American International Group Inc's money-losing consumer finance unit on Thursday said it eliminated 900 jobs and closed 145 branches in the first half of the year, and may make further cutbacks as it prepares to be sold.
In a regulatory filing, American General Finance Corp said its quarterly loss increased sevenfold to $227.2 million from $31.8 million a year earlier, as revenue declined 32 percent.
American General has lost $467.8 million this year, after losing more than $1.3 billion in 2008. It has lost money for six straight quarters. The job and branch cuts represent about 11 percent of the year-end totals that the Evansville, Indiana-based company had reported. American General said it ended 2008 with 7,900 employees and 1,374 offices, a separate filing shows.
"We may implement further measures to preserve our liquidity and capital, including additional on-balance sheet securitizations, portfolio sales, expense reductions, branch closures, and reductions in production," the company said. It said it expects to have enough liquidity for at least a year. An AIG spokeswoman said American General decided on the job cuts in May, and attributed them to the economic downturn.
AIG posted a second-quarter profit last week. The New York-based insurer is trying to sell assets to help repay the government, after accepting a series of federal bailouts totaling roughly $180 billion.
Showing posts with label Recession. Show all posts
Showing posts with label Recession. Show all posts
Friday, August 14, 2009
Thursday, August 13, 2009
IT market, Layoffs in USA, Recession
Kaiser Permanente to slash 1,200 jobs in California
Oakland-based Kaiser Permanente is cutting 1,200 jobs as it continues to struggle with enrollment losses and the tough economic environment, senior officials said Tuesday.
The layoffs affect “just under” 2 percent of Kaiser’s overall workforce, and about one-third of the jobs eliminated were described as involving “temporary, on-call or short-hour employees,” according to an Aug. 11 statement by Gay Westfall, Kaiser’s senior vice president for human resources. She said most medical centers have positions that were eliminated, without providing specifics.
As a result of economic pressures, she said, Kaiser has “lost members, experienced lower patient volumes, and seen a slowing revenue trend that is expected to continue into next year.”
Marc Brown, a Northern California spokesman for Kaiser, said all of the jobs are covered by Kaiser's Labor Management Partnership with the Service Employees International Union and several others (but not including the powerful California Nurses Association). Primary job classifications that are being affected include housekeeping, pharmacy technicians and clerks, unit assistants, transcription/medical secretaries, health information management clerks and local business offices.
However, Dave Regan, the Oakland-based trustee for SEIU's United Healthcare Workers West local, insisted in a statement Tuesday afternoon that his union has an agreement with Kaiser that prevents its members from being included in the layoffs. It represents about 50,000 Kaiser workers in the state.
"We don't think it's necessary to eliminate any positions, given Kaiser's strong financial performance this year," Regan said. "Given that performance, we are disappointed that Kaiser saw fit to send out notices to individual employees notifying them that their positions were being cut. This will unnecessarily alarm those individuals, even though we have negotiated strong options to avoid actual layoffs."
The new round of cuts comes after several earlier rounds that cumulatively resulted in about 900 jobs being eliminated in Kaiser’s national facilities services unit, various data centers, and its information-technology unit, which recently completed the bulk of a multi-year estimated $6 billion electronic medical record installation in Kaiser outpatient clinics and hospitals. Some hospitals in Northern California are yet to be fully wired, however.
Westfall said the cuts reflect “the difficult economy and an uncertain industry environment, including lower Medicare reimbursement rates and changes related to health care reform.”
Along with reducing the size of its non-physician workforce, Kaiser has also deferred merit salary increases for non-unionized employees; adjusted timelines for capital spending projects; reduced the number of full-time employees through attrition and other means, and laid off non-union workers, Westfall said. She noted that some workers affected by the cuts may be able to find other jobs within the sprawling system, which had about 167,300 non-physician employees and 14,600 doctors before the recent cuts, according to its web site.
Total enrollment in Kaiser’s health plan dipped by nearly 36,000 members, remaining at about 8.6 million, over 2009’s first six months, officials announced last week.
Despite that decline in enrollment, Kaiser’s nonprofit health plan, hospitals and affiliated subsidiaries nearly doubled last year’s first half net income figures in results reported late last week, boosting its profits to more than $1 billion.
