A message on the German O’Reilly community blog indicates that the Web 2.0 Expo Europe, an annual event held in Berlin, Germany, has been suspended for this year in the face of the worst economic downturn in decades. (translated version here) The event, co-produced by O’Reilly Media and TechWeb, had been running for only two years.
Web 2.0 Expo Europe was widely known as an outstanding event for the European tech community with a host of excellent speakers, but like many companies O’Reilly and TechWeb are feeling the sting of the declining economy and are being forced to make difficult decisions. Obviously, this is bad news for European entrepreneurs and startups.
Saturday, February 28, 2009
HP
MphasiS: strong results, weak market valuation
Information technology (IT) services provider MphasiS Ltd, owned by Hewlett-Packard Co. (HP), has reported strong results for the quarter ended January, defying the slowdown which caused most IT firms to report weak numbers for the December quarter.
MphasiS follows the November-October fiscal year to align with the practice followed at HP. Revenues grew by a strong 9.3% sequentially and net profit rose by nearly 15% between the three months to January, much higher than the low single-digit growth rates most IT firms reported for the December quarter.
The secret to MphasiS’ success lies in its parentage. HP and its services arm EDS outsource some of their work to MphasiS to cut costs. While software services work coming to the HP group has been affected owing to the slowdown, this hasn’t impacted the work flow pushed down to MphasiS because of the large difference in the size of the two firms.
The HP group reported services revenues of $8.75 billion (Rs44,362 crore) in the January quarter, while MphasiS’ revenues stood at around $200 million. Now, MphasiS derives 45% of its revenues from work pushed down by HP. This amounts to just about 1% of HP’s total services revenues. Even if, for arguement’s sake, HP’s services revenues fall by half owing to the slowdown, the quarterly revenues of around $100 MphasiS derives from HP is hardly at risk. HP contributed to 40% of revenues till October, which indicates its contribution has grown in the last quarter.
It’s not that all the credit of MphasiS’ better-than-industry performance goes to HP. The company has done well to contain costs and take full advantage of the depreciation in the rupee. According to the company’s chief financial officer, Susanto Banerjee, in the past year the company has improved employee utilization, pulled back on travel, and invested in sales and marketing.
But it’s clear that it doesn’t make sense to infer from MphasiS’ results that the IT industry isn’t in trouble. MphasiS’ business model is unique because of the work it gets from HP. Still, the market has valued it at only around 4.5 times annualized earnings for the January quarter.
MphasiS follows the November-October fiscal year to align with the practice followed at HP. Revenues grew by a strong 9.3% sequentially and net profit rose by nearly 15% between the three months to January, much higher than the low single-digit growth rates most IT firms reported for the December quarter.
The secret to MphasiS’ success lies in its parentage. HP and its services arm EDS outsource some of their work to MphasiS to cut costs. While software services work coming to the HP group has been affected owing to the slowdown, this hasn’t impacted the work flow pushed down to MphasiS because of the large difference in the size of the two firms.
The HP group reported services revenues of $8.75 billion (Rs44,362 crore) in the January quarter, while MphasiS’ revenues stood at around $200 million. Now, MphasiS derives 45% of its revenues from work pushed down by HP. This amounts to just about 1% of HP’s total services revenues. Even if, for arguement’s sake, HP’s services revenues fall by half owing to the slowdown, the quarterly revenues of around $100 MphasiS derives from HP is hardly at risk. HP contributed to 40% of revenues till October, which indicates its contribution has grown in the last quarter.
It’s not that all the credit of MphasiS’ better-than-industry performance goes to HP. The company has done well to contain costs and take full advantage of the depreciation in the rupee. According to the company’s chief financial officer, Susanto Banerjee, in the past year the company has improved employee utilization, pulled back on travel, and invested in sales and marketing.
But it’s clear that it doesn’t make sense to infer from MphasiS’ results that the IT industry isn’t in trouble. MphasiS’ business model is unique because of the work it gets from HP. Still, the market has valued it at only around 4.5 times annualized earnings for the January quarter.
MphasiS net profit up at Rs 210 cr
IT solutions and services providers, MphasiS (MPHASIS.NS : 168.5 -3.05) Group recorded net profit of Rs 210 crore for the quarter ended January 2009, showing a steep incline by 270% from Rs 56.7 crore in the corresponding quarter last fiscal.
