IT companies and US economic crisis

[nithyasubramanian]

Five lakh jobs lost to recession in three months: Govt study

New Delhi, Feb 04: Five lakh people were rendered jobless between October to December 2008 due to the recession, according to the latest government study.

The findings are part of a first of its kind survey conducted by the Labour Bureau of ministry of Labour and Employment as part of a study on the effect of economic slowdown on employment in India.

A sample size of 2581 units covering 20 centres across 11 states was taken up for the survey. Eight major sectors like textile and garment industry, metals and metal products, Information Technology and BPO, automobiles, gems & jewellery, transportation, construction and mining industries were also included in the survey.

The total employment in all these sectors had come down from 16.2 million in September 2008 to 15.7 million by December 2008.

Exporting units had observed a higher decline in employment with gems & jewellery sector shedding 8.43 per cent of its work force. This is followed by metals and textile sector which laid off 2.6 per cent and 1.29 per cent of their work force respectively.

Among the domestic sector units, gems & jewellery sector again witnessed the maximum decline in employment with 11.9 per cent of their work force losing jobs.

This was followed by automobiles and transport sectors who shed 4.79 per cent and 4.03 per cent of their work force. The study also found that the overall decline in contract workers was observed to be 3.88 percent during the period in comparison to only 0.63 per cent decline for direct employees.

Contradicting popular belief that the IT and BPO sector during the same period had seen retrenchment the sector had infact increased its employment marginally by 0.33 per cent.

The government, which has so far said that the economic slowdown would have very little impact on the economy other than on parts of the financial system linked to the United States, now agrees with findings of international studies which suggested that developing economies will be impacted by the recession.

"The global slowdown has its implications on the domestic economy...Ministry of Labour and Employment also took a serious note of the economic slowdown and it felt the need to have an assessment of its impact on employment to enable the government to take preventive and ameliorative measures to arrest the decelerating employment in the country," Ministry of Labour and Employment Secretary Sudha Pilla said.

All eight industry sectors had experienced an average decline in earnings by 3.45 per cent during October to December 2008. Overall capacity utilization had reduced by 1.32 per cent per month during the period, with automobile sector witnessing a monthly decline of 7.05 per cent.

courtesy : Zeenews.com

[nithyasubramanian]

New US Attorney General warns companies against fraud

Washington, Feb 04: United States' first African-American Attorney General Eric Holder has signalled a clean break from Bush administration and has warned to hold Wall Street accountable if financial institution engaged in frauds that added to economic downturn.

On his first day in office, Holder, who was sworn in by Vice President Joe Biden, vowed to bring in a new era in the Justice department, which had been wrecked by Bush administration's politically motivated hirings and firings.

The black Attorney General said he would restore the agency's reputation. "This is a place which needs to heal," he told reporters.

Biden said henceforth the Attorney General's office would return to past standards of "no politics, no ideology, only a clear assessment of law and facts."

Holder, who was confirmed by a 75-21 Senate vote, said his agency staff would be to ensure that tax payers' money was utilised properly by the Wall Street companies.

"We won't go for witch-hunting. Yet we will drill down to see to what extent the economic troubles are the result of fraud or misconduct," he said.

"We'll find and hold people accountable," the new Attorney General said echoing the hard words of his President that bailouts packages were utilised by companies in transparent manner.

courtesy : Zeenews.com

[nithyasubramanian]

Fortune lists 100 best companies to work for

NetApp tops the list of the 100 best companies to work for, most of which have open positions and are hiring, Fortune magazine said on Thursday.

Coming in second on Fortune's 12th annual list was Edward Jones, followed by Boston Consulting Group. The list was published online on fortune.com/bestcompanies and contained in an issue set to hit newsstands on Jan. 26.

NetApp, based in Sunnyvale, California, provides storage and data management services to business.

It employs 5,000 people and topped the list due to its "employee enthusiasm for the legendary egalitarian culture," Fortune said.

Of the 100 companies, 73 are hiring, and the open positions are identified in Fortune's list, the magazine said.

California had the most number of companies on the list, at 15, followed by 14 in Texas and nine in New York.

Fifteen companies made the list for the first time, including Zappos.com, DreamWorks Animation SKG, salesforce.com, T-Mobile TMOG.UL and Accenture.

Google, which topped the list for the past two years, dropped to No. 4.

Rounding out the top 10 were Wegmans Food Markets, Cisco Systems, Genentech, Methodist Hospital System, Goldman Sachs and Nugget Market.

Fortune polled more than 81,000 randomly selected employees at 353 companies, using a 57-question survey. Two-thirds of a company's score was based on survey results and the balance was based on studies about demographics, pay, benefits, communication and other factors, it said.

courtesy : Yahoo News.

[nithyasubramanian]

Cisco sees hard times ahead

NEW YORK (CNNMoney.com) -- The global economic downturn will continue to hammer computer networking giant Cisco Systems Inc., chief executive John Chambers said Wednesday.

In its current quarter, Cisco expects to see revenue decline between 15% and 20%, he said in a conference call with analysts.

Analysts expect to see revenue fall by 11% in the third quarter, according to a poll by Thomson Reuters.

Shares of Cisco (CSCO, Fortune 500) dropped about 4% in after-hours trading after adding 22 cents to close at $15.84 in the regular session.

For its fiscal second quarter ended Jan. 24, Cisco reported a 27% drop in net income, but came in ahead of analyst estimates on earnings and revenue.

Profit totaled $1.5 billion, or 26 cents per share, compared with $2.06 billion, or 33 cents per share, a year ago.

Excluding certain one-time charges, the company earned $1.9 billion, or 32 cents per share. Analysts polled by Thomson Reuters, who usually strip out one-time items, had forecast 30 cents per share.

Sales dropped almost 8% to $9.09 billion from $9.83 billion in the same period last year. Analysts had forecast $9 billion.

Because of its size and the number of markets in which it does business, Cisco is often considered a bellwether for the technology industry.

"This is going to make people sit back and realize that this economy is going to be even harder," said analyst Kenneth Muth with wealth management firm Robert W. Baird & Co.

Cisco has taken a number of measures to reduce costs and reorganize its business over the second quarter, including a hiring freeze. But Chambers expressed reluctance about cutting jobs in the near term.

"We are not going to consider (layoffs) at this time," he said. But he added, that if Cisco was forced to cut jobs, it would likely be a large cut of about 10% of its workforce. Cisco employed 67,318 workers worldwide at the end of the second quarter.

courtesy : CNNMONEY.com

[nithyasubramanian]

Nasscom lowers IT, BPO growth to 17 percent in the current fiscal

New Delhi, Feb 05: The economic downturn has forced industry body Nasscom to lower its projection of the revenue growth rate from software and service exports (IT and BPO) to 16-17 percent in the current fiscal from the earlier forecast of 21-24 percent.

"Factoring the impact of the global economic crisis in the second half of 2008-09, the industry is expected to grow by 16-17 percent by March 2009, Nasscom president Som Mittal said.

"Despite an uncertain economic environment, the Indian IT-BPO industry will see sustainable growth over the next two years and our estimates indicate the industry will clock revenues of USD 60-62 billion by FY'11, growing at a compound annual growth rate of 15 percent per year," he added. Software and BPO export revenue is expected to touch USD 47 billion in 2008-09 from the earlier anticipated figure of USD 50 billion, Nasscom said.

The combined revenue (export and domestic) is estimated to touch USD 60 billion in 2008-09, it said. The industry, including domestic companies, recorded an overall growth of 28 percent, clocking revenues of USD 52 billion in 2007-08.

The exports segment grew by 29 percent to register revenues of USD 40.4 billion in 2007-08. With the BFSI sector accounting for almost 40 percent of the revenues of this sector, the collapse of major banks in the US and the UK, Nasscom was left with no option but to revise its targets downwards from the earlier USD 50 billion software exports estimate for FY 2009, analysts said. After growing at 28-30 percent for years, slowdown has hit the export driven industry.

The domestic IT-BPO market is expected to cross Rs 1,11,000 crore by FY 2009 exhibiting a 20 percent growth rate.

courtesy : Zeenews.com

[nithyasubramanian]

Infosys says India's Information Technology export growth may lag forecast

New Delhi, Feb 05: Growth in Indian exports of software and services this fiscal year could be below a downwardly revised forecast from the peak industry body, a senior official of Infosys Technologies said on Thursday.

"The probability that it will be lower than 16-17 percent is higher," TV Mohandas Pai, an Infosys board member, told reporters on the sidelines of a news conference.

On Wednesday, the National Association of Software and Service Companies (Nasscom) said exports of software and services would grow 16-17 percent to about $47 billion in the fiscal year ending March, sharply below an earlier forecast as the global slowdown dents outsourcing.

courtesy : Zeenews.com

[nithyasubramanian]

Layoffs, cutbacks raise joblessness in 98% US

Washington, Feb 05: As layoffs and cutbacks soared to record levels to hit workers across America, unemployment rates rose in 98 percent of metropolitan areas in the US, according to key employment reports.

The number of planned cuts announced in January rose to the highest level in seven years, according to outplacement firm Challenger, Gray & Christmas Inc cited by a TV channel. And ADP's National Employment Report found that private-sector employers cut 522,000 positions.

Job cut announcements by US employers soared to 241,749 in January, up 45 percent from December's 166,348 cuts, according to Challenger. That was the highest number of job cuts since January 2002.

Layoffs rose 222 percent - more than triple - from January 2008, when 74,986 job cuts were announced.

On the heels of the worst holiday season in decades, the retail sector was hit the hardest. Boosted in a large part by Circuit City, 53,968 job cuts were announced.

Following retail, the industrial goods industry cut 32,083 jobs last month, while the computer, pharmaceutical and aerospace industries also notched large losses.

Separately, TrimTabs Investment Research said Wednesday that the US economy lost 650,000 jobs in January after shedding 683,000 jobs in December.

The Labour Department reported that the unemployment rates in 363 of 369 metropolitan areas rose in December 2008, compared with the same month in the prior year. In November, 364 of 369 areas reported higher unemployment rates.

According to the report, 168 areas reported jobless rates of at least 7 percent, compared with just 33 a year ago, and 40 areas reported rates that were higher than 10 percent. Just 22 metropolitan regions had unemployment rates that were under 4 percent, down from 112 last year.

A total of 95 regions registered unemployment rates that were at least 3 percentage points higher than a year ago. Not one region had a jobless rate decrease of more than 0.2 percentage point during that period.

The Labour Department is expected to report Friday that the economy lost another 500,000 jobs, according to a consensus estimate of economists surveyed by Briefing.com.

The national unemployment rate is expected to rise to 7.5 percent from its current level of 7.2 percent, its highest rate since January 1993.

courtesy : Zeenews.com

[nithyasubramanian]

Software growth rate could fall further: Infosys

New Delhi (PTI): The country's second-largest IT company Infosys on thursday said that India's software export growth rate could be less than the forecasted 16-17 per cent during the current fiscal on the economic downturn.

