IT companies and US economic crisis

[dwarakesh]

Wipro goes for cost-cutting measures

Wipro said it has employed 30 cost-cutting measures, especially in the area of operational efficiency, to tackle the current downturn.

Since the third quarter of this financial year, the company has adopted the measures "like any other sane-minded organisation", said Pratik Kumar, executive vice-president (human resources).

"We had done it (cost cutting) at every opportunity earlier. However, we are now doing it more aggressively given the current scenario 'in a very innovative way'," he told mediapersons on the sidelines of a press conference in Hyderabad on Friday, while refusing to spell out further details.

The cost-cutting initiatives include reducing or cancelling executive business trips. Wipro is promoting video conferencing as one of the ways of cutting costs to reduce business travel expenses, a Wipro spokeswomen said, adding that the company's utilisation rate for the third quarter was 79.6 per cent, which will be increased further in the coming months.

Kumar said the company will honour the hiring commitments with "no timeframe and on the basis of requirement". Wipro had given a hiring guidance of 8,000 for FY10. It had a gross hiring of 1,944 in the third quarter of this year.

"We are not making fresh offers and at the same time are not completely freezing on hiring. We will honour the committed offers by June-July. If that doesn't happen, they will spill over into the next year," Kumar said. "It is a question of going back on your offer or honouring it. We have communicated to the freshers giving them a broader indication on when it will happen."

Source: Business Standard

[dwarakesh]

Cognizant fighting bad times

Cognizant Technology has some good news to share despite the bad economy. Its business wing, Cognizant Business Consulting (CBC) has won a significant testing deal with a consumer goods company to test large parts of its applications over the next three years.

CBC was formed with the acquisitions of companies like SVC (media and entertainment consulting), Fathom (telecom), marketRX (pharma and life sciences) and Active Intelligence (retail). These companies were acquired to foray into wide ranging industry verticals.

CBC has 1,800 employees and is headed by an ex-AT Kearney professional, The Economic Times reports.

Indian offshoring majors like Wipro, Infosys and Tata Consultancy Services (TCS) have also adopted a similar strategy of separate consulting groups. However, Cognizant has been ahead in the consulting sphere mainly because of its aggressive sales and marketing strategies.

Cognizant CEO Francisco D Souza has reportedly said that the clients and their environment are changing and that the firm did a trial run which helped the clients to understand CBC's capabilities.

Source: Itexaminer

[dwarakesh]

Indian firms missing out on opportunity in recession

Indian information technology vendors may be missing an unfolding opportunity in the current American recession, Gartner India, the research firm, has warned.

With a clear focus on reducing costs, US firms are interested in offshoring, but Indian IT vendors don't seem to have prepared their sales teams for this, it observes.

"Almost 30 per cent of the calls we have got from clients in the past three months are on decisions to try offshore servicing," says Partha Iyengar, Gartner India's vice-president and regional research director. "These clients are considering offshore for the first time. While many are saying that they want Indian firms to help them, their (the latter's) sales teams are missing in action," he told Business Standard.

The Indian vendors need to step up their sales and account management capability and strategy. "If a client goes to an MNC and talks about rate cuts, it is not easy. Their sales team immediately talks about a business strategy on the levers of getting cost down. That's the evolution we need to see among Indian sales teams and their management," says Iyengar.

He believes this lack of focus in sales teams is creating a vacuum in the market, which a lot of players from Europe and the US itself will eye. "A lot of firms that were late to the offshoring story are getting aggressive in getting the strategy in place, realising very well that the Indian players are missing. It's a great competitive landscape for Indian firms," Iyengar said.

He says while existing clients are looking at rate cuts, Gartner has been advising against it. "A rate cut of 10-12 per cent is just not possible. Besides, in the long run, it dents the relationship. We are telling our clients that rate cuts should be the last part of the conversation and they should focus on other levers to cut cost."

Source: Business Standard

[nithyasubramanian]

'Global job crisis expected to swell number of unemployed women by up to 22mn'

New Delhi, March 05: Deepening recession is expected to increase the number of unemployed women by up to 22 million as global job crisis could "worsen sharply" this year, the International Labour Organisation has warned.

Ahead of the International Women's Day on March 8, the ILO said the labour market projections for 2009 showed deterioration in global labour markets for both women and men.

The UN labour body projected that global unemployment rate could reach between 6.3 per cent and 7.1 per cent, with a corresponding female unemployment rate ranging from 6.5 to 7.4 per cent compared to 6.1 per cent to 7.0 per cent for men.

"This would result in an increase of between 24 million and 52 million people unemployed worldwide, of which from 10 million to 22 million would be women," the ILO said in its annual Global Employment Trends for Women report.

courtesy : Zeenews.com

[dwarakesh]

In the face of the ongoing economic downturn, many IT companies are reportedly receiving requests from international clients to renegotiate on the contracts and lower their prices.

According to an article in Mydigitalfc, the software firms have been requested to drop the contract prices by up to 15 per cent. This, in return, is likely to hit operating profits margins accounts for around 20-25 per cent mark in most companies.

Companies like TCS, Wipro, Infosys, and Tech Mahindra have agreed to the increased pricing pressure. During its quarterly result announcement, Wipro hinted about the reduction of base prices and consolidation of fixed contracts.

A spokesman for Tata Consultancy Services said that there is a pricing pressure of four to 15 per cent during contract renegotiations. The company is, however, confident about the operating margins and claims it to be around 24 per cent, by increasing pushing the work to off-shore locations.

Source: itexaminer

[dhilipkumar]

Recession-hit Japan turns to Indian IT cos

NEW DELHI: With Japanese companies leaving no stone unturned in their pursuit to pare costs as they try to cope with a deepening global recession, Indian IT outsourcing firms may finally be able to crack this $108-billion IT services market.

Troubled auto-makers Toyota and Nissan are putting out outsourcing deals worth $100-200 million each, while Japanese electronics majors are augmenting their existing contracts as they look for more cost-effective ways to maintain and support their global IT systems.

Traditionally, Japanese firms outsource such contracts to companies within the country, and the rest to China and Korea. However, this is set to change in favour of India, according to IT industry experts that ET spoke to. "Most of the Japanese companies have been doing smaller, project-based outsourcing to China and elsewhere. If they want to lower their costs by $100-200 million over the next few years, they will have to look at India," says a Japan-based outsourcing consultant, who did not wish to be named as he advises Japanese firms on outsourcing decisions.

Japan is a strategic market owing to its size, says Wipro Technologies chief strategy officer KR Lakshminarayana.
"There is undoubtedly great interest among Japanese customers for India-based services. They are looking for scale of services and cost benefits," he says. Industry players said that one of the Japanese electronics major ready with an outsourcing contract is Toshiba with a $50-100 million deal. As reported by ET last month, India's largest software exporter TCS, along with Infosys and IBM, is currently pursuing an outsourcing contract worth around $60-100 million from Sony. The contract is a first in a series of IT deals valued over $250 million to be awarded by the world's second-largest electronics maker over the next two years.

Japan is a tough outsourcing market to crack, says sourcing advisory firm TPI India head Sid Pai. Of the $8- billion IT contracts off-shored by Japanese firms last year, India's share was about $1-1.5 billion. China accounted for almost $5 billion of work while South Korea bagged $1 billion worth of software projects.

However, mounting cost pressures are making Japanese companies take a fresh look at India, says Tata Consultancy Services (TCS) Asia Pacific head and executive VP Girija Pande. "Large-scale offshoring will take place from Japan to India. The reluctance among Japanese companies has gone. The question now is how quickly can it be done," Mr Pande says. And to crack Japan, TCS has zeroed in on algorithmic trading platforms for the financial services market and embedded systems used in consumer electronics, auto and telecom handsets and equipment.

Mid-sized IT services firms such as Mumbai-based Patni Computer Systems are using alliances to strengthen their presence in Japan.

