Headhunters say that the domestic job market is already showing signs of a revival, with the hint that probably the worst is over. Some attribute it to the decisive electoral verdict, while others credit the growing consumer demand that has given domestic companies a new lease of life.
“In the last one-month demand for new jobs have shot up by at least 25 per cent,” Vivek Ahuja, managing director Confiar Global said. He added that with a strong government at the Centre, market sentiments had improved tremendously with a trickle down effect upon employers as well.
“Companies are riding on the feel good factor. This has given a new boost to employment prospects for the entire year ahead,” Ahuja said. In merely four weeks, hiring across sectors namely hospitality, energy, infrastructure and FMCG has witnessed a rise.
Sunil Goel, MD Global Hunt said that job enquiries are going up. “We are receiving many emails and phone calls from companies wanting to increase recruitments. This was not the case say 2 months back,” he said.
He adds that this is on account of many companies now eager to execute projects long delayed due to the credit crisis. “Jobs across energy, infrastructure, life sciences and pharmaceuticals have gone up by more than 15 per cent in the last three to four weeks,” Goel added. However, he said that it was mainly the telecom space that was seeing the maximum movement. Financial Chronicle had earlier reported that the telecom space would add a whopping 1 lakh jobs in the next one year.
However Ashok Reddy, managing partner Teamlease cautions that job creation was mainly among the experienced lot, and freshers may still have to wait for their turn. E Balaji, executive director Ma Foi Management Consultants said that the job market was showing signs of a revival but added that India was still far away from the kind of job creation witnessed in the last few years.
Earlier this month, according to a report by global staffing company Manpower Inc, India was most buoyant on hiring with 19 per cent from July to September 2009.
“The global slowdown is likely to have minimal effect on employer hiring plans in India over the next three months,” the report noted. India was followed by Norway (15 per cent) and Poland (9 per cent). Hiring forecasts for China and USA were 3 per cent and – 2 per cent respectively.
Tuesday, June 23, 2009
Outsourcing
Hollywood ups outsourcing to India
Outsourcing to India, long dominated by software engineering and back-office work, is expanding in new terrain: special effects for movies. India's rise comes at a difficult time for US special effects outfits, some of which have buckled as the 2008 LA writers strike cut productions and the financial crisis curtailed financing. Executives in India say cost pressures are pushing studios to send more work to India, where special effects projects are up to 40 percent cheaper than in the US.
To be sure, Indian shops are, for now, minor players. Hollywood's special effects industry is still dominated by US companies like Industrial Light & Magic. Production standards are generally lower in India, and many moviemakers still won't send creative work thousands of miles (kilometers) away.
But the distance between Hollywood and Bollywood is narrowing, and many say it's only a matter of time before the gap in skills, trust, and quality is closed. The domestic market is also maturing as Indian audiences develop a taste for high-tech Hindi flicks.
"Economic conditions are playing out favorably for us," said S Nagarajan, the chief operating officer of Visual Computing Labs, based in Mumbai, the visual effects and animation unit of Tata Elxsi, one of India's most prominent studios. "People are more willing to experiment."
His company, one of 18 special effects studios that worked on "Spider-Man 3," has billed as much in the first three months of this year as it did in nine months last year, he said.
"In 2003 and 2004, when I would visit the US and meet with visual effects companies, I'd be told we can't outsource it. It requires creative control and you are too far away," said Pankaj Khandpur, the company's creative director. Now, he said, those naysayers are telling him, "'Hey, let's talk.'"
So far, most work Indian companies have done is midlevel rotoscoping and compositing, which allow filmmakers to blend complex shots. For "Spiderman 3," Tata Elxsi VCL cut out studio stunt shots of Spiderman and sent them back to California, where they were fit into urban landscapes so the hero appeared to be swooping in death-defying arcs from one tall building to another.
Khandpur said smaller production companies have been more willing to send over complex shots. For "One Night with the King," a 2006 movie about the biblical figure of Esther, the young Jewish woman who became the queen of Persia, VCL used computer software to create and people entire landscapes, filling the land with castles, waterfalls, and hundreds of horsemen, elephants and villagers.
