IT companies and US economic crisis

Started by dwarakesh, Sep 26, 2008, 04:04 PM

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Sep 26, 2008, 04:04 PM Last Edit: Dec 02, 2008, 04:58 PM by dwarakesh
TCS, Satyam to put on hold promotions

Upheavals in U.S. financial market cited as reason; companies wait for clarity

CHENNAI: The spate of bad news emanating from the U.S. has begun to have immediate fallout on the employees of the Indian software companies.

TCS, the biggest of them, has decided to put on hold promotions for the time being.

The company, in a circular, has said that in view of the "upheavals in the U.S. financial market, we feel it prudent to wait for clarity in the business environment." As a consequence, it has decided not to effect promotions in the second quarter of this year. Though the company has completed the process of assessing individuals who are eligible for promotions, it has put on hold promotions in view of the extremely challenging business environment.

According to the circular, "the business environment remains challenging and is expected to remain so in the near future." The circular has also sought the employees to "understand and appreciate the compulsion for postponing a decision on promotions."

TCS is not the only one to halt promotions for its employees. Satyam also has put on hold promotions for its staff. "The promotions have been restricted this time. Similarly, the annual appraisals have not yet been completed for the entire company," according to company sources.

The regular practice of Satyam was to give promotions every two years, which will be unlikely this year. It will also delay the issue of confirmation letters to the employees recruited on probation basis. This will not stop here. It is hoped to delay the issue of appointment orders to fresh graduates, who have been already selected through campus interviews during the last quarter.

Source: The Hindu


Satyam Freshers Programme delayed

Since the downfall in US markets,the IT firms in India have announced that,this year's hiring could be reduced compared to the previous year recruitment. Due to the continous tumbling in US markets, many IT firms have laid off their staffs and many more kept under scanner.

The fired staff's are all experienced people and they have removed due to their under performance.Besides all these TCS and Satyam have proclaimed that the promotions of their employees will be put on hold. Eventhough scanning process for promotions have been finished,the next step has been halted.This decision by these two corporates will make their employees leaving in state of despair.

Decision to "put on hold the promotion" will definitely make a strong impact in the company's work progress.

Moreover Satyam has announced that, there may be some delay in the fresher programme and they are seriously considering about their training schedule.

In L&T infotech, the training programme for the freshers has been postponed without mentioning the date. This created chaos among the students who got placed in L&T infotech through Campus Placements.


IT Fresher Salaries To Increase in 2008

There is an increased demand for the young IT professionals.That is because fresher salaries may increase, going forward, given that MNCs are targetting the same talent pool.

Between themselves, MNCs like IBM, Accenture and Capgemini are set to hire some 2 lakh people by 2009. And that is going to lead to wage inflation at the fresher level.

Edelweiss says a look at salaries offered by Indian majors - TCS and Infosys, to graduates set to join in 2008 and 2009, shows an average hike of 40%.

Also, the recruitment patterns of these companies shows an interesting trend. Aided by a gradual increase in fresher wage hikes, TCS has hiked its offers per college to 78 offers per college for fiscal 2009 compared to 53 offers in fiscal 2008.

Infosys, on the other hand, has reduced its offer per college to 26 offers per college for fiscal 2009 from 46 offers per college in fiscal 2008.

Though, the impact of this inflation will be negligible in the first two years, in the third year, the impact might be over 100 basis points, atleast for Infosys. Smaller IT companies may see an impact of as much as 200 basis points on their margins if the same trend continues.

IT companies are caught in a logjam. If they recruit freshers, salary overhead shoots up to an unmanageable proportion and if they don't, they fall short of manpower. The results will reflect only after 2 to 3 years.


Economic slowdown to change campus placement trends

The economic slowdown is going to impact education, especially campus recruitments. Both immediate and long-term effects are being predicted, which include change in pay packages, profiles and hiring strategies. Additionally, students are likely to opt for more qualifications after graduation, instead of entering the job market.

"On one hand, the high-end pay packages will take a backseat with investment banks withdrawing from the placement process. Last year, Lehman Brothers made an offer of Rs 18 lakhs to a Delhi University (DU) graduate and this year they have backed out," said Seema Parihar, chairperson, Central Placement Cell, DU.

"Other companies that were taking up global projects will also reduce recruitment, as they may not get as many projects now. As the economic slowdown will also affect the use of credit cards, the BPO sector --- call centres in particular --- will also reduce recruitment," she added.

Vaibhav Sharma, member, Placement Cell, Delhi School of Economics (DSE), also predicts a change in the profile of recruiters and the jobs that would be offered. "It will be product-centric companies rather than the people-centric ones that would emerge as top recruiters. These include companies dealing with manufacturing, insurance and telecom. Within consultancy firms, the hiring would be directed towards talent management and talent retention profiles instead of strategic planning," he said. Sharma also believes that students would now have to settle for Indian companies, with fewer MNCs coming forward.

Veer Singh, vice-chancellor, NALSAR University of Law, Hyderabad, is waiting for the recruitment process to begin before drawing any conclusions. However, he believes legal services would witness a positive change. "I think the demand for lawyers is going to increase, as the present situation would require a great amount of documentation with drastic changes taking place at the top-level in organisations," he added.

And would the market slowdown affect recruitment at the Indian Institutes of Technology (IITs) as well? Sanjay Dhande, director, IIT-Kanpur, thinks otherwise. "Every year, top companies visit the IITs and this will not change. However, in the long term, the market slowdown may affect postgraduate education with students opting for additional qualifications, instead of settling for just one," he said.

Echoing a similar sentiment, Peter Cappelli, professor of management, Wharton School, University of Pennsylvania, US, said: "This would be a good time to sit out the downturn by going to business school and picking up a qualification while the economy is down. This way, you won't miss anything." Students, too, believe they have little to fear.

While some have drawn their own market estimates and are planning accordingly, others have decided to wait and see how companies' respond. "We don't think there is any reason to panic before the placement process begins. The scenario can only be gauged by the summer placements for first-year students," says Akshay Sinha, second-year student, XLRI-Jamshedpur.


Ramco to cut top management salaries

Ramco Systems plans to cut the salaries of senior managers by 10 to 15 per cent as part of its efforts to control costs.

Nearly 220 of its 1,663 employees will be affected by the decision. Ramco was also in the news in May for layoffs of nearly 200 employees, accounting for nearly 10 per cent of its staff.

According to COO Kamesh Ramamoorthy, since the proposal was put forward by the executives themselves, it was not likely to affect their morale. Employees' salary forms nearly 65 per cent of Ramco's total cost. As part of the strategy, some of the fixed parts of the salary were changed to variable pay.

The company's net profit for Q2 ended September 2008 dropped to Rs 2.48 lakh ($5,193.6) against Rs 23.26 lakh ($48,720) for the same period last year.

Ramco has been investing more of its resources in technology and new solutions for the last two years. Although the US and Europe are big markets, their growth rates are now down. The company will focus on the aviation sector in the US and Europe - a huge market - and also has plans to focus more on emerging markets such as South Africa and Nigeria.


Satyam shows door to 200 employees

After reportedly sending off 30 of its employees for allegedly fudging bills, Satyam Computer Services, the fourth largest IT solutions and service provider, has now given pink slips to 200 employees in various centers. The move comes a few weeks after the company announced its second quarter results.

At a time when economic slowdown is forcing companies to resort to retrenchment measures, Satyam insists that the move is not part of cost cutting. The move follows the annual appraisal, which usually happens in July-September, the company said. However, employees say that it actually is part of cost-cutting measures to reduce high-cost human resources.

"They are saying that they are continuing to recruit people. But the thing is that they are replacing high-cost human resources with low-cost HR as part of the cost-cutting exercise," a Satyam executive, who was given pink slips recently, told Business Line.

But, S.V. Krishnan, Global Head (Human Resources) of Satyam, has a counter point, "We reiterate that this is not unusual. This development follows the appraisal where the 5-10 percent of staff in the bottom of the performance pyramid is identified for Performance Improvement Plan," he says.

"Those who are in that bracket know that they are in that list. While some of them exit themselves, we will sit and talk with others for their possible relocation. If they insist that they be accommodated in the local projects and continue to reject the proposals for relocation, it could be a problem," he said.

However there are reasons for a former Satyam executive not to believe that nonperformance is the cause of the move as he says on the request of anonymity, "I have proved myself in several important projects and got accolades from the higher-ups too. It was a complete surprise for me to hear that non-performance was the reason for my removal."

On this count, Krishnan said, "We have been recruiting in thousands this year too. In that scenario, why would we remove experienced hands? Would that sound logical?"

The company, which had indicated early this fiscal that it would recruit 15,000, had scaled down the intake outlook to about 10,000 due to the slowdown.


Job losers may miss gratuity & leave encashment too

There could be more bad news in store for employees getting the pink slip as companies cut jobs to fight the economic downturn.

They face the grim possibility of not getting their gratuity as many domestic companies do not keep money under a separate trust to meet the obligation. The law requires money to be kept aside only to meet provident fund payments and not for other long-term benefits. Experts in pension and employee benefits say the companies cutting workforce to remain in business at the time of severe cash crisis and scant orders will find it difficult to meet such unfunded promises made to employees.

"In India, 40% companies do not have dedicated funds under a trust to pay gratuity, and 95% companies do not have funds set aside to meet leave encashment liability. People take the long-term benefits into account while planning their retired life. Not having a dedicated trust for the purpose is against the interest of employees in the lower rung of the corporate hierarchy as they rely most on these investments," said Kulin Patel, who heads the Indian operations of actuarial and financial consulting firm Watson Wyatt Worldwide. The firm arrived at the statistics after a recent survey of CFOs in the country. Leave encashment is allowed by some companies although it is not a norm across the industry.

The practice of not keeping funds under a separate trust is hurting not just the employees but companies too. Under a recently-amended accounting norm (AS 15), companies' profit statements have to show every year whether their employee benefit liability has gone up or down. Future liability is calculated based on several assumptions such as expected salary rise and attrition rates, which could easily go wrong. Liabilities change if the assumptions don't prove to be correct.

Besides, the benefit liability is calculated using a formula involving government bond yields. If the company has a separate trust, the expected return on the assets owned by it would balance the volatility in profit statements. "A 1% change in bond yields can translate into 15-20% change in the liability, which would be a substantial amount. If the company concerned has a separate trust, the expected return on the assets it owns balances adverse movement and volatility. An unfunded employee benefit scheme does not offer the cushion," explained a benefits consultant.

The government encourages companies to have a separate trust to manage funds by income-tax sops, but has not made it mandatory.


Satyam to review hiring projections

Satyam Computer Services, India's fourth-largest software exporter, is set to review its hiring projections for this fiscal in mid-December. The company has already scaled down hiring projections for this fiscal to 8,000 to 10,000 people against 15,000 that it had earlier projected, signalling turbulent times ahead.

Satyam could also take a re-look at the guaranteed component of the variable pay given to its 53,000-odd employees to prune costs. Any cut could mean a lower take-home pay for the employees.

Currently, wage bill accounts for over 60% of Satyam's revenues. Belt-tightening measures could help the company cushion the impact of the global economic meltdown on its profitability. "Internally, we review our hiring projections every quarter. In the past, we did not have to cut our hiring forecasts as the tidings were good. Projections were scaled down, for the first time, in the second quarter of this fiscal.

Given the current economic scenario, we plan to take a re-look at the hiring projections before the end of the third quarter," said SV Krishnan, global head (HR), Satyam Computer Services. India's export-driven software service firms, used to a scorching pace of growth, have been singed by the economic downturn in the United States. The US market contributes to around 62% of Satyam's revenues.

The remuneration package for the 53,000-odd employees comprises a variable and a fixed component. The variable component is 10% at the entry-level, 20% at the middle-level and 30% at the senior management level. Half of the variable pay is a guaranteed payment. The other half is linked to three parameters including the performance of the company, the individual and the business unit.

Clearly, the variable pay is the lever the company has to trim costs. It could re-visit the guaranteed portion of the variable pay, when it makes an assessment of the business prospects in the coming quarters. Satyam's rivals, including India's largest software exporter, TCS had cut variable pay of employees to prune costs.


Wipro to go slow with fresh recruitments

As the slowdown impacts hiring as well as attrition rates in the information technology industry, leading recruiters like Wipro Technologies said that while it will honour offer letters already sent out to freshers, the company would defer recruitments by a quarter or so.

A highly placed source in Wipro's Kolkata office said that it was now waiting for more clear signals from its clients to take a call on further recruitment.

"The cloud of uncertainty is likely to lift in some time, and companies would be able to take more concrete decisions thereafter. Of the offer letters sent out, recruitment could be deferred in case of some", the source said while refusing to give out a time-frame.

"It could be a quarter or even more than that", the source added.
Wipro had around 7000 people working in its Kolkata center, almost equally divided between its business process outsourcing and infotech operations.

It had recruited a couple of thousand people in Kolkata last year.
The source did not want to give out this year's figures.

According to Nasscom, the attrition rates had come down by 6-7 per cent in the last few months due to volatile market conditions.
This had, in turn, impacted fresh hiring by companies as well, as they now needed to hire fewer replacement staff.

Industry insiders said that companies were now hiring closer to completion of projects instead of hiring much before and keeping people on benches.

Companies were now looking at operationalising resources and could shed some people waiting in the benches.

Adding to this, former Nasscom chief Kiran Karnik said that organisations now needed to decide who were useful, people with years of experience or the ones with competence.

"Experience has to be cumulative, it cannot be one year's experince repeated over a number of years. In a fast changing and growing technological era, even competence is a perishable commodity", Karnik said.


TCS freezes salaries

Tata Consultancy Services (TCS) is expected to deprive its employees of salary rises next year, thanks to the worsening economy.

According to analyst firm Cowen & Company, TCS could bring down wage increases during the financial year 2010 to almost zero. The analyst firm in its note said, "Wage inflation is expected to moderate dramatically from over 12 per cent to close to zero, which will help margins."

A TCS spokesperson confirmed this, saying, "Salary hikes in TCS next fiscal are likely to be lower than this year. Wage hikes in India in FY09 were 10 per cent, as against 15 per cent in FY08," reports the Economic Times.

The Indian IT industry is under tremendous pressure at present, with the slackening of US and European economies. Companies are seeking various ways to reduce their operational costs and one of the key components in this will be the remuneration segment, which accounts to nearly 40 per cent of their operational costs.

Another Indian IT major, Wipro, has already announced a seven to eight per cent hike in wage for its offshore employees, and for Infosys it has been in the range of 11 to13 per cent. According to Vati Consulting's Amitabh Das, the average hike for Indian IT industry in the current calendar year has been between eight and ten per cent,  down from last year's level of 15 to 18 per cent.


Here are the firms hiring in India

Citigroup on Tuesday decided to cut 53,000 more jobs, triggering fears of more layoffs across industries.
TOI, however, has decided to be contrarian.

Instead of only writing about pink slips, it hunted out companies that are actually hiring. Here are the sectors that are hiring:

SBI will hire 25,000 new hands, according to bank chairman O P Bhat. Fresh recruitment will be done this fiscal -- 20,000 in the clerical cadre and 5,000 supervisory staff.

Bank of India will hire 10,000 over the next few months. This, on top of over 30,000 fresh recruits in 2008-09. In next 2 years, the bank plans to take in 75,000.

Accenture will hire 10,000 people in India by 2010, says COO Stephen J Rohleder.

Deloitte Touche Tohmatsu, top global management consultants, is looking to hire 3,500 in India in three years.

MetLife, a new private insurance company, will recruit 30,000 agents and 2,000 managers by March 2009, says CEO Rajesh Relan.

Aegis BPO Services will add 1,000 people per month this fiscal.


IIM Bangalore and IIM Calcutta say all their students have got placements for next year.

TCS will hire 30,000-35,000 people this year, says a spokesperson. TCS made 24,789 technical campus offers for 2009-10, a 13% jump over this year.

Infosys is sticking to plans of hiring 25,000 people this fiscal, says CEO Kris Gopalakrishnan. Infosys has made around 20,000 offers for next year.

Satyam plans to hire 8,000-10,000 people this fiscal, says HR head S V Krishnan.

L&T will hire 10,000 people over the next three years, according to CMD A M Naik.

Maruti has decided to hire 1,000 fresh hands despite the sluggishness in the auto sector, says a company spokesman.


Hi Thanks for the information...

Good Post  Dwarakesh..Keep Updating


IT companies move to cut operating costs

Apple and Adobe Systems have announced plans to implement an extended holiday closure.

Apple is granting employees eight days of paid leave beginning 24 December, while Adobe has asked workers to use accumulated vacation days to augment paid holidays such as Christmas and New Year's Day.

Hewlett-Packard (HP) has also informed employees that it will extend a planned one-week holiday shutdown by an additional week.

"Shutting down during a period when many employees traditionally take vacation helps HP achieve operational savings and allows employees to enjoy more time with their families," explained an HP spokesperson.

As IT Examiner previously reported, Acer has overtaken Hewlett-Packard in western European personal computer sales. The Taiwanese-based company apparently achieved market dominance in the third quarter and now controls a staggering 25 per cent of all western European PC shipments.

Nevertheless, HP managed to generate a turnover of $33.6 billion in its fourth quarter, registering an increase of 16 per cent in comparison to the same period during the previous year.

"HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio and numerous cost initiatives," said HP CEO Mark Hurd. "Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force."

The company expects to generate approximately $32.5 billion US dollars during the first fiscal quarter of 2009. However, revenue will be lower than in the fourth quarter as HP "expects an unfavourable year-over-year currency impact on revenue of approximately five percentage points."


The new HR code to fight slowdown

The Human Resources departments at IT and BPO companies have come up with some innovative steps to flight recessionary trends across the world with steps like reducing lateral hires, cutting down campus recruitments, reducing wage hikes while trying to delink revenue growth to that of manpower.

A report in the Economic Times quoted industry officials to state that the focus from here on will be on productivity increase and how best they can squeeze out more from the staff. While fresh recruits can look to increased work hours, the experienced hands could find it difficult to move jobs as companies cut down on lateral moves.

As for freshers with recruitment slips, they are being asked to wait longer before reporting for work or training. Nasscom chief Som Mittal claimed that employee utilization rates have spiked 4-5 per cent while wage hikes were down to 8-11 per cent.

India's largest IT company TCS may be hiring between 30 to 35K staff in the current fiscal year but most of it is at the entry level. Economic Times quoted TCS VP for HR Ajoy Mukerjee as saying that the company was expanding its employee pyramid base which means that over 60 per cent of recruitment will be at entry level.

The story is much the same at Satyam Computer where the article quoted Global HR Head SV Krishnan as stating that it had curbed lateral hires though there would be about 10-12K recruitments this year. There would be lateral hires only for high value work, he was quoted as saying.

Even the new hires may have to wait longer periods before they can hit the payrolls. In the words of Pratik Kumar, EVP of HR at Wipro, the company will be taking in people in small batches rather than mass scale recruitment.

The article further says that companies are now talking about de-linking revenue growth from manpower growth but the shift is yet to set in. So, going forward employees may find the going tough as there would be closer performance monitoring.

So, for the average to low performers, the next few quarters could prove tough, more so if new clients or contracts are tough to get.


