Showing posts with label Recession. Show all posts
Showing posts with label Recession. Show all posts

Thursday, September 17, 2009

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Companies continue to send employees overseas amid cost cuts: KPMG

Companies across the world have continued to send employees overseas to take advantage of business opportunities, despite a reduced budget for international assignment programs during the economic downturn, a KPMG survey says.

According to a survey of 470 human resources (HR) executives by the global consultancy, firms are implementing a variety of options to potentially save costs associated with long-term or standard assignments.

Some of these options include short-term assignments (STAs), currently being used by 79 per cent of firms, while permanent transfers is being utilised by 45 per cent of organisations, the survey said.

"KPMG survey results mirror our experience with clients. We saw that companies/employers often adjusted parts of their programs and examined alternate assignment types based on their business needs, but continued to send assignees to work on long-term business opportunities overseas," KPMG LLP managing director of Global Mobility Advisory Services Achim Mossmann said.

"As the decline in global economy affected almost every area of business and most firms assessed cost-effectiveness of their operations, international assignments were no exception," Mossmann added.

The KPMG survey also revealed that firms made changes to various policy provisions to save costs.

For example, to help determine the cost of living adjustment (COLA) calculation on their assignee packages, 31 per cent of the firms surveyed are using an "efficient purchaser index".

The index is a sliding scale measurement of the ratio of the cost-of-living between the home and host locations, which assumes that an experienced assignee is a 'smart shopper' and is able to purchase goods and services more economically than the average assignee.

The KPMG survey revealed that 49 per cent of respondents find assignees take too much time to administer. Perhaps in response to this view, almost half (47 per cent) of the respondents outsource parts of their international assignment programs to gain access to a service provider's global resources and expertise.

"In some cases, HR departments have been downsized leaving fewer people to manage more work. In these situations, administrative models are often reviewed to achieve efficiency and cost savings," Mossmann said.

The KPMG report stated that outsourcing certain program elements can help reduce the time and effort spent by HR professionals and allows the organisation to tap into the economies of scale in an outsourcing environment.

"As organisations continue to utilise international assignments, they also need to make sure there is a mechanism in place to measure how these assignments provide long-term benefits to the organisation," it added.

Monday, September 14, 2009

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'Year of staycation, not vacation': Survey

Americans are taking their paid time off from work but are cutting back on big vacation spending as they are not ready for unplanned absences that impact their paycheck, a survey has found.

According to a research by a financial services company, the Hartford Financial Services Group, more than half of workers in the US plan to use all of their paid time-off but are cutting back on vacation spending.

Out of 1,019 employees, 56 per cent plan to use all of their time off from work, while 67 per cent want to postpone their vacation.

"Employees said they value the paid time-off that they receive from their employers, but they continue to be worried about their income and expenses. And as a result, they plan to cut back on vacation spending. This could be the year of the so-called staycation," The Hartford's Group Benefits Division absence management director Marjorie Savage said.

The report found that majority of the workers are mostly concerned about personal finance followed by the economy (43 per cent) and only 27 per cent of employees fear losing their job.

Fear of losing one's job registered across all generations and genders. In addition, one in three workers (36 per cent) said they are worried about layoffs.

Friday, September 11, 2009

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Billing rate cuts may not lower delivery costs: Forrester

In a blow to mid- and small-size IT services vendors, technology research firm Forrester has said while these providers may offer lower billing rates than large offshore providers such as Tata Consultancy Services or Infosys Technologies, it does not necessarily translate into lower costs for the customer.

“The lowest hourly billing rates don’t always result in the lowest cost of delivery,” Forrester has said in its latest report.

Lower costs and greater flexibility are the most important reasons for many organisations to choose smaller providers over the tier-I providers, and Forrester’s report may have significant ramifications on future buying patterns. “But this does not mean tier-II providers should be avoided completely,” Sudin Apte, senior analyst, Forrester, and the report’s lead author, told ET.

Of the 300 or so tier-II firms, 10-15% provide value addition through specialisation around a line of service or technology, specialisation around an industry and business process, or a unique client experience, he said. The report mentions providers such as AppLabs (testing services), Microland (infrastructure services) and others such as Syntel and Kale Consultants among the mid-sized specialists. Sourcing teams in companies need to evaluate mid-sized specialists, depending on the needs and objectives of the relationship in terms of the value and duration, according to the report.

Apart from lower billing rates, the other reason for companies to opt for tier-II vendors is because they are flexible and easy to work with. Quoting the example of an European insurance firm that was adding two tier vendors, the report said this firm found its tier-I supplier not agile enough and demanding compensation for variation.

However, Forrester said the line-dividing flexibility and chaotic strategy was very fine. “Small providers often end up accepting work outside their comfort zone to defend the current revenue in an account. Then they start building capability, resources, and often effectively pilot the first project at client cost,” said Mr Apte.

The most common grouse against tier-I players was that they were becoming more like Accenture and IBM, and were no longer interested in small deals. They were pushy about volume ramp-up and no longer had the personal touch. Mr Apte said, tier-I players need to articulate their investments in building IP (intellectual property), innovation and manpower better to clients. “Clients are still looking at them as Indian companies with customer centricity, as being easy to deal with and as being transparent,” he said.