"The probability that the growth rate will be lower than the 16-17 per cent is higher (than the chance of it being higher)," Infosys Director (Human Resources) T V Mohandas Pai said.

Scaling down India's software and services export revenue, including IT and BPO, industry body NASSCOM yesterday said that the sector is expected to clock 16-17 per cent growth in the current fiscal, posting a revenue of USD 47 billion in 2008-09.

NASSCOM had earlier estimated that this fiscal's software and services export revenue could touch 50 billion dollars, and the anticipated growth rate then was 21-24 per cent.

Pai said the customer is not spending on IT and there is a pricing pressure on the software companies.

"The customer wants more value for his money," he said.

Shares of Infosys were down 3.35 per cent at Rs 1,240 on the Bombay Stocks Exchange.

courtesy : The Hindu.

[nithyasubramanian]

Software and services exports to reach $47 b in 2008-09

The BPO industry to see sustainable growth in the next two years

Exports to Europe registered the highest growth

Nasscom team to hold talks with new U.S. administration

NEW DELHI: The information technology and the business process outsourcing sector exhibited resilience against global economic turbulence even as the National Association of Software and Service Companies (Nasscom) on Wednesday estimated the software and services exports growth target at 16-17 per cent against 21-24 per cent to 16-17 per cent.

"Revenues from software and services exports are likely to reach $47 billion in 2008-09 against the earlier estimates of $50 billion, while the total IT-BPO industry, which accounts for 5.8 per cent of the country's gross domestic product, is expected to touch $71.7 billion in 2008-09," Nasscom Chairman Ganesh Natarajan said here while releasing the performance and future trends of the IT industry in the current fiscal.

Nasscom report says that the domestic BPO market would grow by over 40 per cent, while BPO exports are estimated to register a growth of 17.5 per cent to reach $12.8 billion. Similarly, IT services exports are estimated to grow by 16.5 per cent to $26.9 billion, while software products and engineering services would grow by 14.4 per cent to $7.3 billion.

Stating that exports to Europe registered the highest growth, while the U.S. remains the dominant market, Nasscom President Som Mittal said that uncertain economic environment would prevail in 2009 and the Indian IT industry was likely to grow by 15 per cent annually till 2010-11.

Exports were likely to reach $60-62 billion by 2010-11.

"Due to strong fundamentals and other derivatives of value to customers, the industry will continue to grow despite global slowdown. The BPO industry will see sustainable growth over the next two years, Mr. Mittal added. The IT and BPO industry would generate new jobs, giving 22.3 lakh direct and 80 lakh indirect jobs.

Meanwhile, a high-level Nasscom team will be on a five-day visit to the U.S. next month to hold talks with the new administration there, top politicians, thinks-tanks and corporates to convince them of the benefits of outsourcing and immigration issues. Nasscom will also raise the 'totalisation' issue to avoid double taxation on income in the U.S. Indians with H1B or L1 visas contribute significantly to the US social security schemes every year, but do not the get benefits since India and the U.S. does not have a 'totalisation' agreement.

courtesy : The Hindu.

[nithyasubramanian]

Infosys rocks to raise 'green' awareness

Bangalore (IANS): IT bellwether Infosys Technologies Ltd on Wednesday hosted a 'green' rock festival in its sprawling campus here to raise awareness about preserving the environment and address global warming to prevent climate change.

"About 1,200 Infoscions participated in the three-hour long rock fest held at the amphitheatre of the green campus in the electronics city. About 600 students from seven leading city colleges took part in the fest with its theme as green," an Infosys' spokeperson told IANS.

Christened 'Infy Rocks', the fest was organised by 'Green Connect', the environmental sustainability arm of the 'Voice of Youth', with Insync, the campus engagement initiative of the global software major.

"The music fest is an innovative effort by our employees to ignite youth in preserving natural resources and adopt sustainable solutions," the company said in a statement.

The Green Connect programme, spearheaded by Infosys chief mentor N.R. Narayana Murthy as its ambassador, intends to meet its objective through a five-phase cycle towards environmental sustainability called the 'Green Connect Vision' -- 'Encourage-Engage-Energise-Emerge-Enhance-Encourage'.

"Global warming has been a much bandied term in the last few years. Though everyone from corporates to individuals chant the 'green' mantra, few companies put their green vision into action. Infosys is, however, moving forward with firm steps towards preserving the environment," the statement affirmed.

Percussionist Murali Krishnan and singer-cum-musician Chris Avinash compered the event. Among the participant colleges were Bangalore Institute of Technology, M.S. Ramaiah Institute of Technology, St Joseph's College of Arts and Science and Christ College.

courtesy : The Hindu.

[nithyasubramanian]

World stock markets fall amid grim company news

HONG KONG (AP): Most Asian stock markets sank on Thursday, with Japan's index down over 1 percent, as more grim corporate news undermined optimism that China's stimulus measures will help its economy weather the global slowdown. European stocks opened lower.

An early rally was snuffed out in the afternoon by the drumbeat of ugly results from major companies. China's Lenovo Group, the world's fourth-largest computer manufacturer, announced its first quarterly loss in nearly three years and said its chief executive, William J. Amelio, had resigned.

The downbeat earnings reports seemed to sap early enthusiasm over figures about Chinese manufacturing and lending that suggested the world's third-largest economy was faring better than expected despite slumping demand for its exports.

``Governments are coming out with stimulus measures but you can't make the economy and corporate earnings turn around in such a short time,'' said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. ``The global economy is still in the downturn, so we're going to have more bad times.''

Japan's Nikkei 225 stock average slipped 89.29 points, or 1.1 percent, to 7,949.65, South Korea's Kospi slid 1.5 percent to 1,177.88 and China's Shanghai index, up more than 1 percent earlier in the day, lost 0.5 percent to 2,098.02.

Markets in Australia, India and Taiwan also retreated. In Hong Kong, the Hang Seng rose 0.9 percent at 13,178.90, but closed well off its highs.

European markets joined the downward trend, with major benchmarks in Britain, Germany and France off about 1 percent or more. U.S. futures were mixed. Dow futures rose 5, or 0.1 percent, to 7,930 and S&P500 futures fell 2.6, or 0.3 percent, at 827.20.

In Hong Kong, Lenovo shares slid 0.7 percent after the company posted a $96.7 million quarterly loss Thursday due to a drop in sales amid global turmoil.

South Korea's Hynix Semiconductor Inc., the world's second-largest manufacturer of memory chip, dropped 2 percent. The firm said its fourth-quarter net loss more than doubled amid falling prices and weakness in the South Korean won.

In Japan, electronics maker Sanyo said after the market's close that it sank to a loss for the fiscal third quarter because of declining sales and a strong yen.

The corporate gloom extended to Europe, where leading German bank Deutsche Bank AG announced a hefty euro4.8 billion ($6.1 billion) net loss in the fourth quarter, resulting in a shortfall for the full year. The company said it expected global economic weakness to continue posing ``significant challenges.''

The move downward in Asian and Europe tracked U.S. markets, where another round of bleak earnings from leading companies such as Kraft Foods, Walt Disney and Time Warner sent stocks lower. The reports added to concerns about spending by U.S. consumers. Investors are already bracing for Friday's release of the U.S. jobs report.

The Dow fell 121.70, or 1.5 percent, to 7,956.66, as did broader indicators. The Standard & Poor's 500 index fell 6.28, or 0.8 percent, to 832.23, and the Nasdaq composite index slid 1.25, or 0.1 percent, to 1,515.05.

Oil prices were little changed in Asia trade, with light, sweet crude for March delivery trading up 3 cents at $40.35 a barrel on the New York Mercantile Exchange. The contract dropped 46 cents to settle at $40.32 overnight.

The dollar traded at 89.69 yen, up from 89.45 yen. The euro weakened to $1.2832 versus $1.2838.

courtesy : The Hindu.

[dwarakesh]

IT firms offshore work to cut costs

Faced with budget constraints and margin pressures, Indian IT services providers such as Tata Consultancy Services (TCS), Infosys, Wipro and HCL are moving more work offshore (to India) rather than onsite (at the client's site) in a bid to contain costs.

The offshore-onsite mix has changed from 70:30 ratio to 85:15. While this benefits clients who do not want to pay extra in a slowing economy, it also helps IT companies utilise their bench strength better. Holding a bench at offshore locations is cheaper by two-and-a-half times (since salaries are paid in Indian rupees) compared to maintaining a bench onsite (paid in dollars, euros or pound).

The top four IT firms (since Satyam is now out of the pack till it restates its figures), note analysts, have increased their offshore revenue component by 80-150 basis points (bps) to optimise costs. Moreover, fixed-price contracts have also been increased by 2-4 percentage points (or 200-400 bps) over the quarter because they deliver better realisations than time and material billing.

For instance, TCS, India's largest IT software and services exporter, saw an improvement in operating margins by 53 bps through moving more work offshore and the offshore mix also improved by 106 bps in the third quarter that ended December 31, 2008. "In this quarter, we have achieved an offshore movement of 106 basis points and achieved a good volume growth of 2.42 per cent and then maintained our pricing," said N Chandrasekaran, TCS' chief operating officer, during an analyst call after the last quarterly results.

India's second-largest IT services player Infosys' offshore volumes sequentially grew 3.3 per cent, while onsite volumes dropped by 1 per cent in the quarter. The company is also seeing its offshore revenues going up as most of enterprise resource planning (ERP) work is done from offshore now. Moreover, the IT heavyweight feels that telecom majors in France and Germany have announced budget cuts and hence need to engage with offshore players.

However, moving work offshore also implies lower margins for IT firms because the billing rates offshore are almost half that of onsite. According to Sabyasachi Satpathy, director and co-founder of Mindplex Consulting, an outsourcing advisory services firm, "There is a definite rebound towards offshoring and the vendors are cutting down the onsite work. The reason being that there are not enough projects and the clients also want to reduce costs. This culminates in the IT companies taking a hit on their toplines."

"The margins of the IT companies are hit because their clients heavily cut down on the discretionary projects. In fact, on a quarterly basis, the margins are hit 2-3 per cent," said Avinash Vashistha, chairman and CEO of research and advisory firm Tholons.

In the the twin challenges of customers looking for price cuts and stiff competition between vendors chasing fewer deals, analysts say that cost-cutting will be the foremost driver that will hit the IT companies' margins. "Margins can vary between 20- and 30 per cent depending on the type of the project, its pricing and the vertical that is being served," added Satpathy. TCS has increased its offshore revenue by 1per cent and sees more offshore movements in the coming quarters. Wipro's revenue mix from fixed price went up by 440 bps and offshore mix rose by 90 bps in the quarter.

HCL Tech saw the same trend with realisation in constant currency going for offshore by 1.5 per cent, while the onsite went down 1.2 per cent in the quarter (Q2 for HCL Tech) under review. "There is a cost for knowledge capture, which is called transition and then there is a cost for moving onsite work offshore or moving from existing vendor employees to your employees," said Vineet Nayar, CEO, HCL.

