New H1B visa norms likely to isolate Indian IT: Nasscom

The National Association of Software and Services Company (Nasscom) has expressed its concern over the proposed amendment to the H1B visa legislation and said the amendment is likely to isolate and unfairly target Indian IT companies, restricting the level-playing field.

A statement from Nasscom said on Tuesday that it is 'working closely with stakeholders and policy makers in the US Congress' and the administration to ensure that the Indian IT industry is not disadvantaged in any manner due to this.

A team of six officials of Nasscom recently visited the US to prevail upon them over the visa issue and also over the proposed 'Buy America' measure of the Obama administration.

The delegation met senator Charles Grassley, belonging to Iowa, who is spearheading the H1B legislation. Nasscom would be working with him to ensure that any fraudulent use of the H1B visas are apprehended and stopped and ensure legitimate business users are not affected.

The industry body said the only 11% of the total visas issued last year was to the Indian IT industry.

The delegation also met a large cross section of stakeholders from the US administration, elected representatives of the Congress, various associations, US headquartered companies and customer companies.

"Having met with various stakeholders and experts and discussed the protectionist measures with them, Nasscom does not see the "Buy America" clause or the discussion on removal of "tax breaks for US companies that create jobs offshore" provisions in their current forms having any impact on the Indian IT-BPO industry. We are confident that US will consider all factors as they have in the stimulus bill and other proposed initiatives for reviving the economy and employment," the statement said.

"The Indian IT-BPO industry has played a crucial role in helping US companies tap these benefits and remains committed to being a part of the solution to help tide over this crisis It is imperative that the US and all countries continue to be proponents of free trade. With more countries impacted with the slowdown, such protectionism would trigger similar protectionist measures. The world economy will find it difficult to reverse this trend quickly. Restricted trade affects businesses, incomes and employment in other countries thus resulting in lower spending and subsequently lower demand for US goods and services globally," it added.

Infy to hire 20k engg grads at over 8% higher salary

Source: TheEconomicTimes
India’s second-largest software company Infosys will be inducting almost 20,000 engineering graduates this year at over 8.3 % higher salary from what was offered last year, even as the company seeks to cope with a lower demand for software services in its top export markets such as the US and Europe.

At a time when other industry rivals such as TCS, Wipro and HCL Technologies are deferring the
joining dates for new hires, Infosys is holding on to its commitment and that too at better salary levels than last year.

“We have increased the pay package from Rs 3 lakh per annum to over Rs 3.25 lakh per annum for those joining in June this year,” Nandita Gurjar, senior vice-president and global human resources head, Infosys, told ET in an interview. “The idea is to get the best talent even during this slowdown, to provide better training and prepare them for the projects,” she added.

Experts such as Prashant Srivastava, managing partner of Gallup Consulting, said that top tech firms want to retain their edge as preferred employers in the industry. “Proactive companies are preparing and hiring high performers for the future, as they don’t want to run after talent once economy revives in few years,” he said.

The offer letters and dates of joining have been sent to 20,000 freshers (2008-09), and the process of joining will start from June this year. Last year, Infosys recruited almost 18,000 (2007-08) engineering graduates.

The company has also increased the training period for new recruits from the current four months to almost eight months. “It gives them better understanding of a project because the predictability of what kind of work you will get is much lower than what it was last year,” said Ms Gurjar. Infosys visits some 1,100 engineering colleges every year.

At a time when the US government is mulling stricter work permit regulations, Indian tech firms such as Infosys will need to deliver more projects from India. “We have been preparing from past three years to reduce our dependency on H1B visa, which is hiring more and more locals in all the countries, where we work,” said Ms Gurjar.

Indian IT cos face stiff challenges with project cancellations

Source: TheEconomicTimes
Indian IT firms are staring at significant challenges with price cuts (from clients’ end), project cancellations and ramp-downs, according to a recent India Infoline report.

While in the near term, the depreciation of the rupee is a tailwind, worsening macro indicators are yet to show any signs of bottoming out. "Unemployment in the US is at alarming levels and is still growing. Earnings downgrades at major clients have been substantial in the recent past. Current year earnings estimates were cut by 20%. Since then, they have been cut by a further 40%," the report added.