[dwarakesh]

BANGALORE: Employees working in the country's largest software services firm Tata Consultancy Services Ltd. (TCS) have the spectre of retrenchment looming large over them.

An internal communication, posted on its secure website, confirmed their worst fears: as part of "across-the-board optimisation" the management would lay off workers, increase working hours and continue to defer promotions.

The e-mail warns that there will be "some involuntary attrition," a software industry euphemism for plain layoff. This unusual phrase ominously comes at the end of a rather long list of cost-cutting measures.

"The company is helping these employees with outplacement, counselling, alternative positions in subsidiaries if available or a fair exit," the e-mail states. It also mentions "route rationalisation of company transport" and higher employee contribution.

Another e-mail from Ajoy Mukherjee, Vice-President and Head of Global HR, received on March 5, informed employees that from April 1 they will be forced to work nine hours a day, as against eight up till now. The company had sent a similar e-mail in December only to defer the move in January.

Sources in the company told  that rumours were afloat of "right-sizing", cutting bench ranks — those not employed on projects — and laying off at least 5,000 of its 1,30,000 strong workforce. A mid-level executive says that with several development projects being deferred, number of "non-billable" staff had increased. "As for existing projects, with an increase in work hours they are likely to look at further trimming the teams. Hundreds in the middle ranks stand to lose their jobs," he explained. However, official sources refuse to term it as "layoff" and peg this number around 1,300.

"This is a performance-based attrition, which means that one per cent of the workforce may be asked to leave," company spokesperson Pradipta Bagchi said. He also said that joining dates of over 24,000 offers made on campuses this year would be staggered to align with demand.

Furthermore, employees claim that the variable component – which accounts for nearly 30 per cent of their total salary - has plummeted by as much as 30 per cent. TCS pays around eight per cent of gross revenues every year in the form of performance-linked variable pay. Sources said that quarterly variable pay, given in January, was cut by 25 per cent.

Mr. Bagchi attributes this to continuing pressure on pricing and clients seeking price re-negotiations even up to 15 per cent.

The e-mail also announces that deferment of promotions (already enforced in the last financial year) will be extended for now. It also declared complete freeze in lateral recruiting and offshore-movement. Last week, TCS reportedly fired employees in its U.K. office. "There will be off-shore movement of people who are currently located on-site," it states.

Source: Hindu

[dhilipkumar]

Layoffs in U.S. challenge traditional recovery strategies

As U.S. government data showed that 651,000 more jobs disappeared in February, a sense took hold that rising joblessness could reflect a wrenching restructuring of the U.S. economy.

In important industries like manufacturing, financial services and retail, layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business. The unemployment rate rose to 8.1 percent, from 7.6 percent in January, its highest level in a quarter century.

"These jobs aren't coming back," John E. Silvia, chief economist at Wachovia in Charlotte, North Carolina, said after the Labor Department's report Friday. "A lot of production either isn't going to happen at all, or it's going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations."

This dynamic has proved true in past recessions, with fading industries pushed to the brink before others emerged to create jobs when economic growth resumed. But with job losses so enormous over such a short period of time, some economists argue that the latest crisis challenges the traditional American response to hard times.For decades, the government has reacted to downturns by handing out temporary unemployment insurance checks, relying upon the resumption of economic growth to restore the jobs lost. This time, the government needs to place a greater emphasis on retraining workers, these economists say.

Most economists now assume American fortunes cannot improve before the last months of the year, as the Obama administration's emergency spending program, worth $787 billion, begins to wash through the economy."The current pace of decline is breathtaking," said Robert Barbera, chief economist at the research and trading company ITG.

Since the recession began, the economy has eliminated about 4.4 million jobs, with about 2.6 million disappearing in the past four months. This rapid deterioration has prompted talk that some industries are being partly dismantled. Layoffs are multiplying because of dysfunction in the financial system, which is prompting even healthy companies to shed workers and shut down operations out of concern that they may soon lose access to credit.

"Everybody is so fearful that companies are thinking, 'What can we hang on to and what should we liquidate?"' said Martin Baily, a chairman of the Council of Economic Advisers under President Bill Clinton and now a fellow at the Brookings Institution.

American car sales have dropped to an annual pace of nine million, from some 17 million in 2007. Even if sales increase considerably, that is likely to leave a lot of unneeded auto factories.

"The decimation of employment in legacy American brands such as General Motors is a trend that's likely to continue," said Robert Hall, an economist at the Stanford University Hoover Institution. "We have to stimulate the economy to create jobs in other areas."Kim Allgeyer, 46, of Westland, Michigan, was laid off in January from a company that makes assembly lines for the automakers. He is now subsisting on day labor and one-week stints for contractors. "Who's going to put me to work?" he said. "Where's the work at? It's just a great big black hole."

Much the same can be said for financial services, which relinquished 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other investments. That industry is unlikely to return to its former shape.Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks. The economy has eliminated more than 500,000 retail jobs in the last year.

The stimulus bill signed last month includes $4.5 billion for job training. In current dollars, the nation devoted the equivalent of $20 billion a year to job training in 1979, compared with only $6 billion last year, said Andrew Stettner, deputy director of the National Employment Law Project in New York.Some suggested the job cuts reflect the anxiety that has gripped the financial system since Lehman Brothers failed. Borrowing costs have spiked for American companies, making businesses reluctant to expand and hire. And many companies remain spooked by the Wall Street meltdown.

"There was a huge increase in uncertainty and a huge hit to confidence which caused a large rethinking among businesses," said Ethan Harris, co-head of U.S. economics research at Barclays Capital.

[nithyasubramanian]

21st century will be India's: Ambani

Mumbai, March 08: As India's growth story continues the 21st century will be India's and demographically as the world grows older, the country is becoming younger and that will be its strength, RIL Chairman and Managing Director Mukesh Ambani said.

"In this decade and coming decades, India is becoming younger as the world becomes older," Ambani said at the International Bar Association (IBA) Business Law Conference on India as an emerging economic giant here.

"Fundamentally, the world is becoming older and India is becoming younger and that is our strength," Ambani said.

Reeling out statistics, the Reliance Industries' Chairman said out of India's one billion people, 44 per cent are less than 19 years of age.

"In the next 20 years, we will have more than 400 million under the age of 35 and in a decade from now, only 10 per cent of Indians will be above 60 years of age," he said.

Ambani said there are four trends that would drive the world and India has a competitive advantage in them.

"The first driver is demographics," he said.

India today represents in demographic terms exactly what the United States was in the 1910-1920s, he said.

The second trend is democracy and its pluralism and the ability of Indians to believe in that democracy.

"This is our baby-boomer generation that is growing up, that is aspiring, that produces and consumes at the same time and creates internal markets," he said.

"The third trend that I see is again in India's favour and I am a big believer in this." As an engineer, he feels "that technology is going to drive more and more value- creation in the world and in spite of the recent economic meltdown, technology is not going to stop," he said.

It would be technology that would pull the world out of recession, he said and added that relative to most other countries India has embraced technology better.

"The innovation and the knowledge-culture is nothing but competitive embracement of technology, where we just have a mindset, we have a gene pool where our young people can do very well in technology," Ambani said.

He termed the last advantage as globalisation and growth.

"I think we have got an underlined growth momentum, and whatever happens to the rest of the world, we still think that we will grow at six to seven per cent," Ambani said.

If one looked at the next three-four-five decades, India would maintain a double-digit growth and the economy had the growth momentum going for it for the next three decades, Ambani said, adding the country would also reinvent its growth model.

"So, while there will be ups and downs in globalisation, we have the ability to reinvent our growth model and that again is strength. While the world is contracting, we will still continue to grow," Ambani added.