In the last few years a string of acquisitions and new ventures have started to build the relationships and expertise India needs to become a m
ore of a destination for such higher-end work. Two old Hollywood hands recently opened visual effects companies in Mumbai: Geon, founded by "The Lord of the Rings" producer Barrie Osborne, and EyeQube Studios, headed by Charles Darby, whose credits include "Titanic" and the HBO series "Rome."
Darby set up EyeQube with backing from the U.K.'s Eros International and plans to release his first film "Aladin" — an effects-driven live action film featuring top Bollywood talent — in July. He hopes it will be his calling card in the West. "Instead of smiling at India and saying it's not good at special effects, they'll say, 'Hey look at that...Where did that come from? Hell's teeth! It came from India," Darby said.
EyeQube is also in "advanced talks" with a Hollywood studio, which he won't name, to do its first film for US release, he added. EyeQube's ultramodern studios center on an egg-shaped screening room. The 20,000-square-foot (1,860-square-meter) space is filled with hushed, dusky rooms of computer terminals, where artists experiment with complex computer generated avalanches and digitally transform a man's face into vanishing particles of smoke.
"Of course it's a threat" to U.S. firms, Darby said. But "competition is never a bad thing." Geon's founders met while working on "The Lord of the Rings" in 2003. They opened an 18,000-square-foot (1,670-square- meter) office in October with funding -- how much they won't say -- from Sahara India Pariwar, a conglomerate with interests in real estate, finance, media and infrastructure.
Geon ultimately hopes to get out of the effects contracting business, with its razor-thin margins, and start making -- and owning -- its own films. For now, Geon is focused on training a pool of Indian artists.
Chief Executive Jon Labrie says he's looking to hire 50 more artists globally and plans to open a Los Angeles office. But he'll be taking on just one Westerner for every 5 to 10 Indians.
There has also been a spate of acquisitions. Sony Pictures Imageworks acquired the Chennai effects studio Frameflow for a reported $5 million in 2007. Last year, Mumbai's Pixion acquired UK special effects house Men-from-Mars, whose credits include "Elizabeth."
Since 2006, India's Prime Focus has acquired four special effects companies in the U.K. and two in North America, which have worked on films like "There Will Be Blood." All this is putting pressure on smaller US special effects companies, like The Orphanage, a San Francisco-based company that shut its doors in February, laying off 100 people.
"The average cost of a shot gets lower and lower every year," said co-founder Scott Stewart. "If they keep driving the prices down, it will keep driving it offshore. Fewer and fewer artists will be working in the US."
Even the Orphanage had outsourced work to India to save on costs, he said. "Everyone's doing it," Stewart said. Indian companies have already established themselves doing low-end work and are now moving up the value chain, he added. "They're starting to get good at everything."
To be sure, Indian shops are, for now, minor players. Hollywood's special effects industry is still dominated by US companies like Industrial Light & Magic. Production standards are generally lower in India, and many moviemakers still won't send creative work thousands of miles (kilometers) away.
But the distance between Hollywood and Bollywood is narrowing, and many say it's only a matter of time before the gap in skills, trust, and quality is closed. The domestic market is also maturing as Indian audiences develop a taste for high-tech Hindi flicks.
"Economic conditions are playing out favorably for us," said S Nagarajan, the chief operating officer of Visual Computing Labs, based in Mumbai, the visual effects and animation unit of Tata Elxsi, one of India's most prominent studios. "People are more willing to experiment."
His company, one of 18 special effects studios that worked on "Spider-Man 3," has billed as much in the first three months of this year as it did in nine months last year, he said.
"In 2003 and 2004, when I would visit the US and meet with visual effects companies, I'd be told we can't outsource it. It requires creative control and you are too far away," said Pankaj Khandpur, the company's creative director. Now, he said, those naysayers are telling him, "'Hey, let's talk.'"
So far, most work Indian companies have done is midlevel rotoscoping and compositing, which allow filmmakers to blend complex shots. For "Spiderman 3," Tata Elxsi VCL cut out studio stunt shots of Spiderman and sent them back to California, where they were fit into urban landscapes so the hero appeared to be swooping in death-defying arcs from one tall building to another.