Recession in US is over: Obama

US economy has stepped back from its worst recession in seven decades and is on the road to recovery, President Barack Obama said in a rare address to Congress Wednesday night.

In a speech before both houses of Congress that was largely devoted to health care, Obama took credit for pulling the world's largest economy out of a deep crisis but warned there was more pain to come.

"Thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink," Obama said.

But he cautioned: "We are by no means out of the woods. A full and vibrant recovery is still many months away."

The United States has been in recession since December 2007, but most economists expect the downturn to end in the second half of the year.

A regional survey issued Wednesday by the Federal Reserve found that nearly all regions of the country reported their economies were stabilised or growing, but it warned that most regions were still experiencing "flat" retail sales and "weak" labour markets.

Obama's key measure to revive the economy was a $787-billion stimulus package that was narrowly approved by Congress in February.

Thursday, September 3, 2009

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US private sector job loss shrinks in August

Job losses in the US private sector fell to their lowest monthly level in nearly a year, a report by a private employment service showed on Wednesday, signaling stabilization in the labor sector.

US employers cut 298,000 jobs in August, fewer than a revised 360,000 jobs lost in July, according to the ADP Employer Services report. The July decline was originally reported at 371,000 last month. The median of estimates from 31 economists surveyed by Reuters for the ADP report, jointly developed with Macroeconomic Advisers LLC, was for 250,000 private-sector jobs lost last month.

"Despite recent indications that overall economic activity is stabilizing, employment which usually trails overall economic activity, is still likely to decline for at least several more months, albeit at a diminishing rate," ADP said. ADP and Macroeconomic Advisers said the report is designed as a proxy of the government's monthly non-farm payrolls report.

The US Labor Department will release August payroll figures at 8:30 am EDT on Friday. Earlier, Challenger, Gray & Christmas Inc said planned layoffs at US firms fell in August to 76,456, the second smallest monthly total so far in 2009.

Tuesday, September 1, 2009

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Job losses in US slowed in Aug: Survey

Employers in the US probably cut jobs in August at a slower pace and manufacturing grew for the first time in more than a year, adding to evidence the worst recession since the 1930s is ending, economists said before reports this week.

Payrolls fell by 230,000 workers, the smallest decline in a year, according to the median of 65 estimates in a Bloomberg News survey ahead of a September 4 Labor Department report. Figures from a private group of purchasing managers on September 1 may show the first expansion at factories since January 2008.

“We are heading out of the tunnel,” said Jonathan Basile, an economist at Credit Suisse in New York. “It doesn’t mean we’ll have a very rapid recovery because consumers still face many headwinds.”

The worst employment slump in the post-World War II era, a record loss of wealth and mounting foreclosures are among the obstacles American households have to overcome before any recovery can gain speed. Government programmes, including “cash for clunkers” and credits to first-time homebuyers, may help the economy expand in the second half of the year.

The jobless rate in August is likely to climb to 9.5% from 9.4% the prior month, according to economists surveyed by Bloomberg. Unemployment will reach 10% by early 2010, a Bloomberg poll this month showed.

Payroll losses peaked at 741,000 in January, the most since 1949. The US has lost 6.7 million jobs since the recession began in December 2007. Some companies continue to eliminate jobs to cut costs and boost profits amid weak sales.

Whirlpool, the world’s largest appliance maker, said last week it will close a manufacturing plant in Evansville, Indiana, resulting in the loss of 1,100 jobs, or about 1.6% of the company’s workforce.

A record reduction in inventories over the first half of the year sets the stage for production to rebound, economists said. Companies including General Motors and Chrysler Group, both out of bankruptcy, may benefit from higher sales and a boost to output from the government’s “cash-for-clunkers” effort.

The incentive programme, which offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, produced almost 700,000 automobile sales before ending on Aug. 24, the Transportation Department said last week.

Ford Motor, the second-largest US automaker, posted its first monthly US sales gain in July since 2007. “We had a solid July sales month and we are headed toward an even stronger August,” Ford marketing chief Ken Czubay said last week in a statement.

Monday, August 31, 2009

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Slow US recovery to hit IT firms

Analysts see problem continuing as over 60% of revenue comes from North America
The sluggish demand from the US market will continue to hurt the business prospects of Indian IT outsourcing services providers even as the industry expects to see stability in the overall business environment in the second quarter of financial year 2010.

The delay in recovery of US economy, according to analysts and companies, will eat into the top- and bottom-lines of most Indian IT firms, even as they see a surge in demand from some European countries, including the UK and France, along with emerging geographies like Australia and West Asia. The reason is simple — most of the Indian IT services firms derive over 60 per cent of their revenues from the North Americas, including the US.

“There is no doubt that there is some comfort building in the environment. We are seeing some demand from emerging markets and Europe, but it is small in terms of overall exposure. The US has to recover for the world to stabilise, and growth in the US will happen only when consumers start spending there,” explains V Balakrishnan, CFO of India’s second-largest IT firm Infosys Technologies.

Amid the global financial uncertainties in the first quarter of the financial year 2009-10, Indian companies showed some resilience by posting almost flat to slightly negative growth in their top-lines. One of the real concerns for the industry was, however, the decline in volumes.

Even though, India’s largest IT services provider, Tata Consultancy Services (TCS), showed a volume growth of about 3.5 per cent, the volume for Infosys and Wipro declined by about 1 per cent and 1.5 per cent respectively. Thus reflecting the state of the affairs in the supply environment.