He said, "We will have two-three years of recovery in the world and then things will go back (to normal) but even while that is happening, India continues on this path led by its younger people, led really in terms of trying to create and reinvent growth and becoming a powerful engine for the whole world".

courtesy : Zeenews.com

[dwarakesh]

Shrinking onsite staff hits IT cos' margins

Global customers of IT companies are increasingly looking at an "out-ofsight" arrangement rather than the traditional "on-site" model in their effort to reduce costs.

Buyers today are keen to maintain a lean onsite, that is, bare minimum support staff from vendors at their premises, as onsite billing rates are significantly higher than offshore rates. The per hour offshore charges range between $18 and $40 while the onsite rates range from $60 to $150.

So, many vendors are under client pressure to shift at least some onsite staff back to India. Shifting projects and jobs offshore, however, dents the revenues and profitability of domestic technology
companies, say analysts.

On an average, onsite accounts for 40-50 % of the industry's revenues. Currently, the offshore to onsite ratio is 70:25. This is expected to change to 90:10 by the end of the calendar.

Sudin Apte, head of Forrester India, says: "As more work moves offshore, margins will come down by 5-7 %. It will be in addition to the recession related business reduction . However, critical onsite staff will still be retained at clients' sites.''

Siddharth A Pai, MD of IT analyst firm TPI, says, "Onsite brings in close to 50% of the revenues for the industry. But this ratio will change and CFOs are worried as a significant portion of the revenues are at risk.''

Dhiraj Sinha, head of the technology group at Perot Systems , says the ratio of onsite in new contracts has already declined. But he thinks the expected volume increase in outsourcing deals may offset this negative impact.

Many large IT companies, including TCS, Wipro and Infosys , have already cut back their onsite staff by 5% or more depending on the nature of the projects. Several small and medium companies too are doing the same.

Customers believe that the availability of modern, mature collaboration tools, combined with reliable telecom infrastructure, video conferencing and virtualisation technologies, can compensate at least partially the loss of onsite help.

These technologies can contribute towards seamless geographical distribution of teams and work, and thereby minimise the need for staff on their premises.

[dwarakesh]

Email-and-tell is how TCS cuts pay

A top official of Tata Consultancy Services (TCS), India's largest software exporter has informed its employees about deferred promotions and new cost cutting measures through an email. The email justifies the company's moves as inevitable given the current economic turmoil.

The email was reportedly sent by the company's global HR head and vice-president Ajoy Mukherjee.

Mukherjee's email stated: "We have decided to take some measures with immediate effect to ensure that TCS is well-equipped to deal with the sharp contraction in global economic activity."

Few of these measures include re-training of experienced professionals, shifting of onsite staff to offshore locations, deferment of employee promotions and optimisation measures across the organisation.

The email notification came just after CEO S Ramadorai decision to review employees' variable pay, extend their working hours and the buzz to sack 1,300 underperformers.

Source: itexaminer

[dhilipkumar]

2009 very dangerous for economy: World Bank chief

LONDON: World Bank president Robert Zoellick said on Friday that 2009 was turning into "a very dangerous year" for the global economy.

"2009 is shaping up to be a very dangerous year," he told reporters ahead of Saturday's G20 finance ministers meeting on how best to tackle the worst economic slowdown in decades.

"I believe it will be a positive sign if the G20 supports extended IMF resources, condemns protectionism and supports practical solutions," Zoellick said.

The G20 includes the Group of Seven industrialised countries -- Britain, Canada, France, Germany, Italy, Japan and the United States -- the European Union and leading developing nations including Brazil, China and India.

Finance ministers and central bank leaders from the United States and Europe go into Saturday's meeting deeply divided on whether stimulus packages or tighter regulation of the finance sector should be the way forward.

Saturday's gathering in Horsham, south-west of London, is expected to lay the groundwork for a G20 heads of state summit on April 2.

[dwarakesh]

Layoffs in IT sector inevitable

An information technology sector veteran has strongly defended job cuts, saying it's natural in times of recession to stay the course and remain afloat.

"When there is no business, companies have to react; otherwise no body will survive. Either you have to reduce everybody's salary, or you have to let some people go and move on with that," the former IT Secretary of Karnataka, Vivek Kulkarni said.

"Because, if you do not have labour flexibility, you can't do business well," added Kulkarni, who has more than 25 years of experience in business and government, and is currently Chairman and CEO of knowledge process outsourcing firm, Brickwork India.

He admitted that IT companies have resorted to various ways to layoff their staff. Some companies are forcing their managers to give a "lower-rate" to their employees so that they can be removed, citing "non-performance."

Kulkarni knows a company which lost an account of 6,000 people (staff working on an outsourcing contract). "What will you do (when that happens). So, there will be temporary dislocation; no permanent harm."

In times of recession, layoffs are quite natural. He said companies which have lost big accounts and are operating from huge facilities after signing multi-year lease contract, are reducing and rationalising staff.

Kulkarni said the year 2009 is going to be challenging for freshers in the IT sector and it would be tough for them to get jobs, but expressed confidence that hiring would restart in the first quarter of financial year 2010-2011.

Source: timesofindia

[dwarakesh]

Accenture BPO looks at single digit pay hikes

Some of the IT and BPO companies are riding against the tide to hand out pay hikes to employees despite the economic slowdown. Accenture BPO turns out to be one but only with rather small increases.

The IT major has handed over raises to some of its middle level staff but is yet to announce the variable pay which is due by the end of March. However, employee promotions are currently on hold.

One employee said, "There is no talk going in Accenture about the variable pay. This means that it would be paid out like it was in the prior years. There was an increase in salary for whom it was due however there is no promotions i.e. movement from one level to the other. Apart from that, variable payout and sub-level movement is happening."

Last year, Accenture paid a double digit per cent pay rise.

Variable pay is a chunk of an employee's gross remuneration that is based on his/her annual performance assessment as well as the company's annual performance.

Sources said, "Everything is not fine but I guess it is trying to differentiate between key resource and discardable resource because hike given to key resource is maximum single digit per cent hike and for others it falls between four per cent to six per cent".

The company spokesperson failed to respond before press time.

Source: itexaminer

[dwarakesh]

IT-BPO integrated deals to gain importance post recession

The business process outsourcing sector will play a major role in the post-recession phase and combined deals where IT and BPO will be integrated by customers. And Wipro is all set to reap the benefits of this trend.

In a recent interview to a business newspaper, Girish Paranjpe, Wipro's joint-CEO said that after the recession there will be more variety in contracts and customers will be seeking a full range of solutions, preferably from the same vendor.

The company is realigning its processes and operations to address the newer, evolving needs of its customers. Paranjpe also said that the recession was a good thing to happen. "I am glad this downturn happened now because all of us (the industry) were always consumed with 30-40 % growth, thinking about hiring the next thousand professionals and purely executing. We were not really thinking about what next," he was quoted.

Wipro is currently involved in several deals in the $50-100 million and above range. These are from the segments of manufacturing, consumer goods and utilities across the geographies of US, Europe and Australia.

source: bpowatchindia

[dhilipkumar]

Japan in trouble; India relatively safe

MUMBAI: Experts see the global economic recession we are into right now getting worse before it gets better. Some foresee Japan--one of the world's biggest exporters--going bankrupt and its currency plummet if the situation doesn't change near term.

For years, the Japanese have relied on exports to support their economy... but exports have dried up given the severe recession in the global economy, especially in the US. In the last six months, Japan has lost almost a quarter of a trillion dollars in export revenue.

In January, Japan's exports plunged nearly 47% leading to a trade deficit of $9 billion. This is Japan's first trade deficit in 13 years and its biggest deficit in 25 years.

"When you consider the debt, the bad economy, and the coming population problem, it's clear the Japanese government will go bankrupt and may not pay off the money it owes," said Jonathan Paul, principal economist at Krug and Bordman Advisory.