For Infosys, the pricing on reported basis fell 5.8 per cent onsite and 4.6 per cent offshore and it considers this as one big operational lever. "This increase in offshoring is not enough for our IT firms as of the total outsourceable potential, we have explored only 15 per cent of it. So there is a long way to go," explained Vashishtha.

Source: Business Standard

[nithyasubramanian]

Infosys mulls pay cuts

New Delhi, Feb 05: Employees of Infosys Technologies may have to live with a salary cut and without any significant increment, even as the IT bellwether has virtually frozen fresh recruitments on account of the global meltdown, a top company official has said.

"A part of our salary is determined by variable sales component, which is the percentage of the company's revenue," said Infosys' director for human resources T V Mohandas Pai.

"Since the revenues are down, the salaries will naturally be trimmed."

Speaking to reporters on the sidelines of a press conference here, Pai said the leading software exporter and business process outsourcing firm may also opt out of salary hikes because of the slowdown.

"The increments may not happen this year. But, if they do, they will be subdued."

Pai also maintained that the company will honour the 20,000 campus offers made last year, but added that fresh hiring has been frozen.

Infosys, India's second largest IT firm, had reported a net profit of Rs.16.41 billion (USD 335.5 million) for the third quarter of this fiscal, to log a 33 percent year growth. The jump was above expectations but below what it had logged in the past decade.

Speaking about the fallout of the USD 1.43-billion Satyam Computer Services scam, Pai said Infosys had, indeed, received offers from some customers of the rival group, which were being analysed.

"Our chief executive officer (K Gopalakrishnan) had earlier made an announcement that we have received offers from Satyam customers," he said, adding: "But we do not go and poach on customers."

Gopalakrishnan had also said last month that there was no pro-active move on the part of his company to approach Satyam customers. "But if they come on their own, we will look into their proposals case-by-case."

courtesy : Zeenews.com

[nithyasubramanian]

US jobless claims touch 26-yr high

Washington, Feb 05: The claims for unemployment benefits from the state have surged to a stunning 6, 26,000 for the week ended January 31, reportedly the highest since 1982.

The latest data from the US Labor Department showed that initial jobless claims jumped by 35,000 to 6, 26,000.

"In the week ending January 31, the advance figure for seasonally adjusted initial claims was 6,26,000, an increase of 35,000 from the previous week's revised figure of 591,000," the Labor Department said in a statement.

Moreover, the number of people receiving jobless benefits skyrocketed to 4.79 million for the week ended January 24. The latest figure is considered to be the most since the authorities began to keep records in 1967.

The statement noted that the advance number for seasonally adjusted insured unemployment during the week ending January 24 was 4.79 million, an increase of 20,000 from the preceding week's revised level of 4.77 million.

"The advance seasonally adjusted insured unemployment rate was 3.6 percent for the week ending January 24, unchanged from the prior week's unrevised rate," the statement said.

On Wednesday, the ADP (Automatic Data Processing Inc) National Employment Report showed that non-farm private employment on a seasonally adjusted basis, declined "5,22,000 from December 2008 to January 2009".

ADP said the report for January estimates "non-farm private employment in the service-providing sector fell by 2, 79,000".

While the goods-producing sector shed 2, 43,000 jobs, the manufacturing industry saw the loss of 1, 60,000 jobs last month.

According to the report, large businesses which are defined as those with 500 or more workers slashed 92,000 jobs. Further, medium-size and small-size entities reduced their workforce by 2, 55,000 and 1, 75,000 employees, respectively.

Medium-size companies are those having 50 to 499 people whereas small-size firms are described as those with less than 50 workers.

With the financial turmoil rattling the American economy, many of the corporates including the big names like construction manufacturer Caterpillar and pharma major Pfizer have announced massive layoffs. Both companies would be slashing their headcount by as much as 20,000 employees.

The US economy which officially entered recession in December 2007, had contracted 3.8 per cent in the fourth quarter of 2008.

courtesy : Zeenews.com

[nithyasubramanian]

Wall St up on hopes of accounting rule change

NEW YORK: U.S. stocks rallied on Thursday on investor hopes that the government's plan to shore up the financial system will include a change in accounting rules that would stem bank write-downs and spur lending. Bank stocks reversed losses in late morning to lift the Dow off its lowest level since the bear market low of Nov. 21. Bank of America finished up 3 percent, while JPMorgan rose 2.1 percent and the S&P financial index rose 1.4 percent. A solid January sales report from Wal-Mart, coupled with better-than-expected reports from a few other retailers added to the positive tone. "Anything that helps the banks is helpful for the economy if they can start lending," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois. "Wal-Mart news was good, so that also helped." The Dow Jones industrial average rose 106.41 points, or 1.34 percent, to 8,063.07. The Standard & Poor's 500 Index gained 13.62 points, or 1.64 percent, to 845.85. The Nasdaq Composite Index climbed 31.19 points, or 2.06 percent, to 1,546.24. The S&P 500 is now off 6.4 percent since the start of 2009, but has risen 12.4 percent since the bear market low hit in November. A day before the release of the January non-farm payrolls report, investor sentiment got a boost from talk that Washington would suspend an accounting requirement on the recognition of losses that has resulted in billions of write-downs for banks. The Obama administration is due to announce its bank rescue plan next week. There was also encouraging news on the earnings front on Thursday. Akamai Technologies Inc,whose technology helps companies run websites and online businesses, posted a quarterly profit and revenue above Wall Street expectations, sending its shares up 18.1 percent to $16.73 on Nasdaq. Investors also snapped up shares of technology bellwethers, including Apple and Cisco Systems, as a loosening up of lending would boost both consumer and business spending. Apple added 3.1 percent to $96.46 to become the Nasdaq's top boost, while Cisco rose 3.2 percent to $16.35 after initial disappointment with the company's revenue outlook for the current quarter dissipated. Wal-Mart was the top boost to the Dow, jumping 4.6 percent to $48.56 on the New York Stock Exchange after the discounter posted solid January sales. Among bank stocks, JPMorgan shares rose 2.1 percent to $24.54, while Bank of America, which earlier had fallen more than 10 percent to its lowest level since 1984, ended up 3 percent at $4.84. The KBW bank index was up 1.8 percent, after earlier having been as much as 6.8 percent lower. Even with Thursday's rise, financial shares are down 28 percent so far this year. Companies in the basic materials sector rose on higher metals prices, with aluminum producer Alcoa Inc up 3.1 percent to $8.06. Miner Freeport McMoRan jumped 3.9 percent to $28.35. Volume was active on the New York Stock Exchange, where about 1.63 billion shares changed hands, above last year's estimated daily average volume of 1.49 billion shares, while on the Nasdaq, about 2.56 billion shares traded, above last year's daily average of 2.28 billion. Advancers outnumbered decliners on both the NYSE and Nasdaq by a ratio of about 9 to 5.

courtesy : ExpressBuzz.

[nithyasubramanian]

US likely to have lost 525,000 jobs in Jan

New York, Feb 06: US non-farm payroll are estimated to have shed more than half a million jobs in January after losing a similar number in December as employers, fearing the impact of a weak economy on sales and profits, shrank their work forces to cut costs.

A poll of 82 economists by Reuters produced a median estimate of 525,000 jobs lost in January after 524,000 jobs were shed from non-farm payrolls in December. Estimates of January job losses ranged from 400,000 to 780,000.

Manufacturing payrolls were estimated to have lost 139,000 jobs, an unsurprising figure given gloomy readings on regional and nationwide manufacturing indexes.

Average hourly earnings were estimated to have risen a slight 0.2 percent after rising just 0.3 percent in December.

US Labor Department data is due at 8:30 am EST on Friday.

A sampling of forecasts and analysis on the upcoming employment data follows:

CARL RICCADONNA, SENIOR U.S. ECONOMIST, DEUTSCHE BANK SECURITIES:

Forecast: Non-farm payrolls -400,0000

Unemployment rate 7.3 percent

"Even though on the surface, 400,000 jobs lost in January will look like an improvement from even steeper losses in December, the concern is that the number is related to seasonal adjustment issues. The reason we have a smaller decline than consensus is that all of the layoffs that usually happen in the retail industry after the holiday season won't happen this year because temporary hiring for the holiday shopping season took place on a much reduced scale at the end of 2008."

"So the layoffs of those temporary workers that usually occur in January and February will occur on a much smaller scale. The seasonal adjustments thus will probably make job losses look less severe than is the true underlying case. That means labor market weakness will be back with a vengeance, possibly as early as February, but certainly at the end of this quarter and in the second quarter. Fanning the flames of that concern is the fact that we had such a large inventory build-up in the fourth quarter which has to be worked down. That means production will be pulled back even more severely in the current quarter, leading to even more layoffs."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

Forecast: Non-farm payrolls -500,000

Unemployment rate 7.4 percent

"We're looking for a drop in non-farm payroll jobs of 500,000 and for unemployment to be 7.4 percent. We judge that to be consistent with a variety of indicators showing weakening in the economy and job market.

"There is some possibility that the decline will be less than our forecast because of vagaries in seasonal adjustments for retail workers. Stores hired fewer temporary workers than normal for the holiday shopping season so as a consequence fewer than normal workers were laid off in January. We've factored in a small influence for that. If we underestimated that adjustment, non-farm payrolls could show a smaller drop.

"This is also a month where the change in employment from December to January is less meaningful. This is the time of the year for seasonal adjustment revisions. We expect them to be negative revisions, but how they'll affect individual months is anybody's guess.

RDQ ECONOMICS:

Forecast: Non-farm payrolls -400,000 jobs

Unemployment rate 7.4 percent

"The ADP employment report corroborates other data in suggesting that underlying labor market conditions remained very weak in January. We expect, however, that a technical issue related to seasonal adjustment factors in the retail sector may result in nonfarm payrolls falling by less than recent trends in January and we look for a 400,000 job decline in the month."

courtesy : Zeenews.com

[nithyasubramanian]

Layoffs mount as recession drags on

WASHINGTON (AP): Worn down by a drawn-out recession, cost-cutting employers are laying off workers at an alarming clip and there's no end in sight.

The Labor Department releases a report Friday expected to show that January was another cruel month for workers and companies.

With employers in no mood to hire, the unemployment rate is expected to jump to 7.5 percent in January from 7.2 percent in December, according to economists' forecasts. If they are right, that would mark the highest jobless rate in 17 years.

And after suffering heavy job losses last year, the country probably lost another 524,000 jobs month, getting the new year off to a rotten start. Some think the number of jobs reductions in January will be higher _ 600,000 or 700,000.

Employers are slashing payrolls and turning to other ways to cut costs _ including trimming workers' hours, freezing wages or cutting pay _ to cope with shrinking appetites from customers in the United States and in other countries, which are struggling with their own economic troubles.

``It is as rocky as I've ever seen it. Businesses have seen such revenue shortfalls that they are really up against the wall and have no choice but to cut workers,'' said Mark Vitner, an economist at Wachovia Corp.