In the current quarter, while most of the companies are seeing a much better demand than the previous quarter, they are still maintaining a cautious approach owing to the US market, which is yet to come out of the downturn.

“We are not in a downturn now, even though we are not in a recovery phase. We have now come to a stable phase. The recovery will be late by the US market, and we will have to wait and see when this happens,” says S Mahalingam, chief financial officer of TCS.

The silver lining to the cloud is that some of the deals announced recently, including the estimated $1.5-billion BP outsourcing contract to three Indian IT vendors, reveal that clients are now opening up their purse strings to accommodate discretionary spending. In the current environment, according to analysts, clients may be ready to spend as many of them may want to exhaust their existing IT budgets before the year ends. The second reason is that they may be perceiving a better outlook for the overall economy.

“New projects or new business spending by companies had increased in the July-August-September quarter, which will definitely have a positive impact. But there’s no correlation as yet whether this will result in better margins and higher revenue,” cautions Sabyasachi Satpathy, partner, Tholons Advisory.

“The worst is getting over and we are currently moving from a stable to positive territory even though we are maintaining a cautious approach. Our funnel has gone up from the end of the first quarter to now,” says Suresh Senapaty, chief financial officer of Wipro Ltd. Wipro had given a cautious revenue guidance of 0.2 to 2 per cent for the second quarter of the current fiscal.

Outsourcing and offshoring are very critical for companies to become more operationally efficient and agile. But when recovery happens and the economy bounces back, the year-on-year growth rates of 30-40 per cent which IT firms enjoyed will be a thing of the past, since the base is very high.

“It might be around 20 per cent or so,” concludes Mahalingam of TCS.
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Sun Micro posts $147 mn loss

Sun Microsystems Inc recorded a $147 million loss while sales eroded 31 per cent in the April-June period, likely the server and software maker's last full quarter as an independent company.

In April Oracle Corp outbid IBM Corp and agreed to buy Sun in a $7.4 billion deal. It is scheduled to be completed this summer, and still needs approval from European antitrust regulators, which could come any day now.

The deal will give Oracle more control over development of the Java programming language, which Sun invented and is a key ingredient of the Internet. It also moves Redwood Shores-based Oracle, a business software maker, into the hardware market. Sun is one of the world's biggest sellers of computer servers, which power Web sites and corporate back offices.

Sun said after the market closed that it lost $147 million, or 20 cents per share, in the three months ended June 30, which is Sun's fiscal fourth quarter. That compares with a profit of $88 million, or 11 cents per share, in the year-ago period.

Excluding employee stock-based compensation and other expenses, Sun said its loss would have been 3 cents per share. Sales in the latest period fell to $2.63 billion from $3.78 billion last year.

Revenue from server sales fell 36 per cent over last year to $1.1 billion. Revenue from support services fell 15 per cent to $886 million.

Analysts polled by Thomson Reuters expected a loss of 19 cents per share and sales of $2.37 billion. For the full fiscal year, Sun lost $2.23 billion, versus a $403 million profit last year.

The latest results mean that Sun has lost $5.6 billion since 2002. It had only two profitable years -- 2007 and 2008 -- in that period.

Friday, August 28, 2009

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US job mkt in recovery mode; employers plan to hire in a year: Survey

The employment dynamics in the United States are finally changing and for good more than half of the country's employers are planning to hire in the next 12 months, a survey has said.

Technology, customer services and sales are the top three areas which have a bullish perspective in these tough times as employers in this segment would be the first ones to add jobs once the economy recovers.

According to the survey by Robert Half International and CareerBuilder, around 53 per cent of employers surveyed expect to hire full-time employees over the next 12 months, while 40 per cent would hire contract, temporary or project professionals and 39 per cent would add part-time employees.

"Companies already are identifying the key skill sets they will need in new hires to take advantage of the opportunities presented by improving economic conditions.

"Firms that cut staffing levels too deeply may need to do significant rebuilding once the recovery takes hold," Robert Half International Chairman and CEO Max Messmer said.

When the pace of hiring begins to accelerate, entry- and staff-level workers can expect to benefit the most in terms of new opportunities.

The survey said that 32 per cent of hiring managers plan to hire staff-level professionals, while 28 per cent would hire entry-level workers.
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H1-B restriction: Silicon Valley to be hurt

Several bright minds outside America take that flight to the U.S. seeking better opportunities in places like Silicon Valley, which is often described as the Mecca for entrepreneurs. However, with the hue and cry surrounding the H-1B visas the flow of immigrants into U.S. may get affected, which may also diminish the tech prowess of the most technologically advanced nation in the world.

There was at least one immigrant founder in 25 percent of all engineering and technology companies established in the U.S. between 1995 and 2005, reveals a study by a group of Professors in Duke University and the University of California. These entities generated over $52 billion in 2005 sales, while creating over 450,000 jobs as of 2005. With these contributions by the immigrants in the U.S., any impediments in the issuance H1-B visa can have a huge impact on the American economy.

The U.S. administration under George W Bush had been pushing for immigration reforms, which failed to take shape last year. There are roughly 12 million illegal immigrants in the U.S. and the reforms are aimed at making a way for some of these immigrants to stay in the country legally. Now that Barack Obama has taken charge in the White House, are these reforms on his priority list?