"There is a much smaller workforce (in Japan) which actually pays taxes. The economy has shrunk and hence businesses are also paying less tax. Second, the elderly consume social security, health care, and pension resources. These are costs to the government. As the senior population rises, these liabilities increase. The elderly don't pay income taxes," Paul added.


Japan has the second-lowest birth rate in the industrialized world. In Japan, the birth rate has fallen below 1.2. Japan's population fell for the first year in 2005. By 2050, if this trend continues, Japan's population will fall by 20%.

The other problem is life expectancy is going up in Japan. So the elderly are becoming the largest segment of Japan's population. Right now, 20% of Japan's population is over 65 years. By 2050, 40% of Japan's population will be over 65 years old. In the US, the "65 and up" population makes up about 12% of society.

Since falling into a recession 20 years ago following the Asian economic crisis, the Japanese government has infused trillions of dollars into its banking system. In the last six months, it approved three stimulus plans totalling $100 billion. This week, the Japanese prime minister proposed the largest bailout plan yet of $200 billion. As a result, Japan now owes its creditors $7.8 trillion.

Going by the government debt to GDP, a measure for indebtedness of a county, Japan leads with a ratio of 187 per cent. The US follows with debt-to-GDP ratio of 75 per cent, and UK at 48 per cent.

This will also have a deep impact on the Japanese currency, as the yen is expected to drift lower against the world's major currencies in the near term, analysts said.

India, on the other hand, is seen as one of the safest among the developing countries and one which will recover fastest from the recessionary trend, even though the debt-GDP ratio is over 80 per cent.

[dhilipkumar]

Japan in trouble; India relatively safe

The International Monetary Fund (IMF) has projected India's economy to slow down to 6.25 per cent GDP growth this fiscal and further to 5.25 per cent in 2009-10, reflecting the 'deteriorating' global outlook.

This is lower than one percentage point from the CSO's advanced estimates of real GDP growth at 7.1 per cent for the current fiscal. This slowdown comes after India clocked an average growth of 8.75 per cent in the past five years.

Commenting on the Indian economy, Reserve Bank of India Governor D. Subbarao said, "India can be a growth engine. Not that India can recover ahead of the world. But when recovery starts, India's recovery is going to be sharp and rapid."

Sharath Zha, principal economist at Horizon Wealth Advisory, said: "Though India is not spared from the global economic crisis, it will certainly be one of the safest economies led by a solid domestic demand. Exports, on the other hand, have shown weakness which was obvious in the current situation. Though we have seen some unemployment in export oriented sectors in the current situation, I expect the employment market will soon be flooded with jobs as domestic economy will show some revival by mid CY09."

He added, "It has a good base of financial system. Inflation has come down below 0.5 per cent. Comparing with the developed countries that have lowered their key rates to nearly 0 levels, India has a more scope on interest rate front if recession continues to hamper the economy. Other positive point is that India has a larger percentage of younger working generation compared to China and Japan. Hence, once the recovery starts in the global economy-India will be the first to show faster and steep recovery.

[dhilipkumar]

ICRA subsidiary acquires US IT firm

KOLKATA: ICRA Techno Analytics Inc has acquired a 100 per cent stake in Delaware-based computer programming firm Sapphire International Inc.

The acquisition by ICRA Techno Analytics (ICTEAS) New Jersey-based subsidiary would provide strategic synergies to the software initiatives of company in the diversified field of business applications and solutions, ICRA Vice-Chairman and Group CEO P K Choudhury said here today.

Prateep Guha, Managing Director of ICTEAS, a wholly-owned subsidiary of credit rating agency ICRA, said that the acquisition would help the company to expand its client base in the US.

Guha said that Sapphire would also introduce its offerings in the India market.

[dhilipkumar]

IT outsourcing prices to fall: Gartner

Prices of IT outsourcing services will shrink 5 to 20 per cent through 2010 due to the uncertain economic climate, IT budget constraints and competition between vendors, research firm Gartner said on Monday.

"This fall in prices will occur due to increasing competition in the market between traditional and new providers as more providers compete aggressively to keep revenue growth on target, while ensuring margins," Gartner said.

Gartner said it expects prices for application hosting services to fall by 10 to 20 per cent and for network services to fall 10 to 15 per cent. It sees prices for data centre service dropping 5 to 15 per cent and help desk services 5 to 10 per cent.

"These are not 'price list reductions' but represent an overall price reduction on infrastructure outsourcing deals that may apply to new deals and, albeit only partially, to renegotiated deals," analyst Claudio Da Rold said in a statement.

[dwarakesh]

Indian IT firms may have to cut prices further

Already working on thin margins, the information technology (IT) services industry in India will have to cut prices by 5-20 per cent over the next three quarters, say analysts.

Global clients continue to keep purse strings tight and very few deals are coming from traditionally large markets like the Americas and Europe, which account for almost 80 per cent of revenues of most Indian IT firms.

The billing rates of most Indian IT firms in the third quarter were either flat or were cut, compared with the second quarter of the current financial year. For instance, Infosys' pricing in Q3 came down by about 1.8 per cent compared with the second quarter. The pricing for Mindtree in Q3 was almost flat when compared with Q2.

Most IT firms, say analysts, have already cut prices by 5-12 per cent for new contracts or while renegotiating the existing ones.

In many cases, to retain clients at the same price, IT vendors are offering additional services. They also agree to finish outsourcing projects ahead of schedule.

These measures are expected to be reflected in the balance sheets of the IT firms in the fourth quarter of the ongoing fiscal and the first three quarters of the next fiscal (2009-10).

Gartner says prices of IT services in outsourcing are anticipated to shrink 5-20 per cent in 2009 and 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness. Further, cost-focused buying will be a key factor for IT infrastructure outsourcing services from 2009 to 2010, with much variability on each deal, it says.

"This is a tough environment and the only option before us is to manage costs optimally. With this in mind, we are expecting that the pricing (billing rate) may come down 4-5 per cent this (calendar) year. The industry can still sustain a cut, as the depreciation of rupee will help to a certain extent," Phaneesh Murthy, CEO of Nasdaq-listed iGate, told Business Standard.

The financial services sector, traditionally a big client for the IT outsourcing industry, has been badly affected by the global slowdown. Sources say the slump in the sector may continue to stay for three more quarters. Many leading firms in financial services have already gone for a budget cut of about 25-30 per cent for the ongoing calendar.

"Pricing is challenging, as clients want to reduce their operating costs. The client today wants substantial savings. Definitely, there is going to be a price reduction, though I don't know by what percentage," said a senior executive of one of the top five IT service companies.

source: bpowatchindia

[dhilipkumar]

Disney US parks cutting jobs, seeking efficiencies

*Disney parks laying off undisclosed number of workers

*Disney says layoffs may continue as it seeks efficiencies

LOS ANGELES, March 27 (Reuters) - The Walt Disney Co (DIS.N) has cut an undisclosed number of workers at its domestic parks this month in a previously announced plan to consolidate behind-the-scenes operations for Walt Disney World in Florida and Disneyland in California, a spokesman said.

Local media in Florida, tipped off by laid-off workers, have reported cuts as deep as 450 jobs at the two locations.

Disney World spokesman Michael Griffin would not confirm the number but said the cuts may continue as the company searches for efficiencies in the two parks' operations.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Griffin said. "As acknowledged previously, these actions will unfortunately result in the elimination of positions."

In February, Disney's theme park business, anchored by the two domestic resorts, reported a 24 percent drop in quarterly operating income and a 4 percent decline in revenue for the company's first fiscal quarter, due in part to slowing consumer spending.

A couple of weeks later, Disney said it would streamline the parks' services that are not consumer-facing. It said the new structure would require an undisclosed number of job cuts.

Earlier this month, Disney Chief Executive Robert Iger told investors that domestic park attendance was holding "even" in the current quarter but deep ticket discounts designed to drive attendance were cutting into per capita spending.