Infosys (down 1.9% at Rs 1207.65), TCS (down 3.7% at Rs 462.80), Wipro (down 2.4% at Rs 202.20), HCL Tech (down 4.8% at Rs 95.10) and Patni Computers (down 2.8% at Rs 94.95) were being sold heavily by investors. Tech Mahindra was trading 1% higher at Rs 251.15.

After proposing to restrict H1B recruitments at firms receiving TARP funding, President Obama had proposed to limit tax breaks to firms engaged in outsourcing.

"This, in our view, will have minimal impact on IT services vendors, as current tax-breaks are anyway minimal. Further, lack of clarity and practical limitations on this measure’s implementation limit its effectiveness in creating more domestic jobs at the expense of offshored jobs," the India Infoline report said.

Furthermore, the brokerage is not expecting growth in offshoring in FY09. Given the likely short-term nature of the tax-breaks (the previous AJCA-2004 repatriation tax break was for a period of one year), linking the benefits to incremental offshoring could even prove completely ineffective, notwithstanding its popular appeal, the report added.

Satyam loses Coke, GlaxoSmithKline deals too

Coke project to CapGemini
GlaxoSmithKline project to Cognizant

Satyam’s prized possessions, both clients and employees, are slowly slipping away. Coca-Cola and GlaxoSmithKline (GSK) are the latest to exit the company. While Capgemini has already bagged the $100-million seven-year Coca-Cola project, it is learnt that Cognizant will get the $35-million GSK contract.

Coca-Cola and Satyam refused to comment on the development, but Capgemini confirmed that it has bagged the order. On the other hand, both Cognizant and GSK said they do not comment on individual contracts. A few key employees who were critical to the implementation of the Coca-Cola project have quit Satyam to join Capgemini, an official at one of the companies told ET.

“Coca-Cola Enterprises has selected Capgemini for a seven-year arrangement to implement comprehensive finance and accounting (F&A) solutions in CCE’s North American business unit to create an efficient process in a cost-effective environment,” said a Capgemini spokesperson. However, the spokesperson refused to confirm or deny if some Satyam employees had been hired.

When companies change their software vendors, there is usually a clause in the client-vendor agreement that makes it binding on the exiting service provider to assist the new player during the transition period.

“In this case, it (enforcing the clause) wasn’t so easy due to the current circumstances, so Capgemini was asked to recruit some of the important (Satyam) employees,” said a consulting head who is advising some Satyam clients. Some Satyam employees may leave the organisation along with contracts, he said.

But there could be some legal disputes in the offing. “Most employees have a non-solicitation clause which prevents them from joining a rival company,” said Anoop Narayanan, partner law firm Majmudar & Co. “There could also be a non-competition clause, which does not permit the employees from working with any other company in the same field for a particular period of time,” Mr Narayan.

Infosys says no layoffs, to recruit more

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

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


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

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

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

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

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

Cognizant to beat Infosys in revenue addition for the first time

Cognizant Technology Solution has guided to add more incremental revenues in the twelve months ending March 2009, than what Infosys Technologies, India's second largest IT exporter, said it would add, at a time when many assumptions about the software sector are being challenged.

Cognizant started thirteen years after Infosys, and was a mere $400 million company when Infosys crossed its billion dollar mark. Even at the end March 2009, Cognizant will be a good $1.8 billion smaller than Infosys in terms of revenue.

However, going by incremental revenues, another key measure of performance, and the guidance estimates given by the companies, Cognizant would have added more. Cognizant has guided to add $ 589.7 million for the twelve months ended March 2009, against Infosys' $536 million. Neither company made significant, revenue boosting acquisitions in the last one year.

While Cognizant has outgrown the Indian IT companies in percentage terms for many years now, this will be the first time when Cognizant takes Infosys head on in absolute incremental dollars.

Analysts say Cognizant's in sales and marketing is helping the Nasdaq-listed company stand in good stead even in tough times.

"Cognizant has followed this policy of maintaining operating margins at 20% and the rest would be re invested in sales. It has followed this sort of strategy since 2001-2002, which is helping the company grow business even in the current environment," said R Srivathsan, an analyst with Spark Capital.

In a recent report by Edelweiss research, the following reason were cited for Cognizant's higher growth clip among its industry peers- re investing excess margins in business, differentiated approach in relationship management, integration of back end with front end right from the beginning and its focus on depth in each vertical rather than breadth.