Recently, Obama assured the pro-immigrant activists that the immigration reforms would not lose its importance over the health-care reform and the energy legislation. The President is likely to endorse the views of Senator Charles Schumer, Chairman of the Senate's Immigration Subcommittee, who has said that he will introduce new reform legislation this autumn.

However, there are some challenges that Schumer and team faces in order to make the legislation a reality. Senators Richard Durbin and Charles Grassley are sponsors of a bill to stop the alleged abuse of H-1B visas, which allow companies to employ workers from overseas for limited stays. They have introduced a legislation to restrict the number of H1-B visas to be issued, which was bombarded with criticisms outside U.S. These visas are popular among technology companies like Microsoft, Infosys and Wipro, which bring some of the brightest minds from around the world to work in the U.S.

The current situation can make U.S. less attractive to immigrants, who may eventually contribute to the country's growth. Take the examples of Vikram Pandit, Indra Nooyi or Sanjay Jha, who took that flight to the U.S. and have made it big by heading some of the largest companies on the planet.

Commentators like CNN's Lou Dobbs have often highlighted about a huge reverse brain drain in the U.S. - which has been his dream - that is closer to reality. Immigrants, who have received their education and work experience in U.S., are packing their bags to go back to their homeland. In addition, there is also a decline in the number of foreign students seeking admissions in the U.S. universities, for the first time in five years.

According to the latest report by the Council of Graduate Schools, the average decline in the admissions from students outside U.S. is three percent. The highest decline is seen from countries in Asia with India leading the pack with a 12 percent decline.
Originally posted on siliconindia.

Thursday, August 27, 2009

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Slowdown: IT's survival mantras

The prolonged slump in global technology services spending is turning out to be like a boring five-day test match than a T20 encounter.

While the green shoots hold out hope for changes in the macro environment, it’s still some time for the big deals to return to the Indian IT players, who had started getting used to them 12-18 months ago. Since the good old days of 24% annual growth, technology services export growth has dived to 4-7 %.

Despite the setback, the smarter companies haven’t buried their heads in the sand, like the proverbial Ostrich. They are working overtime, identifying niches, markets, creating new systems to get the bucks in this tough environment and prepare for better times.

Sample the action: Infosys Technologies is strengthening the front end and will hire 150 people in France and Germany as it sees these markets open up. Its Bangalore-based rival Wipro Technologies is betting on seven new focus areas, which it sees as the big businesses of tomorrow.

Similarly, Cognizant has tripled its team of consultants to 1,800 and is betting on new geographies like Japan, Australia and India. The largest services player, TCS, is increasing more work offshore and strengthening its combined ITBPO offering. And even a small company like the 5,000-people Mumbai-based Hexaware Technologies has strengthened its innovation team to develop time saving solutions for customers.

Says Suresh Vaswani, joint CEO, Wipro Technologies, “Tough times haven’t gone. We have identified seven themes which will be dominant plays in future.” These `seven wonders’ of Wipro are cloud computing, green IT, collaboration software, social computing, information management, mobility and open source.

Some of these could potentially be billion-dollar business opportunities, but Vaswani hesitates to divulge more. “Even IT, consumer care, lighting were small businesses for Wipro a decade back. Today, they are big. We see similar growth in at least some of the new areas and are consciously studying, building capability on them and making investments in these areas. For Wipro, these will be significant game changers.”

Wipro has taken a long-term view with bets on new areas that could be big businesses of tomorrow. The second largest IT company, Infosys, sees an immediate opportunity in Europe, outside the UK, which has been largely conservative in offshoring work till now.

Says Infosys CFO V Balakrishnan, “From a micro level there’s no significant change in business. Companies are struggling with spending. There are indications of things turning around by December. We are strengthening the sales front end as we see new growth coming out of France and Germany markets, where companies want to offshore to cut costs and improve systems. We are hiring here to strengthen the front end.”

The 150 people that it hires locally will be addition to the 700 people it already has in the global sales and marketing team. Besides bolstering the front end, Infosys is not ignoring the back-end either. It wants to hire more domain experts who can help create combined IT-BPO solutions for HR, as there is more demand for combined solutions rather than just IT or BPO.

Ditto for TCS, which has launched a combined IT-BPO platform in areas like life and pensions processing, HR outsourcing and is now developing platform-based offering for finance and accounting and procurement.

US-headquartered Cognizant sees an uptake in areas like healthcare, retail, logistics, media and entertainment and is integrating consulting capabilities with its global delivery of services.

Says R Chandrasekaran, president & MD, global delivery, Cognizant, “We realised early on that providing great offshore capabilities was not enough and we needed high-level business expertise combined with deep technical experience to properly serve the demands of our client base. Hence, our top-end consultants team has grown from 600 to 1,800 in over a year. We are also focusing on emerging markets like Japan, Australia, India and Middle East. Last year, our business outside the US, Europe grew 65% and we are likely to have more growth from the new markets.’’

While large companies have invested in new manpower, strengthening front end, smaller players like 5,000-people Hexaware Technologies is extracting more out of its bench and focusing on innovation. Says its executive chairman Atul Nishar, “Innovation team strength has gone up from 10 to 50 and the employee use has jumped to 75% from about 63-64 % last year. In recent months, we have developed new solutions which have helped reduce software testing time by up to 40%.”