Net income for 2009’s first half was $1.1 billion, compared with $601 million in 2008. Operating revenue for the period was up about 4 percent to $21.1 billion, Oakland-based Kaiser said. Operating revenue was flat at about $1 billion.
For the second quarter, ending June 30, operating revenue jumped 3.9 percent to $10.5 billion, compared with the year-earlier quarter, but operating income slipped nearly 18 percent from $499 million to $411 million, Kaiser said.
Kaiser’s results were bolstered by a second-quarter jump in non-operating income, as Wall Street recovered from the first quarter’s steep decline.
It posted $209 million in non-operating income for the quarter ending June 30, and had $620 million in net income for Q2, a big jump from 2008’s $351 million Q2 net income. For the first half, however, investment income was just $15 million -- a tiny profit eked out from Wall Street in tough times, but far better than 2008’s first-half loss of $443 million on investments.
Late last month, Kaiser confirmed it is laying off 25 employees in its Oakland-based national facilities services unit, and that Christine Malcolm had resigned as senior vice president of the unit. That came on top of about 70 jobs cut in April and hundreds more earlier in the spring.
In April, Kaiser said it was cutting 70 non-clinical jobs in Northern California due to declining enrollment, and had cancelled 3,000 posted job openings since October. In March, it announced 850 job cuts, due to a $500 million outsourcing deal with IBM and other factors, with 700 cuts coming in Kaiser data centers and 160 from a realignment of its IT workforce.
The layoffs affect “just under” 2 percent of Kaiser’s overall workforce, and about one-third of the jobs eliminated were described as involving “temporary, on-call or short-hour employees,” according to an Aug. 11 statement by Gay Westfall, Kaiser’s senior vice president for human resources. She said most medical centers have positions that were eliminated, without providing specifics.
As a result of economic pressures, she said, Kaiser has “lost members, experienced lower patient volumes, and seen a slowing revenue trend that is expected to continue into next year.”
Marc Brown, a Northern California spokesman for Kaiser, said all of the jobs are covered by Kaiser's Labor Management Partnership with the Service Employees International Union and several others (but not including the powerful California Nurses Association). Primary job classifications that are being affected include housekeeping, pharmacy technicians and clerks, unit assistants, transcription/medical secretaries, health information management clerks and local business offices.
However, Dave Regan, the Oakland-based trustee for SEIU's United Healthcare Workers West local, insisted in a statement Tuesday afternoon that his union has an agreement with Kaiser that prevents its members from being included in the layoffs. It represents about 50,000 Kaiser workers in the state.
"We don't think it's necessary to eliminate any positions, given Kaiser's strong financial performance this year," Regan said. "Given that performance, we are disappointed that Kaiser saw fit to send out notices to individual employees notifying them that their positions were being cut. This will unnecessarily alarm those individuals, even though we have negotiated strong options to avoid actual layoffs."
The new round of cuts comes after several earlier rounds that cumulatively resulted in about 900 jobs being eliminated in Kaiser’s national facilities services unit, various data centers, and its information-technology unit, which recently completed the bulk of a multi-year estimated $6 billion electronic medical record installation in Kaiser outpatient clinics and hospitals. Some hospitals in Northern California are yet to be fully wired, however.
Westfall said the cuts reflect “the difficult economy and an uncertain industry environment, including lower Medicare reimbursement rates and changes related to health care reform.”
Along with reducing the size of its non-physician workforce, Kaiser has also deferred merit salary increases for non-unionized employees; adjusted timelines for capital spending projects; reduced the number of full-time employees through attrition and other means, and laid off non-union workers, Westfall said. She noted that some workers affected by the cuts may be able to find other jobs within the sprawling system, which had about 167,300 non-physician employees and 14,600 doctors before the recent cuts, according to its web site.
Total enrollment in Kaiser’s health plan dipped by nearly 36,000 members, remaining at about 8.6 million, over 2009’s first six months, officials announced last week.
Despite that decline in enrollment, Kaiser’s nonprofit health plan, hospitals and affiliated subsidiaries nearly doubled last year’s first half net income figures in results reported late last week, boosting its profits to more than $1 billion.