Disney shares were down 2.6 percent at $18.55 in afternoon trade on the New York Stock Exchange. (Reporting by Gina Keating; Editing by Gary Hill)

[dwarakesh]

Recession to change hiring trends

A post-recession scenario will see a shift in hiring patterns, with companies focussing on ensuring quality rather than quantity in r
ecruitment and a pronounced thrust on the all-round ability of those recruited to deliver.

"As the global economy recovers, we are going to see companies getting smarter about recruitment," according to Sheeroy, CEO, Professional Aptitude Council (PAC), a leading global network of pre-qualified knowledge workers, who are ranked and differentiated by globally standardised exams.

Focus on technology skills as a hiring criteria would give way to all-round ability to deliver, he said.

"We are going to see a big difference in quality and marked changes in recruitment policies of companies," he said.

There is going to be a massive demand for outsourcing and companies would not just leverage the cost arbitrage, but also look at the quality arbitrage, he noted. The earlier focus on hiring 'larger numbers' would shift to quality, said Sheeroy.

Once above-average quality recruits were acceptable, but now the focus would be to ensure 'high quality' hires. The immense pressure to ensure 'more joins' would give way to 'best quality joins'.

Sheeroy opined that though the economy moves in a cyclic manner with ups and downs, each downturn teaches lessons, determining a new pattern. These lessons would lead to optimising staff potential and hiring, according to the best available skill sets.

In the post-recession period, HR managers would have to re-look at the hiring process and ensure that their hiring patterns are based on scientific principles.

"There is going to be a take off, an embrace of science into the HR process," he said, adding that the future lies in using global standards for recruitment. "Companies will leverage the best talent" available in the global workforce.

Foreseeing the pattern, PAC has come out with scientific tools to help employers hire people with skill sets that are 'best available' geographically.

The PAC test measures candidates over various parameters and compares skill sets with those worldwide. This helps a recruiter understand the kind of skills sets available in a country and compare it to those available elsewhere in the globe and then plan recruitment, given the multi-geographic locations and services.

source: indiatimes

[dwarakesh]

No free coffee for IBMers from May 1

IBM worldwide has begun cost cuts in order to battle the effects of the global financial crisis and will scrap office amenities such as tea and coffee, and even company-funded home internet access.

From May 1, IBM will cease to reimburse Internet access for staff working from home. Direct pay corporate managed and contracted home Internet services will also be scrapped.

"IBM will cease the reimbursement of home internet access for employees," The Australian quoted the company, as saying in an email to staff.

"Secondly, over the next several months the provision of some office amenities, including tea and coffee supplies, will be phased out. Where it makes sense, our intent is to replace this with user-paid vending machines at selected sites."

IBM said the expiring home Internet policy was developed in the 1990s, when home Internet was not the norm. The cost-cutting measures would allow IBM to continue workforce programmes including a salary bonus pool, a single-cycle salary review later in the year, funding education to support revenue generation and continuing to invest billions in research and development, it said.

IBM Australia declined to reveal how much money it expected to save from the cost-cutting initiatives.

IBM reported a 12 per cent gain to $4.4 billion in net income for the fourth quarter of 2008, but slipped 6 per cent in revenue to $27 billion when the recession hit technology spending.

In January, IBM sent layoff notices to more than 2800 people in its sales and software groups in the US. The latest round of job cuts at IBM was announced last month, when industry sources said another 5000 IBM workers in the US would lose their jobs.

source: infotech

[dwarakesh]

Staff asked to use public transport

They have been travelling to work in air-conditioned cabs and luxurious coaches all these years. IT employees of Pune will now also have to get used to public transport buses.

Cost pressures are forcing IT majors like Infosys Technologies, Tech Mahindra and Tata Consultancy Services (TCS) to opt for public transport buses that come at cheaper rates and have a better reach in the city. This leads to cost cutting as compared to cabs and private bus services.

Infosys Technologies, for instance, recently placed a request with Pune Mahanagar Parivahan Mahamandal Ltd (PMPML), the local public transport body in Pune, for an additional 20 buses to ferry its staffers from all over the city to its office locations in Hinjewadi. Infosys already has 16 PMPML buses operating for its staffers for some time.

Even TCS has now placed a request for 13 PMPML buses within Pune city. "Information technology companies have been considering PMPML for transportation of staffers. We provide cheaper and safe service that has better reach and efficiency. Infosys, especially has asked for CNG buses, which we are trying to provide. But we have excellent low-emission buses that would soon be deployed to ferry Infosys staffers," PMPML Managing Director Nitin Khade told Business Standard.

Top officials from Infosys as well as TCS confirmed that they have placed requests with PMPML but declined to give any details. Wipro Technologies and Tech Mahindra, too, are reportedly exploring possibilities to hire PMPML services instead of private bus operators.

The advantage PMPML draws out of providing bus service to IT companies is higher compensation than average running. "In addition to this, we ferry common people during the afternoon hours to improve connectivity to Hinjewadi region," Khade said.

The PMPML charges between Rs 55,000 to Rs 60,000 per month, for a single bus with a 50-passenger capacity it provides to a company.

"Some 16 PMPML buses are already operating for Infosys, while 20 new have been asked for. We expect services to TCS and Tech Mahindra companies will also begin soon," said PMPML traffic manager Sunil Gavali.

If a company hires a bus from a private operator, the monthly charge for a 50-seater bus goes up to Rs 68,000. The PMPML service, is hence, cheaper and has a better reach across the city. "Information technology companies have realised the advantages of ferrying employees in PMPML buses as against private buses. Hence, we are getting more and more demand for transportation services," added Gavali.

A number of IT professionals expressed satisfaction over the PMPML service. "We used to think public transport is pathetically maintained. But we are ferried in good buses and the service is really prompt," said K Sandeep, working with Infosys Technologies.

Another professional working with a BPO unit said, "From air-conditioned cabs, we had moved to private buses. And now, we are being picked up by public transport buses. Cost pressures are really making companies think in a different way."

Source: Business Standard

[nithyasubramanian]

US Senators vote for economic crisis probe

Washington, April 23: The US Senate voted to treat the global economic meltdown like the September 11, 2001 terrorist strikes by creating an independent commission to investigate the causes of the crisis.

"The only way to get an objective evaluation of where mistakes were made is to create an independent commission of experts to ask what went right, what went wrong and what could we have done to prevent this," said Republican Senator Johnny Isakson, the measure's lead sponsor.

Lawmakers voted 92-4 in favor of Isakson's amendment to broaden legislation on financial fraud that is expected to clear the Senate this week, though it would require a companion bill to pass the House before it could become law.

The new committee would have 18 months to investigate the causes of what some call the worst economic crisis since the Great Depression of the 1930s and report back recommendations to prevent such collapses in the future.

The panel would have the power to refer to the US Attorney General and state attorneys general any evidence that institutions or individuals may have violated existing laws.

Isakson said the committee, grouping financial experts appointed by key lawmakers from both major US parties and both chamber of the US Congress, was modeled on the commission that investigated the September 11 strikes and made recommendations to thwart future attacks.

But lawmakers, as well as federal or state government employees, would be barred from serving on the panel. Senators by voice vote later approved another amendment, crafted by Democratic Senator Byron Dorgan and Republican Senator John McCain, to create a special Senate committee to carry out a similar mission.

"We need a select Senate committee to investigate this financial crisis and make sure it never happens again," said Dorgan, who expressed strong support for the independent commission but declared the Senate must also investigate.

In the House of Representatives, Democratic Majority Leader Steny Hoyer told reporters that he expected the US Congress to create a commission to look into the underlying causes of the crisis and recommend ways to prevent a repeat.