An avalanche of layoffs is slamming the nation from a wide swath of employers.

Caterpillar Inc., Pfizer Inc., Microsoft Corp., Estee Lauder Cos., Time Warner Cable Inc., and Sprint Nextel Corp. are among the companies slicing payrolls. Manufacturers _ especially car makers _ construction companies and retailers have been particularly hard hit by the recession. Talbots Inc., Liz Claiborne Inc., Macy's Inc. and Home Depot Inc. are all cutting jobs. So are Detroit's General Motors Corp. and Ford Motor Co.

Americans cut back sharply on spending at the end of last year, thrusting the economy into its worst backslide in a quarter-century. The tailspin could well accelerate in the current January-to-March quarter to a rate of 5 percent or more as the recession drags on into a second year and consumers and businesses burrow deeper under all the economy's negative forces.

Vanishing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench. And, in turn, companies are pulling back. It's a vicious cycle where all the economy's problems feed on each other, perpetuating a downward economic spiral.

Many economists predict the current quarter _ in terms of lost economic growth _ will be the worst of the recession.

With fallout from the housing, credit and financial crises _ the worst since the 1930s _ ripping through the economy, analysts predict up to 3 million jobs will vanish this year _ even if Congress quickly approves the stimulus measure.

President Barack Obama has been making repeated pleas to Congress to swiftly enact a multibillion-dollar package of increased government spending including big public works projects as well as tax cuts to revive the economy and create jobs. Obama says his plan will save or create more than 3 million jobs in the next two years.

The Senate is racing ahead to complete action on a $920 billion plan_ including more money for unemployment benefits _ that will have to be reconciled at some point with the $819 billion package passed by the House.

The economy's problems have proven stubborn. Despite record low interest rates ordered by the Federal Reserve and a raft of radical programs, including a $700 billion financial bailout, consumers and businesses face high hurdles to borrow money, foreclosures are skyrocketing, home prices are sinking and Wall Street remains on edge.

courtesy : The Hindu.

[nithyasubramanian]

US jobless claims surge to highest in 26 years

The number of Americans filing for first-time unemployment benefits last week topped 600,000, a level not seen since October 1982, according to a government report released on Thursday.
The number of initial jobless claims jumped to a much-higher-than-expected 626,000 in the week ended on Jan 31, according to the US Labour Department. That's up from a revised 591,000 in the previous week and the highest level since the last week of October 1982, when jobless claims reached 637,000.

Economists polled by Briefing.com were expecting the number to come in at 580,000 for the most recent week. The four-week moving average for weekly claims totalled 582,250, up from the previous week's revised figure of 543,250.

One economist said that as bad as the report is for the labour markets, the sharp spike in the initial claims could be a peak.

That would indicate the recession is closer to the end than it is to the start, according to Robert Brusca, chief economist at Fact and Opinion Economics, cited by CNNMoney.com.

The number of workers receiving unemployment cheques for one week or more rose to a record 4,788,000 in the week ended on Jan 24, the most recent data available. That tops the previous week's record of 4,768,000.

Brusca, the website said, does not think that continuing claims can stay at record levels for much longer, either. The economy fell quickly, and that should lead to a sharper recovery.

Brusca said a sharp recovery would also be facilitated by the government stimulus plan and aggressive monetary policy. The economy has "extremely low interest rates to help foster a turn around and a lot of fiscal help coming from the government," he said.

The four-week moving average for continuing claims was 4,672,000, up from the previous week's revised moving average of 4,628,000.

The number came ahead of the government's January unemployment report, due out on Friday. The unemployment rate is expected to jump to 7.5 per cent in January, up from 7.2 per cent the previous month, according to a consensus estimate from Briefing.com. Employers are expected to have slashed 500,000 jobs in the month.

courtesy : Hindustan Times.

[nithyasubramanian]

'No signs of economic crisis abating'

New Delhi, Feb 06: India on Friday said it saw no signs of the global economic crisis abating in the near future and prescribed higher public spending to prop up rural economy in developing countries to begin a turnaround.

With the financial meltdown eating into global economic growth, including India's own, External Affairs Minister Pranab Mukherjee, who also holds the finance portfolio, warned that ignoring rural economy could prove to be disastrous.

"The speed and ferocity of this crisis does not indicate any signs of abating. There are still no indications as to how (crisis) will progress and as to when it will bottom out," he said, addressing a conference on financial crisis and global economic governance organised by Research and Information System (RIS) here.

The IMF has already cut global growth forecast for 2009 to 0.5 per cent from 2.2 per cent predicted only three months ago. Indian economy, which had seen over 9 per cent growth for four years, is expected to see just near 7 per cent expansion.

"The global financial institutions need to put more resources for the developing countries in rural economy, build social infrastructure... As next year's outlook is more downbeat... the Government will take further steps to ensure that the labour-intensive sectors are less adversely affected," Mukherjee said.

"As this is a watershed moment in the history of the modern world, we need to think hard about the shape of its future... resources must be put in institutional capacity building," Mukherjee said at the conference attended, among others, by Asian Development Bank President Haruhiko Kuroda.

The minister said he saw the need to revisit Gandhian economics with emphasis on rural self-help and sustainable economic development. "Anything contrary would be disastrous."

Nearly 70 per cent of India's population depends on agriculture for income and for long, the criticism has been that the bolting economic growth of the past few years has not fully percolated to the rural areas.

Mukherjee said since next year's economic outlook was "more downbeat," the government has taken and will take further steps to ensure that labour intensive sectors are less adversely affected.

Commerce Secretary G K Pillai had this week, quoting estimates, said that about 1.5 million people employed in export sector would be out of jobs by March this year.

courtesy : Zeenews.com

[nithyasubramanian]

Wall Street shrugs off gloomy jobs report

Wall Street extended its gains into a second session on Friday, as investors looked past another bleak jobs report and hung their hopes on an economic stimulus plan getting approved.

All the major indexes rose more than 1 per cent, including the Dow Jones industrial average, which rose 150 points.

The Labor Department said US employers slashed 598,000 jobs in January, the most since late 1974. The unemployment rate rose to 7.6 per cent, the highest since late 1992.

The January data were not only a bit worse than anticipated, but December's job losses were revised upward.

Jobs are important to the stock market because if people are unemployed, they aren't likely to maintain their spending, buy a house or keep up with their debt payments. And three of the biggest problems facing the economy are dampened consumer spending, the housing market's slide and accelerating loan defaults.

But a poor January jobs report was already expected by market participants, said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. He said people now are wondering "will government stimulus stop this virus that's spreading throughout the country?"

The Obama administration is aiming to turn the economy around with a stimulus package for individuals and businesses. The Senate is expected to vote Friday on the stimulus bill, currently valued at $937 billion. A similar version already passed the House.


Stocks have been getting a lift on expectations the plan will pass, analysts say, but there has nonetheless been a palpable lack of commitment by investors.

"There's some uncertainty to this package. That's part of the reason why the market has been so jittery as it's been," Fullman said. "Most investors are still sitting this out — this is a traders' market. They're going to wait it out until they see some signs of stability, and that there's improvement on the horizon."

In midmorning trading, the Dow industrials rose 146.23, or 1.81 per cent, to 8,209.30.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 10.87, or 1.29 per cent, to 856.72, and the Nasdaq composite index rose 21.93, or 1.42 per cent, to 1,568.17.

The Russell 2000 index of smaller companies rose 7.84, or 1.72 per cent, to 462.92.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where volume came to 310.1 million shares.

On Thursday, the major indexes soared more than 1 per cent as Wall Street shrugged off troubling economic reports and bargain-hunted among battered retail and technology stocks.

Early Friday, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.94 per cent from 2.92 per cent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.29 per cent from 0.26 per cent.

The dollar was mostly higher against other major currencies. Gold prices fell.

Light, sweet crude fell $1.76 to $39.41 a barrel on the New York Mercantile Exchange.

Financial stocks led the market's advance as investors looked to Washington for additional help from banks. Treasury Secretary Timothy Geithner and other top officials are close to finishing a plan to overhaul the government's $700 billion financial rescue fund. Geithner is expected to announce the changes in a speech on Monday.

Some investors had been worried that the changes would involve nationalizing many banks and, in the process, wiping out shareholders.

Bank of America Corp. jumped 79 cents, or 16 per cent, to $5.63, while JPMorgan Chase & Co. rose $1.67, or 6.8 per cent, to $26.21. Smaller banks also jumped. Fifth Third Bancorp rose 44 cents, or 27 per cent, to $2.08. State Street Corp. advanced $3.84, or 14 per cent, to $31.38.

In corporate news, Toyota Motor Corp., the world's largest automaker, posted a loss for the fiscal third quarter and said it now expects not only a full-year operating loss, but a full-year net loss — which would be its first since 1950. Toyota rose 53 cents to $69.34.

Overseas, Japan's Nikkei stock average rose 1.60 per cent. In afternoon trading, Britain's FTSE 100 rose 2.27 per cent, Germany's DAX index rose 2.53 per cent, and France's CAC-40 rose 1.84 per cent.

courtesy : NDTV.com

[nithyasubramanian]

US loses 1.8 mn jobs in three months

WASHINGTON: In more grim economic news, the United States on Friday reported that it has lost another 598,000 jobs in January, taking the number to nearly 1.8 million over the last three months.

It is said to be the largest one-month job loss since December 1974, and has pushed the unemployment rate to 7.6 per cent, said to be the highest in 16 years.

Overall, the country has lost 3.6 milion jobs over a 14-month period, beginning December 2007 when the US slipped into a recession that was not officially acknowledged till the latter half of last year.

The Labour Department report came amid warnings by President Barack Obama that the unemployment rate would jump to double-digit levels if the US Congress does not speedily clear the $ 900 billion economic stimulus package.

But the Senate could not go ahead with a vote on Thursday with the Republicans, along with some Democrats, calling for trimming the package and making it more focused on creation of jobs.
January's job losses followed upwardly revised cuts of 577,000 in December and 597,000 in November.

The manufacturing sector was the worst hit, shedding 207,000 jobs in January as against 162,000 in December. Professional and business services lost 121,000 positions, construction industries shed 111,000 jobs and retail businesses cut 45,000 jobs. The only additions took place in the Government, education and health services.

"If we fail to act, we are likely to lose millions more jobs," Christina Rommer, head of President Obama's Council of Economic Advisers said in a statement that was clearly aimed at Congressional clearance of the package without delay.

As the Senate began its proceedings on Friday, Majority Leader spoke of progress made since last night and expressed the hope that the stimulus bill could be voted upon by evening.

But Minority Leader Mitch McConnell said the package, currently estimated to be $ 935 billion, was "too big and too unfocused to work" and in need of a massive overhaul.

In contrast to Reid's optimism of an early vote, McConnell dealt a blow to hopes of bipartisan support, saying emphatically: "We (the Republicans) will not support an aimless spending spree masquerading as a stimulus."

courtesy : ExpressBuzz.