Net income for 2009’s first half was $1.1 billion, compared with $601 million in 2008. Operating revenue for the period was up about 4 percent to $21.1 billion, Oakland-based Kaiser said. Operating revenue was flat at about $1 billion.
For the second quarter, ending June 30, operating revenue jumped 3.9 percent to $10.5 billion, compared with the year-earlier quarter, but operating income slipped nearly 18 percent from $499 million to $411 million, Kaiser said.
Kaiser’s results were bolstered by a second-quarter jump in non-operating income, as Wall Street recovered from the first quarter’s steep decline.
It posted $209 million in non-operating income for the quarter ending June 30, and had $620 million in net income for Q2, a big jump from 2008’s $351 million Q2 net income. For the first half, however, investment income was just $15 million -- a tiny profit eked out from Wall Street in tough times, but far better than 2008’s first-half loss of $443 million on investments.
Late last month, Kaiser confirmed it is laying off 25 employees in its Oakland-based national facilities services unit, and that Christine Malcolm had resigned as senior vice president of the unit. That came on top of about 70 jobs cut in April and hundreds more earlier in the spring.
In April, Kaiser said it was cutting 70 non-clinical jobs in Northern California due to declining enrollment, and had cancelled 3,000 posted job openings since October. In March, it announced 850 job cuts, due to a $500 million outsourcing deal with IBM and other factors, with 700 cuts coming in Kaiser data centers and 160 from a realignment of its IT workforce.
IT market, Layoffs in USA, Recession
45 per cent US firms consider hiring temp workers: Survey
Restructuring workforce seems to be another lesson taught by the economic slowdown as a large number of American companies are expecting to hire temporary workers as IT and professional staff in the near future, a survey has found.
Forty five per cent of the polled organisations anticipate hiring temporary workers as part of their present and future workforce, according to a report by staffing services provider Veritude. The research also found that 25 per cent of the organisations polled plan to increase temporary IT and professional hiring in the near future.
“The present economy has forced almost every company to re-examine and restructure their hiring and staffing models,” Veritude executive vice-president Tom Hart said.
“Hiring qualified temporary knowledge workers gives companies more flexibility as well as opportunities to reduce costs, which are important factors in any economy. Our research uncovered that many organisations have used the
current economic lull to redefine the composition of their workforces,” Hart added.
Recognising the benefits of a temporary staff strategy, 33 per cent organisations discern more flexibility to scale workforce to match demand and 30 per cent recognise the ability to handle seasonal fluctuations and the ability to use a “try before you buy” approach.
Besides, one in five executives also reported that high unemployment rate has resulted in more qualified temporary workers.
“Hiring temporary workers can reduce overall hiring risk and augment a company’s core workforce with specialised skills. This is critical among professional and IT job categories, where the abundance of available job candidates has done little to quell the need for the right talent,” Hart added.
Temporary workers are a fundamental part of the re-evaluation of how work gets done, but companies are still most concerned with making the right hire, not just any hire, Hart said.
Many companies are moving away from the fragmented model of working with multiple agencies to using a managed service programme (MSP).
MSP providers can streamline processes, reduce costs, and alleviate substantial risks and administrative burdens.
Forty five per cent of the polled organisations anticipate hiring temporary workers as part of their present and future workforce, according to a report by staffing services provider Veritude. The research also found that 25 per cent of the organisations polled plan to increase temporary IT and professional hiring in the near future.
“The present economy has forced almost every company to re-examine and restructure their hiring and staffing models,” Veritude executive vice-president Tom Hart said.
“Hiring qualified temporary knowledge workers gives companies more flexibility as well as opportunities to reduce costs, which are important factors in any economy. Our research uncovered that many organisations have used the
current economic lull to redefine the composition of their workforces,” Hart added.
Recognising the benefits of a temporary staff strategy, 33 per cent organisations discern more flexibility to scale workforce to match demand and 30 per cent recognise the ability to handle seasonal fluctuations and the ability to use a “try before you buy” approach.
Besides, one in five executives also reported that high unemployment rate has resulted in more qualified temporary workers.