"Certainly we are moving in that direction," he said. "I think a commission certainly could be useful." Democratic House Speaker Nancy Pelosi has expressed support for creating a congressional commission on the crisis.

courtesy : Zeenews.com

[nithyasubramanian]

Economic recovery in H2, if stable govt comes: Goldman Sachs   

New Delhi, April 24: Global financial major Goldman Sachs expects the Indian economy to recover from slowdown in the second half of this fiscal, if a stable government is formed after General Elections.

"The evidence appears to suggest that if a stable government were to come to power, markets would be driven by fundamentals and global cues. In that event, leading indicators suggest to us a recovery in economic activity in the second half of fiscal year 2009-10," Goldman Sachs said.

Referring to economic activity post-polls in the past, the financial firm said economic activity increased immediately after five elections out of seven since 1984.

"On each of those five occasions, a coalition perceived to be stable, has come to power," it said in a report, titled India: Impact of the Elections on Acitity and Markets.

The two elections in which activity declined were when neither of the two major national parties—- the Congress or the BJP-- were a part of the ruling coalition.

Elections do not change the trajectory of the business cycle, the report said, adding that the impact of the elections should not be overplayed.

"According to our estimates, election cycles do not interfere significantly with the economic cycle. We continue to expect GDP growth to be 5.8 per cent in FY10, above the consensus of 5.1 per cent."

courtesy : Zeenews.com

[dwarakesh]

Indian IT firms try to reduce or push out benched staff

A large bench (people without assigned work) is generally considered to be an asset, a tool to control attrition. But with the global slowdown hitting the sector, it is proving to be a liability.

This is forcing companies to devise ways to reduce bench strength, by posting in other areas and paying them less till they become productive assets.

India's second-largest software company Infosys Technologies, for instance, has given its bench employees a choice, wherein they can work with the company's Business Process Outsourcing (BPO) arm with the same salary and perks. It is also encouraging benched employees to apply for projects using the Intranet portal — wininfy.com — the failure of which may also lead to job loss. In some companies, techies on the bench are being encouraged to find projects on their own, internally, by hardselling themselves.

Excluding trainees, Infosys officially agrees their bench strength is 3,500-4,000 people. This will increase once the 8,000 people undergoing training join in the next two months. Besides, the company has issued joining letters to around 16,000 campus recruits, who were given offers last year. To mitigate such pressures, Infosys has already announced an increase in the current training duration from the three months to almost six months.

Wipro has already given an option to its bench resources to work for only two days a week and take a 50 per cent cut in their salary. Close to 1,000 employees, including senior managers and project managers, have availed of this offer so far, according to the company. In some cases, the company is encouraging the bench resources, including managers, to come to office 10 days a month at a stretch and take a cut in salary.

The company is also encouraging some employees to take a sabbatical for six months or more to go for higher studies. About 10-12 per cent of Wipro's employees with the IT services business are said to be on the bench now. "We want to keep our efficiency level fairly high. We don't want to create laxity there. It is not just the question of a bad economic situation, but working habits, too, get spoiled by doing so. It is better to keep a tight bench and keep everybody fairly engaged," says Girish Paranjpe, Joint CEO of Wipro's IT business.

HCL Technologies has urged its benched employees to take a pay cut of 25 per cent. It is also asking them to find opportunities inside the company on their own, failing which they may lose their jobs.

TCS, India's largest IT firm, which added 32,000 employees last financial year, including close to 25,000 freshers, says it is very important to ensure utilisation is at least at 74 per cent, though the company claims the increasing bench is not much of a problem. It, however, says the plan is to increase the training period of new recruits.

"The idea is to train people better, utilise people better and also help them gain experience. The normal training period is the same, but in addition to that we will give more training, if there is an additional period for which we have to keep them on the bench. We will definitely use them either in development of some of the assets (IT solutions, platforms) or we will give them some training. It can be an additional two or three months. It will differ on a case by case basis," said N Chandrasekaran, COO and executive director of India's largest IT firm.

Moreover, while the physical bench had always been there, mid-sized IT firms like Hexaware and Mastek have coined the word 'virtual desk' to define a certain section of their unutilised resources who will be enjoying lesser privileges and perks. Hexaware had said the virtual bench has about 350 employees who will get about half their basic salary.

source: businessstandard

[dwarakesh]

IT may see 1 lakh job cuts by Sept

The Indian IT services sector may see up to five per cent layoffs -- amounting to more than one lakh job cuts -- over the next six
months as companies focus more on cost-cutting due to persisting weakness in global demand, experts say.

Companies may reduce workforce in this fiscal, mostly based on stringent performance criteria, experts added.

"We expect the knowledge industry (IT) to see 3-5 per cent non-voluntary exits in the first two quarters of the financial year mainly in senior and middle levels," Deloitte Touche Tohmatsu Senior Director (Management Consultancy Services) P Thiruvengadam said.

Given the fact that more than 22 lakh people work in the IT industry, five per cent non-voluntary exits would mean more than one lakh employees being shown the door by September.

Nasscom estimates more than 22 lakh people were working in the Indian IT-BPO sector in FY2009 (till February), while indirect job creation is estimated at about eight million.

International Management Institute (IMI) Director C S Venkata Ratnam said, "The IT sector is better off but it may see up to 4-5 per cent job losses in the first two quarters of this fiscal."

The global financial turmoil has also hit the country's other export-related sectors including textiles and some unorganised industries like auto ancillaries, Venkata Ratnam said.

Besides, IT services (including engineering services, R&D, software products) exports, BPO exports and the domestic IT industry provide direct employment to 9,47,000, 7,90,000 and 5,00,000 people, respectively, Nasscom says.

The next 5-6 months would be critical for companies in deciding on job cuts. At present, layoffs are very few and more companies have frozen hiring to tackle the economic slowdown, Thiruvengadam said.

Last week, third-largest software exporter Wipro said it would freeze salary hikes and is uncertain about campus recruitment.

Further, as per government data, over one lakh people lost jobs in the export sector due to the global downturn.

source: economictimes

[dhilipkumar]

Forrester: PC power management still not widespread in IT, despite recession

Most IT professionals aren't managing PC power use within their organizations, even as many companies look to cut costs because of the economic recession, according to a survey conducted by Forrester Research Inc. By not doing so, they may be passing up big savings, especially in regions with high energy costs.

Forrester surveyed 91 IT managers in midsize and large companies about their PC power management practices. The consulting firm, which issued a report about the survey to its clients this month, found that only 13% of the respondents had implemented wide-scale power management programs, while another 18% had set up programs but not for all of their PCs.

The top reason cited for the low deployment rate was IT managers not being responsible for technology energy costs, said Doug Washburn, the Forrester analyst who conducted the survey.

The survey results aren't surprising: The U.S. Environmental Protection Agency estimates that no more than 10% of all PCs in use within organizations have their power management capabilities turned on.

One reason for that may be skepticism about how much money can be saved per PC. Another may be the continued use of Windows XP. Windows Vista gives administrators the ability to natively manage power settings on PCs over a network, but XP does not, although there are third-party tools available for that, including a free one from the EPA called EZ GPO.

In addition, managing electricity usage typically falls under the duties of facilities managers such as Forrest Miller, director of support services at the Lake Washington School District in Redmond, Wash. Among other things, he is responsible for the power utilization of about 11,500 PCs.

For the past several years, Miller has been using software from Seattle-based Verdiem Corp. to manage the school district's PC power consumption. The tool is set to put PCs into sleep mode after 20 minutes of inactivity, said Miller, whose IT department administers the software.

The Verdiem software costs Lake Washington $25,000 annually under a three-year agreement. Miller said that the application has helped the district reduce power consumption by about 3.66 million kilowatt-hours per year, for an annual savings of about $256,000, based on current electricity rates.

computerworld

[dhilipkumar]

Forrester: PC power management still not widespread in IT, despite recession


Miller said he views power management as an easy way for users to have a major effect on energy costs with minimal or no impact on work processes. He added that he has yet to hear any complaints from employees about the program. "It would be interesting to me to know why people wouldn't do this," he said of PC power management in general.