Companies that constantly innovate, looking for those niche growth areas are likely to ride the tough time more easily. Says Partha Iyengar, regional research director, Gartner India; “If you see the recent results, HCL and Cognizant bucked the trend precisely because of agility on sales and marketing fronts. The Indian offshore model has never been more relevant for global customers than it is now. It is up to the vendors to identify the opportunity, innovate and bag the business.”
Source: indiatimes

Fujitsu to cut 1,200 jobs

Japanese IT firm Fujitsu Ltd said on Wednesday it was cutting up to 1,200 jobs in the UK in response to lower-than-anticipated revenues.

The company, which employs 12,500 people in the UK, said the action was necessary to remain competitive in the current difficult economic climate.

It said had already frozen pay across the company and reduced its contactors and temporary workers in order to avoid job losses in Britain, where it has annual revenues of 2 billion pounds ($3.3 billion).

Tuesday, August 25, 2009

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10 days off for Honeywell employees without pay

Honeywell has announced that its employees will have to take a mandatory 10 days off in the month of December-January without pay. Krishna Mikkilineni, President of Honeywell Technology Solutions, conveyed the decision at a public gathering in Bangalore recently, reports Economic Times.

On this matter, a Honeywell Spokesperson said, "Even as Honeywell continues to grow its businesses in India, our employees have agreed to participate in a voluntary and temporary reduced work schedule, in consonance with their colleagues elsewhere."

Honeywell, which makes products like aviation electronics, car turbochargers and temperature control systems for buildings, has been hit badly by the global recession in all of the key businesses it supports - aviation, auto and property. In the second quarter ended June 30, its profit plunged 38 percent and revenue dropped 22 percent.

In the quarterly report, the company said that it did not expect any recovery this year from the recession, as customers were expected to keep holding off on the purchase of Honeywell parts. Sales in the aerospace unit, which makes radar systems and other aviation equipment, dropped 17 percent, to $2.7 billion. The company said that many of its airline customers were choosing to use parts from their own idled planes for repairs rather than buying new parts from the company. One of the few growth areas is military sales, where Honeywell expects a three percent growth in sales. David M. Cote, Chief Executive, Honeywell said, "We are executing very well. Unfortunately, it is a very tough economic environment."

The company has taken a number of cost cutting measures. At least for some employees in the U.S., Friday is now a half-day without pay. In India, where it has 10,000 employees, benefits like cafeteria subsidies and vacation rewards at the end of five years of service with the company have been withdrawn.

Friday, August 21, 2009

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Indian IT companies may have to hire more UK staff

UK, one of the top export markets for India’s over $40-billion software industry, is evaluating stricter immigration rules proposed by the Migration Advisory Committee (MAC) after several British trade lobbyists and workers alleged that Indian tech firms are replacing local workers with overseas staff at lower salary levels.

Top Indian tech firms including TCS, Infosys, Wipro and Tech Mahindra serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short-term project assignments. With more stringent norms, these companies may have to employ more local UK workers instead of sending their Indian staff for onsite projects.

Anti-offshoring lobbies including Unite and the Association of Professional Staffing Companies (APSCo) allege that Indian tech firms are misusing the ‘intra-company-transfer’ rules by replacing UK workers at wages lower than prescribed levels in the country.

The MAC report submitted by the committee’s chairman Professor David Metcalf to UK’s Home Office on Wednesday has recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from around £17,000 currently, making it tougher to earn points needed for allocation of work permits.

“We believe that the earnings thresholds should rise in line with earnings inflation. We recommend raising the minimum threshold for gaining 10 points to £24,000 per annum, and raising the minimum threshold for gaining 15 points to £28,000 per annum,” the MAC report added. These figures compare to £20,000 and £22,000, respectively, under the current system.

Last year, UK granted around 45,766 work permits to workers coming to the country through intra-company-transfer route, a majority of them awarded to the IT professionals. The majority of intracompany transfers are for Indian nationals, who account for 69% of the permits granted through this route.

Almost half (48%) of intra-company transfers are for Indian nationals in just one occupation — software professionals . “Companies are even allowed to pay these workers offshore in foreign currencies, so intra company transfers are potentially very easy to exploit in order to bring cheap foreign labour into the UK,” Ann Swain, chief executive of APSCo said in a recent statement.

Nasscom, the Indian software industry lobby, said the recommendations will help fix the loopholes in the system. “There were some cases of abuse reported in the past and the new norms ensure compliance to guidelines and there is a system in place to audit the visa process,” said Som Mittal, president of Nasscom. “The issue of salary — at least £20,000 a year as minimum wage for an employee going to the UK is also acceptable as less than 0.2% of the current ICT employees going to the UK are at a salary less than that. This measure has been put in place to check abuse,” he added.

The report also recommends that migrants coming to UK under intracompany-transfer route cannot have a right to permanent residence. “Because the intra-company transfer route exists to facilitate temporary immigration to the UK, we recommend that time spent in the UK under this route does not lead to a right to permanent residence,” the report said. Under the current rules, after five years of working in the UK on the intra-company transfer route or any other route under tier-II, it is possible to be granted permanent residence.