Khandpur said smaller production companies have been more willing to send over complex shots. For "One Night with the King," a 2006 movie about the biblical figure of Esther, the young Jewish woman who became the queen of Persia, VCL used computer software to create and people entire landscapes, filling the land with castles, waterfalls, and hundreds of horsemen, elephants and villagers.
In the last few years a string of acquisitions and new ventures have started to build the relationships and expertise India needs to become a m
ore of a destination for such higher-end work. Two old Hollywood hands recently opened visual effects companies in Mumbai: Geon, founded by "The Lord of the Rings" producer Barrie Osborne, and EyeQube Studios, headed by Charles Darby, whose credits include "Titanic" and the HBO series "Rome."
Darby set up EyeQube with backing from the U.K.'s Eros International and plans to release his first film "Aladin" — an effects-driven live action film featuring top Bollywood talent — in July. He hopes it will be his calling card in the West. "Instead of smiling at India and saying it's not good at special effects, they'll say, 'Hey look at that...Where did that come from? Hell's teeth! It came from India," Darby said.
EyeQube is also in "advanced talks" with a Hollywood studio, which he won't name, to do its first film for US release, he added. EyeQube's ultramodern studios center on an egg-shaped screening room. The 20,000-square-foot (1,860-square-meter) space is filled with hushed, dusky rooms of computer terminals, where artists experiment with complex computer generated avalanches and digitally transform a man's face into vanishing particles of smoke.
"Of course it's a threat" to U.S. firms, Darby said. But "competition is never a bad thing." Geon's founders met while working on "The Lord of the Rings" in 2003. They opened an 18,000-square-foot (1,670-square- meter) office in October with funding -- how much they won't say -- from Sahara India Pariwar, a conglomerate with interests in real estate, finance, media and infrastructure.
Geon ultimately hopes to get out of the effects contracting business, with its razor-thin margins, and start making -- and owning -- its own films. For now, Geon is focused on training a pool of Indian artists.
Chief Executive Jon Labrie says he's looking to hire 50 more artists globally and plans to open a Los Angeles office. But he'll be taking on just one Westerner for every 5 to 10 Indians.
There has also been a spate of acquisitions. Sony Pictures Imageworks acquired the Chennai effects studio Frameflow for a reported $5 million in 2007. Last year, Mumbai's Pixion acquired UK special effects house Men-from-Mars, whose credits include "Elizabeth."
Since 2006, India's Prime Focus has acquired four special effects companies in the U.K. and two in North America, which have worked on films like "There Will Be Blood." All this is putting pressure on smaller US special effects companies, like The Orphanage, a San Francisco-based company that shut its doors in February, laying off 100 people.
"The average cost of a shot gets lower and lower every year," said co-founder Scott Stewart. "If they keep driving the prices down, it will keep driving it offshore. Fewer and fewer artists will be working in the US."
Even the Orphanage had outsourced work to India to save on costs, he said. "Everyone's doing it," Stewart said. Indian companies have already established themselves doing low-end work and are now moving up the value chain, he added. "They're starting to get good at everything."
Layoffs in India
Hire & fire policy not acceptable in India: Sunil Mittal
Supporting the idea of labour reforms in the country, telecom czar Sunil Bharti Mittal said "hire and fire policy" is not going to be acceptable in the country and asked India Inc to be much more benevolent.
"I think labour reforms again are something desirable but having a hire and fire policy in a country like India is not going to be an acceptable task, neither should that be the requirement from the industry," Mittal, who's the Chairman of diversified conglomerate Bharti Group told a private news broadcaster.
"We have to be much more benevolent much more care taking of our labour force and our people and that at least the philosophy that I hold very dear to myself and I think all industry players must (follow the same).
However, he maintained that there will be times of distress for corporate houses, when they may take such steps. He thus voiced for a "platform" where the government and industry can hold discussions on such a subject.
"...there will be industries in distress ... and they need to have some flexibility from time to time so it will be desirable for the industry and government to come together create a platform on which they can have a discussion when in trouble, how should industry behave," he added.