IT industry in India is underdeveloped

"Today technology has made a big change. I know someone who is controlling a chemical plant in Singapore by sitting right there in Mumbai. It doesn't matters if the plant is 100 miles or 5,000 miles away," Karnik said adding "This is the kind of technology penetration that makes anything possible."

"But, IT market in India is underdeveloped and underpenetrated, we should undertake new kind of works that the technology has made it possible today, such as rural BPOs," he said while answering to a query from IIM-A student at the valedictory session of Confluence-2008.

When asked about impact of US President Elect Barrack Obama's stance on key issues pertaining to Information & Technology (IT) and health care vis-a-vis its impact on India, Kiran Karnik said, "if India happens to be the best place to do competitive business then they have to do it here."

"It has to be a competitive growth. To be competitve they need to find a best place, and if India happens to be the
right place then they have to do it here," he added.

"One of the major agenda on Barrack Obama's list is to cut high cost of healthcare services," Karnik said.

"US government wants to cut cost in this segment so all the back office work such as insurance, billing, maintaining patient records could be outsourced, UK has already done this," he added.


Indian IT companies may feel Citi heat

Some top Indian information technology (IT) firms such as Tata Consultancy Services (TCS), Satyam Computer and Polaris could feel the heat if Citigroup decides to sell part of its business or look for partners to tide over its losses.

Analysts feel TCS' revenue might have an impact as Citi has signed an assured revenue agreement of $2.5 billion (Rs 12,500 crore) for a period of over nine years. This was the part of the $505 million acquisition of Citigroup Global Services (CGSL) -- the business process outsourcing (BPO) arm of Citigroup -- by TCS a few months back.

When contacted, a TCS spokesperson said, "TCS announced its intention to acquire Citigroup Global Services in October and the transaction is proceeding as per the terms of the agreement in a planned manner. Our agreement with Citigroup adequately addresses our interests in case of a sale or merger of the bank."

However, analysts are not convinced. Citi is a $300 million account for TCS. With the acquisition of CGSL, Citi not only catapults itself as the largest client for the IT giant but also means an account size of half a billion. Experts point out that Citi would easily account for around 5-6 per cent of the IT giant's revenue.

"Whenever the ownership of a company changes, all the contracts and deals come under the review of the new owner. So, in case Citi has a change of owners, we assume even the $2.5 billion contract will also come under review. It's too early to predict anything. But there are chances of price negotiations," said another deal tracker.

Analysts said they are hoping that TCS has made no upfront payment. "However, we think TCS would have structured the deal accordingly and would have built such a scenario into the contract," they said.

TCS is not the only IT firm. Satyam, India's fourth largest IT firm might also be impacted as Citi is part of its top 10 clients.

Polaris is another firm that may be in a spot if Citi sells some of its business units. "Citi does source some work to Polaris as well. But the biggest impact would be if Citi sells its stake in Polaris, which is over 40 per cent," said an analyst. Citigroup holds 22.88 per cent in Chennai-based Polaris and an additional 20.45 per cent through its wholly-owned subsidiary, Orbitech.

The rumours on Citigroup led to changes in share prices of the Indian IT companies in different ways. While the TCS stock price went up by 7.8 per cent to close at Rs 506 on Friday, Satyam was up 3.08 per cent. However, Polaris was down by 0.52 per cent on buzz that Citi might sell its stake in the company.


Heads of IT firms keep their fingers crossed Public eye

MYSORE: The information technology (IT) industry in Mysore, which has been riding on a wave of steady and uninterrupted growth for the last ten years, is suddenly finding itself gripped by uncertainty in the wake of the global economic slowdown.

Though the IT industry in Mysore has managed to stay afloat so far with software exports during the first two quarters of the current financial year matching last year's figures, experts have admitted that the impact of the economic recession in the U.S. and Europe markets has begun showing in the export figures of the third quarter.

With the prospects for the fourth quarter predicted to be far from rosy, the software exports from Mysore are unlikely to match the Rs. 1,100-crore mark realised during the last financial year, let alone breach it.

"Though software exports from Mysore were estimated to be about Rs. 700 crore so far this financial year against the Rs. 650 crore recorded around this time last year, there is fear that exports will slow down as the impact of the slowdown will be felt only now," an expert from the industry said.

Though heads of IT companies in Mysore claim that the global economic recession has not left any impact on their companies, the uncertainty over the world economic scenario has given cause for worry.

D. Sudhanva, Managing Director of Excel Soft, a software company in Mysore, said his software development firm, which primarily caters to the educational sector in Europe and U.S., has not been affected so far.

"We have not felt the impact of the slowdown so far. Most IT companies in Mysore cater to a niche area and hope to remain insulated from the general recession," Mr. Sudhanva said.

But, he admitted that heads of IT companies in Mysore were keeping their fingers crossed.

"Even though we have not felt the pinch so far, we are anxious about how things will unfold as the fiscal year for companies in the U.S. begins in January and ends in December. Most companies will be planning their budgets in the end of November and early December. We will have to wait at least till mid-December to find out what is in store for us," Mr. Sudhanva said.

Vice-president (India Operations) of Software Paradigms Madhukar V. too claimed that his company had not been hit by the recession. "On the contrary, we are doing well.

When everybody is firing people, we are hiring," said Mr. Madhukar adding that his company planned to add about 100 more employees to its existing strength of 900 over the next five to six months.

The reasons cited by Mr. Madhukar for his company's insulation from the sluggish economy include the absence of any financial institution among their list of clients. "The crisis has basically affected financial institutions in the U.S. Most of our clients are in the retail sector," he claimed. However, Mr. Madhukar said the next yearwill be critical for the IT industry. "It will be a challenge for the IT industry. Only companies that can cut costs will be able to face the challenge," he said.

Despite their brave front, it is clear that the global economic recession has triggered anxiety among the IT companies in Mysore.

The impact of the global recession on the IT industry in Mysore is considered to be significant in view of the Government's efforts to promote the city as an alternative IT destination to Bangalore.

The city, which has more than 53 IT companies, is second only to Bangalore in terms of software exports.

Ever since software firms began operations in Mysore in the late 90s, the city has not looked back with the quantum of software exports registering a "fairy tale like" growth, experts said.


Mid-tier IT companies see revenue fall

Mid-tier IT firms like Sasken and MindTree are fearing their market capitalisations are facing problems due to falling demand.

Sasken's present enterprise value stands at $45 million which is half of its total revenues of $123 million recorded in 2008. MindTree stands at an enterprise value of $233 million with revenues of $189 million. Compared to biggies like TCS, Infosys and Wipro, these mid-tier firms have seen a decline in their enterprise values, says The Economic Times.

According to the Chesapeake Group, Infosys's enterprise value stands at $14 billion on revenues of $4.6 billion. TCS, on the other hand, counts $10.4 billion on revenues of $5.2 billion. The enterprise values for companies with less than $100 million revenues is about 0.5x below  their topline.

The export-driven Indian IT services industry is being greatly affected by the US economic turmoil. The vice president of Karvy Stock Broking, Ambarish Baliga, said that the large IT entities are at an advantage, compared to the smaller ones since they are aiming to diversify into new locations with new services.


Some of the companies in India have started to send out (sack) some employees in the back ground of global recession. Around 100 are already sacked is the unofficial report. IBS working inside Techno park Trivandrum send out 27 employees has given rise to much arguments and counterarguments. Labour department conducted some inspection inside the Company but the Chief Minister who is holding additional charge of IT was silent.

The Hon Prime Minister Dr Manmohan Singh appealed to top company CEOs not to dispense with the services of employees in the wake of global recession.

IBS management came out with a statement that they are sending out the shirkers and those who did not perform well. The owners of the Companies expressed strong protest in labour department conducting inspection in their companies. It is widely felt that more and more companies are moving in the direction of IBS.

Due to the deepening crisis and that more jobs may be lost the Chief Minister of Kerala has directed to call an emergency meeting of CEOs of companies in his chamber at 9.30 am on 13Nov08 to discuss the problems in the background of global recession.


India faces a difficult situation because of the global financial crisis and may even witness a slowdown, but its economy was nowhere near a recession, Finance Minister P Chidambaram said in New Delhi on Monday.

"A recession is defined as two successive quarters of contraction of GDP (gross domestic product). I wish to emphasise that India is nowhere near a recession," Chidambaram told the annual Economic Editor's Conference.

He said the financial crisis that has enveloped the world since 2007 had become worse with many rich nations like Germany, Japan, Britain and the Netherlands officially in recession, and many more, including the US and France, expected to join them soon.

"In our view, we may expect a moderation in growth rate in the current year to a level between 7 and 8 per cent. But India would still be the second fastest growing, large economy in the world," Chidambaram added.

India still faces a difficult situation, he said but promised every possible fiscal and monetary measure to contain the impact of the global crisis on the domestic economy.

According to the finance minister, sectors like manufacturing, communications, trade, agriculture and construction that have been the major drivers of the Indian economy in the past, were likely to see a moderation of growth.

As a result, India needed more investment and quicker implementation of projects covering roads, ports, airports, power, education, health and skill development to spur growth, he said.

"Increasing expenditure in the infrastructure sector is an important part of the counter cyclical measures that are being contemplated to address the impact of the global slowdown," he said.

"On the whole, the general outlook continues to be one of cautious optimism."

Chidambaram also said that while the previous National Democratic Alliance (NDA) government was claiming high economic growth rate during its regime, the reality was far removed.

"At best, the growth rate during that period was modest. In particular, 2002-03 recorded the lowest growth rate after the beginning of the reforms in 1991-92," he said, while listing the growth rates since 1997-98.

"As a consequence, the growth rate in 2003-04 appears impressive. But what is important is the average for that period. The average was only 5.7 per cent."

The finance minister said India's external sector, too, continued to be robust and reflected the strengths of the economy in 2007-08.

"In the current fiscal, merchandise trade data is available for April-September 2008. Exports and imports have registered an impressive growth of 30.9 percent and 38.6 per cent, respectively," he said.

He said there was a deceleration, but that was being addressed by diversifying exports to other markets.

"For example, during the first quarter of this financial year there has been an increase in the share of India's exports to China, Singapore, the Netherlands and Saudi Arabia."


IT firm cheats techies in Chennai

You would have heard of chit companies or even investment companies duping people and fleeing with their hard earned money. However, now an IT company is doing the same in Chennai, as it allegedly cheated software engineers by collecting crores of rupees as security deposit.

The company had promised jobs for more than 400 fresh graduates and collected Rs one lakh to Rs two lakh but has now closed down without leaving a trace.

Fresh engineering graduates jumped at the offer. They even paid a security deposit of a lakh and a half each while being recruited in the company and signed a two-year bond.

They were to undergo six months training in Thiruvananthapuram after which they were to be confirmed. But their joy remained shortlived as the company folded up, leaving more than 400 fresh recruits in the lurch. Forget about compensation, even their security deposit has not been refunded.

"They said they will pay us Rs 11,000 first, and then Rs 17000 to Rs 20000. They did not pay anything," said an affected software engineer.

"They trained us for only 15 days. The training was bad. By the time we asked for a different trainer, the company shut down," said another engineer.

Most of the software engineers are from small towns in Tamil Nadu, Kerala and some even from Orissa, who even borrowed money to pay the deposit. Now they have no salary to keep the home fires burning. And creditors are already knocking at their doors.

"We asked them to accept certificates as bond. But we had to give Rs 1.5 lakh. We had to pawn our jewels," said husband of an affected engineer.

The police have formed two special teams to look for the three main accused - Arun Kumar Ramiah, Zakir Husain and Sasi.

"Registering a company is so easy these days. These laws should be toughened so other students will not face same trouble," said Sankara Kutraliangam, advocate for affected software engineers.

As the economic slowdown sets in, and many more companies from the West shying away from BPO investments, experts have asked job seekers to be careful while accepting such terms of employment.


Dec 02, 2008, 04:57 PM Last Edit: Dec 02, 2008, 05:02 PM by dwarakesh
TCS draws up austerity plan

It's official now. Tata Consultancy Services (TCS), India's biggest software company in terms of sales, is poised to unveil a host of
cost-management initiatives to withstand the global economic downturn.

So much so, the TCS board has ratified a bunch of tough decisions to beef up internal efficiencies to secure the company in the long run.

In a recent email to all company employees, TCS CEO & managing director S Ramadorai has noted: "At various times, we've taken decisions that are tough, but meant for the organisation's long-term benefit. These decisions need to be seen in light of the current unusual circumstances that we are working through. I realise I am asking you to put the organisation before yourself and asking you to go beyond the call of duty."

In his email (a copy of which is with ET), Mr Ramadorai further notes: "Unprecedented situations call for unprecedented responses. These are times of austerity and there are some immediate cost management remedies that we would like to put in place. Details of these will soon be shared with you."

The key cost management initiatives in the pipeline include ways to rationalise or consolidate TCS' infrastructureglobally to save costs. Other measures include saving on energy costs through efficiency programs and optimising on travel and communication costs. The TCS management is also re-examining its capex program to conserve cash in the current volatile environment. However, the company has no plans to modify its performance-linked variable payout practices to its over 1 lakh employees.

In response, the TCS spokesman wrote back: "In terms of cost management programmes, we are looking at ways to rationalise or consolidate infrastructure globally to save costs as well as other conservation initiatives like saving on energy costs through energy efficiency programs, optimising on travel/communications costs as well as ensuring that we use available technologies more effectively to drive costs lower on a sustained basis. "

Source: Economic Times


IT/ ITeS sector job seekers face pressure

Information technology (IT) employees and fresh graduates in Kolkata have started to see salary cuts and employee lay offs.

IT and ITeS companies wanted either experienced personnel or was focused on cost cutting measures.

A few of the IT companies have even put their Bengal plans on hold.

Although the financial turmoil has not yet prompted large-scale sackings in Salt Lake's sector V, the IT hub for Kolkata, the general notion is that trainee jobs have dried up.

A slowdown in hiring and pay-hike squeeze had been forecast by the IT industry association, Nasscom, confirming the worst fears of young professionals.

The industry is working very hard to improve utilisation of resources, which will also have an impact on the need for fresh manpower.

Last year, the manpower growth in IT was around 15 per cent and the headcount had crossed 2 million.

"The average growth in increment, too, will take a hit and come down from last year's 13 to 14 per cent to a single-digit figure," said Sangeeta Gupta, the vice-president of Nasscom.

The situation will compound problems for youngsters either passing out of colleges or planning to switch jobs.

The indefinite postponement of the joining dates of a number of fresh graduates from Jadavpur University and Bengal Engineering and Science University, Shibpur, is another indication of the tough days awaiting job aspirants.

For instance, Wipro Technologies, one of the largest IT companies operating in Kolkata, has asked engineering graduates to join its business process outsourcing (BPO) department instead of joining as project engineers.

As project engineers, the students were supposed to get Rs 2.75-3.25 lakh a year, while as a BPO employee, this has been reduced to Rs 1.2-1.6 lakh annually, the students said.

According to a student of JIS Engineering College, Kalyani, the nature of job is that of a "technical helpdesk engineer" instead of "project engineer" as promised earlier.

According to students, the company had given them offer letters to join as project engineers after campus interviews in 2007. They were promised jobs in February 2009 after they passed out of college.

Most companies operating in Kolkata are small and medium-size enterprises with less than 1,000 employees.

The city has only six big names in the IT arena at present - TCS, Wipro, IBM, Cognizant, Tech Mahindra and HSBC Electronic Data Processing (the back office arm of HSBC Bank).

TCS, IBM and Cognizant together account for more than 70 per cent of Kolkata's software exports.

According to Kalyan Kar, MD, Acclaris, one of the fastest growing mid-sized companies in Kolkata, increasing cost pressure will force companies to devise measures to deliver more with less people.

On the other hand, Satyam Computer Services, India's fourth largest software exporter, has categorically ruled out any investment in Kolkata till the government provides 'adequate' land to set up an IT SEZ.

In 2005, Satyam was allotted a 2.77 acre plot at the IT hub in Salt Lake for setting up a software development centre.


IT majors ask staff for help cutting costs

Having tried all the ways they can think of to cut costs, TCS and Infosys are now asking staff to come up with ideas of their own and put their employers ahead of themselves.

In an email to employees, TCS CEO and managing director S Ramadorai says, "At various times, we've taken decisions that are tough, but meant for the organisation's long-term benefit. These decisions need to be seen in light of the current unusual circumstances that we are working through. I realise I am asking you to put the organisation before yourself and asking you to go beyond the call of duty."

He added, "Unprecedented situations call for unprecedented responses. These are times of austerity and there are some immediate cost management remedies that we would like to put in place. Details of these will soon be shared with you."

While the company may not yet have shared these details with staff, it seems to have done so with the Economic Times.  The paper says that TCS is not looking to alter its performance-linked variable payout practices to its 100,000-plus employees. It wants to rationalise or consolidate the company's infrastructure globally to save costs. Other cost cutting measures also include optimum usage of energy, setting a maximum bar on travel and communication costs.

Meanwhile, Infosys, having increased work hours to 9:15 hours, has now put the onus of saving on its employees. CEO Kris Gopalakrishnan, has shot a mail to his employees, asking each one of them to save $10.

The mail reads, "If each one of us is able to identify a savings of even $10 - not just per day or per month, but $10 as a one-time effort from each one of us, that would translate to a saving of close to $1,000,000 - which is a substantial amount."

He urged employees to examine their work and look at opportunities to improve utilisation of resources and control expenditure. Given the backdrop of the global recession, Gopalakrishanan said the company has four main objectives - to increase the billability and utilisation of all employees around the globe,  to increase revenues and margins, to identify cost optimisation opportunities, and to improve the control over spend and optimise return on investment.

Source: Economic times


Pay us if you want a job, say IT firms

Some IT firms are demanding money from job applicants as a condition of recruitment. The companies claim the sum is intended to cover training costs.

One third-year master of computer application student told Business Standard that she was informed that she would have to pay $990 (Rs 50,000) for a summer placement .

Other students have been asked to pay $99 (Rs 5,000) as a non-refundable registration fee - for internships in which they will not be entitled to any stipend. Those who refuse are turned away.

According to analysts and HR consultants, this demand for money is not only unacceptable but also illegal. However, they say, economic conditions create scope for such exploitation.

College placement officers complained of such demands from two IT firms. They said that they would not let any of their students be subjected to such unjustified offers.

Monisha Advani, managing director of EmmayHR Services, pointed out that these claims are usually cost recovery steps related to training, special orientation programmes and exposure to overseas travel.

Source: Business standard


Wipro puts 9,800 freshers on hold

Reeling under the impact of global meltdown, Wipro Technologies Ltd has kept about 9,800 graduate engineers, hired from campuses last year, waiting to join the IT bellwether, a company official said.

"Of the total 13,500 campus offerings made across the country last year, we have taken 3,700 of them so far, while the remaining (9,800) have been told to wait for their turn to join," Wipro vice-president for talent acquisition Pradeep Bahirwani told reporters at a hurriedly called press conference.

Due to slowdown in the IT industry and tough business environment, Bahirwani said, the company had discontinued campus offerings this fiscal for the time being.

"We have made 8,000 campus offers across the country in about 200 engineering colleges, including IITs and NITs (National Institutes of Technologies) this year as against 13,500 last year," Bahirwani said.

