What are your plans for India - especially in terms of adding companies to your member base?
This visit of mine is packed with customer meetings and we are in active discussions with a few Indian corporates who are potential customers for our services. We cannot disclose names but we have met companies in the auto, consumer, energy and process industries. India is very important to our overall footprint and so this is a mission critical task.

What sort of buying commitments do you expect from your members and what sort of cost savings do you offer in return?
We expect buying commitments which range between $50 million and $1 billion from the company, which means that they would have to route this amount of purchase through us and we charge a commission on the transaction. We have offered overall savings to the tune of $2 billion to our customers so far and we ensure cost savings in precisely 6 weeks after they actually register.

What are the key efficiencies that FreeMarkets brings to the table for its members?
We basically organise markets and eliminate inefficiencies between buyer and seller. We help companies gain efficiencies in the way they source and also identify new sources of supply for them. We continuously put new suppliers in touch with buyers and have about 150,000 suppliers right now. As far as our Indian members go, they can hit on efficiencies if they are sourcing domestically and if they are looking at international markets we could help them source new suppliers.

Given your birds eye view of global market places and e-exchanges, it would be interesting to hear your views on how you see the e-exchanges market shaping up?
Most e-exchanges are nothing more than a press release today. When they start operations, they hope to deliver on everything from design to sourcing, you cannot deliver on everything. You have to be able to realise and execute a part of that vision. Eventually, these exchanges will see a value creation that is very different from what the press release says.

What are the sectors where you see e-exchanges actually add some value?
First of all, each sector is different. The dynamics of various industries will determine the role that an exchange can play there. In industries where cost is a major differentiator, like auto, you are likely to have multiple exchanges. In the consumer goods sector as well, you cannot have a single exchange since again cost is a major dimension of differentiation.

What sort of opportunities do you see for e-exchanges in these sectors?
I see scope for back office collaboration. In sectors like consumer goods, companies could collaborate for logistics or finance, they could look at shared warehousing facilities and the like. For the automotive sector, there is tremendous scope in standardisation of transactions. At the moment, they have put in place EDI transaction mechanisms from point to point. If Covisant, for instance were to convert this into a hub and spoke operation instead there would be tremendous value addition for members.