Operating profit of the group for the quarter surged 246% to Rs 210.6 crore from Rs 60.8 crore, while revenue increased by 58.1% to Rs 977.7 crore from Rs 618.3 crore.
Operating profit of the group for the quarter surged 246% to Rs 210.6 crore from Rs 60.8 crore, while revenue increased by 58.1% to Rs 977.7 crore from Rs 618.3 crore.
Friday, February 27, 2009
TCS
More work, less pay @ TCS
The infotech leader, Tata Consultancy Services (TCS), said on Thursday that there would be no salary hikes for its employees next year. To cut costs, the company would also review the variable component in salary packages.
The company’s managing director and chief executive officer, S Ramadorai, did not rule out job cuts either if the business environment got worse. He told media here that TCS planned to increase the working hours of employees from 40 hours a week now to 45 hours from April 1. He said this was being done to better serve the company’s customers.
Ramadorai said, “The situation is so bad that one of our clients has asked for a 70 per cent price cut. We have told them of our inability to do so. In general, we have received a price reduction varying between four and 15 per cent. In this situation, we have decided to cut costs and increase our efficiency for long- term viability and sustainability.”
The variable pay component ranges from 20 to 35 per cent of gross salaries of the company’s 1,40,000 staff, and account for 8 per cent of its revenue. All lateral recruitments have been frozen except where urgently needed. Costs on other heads, including capital expenditure, are also being lowered.
The price pressure on TCS because of the global economic meltdown has also left an impact on the company’s recruitment plans. “We asked around 24,500 people to join our company in the next financial year. But we will take real- time decisions while recruiting them -- which means they will be inducted according to the need,” Ajoyendra Mukherjee, TCS vice- president and head of global human resources, said.
There is a bright spot in all this. TCS has been selected to provide IT services years for a suite of applications used by the Singapore Airlines group of companies, according to Girija Pande, head of TCS Asia Pacific.
Under the three-year agreement, TCS will continue to manage a significant portion of the airline’s IT systems, including 24x7 business critical applications ranging from passenger reservations to flight operations. The infotech company’s metrics-based management model and airline domain expertise will ensure make the airline more responsive to its customers.
Besides, its application rationalisation programme will help the airline minimise costs, reduce risks and increase business agility, Pande said.
The company’s managing director and chief executive officer, S Ramadorai, did not rule out job cuts either if the business environment got worse. He told media here that TCS planned to increase the working hours of employees from 40 hours a week now to 45 hours from April 1. He said this was being done to better serve the company’s customers.
Ramadorai said, “The situation is so bad that one of our clients has asked for a 70 per cent price cut. We have told them of our inability to do so. In general, we have received a price reduction varying between four and 15 per cent. In this situation, we have decided to cut costs and increase our efficiency for long- term viability and sustainability.”
The variable pay component ranges from 20 to 35 per cent of gross salaries of the company’s 1,40,000 staff, and account for 8 per cent of its revenue. All lateral recruitments have been frozen except where urgently needed. Costs on other heads, including capital expenditure, are also being lowered.
The price pressure on TCS because of the global economic meltdown has also left an impact on the company’s recruitment plans. “We asked around 24,500 people to join our company in the next financial year. But we will take real- time decisions while recruiting them -- which means they will be inducted according to the need,” Ajoyendra Mukherjee, TCS vice- president and head of global human resources, said.
There is a bright spot in all this. TCS has been selected to provide IT services years for a suite of applications used by the Singapore Airlines group of companies, according to Girija Pande, head of TCS Asia Pacific.
Under the three-year agreement, TCS will continue to manage a significant portion of the airline’s IT systems, including 24x7 business critical applications ranging from passenger reservations to flight operations. The infotech company’s metrics-based management model and airline domain expertise will ensure make the airline more responsive to its customers.
Besides, its application rationalisation programme will help the airline minimise costs, reduce risks and increase business agility, Pande said.