[nithyasubramanian]

Markets eye another pre-poll stimulus package

Expectations of another stimulus package in the interim budget to boost the slowing economy and likely interest rate cuts from the central bank may keep the market firm.

The BSE Sensex jumped 209.98 points, or 2.31 per cent to 9,300.86 on Friday boosted by reports the government's forthcoming interim budget on February 16 might offer tax sops and sector-specific stimulus package. However, global cues will also be closely watched.

The index of industrial production (IIP) data for December 2008 will be released on February 11. The IIP for the November 2008 stood at 2.4 per cent, compared to contraction of 0.4 per cent in October 2008.

The Commerce Secretary, GK Pillai, said on Thursday, that government is most likely to announce a third stimulus-like package by the month end to help the various sectors tide over the impact of the current global slowdown and recession. Meanwhile, the Minister of State for Industry, Ashwani Kumar, added the package will contain sector-specific measures, especially for the infrastructure sector and exporters.

The Government had unveiled the first package on December 7 that called for additional state spending worth about Rs 20,000 crore to spur growth, while cutting value-added tax across the board by 4 per cent.
The second one announced on January 2 provided access to Rs 30,000 crore worth of tax-free bonds to India Infrastructure Finance Co and called for the setting up of a holding company to provide credit worth Rs 25,000 crore to non-banking finance firms.

With exports declining for the third straight month in December 2008 and industrial output also logging a sluggish expansion, the United Progressive Alliance (UPA) Government has been under pressure to unveil another package.

The government will present an interim budget on February 16 before the parliament elections, which are due by mid-May 2009. As per reports policymakers are examining all options, including tax cuts, aimed at giving a boost to the slowing economy and relief to industry to prevent job cuts.

Inflation slipped to near one-year low in late January 2009, giving more room to the Reserve Bank of India (RBI) to resort to rate cuts to spur the economy. On January 27 the RBI in its monetary policy review annual said inflation is expected to be below 3 per cent by the end of March 2009.

Inflation measured by the wholesale price index eased to 5.07 per cent in the week ended 24 January 2009 from 5.64 per cent in the previous week, government data released on February 5 showed. Inflation has now more than halved from a 13-year high of 12.91 per cent hit in August 2008

The RBI has already reduced its leading lending rate to commercial banks, the repurchase rate, by 350 basis points since October 2008 to a historic low of 5.5 per cent. The central bank has also cut the rate at which the bank absorbs funds from the market, the reverse repo, by 200 basis points since December 2008 to 4 per cent.

World economic growth will be 0.5 per cent this year, the weakest postwar pace, with bank losses reaching as much as $2.2 trillion, the International Monetary Fund predicted on January 28.

On the global front, investors are keenly awaiting a vote on a new version of US President Barack Obama's economic stimulus plan. The US Senate is debating a $920 billion plan next week but it could shrink before being passed.

Meanwhile, caution prevailed ahead of the US jobs data due later on Friday. Market watchers said the slight improvement in sentiment towards the US economy, which had helped underpin stocks, could be dampened again if the numbers point to a worse-than-expected deterioration in the job market.

The Obama administration on Monday, will release its comprehensive plan to revitalize the financial markets, which is expected to include a new strategy to deal with banks' bad assets and a controversial new program to help troubled homeowners avoid foreclosure.

courtesy : NDTV.com

[nithyasubramanian]

Italy's recession may stretch into 2010: IMF

Washington, Feb 07: The International Monetary Fund said that the possibility of Italy's economic recession stretching into 2010 "cannot be ruled out" amid the global slump and financial crisis.

"In line with the rest of the euro area, Italy is being severely affected by the worsening economic environment, although its financial sector has remained relatively resilient," the IMF said in its country report on Italy.

"The economic recession is deepening, and, while a gradual recovery is expected in 2010, the possibility of a prolonged downturn cannot be ruled out.

"The economy's recovery, however, is likely to be slow and weak, reflecting underlying structural rigidities, lack of domestic competition, and the limited scope for a fiscal response," the IMF said after completing a review of Italy's economy.

The 185-nation IMF routinely conducts the reviews, known as IV consultations, with member countries.

The IMF confirmed in the report its outlook for the Italian economy, published on January 28, projecting three consecutive years of contraction in gross domestic product (GDP), a broad measure of economic activity.

According to the IMF, Italy's GDP contracted an estimated 0.6 percent in 2008 and will shrink 2.1 percent in 2009 and 0.5 percent in 2010.

The Washington-based institution expressed concern about Italy's ballooning public deficit, which it forecast would reach 2.7 percent of GDP this year and 3.9 percent of GDP in 2010.

Following "exceptionally strong revenues" in 2006 and 2007, "the revenue-based fiscal consolidation has come to an end," the IMF warned, projecting that public debt would swell to 105.6 percent of GDP in 2009 year and to 109.4 percent of GDP the next year.

The IMF, which has called on Italy in recent years to undertake structural economic reforms, stressed "the importance of reducing regulation, increasing competition, and improving the business environment to raise Italy's productivity and growth potential."

The policies of Silvio Berlusconi's government won praise in the evaluation.

The IMF hailed "the progress made in improving Italy's fiscal frameworks" and the government's anti-crisis fiscal package, which "takes into account the limited room for fiscal stimulus, and focuses on temporary, targeted, and timely measures, as well as on accelerating public investment projects."

"The financial system has weathered the global turbulence, although vulnerabilities have increased. While banks came under pressure, the system as a whole remained solid, and no institution failed or fell short of regulatory requirements," it said.

The IMF noted that the system's resilience "reflects its relatively safer risk profile, which was supported by a firm regulatory and supervisory environment, strong intervention and resolution frameworks, and pre-existing high levels of depositor protection.

"However, vulnerabilities have risen, related to banks' capitalization, funding, credit quality, profitability, and exposure to Central and Eastern Europe," it warned.

courtesy : Zeenews.com

[nithyasubramanian]

US Senate imposes strict conditions on H-1B hiring

Washington, Feb 07: In what could be seen as a setback to Indian IT professionals, the US Senate has voted for imposing strict conditions on hiring of people with H-1B visas by American companies receiving federal bailout money.

The amendment to the pending stimulus bill restricting the hiring of foreign workers, passed by the Senate through a voice vote yesterday, was a watered-down version of what was introduced earlier.

The original amendment had called for a blanket ban on H-1B hiring by companies that would have received money under the Troubled Assets Relief Programme (TRAP).

The amendment approved by the Senate was co-sponsored by Republican Senator from Iowa, Chuck Grassley, and independent Senator from Vermont, Bernie sanders.

The modified amendment requires that a company receiving TARP funds and applying for workers under the H-1B process must operate as an "H-1B dependent company."

This means, explained Grassley in a statement, that the companies will still be able to hire H-1B visa holders, but must comply with the H-1B dependent employer rules which include attesting to actively recruiting American workers; not displacing American workers with H-1B visa holders; and not replacing laid off American workers with foreign workers.

"Hiring American workers for limited available jobs should be a top priority for businesses taking taxpayer money through the TARP bailout programme," Grassley said.

With the unemployment rate at 7.6 per cent, there is no need for companies to hire foreign guest workers through the H1-B programme when there are plenty of qualified Americans looking for jobs, he argued.

Even as he supports the H-1B programme, which has mostly benefitted Indian techies, Grassley said there is an urgent need for a reform in it.

The programme should be used in the way it was intended – as a temporary measure to supplement a company's need for hi-tech or specialised workers when none are available in the US, he said.

In another statement, Sanders said the amendment would require bailed-out banks, where there have been layoffs, to hire only Americans for two years.

"The very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labour from overseas while they are laying off American workers," Sanders said.

"Wall Street caused the crisis, millions of people lost jobs, including 100,000 in financial institutions. Now they want to bring in foreign workers," Sanders said, adding: "Talk about adding insult to injury."

courtesy : Zeenews.com

[nithyasubramanian]

California govt forces employees to take unpaid holiday

New York, Feb 07: In the wake of deepening recession, the Californian government forced more than 200,000 of its employees to take an unpaid holiday on February 6 with another due on the third Friday of the month.

The unpopular step brought demonstrators on the streets protesting the decision which envisages government employees taking first and third Friday as unpaid holidays at least through June 2010 but Governor Arnold Schwarzenegger said that the alternative was layoffs.

The unpaid holidays will cost workers ten per cent of their salary but save the State around USD 1.3 billion. By 2010, the State expects to have a budget deficit of around USD 42 billion.

Employees in critical areas such as hospitals and prisons were not included in the Friday forced holiday which affected around 90 per cent of the workforce. But they were expected to take the unpaid off days later.

"The governor understands how difficult this is. And just like every California business and family is doing, the governor needs to cut back as well," said spokesman Aaron McLear.

Meanwhile, Democrats and Republicans lawmakers are deadlocked over the budget with Democrats favouring tax increased and some spending cuts and Republicans seek deep cuts but no budget increases.

courtesy : Zeenews.com

[nithyasubramanian]

US restrictions on H-1B hiring

Washington, Feb 07: In what could be seen as a setback to Indian IT professionals, the US Senate has voted for imposing strict conditions on hiring of people with H-1B visas by American companies receiving federal bailout money.

The amendment to the pending stimulus bill restricting the hiring of foreign workers, passed by the Senate through a voice vote yesterday, was a watered-down version of what was introduced earlier.

The original amendment had called for a blanket ban on H-1B hiring by companies that would have received money under the Troubled Assets Relief Programme (TRAP).

The amendment approved by the Senate was co-sponsored by Republican Senator from Iowa, Chuck Grassley, and independent Senator from Vermont, Bernie sanders.

The modified amendment requires that a company receiving TARP funds and applying for workers under the H-1B process must operate as an "H-1B dependent company."

This means, explained Grassley in a statement, that the companies will still be able to hire H-1B visa holders, but must comply with the H-1B dependent employer rules which include attesting to actively recruiting American workers; not displacing American workers with H-1B visa holders; and not replacing laid off American workers with foreign workers.

"Hiring American workers for limited available jobs should be a top priority for businesses taking taxpayer money through the TARP bailout programme," Grassley said.

With the unemployment rate at 7.6 per cent, there is no need for companies to hire foreign guest workers through the H1-B programme when there are plenty of qualified Americans looking for jobs, he argued.

Even as he supports the H-1B programme, which has mostly benefitted Indian techies, Grassley said there is an urgent need for a reform in it.

The programme should be used in the way it was intended – as a temporary measure to supplement a company's need for hi-tech or specialised workers when none are available in the US, he said.

In another statement, Sanders said the amendment would require bailed-out banks, where there have been layoffs, to hire only Americans for two years.

"The very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labour from overseas while they are laying off American workers," Sanders said.

"Wall Street caused the crisis, millions of people lost jobs, including 100,000 in financial institutions. Now they want to bring in foreign workers," Sanders said, adding: "Talk about adding insult to injury."

courtesy : Zeenews.com

[nithyasubramanian]

Recession best time to be an investor, entrepreneur: Rekhi

Mumbai (PTI): Recession is the best time to be an investor and an entrepreneur, venture capitalist and Silicon Valley tycoon Kanwal Rekhi said on Saturday.