The company's novel initiative to ask freshers hired for IT services to join BPO division by paying upfront Rs 75,000 for bond backfired in Kolkata, with the hired engineers protesting against such the move and taking up the matter with West Bengal IT Minister Debash Das on Monday.

"The option has been given in commensurate with our current requirements, which are more in BPO than in IT services, as technical support role requires engineering grads and not those from science or general stream. There is no compulsion or change in compensation," Bahirwani clarified.

Defending the offer to join the BPO division, the HR official said the decision was taken to give an opportunity to engineering graduates to get on work without further delay.

Wipro's global IT services business had 97,552 employees, including 16,500 in the BPO division till the second quarter (July-September) of this fiscal.


WNS not to venture into Indian markets

WNS Global Services is bucking the trend of IT-BPO companies looking at domestic markets to offset the negative impact of a global slump with a call to not participate in the Indian markets and keep its focus on exports, published media reports say.

A report in the Economic Times quotes group CEO Neeraj Bhargava as stating that the company would foray into APAC markets other than India besides looking to start a development centre in China.

The decision to stay away from Indian markets is fuelled by the fact that growth and margins are much better in the global market, Bhargava said adding that WNS Global would look at enhancing its business across the US and Europe before considering a growth strategy for the Asia-Pacific market.

Following reports of the global economic slowdown, Indian IT-BPO companies like Infosys, Genpact and Wipro have started seeking projects within the domestic market in an effort to diversify revenue streams besides cornering a share of the ever-growing market for outsourcing in India.

The newspaper quoted Bhargava as saying that WNS had evaluated domestic markets recently but decided to stay away due to the feeling that it was both immature as well as unattractive. With close to 85% of the domestic BPO market relates to voice-based call centre operations, the margins remain unattractive, he added.

As for offshore development centres, WNS already has one in Romania besides another one in Philippines through a joint venture. It is now looking to have a presence in China to service the APAC market in the none-too-distant future.


Satyam plans to send staff on sabbatical to trim costs

Satyam Computer Services
, the country's fourth-largest services exporter, is taking a cue from its rival Infosys to trim costs as the global slowdown could impact revenues.

The company is looking at sending its employees on a sabbatical, but will take a final decision depending on the third-quarter results. Satyam has already scaled down its hiring projections for the current fiscal to around 8,000-10,000 compared to 15,000 that it had earlier projected.

"We are looking at various options to reduce costs and sabbatical is one such option. We will be able to shift our employees to take up social activities relating to our own corporate social responsibility programmes. Employees can also look at working with NGOs during the time of sabbatical. But, they will have to compromise on their salary during sabbatical as the pay structure will be lower than what they are currently drawing," said SV Krishnan, global head (HR), Satyam Computer Services.

According to him, the firm will finalise a decision depending on its third-quarter result. "If the result is in line with our expectations, we may not adopt any drastic cost-cutting measures," he said.

Currently, Satyam employs 47,000 people in the IT services segment. Inclusive of the BPO arm, the overall headcount is around 53,000. "It is not a viable option to shift IT employees to the BPO subsidiary as it is engaged in specialised works," said Krishnan.

Infosys, Satyam's peer, had issued letters to its employees saying they could opt for a one-year sabbatical to engage themselves in philanthropic activities. Infosys had said the employees would continue to draw 50% of their salary during the sabbatical.

Though Infosys' move coincided with the global financial meltdown and likely slowdown in the growth rate of the IT industry, the firm said that the option would be entirely voluntary for employees.

Industry observers reckon programmes of this kind will help IT firms cut down their costs as their major market, the US, is facing recession. "Visibility from the US market is still not clear and firms are under pressure to cut costs. It has triggered IT firms to look at ways to trim costs," said Harit Shah, analyst (IT, telecom), Angel Broking.

At present, wage bill accounts for over 60% of Satyam's revenues. Belt-tightening measures could help the firm cushion the impact of the global economic meltdown on its profitability.

SV Krishnan had earlier told  that the company could take a relook at the guaranteed component of the variable pay given to its employees.

Source: Economic Times



IT growth to halve- Infosys CEO

India's Infosys Technologies Ltd CEO said he saw the technology sector growing 15 per cent in 2008/09, its chief executive said.

"Last year the IT industry grew more than 30 per cent, this year it is looking at somewhere in the region of 15 per cent. So it has slowed down," S Gopalakrishnan told reporters.

Infosys would hire the 25,000 people it has targeted for this year, but there would be no fresh recruitments beyond that, except in specific skills, he said

There were no plans to cut headcount, he said.

Infosys has seen delays in orders but there was no change in its third quarter guidance, he added.


Guj BPOs say 'work from home'

Going by the adage 'necessity is the mother of invention', business process outsourcing (BPO) knowledge process outsourcing (KPO) units in Gujarat keep finding unique ways to cut cost amidst economic slowdown. In order to reduce infrastructure costs and optimise on available resources, these units have been encouraging their employees to work from home or offer flexible working hours.

"Cost cutting measures are ubiquitous in these turbulent times. Therefore, BPOs and KPOs have been innovating in order to cut costs. Which is why options like working from home and flexible hours are being offered to employees. While this may not be possible for voice-based BPOs, the non-voice BPOs and KPOs have been looking at these options," said Nirav Shah, president of Gujarat Electronics and Softwares Industries Association (GESIA).

For instance, Contech BPO Services Pvt. Ltd. has been offering flexi-hours to its employees. It also plans to introduce home-based work projects once it takes up expansion of seats, said Rajan Vasa, chairman and managing director of Contech.

"By offering flexi-hours, we can optimise the existing resources and manage time as well as fulfill our commitments towards our clients. If and when needed, we may also opt for home-based projects in future when we will go for expansion of seats," he said.

The trend is already prevalent since sometime in US, where now almost 50 per cent of employees in BPOs and KPOs work from home. In India, the share of such employees working from home could go up to 30-40 per cent in the next 5-10 years.

Nonetheless, there are certain concerns raised over issues like privacy and security in some KPOs. However, the salaries do differ to some extent for employees working from home. If the company is not required to offer much of the infrastructure like PCs, internet and some softwares to the employees working from home, then they do receive some incentives in return.

The BPO/KPO industry in Gujarat had pegged a turnover of around Rs 1,000 crore in financial year 2007-08 and is expected to grow by another 10 per cent.

Source: Business Standard


Hi  dwarakesh

it is a good, and informative post..

keep posting....


Protest ends as Wipro goes ahead with hiring

A week long hiring drama came to an end, as Wipro announced that it will hire around 13,500 engineering graduates as planned earlier. The IT major, had faced scrutiny in West Bengal, after the company offered BPO jobs to students who were earlier hired in the IT segment.

After the protest, Wipro called for a press conference, where Pradeep Bahirwani, Vice President, Talent Acquisition, Wipro Technologies,  in a jiffy said, Of the total 13,500 campus offerings made across the country last year, we have taken 3,700 of them so far, while the remaining (9,800) have been told to wait for their turn to join,"

However, later Bahirwani said "There is an option for engineering graduates to join our BPO division as technical support engineers. The technical support role needs engineering graduates, and that the company would have to hire fresh engineers from outside, if it had not made this offer to campus recruits.

Also, mentioned that more than 95 per cent of the engineering graduates have already accepted the option of working in Wipro's BPO centre in Kolkata, and there will not be any change in the salary package for those opting to join Wipro BPO. These graduates will make anywhere between Rs 2.75 lakh and Rs 3.25 lakh per annum.


IT sheen leads to lesser no of Civ Ser aspirants

Growing job opportunities in IT and ITES sector has led to a decrease in the number of Civil Services aspirants, even as the general aptitude of those who were appearing for the tests were not upto the mark, a Union Public Service Commission (UPSC) member said.

The aspirants generally lacked in-depth knowledge, analytical and communications skills, N Balagurusamy, member, UPSC, told reporters, after inspecting the Civil Services Main Examination 2007, held in a city school.

"Most of them lacked things like in-depth knowledge of subjects, ability to logically analyse and solve problems and the most important communication skills".

"The communication skills are very weak and the overall quality of aspirants is not upto the level of our expectations," he said.

He also said that the growing employment opportunities in South India, especially in the field of IT and BPO, had resulted in diminishing number of civil services aspirants from the region.

This year in the country, 3.2 lakh persons had submitted applications for the exam. Around 1.2 lakh took the preliminary test, while only 9,300 appeared for main exams.

Stressing the need for higher education, he said students should be prepared for challenges like civil services at schools and colleges.

Last year 23 per cent of selected candidates were from engineering background while 15 per cent from medical background.

"They get through easily because of strong (educational) foundation," he added.

On the attrition rate in the services, he said that only about five per cent of them quit for various reasons, including offers from private sector.

Balagurusamy also found that not many aspirants knew there were 23 options in the civil services.

"There are all kinds of services available in the UPSC, for candidates from almost every background, ranging from medicine to engineering to economics," he said.

There were services such as Indian Audit and Accounts Service (IAAS), Indian Ordnance Factories Service(IOFS), Indian Railway Traffic Service(IRTS), Indian Defence Estates Service(IDES) and Indian Information Service(IIS) among others.

"Successful candidates generally prefer Indian Foreign Service(IFS), Indian Administrative Service (IAS) and Indian Police Service (IPS)," Balagurusamy, also former Vice-Chancellor of Anna University, said.


IT caught in slowdown web

Mumbai: The economic slowdown has brought about an array of worries for Indian IT players. As the budgeting season arrives, companies assume wait and watch situation to see what their international clients will decide. Moreover, only players with strong cash flows will be able to sustain the onslaught of the slowdown. Others will have to cut costs drastically or borrow.

Industry analysts feel this year, due to the economic downturn, the budgeting for IT spend might get delayed by a couple of months. There will definitely be price revisions. Already CLSA has mentions that it expects a 4% downward revision in Infosys's billing rates.

As far as spending for new developments and new projects are concerned, the companies might come out with short-term budgeting and review and revise it over time depending on the situation.

As much as 70% of budgeting done by the companies is on the non-discretionary front, and the rest 30% is done for new projects and developments. "The budgeting for non-discretionary stuff is likely not to get affected. However, the IT sector will definitely get affected as far as the new project developments are concerned," commented Ganesh Natarajan, chairman, Nasscom & global CEO, Zensar Technologies.

Discretionary budgets however, will be cut drastically. Abhiram Eleswarapu of BNP Paribas Securities India mentions in his report, "We expect Indian players will face heavy discretionary spending cuts in FY10 as clients tighten their purse strings given our projections for an impending recession. Indian companies need to quickly broaden their client focus to sustain growth, which we see as unlikely."

Hence, companies could well take the short term budget route. "During the current market situation, it is highly probable that the clients might come out with short term budgets, and review and revise their spending depending on the situation," Natarajan added.

The Indian IT companies have already seen new projects getting delayed by the clients during last 4-5 months. However, as most industry experts feel that the economic downturn will go on for the next 6-9 months, the short term budgeting, if happens, will definitely put the companies in a difficult situation. Thus, it is predicted that this year the IT industry will grow at the of 21%-24%, which is 5%-6% slower as compared to last year's growth rate, which was around 29%.


IT cos with BPO arms to steal the show

At a time when the global financial meltdown is staring the Indian IT-BPO industries in the face, a market research survey suggests that leading software services firms having back-office operations are likely to reap the rewards in the BPO market.

The survey report from research firm Datamonitor says that companies like TCS and Cognizant accounted for almost 80 per cent of the total value of large BPO contacts awarded in the last 12 months with nearly 55 per cent of all big BPO deals being signed by IT companies with BPO arms.

"While the BPO players did account for 44.7% of all announced deals, their cumulative contract value reflects only 19.5% of overall deal value," said Vamshi Krishna Mokshagundam, analyst with Datamonitor India adding that "BPO services are being increasingly signed on as part of a bigger IT services contract."

The largest BPO deal in recent times came from Citigroup which sold its BPO arm to TCS for a whopping 2.5 billion dollars. The deal is noteworthy from the point that a multi-billion dollar BPO deal went to an IT services player and also that TCS was keen on acquiring the asset despite questions surrounding Citigroup's own financial stability, says the research firm in a press statement.

Cognizant Technology Solutions, a healthcare and life science specialist, picked up a 95 million dollar deal for clinical data management from Astra Zeneca, in what is seen as one of the biggest publicly announced deal in the KPO industry.

The revenue data also tells its own tale with Infosys growing its IT services revenue from 931.5 million dollars to 1101 million dollars between October-September 2007-08 while its BPO revenues grew from 53 million to 72 million dollars in the same period, which was almost double the growth in percentage terms over the IT growth.


Infosys CEO passes on savings mantra to staff

A dollar saved is a dollar earned seems to be the mantra of success shared by Infosys Technologies CEO Krish Gopalakrishnan with his employees as the software major has asked each member of its staff to individually cut costs by ten dollars.

A news report published in the Economic Times said Gopalakrishnan made this point in an internal circular to all employees asking them to identify a savings of ten dollars as a one time effort which would translate to a million dollars across the company.

"I urge each one of you as a key stakeholder of the company's success, to examine your work environment and look at opportunities that will optimize utilization and control expenditure. What may appear to be an insignificant saving at the ground level, may well add up to substantial savings when aggregated at the regional or global level," he said.

Pointing out that the recession could last for a longer period than initially imagined, the Infosys CEO said this necessitates a re-evaluation of corporate priorities and setting up of fiscally responsible measures that will ensure sustainability for the next 12-18 months.

The company has listed out four key objectives that include increasing billings and utilization of employees, enhancing revenues and margins, identifying cost reduction measures and controlling expenditure and optimizing return on investment.


Offshoring to hit IT biggies

Top Indian tech firms such as TCS, Wipro, Satyam and HCL will see their earnings before interest, taxes, depreciation and amortisation (EBITDA) margins, a measure of operating profit--plunge below 20 per cent over the next three years, as these companies move more information technology projects to India, and align their operations with rising wages.

Leading outsourcing customers such as GE, Royal Bank of Scotland and Bank of America plan to increase their offshore outsourcing in order to lower their cost of managing IT in the US and UK, where billing rates are more than twice of what can be achieved by sending work to offshore locations such as India.

HCL Technologies is expected to see its EBITDA decline by half from 22.2 per cent in 2008 to 11.2 per cent in 2011, country's biggest software firm TCS could see its margins go down from 26 per cent last year to 18.2 per cent over next three years, according to Anand Rathi Research.

Country's third biggest tech firm Wipro is also expected to see its EBITDA decline from around 20.1 per cent last year to 13.5 per cent by 2011, the brokerage firm said.

Infosys is expected to see its EBITDA decline from 31.4 per cent to 23.6 per cent by 2011. A large proportion of Indian tech firms' costs are rupee-denominated, and at a time when the revenue growth (primarily in US Dollar) is expected to be lower, their rupee costs will not see any significant decline. Moreover, the rising wage costs are also expected to impact the margins.

In their November report, Anand Rathi analysts Tarun Sisodia and Naushil Shah said that while revenues for the top tech firms will grow at 15 per cent during next three years, "the impact on EBITDA is expected to be more severe just 2 per cent growth."


Vietnam aims to fix struggling software industry

Vietnam has held a comprehensive national workshop on the state of the country's nascent IT sector.

Participants highlighted some of the shortcomings currently plaguing the industry, including a lack of human resources, poor communication skills, high telecom service charges and a serious shortage of qualified managers.

Professor John Vu, chief engineer of the Boeing Group IT centre, recommended that Vietnam promote potential IT projects based on ability and skill, rather than focusing on the bottom line, or low-cost factor.

Dr Le Hoang Minh suggested that the software industry would benefit from the creation of government investment funds. The director of the Software Technology and Digital Content Institute also emphasised that software companies had yet to receive financial support from the state for "adventure investment".

IT Agency chief Dr Nguyen Anh Tuan explained that Vietnam's policy on technology remained a "combination of the strategy of protecting domestic industries until they are eligible for competition". However, Nguyen noted that after joining the World Trade Organization, trade barriers and the majority of protectionist polices were lifted. As such, local businesses were unable to directly compete with multinational groups in local and international markets.

Despite these difficulties, Vietnam has still managed to attract the attention of Japanese IT corporations seeking a potential outsourcing hub. The Asian island currently shifts 17 per cent of its outsourcing projects to Vietnam, generating approximately 10-15 billion ($101-152 million) per year. Hoang Le Minh, a high-ranking government official, confirmed that the country planned to increase its outsourcing capabilities.

In addition, a number of Taiwanese PC firms have announced plans to establish a presence in the country, including Compal, Hon Hai Precision and Wistron Corp. International companies such as Canon, Sun and BT Frontline have also recently expanded their presence in the country.


US shed 1.2 million jobs in last three months

Figures released by the US Labor Department showed that 533,000  people were laid off in November, bringing the total of jobs lost in the last three months to over a million. The figures are the highest for over 30 years.

The job losses were large and widespread over a number of major industry sectors, and the unemployment rate now stands at 6.7 per cent, the Labor Department said.

Job losses over the last three months have averaged at 419,000 per month, and two thirds of the job losses were in service providing sector. In the first eight months of 2008, job losses were mostly in the construction and manufacturing sectors.

Retail trade employment fell by 91,000 in November and in total 10.3 million people were unemployed, with 2.2 million of the unemployed being out of work for 27 weeks or more.

US secretary of Labor Elaine Chao had this to say about the figures: "Today's report underscores the urgent need to stabilise financial markets, ensure access to credit and create a positive environment for job creation."


US job losses mount as economic picture worsens

Record numbers of homeowners are falling behind on mortgage payments and the U.S. economy is losing jobs at an alarming rate with companies big and small slashing their work force.

A half-million American jobs disappeared month, the worst mass layoffs in more than three decades, as the nation spiraled downward in what could be the hardest hard times since the Great Depression.

Bush administration officials said Friday night that the White House is considering telling Congress as early as next week that it wants to tap the unused $350 billion of the financial industry bailout. It was not immediately clear how the administration might use the money.

General Motors, one of the Big Three automakers that went to Congress this week for a second time with hat in hand, announced it was cutting even more jobs.

"The economy is in a free fall," said Richard Yamarone of Argus Research. "It is as if someone flicked off the switch on hiring."

Despite the gloom, investors found a silver lining, betting that so much bad news would force fresh government action to revive the foundering economy. The Dow Jones industrial rose 259 points.

But economists, staring at 533,000 lost jobs, were anything but hopeful. Since the start of the recession last December, the economy has shed 1.9 million jobs, and the number of unemployed people has increased by 2.7 million -- to 10.3 million now out of work.

Some analysts predict 3 million more jobs will be lost between now and the spring of 2010 -- and that the once-humming U.S. economy could stagger backward at a shocking 6 percent rate for the current three-month quarter.

"It's a mess," said Mark Zandi, chief economist at Moody's "Businesses, battening down the hatches, are concerned about their survival and are cutting workers."

President-elect Barack Obama said the crisis "is likely to get worse before it gets better," and no one was going to argue that point. Economists predicted the unemployment rate, which rose to a 15-year high of 6.7 percent in November, could soar as high as 10 percent before skittish employers begin hiring again.

The jobless rate would have bolted to 7 percent for the month if not for the exodus of 422,000 people from the work force for any number of reasons -- going back to school, retiring or simply abandoning job searches out of frustration. When people stop looking, they're no longer counted in the unemployment rate.