"Depth serves Cognizant well in this environment as despite having a 46% revenue exposure to the Banking, financial services and insurance (BFSI) segment, and an 80% exposure to the US," said the analysts in the report.

For the year 2008-09, Cognizant grew revenues by 32%, surging ahead Nasscom's estimate of 16-17% for the industry.

Cognizant acquires Canada based Active Intelligence

In a bid to enhance its consulting expertise, software services firm Cognizant has acquired Canada-based consulting firm Active Intelligence (AI) for an undisclosed amount.

A Cognizant spokesperson confirmed the development to The Economic Times. "AI specializes in providing consulting, implementation and support services around the Oracle Retail Merchandising, Planning and Optimization suite, a growth area for Cognizant's retail practice. We plan to combine AI's consulting capabilities and Cognizant's delivery capabilities in this area," he said.

Though the exact figure of the deal is not available, Industry sources said the size of the deal is quite small. Cognizant has already worked with AI on a number of engagements as independent parties. The acquisition, which was made last week, will be formally announced during Cognizant's annual results announcement on Friday.

Move on H1B curbs may hit Indian IT firms

Source: Business Standard
Senate votes to prohibit bailed-out banks from replacing laid-off workers with foreign guest workers. The Indian IT industry, which recently lowered its growth projections on the back of a slowing economy, sees no immediate impact of the recent US Senate vote to prohibit banks which are bailed out by the government from replacing laid-off workers with foreign guest workers (read H1B workers).

The situation, however, would hurt the fortunes of Indian IT firms if the amendment becomes policy. The top 10 H1B visa list is made up largely of India-based firms, including Infosys Technologies, Wipro and Satyam Computer Services. And the deadline for companies to request petitions for new H-1B visas is April 1. Both US (read Silicon Valley) and Indian companies have repeatedly stressed the need to raise the cap, which was reduced from 195,000 to 65,000 two years ago.

However, Senators Sanders and Charles Grassley (a well-known H1B opponent) recently introduced an amendment that would require bailed-out banks to hire only Americans for two years. This was accepted by the US Senate a day after it was revealed that Americans lost almost 600,000 jobs in January. However, the amendment has to go for 'reconciliation' (a legislative process) before going to Congress and finally the President before it becomes policy.

It is feared that these banks (bailed-out with taxpayers’ money), in a bid to contain or cut costs, would outsource and offshore more work to low-cost countries like India, reducing the chances of American workers of getting jobs. The senate amendment seeks to prevent this, and it could affect the fortunes of the Indian IT industry since outsourcing from the Banking, financial services and insurance sector accounts for almost 40 per cent of its revenue.

“Wall Street caused the crisis, millions of people lost jobs, including 100,000 in financial institutions. Now they want to bring in foreign workers,” Senator Bernie Sanders said in a release. It is feared that the bailed-out automakers too would face a similar diktat. This is another lucrative revenue segment for local IT firms.

Software body Nasscom said that it's up to American banks to choose whether they need to outsource more work to cut costs. “The wording is very confusing. Besides, one may also remember that it is applicable only to H1B dependent companies (an H-1B dependent employer is one whose workers brought in with that visa comprise 15 per cent or more of the employer's total workforce). We hardly have any such IT firms in India,” said Nasscom President Som Mittal.

“There won't be any immediate impact but if the issue persists and becomes policy, then the concern could become grave,” cautions Ganesh Natarajan, Chairman Nasscom and Deputy Chairman and MD of Zensar Technologies. Observers also said that the amendment isn’t as tough as the one Senator Grassley proposed on February 5, which would have prohibited firms from hiring H-1Bs altogether.

US Senator asks Microsoft to layoff H1-B employees

Microsoft H-1B workers may be first to lose jobs??

With plans to lay off 5,000 employees in the face of the global credit crisis, there have been calls to Microsoft asking workers on the H1B visa to be the first to go. In a letter to Microsoft Chief Executive Steve Ballmer, Republican Senator, Chuck Grassley personally requested H1B employees be the first up for redundancy.

"During a layoff, companies should not be retaining H-1B or other work visa programme employees over qualified American workers," Grassley said.

A majority of the 60,000 H-1B visas issued every year go to India skilled professionals, with Microsoft being one of the major recipients.

"We care about all our employees, so we are providing services and support to try to help every affected worker, whether they are US workers or foreign nationals working in this country on a visa," said a Microsoft spokesperson.