"Recession is absolutely required, for resources will be freed up. Entrepreneurship thrives during recession. It is the best time to be an investor and the best time to be an entrepreneur because valuations are lower," Rekhi, who is the Managing Director of Inventus Capital, told reporters at the Entrepreneurship Summit organised by IIT here.

The US-based former IIT-B alumnus said recession creates a set of good values and discipline.

Disapproving bailout packages to boost economies, Rekhi said, "I don't believe in bailouts...I would much rather let them die."

He said history has shown that bailouts are generally not successful. "How many jobs do the bailout packages create?" he asked.

The Government should, instead, invest more in primary education, primary healthcare and primary infrastructure, he said.

"They (the Government) only show that they care. They should have set up 50 more IITs instead," he said.

courtesy : The Hindu.

[nithyasubramanian]

'Indian economy likely to grow 6.5-7% this fiscal'

New Delhi, Feb 08: Indian economy is likely to grow by around 6.5-7 per cent in the current fiscal, the advance data for which would be out on Monday, against 9 per cent in the previous fiscal despite two rounds of stimulus packages announced by the Centre, economists said.

"Something close to seven per cent. It could be little less than seven per cent," former chairman of PM advisory panel C Rangarajan told reporters when asked about his projections for economic growth in the current fiscal.

The Central Statistical Organisation would release advance data of economic growth for 2008-09 tomorrow.

Seven per cent or close to seven per cent in the current year means growth rate of about six per cent in the second half of this fiscal, Rangarajan, who was also the former RBI Governor, said adding he expects the economy to grow at close to six per cent in the next fiscal as well.

Crisil Principal Economist D K Joshi said, "I expect growth rate to be between 6.5 and seven per cent in 2008-09."

The growth rate in the second half of the current fiscal was widely expected to be moderate, even as the government came out with two rounds of stimulus packages.

The economy grew by 7.8 per cent in the first half of this fiscal against 9.3 per cent a year ago. In whole of last fiscal, economy expanded at the rate of 9 per cent.

courtesy : Zeenews.com

[nithyasubramanian]

India sees 2008/09 economic growth at 7.1%

Given the impact of the global financial meltdown, the government today (February 9) projected Indian economic growth to slow down to 7.1 per cent in the current fiscal against 9 per cent in 2007-08.

Even though economic growth is slowing down, it is on expected lines and the rate projected has been as predicted by the Prime Minister's Economic Advisory Panel. While manufacturing, agriculture, power, construction and financial services are likely to pull down growth, services including trade and hotels as well as mining are projected to give a push to the economy. 

Agriculture is set to grow by 2.6 per cent in 2008-09 against 4.9 per cent in the previous fiscal, manufacturing is likely to expand by 4.1 per cent against 8.2 per cent, and construction by 6.5 per cent against 10.1 per cent.

Financial, insurance, real estate and business services are set to grow by 8.6 per cent against 11.7 per cent. On the other hand, the category of trade, hotels, transport and communication is projected to grow by 10.3 per cent against 12.4 per cent and community, social and personal services by 9.3 per cent against 6.8 per cent.     

These are advance estimates by the Central Statistical Organisation and actual growth figures may not exactly be the same.

courtesy : TimesNow.

[dwarakesh]

Outsourcing 'seemingly' not hit by H1B curbs

Indian IT companies can take a breather as the US Senate vote for imposing stringent conditions on the hiring of H-1B visa workers by the American firms receiving Federal bailouts would not hit them.

"From the reading of the provisions, it seems the impact is only on the people directly employed by the TARP companies. Outsourcing firms including those from India are seemingly not impacted," Nasscom President Som Mittal told PTI.

The amendment Bill is yet to go through reconciliation in the House before it is enacted, he said. None of the top Indian IT companies commented on the possible impact of the decision on them.

He said a Nasscom delegation which will visit the US to meet customers, analysts, government officials is going to raise the issue to state how protectionism is not good for the global world. Mittal said, G-20 has already endorsed that protectionism is detrimental.

Referring to the amendment, he added that it means the US companies that are receiving 'Troubled Asset Relief Program' (TARP) funds will be deemed to be H1B visa dependent. Of the total workforce if 15 per cent staff carry H1B visa then they can be said 'dependent'.

Source: Business Standard

[nithyasubramanian]

Inflation rate dips further to 4.39 per cent

New Delhi (IANS): India's annual rate of inflation continued its descent during the week ended Jan 31 and fell to 4.39 percent from 5.07 percent for the week before, official data showed Thursday.

The inflation rate, based on the official wholesale price index (WIP) stood at 4.74 percent for the corresponding week of the previous fiscal, showed the statistics released by the industry ministry here.

The fall during the week under review was due mainly to a 3.1 percent decline in the index for fuels, as the result of a 21 percent drop in prices of lignite, 11 percent in petrol, 8 percent in cooking gas and 7 percent in high speed diesel.

While the index for primary articles fell 0.2 percent, that for manufacturing also declined 0.1 percent.

courtesy : The Hindu.

[VelMurugan]

Inflation slips below 5 per cent

Continuing its southward journey, inflation fell further to 4.39% during the week ended January 31 from 5.07% a week earlier. This is the lowest rise since January 12 last year, when inflation was at 4.36%.

Earlier a Reuters poll predicted that the inflation rate was expected to have fallen to its lowest in just over a year at the end of January due to a cut in fuel prices.

The median forecast of 11 analysts was for a 4.43% rise in the wholesale price index in the 12 months to January 31, compared with 5.07% in the previous week.

Earlier Shubhada Rao, chief economist at Yes Bank, said, "We have seen almost an 18 point correction in the fuel price index, which is essentially being the driver of this week's inflation number."

The government cut retail fuel prices by up to 11% in the last week of January, its second reduction in nearly two months.

Inflation had raced into double digits in June last year after the government raised fuel prices, and peaked at 12.91% on August 2.

The RBI expects annual inflation to be below 3% by the end of the 2008/09 fiscal year in March, with some analysts even expecting it to be below 2%.

Source : EconomicTimes

[nithyasubramanian]

Patni Computer FY'08 net dips 9%, declares 150% dividend

Mumbai, Feb 12: Patni Computer Systems on Thursday reported a 9.44 per cent dip in consolidated net profit at Rs 438.01 crore for the financial year ended December 31, 2008.

The company had a consolidated net profit of Rs 483.63 crore in the last fiscal, Patni Computer Services said in a filing to the Bombay Stock Exchange.

However, consolidated total income of the IT firm rose to Rs 3,247.61 crore in FY'08 from Rs 2,775.03 crore of FY'07.

"The effect of the global meltdown has been more than expected for everyone and this is impacting our business in the short run."

"However, our global delivery model will only strengthen further in these tough times and we will remain bullish in our long-term strategy and are making prudent investments in our business," Patni Computer Chairman and CEO Narendra K Patni said.

On a standalone basis, the company registered a profit after tax (PAT) of Rs 389.15 crore in the latest fiscal, a nominal growth compared to Rs 387.52 crore of last year.

Meanwhile, in Q4 ended December 31, Patni posted a PAT of Rs 68.66 crore against Rs 85.90 crore, a 20.06 per cent dip over the same quarter last year.

Patni Computer also announced a dividend of 150 per cent, or Rs 3 per share, for the year 2008.

courtesy : Zeenews.com

[nithyasubramanian]

Industrial growth shrinks by 2% in December

New Delhi, Feb 12: Despite the government's stimulus package to boost sagging demand, the Index of Industrial Production (IIP) shrank by 2% in December - for the second time this financial year- official figures indicated Thursday. However, inflation continued to head south as it softened further to 4.39% for the week ended Jan 31 vs 5.07% recorded for the previous week.

The downturn in the IIP is chiefly attributed to the high base effect and the waning domestic demand for manufactured goods and dipping exports leading to a decrease in production. Incidentally, exports had dipped 1.1 percent in December 2008.

The manufacturing sector, which has a weight of about 80 per cent in the Index of Industrial Production (IIP), registered negative growth of 2.5 per cent against a rise of 8.6 per cent in December 2007.

Even mining output and electricity generation grew only by one per cent and 1.6 per cent against 5 per cent and 3.8 per cent, respectively, a year ago.

The production of consumer durables and consumer non-durables as well as intermediate items declined.

Consumer durables production fell as much as 12.8 per cent.

For the first nine months of the current fiscal, industrial growth stood at 3.2 per cent against 9 per cent a year ago.

The official advance estimates released earlier this week pegged industrial growth at 4.8 per cent for the current fiscal.

Inflation down to 4.39%

On the inflation front, the sub-5% levels were attributed to the continued softening on fuel and food prices. The Wholesale Price Index (WPI) for all commodities was down 0.7% at 22.8.4. Sector wise, the biggest fall was in the WPI for fuels which was down 3.1%.

courtesy : Zeenews.com

[nithyasubramanian]

Foreign investment norms for retail to stay: Kamal Nath

NEW DELHI:  The government has rationalised the foreign investment norms as there is a tightening in the global markets, but the cap on such investments in single-brand retail would continue, Commerce Minister Kamal Nath said here Thursday.

"The government has rationalised calculation of FDI (foreign direct investment). Because of this, there will be further inflow of investment in India," Kamal Nath told reporters on the sidelines of the India Carpet Expo.

The minister, who inaugurated the four-day exhibition here at Pragati Maidan, however stated that the 49 percent cap on foreign investment in single-brand retail would continue and that there would be no change in sectoral limits.

"That position will not change and will remain."

Foreign investment in multi-brand retail is not allowed in India.

"I believe the government will do whatever is possible to prop the economy," he said, while insisting it would ensure the new foreign investment norms are not misused.

Referring to the slowdown in the US and Europe, Kamal Nath asserted: "But we will be able to maintain a GDP growth at 7 percent."

The carpet expo, organised by the Carpet Export Promotion Council (CEPC), was also attended by Minister for Textiles Shankersinh Vaghela, Commerce Secretary G K Pillai and Textile Secretary Rita Menon.

Buyers from the US, Britain, Germany, France and Australia are expected to visit the expo, said CEPC chairman Ashok Jain.

courtesy : ExpressBuzz.

[nithyasubramanian]

Hexaware surges 100 pc on stake-sale rumours

Mumbai (PTI): Software firm Hexaware Technologies on Thursday surged 100 per cent on the country's two prime bourses, amid huge trading at the counter on market rumours of a possible stake sale by the company.

Hexaware shares on Thursday jumped to a high of Rs 42, up 109 per cent on the Bombay Stock Exchange in morning trade and was trading at Rs 34.20, up 70.15 per cent in the afternoon deal.

Analysts said that the surge was not confined to Hexaware stock only, as other mid-cap and small-cap companies are also trading in the green.