Corporate houses, both in India and abroad, have resorted to job cuts to stay afloat amid the global economic crisis.
"I think labour reforms again are something desirable but having a hire and fire policy in a country like India is not going to be an acceptable task, neither should that be the requirement from the industry," Mittal, who's the Chairman of diversified conglomerate Bharti Group told a private news broadcaster.
"We have to be much more benevolent much more care taking of our labour force and our people and that at least the philosophy that I hold very dear to myself and I think all industry players must (follow the same).
However, he maintained that there will be times of distress for corporate houses, when they may take such steps. He thus voiced for a "platform" where the government and industry can hold discussions on such a subject.
"...there will be industries in distress ... and they need to have some flexibility from time to time so it will be desirable for the industry and government to come together create a platform on which they can have a discussion when in trouble, how should industry behave," he added.
Corporate houses, both in India and abroad, have resorted to job cuts to stay afloat amid the global economic crisis.
No layoffs
Not laid off any employee: ICICI Bank
Distancing itself from the issue related to the alleged job loss-triggered suicide attempt of an employee of one of its service providers, ICICI Bank on Sunday said it has not laid off any employee and said it has also apprised the police over forced entry by some "unruly people" into its office.
One Suyog Deshmukh, who was working for Delta Services Ltd, an outsourced service provider for ICICI Bank's credit card processing department, is said to have allegedly attempted suicide after his job was terminated. He is also said to have named two managerial level employees of the bank in his suicide note. Reacting to the media reports, which also said that the company was forced to reinstate all the employees sacked along with Deshmukh after a demonstration by them subsequent to the suicide attempt, ICICI Bank said in a statement that it "has had no discussions or agreement with any one on the issue of reinstatement of any employee."
One Suyog Deshmukh, who was working for Delta Services Ltd, an outsourced service provider for ICICI Bank's credit card processing department, is said to have allegedly attempted suicide after his job was terminated. He is also said to have named two managerial level employees of the bank in his suicide note. Reacting to the media reports, which also said that the company was forced to reinstate all the employees sacked along with Deshmukh after a demonstration by them subsequent to the suicide attempt, ICICI Bank said in a statement that it "has had no discussions or agreement with any one on the issue of reinstatement of any employee."
Monday, June 22, 2009
Outsourcing, Recession
IT firms shifting more work to India to cut costs: analysts
Partly an answer to downturn, political pressure; trend should shift again, say analysts. To save costs for themselves and their clients, information technology firms in India have started increasing the work done from Indian shores (known as offshore). In some cases, these IT companies have even started calling back onsite (on foreign shores) Indians.
India’s largest IT firm, Tata Consultancy Services (TCS), for instance, has called back over 1,000 employees as a part of its focus to increase offshoring work. Infosys Technologies and Wipro have called back a similar number. “We achieved our overall target of 45 per cent offshore leverage, an improvement of 310 basis points on an annual basis from Q4 of ‘08 to Q4 of ‘09,” said a TCS spokesperson. Part of this gain is attributed to costs saved due to employees shifting back to India.
Infosys, too — while posting its fourth quarter results — mentioned that in a survey among its customers, 22 per cent said there will be a slight increase and 5 per cent said there will be a more than 10 per cent increase, in offshore spending.
The fact that the H1-B visa quota has still not touched the cap of 65,000 adds credence to the story of cost cutting. Till May 2009, the US Citizenship and Immigration Services (USCIS) had about 45,500 H-1B petitions, 19,500 short of the quota. The cost of one H-1B visa is around $3,000. The number of H-1B visa holders in Infosys, which was 8,700 as of December 31, 2008, came down to 8,200 as of March 31, 2009. This number is expected to come down further by another 500 at the end of the first quarter of fiscal year 2010, said the company.
With total employee costs as a percentage of revenue being around 50 per cent, analysts note it is obvious for IT firms to look at the employee base to bring in cost efficiencies. The salary difference of an onsite and offshore employee can range between 40- and 60 per cent On an average, a software coder with 3-4 years of experience will get a salary of Rs 6-8 lakh per annum. The same person will get a minimum salary of $40,000 (around Rs 19 lakh) per annum in the US, according to an HR consultant.