The rate was at 4.7 percent just one year ago, 6.5 percent in October.

Employment shrank in virtually every part of the economy -- factories, construction companies, financial firms, accounting and bookkeeping, architectural and engineering firms, hotels and motels, food services, retailers, temporary help, transportation, publishing, janitorial and building maintenance, and even waste management. The few fields spared included education, health care and government.

The United States -- already in recession for a year, may not be out of it until the spring of 2010 -- making for the longest downturn since the Great Depression of the 1930s, economists are now saying. Recessions in the mid-1970s and early 1980s last 16 months.

Unemployment peaked at 10.8 percent in 1982, terrible but still a far cry from the Depression, when roughly one in four Americans were out of work.

That said, more pain is certainly in store. Fresh evidence:

A record one in 10 American homeowners with a mortgage was either at least a month behind on payments or in foreclosure at the end of September, the Mortgage Bankers Association reported.

General Motors, already pleading with Congress for billions of dollars to survive the month, said it would lay off an additional 2,000 workers as it cuts shifts at three car factories starting in February due to slowing demand for GM cars.

President George W. Bush, who used the word "recession" for the first time to describe the economy's state, pledged Friday to explore more efforts to ease housing, credit and financial stresses.

"There is still more work to do," Bush said. "My administration is committed to ensuring that our economy succeeds."

President-elect Obama said the dismal job news underscored the need for forceful action, even as he warned that the pain could not be quickly relieved.

Employers are slashing costs as they cope with sagging sales in the U.S. and in other countries, which are struggling with their own economic troubles.

In recent days, AT&T Inc., DuPont, JPMorgan Chase & Co., as well as jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., and mining company Freeport-McMoRan Copper & Gold Inc. all have announced layoffs.

Tom Solso, chief executive of Columbus, Ind.-based manufacturer Cummins Inc., said Friday the company planned to cut 500 jobs, or about 3.5 percent of its work force despite other cost-cutting moves such as temporarily shutting down plants, shortening work weeks and extending holiday shutdowns.

Fighting for survival, the chiefs of Chrysler LLC, General Motors Corp. and Ford Motor Co. returned to Capitol Hill Friday to again ask lawmakers for as much as $34 billion in emergency aid.

Workers with jobs did see modest wage gains in November. Average hourly earnings rose to $18.30, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven't stretched that far because of high prices for energy, food and other items.

Federal Reserve Chairman Ben Bernanke is now expected ratchet down a key interest rate -- near a historic low of 1 percent -- by at least a half-percentage point on Dec. 16 in a bid to breathe life into the moribund economy. Bernanke is exploring other economic revival options and wants the government to step up efforts to curb home foreclosures.

Treasury Secretary Henry Paulson, whose department oversees the $700 billion financial bailout program, also is weighing new initiatives.

Obama, who takes office on Jan. 20, has called for a massive economic recovery bill to generate 2.5 million jobs over his first two years in office. House Speaker Nancy Pelosi, D-Calif., has vowed to have a package ready on Inauguration Day for Obama's signature.


US auto crash likely to hit Indian IT firms

The problems facing the US automobile industry as a result of the meltdown of US banks will have an impact on the growth of some Indian IT companies, say analysts.

According to the analysts, firms such as Satyam Computer Services, TCS, Wipro and Infosys could be hit by delayed payments and a freeze in contracts as their major customers in the auto sector face the threat of bankruptcy.

The top three US automakers - General Motors (GM), Ford Motor and Chrysler - are seeking a bailout from the US government. Even if they get it, they will have to bring down their IT expenses by more than $1.5 billion a year. And future business proposals are likely to come with demands for price cuts, which IT companies will be forced to go along with, suggest analysts.

Gartner VP in the advisory service manufacturing group Thilo Koslowski said, "To cut costs, auto companies would shrink in size to trim their operations. Some of them will shut down a few plants. This means reduction in operational IT spends." Companies are also likely to curb expenditure on new IT initiatives, referred as discretionary spends.

According to Edelweiss Capital's IT analyst Viju George, Satyam Computers will be worst hit by the slackening on IT projects from the auto industry, as it earns five to six per cent of its revenue from the automobile sector, providing services to GM and Ford Motors. Wipro will experience a minimal effect, since its dependence on the auto sector is modest, having GM as its only major client. TCS's exposure to the US auto market is also limited, with just Chrysler as its client.

Infosys, however is likely to feel the pain, as a good portion of incremental deals won by Infosys in the past seven or eight quarters have been in manufacturing.


HR bosses prefer to quit than fire

As corporate India lays off staff in a slowing economy, top human resources (HR) executives at many companies are switching jobs, some of them to avoid the unpleasant task of sacking workers. This, even as a few companies are on the lookout for HR professionals with a skill particularly useful in tough economic times: the ability to fire employees while still keeping the morale of the organisation high.

"Either you stay at a firm and carry out the dirty job of sacking people and then, wait for your own turn, or move to a safe place," said the HR head of large multinational company, on condition of anonymity. Vibhav Dhawan, managing partner of Positive Moves Consulting, said several organisations are evaluating the effectiveness of their current HR leadership in coping with the economic downturn.

"During a downturn, the demand for high-quality, talented HR leaders sees a significant spurt because of the crucial crisis management role that HR has to play, either in the form of delivering bad news to employees or keeping the workforce productively motivated and engaged despite the stress at the workplace," he said.

Uday Chawla, a partner at executive search company Transearch, says three large companies have given him the mandate to look for new HR heads. Another executive with a prominent search firm, reluctant to come on record, told ET that he has a similar mandate from four big companies. "This is the first time that I am handling the mandate for four HR chiefs at a time."

In some cases, former HR heads have just got back their jobs, replacing the incumbent: Lupin's Diwakar Kaza returned after Rajan Dutta quit a few months ago and Ranbaxy's Udai Upendra made a comeback following the exit of Bhagwat Yagnik.

Some are making the move simply in search of greener pastures. N Balachandar, who quit as vice-president of GE Money Asia in Tokyo a few months ago, is now joining a pharmaceutical company. People familiar with the development say Mr Balachandar resigned because his workload had come down. Mr Balachandar, though, says his decision was only influenced by his wish to return to India.

Amitabh Ganguly of Delhi-based realty firm Ansal Properties and Infrastructure, which cut workforce by nearly a tenth, quit a few weeks ago to join a rival property firm. ICICI Prudential HR head Vasant Sanzgiri has left the financial services sector to join a brick-and-mortar enterprise.


Employers plan to slow hiring further: Manpower

Employers globally expect to slow their hiring in the three months to March, a quarterly survey by Manpower showed, adding to the pain from the financial crisis that has already put much of the rich world into recession.

The staffing firm's quarterly survey of over 71,000 firms in 33 economies--coming a few days after a bleak US jobs report--showed employers
in 30 of them expect weaker recruitment, noticeably in the Asia-Pacific region.

"The vast majority of employers are telling us that they will take a 'wait and see' approach before hiring or further reducing staff," Jeffrey Joerres, chairman of Manpower, said in a report.

"Unless they see more positive economic signals ... it will be a rougher road for job seekers." Employers in all but three economies surveyed--Canada, the United States and Switzerland--expect to slow the pace of hiring from the final quarter this year, Manpower said.

Singapore and Taiwan were among the 21 economies that saw employers reporting the weakest hiring plans in the survey's history, with those planning to job cuts outnumbering those expecting jobs to increase.

The seasonally adjusted net employment outlook index--which measures the gap between employers who plan to add jobs and those who expect to cut them--showed negative readings in those economies, as well as in Britain, France, Italy, Spain and Ireland.

The US net employment outlook was up one point at 10, marking the first increase in five quarters, but it was down from 17 a year ago, illustrating the US job market slowdown.

The Labor Department said on Friday US employers axed 533,000 jobs from payrolls in November, the most in 34 years, as the year-old recession hammered the economy, and the unemployment rate hit 6.7 per cent, the highest since 1993.

Outlooks in 24 other economies including Japan also declined from the same quarter a year before.


Tech firms rooted to fixed contracts

Leading IT companies are moving in to shore up their bottom line against further losses of contracts and blunt the effect of the plummeting rupee by increasing their share of fixed contracts as opposed to man-hour based billing.

Industry sources said that while man-hour based billing has been resorted to by Tier-II and -III outsourcing companies into the third quarter of the current financial year, the larger players are chasing fixed contracts even more in the face of deteriorating global economic conditions.

TCS, Wipro and Infosys have foreseen uncertainties in the American markets, which fetches roughly half of their revenues, much of it from banking, financial and insurance support services. Infosys Chief Executive Officer Kris Gopalakrishnan reportedly expects the economic slowdown to last between 12-18 months.

Infosys Chief Operating Officer and member of the Board, S D Shibulal, noted that fixed contracts are desirable both from a client's perspective as well as for the company. "For the clients, in these times of cost and competitiveness pressures, fixed-price contracts allow them to firm up their commitments and help bring in predictability into their IT spends....For us, it allows us to extract internal efficiencies and share the benefits with the clients without impacting the rates."

Manish Dugar, chief financial officer of Wipro Technologies, said that as a concept, fixed priced contracts provide the comfort of a fixed fee for defined outcome. "To Wipro, it provides an ability to optimise delivery and resources," he said.

Noting that there is no perfect mix between fixed- contract versus per man-hour billing, Shibulal said, "Ability to make a project fixed price depends on the type of project, maturity of the service, concreteness of the requirements as well as the strength of relationships."

Over the last five quarters, Wipro has improved its proportion of revenues from fixed-price contracts from 24.6 per cent in the first quarter of 2007-08 to 31.6 per cent in the second quarter of 2008-09.

Wipro currently has 31.6 per cent of its revenues coming from fixed-price contracts, and sees significant headroom to increase it further, Dugar said. He added that the Bangalore-based outsourcing company stands by its guidance for the third quarter of the current financial year based on exchange rates prevailing at the end of the September quarter.

The current downturn is intensifying the search for non-linear growth, say industry watchers. Leading IT companies have deepened their focus on emerging industries like the music, media and entertainment, which hold forth new growth opportunities in digitisation and archiving, print publishing, pre-press services, online information services and digital advertising. Products will be another growth lever.

Dugar said that Wipro's system integration and total outsourcing contracts in global markets involve a good proportion of the company's products business. "Products are central to our overall growth strategy and not necessarily driven by economic environment," he said.

In any case, the US financial services sector has been temporarily knocked out as the engine of growth for Indian IT services companies. But the impending consolidation in this sector will throw up ample process re-engineering opportunities. Herein lies the big opportunity for India to tap in the last two quarters of FY 2009, industry experts said.


US clients renegotiate outsourcing deals, seek discount

The US recession may cost Indian outsourcing companies dearly. Many US companies who have outsourcing contracts with Indian partners are looking at renegotiating rate cuts. Companies like Best Buy, Visa and Conseco are seeking rate cuts anywhere in the range of 3-7 % says a report in the Economic Times.

"New contracts are being doled out at lower rates, along with discounts offered for the existing projects," the paper quoted an expert on the condition of anonymity. Also, new projects are being postponed for at least one year as customers look to reduce their operational costs. In some instances, customers are asking vendors to do more with same budget by renegotiating the scope of service level agreements.

Infosys chief executive S Gopalakrishnan also had admitted that customers were asking for discounts while offering more work. In some cases, outsourcing customers are also looking at vendor consolidation and letting fewer vendors do more work at lower rates.

While TCS works with Best Buy and Visa, Infosys signed a five year outsourcing agreement with the insurance firm Conseco in April this year. Conseco has shelved most of its new IT projects planned this year, Infosys' prospects could be hit depending upon its exposure to such projects said the paper. Wipro, reportedly has an outsourcing contract with Best Buy, but a company official declined to comment.


Cognizant bags $100 mn US contract

Cognizant Technology Solutions, which competes with Indian offshore biggies such as TCS, Infosys and Wipro, continues to win new contracts from its existing customers, including Astrazeneca and Merck, even as the industry prepares to cope with lower information technology spend in top markets of the US and Europe.

According to sources, Cognizant has won a $50-100 million contract from one of its existing customers last month, which is among the top five American pharma companies. "This initiative involves new Oracle Fusion work, both application development and maintenance, and is described as 'a big engagement', with an estimated 200-400 employees working on the project that will start billing the second week of December," said James Friedman, an analyst at Susquehanna International Group (SIG).

The company has also won $100-million (total contract value) deals from Deutsche Telekom and Healthnet during the past few weeks.

During the past few quarters, Cognizant has won 5-6 deals every quarter, with each contributing up to $50 million in annualised revenues. "In the past few months, Cognizant hired away a number of group managers from competitors. Some of the deal flow may be attributed to these new employees, many of whom brought clients with them," Mr Friedman added in his report.

Cognizant, which serves leading drugmakers such as Astrazeneca, Merck and Pfizer, could not offer specific comments about whether the company has won any new contract with one of them. However, when contacted, an Astrazeneca spokesperson said the company has recently partnered with Cognizant.

According to Gartner, none of the Indian offshore players are among the top 15 service providers in Germany in terms of market share. Cognizant partnered with T-Systems, which has a market share of 16%, ahead of rivals IBM and Accenture with 6% and 3% of the market respectively.


Recession in US may send more projects to India

A survey by the Offshoring Research Network (ORN) in collaboration with Duke University and research firm Price waterhouse Coopers found that the economic recession in the US could result in more projects being sent to India in order to cut down operational costs.

In the survey, nearly 40 of the 100 companies interviewed admitted that they would pressurise service providers to offer better contract terms to bring down costs. Some of the companies wanted the vendors to shoulder the upfront costs of contracts. Companies are even demanding longer project implementation periods.

The cost of acquiring new businesses is expected to increase with cutomers demanding more investment from the vendors. According to the study, captive operations of American companies are likely to focus on niche projects in addition to managing third party relationships on behalf of their parent organizations in India. Captives will have increased involvement with costs, and are likely to turn away from work, which can be outsourced to third party vendors.

Companies considered increased efficiency and cost reduction as top priorities. Nearly 12 per cent of respondents considered moving their captive operations to a provider or have already done so, according to the study.


Credit Suisse to reduce outsourcing to Wipro

Credit Suisse, the global bank that recently announced layoffs of more than 5000 people, may also be cutting down outsourced work to Wipro, published media reports have indicated.

Wipro has about 1,400 people working on Credit Suisse projects and if work comes down several of these consultants may have to moved or benched.

The bank, which ranks among Wipro's top-10 clients, could go in for another round of layoffs over the next few days. Any reduction in work would adversely impact the Indian tech giant's revenues as well.

Another Indian IT company that could be impacted by the Credit Suisse meltdown is Cognizant Technology Services for whom the bank is their second largest client in the financial services vertical after JP MorganChase.

In addition to the exposure to Indian IT companies, Credit Suisse also has a captive BPO facility in Pune that employs 5000 people. The article claimed that when the last round of layoffs was announced, the bank's Asia-Pacific CEO Kai Nargolwala was traveling in India.


IT slowdown will ease off next year

Global research firm Forrester says the tech slowdown will continue to haunt firms up to the third quarter of 2009. IT consulting and systems integration services will stagnate in 2009, while IT outsourcing will grow at a moderate pace in 2009 and 2010.

According to a new report, companies will turn to vendors that can help cut costs in the prevailing slowdown period, but growth in outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller scale outsourcing deals.

The research firm claims that even though the US market outlook is bad, it is better than the 2001-02 technology downturn. Andrew Bartels, the report's author and a vice-president of Forrester Research, said, "This time, computer equipment vendors will see declines of five to ten per cent  in US revenues on a quarterly basis, not the 20 per cent to 25 per cent drops of the early 2000s."

Assuming a decline in US GDP in the third quarter of 2008, the research firm has projected a growth of 1.6 per cent in IT spend for 2009. The slide will start to accelerate in the fourth quarter of 2008 and first half of 2009, and will start to show a weak recovery by the second half of 2009.

Federal government, primary production, consumer products and pharmaceuticals, chemicals and oil and gas, public services like healthcare and education, insurance, utilities and telecom will be among the industries that will provide business opportunities to IT vendors in 2009.

On the other hand, IT goods and services including financial services, consumer durables, construction and housing, retail, and industrial products  including the auto industry will cut down expenses on IT purchases.

The financial service industry, which has already cut down IT purchases by three per cent in 2008, is most likely to increase it by one more per cent in 2009. The construction industry is expected to cut purchases back by two per cent in 2008 and 2009. The retail industry will show no growth in IT purchases in 2009 and IT buying by industrial manufacturing will slow to one per cent in 2009, notes the report.

The report sees high-tech products, wholesale trade, media and entertainment, transportation and logistics to have mixed IT buying prospects.


Infy reins in salary hikes

After trying everything else to cut costs, Infosys is now looking to put a brake on mighty salary hikes, and will offer only single-digit rises for the next financial year.

By making this move, the company is following in the foosteps of its peers, including TCS (Tata Consultancy Services) and Wipro, which have indicated that they will either defer salary hikes or restrict them to seven or eight per cent in order to cope with hard times.

Sandeep Mahindroo, senior manager of investor relations with Infosys, confirmed the move at Credit Suisse's annual technology conference. He said, "Wage inflation will be lower in the coming fiscal and will be in single digits. It will be difficult to predict whether it will be in low or high single digits", reports Economic Times.

Mahindroo said that pressures on the wage bill will fall in the coming fiscal year, with Wipro implementing a seven-to-eight per cent increase in salaries for its offshore employees during the second quarter. TCS has already indicated that hikes will be in single digits - or even zero - during the next fiscal year, noted investment bank Cowen and Co.

Not long ago, Infosys was proud to be offering greater wage increases than TCS and Wipro, with the salary of the top three Infy men rising by 49 per cent in 2007-08, compared to TCS's and Wipro's 19 per cent and 18 per cent respectively. Now, the company seems a little less keen to sound the trumpet.

Before the recession, the Indian IT services industry traditionally offered wage hikes of between 12 and15 per cent.


Wipro denies making lay-offs

Wipro Technologies
has laid off a number of workers without notice, according to a source close to the company. Employees said they were suddenly asked to leave.

The move was especially upsetting for staff who were recently awarded quality achievements. Termination has become more unpredictable, with one employee dismissed on "person to person behavioural front" - believed to be a miscommunication between the worker and a senior official long before. Another commented, "I have no regrets, since getting laid-off doesn't actually count back my fault."

One employee still within the company said, "We don't protest any amount of job, or any kind of harsh behaviour these days, since all we strive is to survive in the organisation."


Job insecurity becomes the norm

As the economic slowdown bites, IT and ITES companies are adopting a number of techniques to keep manpower low.

The exams are being conducted as a selection process, with a second level of exams, more demanding than the first, being included to cut down the number of qualifying applicants.

Performance targets are also being tightened. An associate executive of a software company said, "Job cuts at high level are being undertaken on performance basis." She said that the activities of employees are being "watched."

Employees at all levels are vulnerable. While some people feel that holding a high position means greater security, others are of the opinion that high officials are being targeted as they draw thicker salaries.