"In the past few days, such activity has been seen in the mid-cap and small-cap stocks, it's mainly an operator driven activity and may be some vested interest in some counter," Ashika Stock Brokers Research Head Paras Bothra said.

The BSE Mid-cap index was trading up 0.41 per cent at 2,977 points in the afternoon trade.

On the National Stock Exchange, Hexaware had zoomed 100 per cent to Rs 40.50 in the morning trade and was later trading at Rs 34.15, up 70.32 per cent in the afternoon trade.

Over two crore shares had changed hands on both stock exchanges by the late afternoon trade.

Marketmen also said that any rumour about a particular stock spurs up the scrip unusually and this might be true in the case of Hexaware, as rumour about stake sale by the IT firm was buzzing in the market.

courtesy : The Hindu.

[nithyasubramanian]

Inflation at year's low; hopes of rate cuts by RBI

New Delhi (PTI): Lower prices of fuel, food and liquour pulled down inflation to over a 12-month low of 4.39 per cent, raising expectations of further cuts in policy rates by the Reserve Bank.

Wholesale price-based inflation declined by 0.68 percentage points during the week ended January 31 from 5.07 per cent a week ago, mainly on account lower prices of petrol, diesel and cooking gas.

On January 28, the government reduced the prices of petrol by Rs 5 a litre and diesel by Rs 2 per litre, while the domestic LPG rate was also slashed by Rs 25 per cylinder.

The previous comparable low was recorded at 4.36 per cent for the week ended January 12, 2008.

The inflation number is slightly higher than expected.

However, this gives the RBI more elbow room for rate cuts. There could be reduction in the repo and reverse repo rates by 50 basis points each in the coming days, said HDFC Bank Economist Jyotinder Kaur.

During the week the fuel group index declined by 3.1 per cent mainly due to the cooling of petrol prices by 11 per cent, LPG by 8 per cent and diesel by 7 per cent.

The other consumable items that became cheaper were liquor, by 15 per cent; fruit and vegetable, by 3 per cent; and tea, by 1 per cent.

In the last two weeks, inflation declined by as much as 1.25 percentage points. "I see deflation in the month of April, which might continue till October," Kaur said.

Inflation stood at 4.74 per cent in the corresponding week a year ago. During the week, prices of groundnut oil were cheaper by 3 per cent while imported edible oil and mustard oil declined by 2 per cent each.

Elsewhere, prices of the raw cotton declined by 1 per cent while chemicals like titanium dioxide got cheaper 16 per cent, monocrotophos 13 per cent, benzene 12 per cent, and endosulfan 5 per cent.

Items of common use like dhoties, sarees became cheaper by 6 per cent and ceiling fans by three per cent.

Auto rickshaws were cheaper by 4 per cent and springs were down as much as 31 per cent.

However, items that turned expensive during the week were jowar, by 7 per cent; maize and bajra, by 3 per cent each; wheat and rice, by one per cent each.

Other items like ghee were dearer by 2 per cent and sugar prices went up by 1 per cent.

Cement also got expensive marginally during the week. Tablets except vitamins and penicillin were dearer by 3 per cent while footwear and plywood by 1 per cent each.

Inflation for the week ended December 6, 2008, has been revised downwards to 6.56 per cent as compared to 6.84 per cent in the provisional estimates.

courtesy : The Hindu.

[dwarakesh]

Infosys extends staff training period to deal with crisis

IT major Infosys Technologies today said it has extended the period of training for people on the "bench" to 29 weeks from the present 16 weeks because of the ongoing global economic recession.

"We are looking at better training in these times. We have increased the training period from 16 weeks to 29 weeks," Infosys Chairman and chief mentor N R Narayana Murthy said.

Murthy was here to participate in the day two proceedings of the three-day Nasscom summit.

N R Narayana MurthyThe Bangalore-headquartered firm has a cash balance of $2 billion and can survive for one more year without any revenue, he said. "Of course, it (zero revenue) is not going to happen."

Murthy equated the present economic crisis in the US, the world's largest economy, to the Great Depression of 1929 in that country.

"The present crisis in the US reminds me of the 1929 depression. More signals are emanating of the 1929 depression than the 70s' one. I have a suspicion that it (present crisis) could be a longer one," he said.

A recovery from the present crisis may take longer than 18 months, he said.

For IT companies to come out of this crisis, senior managements would have to take salary cuts, he said.

Source: Businessstandard

[nithyasubramanian]

Sensex down 153 pts, closes at 9466

Mumbai, Feb 12: The Bombay Stock Exchange benchmark Sensex fell for the second straight session on Thursday after industrial output dropped most in almost 16 years.

The Sensex, which declined 29 points in the previous day's trading, fell further by 152.71 points at 9,465.83 on heavy selling by funds in bluechip stocks led by the software, refinery and heavy machinery segments.

The key index touched the day's low of 9,445.54 and a high of 9,580.13 points.

In similar fashion, the 50-share National Stock Exchange index Nifty fell by 32.65 points at 2,893.05, after moving between 2,886.55 and 2,939.00 points during the day.

Output at factories, utilities and mines dropped two percent from a year earlier after a revised 1.7 percent gain in November. Manufacturing, which accounts for about 80 percent of the total output, fell 2.1 percent in December against 1.7 percent gain in November.

Selling pressure continued and even reports of a steep fall in the inflation rate failed to boost trading sentiment to any extent.

Infosys Technologies-led software exporters ended lower on concerns that US measures to stem the financial crisis will fail to boost growth in the industry's biggest market.

The country's over 60 percent software revenue comes from the US market.


courtesy : Zeenews.com

[nithyasubramanian]

IT industry needs to look inwards, says Kamal Nath

India will have to tackle the near-term issues

Commerce Minister predicts a solid 2009

'Banks should get back to lending'

MUMBAI: "The Indian information technology (IT) industry has flown the India flag high but we have for long looked outward. It is now time to look inward and maybe the current global crisis will trigger some inward looking," said Kamal Nath, Union Minister for Commerce and Industry, during his address at the inaugural session of National Association of Software and Service Companies (Nasscom) India Leadership Forum 2009.

The domestic market is huge and the IT industry needs to accept the challenge to focus on this market said Mr. Kamal Nath adding that the policy of looking inwards should not be done only because companies were facing the heat because of the global recession.

Mr. Kamal Nath said the IT industry should consider its future now, particularly in view of the fact that just two per cent of the population used computers. He said though the top-end of Indian companies had taken to IT in a big way and were implementing projects using the same, the middle and lower segments of the market were still not targeted by Indian IT vendors.

Som Mittal, President, Nasscom, said in the current developments across the globe, "recession is having an impact but the Indian Industry is resilient and we have to tackle the near-term issues while keeping in mind the long-term view. The current scenario is triggering a resetting of expectations, be it the employer or the clients as well as a change in business models".

The immediate issues are surviving the crisis and the long-term ones are green IT innovation and country specific concerns.

Mr. Mittal also touched upon issues such as protectionism and government roles in the current global scenario.

Mr. Kamal Nath said the problems in the U.S. and Europe were more to do with liquidity and lending.

"India is not plagued by the same problems as those countries. Unless lending happens by banks, no economic package will solve any problem. It is no use saving the banks such as in the U.K. The banking system needs to get back to lending and not governments lending to banks. If the government has to lend to the banks, it is better to shut them down and make restaurants and hotels out of them," he added.

Mr. Kamal Nath predicted a solid 2009 for the Indian IT industry, adding that "I see a great metamorphosis in IT here and not an IT revolution, which has already happened. For India, it is a digital future with the country becoming more and more sensitised. This increasing digital sensitisation will be at the heart of the metamorphosis which has got to take place".

To form new panel

Nasscom will be forming a Corporate Governance and Ethics Committee which will be chaired by N. R. Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies. This committee will function as a permanent sub-committee under the aegis of the Nasscom Executive Council. This is one of the initiatives being taken by the association to strengthen corporate governance practices in the Indian IT-BPO industry.

MoU with Colombia

The association signed a memorandum of understanding (MoU) with the Colombian Federation of Software and Related Technologies (FEDESOFT), aimed at encouraging trade, investment, economic, commercial, technological and friendly relationships between Colombia and India.

courtesy : The Hindu.

[nithyasubramanian]

Need third package to boost consumer confidence: FICCI

New Delhi (PTI): Apex industry body FICCI on Thursday demanded a third stimulus package for the economy claiming that the previous two have not produced the "desired result".

FICCI President Rajeev Chandrasekhar said that the next stimulus package should be aimed at boosting demand in the economy.

"The two stimulus packages announced have not worked. One more stimulus package is required. The third stimulus package should be aimed at restoring consumer confidence," he told reporters on the sidelines of the Chamber's annual general meeting here.

In the first package, announced on December 7, the government brought down CENVAT rate by 4 per cent in all sectors except in petroleum. An additional plan expenditure of up to Rs 20,000 crore was also announced.

The government had authorised India Infrastructure Finance Company Ltd (IIFCL) to raise Rs 10,000 crore through tax-free bonds by March 2009 and said it would be permitted to raise further resources.

On January 2, the government announced a second stimulus package with higher public spending and easier credit especially for exports, housing and small industries, and special attention was paid to auto and infrastructure sectors.

courtesy : The Hindu.

[nithyasubramanian]

Top US celebrites, media to join FICCI Frames

Washington (IANS): Top US media and entertainment companies, as well as important industry icons, have joined a high-level executive mission to the 10th Anniversary FICCI Frames Conference in Mumbai next week.

The US delegation will include actor Danny Glover, Don Whiteside of Intel, Jacqueline Celeste Lundquist, fashion designer and wife of former US Ambassador Richard Celeste and Academy Award Nominee Joslyn Barnes.

The US is serving as the Partner Country for the largest and most important media and entertainment conference in Asia.

"The Frames Conference will provide a unique opportunity to further strengthen the growing ties between the American and Indian media and entertainment sectors," noted Ron Somers, president of US-India Business Council (USIBC).

"In spite of the global economic downturn, this past year has been marked by outstanding new achievements in media and entertainment. As exemplified by 'Slumdog Millionaire', collaboration has made this a banner year for US-India cooperation."

But an important theme of this year's Frames conference is that the "best is yet to come" if both countries work together to address shared challenges and create new and meaningful opportunities, USIBC noted.

The governments and private sectors of both countries must work cooperatively to develop and implement policies that unleash entrepreneurship, said the trade association representing 300 of the largest US companies investing in India and global Indian companies.

"This means protecting intellectual property, tearing down barriers to trade and investment, and creating a business environment that encourages international collaboration and nurtures creativity."

The Executive Mission will participate in the Feb 17-19 Frames Conference in Mumbai and then travel to New Delhi for high-level meetings with Government of India officials.

courtesy : The Hindu.

[dwarakesh]

Hexaware sees challenges in next 3-4 qtrs; freezes hiring

Global IT and BPO services provider Hexaware Technologies today said it has frozen hiring in the company and the coming 3-4 quarters are going to be tough for the firm in the backdrop of an economic slowdown.