It also helps the clients save on costs, since offshoring (when compared to onsite work) is much cheaper in terms of billing rates. IT firms are said to have helped US-based customers to save $12-16 billion in 2008, and European customers somewhere between $8-10 billion.
“Bringing back employees from onsite centres will surely lead to substantial savings but you also have to understand that customers are also getting stringent and looking at all possible ways to reduce costs. Besides, IT firms are also moving away from time and material to fixed-priced contracts that now allows them to focus more on delivery,” explained Venkatesh Subramanian, VP-IT Practice, TMI Network, an HR consultancy firm.
HR consultants also said that IT firms are reducing the bench period for employees onsite. “We have observed that the bench availability has been reduced to 30 days. So, if an employee is able to get absorbed in the project, he/she can continue, otherwise they are being asked to return. Besides employees that are not billable, as in managerial-level employees, are also being asked to return,” said an HR consultant on condition of anonymity.
Ganesh Shermon, partner and head of people and change advisory services, KPMG, also adds that more than just cost optimisation, the utilisation level among firms has gone up. “Besides, when you call back a senior executive, other costs also reduce. There is travel cost, there is consolidation of real estate, among other measures.”
But what about the backlash when jobs are outsourced? For one, Indian IT firms have realised the importance of creating more local jobs in the geographies they operate, especially the US, to counter growing ‘protectionist’ rhetoric from US senators and pressure from the Obama administration. Even though the net addition of jobs would be marginal due to jobs moving back to India, during the last six months alone, analysts estimate that Indian IT-BPO firms would have created over 10,000 jobs in international locations, with the majority of these being created in the US.
For instance, HCL Technologies alone has created approximately 2,500 jobs in the US and UK combined in the past six months. TCS, the largest employer in the IT sector in India, has added 2,146 employees in its overseas branches, including those in the US, UK and Mexico, during the past two quarters. And though Infosys and Wipro declined to share the number of overseas recruits during the past two quarters, industry sources say these numbers are well above 1,000.
“It is but natural for the US government to talk about protectionism. Anyone would have if you have an increasing number of umemployed citizens. So, in that sense, I think this is temporary,” said Shiv Aggarwal, CEO, ABC Consultants. Concurred Shermon: “IT firms still need to attract good talent and sending them overseas is a big incentive.”
India’s largest IT firm, Tata Consultancy Services (TCS), for instance, has called back over 1,000 employees as a part of its focus to increase offshoring work. Infosys Technologies and Wipro have called back a similar number. “We achieved our overall target of 45 per cent offshore leverage, an improvement of 310 basis points on an annual basis from Q4 of ‘08 to Q4 of ‘09,” said a TCS spokesperson. Part of this gain is attributed to costs saved due to employees shifting back to India.
Infosys, too — while posting its fourth quarter results — mentioned that in a survey among its customers, 22 per cent said there will be a slight increase and 5 per cent said there will be a more than 10 per cent increase, in offshore spending.
The fact that the H1-B visa quota has still not touched the cap of 65,000 adds credence to the story of cost cutting. Till May 2009, the US Citizenship and Immigration Services (USCIS) had about 45,500 H-1B petitions, 19,500 short of the quota. The cost of one H-1B visa is around $3,000. The number of H-1B visa holders in Infosys, which was 8,700 as of December 31, 2008, came down to 8,200 as of March 31, 2009. This number is expected to come down further by another 500 at the end of the first quarter of fiscal year 2010, said the company.
With total employee costs as a percentage of revenue being around 50 per cent, analysts note it is obvious for IT firms to look at the employee base to bring in cost efficiencies. The salary difference of an onsite and offshore employee can range between 40- and 60 per cent On an average, a software coder with 3-4 years of experience will get a salary of Rs 6-8 lakh per annum. The same person will get a minimum salary of $40,000 (around Rs 19 lakh) per annum in the US, according to an HR consultant.