There's a collective view that freshers are more vulnerable to losing their job. One manager with a global financial services firm said that people on the bench are also likely to suffer, as organisations fail to receive the expected number of projects due to the reluctance of companies to outsource their business.

One airline manager said that the economic scenario left most young people in unstable jobs and feeling insecure.


Economic recession 'won't last' says optimistic NASSCOM

Following the global meltdown, NASSCOM has hinted at the possibility of lowering the Indian IT-ITES growth forecast of 21-24 per cent for 2008-09.

On the sidelines of 'TiE Entrepreneurial Summit 2008 (TES 2008)', President of NASSCOM, Som Mittal said, 'There would be some resetting of expectations. But it's all for the short-term. We believe that it could be 4-6 quarters of uncertainty that will prevail. I see a lot more clarity coming from the first quarter (April-June 2009).' On revisiting the growth forecast, Mittal said, 'We are getting there; we are picking up information and analysing it. First half (of 2008-09) has been reasonably good. We had a 24 per cent growth in the first six months. Second half should be slower than the first half. That's very clear.' He indicated that the NASSCOM would come out with a clear view vis-a-vis the growth forecast in Junuary first week, saying 'it may happen before the quarterly results start coming out.'

The wages in IT-ITES sector are likely to get moderate next year. With mixed results, continuing growth in some areas are still visible as customers are under pressure. Mittal said that net additions (of employees in the IT-ITeS sector) in 2008-09 would be significantly lower than the previous year.


IT job-seekers find the going tough

For those seeking jobs in the information technology industry, these are the testing times. The end of the year, usually marked by sluggish recruitment, is proving to be dismal owing to the economic downturn.

"There are no jobs," says Sathya Krishnan of Saaki and Argus Consulting, an HR management and consulting firm. "Companies have stopped hiring. This is true for both products and services," she says. Though large companies have not totally stopped recruitment, it is only 20 per cent of what they used to do.

The figures from a job website echo her words: job postings have declined by 10-15 per cent in the past few months across industries.

Gopal*, a domain expert in the financial sector, who recently shifted from an IT major to another, says many of his colleagues, who resigned with him, were not as lucky. "They are not getting the right placement. Either the pay package is less or they have to accept a different job profile."

According to the data from a job website, resumes from banking and financial services have increased by 15-20 per cent for the August-November period, compared with last year. This increase translates to choice-pickings for companies.

Bhaskar Das, vice-president, Human Resources, Cognizant, says: "While employee referrals continue to be the mainstay of Cognizant's recruiting in the lateral market, one visible trend in the last few months is that the richness of resumes in job portals is getting better. With increased uncertainty in the marketplace, we are seeing prospective candidates demonstrate a natural affinity towards larger and growth-oriented companies."

Kaustubh Dhavse, Deputy Director, ICT Practice, Frost & Sullivan, South Asia & Middle East, says recruitment will remain very tight. "The whole of 2008 has been tough for the IT industry. First, it was the rupee appreciation, then the sub-prime crisis and now the global financial meltdown. This has resulted in both challenges and opportunities, and our IT/ITES sector is mature and resilient enough to handle this phase. Companies will continue to hire, but now the model will be non-linear. Hence, more focus on employee utilisation."


Infosys says IT to see slow growth for a while

Infosys Technologies, India's second largest software services exporter, sees the Indian IT industry going through a slow phase of growth for some time, its chief executive said on Wednesday.

"You have still to see the end of bad news," Kris Gopalakrishnan told reporters on the sidelines of a technology conference. "That is why the uncertainty about when the recovery will start."

Industry body the National Association of Software and Service Companies has said this week that India's export-focused software sector faces an uncertain four to six quarters due to the deepening global turmoil which has dampened technology spending.

With an army of English-speaking workers and relatively cheap wages, technology exporters like Infosys and sector leader Tata Consultancy Services have thrived on deals from overseas clients -- the majority of which are in the United States.

The party ended last year when Wall Street banks, some of whom are major clients of Indian IT companies, began to announce staggering write-downs related to the subprime mortgage crisis, and the wider US economy headed towards recession.


Increments at Infosys tumble into single figures

Make no mistake, the good times for IT and BPO industry has gone and the impact of the global economic meltdown is now being felt by the employees in the form of lower increments.

A report in the Economic Times suggested that India's second largest IT company Infosys would be handing out single digit salary hikes for the next financial year and in doing so would be joining its peers like Wipro and TCS.

The article said that IT companies were either deferring the salary hikes or looking at dishing out anything between 7-9 per cent increments as lower demand for services from the US and Europe eroded their bottom-lines.

The newspaper quoted Sandeep Mahindroo, Senior Manager (Investor Relations) at Infosys to say that wage inflation would be lower in the coming fiscal and will be in single digits. It will also be difficult to predict whether it will be in low or high single digits, he said at the annual conference organized by Credit Suisse.

While this means pressure from salary costs would reduce in the next year, there is also a feeling that attrition rates would come down as uncertainty abounds in the entire IT and BPO industries.

In the past the IT services industry has doled out annual hikes in the range of 13-15 per cent which often meant that the mid-tier and smaller IT companies have often found it difficult to find talent at prices that are affordable from their perspective.


Indian IT industry to recover in 12 months: NASSCOM chief

In spite of a continuing recessionary trend globally, the Indian IT industry is expected to recover in another 12 months. According to the National Association of Software and Service Companies (NASSCOM), the industry will witness slower growth in the third and fourth quarter of financial year 2008-09.

"The Indian IT industry may have suffered from the recessionary trends but it will recover in another 12 months. Moreover, after 12 months, the Indian IT industry will focus more on domestic market and less on international markets," said Ganesh Natarajan, chairman of NASSCOM and global chief executive officer of Zensar Technologies Limited to reporters during the International Entrepreneurship Forum at Mudra Institute of Communications, Ahmedabad (MICA).

Brushing aside the recessionary trends as sentimental and not actual, Natarajan said that the IT industry will still grow though at a lesser pace.

"Recession times help the entrepreneurial spirit to flourish unobtrusively. This is not the time for sentimentalism. The future of business beckons to collaborative techniques and networking of enterprises," said Natarajan.

As compared to India, Natarajan said that the UK and other European markets will recover in 2-3 years while the US will take another 12-18 months to emerge from the current gloomy conditions.

Among these countries, Japan is the worst hit since it is a big client of Indian and the US IT industry.

Unlike a growth rate of 24 per cent last year, the Indian IT industry will witness a lesser growth rate while the GDP will continue to grow at around six per cent, he added.

When asked about lay offs in the industry, Natarajan said that around one lak job commitments have already been made by IT companies in India during campus interviews for 2009.

Also, additional 50,000 people will be recruited during the next year.

In 2008, the industry recruited around two lakh people, said Natarajan.


Firms ask applicants to pay for a job

Once upon a time, companies paid you a bonus for joining. Now, they expect you to pay them.

With the economic recession as the excuse, start ups and small IT firms are telling potential recruits, "pay us and get the job. Your payment will be returned if you continue through the fixed period  - but if we shut our operations, kiss goodbye to your money."

One job aspirant, fresh out of engineering college in Bengal, came to the IT capital, Bangalore, a few years back. After rejecting a few offers, he was unlucky to start experiencing the effects of the recession, and so jumped at the chance of a job with software research and development company Aryans Infoway, based at Technopark Campus, Thiruvananthapuram.

"I got the offer letter from Aryans Infoway in the month of April, after depositing deposit money of Rs 100,000, which I was told will be refunded after I complete tenure of three years with the company. Non-completion would cost me the deposited amount. Going through the torturous professional period, I decided to accept the offer letter and joined the company from mid May," said the engineer.

"However, little did I know that the company I joined will shut its operation - yes, the company shut doors and stopped its operations in few months. Our deposit money went for a toss with our carrier. We did file a case against the company at the Thampanoor police station in Trivandrum, but yet to receive our money back," the engineer added.

The engineer moved back to Bangalore to start his quest again, at a time when major companies were stalling hiring. "Finally, at Axil Software Technologies I applied as a software engineer. Having cleared the first round of interview, I was called for the HR round, where I was briefed about the same deposit money rule. I was asked to deposit Rs100,000 with the company against a bond of two years. The HR said if I leave the company before a year, I won't get the refund; if I quit after one year then Rs 50,000 will be refunded; and whole money will be refunded if I stay put till two years."

The Bengali engineer decided not to accept such offers; however, he said there are many who have. "There are boys from my college who passed this year and are willing to take a chance, since they have not yet received joining dates against the offers they were given by some of the major IT companies like Infosys, IBM et cetera," he added.


Oracle rules out salary cuts

Allen Mathew, senior director in human resources, Oracle India has ruled out salary cuts in the company.

Mathew said, "We don't go outside to recruit and we don't go to consultants for recruitment. We run our own recruitment agency. So we have a very different model. We don't have requirement at this point of time. We only find people in specific domains to hire, but it is difficult." He added, "There are no salary cuts or job cuts as of now. Coming to our pay cycle, we have got last year's bonus. December will be the latest period. And we are still hiring. So far, we don't have any such move in our company".

Consult the oracleHowever, he is unsure about the future. He said, "We don't know what will happen in three years or five years or one year down the line. In the near future I don't see anything like that." On an optimistic note, he spoke about the situation in 2004 when Oracle started mergers and acquisitions (M&A) of other companies.  At that time everyone said that M&A won't work for Oracle as there will be a great number of job cuts and layoffs.

Mathew said that difference of culture could be of great significance in M&A. He said that Oracle had acquired multicompanies and was quite successful. He also gave an example of cultural adaptation. At one company they had acquired, the cafeteria had no non-vegetarian food on the menu. Now all cafeterias in Oracle offer non-vegetarian food. Mathew used this example to show that Oracle could adapt to other companies' policies and merging was not only in business but also in culture.

However, employees of I-flex solutions limited, now Oracle Financial Services Software Limited, have a different story to tell. They said that the vendors in the company were in the process of being sent out. The senior employees in the C and D bands got 10 to 15 per cent salary cut. The company has also cancelled bonus for the year. The company's staff in the prime sourcing division was given a pay cut of about 50 per cent and was required to work only for three hours a day. The old I-flex management supposedly wanted to layoff the entire staff in the division. However, the Oracle management decided against it as Oracle feared that it would give an impression that the M&A was a failure.

Employees also said that the company had cancelled perks such as transport charges. Earlier, 50 per cent of the employees' transport charges were borne by the company. The company has also cancelled free snacks for the staff in the evening. Free food for its support staff also has been cancelled. The recruitment procedure is said to have become more rigid following M&A. The employees' version gives a completely different picture to that given by Mathew.


Expect salaries to dip in 2009, says new survey

If you thought that the global financial crisis has taken its full toll on Indian industry, there is some more bad news filtering through now. Executive salaries across India Inc. will be constant in the New Year with at most a very marginal hike, a new survey has said.

Companies would resort to large-scale cost cutting and selective layoffs, says the survey on compensation and hiring plans conducted by the US human resources firm Mercer Llc., which says that as many 80 per cent of the companies surveyed expect 2009 to be worse than 2008.

Though layoffs aren't a priority for most fo these companies, they are also averse to fresh hires in the coming twelve months. More than two-third of those surveyed believe that there wouldn't be any significant reduction in headcount.

Only one-fourth of the companies indicated that they would be recruiting afresh which means that most would be only seeking replacement positions, which in itself indicates that there would be no layoffs.

Terming the job freeze as a correction, Mercer's country manager for India Padma Ravichandar, said "India grew on the back of knowledge and people-centric industries such as financial services, information technology, and retail, among others. However, a talent crunch led to spiralling employee costs since 2003 and companies have been under severe strain thereafter."

"This current situation should be perceived as a cooling down period in terms of talent costs," she said adding that more than 35 per cent of the respondents in India said that they have had to downscale their hiring plans post-September.

The level of increments would also be pegged lower in the coming year with more than 83 per cent of the respondents stating that salary hikes in 2009 would be lower than that planned for originally. In fact, about 19 per cent of the companies said salaries would be frozen at 2008 levels.


 DWARAKESH  its really nice topic.... and more useful and informative..

this post is useful to analysis our economic down turn

keep posting....


Mphasis forces employees to move to low-cost locations

IT and BPO firm, Mphasis has asked its BPO employees to relocate to the company's low-cost locations like Indore and Vadodara. The other option given is to quit. More than 1,000 employees in its Noida centre have been given this condition for their survival in the company.

Most of these employees are reportedly going for the second option, that is, to quit. There's just a week left for them to decide as the company has given a deadline of the end of December.

While opening the BPO centre in Vadodara earlier this month, Mphasis said it aims to expand the facility from the existing 400 seats to 800-2,500 seats in a year long time.

Mphasis declined to comment on the relocation but said that Noida operations will be on.

Shaping up operations could be just an excuse but the reality is company is aiming to move out to low-cost facilities to cut sown the costs.

The company has also invited other IT and BPO firms to recruit from its employees.

In this crisis situation, relocation to low-cost locations is not a bad idea to avoid mass job-cuts.

If the employees move to these low-cost locations, the operations may fall in place smoothly as per plans. But, if the majority employees refuse to do so and quit, then the company might have to compromise with the quality with new recruits, most of them could be local candidates also.

EDS, a company that holds the majority stake in Mphasis, was bought by HP earlier this year.


Over 50,000 IT jobs may be lost in January-June 2009

Over 50,000 IT professionals in the country may lose their jobs over the next six months as the situation in the sector is expected to worsen due to the impact of global economic meltdown on the export-driven industry, a forecast by a union of IT Enabled Services warned.

There would be 50,000 job losses (IT and BPO put together) over the next six months," Karthik Shekhar, general secretary of UNITES India, a politically neutral union of ITES professionals told reporters.

The job loss in the IT and BPO sector in the country topped 10,000 in the September-December period, Shekar said.

While employees of medium-sized companies bore the brunt of job losses in the September-December period, it's going to be their counterparts in the big and small firms who would increasingly face the axe in the coming six months, he said.

UNITES India, affiliated to the global union United Network International, suggested that the companies in trouble could resort to salary and incentive cuts without trying to "squeeze" the staff, rather than adopting the "layoff path".

Employees are willing to take such cuts for 12-16 months till the demand picks up again, when such benefits should be restored to them.


BPO staff told to wash their hands

The effects of the global economic recession are being felt in some strange ways in the multi-million dollar BPO industry. Amidst oft-used words like layoff, low salary hikes and cost-cutting, now comes the dreadful spectre of employees having to wash their hands in the loo!

Yes, that's what some of the companies are making their staffers do as their finance departments have instructed the facilities wing to stop having tissue paper rolls inside the rest rooms. So, if you want to wipe the water off your hands, you might just end up using a hand kerchief.

Of course, there are others who have offered unpaid leave to staff over the Christmas season, the logic being that empty offices result in power savings. Even Infosys had reportedly pushed more staff into a single floor in order to minimize power usage.


Indian IT firms face payment delays

Information technology firms, which are already in trouble due to the slowdown in their key markets, are now facing payment delays. Many firms said collections cycles (receivables) are getting extended.

The average cycle for collection of payments is 70-80 days. In some cases, the delay is already as much as 90-100 days and could get worse. Analysts said while this may not impact the large IT firms, which have enough cash on their books to take care of working capital, it will be the mid-cap and small firms that will feel the pinch.

"Large-cap firms like TCS and Infosys will manage as they still have over a $1 billion as cash. But for mid-cap firms which have limited cash reserves, this will mean a huge impact on their working capital. Normally, firms finance their working capital through short-term loans. Since banks are gling slow on loans, interest rates are going up and that could add to the woes of cash-strapped mid-cap firms," said an analyst.

Analysts said while delays are becoming a norm, the bigger problem is the possibility of some clients becoming bankrupt. "The current scenario is such that your clients are getting impacted. Hence there is no surity that this is just a small delay and it doesn't convert into a writedown," said an analyst on the condition of anonymity.

"If you know the cycle is delayed by a few days it is still possible to plan ahead, but these days collection cycle have gone erratic. That makes it that much difficult for planning as there is no clear visibility," said Hanuman Tripathi, managing director InfrasoftTech. The company has a receivable period of 30-40 days. In the last few months, the company has seen this go up to 90-100 days.

Tripathi believes that firms in the products and solutions business will be hit hard as there will not be many new ramp-ups. Hyderabad-based Megasoft is another firm, which has seen a lag in its receivables. "The situation is still not worrying as all our large clients have been paying on time. These clients constitute 60-70 per cent of our revenues. But yes, there has been a delay from the smaller clients, those below the $1 million bracket," said V Balasubramanian, CFO, Megasoft.

Megasoft has seen payment delays from close to 20-25 clients, which constitute 25 per cent of the company's revenue, by 80-90 days. "The delays will have pressure on our cash flows," he added further.


Global meltdown catches IT firms off-guard

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.


Infosys to integrate IT & BPO operations to cut costs, add value

Infosys Technologies is looking at ways of increasing synergies with its BPO arm. In addition to easier movement of executives between
Infosys the IT and BPO arms, the tech bellweather is also working on integration and business plans to maximise profits.

The knowledge services business unit of Infosys BPO is headed by a former Infosys Technologies executive. So is the vice-president and head of sales of Infosys BPO. Communication, the second-largest revenue earning customer segment for the BPO, is also headed by an executive formerly with Infosys Technologies.

But the real push for synergies between the IT and BPO businesses is due to business slowdown and pressure from customers to get more value for the same cost. The BPO arm is now jointly working on solutions, platform-based BPO and on transformation initiatives with the technology arm. Compared to plain-vanilla BPO services, where pricing is based on the number of seats per hour, these solutions are linked to outcomes and number of transactions.

For instance, Finacle, the core banking product of Infosys, is now offered by the BPO arm as a 'bank-in-a-box' solution, where services such as opening a customer account or linking two customer accounts are provided by the BPO.

"Customers are given both options -- they can opt for the product or the solution. In any case, many product companies are also moving from a licence fee-based model to a services-based model," said Ritesh Idnani, member of the executive council of Infosys BPO. Similarly, the BPO and the technology arm have jointly developed a solution for the media industry called, 'newspaper-in-a-box'.

"Our strategy is, if we can integrate technology and BPO, there is a big opportunity," said Gopal Devanahalli, vice-president, who heads the business unit focussed on communication service providers. While most telecom providers have outsourced customer services and, to some extent, areas such as finance and accounting and human resources, Infosys BPO believes real profits are to be made from areas that directly impact the cost of revenues.

These areas also require greater technology intervention and involve services such as fulfilment, assurance and billing. Each BPO business unit is also now setting up a transformation cell, which co-ordinates with both the BPO and technology arms, to come up with ways that can result in gain for both the client and the company.

What makes this exercise interesting is that in some cases, the transformation initiatives targeted at automating some of the processes could result in lesser revenues in the short term because it reduces the number of seats for the BPO.

"It may set us back in the short term, but in the long term, the breadth of the relationship with the customer expands. If you don't do it today, somebody else will do it tomorrow," said D Swaminathan, senior vice-president, Infosys BPO. According to Mr Swaminathan, who has been with the BPO for over five years, it is now not about doing it better or cheaper but doing it differently.


Infosys to integrate IT & BPO ops

Infosys Technologies is looking at ways of increasing synergies with its BPO arm.In addition to easier movement of executives between the IT and BPO arms, the tech bellwether is also working on integration and business plans to maximise profits.

