% dip in utilisation levels due to higher attrition rates and backfilling of vacancies.
With over 200,000 freshers added to the talent pool over the past fiscal year, companies are expected to struggle with utilisation rates till most of the current crop of freshers become productive.
Other Top Stories
Wipro appoints Capgemini veteran Amit Choudhary as COO: Wipro has appointed Capgemini veteran Amit Choudhary as its chief operating officer (COO) and member of the executive board. The company has, through the appointment, reinstated the position of COO in its top management, a role that it had discontinued after BM Bhanumurthy retired in July 2021.
SaaS firm Chargebee to cut 10% of workforce: Chennai- and US-based SaaS company Chargebee will cut 10% of its workforce in response to tougher market conditions marked by recessionary trends in the North American market, higher inflation rates and the growing need among VC-backed companies accelerate on the journey to profitability.
Cognizant Q3 net profit up 15.6% but revenue growth disappoints: Software exporter Cognizant reported a 15% jump in net profit during the third quarter (Q3) even as revenue came in below expectations. Net profit was at $629 million from a quarterly revenue of $4.85 billion, up 5.6% in terms of constant currency.
Global Picks We Are Reading
■ OpenAI opens up AI text-to-image generation to businesses with launch of DALL-E API (The Verge)
■ Dear artists: do not fear AI image generators (Wired)
■ Musk’s Trump-style management rattles Twitter workers awaiting layoffs (The Washington Post)