The dollars savings may vary significantly by region, though. For instance, Washington state has relatively low power costs, in the range of 5 to 7 cents per kWh. Contrast that with Northeast states such as Connecticut, where rates range from 14.25 cents to nearly 20 cents per kWh, according to data from the U.S. Energy Information Administration.

The EPA estimates cost savings of $25 to $75 per PC annually if system standby or hibernation features are activated on machines.

Washburn said there are other reasons why PC power management tools aren't being deployed more widely. That includes concerns about possible end-user backlash, uncertainties about the best approach and policies to put in place, and an inability to predict financial savings and make a business case for a program if companies haven't measured their existing power consumption levels.

But only 9% of the IT managers surveyed by Forrester said they had no interest at all in PC power management, while 48% said they were considering the idea of setting up a program. Washburn thinks that change is afoot. Even if IT managers don't own the energy budget at their companies, "there is much more pressure to understand energy consumption," he said.


computerworld

[dwarakesh]

Obama's tax proposal to hit US companies rather than Indian IT sector

Indian IT services providers do not appear perturbed over the proposal of US President Obama to eliminate a loophole that allows US firms to avoid paying tax on profits earned overseas.

They say that the proposal will primarily impact US-headquartered companies like IBM, Hewlett Packard, Microsoft and Oracle that have overseas operations in countries like India.

Most large American companies earn more than 50 per cent of their revenues from markets outside the US and will be affected by the proposed tax reforms.

For instance, IBM has over 70,000 employees in India and more than 55 per cent of its revenue comes from outside the US. So, too, for Hewlett Packard, which has 30,500 employees in India.

Intel, the world's largest chip maker, counts emerging markets as the next growth area. And as part of increasing their hold in these markets, all US IT firms have invested both in terms of finance and people.

"The current proposal, as we understand, is to close corporate tax loopholes for US multinational corporations. We do not believe it has anything to do with IT outsourcing done by US corporations," India's second-largest IT services provider, Infosys Technologies, said in a statement.

Raman Roy, founder of Quatrro BPO Solutions, said: "These new tax proposals will generate incremental revenue for the US government because it will be taxing the profits of overseas companies. Captives will benefit from this move. However, these benefits will be short-term. In the long run, it might make us less competitive."

"For Indian IT firms, there is no immediate impact in the light of the recurring protectionist voice coming from the US. But the tax reforms that are being talked about have more to do with the global operations of US firms," said Ganesh Natarajan, CEO and MD, Zensar.

The current law in the US states that "any income that is earned outside the US is not taxed until such time it is brought back into the US". The Obama proposal aims to alter that to raise the revenues of the US government. Obama said removal of tax deductions to firms that earned profits in countries with low tax rates and closing other loopholes would net $210 billion in additional tax collections over the next decade.

The tax reforms (announced yesterday) have only been proposed and there will be an extended debate on these before they can be implemented, as they require existing laws to be changed, according to software body Nasscom.

Business groups in the US had assailed the proposal, arguing that it would subject them to far higher taxes than their foreign competitors must pay and ultimately endanger US jobs, it added.

As far as India goes, global companies that earn profits here are subject to a tax rate of 33.9 per cent (including surcharge and cess) and the impact of the proposed reforms on them would be marginal.

Analyst firm Zinnov said the proposed revision in tax breaks was counter-intuitive to organisations who were looking at India strategically for long-term growth.

"If the Obama government thinks that outsourcing is a 'reversible phenomenon' and cutting tax breaks will help create jobs in the US, then the thought process is quite short-sighted and needs lot more clarity. Consequences of such a policy spanning across different countries and verticals can be unimaginable. Its complexity and implications can be much larger than the current recessionary scenario that we are dealing with," said Chandramouli, director, Advisory Services, Zinnov.

Others, especially in Japan and Europe, are moving to a territorial system that taxes only corporate profits earned within their borders and the latest US proposals are contrary to the trend, notes Nasscom. This might actually end up reducing competitiveness of US companies with global operations when compared to their European and Japanese counterparts, it concluded.

Source: Business Standard

[nithyasubramanian]

U.S. sheds 539,000 jobs in April, fewest in 6 months

WASHINGTON: U.S. employers cut 539,000 jobs last month, the fewest since October, according to government data on Friday that signaled the economy's steep decline might be easing and gave the stock market a boost.

The unemployment rate, however, soared to 8.9 percent, the highest since September 1983, from 8.5 percent in March, and job losses in March and February were a combined 66,000 steeper than previously estimated, the Labor Department said.

A 72,000 jump in government payrolls tempered the overall job-loss figure.

Government employment was bolstered by the hiring of about 60,000 temporary workers in preparation for the 2010 census and U.S. Labor Secretary Hilda Solis said this figure would fluctuate in the months ahead.

Private sector employment fell by 611,000 in April after a 693,000 decline in March, the department said, which curbed some of the optimism over the report.

Still, the data was not as bleak as financial markets had expected and offered the freshest sign that the intensity of the recession, now in its 17th month, was starting to fade.

"The labor report added to the growing list of data points that imply that the steepest part of the economic contraction is now past," said Brian Fabbri, chief North America economist at BNP Paribas in New York.
The payrolls reading, which beat market forecasts for a 590,000 drop, and results of the government's tests on the health of the 19 biggest domestic banks buoyed U.S. stocks.
The Dow Jones industrial average ended up 1.96 percent at 8,574.65. Government bond prices ended higher as unemployment was seen still rising well into 2010.

President Barack Obama, whose government has rolled out a record $787 billion rescue package of spending and tax cuts, said April's payrolls number was somewhat encouraging, but that the job losses were still a sobering toll.

"It underscores the point we're still in the midst of a recession that was years in the making and that is going to be months or even years in the unmaking.

We should expect further job losses in the months to come," Obama said.

Since the start of the recession in December 2007, the U.S. economy has lost 5.7 million jobs, the Labor Department said.

In neighboring Canada, a surprise 35,900 jobs were added to payrolls in April, confounding analysts who had expected the economy to extend its pattern of heavy job losses.

GLIMMERS OF HOPE

In a hopeful glimmer for the U.S. economy, the rise in the unemployment rate reflected a surge in people joining the labor force, as opposed to a collapse in employment.

The report showed job losses across almost all sectors, although at a less steep pace than in previous months.

Manufacturing lost 149,000 jobs in April after shedding 167,000 in March.

Economists were heartened by a slight increase in hours worked in manufacturing, where the average work week inched up to 39.6 hours from 39.4 in March.

"The very good news is that the hours in the manufacturing sector were up, which implies that we are going to have some production increases soon, if not in April for industrial production, perhaps in June at the latest," said Kurt Karl, chief U.S. economist at Swiss Re in New York.

Government data last week showed a record $103.7 billion drawdown in inventories in the first quarter. Analysts reckon this created a platform for a recovery in manufacturing.

Construction, among sectors hit hardest by the housing-led recession, shed 110,000 jobs in April, the Labor Department said, after losing 135,000 the previous month.

The service-providing industry slashed 269,000 positions after cutting 381,000 in March, while in education and health services they rose 15,000 after increasing 10,000 in March.

Despite the slowdown in the pace of job losses, the unemployment rate will continue to rise until at least the first quarter of 2010, peaking anywhere between 9.5 and 10.5 percent, according to economists.

"It does look as if we are falling more slowly and we are likely to hit bottom reasonably soon, at least when it comes to economic growth," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, but added:

"We are looking at rising unemployment rates for quite some time even as job losses moderate."
The length of the average work week was unchanged at 33.2 hours in April. Average hourly earnings edged up to $18.51 from $18.50 in March, which analysts said was a reminder that incomes remained under pressure.