The knowledge services business unit of Infosys BPO is headed by a former Infosys Technologies executive. So is the vice-president and head of sales of Infosys BPO. Communication, the second-largest revenue earning customer segment for the BPO, is also headed by an executive formerly with Infosys Technologies.

But the real push for synergies between the IT and BPO businesses is due to business slowdown and pressure from customers to get more value for the same cost. The BPO arm is now jointly working on solutions, platform-based BPO and on transformation initiatives with the technology arm.

Compared to plain-vanilla BPO services, where pricing is based on the number of seats per hour, these solutions are linked to outcomes and number of transactions.

For instance, Finacle, the core banking product of Infosys, is now offered by the BPO arm as a 'bank-in-a-box' solution, where services such as opening a customer account or linking two customer accounts are provided by the BPO.

"Customers are given both options -- they can opt for the product or the solution. In any case, many product companies are also moving from a licence fee-based model to a services-based model," said Ritesh Idnani, member of the executive council of Infosys BPO.
Similarly, the BPO and the technology arm have jointly developed a solution for the media industry called, 'newspaper-in-a-box'.

"Our strategy is, if we can integrate technology and BPO, there is a big opportunity," said Gopal Devanahalli, vice-president, who heads the business unit focussed on communication service providers.

While most telecom providers have outsourced customer services and, to some extent, areas such as finance and accounting and human resources, Infosys BPO believes real profits are to be made from areas that directly impact the cost of revenues.

These areas also require greater technology intervention and involve services such as fulfillment, assurance and billing. Each BPO business unit is also now setting up a transformation cell, which co-ordinates with both the BPO and technology arms, to come up with ways that can result in gain for both the client and the company.

What makes this exercise interesting is that in some cases, the transformation initiatives targeted at automating some of the processes could result in lesser revenues in the short term because it reduces the number of seats for the BPO.

"It may set us back in the short term, but in the long term, the breadth of the relationship with the customer expands. If you don't do it today, somebody else will do it tomorrow," said D Swaminathan, senior vice-president, Infosys BPO. According to Swaminathan, who has been with the BPO for over five years, it is now not about doing it better or cheaper but doing it differently.


IT firms shifting focus from headcount to result

Even while Indian IT firms are taking steps to reduce costs wherever possible, they are also making their delivery mechanisms stronger with less focus on employee addition.

So, while agreeing to deliver the best results, the IT firms are also seeking to secure the authority to decide the number of people it will deploy in a particular project and the centres of execution.

"As per the traditional model, if we have 50 people working with the clients onsite, another 300 people work in offshore locations. Now, we are asking the clients to let us decide the number of people to be deployed for the project. They will explain the kind of services and levels they require, based on which we will decide our approach. We may thus deploy 10 people onsite, 20 people near-shore and 300 people offshore. And the persons deployed offshore need not be at one delivery centre, but at multiple locations," said Suresh Vaswani, Joint CEO of Wipro's IT business.

Firms tend to outsource work to save costs and reduce the time gap to hit the market. Increasingly, the model is shifting towards best-shoring, by which the vendors decide the location for delivery of certain components of services based on various factors such as the availability of talent and cost efficiency.

This is propelling companies such as Infosys, Wipro and TCS to sign more outcome-based price contracts, as against the earlier model, which was based on the number of people deployed in a project.

TCS, the largest IT exporter in the country, sees outcome-based pricing as part of its non-linear growth strategy rather than headcount-based pricing. The company has invested in various non-linear opportunities in areas such as software products platform, basic process outsourcing (BPO) and software as a service.

Most of the new contracts being signed by Wipro are also outcome-based price contracts. Following its acquisition of Citigroup's captive IT arm in India, the company secured $500 million worth of contracts, a major part of which has outcome-based price components.

Infosys is vying to sign more outcome-based contracts and reduce dependence on headcount. Even though application, development and maintenance (ADM) still constitutes the largest chunk of Infosys' overall revenue, the company is focusing on consulting and IP-based services where the margins are higher.

S Gopalakrishnan, CEO and MD, Infosys Technologies, said, "The transition to non-linear growth areas will happen slowly. We invest in the business and the future; and over time, the business changes. If you look at our business today from five years ago, more than 50 per cent of our revenues today comes from non-application development and maintenance work. It's a significant change over the last five years, and that's the strategy we have adopted."

Analysts say that IT service providers prefer outcome-based pricing contracts because it rewards both the client and the service provider almost equally. "Outcome-based contracts are better from the customer's point of view because it gives more accountability to the service provider. It is better from a service provider's point of view because he constantly looks at innovating to deliver better service at a better cost," said Sabyasachi Satpathy, Director & Co-founder of Mindplex Consulting, an outsourcing advisory firm.


For techies, the day just got a tad longer

BANGALORE: Across the city, several IT companies have informed employees of their decision to extend daily working hours, piggybacking on the financial slowdown.

Though companies such as Accenture forewarned its employees a month ago, in scores of individual project teams and mid-size companies, the unofficial decision came as an expected New Year "surprise".


Employees are unhappy, and understandably so.

"Four people were ejected from my team last month. Yet, we are pushed to put in more work hours. It seems like those working are paying the 'price' for all the cost cutting," laments an employee in an IT major.

With a blanket freeze on increments, promotions and even benefit rollbacks, this move further tightens the noose. And with retrenchments lurking around the corner, nobody wants to be seen protesting.

Accenture employees in December received an email from the Lead - Delivery Centers for Technology India, informing them of a decision to extend the work week from 40 to 45 hours, increasing daily hours from eight to nine.

"This will enable us to be more competitive," the mail stated. An employee, working in IT services, says: "Stress levels are high and team leaders are handling multiple projects. But with layoffs on the cards, who will protest?" Ironically, the same email terms 2008 an "excellent year".

Cost advantage

Consider this. This employee, who takes home Rs. 32,000 a month, earned Rs. 800 per hour till last month. Now, with an added work hour, his pay per hour slides down to Rs. 711.

"The company hopes to attract/retain clients by throwing in an extra man-hour for the same price, a.k.a. cost advantage," the employee points out. The IT coolie, as aware as he is, cannot afford to raise such questions.

TCS, another IT services giant, sent similar communication extending work hours by 30 minutes, but put the decision on hold last week.

While Wipro employees already work 9.5 hours a day (including lunch break), some companies, including Infosys, have offered incentives to early birds.

"Everybody is strictly enforcing work hours and trying to squeeze (out) every ounce of productivity," an HR executive said.

Much worse

The situation is much worse with in midsize and small companies, where the slowdown led managements to cut down on manpower.

A senior employee in a mid-size company said: "While overtime benefits ceased to be applicable, my shift had been extended by two hours."


UNITES, the Indian arm of the Union for Information & Technology Enabled Services, is filing a PIL against the "arbitrary policy" of companies accusing them of violating the "eight-hour working mandate of the Indian Factories Act, 1948". Karthik Shekar, president of UNITES, says: "In the absence of laws tailor-made for the IT industry, corporates are getting away with "arbitrary policies". However, companies maintain that the 48-hour upper limit on working hours is for a six-day week. An HR executive said that companies are using the extra hour only as a trade-off for giving employees a two-day weekend.

"Moreover, these are only technical objections that people can raise. An average techie at any time is bound by his project deadline, and more often than not they work much more than the stipulated time. The stress was always there," remarks the official.


HCL defers joining date of recruits, again

HCL Technologies has deferred the joining month for some of its recruits from January to April, according to a person familiar with the development.

It could not be ascertained as to how many potential employees have been affected as a result of the company's decision. "These recruits were earlier told to join in January. This has been extended by three months," the official said.

The company had in October deferred the joining date for some of its recruits to January. "Our recruitment drive for 2009 is very much in progress, and it hasn't varied much from the previous years. It has been business as usual for us," said Ravishankar B, senior vice-president and head of the Talent Management Group of the company, said via e-mail.

The company had net added 7,072 employees in the four quarters ended September. The company's financial year runs from July to June. Given that HCL Technologies operates in software services and business process outsourcing sectors, a large number of employees that the company adds every quarter comprise engineers.

Most engineering colleges in India complete their academic year in July. Typically every year, campus joining at software services company is spread out over the four quarters. This is done for logistical reasons such as training needs and the consequent demand for seating.

Offers for students pursuing engineering courses, which are of a four-year duration, usually start trickling in from the start of their third year. HCL's decision to defer the date of joining for its recruits is not surprising, as it comes on the heels of its peers already having done more or less the same. The sector has been under severe pressure due to liquidity crunch in the global financial markets, currency fluctuations, cancellation of orders, rise in clients' expectations and the expected downward revision in their budgets.

Shares of HCL Technologies closed the day's trading at Rs 130.55 on the National Stock Exchange, up 3.49 per cent from Monday.


Companies will likely step up bond sales in coming weeks as the RBI's aggressive rate cuts raise expectations of lower borrowing costs and better investor appetite.

On Friday, RBI slashed its key lending and borrowing rates by 1 percentage point, the fourth cut in four months, with immediate effect, and lowered cash reserve requirements effective Jan 17.

The government also raised the foreign investment limit in corporate bonds to $15 billion from $6 billion, boosting hopes of foreign portfolio investments in corporate debt in a falling interest rate regime.

"The CRR cut will definitely help sentiment. The enhancement in the FII (foreign institutional investor) limit will help to narrow down the corporate bond spreads," J. Moses Harding, executive vice president at IndusInd Bank, said.

The yield on the 10-year corporate bond in the secondary market has eased to 8.2 percent, down 340 basis points from 11.6 percent in mid October

The spread on five-year corporate yields and government bond has also eased to 285 basis points, from nearly 400 basis points in November, Reuters data shows.

"With so much steps by the government and RBI and liquidity infused, "AAA" rated corporates would be able to borrow long-term funds around 9 percent," S. Krishnamurthy, treasury head, ACC Ltd, said, referring to top-rated borrowers.

Banks, under pressure to boost their capital base and increase lending, will probably be the first to hit the market with perpetual, lower Tier II and upper Tier II bonds. Several firms are also enquiring with merchant bankers to sell bonds.

CROWD OUT But an expected rise in government borrowing to finance a $4 billion additional spending plan announced in December will crowd out corporate borrowers and keep spreads from falling below 8.5 per cent, Krishnamurthy added.

The market also awaits the first tranche of state-run financial institution India Infrastructure Finance Company's (IIFCL) bond sales, which has been allowed to raise a total 300 billion rupees through tax-free bonds in tranches.

"I expect government bond yields to stabilise at 4.75 per cent... and that means there is a lot of value in corporate spreads," said Nirav Dalal, head of corporate debt at YES Bank. adding that interest and appetite in corporate debt will rise.

On Monday, the 10-year federal bond yield touched a record low of 4.86 percent after the hefty rate cuts.

Dalal said bonds issued by state-run companies are currently going at a spread of 300 basis points over government bond yields, and private sector bonds at about 375 basis points. He expects spreads to compress by the end of this month.

"There are a lot of prime-rated corporates evincing interest in issuing bonds, it is a matter of timing... hitting the market at the right time to get the right rates," he said.

courtesy : economic times


Economists see longest US recession since WWII

The US recession will probably be the longest since World War Two and could worsen without heavy government spending, according to a closely-watched survey of economists released on Saturday.

The Blue Chip Economic Indicators poll of 52 economists from top financial firms, major companies and academia found that most expected a tepid recovery to begin later this year, with growth returning to more normal levels in 2010.

A majority of those polled thought the recession would officially end in the third quarter of 2009, which would make this the longest downturn since World War Two.

However, more than half of respondents thought unemployment would peak no earlier than 2010, suggesting that economic pain may linger long after the recession is technically over.

For 2009, the consensus view was that real gross domestic product would fall 1.6 per cent, gloomier than the previous month's forecast for a 1.1 per cent decline. A drop of that magnitude would be the worst yearly performance since 1982.

Merrill Lynch held the most pessimistic view, predicting a 2.8 per cent decline, while Fedex Corp (FDX.N) was the most optimistic of the bunch, forecasting just a 0.2 per cent dip.

"Much likely will depend on the relative success or failure of ongoing and prospective stimulus measures applied by government," Blue Chip's monthly newsletter said, adding that absent a stimulus package, "prospects would be much darker."

The consensus opinion was that the stimulus plan would total $778 billion, with estimates ranging from $635 billion to $900 billion. President-elect Barack Obama has encountered some resistance in Congress, but a large spending package is widely expected to be approved next month.

The economists seemed to conclude that government efforts to push down mortgage rates may stall. On average, they expected rates on 30-year conventional mortgages at 5.1 per cent at the end of 2009, roughly where they are now.

They forecast that the consumer price index would fall 0.4 per cent this year, which would mark the first year-over-year decrease since 1955 and no doubt deepen investors' worries about deflation.

The panelists were split on the outlook for the US dollar, which some economists have warned may be headed for a steep slide this year as the US deficit soars and the Treasury Department issues a record amount of debt.

Nearly 48 per cent thought the trade-weighted value of the dollar would end 2009 higher than its current level.

source : economic times


Layoffs dominate the headlines

This week saw IT companies hitting the headlines for attrition, layoffs and projections of hiring. Job uncertainty deepened with more IT giants joining the band.

IBM was in the news this week for alleged job cuts of about 16,000 planned globally. IBM India, however, brushed off the news as rumours. In 2007, the company had laid off more than 2,000 employees in two phases. In 2002, IBM made 15,600 job cuts. According to IBM, it is all about constantly rebalancing workforce and continuing to invest in growth areas. The impact of any job cuts in India is said to be minimal. Later reports said that employees of IBM's hardware segment are likely to be most affected.

In contrast, IBM also has plans to create up to 1,300 new jobs through a new computer support centre in Iowa by the end of this year.

While Satyam made headlines due to its chairman Ramalinga Raju admitting a $1.5 billion fraud, the industry speculated that the company may lay off more than 10,000 employees next month. The number of employees who have poseted their resumes increased from 7,800 to 14,000 following the incident. Nearly 53,000 employees of Satyam face uncertainty about jobs especially since the industry is slow on recruitment.

Infosys announced its third quarter results and its plans to hire 27,000 new staff, up from 25,000 announced earlier. However, the company's BPO number addition has dropped to 16,941 at the end of the third quarter against 17,327 at the end of the second quarter. This makes it difficult to understand the actual figures. Infosys is reported to have made offers to around 20,000 engineering graduates for the next year. Its training program is reported to have become stricter with tolerance for non-performance coming down to zero.

Motorola announced plans to cut 4,000 jobs, which accounts for nearly six per cent of its workforce. Nearly 3,000 job cuts are expected from its handset unit, while 1000 will be from the rest of the company. Motorola had earlier announced another major job cut in October as part of its restructuring plans. The company has also cautioned that its fourth-quarter revenue fall to between $7 billion and $7.2 billion, from the projected $7.5 billion.

According to sources, AMD is likely to announce massive layoffs and pay cuts shortly. While rumours have been doing their rounds for a while now, more details have surfaced recently. However, there has been no announcement from AMD yet. The company's results will be announced next week and the details about the pay cuts are expected to be announced then. Pay cuts of about 20 per cent is expected at the top level and about five per cent for the lowest-tier workers.


Chandigarh IT survives meltdown

Chandigarh-based entrepreneurs engaged in outsourcing for US-based business conglomerates have been able to insulate themselves from the financial meltdown.

These units, mostly promoted by technically qualified entrepreneurs, took precautions in the pre-meltdown phase and are now devising alternatives for the future growth.

Puneet Vatsyayan, director, Mobera Systems Private Ltd, said their limited exposure to financial markets and real estate insulated them from the the meltdown. The company that is primarily into the outsourcing of embedded technologies (software for hardware devices, healthcare, communication and software) is now scouting for new markets.

"Our US-based business has not been hit by the recession, but we are vigilant. We are exploring opportunities to make sales channels in Europe and in Japan."

Vatsyayan, who spent over a decade in Silicon Valley before starting his venture in India, added that tremendous potential exists in Europe and Japan. Till now, these economies did not favour outsourcing. However, to trim their expenses they plan to turn towards India.

"Europe is my growth driver as they will be aggressive in controlling their costs. Japanese cost structure is also high," he added.

Vatsyayan, however, was senstive to the fact that overall growth might be effected. "My growth target was 70 per cent in 2008. It has been scaled down to 50 per cent for 2009," he said.

Pratap Aggarwal, managing director and CEO, IDS Infotech Ltd, said there was no dearth of orders. "Our clients are based in the US and Western Europe. We plan to focus on existing markets."

Aggarwal expected at least 20 per cent growth in his business. Harshvir Singh, director, Drish Infotech, said current orders had not been effected but they were planning ahead. Drish Infotech provides web solutions and medical subscriptions to US-based companies. The firm is also planning to tap the Indian market.

Singh said he expected 15 -20 per cent growth in the firm's overseas business this year as compared to 50 per cent last year. "There are business opportunities in domestic markets in the field of web applications, ERP (Entreprenuer Resource Planning) for manufacturing , service and educational institutes and CRM (Customer Relationship Management).

The small IT companies in Chandigarh did not resort to any lay offs during the current recession in the global market. Fresh hiring has been frozen. However, entrepreneurs expect to grow due to the competitive edge in the global market.

Source: Business Standard


Global slowdown hits developers' marriage prospects

Expatriate software developers are no longer seen as good prospects for families wanting to marry off their daughters.

Many websites for arranged marriages are reporting that interest in non-resident Indian men has fallen sharply since the global economic crisis.

Mumbai's Midday newspaper quotes Vivek Khare, senior vice-president at, as saying that contact with expat software developers has gone down by about 15 per cent. The chief executive of, Murugavel Janakirama, told the newspaper that since the global slowdown it has registered a 20 per cent decline in demand for overseas grooms.

Varun Rana, of, said that the recession has left parents in deep thought before they browse the overseas sections in matrimonial ads for their daughters.

The problem is that parents know that overseas tech companies are laying off staff, and that therefore Indian expat workers in the US and UK are not as secure as those in India.

In fact, there are concerns that things might be so bad that these tech workers will return home, particularly some of the estimated four million Indians in Gulf states. However, Vibhas Mehta, business head at, suggested that there might be a change in social norms which might mean that Indian women are not interested in moving abroad after marriage.

Source: IT Examiner


'Global economy may improve this year'

Seoul, Jan 21: The global economy may begin to show feeble improvement later this year or early next year after the global credit crisis plays itself out, a senior executive with the US investment bank Morgan Stanley has said.

"Recovery, when it comes late this year or in 2010, will be disappointingly weak, and key features will be a multi-year slow-down," Stephen Roach, head of the New York- based bank's Asian operations, told reporters.

Roach said the financial crisis is only about 50 per cent over, noting that "as the business cycle turns, the loan quality deterioration rate will lead to an increase in non-performing loans, which causes further earnings impairment issues for financial institutions."

The operation chairman in Asia also warned against the South Korean economy's excessive reliance on exports for economic growth.

Exports account for about 60 per cent of the Korean economy.

"When you have an open economy to the extent of the Korean economy, there's a limit to what you can do to overcome external shocks," said Roach.

He also credited South Korea with seeking a demand-led recovery in the aftermath of the 1997-98 Asian financial crisis, recommending boosting consumption through a combination of monetary and fiscal policy.