Meanwhile, Indian IT workers in UK feel such recommendations are not required. “Tier-II visas without the right to settlement will lead to exploitation of skilled professionals who will have to pay taxes but will not be able to settle in the UK,” said Amit Kapadia, executive director of the Highly Skilled Migrant Programme (HSMP) Forum in UK. “In recommending so we believe the MAC has gone beyond its scope in answering the questions which were raised by the then home secretary Jackie Smith,” he added.

Experts such as Bob McDowall, who is the research director with Tower-Group said these allegations are true. “The wages are lower than the UK minimum wage, though there remains a substantial cost of living differential between India and the UK,” he said. The backlash, according to him, is set to gain more momentum because of the rising unemployment. Moreover, IT workers coming to UK for short-term projects will also need to have more work experience. “To ensure that the route allows only people with company-specific expertise to come to the UK, we believe that the qualifying period with the company overseas should be doubled from the current six months to 12 months.”

However, MAC’s recommendations are pure advisory and the Home Office may or may not accept them. “We need to remember that these are recommendations at this stage and the government is considering the report before responding formally. No decisions have been taken and it’s too early to speculate on the government’s response ,” Chris Dix, regional director South Asia and the Gulf, UK Border Agency, told ET on Thursday.
Source: EconomicTimes
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New US jobless claims unexpectedly rise last week

The number of US workers filing new claims for jobless benefits unexpectedly rose last week, a government report showed on Thursday, as companies continued to cut payrolls amid uncertainty over the economic outlook.

Initial claims for state unemployment insurance benefits rose 15,000 to a seasonally adjusted 576,000 in the week ended August 15 from 561,000 the prior week, the Labor Department said.

Analysts polled by Reuters had forecast new claims slipping to 550,000 last week from a previously reported 558,000. A Labor Department official said there were no special factors influencing the report.

The number of people collecting long-term unemployment benefits edged up 2,000 to 6.24 million in the week ended August 8, the latest week for which the data is available. However, the four-week moving average declined 2,500 to 6.27 million.

The insured unemployment rate, which measures the percentage of the insured labor force who are jobless, was unchanged at 4.7 percent.

The four-week moving average for new claims climbed 4,250 to 570,000 last week. The four-week moving average is considered a better gauge of underlying trends as it irons out week-to-week volatility.

Thursday, August 20, 2009

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Most employees in dark abt biz performance impact on pay

Companies in different parts of the world are keeping their employees better informed about business activities amid economic downturn, but on pay and benefits, the communication seems to be far less, says a survey.

According to global consultancy firm Watson Wyatt, many companies have either communicated to employees about their business performance or plan to do the same in the coming months.

However, the report noted that a considerable chunk of firms surveyed have not informed their employees much about the impact of business performance on pay and benefits.

"Though three-fourths of companies have communicated to employees about the organisation's business performance or plan to do so within 12 months, a considerable number of companies aren't making the connection between the business results and things that affect workers most personally: pay and benefits," the report noted.

The findings are the outcome of a survey covering a total of 328 employers from North America, Europe, the Middle East and Australia who took part in the study, from late-April through mid-June 2009.

In the coming months, only 28 per cent of companies plan to increase communication to employees on business performance. But, when it comes to benefits for employees, only 27 per cent intend to increase their communication while it is only 19 per cent in the case of pay.

"During the past year, employers across many industries have encountered significant challenges in dealing with the global economic downturn,

"... Messages to employees explaining these changes have not been easy to deliver. Employees are concerned and confused. They do not know what all this means for their future or when the next take-aways will come along," the report said.

In terms of the medium of communication with employees, 'face-to-face discussions', 'staff meetings' and 'e-mails' are preferred, the report added.

As per the survey, leaders at different levels of their organisations have different goals for communication efforts. Among those surveyed, about 49 per cent senior leaders are most apt to communicate to ease employee stress regarding the impact of economic downturn on business.
Source: EconomicTimes
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HP sales and profit fall, but tech giant says it's poised for a turnaround

After months of bad economic news, the world's biggest technology company said Tuesday that business appears to be stabilizing — and that was enough for some industry analysts to breathe a sigh of relief.

But Hewlett-Packard CEO Mark Hurd said he's still not ready to declare that things have turned around. HP reported total sales of $27.5 billion for the quarter ending July 31, down 2 percent from a year ago, and a profit of $1.6 billion, down 19 percent. Still, those numbers were better than analysts had expected and the company itself projected in May.

"It definitely looks like the worst is behind us," said Brent Bracelin, an investment analyst at Pacific Crest Securities. "We're starting to pull out of the severe downturn you saw in the first half of the year."

Other leading tech companies, including Cisco Systems and Intel, have said in recent weeks that they believe the worst effects of the global recession are behind them. Hurd at HP has been more conservative in his assessments.
"We're encouraged by the stability we're beginning to see in the market, but we're not yet at the point where we're ready to call it a turn," Hurd said during a conference call Tuesday.

Many analysts view HP as a barometer for the overall tech industry because it sells a wide range of consumer and business products in markets around the world. It sells more personal computers than any other company and is a market leader in servers, printers and other segments.

The latest quarterly earnings report showed sales were up slightly from $27.4 billion in the previous quarter of this year, and Chief Financial Officer Cathie Lesjak predicted more improvement in the current three-month period — although "slightly below" the increase that HP typically sees in its fall quarter.