Cost cutting, H1-B, NRIs
Microsoft slashes contract worker rates by 10 pct
Microsoft Corp. is slashing overtime, hours and pay for U.S. temporary workers as part of an overall push to curb expenses during the recession. Microsoft will cut what it pays the staffing agencies by 10 percent for current projects and won't raise the rate it pays for temporary workers who return after a mandatory annual 100-day break. The company also plans to reduce overtime and the total number of hours clocked by temporary workers.
Microsoft does not disclose how many contract workers it uses, and analyst estimates vary. Sid Parakh, an analyst for McAdams Wright Ragen, said he believes the number is somewhere between 40,000 and 60,000 worldwide. The company employs an additional 95,000 permanent workers globally.
In a statement Thursday, the company said it talked with some employment agencies before making the decision. Online advertising spending is also on the wane. Microsoft's online search and ad business was already losing money despite heavy spending to beef up the underlying technology. Chief Executive Officer Steve Ballmer said this week that the company would continue to pour money into competing with Google Inc. on this front.
The company relies on skilled contract workers for all sorts of jobs, from developing and testing software to designing Web sites to writing technical documentation. And it's not alone. Tech companies including IBM Corp. and Advanced Micro Devices Inc. routinely hire temporary workers; Google had 10,000 contractors as recently as October.
In the United States, a 2006 General Accountability Office report indicated that about 21.5 million U.S. workers find jobs through temp agencies, work as independent contractors or are self-employed. Inside Microsoft, the fine distinction between permanent and temporary workers was contentious enough to prompt a class-action lawsuit in 1992, in which contract workers argued they were treated exactly like permanent workers but offered fewer benefits. Microsoft settled in 2001 and began paying $72 million to nearly 8,600 former contract workers in 2005.
Microsoft does not disclose how many contract workers it uses, and analyst estimates vary. Sid Parakh, an analyst for McAdams Wright Ragen, said he believes the number is somewhere between 40,000 and 60,000 worldwide. The company employs an additional 95,000 permanent workers globally.
In a statement Thursday, the company said it talked with some employment agencies before making the decision. Online advertising spending is also on the wane. Microsoft's online search and ad business was already losing money despite heavy spending to beef up the underlying technology. Chief Executive Officer Steve Ballmer said this week that the company would continue to pour money into competing with Google Inc. on this front.
The company relies on skilled contract workers for all sorts of jobs, from developing and testing software to designing Web sites to writing technical documentation. And it's not alone. Tech companies including IBM Corp. and Advanced Micro Devices Inc. routinely hire temporary workers; Google had 10,000 contractors as recently as October.
In the United States, a 2006 General Accountability Office report indicated that about 21.5 million U.S. workers find jobs through temp agencies, work as independent contractors or are self-employed. Inside Microsoft, the fine distinction between permanent and temporary workers was contentious enough to prompt a class-action lawsuit in 1992, in which contract workers argued they were treated exactly like permanent workers but offered fewer benefits. Microsoft settled in 2001 and began paying $72 million to nearly 8,600 former contract workers in 2005.
Layoffs in India
Cap Gemini sacks 2,000
Notice period? What notice period?
Questions are being raised about how IT consultancy giant Cap gemini is laying off employees in its Indian offices. The company sent out an email to employees early 2008 saying they need not serve a 90-day notice period when they quit their jobs. The notice period was reduced to 30 days. This was done without the consent of employees as it results in huge savings for the firm - Capgemini will now have to pay outgoing staffers a month’s salary instead of three months, an insider told IT Examiner.
Another message followed, asking employees to sign on a tailored resignation letter. While most employees fell prey to the nasty nip, few decided to snub the proposal, calling it illegal, said the source.
According to our source, this method has been adopted to lay off around 2,000 employees over several months, in Bangalore, Mumbai and Kolkata. In these tough times, it’s shocking to see companies choosing methods that can hardly be termed as legal to cut costs. Shrinking the notice period without employees’ consent is unethical.
Our source said that those who refused to sign the resignation letter pointed out that their appointment orders clearly states that the notice period extends to three months. The HR department responded by de-activating their email IDs and even threatened them, the source said.
A few employees, who spoke to Capgemini’s India HR head Dr. Sripada Chandrashekhar, were told that if the company decides to shrink the notice period from three to one month for 2,000 employees, it certainly has to be legal. “Following the massive revolt, Jnanes Kumar who was heading the HR process back then was deported to another division. Arun Kumar was brought in as replacement,” the source said.