“Hiring temporary workers can reduce overall hiring risk and augment a company’s core workforce with specialised skills. This is critical among professional and IT job categories, where the abundance of available job candidates has done little to quell the need for the right talent,” Hart added.
Temporary workers are a fundamental part of the re-evaluation of how work gets done, but companies are still most concerned with making the right hire, not just any hire, Hart said.
Many companies are moving away from the fragmented model of working with multiple agencies to using a managed service programme (MSP).
MSP providers can streamline processes, reduce costs, and alleviate substantial risks and administrative burdens.
IT market, Recession
D Telekom's T-Systems to cut 3000 jobs by 2010
Deutsche Telekom's business client unit, T-Systems, has reached an agreement with labour representatives to shed 3,000 jobs by next year in an effort to cut costs, a T-Systems manager said.
T-Systems had almost 45,000 employees by the end of the second quarter, down 1.9 per cent from the previous year.
Matthias Schuster, head of personnel at T-Systems, said on Wednesday remaining staff could count on job guarantees until mid-2012.
T-Systems is Deutsche Telekom's smallest and least profitable unit. In 2008 it reported an adjusted core profit of 826 million euros ($1.17 billion) on sales of 9.34 billion euros. Deutsche Telekom 2008 core profit was 19.5 billion euros.
In the quarter ended June 30, T-Systems posted a 22.9 per cent increase in adjusted core profit thanks to cost-cuts and an asset disposal. Sales dropped 3.2 per cent.
T-Systems, which provides IT and telecoms services for businesses as well as for German federal and municipal governments and European public administrations, has been struggling with shrinking sales and low margins.
Last year, T-Systems entered an alliance with IT service provider Cognizant to boost its system integration business, which helps companies link information technology, devices and programs to share and exchange data and ultimately lower costs.
T-Systems had almost 45,000 employees by the end of the second quarter, down 1.9 per cent from the previous year.
Matthias Schuster, head of personnel at T-Systems, said on Wednesday remaining staff could count on job guarantees until mid-2012.
T-Systems is Deutsche Telekom's smallest and least profitable unit. In 2008 it reported an adjusted core profit of 826 million euros ($1.17 billion) on sales of 9.34 billion euros. Deutsche Telekom 2008 core profit was 19.5 billion euros.
In the quarter ended June 30, T-Systems posted a 22.9 per cent increase in adjusted core profit thanks to cost-cuts and an asset disposal. Sales dropped 3.2 per cent.
T-Systems, which provides IT and telecoms services for businesses as well as for German federal and municipal governments and European public administrations, has been struggling with shrinking sales and low margins.
Last year, T-Systems entered an alliance with IT service provider Cognizant to boost its system integration business, which helps companies link information technology, devices and programs to share and exchange data and ultimately lower costs.
Wednesday, August 12, 2009
IT market, Recession
Are information technology's glory days gone?
Source: TheEconomicTimes
If Thomas M. Siebel can accurately see the future, computer science students with the entrepreneurial gene may want to look for a different major. And investors who think that information technology is a sector that will produce outsized returns should wake up.
In Siebel's view, IT is a mature industry that will grow no faster than the larger economy. He contends that its glory days are past – long past, having ended in 2000.
I believe that Siebel may well be wrong. But his own illustrious career in IT makes his opinions a matter of uncommon interest.
Earning both a master’s degree in computer science and an MBA at the University of Illinois at Urbana-Champaign, he was an executive at Oracle from 1984 to 1990. In 1993, he founded Siebel Systems, which sells software for tracking customers and sales prospects; the company was acquired in 2006 by Oracle, which paid almost $6 billion. In Siebel’s self-deprecating narrative, he was simply standing in the right place at the right time.
Addressing Stanford students in February as a guest of the engineering school, Siebel called attention to 20 sweet years, from 1980 to 2000, when, he said, worldwide IT spending grew at a compounded annual growth rate of 17 percent. "All you had to do was show up and not goof it up," he said. "All ships were rising."
Since 2000, however, that rate has averaged only 3 percent, he said. His explanation for the sharp decline is that "the promise of the post-industrial society has been realized."