Wednesday, August 19, 2009

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IT services companies look at BPO to soften recession impact

Source: EconomicTimes
A potential sale of India-based back office firm WNS Holdings could trigger consolidation in the business process outsourcing sector as IT services firms, knocked back by the global financial crisis, look to bolster their presence in the growing BPO market.

According to a media report last week, private equity firm Warburg Pincus was looking to sell its 50.12 percent stake in WNS, a move that would entail a change of control at the Mumbai, India based call-center operator.

IT services firms have thrived for years by winning contracts from international clients, helped by a large pool of English-speaking engineering workforce and cheaper wages.

But a downturn in the United States, which accounts for more than half of the sector's export revenue, and turmoil in the global financial sector have halted the scorching pace of growth.

"Perhaps because the IT offshore business slowed down in the recession, IT services firms are looking at other areas where they can make some good progress," Brandon Dobell, an analyst with William Blair & Co, said.

While most of the top Indian IT services firms such as Infosys Technologies and Wipro have BPO arms, some of their U.S. based counterparts such as Cognizant Technology Solutions and Affiliated Computer Services Inc could be interested in the sector.

A Cognizant spokesman refused to comment. Even some of the world's largest IT services firms such as IBM and Accenture have forayed into BPO services. In 2004, IBM acquired Daksh to create India's largest BPO firm.

Pure-play BPO firms such as WNS and EXLService Holdings, which largely provide services such as insurance claims processing, payroll management and customer support, are seen by analysts as possible takeover targets.

Sykes Enterprises Inc, Genpact Ltd and ICT Group could also be on the takeover radar.

"Strategically, it makes some sense. There is a lot of offshoring growth opportunities available in BPO, and lot of budget dollars that could be captured by acquiring one of these BPO players," said Joseph Vafi of Jeffries & Co.

A recent Nasscom-McKenzie report had projected BPO to be a $340 billion-$360 billion market opportunity by 2020.

"So, I would look at it as an opportunistic move to expand platforms," said Vafi, adding that companies such as Cognizant and Patni Computer Systems, which do not have a strong BPO platform, could look at BPO firms such as WNS.

In an indication of what lies ahead, Philippines-based BPO firm eTelecare Global Solutions Inc and Boston-based Stream Global Services Inc merged late last week to broaden offerings and geographic footprint.

China's leading IT outsourcing firm VanceInfo Technologies is also looking at fresh acquisitions to boost its presence in the backroom operations of the financial industry.

SOLID RESULTS, GREAT VALUATION
Although the financial crisis has robbed the BPO sector of some of its charm, the pace of decline has slowed due to a revival in insurance, mortgage financing, and transactions and claims processing.

WNS, whose key areas of operations are utilities and insurance, beat analysts' expectations in its June quarter with a 53 percent jump in adjusted net income, and said it is seeing a pickup in U.S. sales and expects profitability to improve.

BPO companies enjoy decent valuations as there are not many pure play BPO assets available. IT services companies with critical mass in pure play BPO are also few, analysts said.

The improvement in the BPO business and an impressive quarterly performance may help WNS get a good price, Jeffries' Vafi said.

WNS shares are up 147 percent in the last 6 months and have risen almost five fold since touching a year low in March.

WNS shares trade at 12 times forward earnings, compared to the Data Processing & Outsourced Services average of about 16 times.

"The recurring revenue of WNS...and its client base are pretty attractive. The IPO of the company was higher than what the stock is currently trading. So, Warburg Pincus could ask for a higher price," said Vafi.

TIME TO INVEST
When WNS responded to the deal chatter, saying the company got expressions of interest on possible change of control, it signaled a revival of deal aspirations for IT services firms, which have long refrained from sizeable acquisitions due to a challenging economy.

Improved visibility on customer actions and client budgets should now encourage IT outsourcing firms to get active on acquisitions, William Blair's Dobell said.

"The average CEO or CFO are probably a little bit more open to thinking about making acquisitions or making bigger bets on new business opportunities," he said.

"These offshore IT firms have large cash balances that will have to be deployed at some point," said Vafi.

Among other BPO stocks, Genpact shares have risen 51 percent, while shares of ExlService have gained 55 percent of their value in the last six months.
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Bankruptcy not to affect outsourcing deal: HCL Tech

New-Delhi based IT services provider, HCL Technologies — which signed a $350 million (around Rs 1,700 crore) seven-year IT operations and management deal with Reader’s Digest Association (RDA) in March this year — says RDA’s filing for bankruptcy, under Chapter 11 of the US Bankruptcy Code, will not affect the deal.

“It is business as usual and it (HCL Tech) continues to support RDA and does not see any impact on itself as of now,” the IT firm said in a Bombay Stock Exchange (BSE) filing today. The Chapter 11 filing will apply only to RDA’s US businesses. Its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be hit.

“HCL is at the very core of our global operations, and we value the relationship today and going forward. Our underlying business operations are strong, and we are undertaking this initiative with the banks so we can significantly cut our debt and free cash for use in building our business. Our creditors are supportive and are working to ensure a smooth process with no disruptions to business operations,” said Albert Perruzza, senior vice-president (IT), Global Operations and Business Redesign for RDA, in a statement.