A senior advocate, on condition of anonymity, told IT Examiner that, “as per Indian laws, companies cannot shrink the notice period in the case of permanent employees. But it can be done with those still on probation. Otherwise it is illegal to reduce the notice period without the consent of employees.' According to him, in such cases employees usually give up and sign the resignation letter. 'A company has an upper hand in these cases as employees are reluctant to individually sue the company fearing high expenses of the legal process. Even if one wins the case, there is no guarantee that the company will hire him/her in the same position. The best way to battle this is by approaching an employees’ union and fighting the legal case, making it more economical.'
IT-BPO union, UNITES has made an appeal to the Capgemini employees to raise their voice. “I am aware of what’s going on at Capgemini. Employees often commit a mistake by succumbing to the pressure. Capgemini has done the same thing by forcing them to sign it. We cannot intervene once they sign the resignation letter,” said UNITES India general secretary, R Karthik Shekhar told IT Examiner.
Shekhar added, “It’s illegal to violate the terms and conditions mentioned in the agreement. If they have promised three months’ pay, they have to hand it over the same day. This is unacceptable. Even if they throw workers out citing poor performance, this has to be given in writing.”
He made an appeal saying, “We can go to the labour commissioner with this problem only if the employees are courageous enough to talk to us.”
Capgemini failed to respond to our queries by press time. But do they have anything to say at all?
Courtesy: itexaminer.com
Questions are being raised about how IT consultancy giant Cap gemini is laying off employees in its Indian offices. The company sent out an email to employees early 2008 saying they need not serve a 90-day notice period when they quit their jobs. The notice period was reduced to 30 days. This was done without the consent of employees as it results in huge savings for the firm - Capgemini will now have to pay outgoing staffers a month’s salary instead of three months, an insider told IT Examiner.
Another message followed, asking employees to sign on a tailored resignation letter. While most employees fell prey to the nasty nip, few decided to snub the proposal, calling it illegal, said the source.
According to our source, this method has been adopted to lay off around 2,000 employees over several months, in Bangalore, Mumbai and Kolkata. In these tough times, it’s shocking to see companies choosing methods that can hardly be termed as legal to cut costs. Shrinking the notice period without employees’ consent is unethical.
Our source said that those who refused to sign the resignation letter pointed out that their appointment orders clearly states that the notice period extends to three months. The HR department responded by de-activating their email IDs and even threatened them, the source said.
A few employees, who spoke to Capgemini’s India HR head Dr. Sripada Chandrashekhar, were told that if the company decides to shrink the notice period from three to one month for 2,000 employees, it certainly has to be legal. “Following the massive revolt, Jnanes Kumar who was heading the HR process back then was deported to another division. Arun Kumar was brought in as replacement,” the source said.
A senior advocate, on condition of anonymity, told IT Examiner that, “as per Indian laws, companies cannot shrink the notice period in the case of permanent employees. But it can be done with those still on probation. Otherwise it is illegal to reduce the notice period without the consent of employees.' According to him, in such cases employees usually give up and sign the resignation letter. 'A company has an upper hand in these cases as employees are reluctant to individually sue the company fearing high expenses of the legal process. Even if one wins the case, there is no guarantee that the company will hire him/her in the same position. The best way to battle this is by approaching an employees’ union and fighting the legal case, making it more economical.'
IT-BPO union, UNITES has made an appeal to the Capgemini employees to raise their voice. “I am aware of what’s going on at Capgemini. Employees often commit a mistake by succumbing to the pressure. Capgemini has done the same thing by forcing them to sign it. We cannot intervene once they sign the resignation letter,” said UNITES India general secretary, R Karthik Shekhar told IT Examiner.
Shekhar added, “It’s illegal to violate the terms and conditions mentioned in the agreement. If they have promised three months’ pay, they have to hand it over the same day. This is unacceptable. Even if they throw workers out citing poor performance, this has to be given in writing.”
He made an appeal saying, “We can go to the labour commissioner with this problem only if the employees are courageous enough to talk to us.”
Capgemini failed to respond to our queries by press time. But do they have anything to say at all?
Courtesy: itexaminer.com
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