The company has been a major supporter of the US visa service which allows overseas employees in specialty occupations to work in the US for up to six years.

Satyam-State Farm insurance project: What will be the next step of Satyam on-site employees?

Related: State Farm Insurance terminates Satyam contract: affects 400 on-site employees

Among the 400 onsite employees working on client’s location at Bloomington, Illinois, U.S., 180 have H1-B Visas, sponsored by the company. The rest have L1 Visas.

Those with H1-B Visas have an option to resign from Satyam and take up another job, but the sponsor company will have to give an approval.

Those with L1 Visas have no option but to return to India for joining other projects.

Will Satyam grant approval to the H1B Visa-holders? Maybe yes. If State Farm Insurance chooses some of them to work with itself and “negotiates” with other vendors (software companies) to rebadge a few more (employing the associates on the project at their current levels of operation by the new vendor), while transitioning the project, there may not be a big problem.

But if Satyam wants to retain them even though some of them wish to join the new arrangement, the employees will have to get back to India and restart the process of securing Visas.

Troubles of Satyam Could Benefit Rivals and 2 U.S. Companies

 The financial fraud at Satyam is rippling through the technology services industry, as customers scramble to line up other suppliers and rivals look to pick up business. 

Already, competitors are angling for a share of Satyam’s nearly $2 billion in annual revenue. The big winners from the fallout are likely to be two American companies, Accenture and I.B.M., Rod Bourgeois, a technology services specialist at Sanford C. Bernstein & Company, said Thursday.

Accenture and I.B.M., Mr. Bourgeois said, have three advantages over other competitors. Each company already supplies most of the blue-chip corporate clients of Satyam. I.B.M. and Accenture have built up their Indian operations in recent years, so they offer Satyam customers the same skills at competitive prices. And they are not Indian companies.

The $50 billion-a-year offshore outsourcing business was growing at a 29 percent annual rate until the credit crisis hit last fall, Mr. Bourgeois said. But he now forecasts growth in 2009 to be about 10 percent.

The impact on other Indian outsourcing companies is unclear, but analysts say that, long term, the fraud could have wide implications. The scandal at Satyam — a company listed on the New York Stock Exchange and audited by an American accounting firm, PricewaterhouseCoopers — raises doubts about other Indian companies.

“This is a crisis of trust,” said Frances Karamouzis, an analyst at Gartner. “It’s not really Satyam at stake; it’s the India Inc. brand.”

The big Indian outsourcers like Tata Consulting Services, Infosys and Wipro could pick up business as a result of Satyam’s travails. The same is true, analysts say, for Cognizant Technology Solutions, which has its headquarters in Teaneck, N.J., but most of its operations in India.

Yet in the business of outsourced technology services, where suppliers build and maintain a customer’s vital software, reputation matters a lot. Companies often depend on their outsourcing suppliers to manage the technology behind basic tasks like billing, purchasing and customer relations. In the corporate market, it is said, customers are not buying technology, which can change rapidly, but buying a relationship with a supplier.

For that reason, Ms. Karamouzis said, the odds are that the Indian government and the industry’s powerful trade group, Nasscom, will develop a rescue package for Satyam, if necessary.

For corporate customers, the crucial resource is the software developers at Satyam, far more than the corporate entity itself. Satyam’s strongest business is maintaining and customizing so-called enterprise resource planning software, typically from SAP and Oracle, which runs the basic operations at companies.

Ms. Karamouzis said Gartner’s advice to clients was to identify by name the most important Satyam developers working on a company’s outsourced software projects. Then, she said, companies must assess the risk at Satyam, which may include sending people to India for a first-hand look.

In a letter to the Satyam board on Wednesday, Ramalinga Raju, the chairman and co-founder, said that the company’s cash reserves were about $69 million, instead of the $1.1 billion reported last year.

“If they don’t make payroll, there will be a mass exodus of employees,” Ms. Karamouzis said.

If Satyam remains intact, she said, companies may well want to offer bonuses to keep the important engineers working on their projects, instead of defecting to outsourcing rivals.

The Satyam setback has occurred at a time when the once-torrid growth of the Indian technology outsourcing industry has been slowing significantly. The terrorist attacks in Mumbai last November and a stronger rupee, analysts say, have prompted some companies to look at lower-cost alternatives in China, Mexico and Brazil.