“At this point of time, the nature of the bankruptcy is unknown. We don’t know to what extent the restructuring will happen. It could be segmentation or realigning the existing business for RDA. So, there might not be an immediate impact on HCL Tech,” said Sabyasachi Satapathy, Partner at Tholons Advisory. Analysts tracking the stock markets corroborated that bankruptcy doesn’t mean that the entire business is lost and that many parts of the business are insured. “So, it is difficult to comment on the loss of business for HCL,” said an analyst.

Monday, August 17, 2009

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Hackers prey on job aspirants

One man's recession is a conman's opportunity. Twenty-two year old Naresh Kothari (name changed), who works for a mid-sized IT firm, learnt this the hard way.

He was desperately seeking a change for the past few months. Having posted his resume on popular job sites like naukri, monster and jobsahead, he hoped to land a new job soon. So, he was elated to get an email from IT services major HCL Technologies stating that his “offer letter” was being dispatched. He was needed in Noida with some documents on August 24, for which an air ticket would be sent.

All he had to do was to deposit a cheque of Rs 5,250 as refundable security in a particular bank by August 12.

CON-JOBS
(How the job fraudsters work)
* Email ID databases can bought online and offline
* They can also be spoofed — made to appear as someone else’s ID
* Hackers can take advantage of typos, odd words, phrases
* Users can be led to fake websites by cyber-squatters


Could he have asked for more? He shared the good news with some friends. One of them, who happened to work in HCL, Tech smelt a rat since his company had never asked for a deposit. So he dug deeper, tapping his friends in the HR department and alerted Kothari, who promptly wised up and attempted to verify the email sender's details. He is yet to receive a reply. He may never get one simply because HCL Technologies did not send the email.

Ravi Shankar B, senior VP & HR Head, HCL (India), acknowledges that “such fraudulent mails cheat innocent job aspirants, misleading them into giving money with the promise of providing jobs... ". These activities, he added, also end up tarnishing a company’s image, though it plays no part in the scam. HCL Tech is working with the police to curb such malpractices.

Kothari is not a lone case. Earlier this year, some job aspirants had received a similar email, purportedly sent from India's third-largest IT firm Wipro Technologies, too. The IT major also issued a note cautioning aspirants to avoid falling prey to fraudsters.

With rising unemployment prompting more people to apply online for jobs, hackers are targeting corporate job sites and even setting up fake sites to collect applicants' personal information – a process known as phishing.

They are even duping gullible aspirants by asking them to deposit cash in banks as refundable security deposits. But can't the money be traced back to them? It's here that many unemployed people succumb to the lure of ads like “mailto:work@home and earn up to Rs 25,000..." work@home and earn up to Rs 25,000... ” and so on.

Work-at-home schemes, notes the US Federal Bureau of Investigation (FBI), attract otherwise innocent individuals, causing them to unwittingly become part of criminal schemes. Victims are often hired to process payments, transfer funds or “reship products”. These job scams involve the victims receiving and cashing fraudulent checks, transferring illegally obtained funds for the criminals, or receiving stolen merchandise and shipping it to other criminals.

Related phishing schemes have also been found using keywords like Google Cash Club, Make Money with Google, Google Money Monster, and Google Home Income. Google has issued an advisory on its blog alerting users to this scam.

Most people are smart enough to ignore such emails, naukri.com cofounder and CEO Sanjeev Bikhchandani pointed out. "However, I must clarify that no such emails are sent from naukri.com. Our website has enough filters to identify such emails. In fact, these emails are sent out by using the email IDs that have been misappropriated from our database,” he said.

He added that whenever his company sent out emails, it “categorically advises our members in a footnote not to pay any money”. In the case of any misuse, the company informs the police as a general practice. “Having said that, no system is foolproof. So we advise our members to exercise caution," he pointed out.

Sanjay Modi, Managing Director, Monster India (SEA, Middle East) concurs: “We maintain a high level of security or we take immediate actions in such cases."

Abhinav Karnwal, Product Marketing Manager, Trend Micro (APAC), noted that such incidents can occur in several ways. Legitimate sites can be hacked by an expert or people can hire hackers (who can be located on the internet and bought for a fee) to steal databases or email IDs from legitimate sites. Alternatively, databases of email IDs can be bought online and offline too through backdoor channels.

Because of the relatively open nature of web technology, it is very easy for criminals to fake web pages with convincing graphics, cautioned Shantanu Ghosh, VP, India Product Operations, Symantec. He advises users to be suspicious of obvious typos in text, odd words or phrases or the feeling that the site just doesn't look right. It's easy to steal graphics, but thieves are often very clumsy writers, Ghosh noted. "If you ever see an IP number in a URL, leave the site immediately. It is almost certainly a fraudulent site. Another method to ensure that you are on the correct site is to check if there is an ‘s’ after the ‘http’ in the URL. This code often appears in e-commerce websites and essentially means that all transactions are secure and the site is legitimate,” he adds.

“Such things do not target any particular company. It is easy for spammers to send spam mails and entice people to click on them. These compromise the users specially when there are not many jobs in the economy,” said Nitin Jyoti, manager, McAfee Avert Labs. He advises users to verify the legitimacy of the mail but writing back to the person or meeting the company representative in person to validate the mail.

In short, if something is too good to be true, then it probably is.
Source: BusinessStandard