The South Korean economy grew 0.5 per cent in the third quarter, the weakest in four years, as exports faltered amid sluggish domestic demand. The country's central bank predicted the economy will grow a mere 2 per cent this year.

The government has unveiled tax cuts worth 35 trillion won (USD 25.4 billion) and 16 trillion won of extra spending as part of an economic stimulus package.

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Tata Consultancy says hiring to slow this year

Tata Consultancy Services said it expects to slow its rate of hiring new staff this year, as a broad economic downturn affects its  global clientele.

CEO S Ramadorai told in an interview on Friday that the company expects to add 15,000-18,000 people to its headcount over the next 12 months, compared with nearly 8,700 in the three months to December.

TCS currently has about 144,500 staff.

Ramadorai said some contracts and projects were being delayed or cancelled, but the company expected to achieve some earnings growth in 2009 despite the worsening global economic outlook.

"We are confident of some growth, but what that amount is is difficult to say," he said.

"Yes, we are winning some contracts, but then there are delays in the decision making on a number of contracts," he said, adding there were hold-ups in implementing deals that had already been signed as well as several project cancellations.

"The slowdown is very obvious and very visible, and we think it will continue for the foreseeable future."

TCS, part of India's Tata Group, posted a lower-than-expected 1.6 percent rise in October-December net profit on Jan. 15.

source- Economictimes


IT may miss FY10 hiring target

Nasscom, the trade body for India's IT and BPO sector that is in the process of reworking the growth figures for the industry post the Satyam fallout and a slowdown in the global economy, has plans to revisit its members' hiring numbers.

"Nasscom is reworking the employment numbers for the industry and it will be lower than the expected target of 2.5-3 million. But that does not mean there will be no hiring. The second half of FY09 has certainly been very difficult for companies across sectors. Every company is looking at reducing cost. It is obvious that demand for new talent has gone down, as earlier firms would hire in anticipation," Sangeeta Gupta, vice-president, Nasscom, told Business Standard.

The Nasscom Strategic Review 2008 predicted that by 2010 the IT-BPO sector would have employed about 2.5-3 million professionals directly. However, the figure would be much lower as IT firms have either reduced their hiring or plan to freeze their recruitment numbers in the next financial year.

For instance, Infosys, one of the top three companies, has already announced it would not make any fresh hirings other then the offers that it has committed for the FY10. Similarly, another leading company Tata Consultancy Services (TCS) has put a freeze on its lateral hiring and will take a final call on the future numbers only next month. Wipro's third quarter hiring numbers, too, have already showed a de-growth.

However, analysts feel that in the short-term, the impact would not be too severe as campus hiring is done in advance. For instance, the top three IT firms will be hiring over 52,500 for FY2010 as they have stated they would honour commitments.

However, E Balaji, CEO of management consultancy Ma Foi Management, feels that more than the hiring numbers what needs to be known is what is the time when these students join the company. "We get a sense that students from the 2008 batch are yet to be inducted by firms. In many cases, they have not even been indicated a joining date," he adds.

"While it is good to hear that these major IT firms will honour the commitment, it is obvious that there will be an extra pool of people in the industry," says Rohit Ramani, director, EmmayHR Services. Gupta feels that it is time that students, institutes as well as organisations look inwards. "Students and academics should try and increase their skills in such conditions."

Moreover, HR consultants also feel that hiring among the BPO outfits will also taper down in the coming quarters. "While it is true that BPOs have completely stopped hiring, the good news is that hiring among the captives have gone up. With a need to cut cost, many of the captive units have stepped up their hiring. On sequential basis, captive hiring has gone up by approximately 20 per cent," adds Ramani.

Source: Businessstandard


Infosys puts over 5,000 employees under scanner

About 40-50 sales executives have also been asked to quit in the last two months.

Infosys Technologies has placed around 5 per cent of its global workforce under the scanner. The move, which is being seen as an offshoot of the global financial meltdown, is expected to affect over 5,000 of the 100,000-plus employees on the company's rolls.

It is learnt that Infosys, the country's second-largest information technology services provider, has told its senior managers (project managers, senior and group project managers, delivery managers) to give the lowest performance rating (4 on a scale of 1-4) to the 'underperforming' 5 per cent as a part of the company's consolidated relative ranking (CRR).

Though rock-bottom rankings are not unknown in the company, this is the first time that Infosys has made it mandatory. CRR is decided based on the employee's appraisals which is done twice a year. "The recommendations have already been submitted this month," a senior project manager working with Infosys told Business Standard on the condition of anonymity.

Infosys Vice-president and Group HR Head Nandita Gurjar said there was no change in the policy but "...the percentage of employees who are given CRR 4 keeps varying every year between 1 per cent and 5 per cent based on their performance."

The company has decided to implement a six-month mentoring programme for such employees after which it will decide their future based on the improvements they have made. As a part of this programme, each affected employee will be asked to work under the supervision of a mentor who is a senior executive.

During this period, the employee will not be given any important assignment, even though he will be allowed to work on the project where he is working at present. If the concerned employee is on bench, he will give all his time for the mentoring programme. During this time, the employee will get full salary as well as the regular allowances.

"While 50 per cent of such employees come back to the system, others get the message and quit voluntarily in most cases," Gurjar said.

It has also been learnt that about 40-50 pre-sale executives, most of who were located in the US, have been asked to quit during the last two months. Most of these people are from consulting background who are in a client-facing role. Gurjar confirmed the move but did not cite the number of people who have been asked to quit. "This is a part of our annual CRR initiative," she said.

Source: Itexaminer


TCS beats recession, wins new orders

CHENNAI: Even as the fear of recession hits IT companies, Tata Consultancy Services (TCS) walk away with one order after another. In the last couple of months, TCS has bagged several orders from various international players. To begin, it landed the World Bank order.

This was followed by a contract from the Caterpillar. Soon, the Italian bike maker Ducati Motor Holding made a beeline for TCS.

Today, the Tata company has added yet another to its growing list of clients by getting an order from Phones 4U of the U.K.

Sources say that the international companies are even now looking at low cost countries for their off-shore option. This syndrome will continue even during the recession period. Today, customers do not want to spend more money on the near-shore market, which is customer location. This will be a boon to Indian IT companies. But what will happen if the rules are reversed by the U.S. President Barak Obama? One has to wait and watch. However, TCS seems to be looking at Europe and the U.K. markets in a big way. Will this be an alternative proposition for TCS?

Today, the company has bagged a $100 million agreement to provide a full range of managed IT services to 4UGroup, the holding company of Phones 4U, and other organisations in the U.K. telecommunication and financial services marketplaces.

Under the agreement, TCS will provide a full range of IT and business change services to 4U Group, including service management, application support, maintenance, management and development, data centre and desktop services, helpdesk, networks and communications, business support, and management of all third party contracts for the organisation's retail operations. This will enable the group to improve IT service, increase capacity, boost skills, create a more flexible IT model and ultimately enhance the business to meet current and future demands.

According to sources, it will be a three-to five-year agreement. Since the retail innovation centre is located in Chennai, it is assumed that the delivery will be from the centres located in Chennai. Similarly, the company has also reportedly bagged another retail order from the U.S.

A. S. Lakshminarayanan, Vice-President and Country Manager, U.K. & Ireland, TCS, said the significant contract win underlined the important role that the company played in enabling the U.K. businesses to enhance their competitiveness and retain market share, especially in the current economic environment.

Source: Hindu


2009 will be the bleakest-ever for IT

The outlook for the Indian software in 2009 is "the toughest" ever seen and somewhat "overwhelming". The industry, for the first time in its history, faces a top-line decline in the first half of the year. The story will be "not one of competitiveness but survival".

The massive reorganisation in the US financial services industry which has led to closures, bailouts and mergers, is likely to lead to a cut in its IT expenditure by as much as 25 to 30 per cent, foresees Phanish Murthy, CEO of US-based iGate with large operations in India offering a combined platform for clients' software and BPO needs. The BFSI (banking, financial services and insurance) vertical accounts for a third of the revenues of India's software services industry.

The worst part of it is that you do not know as yet where exactly the trough is likely to bottom out. IT budgets, not just for BFSI but across industries, which are normally fixed annually are now being set on a quarterly or even monthly basis, adds Murthy. So client CTOs who will place the orders themselves do not know where they stand.

The same sentiment is expressed by Srini Rajam, chief of Ittiam, one of the leading technology firms in the country which creates intellectual property in the DSP (digital signal processing) space. Global semiconductor companies are looking at a revenue downturn of 20 to 25 per cent. Thus, the outlook for both services and product firms is equally bleak.

Just as budgets are being fixed for very short periods, revenue guidances are sometimes being revised not on a quarterly but a monthly basis as big listed firms seek to keep analysts in the picture. There is, in fact, a chance of the negative sentiment being "overdone" and firms "overreacting" in lowering sights. The outlook for consumer electronics has been hurt by both fall in overall consumer sentiment and rising unemployment. From chip makers to device makers -- Intel, Samsung, Sony and even Microsoft -- most have issued dire projections. The only exception is Apple.

Avinash Vashistha, head of Tholons, the offshoring consultancy, recalls that during the earlier crisis period of 2001-02, offshoring revenue growth had slowed, but in 2009 it is likely to be almost flat, negative in the first half and positive in the second half. What is more, virtually for the first time, the Indian industry will experience a pricing decline which will affect different players according to whether they have been commanding a pricing premium or not. TCS will not be hit on this score, but Infosys, which is used to a 10 per cent premium, will be.

Murthy visualises pricing pressure from two directions - one, customers looking for price cuts and two, stiff competition between vendors chasing fewer deals. In this scenario, cost cutting will be the foremost driver and quality and customer support will take second place. Similarly, application maintenance and support will gain precedence over application development.

Murthy guesses that the current scenario will continue through the first half of 2009. The nadir will come for vendors as more and more companies in the US go into not just Chapter 11 mode. Vashistha sees offshoring going up eventually but that will be only in 2010, with pricing beginning to recover in mid-2010.

Rajam distinguishes the past from the present for the semiconductor industry by noting that it is familiar with cyclicality but till now the ups and downs have been mostly caused by its own actions like excessive buildup of capacity and inventory.

Source: bpowatchindia


Layoffs are unnecessary, says analyst firm

India is not in recession and layoffs are easy to avoid, delegates at a panel discussion on managing HR challenges in the current economic environment were told today.

At the discussion, organised by Dun & Bradstreet India, Kaushal Sampat, COO of D&B India, underlined the fact that India is the second fastest growing economy of the world. He said, "We are luckier than China in terms of export. We catch cold when US sneezes, but China catches pneumonia and that's worse. We did exports worth 1$62 billion last year and target $200 billion this year."

"Our banks are in the pink of health, each bank outperforming each other, when most foreign banks are trying hard to even survive. India is not under recession and it is just a slowdown period for us, we need to be optimistic, rather being pessimist," added Sampat.

Narayan said, "The current situation doesn't say that there is no chance of recruitment at all, it's just that the psyche of the recruiters these days is to find the right fit. HR in such a situation plays a vital role - every organisation needs to renew with core competency and creative restructuring. They need to focus on future opportunities," said KA Narayan, HR president with Raymond LTD.

Tanuj Kapilashrami, head of HR for HSBC bank, said, "In the current market situation it is important that the staff cost is managed strategically. We all do customer segmentation but hardly feel the need for employee segmentation. We in HSBC did employee segmentation and found that 70 per cent of our employee was under the age of 30 years, who were either single or recently married. Seeing this we brought in hospitalisation insurance for all our employees and included it as a part of expense. The facility was hardly of any use for 70 per cent of employees, and this way we were able to cut cost."

"Such innovative ideas can very well avert the option of layoffs, we just need to align HR with the current market situation," added Kapilashrami.

Source: Itexaminer


Wipro sees slowdown in big new contracts

Software services exporter, Wipro Ltd, expects demand for new software and systems to stagnate for up to two years as a
result of the global economic slowdown, a top executive said on Saturday.

In response, Wipro plans to focus on providing operations services and helping clients cut costs, Wipro joint Chief Executive Girish Paranjpe told Reuters in an interview.

He sees a return to growth in the new software and systems segment "18 to 24 months from now" when clients could look to launch new products or streamline internal systems which have come about through mergers and acquisitions.

"We are really using this next 12 to 18 months to invest in that capability, so that when growth returns and clients look at their own internal systems more rationally, we are there (and) well positioned to help them actually to execute on that."

Paranjpe, speaking on the sidelines of the annual meeting of the World Economic Forum, declined to give a projection for revenue growth in the 2009/10 fiscal year, but said he thought Wipro could attain its target of 18 percent revenue growth for the full 2008/09 year to March.

Wipro's profits rose 8.7 percent in the October to December period, but it said last week that it anticipated a quarter-on-quarter decline in revenue for the January-to-March quarter.

Wipro, which counts Citigroup, Credit Suisse and Cisco among its clients, had so far not seen any impact on its business from the recent revelations of overstated profits and fictitious assets at rival Satyam Computer Services, Paranjpe said.

"So far we have not seen any fallout in terms of cancelled orders or withdrawn inquiries or anything of that sort, maybe just a higher degree of due diligence from new prospects before they close the deal," he said.

Wipro had not proactively approached any of Satyam's clients, he added.

"But some of the clients have tried to make contingency plans, saying that if they wanted to continue their business operations without Satyam being in the fray, how could we help," he said.

"We don't want the reputation of the industry to go down, so as long as clients' business operations don't suffer, broadly they will be alright."

Source: Economictimes


Global slowdown: Japan PM set to announce huge aid package

Tokyo, Jan 31: Japanese Prime Minister Taro Aso will announce a multi-billion-dollar aid package for Asian countries in a speech Saturday at the World Economic Forum in Davos, reports said.

The three-year package from April 2009, worth 1.5 trillion yen (16.5 billion dollars), would be aimed at boosting the Asian economy through development programmes, including infrastructure projects, Jiji Press and other local media reported, without citing sources.

Japan's official development aid, an important diplomatic tool for the pacifist country since the end of World War II, has historically focused on Southeast Asian countries.

Aso will also highlight Japan's own efforts to increase domestic demand with stimulus packages worth a total of 75 trillion yen, calling for other nations to adopt similar economic policies, reports said.

Separately, Trade Minister Toshihiro Nikai and Farm Minister Shigeru Ishiba will propose a plan to cut or lift tariffs on environmentally friendly products at an informal meeting of the World Trade Organisation to be held on the sidelines of the Davos meeting, the business daily Nikkei reported.

The proposal is aimed at promoting trade in goods such as lithium-ion batteries and solar power generation systems, which could help address global warming and are areas that Japanese companies have strength in, it said.

Aso left Friday on a lightning visit to the Davos gathering, where he is expected to seek a leadership role for the Asian power in fighting the global slowdown.

He is also expected to highlight Japan's proposal to lend up to 100 billion dollars to the International Monetary Fund to help emerging countries hit by the economic crisis, officials have said.

Aso, embroiled in a stormy session of the politically divided Parliament, will spend only a matter of hours in the Swiss mountain resort and return to Tokyo by late Sunday.

Opposition leader Ichiro Ozawa said Saturday he expects general elections to be held in April, renewing his pledge to take office.

"We are preparing for the general election as we believe it will be held in April," he told a conference in Tokyo.

Despite a fresh round of dire economic news from Japan, Aso has argued that the world's second largest economy is in a strong position to use its resources to jump-start growth.

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Merkel and Brown call for global economy rules

Davos, Jan 31: German Chancellor Angela Merkel and British Prime Minister Gordon Brown argued for tougher control of the international economy, opening up a potential split with the United States on ending the financial crisis.

Merkel said a UN economic council based on the UN Security Council may have to be created to police the global economy, while Brown said his "shared revolution" would strengthen current international institutions.

Both proposals went counter to US ideas rejecting any global enforcer. At a Group of 20 summit in November, Washington fought for national regulators to take precedence.

Brown and Merkel set out the case for greater international control at the World Economic Forum in Davos, both looking forward to a new G20 summit on the crisis to be held in London in April.

The British Prime Minister, his concentration broken by his own mobile phone ringing during a press conference, called for "a shared revolution in common action to deal with real problems."

He said leaders had been calling for the past decade for "a global financial institution with proper supervision, with proper accountability and a proper early warning system."

"There is now recognition all around the world that if you have global financial markets ... that national supervision is inadequate."

The priorities of the G20 meeting would be agreeing "an early warning system of risk on any continent in the world economy" and replacing "the patchwork of current regulation," Brown said.

He would push for "international standards of transparency and disclosure" for financial institutions. "And we need to reform and strengthen international institutions giving them power and resources to invest at global level."

In an interview published Saturday, Brown added that he had "utter confidence" that Britain could solve the worldwide economic crisis. Britain was "in the eye of a global financial storm" but was the only country leading the way out of the downturn, he told British newspaper The Daily Telegraph.

"The central issue is: do we have the self-belief and confidence in ourselves as a country to solve the problems that every other country faces?" he said

"We are focused and I believe Britain should have confidence in itself.

"We are the only country that has so far set down the path in the upturn to deal with the fiscal challenges."

He said: "I have utter confidence not only in the British people's determination to come through this, but that people will work together to make sure Britain emerges from this.

"The British spirit is to see a problem, identify it, and get on with solving it. Once a problem hits us we are determined and resolute and we are adamant that we are going to deal with that problem.

"And that is the resolve, not just of the government, but the resolve of the whole people."

The G20 summit in November tasked finance ministers to draw up recommendations by March 31 to used at the London summit.

Brown said any changes had to be ready "as a matter of urgency."

Merkel said the G20 -- which groups the industrialised powers and emerging giants Brazil, China, India and Russia -- could eventually agree a global economic charter to enforce new standards when the world comes out of the financial crisis.

Merkel said governments must take firmer control of markets and used her speech to again criticise US subsidies to ailing American car firms which she called a form of "protectionism".

The German chancellor said international leaders must make a commitment to free market forces while ending the market excesses and "irresponsible deeds" that caused the crisis.

She said Germany's social market economy could reconcile both aims with the state as "the guardian of economic and social order."

"Freedom is a necessary precondition for market forces to operate. But individual freedom needs to be limited if it takes freedom away from others. A completely unfettered market cannot take this structure."

She said the world needs "clear cut rules quite in contrast to an unfettered capitalism that runs enormous financial risks."

The rules "need an integrated financial system with the necessary institutions to take necessary international responsibilities."

"All these principles need to be enshrined in the form of a global economic order charter" which could be agreed by the G20.

The charter "could lead to the establishment of a UN economic council, just as the Security Council was created after World War II", she said highlighting the importance of the UN body in dealing with the wartime crimes of the German Nazis.

US Treasury Secretary Timothy Geithner will warm up for these discussions when he attends his first meeting representing the United States at the upcoming Group of Seven finance minister meeting in Rome next month, his office said Friday.

The gathering of top finance officials including central bank governors normally plays a key role in economic coordination among the top industrialized nations.

Meanwhile, President Barack Obama and China's President Hu Jintao agreed to forge "more positive" US-China relations in their first telephone call since the US leader came to power, the White House said Friday.

"President Obama stressed the need to correct global trade imbalances as well as to stimulate global growth and get credit markets flowing," spokesman Robert Gibbs said in a statement.