"The figures gave a cautionary warning about consumer incomes," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

"(The modest rise in) hourly earnings, which combined with the heavy loss of jobs signals a continuing decline in overall wage and salary incomes, is bad news for purchasing power."

A separate report from the Commerce Department showed wholesale inventories dropped 1.6 percent to $411.7 billion, the lowest since November 2007, after falling a record 1.7 percent in February.

courtesy : Express Buzz.

[dwarakesh]

Capgemini cuts about 100 jobs in Chennai

More than 100 employees have been laid off by Consulting and outsourcing firm Capgemini at its Chennai centre.

As per the reports, Capgemini sacked 600 employees in Hyderabad and Pune. The company has nearly 20,000 people working in India and the pink slips were issued for mostly in the middle management employees.

According to the sources, the layoff across centers was due to overall economic slowdown, company's project flow and clients were impacted by this.

Though the size of the contracts from the clients have been ramped down, like the "Lehman Brothers account closed after the company's collapse". Apart from the middle management, some employees on temporary basis were also asked to leave.

India is central to the global delivery model and also in the process of mapping existing skills with the business in hand and the business outlook. The economic condition is tough and no company is immune to its effects.

Sources also say that industry was seeing a service within all the affected verticals. The process is hard but it has to be undertaken to align the business with global economic realities, optimise operational efficiency, ensure financial health and enable future growth.

In the financial year of 2009, Capgemini group posted consolidated revenues of Euro 2,205 million, up 0.9 per cent compared with the year-ago period.

Source: itvoir

[dwarakesh]

Infosys to cancel home loan facility

The cup of troubles for tech employees is overflowing. After companies have cut-back on salaries and perks given to employees,
Infosys Technologies is planning to withdraw its home loan facility for employees with effect from 1 July, according to an internal mail from the company.0

Infosys, which values each employee at nearly Rs 1 crore, has been providing interest free home loans to needy employees for several years. So far over 2,000 employees (with experience of five years and above) have availed the loan facility accounting for a cumulative disbursements of Rs 80 crore, company officials said.

Source: Economictimes

[dwarakesh]

8,500 jobs may be axed if work not found: Satyam

Satyam Computer Services today said 8,500 idled employees might be fired in six months, unless business picked up as the Indian software provider reorganised.

"There is a possibility" the employees who have been furloughed on reduced pay because of a lack of work will be fired, newly-appointed Executive Vice-Chairman Vineet Nayyar said in an interview. The cuts would represent 18 per cent of the workforce, based on the number of employees Satyam said it had in April.

The company will release a reorganisation plan tomorrow to cut costs and help retain customers after a stock collapse prompted by founder B Ramalinga Raju's admission in January that he overstated assets.

The possibility of Satyam's business improving enough in six months so that all the idled employees can be deployed is "very negligible," Srivathsan Ramachandran, a Chennai-based analyst at Spark Capital Advisors, said. Satyam, which said it had about 48,000 employees at the time Tech Mahindra agreed to buy it, has 8,500 employees on a "virtual bench" because of a lack of orders, Chief Executive Officer Chander Prakash Gurnani had said yesterday.

Source: businessstandard

[dwarakesh]

Satyam places another 500 on bench

Mahindra Satyam is on course to cut more flab to trim costs. After placing over 8,000 employees on the virtual pool, the comp
any has now created a "corporate reserve" akin to a bench for over 500 associates.

The move, however, sparked off speculation about possible exit of senior-level employees in the Hyderabad based outsourcing firm.

In an internal communication, the company said "associates belonging to the enterprise business competency (EBS) and those in sales, relationships, operations management, programme management, delivery integration, solution frameworks & presales will reside in the corporate reserve till allocations are made.

According to him, there would only be a few hundred associates in the corporate reserve. "We are aware of the inconvenience that this could cause for the small set of associates, but request your understanding given the complexities of this large-scale exercise," the communication stated.

Earlier, the company placed around 8,000 people on the virtual pool fort six months. The creation of a corporate reserve, according to analysts, is akin to placing employees on the bench. Scam tainted Satyam had around 42,000 employees on its rolls when the firm was acquired by Pune based Tech Mahindra.

source: timesofindia

[dwarakesh]

IT's back to business as hiring, hikes return

Six months ago, Indian IT looked like it was staring into a long, dark tunnel—one that might take at least a year to get out of. Today, however,
there's already a hint of a light at the other end.

Information infrastructure company EMC has just announced that it will invest $1.5 billion in India over the next five years, a level of investment from a single company that the sector has not seen in close to two years.

Manpower supply company TeamLease that saw its open positions drop dramatically from 10,000 a month to 800 post the Wall Street
crash, has in the past two months seen those numbers rise to 3,500. Wipro has lifted its freeze on hikes and promotions, at least for some employees.

Partha Iyengar, regional research director in Gartner India, says the number of calls the company gets from customers for directions and consulting has gone up sharply in the last 3-4 months, "indicating that a large number of IT deals will hit the pipeline in the next two quarters".

The Indian IT industry was one of the worst hit by the recession on account of its almost complete dependence on international markets—especially the US and Europe. The freeze on IT budgets by companies around the world meant that new orders dried up. Industry association Nasscom initially forecast that IT exports would grow by 22-24% in 2008-09, but as the recession deepened, this was revised down to 16%. For this fiscal, the association has projected a mere 4-7% growth to $48-50 billion.

But optimism is making a tentative return. "That phase of drastic downturn is behind us," says S Ramadorai, CEO of Tata Consultancy Services, India's biggest IT company. "There's stability now. The deal pipeline is encouraging, but the time it takes to close a deal remains long. And many customers are yet to fully open up their IT budgets."

Source: indiatimes

[lillyglobe]

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

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

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

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

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

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

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

[dwarakesh]

Goodies shine on IT employees

Things get better HCL Tech plans to hire 2,000 by Dec-Jan; considering salary hikes for top performers Infosys said it will be starting compensation review for need-based promotion starting Oct Mahindra Satyam will reinstate variable pay across employee levels starting Oct 1 Employers are talking about hiring, salary hikes and promotions after almost a year of cost cutting that involved lay-offs, lower perks and recruitment freezes.

HCL Technologies plans to hire 2,000 people over the next quarter, including some fresh graduates. It has started the process of identifying its top performers for a salary hike.

Infosys Technologies said last week that it would start a compensation review exercise for "need-based promotion" starting October 1, signalling a new employee welfare initiative. Mahindra Satyam is also trying to rebuild its corporate image and employer brand after the Mahindras took over the corporate fraud-hit Satyam Computer Services, and renamed it.

Source: yahoonews

[dwarakesh]

Satyam to recruit again, even seniors

For the first time in almost six months after it was acquired by Tech Mahindra, Satyam Computer Services (now rebranded as Mahindra Satyam) will hire 130 people from outside the company.

In June this year, Satyam had initiated a 'virtual pool programme' (VPP) for close to 10,000 surplus employees, that allowed 'excess' talent pool in India to be retained, albeit at a reduced pay for a defined period of four to six months. Some of these employees were later "called back to work" with full wages.

He, however, did not disclose the roles to be assigned to these seniors it plans to hire. The company currently has around 34,000 staffers globally, and is working towards shaking off the bad image its disgraced founder, Ramalinga Raju, had left it with.

Mahindra Satyam lost 200-250 client companies after the confession by founder Ramalinga Raju that he had cooked the company's books for several years. Today, the company has 400 customers globally.

On the cultural side and people-related issues, he said the company had recently initiated employee connect programmes, including one in which the chief executive officer, C P Gurnani, walks across different floors and talks to people and listens to their issues.

Source: Business Standard

[michelclarck]

Protest ends as Wipro goes ahead with hiring

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

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

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

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

[dhoni]

america is major part of it company while the some years before the america has senses problem

but it can be major damage in many sort of company

while america senses get problem means and entire cost value has been changed