But the main reason is the sudden slowdown in the global economy, especially the crisis in the financial services sector, a large source of business for the Indian outsourcers.

Yet when the global economy comes out of its slump, many analysts expect the growth of the leading Indian outsourcers to pick up, if not to the previous levels.

“The golden age of very high growth and financial returns is over,” said John C. McCarthy, an analyst at Forrester Research. “But Satyam and the current economic troubles do not change the fundamental economics of offshore outsourcing.”

Forrester projects that the offshore outsourcing business will grow by 17 percent annually through 2012.

Satyam Crisis[update]: Possible takeovers

Satyam Computer is understood to have grabbed the attention of private equity investors, rival IT firms and other institutional investors, which are looking at the IT major as a possible takeover target with attractive valuations.

Satyam Computers is available at a bargain:
Though the company looks attractive, the three top Indian IT services companies are unlikely to bite. According to market sources, the Big 3: TCS, Infosys and Wipro are most definitely not going to make a bid for Satyam. The reasons are simple. The foremost being acquiring Satyam would be "more of the same." Same suite of businesses, technologies and clients. Market participants also believe that considering the cash one would have to fork out, the only thing assured are 53,000 employees. The big 3 don't necessarily want those number of additional people at the moment.

While there has been market speculation that IBM or Accenture might emerge as strategic buyers, the general perception within the industry seem to be that they might also stay out. Both the companies have hugely grown their local operations and today have 74,000 IBM) and 37,000 (Accenture) employees in India. Adding more people through acquisition might not be a priority while they can be grown organically especially in the current environment where quality people are available at reasonable prices.

Satyam for Cash:
A controlling 26% stake in the company can be acquired for $520-million, given that the company's market cap is around $2-billion. Then, of course, the cherry on the cake: $1.2-billion in cash.

Cognizant interested in Satyam?
As speculation mounts on who could be a potential ‘buyer' of Satyam Computer Services, the one name repeatedly touted as a very interested party is Cognizant Technologies. The Teaneck, New Jersey-based, Nasdaq-listed company with a huge India back-end has not hid its ambitions of wanting to be in the big league. The company that has clocked very aggressive top line growth in the last few years grew 50% in 2007 with revenues at $2.13 billion.

If it were to buy Satyam which had revenues of $2.14-billion last fiscal, then Cognizant with has 59,000 employees would easily pip Wipro to emerge as the third largest IT services company. Wipro's IT services business closed last fiscal with a topline of $3.41-billion. Cognizant and Satyam with combined revenues in excess of $4-billion would easily move Wipro to the fourth slot among the top Indian IT service providers. When contacted Cognizant Technologies' spokesperson R Ramkumar, said, "As a policy, we do not comment on market speculation."

Among the big IT players, analysts say Cognizant is likely to gain the most if it acquires Satyam as the deal will give it scale, an opportunity to diversify from concentrations such as banking, financial services and pharmaceuticals and access to a robust SAP business.

Is Hewlett-Packard eyeing stake in Satyam?
BANGALORE: Hewlett-Packard (HP) is evaluating the possibility of acquiring a stake in IT services provider Satyam Computer, attracted by the latter’s lucrative business software practice. The opportunity to challenge rival IBM with bigger, low-cost offshore capabilities is also alluring, those familiar with the strategic options being considered by the company said.

More:
Raju tells Satyam staffers to stand by him. Letter to all Satyam Employees.

50,000 techies may lose jobs in next six months in India

Source:UNITES
Bangalore: It is really tough time for employees in IT and BPO sectors in India as worsening economy may cause to lose over 50,000 jobs in these sectors over the next six months. Employees in Big and small firms are likely to be the most impacted section of the downturn in next six months, while it was employees in medium-sized companies met job losses largely during September-December period.

Karthik Shekhar, General Secretary, Union of IT Enabled Services (UNITES) India finds that there was a loss of 10,000 jobs in IT and BPO sectors during the September-December period. According to the UNITES India, companies in trouble could resort to salary and incentive cuts without trying to squeeze the staff, rather than adopting the layoff path.

Karthik further added that employees are willing to agree with cuts in their salary and other incentives for 12-16 months and when the demand picks up again such benefits should be restored to them. He said senior officials of the industry had concurred with the figure of 10,000 job losses in September-December, stating that it accounted for bottom 5 percent of the performers.