No new technological advances, he believes, would impel IT customers to replace the computer technology they already had: "I would suggest to you that most of what’s going on today is not very exciting."
In his view, far larger opportunities are to be found in businesses that address needs in food, water, health care and energy. Though Silicon Valley was "where the action was" when he finished graduate school, he says, "if I were graduating today, I would get on a boat and I would get off in Shanghai."
When I called him last month to discuss his provocative arguments, he was disarmingly modest. "I’m just an old has-been, I don’t present myself as an expert in this or any other area," he said.
The huge difference in growth rates, pre- and post-2000, may seem so stark as to leave no room for an alternative view of IT’s prospects.
But the recent drop is not as steep as it seems at first. I asked Shane Greenstein, an economist at Northwestern University’s Kellogg School of Management who has written extensively about the computer industry, to take a look at the raw data upon which those numbers were supposedly based: the annual IT spending estimates published by IDC.
Greenstein’s calculations produced a more moderate compounded annual growth rate of 11.6 percent for 1980 to 2000, instead of 17 percent.
When Greenstein looked at the full IDC data set, which goes back to 1961, and used other breakpoints to compare growth in earlier and later periods, he found that the most golden years of IT were in the 1960s, when use of mainframe computers spread widely. From 1961 to 1971, the compounded annual growth rate was 35.7 percent, more than three times the rate in the 1980-2000 period celebrated by Siebel.
Declining growth rates over time are to be expected, Greenstein said. After all, it doesn’t take many sales to show huge percentage gains when the base is small.
Timothy Bresnahan, a Stanford economist, similarly does not accept Siebel’s contention that the decline in growth rates this decade, which encompasses two recessions, signals a permanent end to IT’s record of growing faster than the larger economy. "It is early days to say the game is over," he said.
When the economy recovers, there is no dearth of unfinished projects for IT, he said, like "automating white-collar work and automating buying and selling in markets."
And when one company dominates a certain area of technology, it can be a bottleneck along the road to innovation – an obstacle to the technology of others. Bresnahan says that this has happened with Microsoft in the PC side of corporate information technology, and in earlier times with IBM in computers and AT&T in telecommunications. But he said that entrepreneurial companies of those earlier days – like Siebel Systems – ultimately invented around bottlenecks and "innovation-led growth picked up again."
The biggest decline in IT’s growth came at the end of the 1960s, well before Siebel’s own IT career. A fortune or two could still be made, it turns out. Siebel Systems, which its founder says attained $2 billion in revenue annually in only seven years, was founded after the growth rate of IT spending dropped precipitously.
Entrepreneurial engineers in the United States should take heart. There’s no cause for mass flight to Shanghai.
If Thomas M. Siebel can accurately see the future, computer science students with the entrepreneurial gene may want to look for a different major. And investors who think that information technology is a sector that will produce outsized returns should wake up.
In Siebel's view, IT is a mature industry that will grow no faster than the larger economy. He contends that its glory days are past – long past, having ended in 2000.
I believe that Siebel may well be wrong. But his own illustrious career in IT makes his opinions a matter of uncommon interest.
Earning both a master’s degree in computer science and an MBA at the University of Illinois at Urbana-Champaign, he was an executive at Oracle from 1984 to 1990. In 1993, he founded Siebel Systems, which sells software for tracking customers and sales prospects; the company was acquired in 2006 by Oracle, which paid almost $6 billion. In Siebel’s self-deprecating narrative, he was simply standing in the right place at the right time.
Addressing Stanford students in February as a guest of the engineering school, Siebel called attention to 20 sweet years, from 1980 to 2000, when, he said, worldwide IT spending grew at a compounded annual growth rate of 17 percent. "All you had to do was show up and not goof it up," he said. "All ships were rising."
Since 2000, however, that rate has averaged only 3 percent, he said. His explanation for the sharp decline is that "the promise of the post-industrial society has been realized."
No new technological advances, he believes, would impel IT customers to replace the computer technology they already had: "I would suggest to you that most of what’s going on today is not very exciting."
In his view, far larger opportunities are to be found in businesses that address needs in food, water, health care and energy. Though Silicon Valley was "where the action was" when he finished graduate school, he says, "if I were graduating today, I would get on a boat and I would get off in Shanghai."
