IT companies and US economic crisis

Started by dwarakesh, Sep 26, 2008, 10:34 AM

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dwarakesh

TCS, Satyam to put on hold promotions

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

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

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

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

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

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

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

Source: The Hindu

dwarakesh

Satyam Freshers Programme delayed

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

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

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

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

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

dwarakesh

IT Fresher Salaries To Increase in 2008

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

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

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

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

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

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

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

dwarakesh

Economic slowdown to change campus placement trends

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

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

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

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

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

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

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

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

dwarakesh

Ramco to cut top management salaries

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

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

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

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

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

dwarakesh

Satyam shows door to 200 employees

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

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

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

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

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

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

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

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

dwarakesh

Job losers may miss gratuity & leave encashment too

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

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

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

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

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

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

dwarakesh

Satyam to review hiring projections

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

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

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

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

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

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

dwarakesh

Wipro to go slow with fresh recruitments

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

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

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

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

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

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

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

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

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

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

dwarakesh

TCS freezes salaries

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

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

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

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

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

dwarakesh

Here are the firms hiring in India

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

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

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

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

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

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

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

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

CAMPUS HIRING

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

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

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

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

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

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

ganeshbala

Hi Thanks for the information...

Good Post  Dwarakesh..Keep Updating

dwarakesh

IT companies move to cut operating costs

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

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

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

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

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

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

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

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

dwarakesh

The new HR code to fight slowdown

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

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

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

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

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

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

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

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

sajiv

IT industry in India is underdeveloped

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

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

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

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

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

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

dwarakesh

Indian IT companies may feel Citi heat

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

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

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

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

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

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

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

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

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

sajiv

Heads of IT firms keep their fingers crossed Public eye

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


dwarakesh

Mid-tier IT companies see revenue fall

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

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

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

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

sajiv


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

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

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

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


sajiv


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

sajiv

IT firm cheats techies in Chennai

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

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

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

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

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

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

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

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

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

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

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


dwarakesh

#21
TCS draws up austerity plan

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

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

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

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

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

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

Source: Economic Times

dwarakesh

IT/ ITeS sector job seekers face pressure

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

dwarakesh

IT majors ask staff for help cutting costs

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

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

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

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

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

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

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

Source: Economic times

dwarakesh

Pay us if you want a job, say IT firms

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

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

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

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

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

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

Source: Business standard

dwarakesh

Wipro puts 9,800 freshers on hold

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

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

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

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

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

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

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

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

dwarakesh

WNS not to venture into Indian markets

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

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

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

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

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

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

dwarakesh

Satyam plans to send staff on sabbatical to trim costs

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

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

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

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

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

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

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

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

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

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

Source: Economic Times

ganeshbala


dwarakesh

IT growth to halve- Infosys CEO

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

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

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

There were no plans to cut headcount, he said.

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

dwarakesh

Guj BPOs say 'work from home'

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

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

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

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

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

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

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

Source: Business Standard

dhilipkumar

Hi  dwarakesh

it is a good, and informative post..

keep posting....

dwarakesh

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.

sajiv

IT sheen leads to lesser no of Civ Ser aspirants

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

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

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

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

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

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

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

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

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

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

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

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

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

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


sajiv

IT caught in slowdown web

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

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

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

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

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

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

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


dwarakesh

IT cos with BPO arms to steal the show

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

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

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

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

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

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

dwarakesh

Infosys CEO passes on savings mantra to staff

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

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

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

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

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

dwarakesh

Offshoring to hit IT biggies

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

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

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

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

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

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

dwarakesh

Vietnam aims to fix struggling software industry

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

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

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

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

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

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

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

dwarakesh

US shed 1.2 million jobs in last three months

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

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

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

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

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

dwarakesh

US job losses mount as economic picture worsens

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

dwarakesh

US auto crash likely to hit Indian IT firms

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

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

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

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

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

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

dwarakesh

HR bosses prefer to quit than fire

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

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

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

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

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

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

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

dwarakesh

Employers plan to slow hiring further: Manpower

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

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

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

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

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

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

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

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

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

dwarakesh

Tech firms rooted to fixed contracts

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

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

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

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

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

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

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

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

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

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

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

dwarakesh

US clients renegotiate outsourcing deals, seek discount

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

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

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

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

dwarakesh

Cognizant bags $100 mn US contract

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

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

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

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

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

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

dwarakesh

Recession in US may send more projects to India

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

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

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

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

dwarakesh

Credit Suisse to reduce outsourcing to Wipro

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

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

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

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

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

dwarakesh

IT slowdown will ease off next year

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

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

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

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

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

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

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

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