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Recession a disaster: Obama

Washington, Jan 31: President Barack Obama warned on Friday that grim data showing a deepening recession revealed a "continuing disaster" for US workers and meant Congress must act immediately on his economic stimulus plan.

Disappearing jobs, home foreclosures and evaporating college and retirement savings were adding up to "the American dream in reverse," the President warned.

"This isn't just an economic concept, this is a continuing disaster for America's working families," Obama said before signing measures reversing several Bush administration policies curtailing trade union rights.

The President spoke after the release of government data showing that the US economy contracted in the fourth quarter of 2008 at the fastest pace since 1982, with a 3.8 percent rate of decline.

"The recession is deepening, and the urgency of our economic crisis is growing," Obama said at an event also highlighting the launch of a "Middle Class Task Force" under Vice President Joe Biden.

"I'm pleased that the House has acted with the urgency necessary in passing this plan. I hope we can strengthen it further in the Senate.

"What we can't do is drag our feet or delay much longer. The American people expect us to act, and that's exactly what I intend to do as president of the United States."

The House of Representatives passed an 819 billion dollar version of the stimulus plan this week, but without hoped-for Republican support. The Senate is expected to start debating the measure next week.

At his daily briefing, White House spokesman Robert Gibbs was asked whether Obama's plain spoken rhetoric at the state of the economy risked further depressing confidence and hopes of recovery.

"I think it's kind of hard to sugarcoat and spin an economy that shrank at a faster rate in any quarter except -- or since 1982," he said.

"I think what the American people also want to see is somebody who will level with them about the challenges that we face, and will give them a sense of where he hopes to take them.

"But I don't think he can do that if he is continually telling people that things are different than what they know to be true in their everyday daily lives."

Biden said his task force would work across government agencies to quickly frame policies to improve the lot of the hurting middle classes which he portrayed as the backbone of US prosperity.

"America's middle class is hurting. Trillions of dollars in home equity and retirement savings and college savings are gone," Biden said.

"Every day, more and more Americans are losing their jobs. President Obama and I are determined to change this. Quite simply, a strong middle class equals a strong America. We can't have one without the other."

Obama signed a series of executive orders giving new rights to union members and people who work for government contractors.

The measures will make federal contractors offer jobs to current workers when contracts end and reverse a Bush-era order forcing contractors to post a notice telling workers they can limit financial support to unions.

The third order prevents government contractors from being reimbursed for expenses incurred in activities intended to influence workers against forming a union or taking part in collective bargaining.

On Thursday, Obama signed a new law making it easier for women to sue their employers for pay discrimination.

The President said he believed "we have to reverse many of the policies towards organized labor that we have seen these last eight years."

"I do not view the labor movement as part of the problem.

"To me, it's part of the solution."

Obama's moves won strong support from the labor movement, a key constituency in the Democratic Party's power base.

"It is a new day for workers," said Teamsters General President Jim Hoffa who attended the ceremony in the East Room of the presidential mansion.

"We finally have a White House that is dedicated to working with us to rebuild our middle class. Hope for the American Dream is being restored."

The International Brotherhood of Teamsters has more than 1.4 million members in the transportation, freight and related industries in the United States, Canada and Puerto Rico.

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US economy suffers biggest slowdown in 26 years

Washington, Jan 31 (IANS) The US economy suffered its biggest slowdown in 26 years in the last three months of 2008 as consumer spending recorded the worst slide in the post-war era - a trend that is likely to continue in the coming months.

Gross domestic product, the broadest measure of the nation's economic activity, fell at an annual rate of 3.8 percent in the fourth quarter, adjusted for inflation, according to official figures released Friday.

That's the largest drop in GDP since the first quarter of 1982, when the economy suffered a 6.4 percent decline. But the pace of contraction was less than forecast, with a buildup of unsold goods cushioning the blow.

As consumer spending accounts for more than two-thirds of overall economic activity, without the jump in inventories, the decline would have been 5.1 percent, the Commerce Department said.

Hit by tight credit and soaring job losses, Americans slammed the brakes on spending in the quarter and consumer spending fell at a 3.5 percent annual rate, with spending on big-ticket durable goods plunging at a 22 percent pace.

But it wasn't just consumers pulling back. Fixed investment in equipment and software, taken as an indication of business spending, plunged at an annual 28 percent rate. And consumers and businesses outside the United States also had less demand for US goods, as exports fell at nearly a 20 percent annual rate.

Economists warned that the less severe than expected drop in GDP was due to a number of factors that suggested more weakness ahead.

'When the economy is dropping fast it is hard for firms with plummeting sales to halt inventory accumulation,' Robert Brusca of FAO Economics was cited as saying by CNN. He said since companies are likely to respond to the excess inventories by slashing production at the start of this year, GDP will be weaker in the next few quarters.

In addition, prices for goods and services fell more than expected during the quarter. That limited the decline in GDP, which is adjusted lower to account for inflation.

The prices paid by consumers during the quarter fell at an annual 5.5 percent rate in the quarter, due primarily to lower gas prices. That's the biggest such decline in that key price measure since the Commerce Department started calculating it on a quarterly basis in 1947.

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Global recession comes as refreshing change for indigenous LCA project

New Delhi, Feb 01: The global meltdown has come as a blessing in disguise for the country's indigenous fighter aircraft development programme -- Light Combat Aircraft (LCA).

Unable to retain its flock due to the Information Technology (IT) boom in the past, India's premier Aeronautical Development Agency (ADA) believes that recession will help complete its LCA programme in time.

"After recessionary trends in the economy, we are not losing men to the IT industry, which will help our efforts to complete the programme in time," ADA Director P S Subrahmanyam said here.

On the exodus of LCA programme team members to IT industries in early part of the decade, Subrahmanyam said, "The LCA team comprises 350 members and in last five years more than 150 of them left for greener pastures."

After the global economy started to slowdown, former members of the LCA team have started approaching DRDO to work on the indigenous aircraft development programme.

"I am getting feelers from people who had left us then and joined companies such as Wipro, Satyam, Infosys and other major IT companies that they again want to join the prestigious programme," Subrahmanyam said.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Indian IT spending to grow slow in 2009

New Delhi, Feb 01: The country's IT spending is expected to slacken this year, growing at an annual 14.1 per cent, down from 18.1 per cent recorded in 2008 due to the ongoing economic slowdown, according to a research report.

Springboard Research in its brief titled 'India IT Market Predictions 2009' said, IT spending in verticals like retail and real estate will be hardest hit, while the advent of 3G and a protected financial system will help sustain growth in the telecom and banking/finance verticals respectively.

In addition, government initiatives will spur economic growth and increase spending on public security and national defence, coupled with rural sector initiatives should include outlays for new technology in the years to come.

"With the economic crisis expected to further worsen, we will see IT spending affected in India - although not to the same degree as in North America, Europe and other Asia Pacific markets like Japan, Australia and Korea", said the firm's Research Research Manager Manish Bahl.

"On the other hand, the country had delivered impressive growth and profits to both leading multinational and domestic vendors last year, and for many of these vendors, their Indian revenues grew more than 50 per cent in 2008," added Bahl.

The study highlights the top 10 trends that will shape the IT market in India this year including the arrival of 3G which would unlock enormous opportunities for the IT vendors.

Also, cost concerns would drive a key focus on IT infrastructure consolidation and economic pressures to drive SMBs towards outsourcing.

Start-ups and smaller firms will become more important accounts for IT vendors while virtualization would gain traction in medium and large sized enterprises and IT outsourcing could be seen as a catalyst to HR retention and cost reductions during the economic squeeze, it said.

Online advertising markets will gain momentum with the emergence of niche social networking sites and regional portals and Public Sector to buoy IT spending, the Springboard report pointed out.

Further, it said, Indian enterprises will be more focused on their "core" areas to foster specialization and this will increase their dependence on technology to reduce operational expenditure.

Also, the increased use of the internet and IT will continue driving infrastructure requirements that will create new opportunities in the Indian market, it said.

"Albeit in a slow pace, SMBs will also play their part to drive the market and this is well supported by the changing attitude of companies to view IT as an investment," Bahl said.

Besides, the increased use of the internet and IT will continue driving infrastructure requirements that will create new opportunities in the Indian market.

Moreover, the current economic slowdown will trigger a new kind of competition in the market as enterprises focus more on ROI calculations, enhanced planning and extended involvement of the IT vendors.

The ongoing crisis will provide a platform for Indian companies to be more productive and gain a level of maturity from both the business and IT perspective.

At the end of the crisis, India is expected to emerge as a more sophisticated IT market that plays a bigger role in the overall Asia Pacific IT market.

"While major multinational vendors continue to view India as a critical growth market, we expect other US-based firms to amplify their resource influx into the region and set up special teams to focus only on emerging markets such as India," Bahl said.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


No answer at Davos forum to global meltdown

Davos, Feb 01: Mired in indecision and uncertainty, the world's foremost gathering of the best and brightest in government and business failed to come up with any new plan to stem, much less reverse, the global financial meltdown.

The five-day World Economic Forum in this Swiss alpine resort wrapped up today in the same atmosphere of doom and gloom that it began, with a realisation that the depth of the crisis is still unknown and the solution remains elusive.

"Everybody's lost in Davos," said Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore.

"No one seems to have a clear understanding of how big this crisis is and what we need to do to get out of it." he told a news agency.

"My own view is that you really need to do a fundamental reexamination of the whole global system to see what went wrong, and nobody here is yet ready to ask these kinds of fundamental questions in Davos."

There was widespread agreement that there's plenty left to do, starting at the April meeting of leaders of the 20 largest economies in London.

"Now the hard work begins," the forum's founder, Klaus Schwab, said, calling for a redesign of the global systems of banking, financial regulation and corporate governance.

Cautioning that the G20 wouldn't be able to solve all the issues, Schwab announced that in a few weeks the forum would start a "Global Redesign Initiative" which he said was supported by almost every world leader who attended this year's forum, from China's Premier Wen Jiabao to UN Secretary-General Ban Ki-moon.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


WEF honours Amitabh with Crystal Award

Legendary Bollywood actor Amitabh Bachchan has been honoured with the World Economic Forum's Crystal Award at Davos for his contribution to the world of cinema.

Bachchan received the award along with another Indian artist - Mallika Sarabhai - a Kuchipudi and Bharatnatyam danseuse.

Bachchan and Sarabhai would be joining the league of famed US cellist Yo-Yo Ma and British actress Emma Thompson, who bagged the award in 2008.

"I have no idea there is so much visibility to Indian cinema in other parts of the world. Just so amazing ... This recognition, this attention, this awareness to our world and our craft. So overwhelming," Bachchan wrote from Davos.

Other Indian names associated with the award are veteran actress Shabana Azmi, sarod maestro Ustad Amjad Ali Khan and renowned sitar exponent Pandit Ravi Shankar.

Besides, Chinese martial arts movie star Jet Li and famous musician Jos Antonio Abreu was also honoured.

Crystal Award pays tribute to decisive role of arts and culture in creation of global understanding and peace.

The World Economic Forum is a Geneva-based non-profit foundation known for its annual meeting, which brings together top business leaders, international political leaders, selected intellectuals and journalists to discuss the most pressing issues facing the world, including health and environment.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Indian IT spending to grow slow in 2009

The country's IT spending is expected to slacken this year, growing at an annual 14.1 per cent, down from 18.1 per cent recorded in 2008 due to the ongoing economic slowdown, according to a research report.

Springboard Research in its brief titled 'India IT Market Predictions 2009' said, IT spending in verticals like retail and real estate will be hardest hit, while the advent of 3G and a protected financial system will help sustain growth in the telecom and banking/finance verticals respectively.

In addition, government initiatives will spur economic growth and increase spending on public security and national defence, coupled with rural sector initiatives should include outlays for new technology in the years to come.

"With the economic crisis expected to further worsen, we will see IT spending affected in India - although not to the same degree as in North America, Europe and other Asia Pacific markets like Japan, Australia and Korea," said the firm's Research Research Manager Manish Bahl.

"On the other hand, the country had delivered impressive growth and profits to both leading multinational and domestic vendors last year, and for many of these vendors, their Indian revenues grew more than 50 per cent in 2008," added Bahl.

The study highlights the top 10 trends that will shape the IT market in India this year including the arrival of 3G which would unlock enormous opportunities for the IT vendors.

Also, cost concerns would drive a key focus on IT infrastructure consolidation and economic pressures to drive SMBs towards outsourcing.

Start-ups and smaller firms will become more important accounts for IT vendors while virtualization would gain traction in medium and large sized enterprises and IT outsourcing could be seen as a catalyst to HR retention and cost reductions during the economic squeeze, it said.

Source: Business Standard


'Computer industry will recover from recession'

The computer industry is fast developing as it is meeting the demands of its customers uncompromisingly, observed K. Suryanarayana, the academic relationship manager of Tata Consultancy services.

He was addressing students at the one-day workshop 'New software development methodologies' at Kakatiya Institute of Technology & Science (KITS), Warangal being organised by the Industry-Institute Partnership Cell. The components in the development of software are to be clearly understood by the students in order to get success in getting a job in good computer industry, he pointed out.

The chairman of the function, principal C.V. Guru Rao said due to the present recession in the world, the job opportunities for the students are slightly decreased, but it would recover soon. About 400 student delegates and professors participated.


'IT exports to decline in FY' 09'

New Delhi, Feb 04: India's software and services export revenue, including IT and BPO, is expected to clock 16-17 percent growth in the current fiscal, posting a revenue of USD 47 billion in 2008-09.

NASSCOM had earlier estimated that the current year software and services export revenue could touch 50 billion dollars, and the anticipated growth rate then was 21-24 percent.

Industry body NASSCOM today said the revenue estimate for FY '11 (2010-11) in software and services export is USD 60-62 billion. The combined software and services revenue (export and domestic) is estimated to touch USD 60 billion in 2008-09, it said.

"Due to strong fundamentals and other derivatives of value to customers the industry will continue to grow despite global slowdown," Ganesh Natarajan, Chairman, NASSCOM, today said while releasing the performance and future trends of the IT industry in the current fiscal.

The BPO export is estimated to grow at 17.5 percent in the current fiscal and touch USD 12.8 billion.

The industry remained a net hirer with direct employment in the IT-BPO sector likely to touch 2.23 million.

The BPO industry will see sustainable growth over the next two years," said Som Mittal, president, NASSCOM.

courtesy :

Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Montek for continuing stimulus in 2009-10 to counter slowdown

Seeking to counter the impact of the global slowdown on India, the Planning Commission on Tuesday (February 3) said that Centre should continue to provide stimulus to the economy in 2009-10, even while allowing the states to borrow more funds to step up capital expenditure.

Pointing out that the "global economy is not in good shape," Planning Commission Deputy Chairman Montek Singh Ahluwalia, who has recently returned from the World Economic Forum meeting at Davos, told reporters the "fiscal stimulus that we have given during the year should continue for one more year".

The permission given to states, as part of the second stimulus package, to borrow additional 0.5 per cent of their Gross State Domestic Product (GSDP), over and above 3 per cent, during the current fiscal should continue in 2009-10, he added.

The government, as part of the second stimulus package announced last month, allowed states to borrow an additional 0.5 per cent of GSDP to raise Rs 30,000 crore to fund capital expenditure. This was in addition to the 3 per cent of the GSDP allowed by the Finance Ministry in accordance with the recommendations of the Twelfth Finance Commission.

In order to boost the economy, reeling under the impact of a global slowdown, the government had announced slew of steps that include reduction in excise duty by 4 per cent and increasing public expenditure.

The government, through two supplementary demands of grants, raised public expenditure to Rs 9,00,000 crore, over and above Rs 7,50,000 crore estimated in the budget for 2008-09.

Besides, the RBI has announced monetary steps releasing Rs 3,88,000 crore and signalling a soft interest rate regime by cutting various policy ratios and rates.

courtesy : Timesnow.

Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Global downturn to cost 15 lakh Indian jobs by March

New Delhi, Feb 03: With global downturn taking its toll on India, about 15 lakh people employed in the exporting sector will be out of jobs by March this year, Commerce Secretary G K Pillai said on Tuesday.

"We have figures from August till middle of January. We estimate something like between 7-10 lakh job losses till now," Pillai told in a media interview.

He said if the slowdown, especially in the US, Europe and Japan continues, another five lakh people would be unemployed by March.

Earlier in the day, Pillai told reporters that the prospects for the country's outward trade look bleak for the next fiscal as well.

"It would be an achievement if we reach USE 160 billion-mark in 2009-2010," he said.

After an impressive expansion of over 30 per cent in the first six months of 2008-09, export growth has turned negative with the result that the total shipments in the current fiscal would fall much short of the USD 200 billion target.

Though exports account for less than 20 per cent of the country's GDP, the sector is highly employment oriented with the total estimated 6.5 crore workforce.

"Exports are going to come down and we have to live with it," Pillai said.

courtesy :

Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Nasscom scales down IT-BPO export growth for FY09

India's software and services export revenue, including IT and BPO, is expected to clock 16-17 per cent growth in the current fiscal, posting a revenue of $47 billion in 2008-09.

NASSCOM had earlier estimated that the current year software and services export revenue could touch 50 billion dollars, and the anticipated growth rate then was 21-24 per cent.

Industry body NASSCOM on Wednesday said the revenue estimate for FY '11 (2010-11) in software and services export is $60-62 billion. The combined software and services revenue (export and domestic) is estimated to touch $60 billion in 2008-09, it said.

"Due to strong fundamentals and other derivatives of value to customers the industry will continue to grow despite global slowdown," Ganesh Natarajan, Chairman, NASSCOM, on Wednesday said while releasing the performance and future trends of the IT industry in the current fiscal.

The BPO export is estimated to grow at 17.5 per cent in the current fiscal and touch $12.8 billion.     
The industry remained a net hirer with direct employment in the IT BPO sector likely to touch 2.23 million.   
The BPO industry will see sustainable growth over the next two years," said Som Mittal, President, NASSCOM.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications


Jobless turn to helplines for comfort

With job losses in India mounting because of the global economic crisis, people who are caught in the eye of the storm are turning to helplines to find comfort in councellors. And those who have setup these helplines, the phone has not stopped ringing for them.

At a call centre in Thane, Mumbai, an increasing number of calls come from people who dread being laid off.

"Earlier, we had just two calls a year on this and they too were not factual. But now, it is close to two or three calls a month from those who have lost their job or fear a lay off," said Sulbha Subramanian, a helpline counsellor.

Lata Misra lost her job three months ago. Chronic headaches and sleepless nights followed. But now, she has learnt to hope instead of panic.

"Earlier, I used to be with friends and work all day. Now, I am mostly at home. I can't watch TV all day or entertain myself. At the end of it, there is that stress that refuses to go," she said.

Even those who have jobs are working hard not to get worried.

"My friend in the IT department lost his job. I saw him depressed and I have been thinking this could me and my life any day," said Kanchan Misra, an employee in the Insurance sector.

Experts believe that younger professionals can tide over tough times. But those over 40 or with heavy financial commitments would find the going tougher.

Seeking professional help is not an option for many. Most people discuss this only with family and friends. And the feeling that many are sailing in the same boat is comforting.

courtesy :
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications

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