When I called him last month to discuss his provocative arguments, he was disarmingly modest. "I’m just an old has-been, I don’t present myself as an expert in this or any other area," he said.
The huge difference in growth rates, pre- and post-2000, may seem so stark as to leave no room for an alternative view of IT’s prospects.
But the recent drop is not as steep as it seems at first. I asked Shane Greenstein, an economist at Northwestern University’s Kellogg School of Management who has written extensively about the computer industry, to take a look at the raw data upon which those numbers were supposedly based: the annual IT spending estimates published by IDC.
Greenstein’s calculations produced a more moderate compounded annual growth rate of 11.6 percent for 1980 to 2000, instead of 17 percent.
When Greenstein looked at the full IDC data set, which goes back to 1961, and used other breakpoints to compare growth in earlier and later periods, he found that the most golden years of IT were in the 1960s, when use of mainframe computers spread widely. From 1961 to 1971, the compounded annual growth rate was 35.7 percent, more than three times the rate in the 1980-2000 period celebrated by Siebel.
Declining growth rates over time are to be expected, Greenstein said. After all, it doesn’t take many sales to show huge percentage gains when the base is small.
Timothy Bresnahan, a Stanford economist, similarly does not accept Siebel’s contention that the decline in growth rates this decade, which encompasses two recessions, signals a permanent end to IT’s record of growing faster than the larger economy. "It is early days to say the game is over," he said.
When the economy recovers, there is no dearth of unfinished projects for IT, he said, like "automating white-collar work and automating buying and selling in markets."
And when one company dominates a certain area of technology, it can be a bottleneck along the road to innovation – an obstacle to the technology of others. Bresnahan says that this has happened with Microsoft in the PC side of corporate information technology, and in earlier times with IBM in computers and AT&T in telecommunications. But he said that entrepreneurial companies of those earlier days – like Siebel Systems – ultimately invented around bottlenecks and "innovation-led growth picked up again."
The biggest decline in IT’s growth came at the end of the 1960s, well before Siebel’s own IT career. A fortune or two could still be made, it turns out. Siebel Systems, which its founder says attained $2 billion in revenue annually in only seven years, was founded after the growth rate of IT spending dropped precipitously.
Entrepreneurial engineers in the United States should take heart. There’s no cause for mass flight to Shanghai.
Friday, August 7, 2009
Layoffs in USA, Recession
Layoffs rise in US 1st time in 6 months
Job cuts announced by US employers jumped 31 per cent in July to over 97,000, increasing for the first time in six months, warning of a further hike in downsizing activity by the last quarter of the year, a report said on Thursday.
After falling to a 15-mo-nth low in June planned job cuts announced by US employers jumped to 97,373 in July. It was the first increase in monthly job cuts since January, global outplacement consultancy Challenger, Gray & Christmas said here in its latest report.
“After June’s surprisingly low job-cut total, a July rebound was not entirely unexpected. While there are signs that the economy is stabilising and the pace of layoffs slowing, we are still a long way from a full recovery. In fact, monthly job cuts are likely to return to levels in excess of 100,000 by the fourth quarter,” Challenger, Gray & Christmas CEO John Challenger said.
Job cuts had fallen 33 per cent in June to 74,393, the lowest monthly total since March 2008. The July total was 6 per cent lower than the same month a year ago, when employers announced 1,03,312 cuts. So far this year, employers have announced 9,94,048 job cuts, 72 per cent more than 5,79,260 layoffs through the first seven months of 2008.
The July surge in job cuts was led by firms in the transportation industry, which announced plans to reduce payrolls by 27,954 positions, a five-fold increase from the June layoff total of 5,587.
The telecommunicatio-ns sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
The automotive sector, has seen layoff announcements decline in each of the last three months.
After falling to a 15-mo-nth low in June planned job cuts announced by US employers jumped to 97,373 in July. It was the first increase in monthly job cuts since January, global outplacement consultancy Challenger, Gray & Christmas said here in its latest report.