"Continued slowdown, likely tax application to companies outsourcing jobs under the new U.S. regime and tightening procedures with regard to H1B visas are among key reasons cited for acceleration in issue of pink slips," he opined.

Cognizant eyes on India deals

Cognizant, which derives a major portion of its revenues from North America and Europe, sees major opportunities in the Indian market.

Past deals in Indian market with other companies:
Deal of Bharti Airtel ($750 million for ten years) several years back went to IBM, the recent deal for their DTH services was signed with Infosys for all their devices, application server
and interactive applications.

In the banking space, there are examples in Vijaya Bank, Union Bank of India and Oriental Bank of Commerce, where Infosys won the core banking solution business while Wipro won the systems integration piece. State Bank of India works with Infosys on the core-banking front and Mphasis (part of EDS) for its BPO functions.

What this essentially means is that even without competence in the infrastructure or the hardware side, IT companies can win fairly large pure-play services contracts in India.

Cognizant extends joining dates of freshers

Source: Business Standard and others
Cognizant, a leading information technology services company, said it is pushing back many of its campus offers valid this year to 2009.

Cognizant conducted 2,700 campus recruitments in the third quarter ended September 30, and is reasonably bullish about meeting its revenue growth target of 31.6 per cent in the quarter ending December 31, which marks the close of the financial year in Cognizant's books.

"We are pushing a small proportion of our campus offers over to the next year as we have achieved our original growth gains through recruitments for this year," a Cognizant spokesperson said, without specifying the numbers. He maintained that the company would honour every single offer made on campus, including the level of compensation offered to prospective joinees.

"This year, fresh graduates across disciplines — engineering, management, science and humanities — started joining us, as usual, in the June-July timeframe. However, consistent with the rest of the industry, we have extended the joining dates over a somewhat longer period due to the economic environment," the spokesperson said.

"Our policy has always been to absorb fresh graduates over a period of time following their graduation, and this year was no different. Of course, each year, we stagger the joining dates in order to accommodate our business needs and also based on our capacity to provide them the required training to transition to our practices."

This is a downgrade from the earlier growth outlook of 38 per cent even as the industry expects its results to be adversely affected by the battering on the financial services front. The company has given a revenue guidance of around $2.81 billion for 2008.

The weakening financial sector has seen leading IT vendors like TCS, Wipro, Infosys and Patni cite the credit squeeze, slower sales cycles, delays in project ramp-ups, and strained pricing power as impediments to future growth. IT firms have been hoping that vendor consolidation through mergers and acquisitions and network and IT architecture integration will steady demand from the financial services market. On the other hand, research firm Forrester expects the US financial services industry to cut its IT purchases by 3 per cent in 2008 and 4 per cent in 2009.

Good sequential growth rates were posted by Wipro (7.8 per cent), Cognizant (7.9 per cent) and Infosys (3 per cent) in the key financial services vertical during the quarter ended September. While on the compound annual growth rate (CAGR) front, Cognizant has scored higher than fellow SWITCH (Satyam, Wipro, Infosys, TCS and HCL) vendors, recording CAGR of about 56 per cent in the last five years.

"If the pace of financial consolidation does not pick up into the first quarter of 2009, we will see companies placing their bets on Europe even more. We could see an increased focus by Tier-I IT firms on the retail and manufacturing sectors in northern Europe as they target deals in $30 million-$50 million range," said an industry analyst. Forrester had recently revised downward its 2009 overall US IT spending forecast. It is now projecting mere 1.6 per cent annual growth in US IT spending for next year, down from 4.1 per cent in 2008.

Further, the demand for tech consulting and systems integration from the financial sector is expected to drop to 2.2 per cent in 2009.

In meltdown, big IT and BPO deals cheer India

MUMBAI: Outsourcing fights back and lives to see another day. While everybody was rushing to write off the industry in the wake of Barack Obama's election and the global economic
slowdown, two major outsourcing deals in the hospitality and the pharma sectors have been
signed which should bring hope and cheer for the Indian IT and BPO sector.

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.

Genpact got Hyatt Corporation deal
The world's premier hotel company, Chicago-based Global Hyatt Corporation, has outsourced part of its financial and accounting transaction services to India's Genpact. The Hyatt agreement is a trend-setting move in the hospitality industry and follows in the footsteps of other
global banking and insurance giants who outsourced a large part of their processes to India's BPO sector to save costs.