"There has been a hiring freeze in the company and next three four quarters are going to be challenging in terms of revenue," Hexaware Technologies founder and Executive Chairman Atul Nishar told reporters on the sidelines of a Nasscom summit here.

Nishar said that revenues would be impacted because clients have been downsizing there budgets and the company would have to bear this because of global economic slowdown.

"Hiring is going to be very need-based and we are adopting strict performance review," Nishar added.

With 175 active clients, 60 of which are Fortune 500, Hexaware has achieved leadership in technology solutions for industries such as banking, financial, insurance, leasing, transportation and HR.

According to its website, Hexaware employs 7,000 workers globally. The company has six development centres, four in India and one each in Germany and Mexico. It also has offices in North America, Europe and Asia Pacific.

Source: Business Standard

[dwarakesh]

IT companies put recruitment on hold

Software companies are extending their entry level recruitment process by about 12 to15 months.

Until now, the trend was to hire engineering graduates a year before they passed out, but now organisations are deciding to undertake recruitment only when a batch is about to pass out of college.

Industry body Nasscom, after consulting all large recruiters, has written to over 200 engineering colleges in India asking them to delay their placement procedures from the sixth to eighth semester or the final year.

Nasscom president Som Mittal wrote to colleges stating "Companies have to make an estimate of their requirements almost 18 to 24 months prior to their need. This worked well in past with some degree of certainty of growth, but is increasingly difficult during current economic environment. In many cases, it has also led to joining dates of students getting staggered and deferred," reports the Economic Times.

The decision to send the letter was unanimously approved by all members of Nasscom's executive council. The letter also states that it is not mandatory for all IT companies to follow this recruitment strategy. This proposed policy will come into play from the next fiscal year.

IT companies have welcomed the move, since  the flow of projects is slow and uncertain right now. Honouring offers made a year ago will only increase the bench cost.

"This move, if implemented, will help remove the element of uncertainty among students about the timing for placement and also reduce the waiting period," said Ma Foi management consultants CEO, E Balaji.

Source: Itexaminer

[dwarakesh]

IT firms rejig plan for campus hiring

Software companies will go in for just-in-time hiring on campuses to ensure that they do not needlessly increase their bench strength in an environment where project pipelines are under pressure.

The strategy has received software lobby Nasscom's blessing and it has asked top colleges in the country to postpone their placement season to the final semester.

Till now, IT companies hired engineering graduates a year before they passed out, but now have decided to undertake recruitment only when a batch is about to pass out of college. Nasscom, after consulting all large recruiters, wrote to over 200 colleges in India last week, asking them to delay the placement procedure from the sixth to eighth semester or the final year.

"Companies have to make an estimate of their requirements almost 18-24 months prior to their need. This worked well in past with some degree of certainty of growth, but is increasingly difficult during current economic environment. In many cases, it has also led to joining dates of students getting staggered and deferred," Nasscom president Som Mittal wrote in his letter to the colleges.

IT executives say the decision to send this letter was unanimously approved by all members of Nasscom's executive council, though they added that it is not mandatory for all IT companies to follow this recruitment strategy. This proposed policy will come into play from the next fiscal.

"When project flow is slow, companies have to still honour the offers given 16-18 months earlier and increase their bench costs. The move will ensure lower costs for companies and also better hiring strategies," said Infosys Technologies SVP and group HR head Nandita Gurjar.

"This change is good for all stakeholders, including companies. It will ensure that when hiring outlook changes, companies can offer jobs accordingly," added Wipro EVP-HR Prateek Kumar.

Nasscom's directive comes on the back of requests for a delay in recruitment process, not just from companies, but also from colleges. In a recent study conducted in Tamil Nadu by HR consulting firm Hewitt Associates and AMCHAM, a group that represents US companies in India, a large number of faculty members from engineering institutions wanted campus placement to happen "only in the final semester", and not in the penultimate semester or pre-final year.

An official of a South-based top IT company said: "It is good for students because they have an extra year to prepare themselves for placements." "This move, if implemented, will help remove the element of uncertainty among students about the timing for placement and also reduce the waiting period," said Ma Foi management consultants CEO E Balaji.

Source: Economictimes

[nithyasubramanian]

Infosys has no lay off plans

Chennai, Feb 16: IT major Infosys has no plans to lay off its employees and is going ahead with placement of all the 18,000 candidates who were extended offer letters.

"No, we do not have any plans," Infosys Chief Executive Officer and Managing Director Kris S Gopalakrishnan told reporters here when asked whether the company had any plans to lay off as a result of the economic meltdown.

Gopalakrishnan said the company would continue to honour the job offers it had made in the past. "We have made 18,000 job offers in the past (year) and by July this year, the new candidates would start joining," he said.

He said the company had decided to extend the training period from the current 3.5 months to 4.5 months.

"We have extended it by adding another four weeks to it as there is adequate time available and utilisation level is also low," he said.

He said they were implementing the new time duration for the existing new recruits as well.

Asked about the US Government's decision on restriction of H1B visas and the stimulus packages, he said, "Right now, I see there is no impact. One has to wait and see before coming into any conclusion," he said.

On the industry's down trend, Gopalakrishnan predicted that the it would improve within the next four years.

"Currently the environment is challenging as the industry estimates 30 percent downtrend," he said.

Gopalakrishnan suggested that the government should bring more clarity and streamlining of rules on SEZs and also take adequate steps to improve the current situation.

To a query on acquiring some of scam-hit Satyam Computers clients, he said that some of its clients had approached Infosys (for acquisition). He, however declined to elaborate.

He also said the government could help the IT industry by accelerating e-governance programme.

courtesy : Zeenews.com

[dwarakesh]

Companies don't expect base salary fall in 2009

The slowdown has made the general economic environment uncertain but companies remain optimistic on salaries. Of the 48 Indian companies surveyed across 22 sectors, 69 per cent don't anticipate a freeze on base salaries in the next 12 months as a result of the recent economic events though most of them expect options to be re-priced, according to a new report by consulting firm Mercer.

The base salary, notes the report, is determined by individual and company performance and 58 per cent firms consider base salary to be the most effective pay element to align executive remuneration to organisation strategy. Executive compensation includes both short-term incentives (STI) and long term incentives (LTI), which are decided by another set of factors.

Around 38 per cent companies expect lower STI payouts with 54 per cent anticipating a change in the STI performance. Absolute company-wide financial measures such as EBIT performance against the budget are considered vital for STI but relative company-wide financial measures such as relative performance versus competitors, is not important.

Executive base salary increase in case of STI is decided by individual performance, company performance and comparator/market practices whereas tenure and prior year's increases are the least important factors. On the LTI front, 60 per cent companies have plans and among these, 78 per cent offer options. Individual performance, strategic contribution and potential of employees are the three most important factors in determining eligibility for option plans in LTI. Target grant LTI value in India is calculated using a percentage of total remuneration and the executive's level in the organisation.

Among the companies with option plans, 31 per cent use "value divided by current stock price" to calculate the target grant units, and about 26 per cent also use Black Scholes for option pricing, reflecting that market is gradually moving towards more scientific approaches to valuation and grant determination.

Going ahead, in the next 12 months, 84 per cent companies don't plan to enhance executive compensation disclosure in their annual report, while 16 per cent companies do.

Source: Businessstandard

[nithyasubramanian]

H-1B visa ban for bailed out US firms is protectionism: Montek Singh Ahluwalia

New Delhi, Feb 17: As President Barack Obama prepared to sign into law a legislation barring financial institutions seeking bailout funds from hiring foreign H-1B visa workers, Government tonight said it is the beginning of an "irreversible protectionism" in the US.

"I think it is an indication of protectionism and interestingly it is an extremely bad decision...This is the beginning of what could be an irreversible slide into protectionism which happened in 1930," said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Ahluwalia's comments lent weight to the concern voiced by parliamentarians-- Aruna Kumar Vundavalli and V Hanumantha Rao--who have written to External Affairs minister Pranab Mukherjee seeking his intervention. Indian software professionals account for bulk of the H-1B visas.

"The decision says that if you have a company that needs assistance it must not hire H-1B visa workers, which really means if you have company that is weak and you want to assist it you are going to deny it the opportunity to hire cheaper labour. To my mind it is economically irrational," Ahluwalia said.

The controversial provision relating to H-1B visas is contained in the American Recovery and Reinvestment Act providing for the 789 billion dollar bailout package.

According to representations received by the MPs, thousands of H1-B visa holders are in danger of losing their jobs.

Currently, there are an estimated 650,000 Indian immigrants in the US working under the H1-B visa programme.

Also, there are 100,000 Indian students who go to pursue higher studies and career under the same programme.

courtesy : Zeenews.com

[dwarakesh]

Infy: Recession creates entrepreneurs

Infosys official described the recession as a good time to become an entrepreneur.

IT major Infosys Technologies' Co-Chairman Nandan Nilekani said, "Google and Intel were started when the economy was slowing. It is the time when people can take risks. Anyway, there are not many jobs around (during recession)," he said.

He added, "India will come out of this global economic recession faster than any other country in the world."

"We will come out of it earlier than other countries," he said, while attending a function at the Vidyanagari Campus in Kalina in the city to talk about his book 'Imagining India: Ideas for the New Century'.

India's GDP is consumer-driven, he said, adding that India was least dependent on exports. This is the reason why India would come out of the recession sooner than other countries, he said.

While it would not be possible to comment on how long the present global economic recession would last, India would be the fastest-growing economy in the next few years, Nilekani said.

Replying to a query on the economy in the neighborhood, Nilekani said that "better to have good neighbours -- it is in our vested interest to make our neighbors prosperous."

Source: Timesofindia

[dhilipkumar]

Four-day working week to be discussed at jobs summit

A four-day working week for companies struggling to keep staff during the recession is one suggestion that will be discussed at next week's jobs summit, the Government has confirmed.

A spokeswoman for Prime Minister John Key said tonight hundreds of ideas were coming through and they would all be considered at the February 27 meeting of ministers, business representatives and trade unions.

The four-day week is one of them. It could not be established tonight whether the suggestion came from a government department or the private sector.

TV One News reported it involved companies that were in difficulty moving to a four-day week, instead of having to lay off staff.

On the fifth day, the staff would work on community projects, with the Government picking up the tab, or go into government-sponsored training.

It is understood ministers are interested in the suggestion but don't see it as any sort of silver bullet solution.

Finance Minister Bill English said on One News the Government was open to any suggestions that came up at the jobs summit.

"It's not going to work if we're going to prejudge things or rule too many things out," he said.

He was cautious about the extent of any government contribution to a four-day week scheme.

"The Government's books aren't in good shape. There won't be room to spend large amounts of money," he said.

Mr Key called the jobs summit to find ways to get New Zealand through the recession with minimum damage.

He is looking for ideas that can be turned into reality, particularly to help small and medium-sized businesses get through without losing their staff.

Ministers have said if that happened, it could be difficult for the businesses to get them back when the economy rebounds.
NZherald.com