It also helps the clients save on costs, since offshoring (when compared to onsite work) is much cheaper in terms of billing rates. IT firms are said to have helped US-based customers to save $12-16 billion in 2008, and European customers somewhere between $8-10 billion.
“Bringing back employees from onsite centres will surely lead to substantial savings but you also have to understand that customers are also getting stringent and looking at all possible ways to reduce costs. Besides, IT firms are also moving away from time and material to fixed-priced contracts that now allows them to focus more on delivery,” explained Venkatesh Subramanian, VP-IT Practice, TMI Network, an HR consultancy firm.
HR consultants also said that IT firms are reducing the bench period for employees onsite. “We have observed that the bench availability has been reduced to 30 days. So, if an employee is able to get absorbed in the project, he/she can continue, otherwise they are being asked to return. Besides employees that are not billable, as in managerial-level employees, are also being asked to return,” said an HR consultant on condition of anonymity.
Ganesh Shermon, partner and head of people and change advisory services, KPMG, also adds that more than just cost optimisation, the utilisation level among firms has gone up. “Besides, when you call back a senior executive, other costs also reduce. There is travel cost, there is consolidation of real estate, among other measures.”
But what about the backlash when jobs are outsourced? For one, Indian IT firms have realised the importance of creating more local jobs in the geographies they operate, especially the US, to counter growing ‘protectionist’ rhetoric from US senators and pressure from the Obama administration. Even though the net addition of jobs would be marginal due to jobs moving back to India, during the last six months alone, analysts estimate that Indian IT-BPO firms would have created over 10,000 jobs in international locations, with the majority of these being created in the US.
For instance, HCL Technologies alone has created approximately 2,500 jobs in the US and UK combined in the past six months. TCS, the largest employer in the IT sector in India, has added 2,146 employees in its overseas branches, including those in the US, UK and Mexico, during the past two quarters. And though Infosys and Wipro declined to share the number of overseas recruits during the past two quarters, industry sources say these numbers are well above 1,000.
“It is but natural for the US government to talk about protectionism. Anyone would have if you have an increasing number of umemployed citizens. So, in that sense, I think this is temporary,” said Shiv Aggarwal, CEO, ABC Consultants. Concurred Shermon: “IT firms still need to attract good talent and sending them overseas is a big incentive.”
Infosys
Infosys Tech not keen on acquisitions in India
India’s second-largest IT services company Infosys Technologies is not interested in acquiring companies in India as the company is capable of growing organically quite fast. The $4.6-billion company, which had earlier made an unsuccessful bid to acquire SAP consulting firm Axon that was latter acquired by HCL, would prefer acquiring companies overseas where growing organically is a little challenge, the Bangalore-headquartered company’s CEO and MD S (Kris) Gopalakrishna said.
Replying to a query by a shareholder during the company’s 28th annual general meeting (AGM) held here on Saturday on why Infosys did not consider acquiring Satyam, Gopalakrishna said the company was finding no difficulty in adding people in India, which is evident from the company’s addition of over 25,000 employees alone in fiscal 2008-09. “When we look at acquisitions, we believe that the requirement of acquisition is more outside the country than in India. We are not facing any challenge in adding employees in India,” he said. Unlike the other Bangalore-headquartered company, Infosys had not been very active in making an inorganic pursuit in the past. The company, which is sitting on cash reserves of over $2 billion (Rs 9,695 crore as of March 31, 2009), has so far made two successful acquisitions during its nearly three-decade old existence.
Replying to a query by a shareholder during the company’s 28th annual general meeting (AGM) held here on Saturday on why Infosys did not consider acquiring Satyam, Gopalakrishna said the company was finding no difficulty in adding people in India, which is evident from the company’s addition of over 25,000 employees alone in fiscal 2008-09. “When we look at acquisitions, we believe that the requirement of acquisition is more outside the country than in India. We are not facing any challenge in adding employees in India,” he said. Unlike the other Bangalore-headquartered company, Infosys had not been very active in making an inorganic pursuit in the past. The company, which is sitting on cash reserves of over $2 billion (Rs 9,695 crore as of March 31, 2009), has so far made two successful acquisitions during its nearly three-decade old existence.
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