Infosys bags AstraZeneca
In the other major deal, the $30-billion global pharma giant AstraZeneca has outsourced its
end-to-end maintenance services for a variety of corporate services (such as human relations,
finance) to Bangalore-based Infosys. While the values of the two deals have not been disclosed
yet, both envisage increasing the scope of the work over time.

HCL Tech completes Axon buy

HCL Technologies on Monday closed the acquisition of UK-based Axon Group for £441 million ($658 million), marking the largest tech buyout by an Indian firm. HCL Axon, the new entity formed after the buyout, is now chasing outsourcing deals worth $1.2 billion.

Credit Suisse plans to cut down outsourcing to Wipro

1,400 Wipro consultants may affected

MUMBAI: Top Swiss bank Credit Suisse, which announced global layoffs to the tune of 5,300 last week, is significantly reducing work to Wipro, according to sources.

With about 1,400 Wipro consultants currently working with Credit Suisse, the IT company may have to shift many of them to other projects or put them on the bench. More layoffs at Credit Suisse are expected, according to industry and market sources, in the next five days.

The bank ranks among Wipro’s top-10 customers, said an analyst with a foreign brokerage firm. Any reduction in work volume will, therefore, have a significant impact on its revenues. The company, however, refrained from commenting on how it plans to employ the consultants working with Credit Sussie. 

“We will be unable to comment on this as we do not comment on individual customers,” a Wipro executive said in an e-mail response. However, an analyst said Credit Suisse is unlikely to ask all the 1,400 consultants to leave in one shot. “It is very unlikely that all the consultants will be affected.” Wipro also faces the prospect of a decline in business from auto major General Motors, which has asked for a bailout package from the US government along with other auto giants. 

Apart from Wipro, Cognizant Technology Services (CTS) is also a Credit Sussie vendor. For CTS, analysts said, it is the second-largest financial services client after J P Morgan. A spokesperson for CTS refused to comment on how business from Credit Sussie would be impacted. “Unfortunately, we would not be able to comment on any specific customer,” the spokesperson said in a written response. 

CTS, for which financial services is a key customer area, is now focussing more on healthcare and life science clients to compensate for the upheaval in the financial services sector globally. The company recently won a $100-million contract from pharma company AstraZeneca, an existing client. 

Credit Suisse also has a captive facility in Pune that employs 1,500. When the layoffs were announced, the bank’s Asia-Pacific CEO, Kai Nargolwala, reportedly travelled to India. 

While the bad news is spreading to other sectors as well, financial services, which is the most aggressive technology spender and accounts for most Indian IT firms’ revenues, is trimming costs as well as manpower. Since the collapse of the US financial giants in mid-September, the BSE’s IT index has fallen from 3800 levels to around 2400, a 35% decline.

Source: The Economic Times

IT sector job seekers face pressure

Source: Business Standard

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 attrition rates have come down by at least six to seven per cent in the past few months because of the market condition. This will surely slow down hiring,” said Som Mittal, the president of Nasscom.

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.

Wipro Technologies vice-president Pradeep Bahirwani clarified, "We are providing the students an option of a role in our BPO division, so that the engineering graduates commence work without delay. The technical support division will join with the same package that was mentioned in the original offer letter. "

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.

According to B Ramalinga Raju, chairman of Satyam, “We need additional land up to 25 acres so we can make it into an SEZ. We are waiting for the Bengal government to give us the additional land. We need to have an HR training centre and administrative building and so the additional land is a must.”

On the government’s part, Bengal IT minister Debesh Das, claimed, “Next month we will hand over 90 acres each to Infosys and Wipro at Kolkata IT Links. We are also trying to get 25 acre for Satyam at this facility or near the neighbouring Jagdishpur mouja.”

CTS removes Subsidies for its Employees!

Forwarded by Venkat

Unconfirmed News:

IT major Cognizant has removed its food subsidy of INR 16 per day per employee. Calculate the total cost saved per annum is INR. 280000000.(16 * 65000 (no. of employees) * 22 * 12 (no of working days) ) Phenomenal!

Is it cost cutting? or like Narayan Murthy said “SW Engg don’t need subsidies!