“After June’s surprisingly low job-cut total, a July rebound was not entirely unexpected. While there are signs that the economy is stabilising and the pace of layoffs slowing, we are still a long way from a full recovery. In fact, monthly job cuts are likely to return to levels in excess of 100,000 by the fourth quarter,” Challenger, Gray & Christmas CEO John Challenger said.
Job cuts had fallen 33 per cent in June to 74,393, the lowest monthly total since March 2008. The July total was 6 per cent lower than the same month a year ago, when employers announced 1,03,312 cuts. So far this year, employers have announced 9,94,048 job cuts, 72 per cent more than 5,79,260 layoffs through the first seven months of 2008.
The July surge in job cuts was led by firms in the transportation industry, which announced plans to reduce payrolls by 27,954 positions, a five-fold increase from the June layoff total of 5,587.
The telecommunicatio-ns sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
The automotive sector, has seen layoff announcements decline in each of the last three months.
Recession
US may be seeing beginning of recession's end: Obama
President Barack Obama said on Thursday the actions taken by his administration have helped stop an economic freefall and the United States may be seeing the "very beginnings" of the end of the recession.
Obama, addressing a raucous campaign rally for the Democratic candidate for Virginia governor, offered a spirited defense of policies implemented in his first 200 days in office to combat the worst US economic crisis in decades.
"I'm convinced that actions we've taken in the first six months have helped stop our economic freefall," he told a crowd in Tysons Corner, Virginia, outside of Washington. "We're losing jobs at half the rate we were at the beginning of this year."
"Our financial system is no longer on the verge of collapse. The market is up. Housing prices are up for the first time in nearly three years. So we may just be seeing the very beginnings of the end of this recession," he added. Obama acknowledged more work is needed on recovery efforts but struck back at Republican critics, reminding his audience he had inherited the economic crisis when he took office in January. It began under his Republican predecessor, George W Bush.
"I don't want the folks who created the mess to do a lot of talking. I want them to get out of the way so we can clean up the mess," Obama said to loud cheers. Many Republicans have accused Obama of making economic matters worse by trying to spend the country out of recession.
Obama spoke after a government report showed the number of US workers submitting new claims for jobless benefits fell sharply last week, fanning hopes the fragile labor market was on the mend and the broader economy was stabilizing.
Earlier, top White House economic adviser Christina Romer cautioned, though, that economic recovery will be painful and Friday's widely watched report on July unemployment likely will show hundreds of thousands more jobs were lost.
Obama, addressing a raucous campaign rally for the Democratic candidate for Virginia governor, offered a spirited defense of policies implemented in his first 200 days in office to combat the worst US economic crisis in decades.
"I'm convinced that actions we've taken in the first six months have helped stop our economic freefall," he told a crowd in Tysons Corner, Virginia, outside of Washington. "We're losing jobs at half the rate we were at the beginning of this year."
"Our financial system is no longer on the verge of collapse. The market is up. Housing prices are up for the first time in nearly three years. So we may just be seeing the very beginnings of the end of this recession," he added. Obama acknowledged more work is needed on recovery efforts but struck back at Republican critics, reminding his audience he had inherited the economic crisis when he took office in January. It began under his Republican predecessor, George W Bush.
"I don't want the folks who created the mess to do a lot of talking. I want them to get out of the way so we can clean up the mess," Obama said to loud cheers. Many Republicans have accused Obama of making economic matters worse by trying to spend the country out of recession.
Obama spoke after a government report showed the number of US workers submitting new claims for jobless benefits fell sharply last week, fanning hopes the fragile labor market was on the mend and the broader economy was stabilizing.
Earlier, top White House economic adviser Christina Romer cautioned, though, that economic recovery will be painful and Friday's widely watched report on July unemployment likely will show hundreds of thousands more jobs were lost.
Layoffs in India, Recession
India's flagship outsourcing sector hits tough times
Source: EconomicTimes
These are tough times for India's flagship outsourcing industry whose skilled, low-cost workforce helped plant the country on the global business map.
With the world in the grip of the worst economic slump since the 1930s, revenue growth from outsourcing -- subcontracting work to a third-party company -- is slowing sharply after years of posting scorching double-digit increases.
"IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen purse strings," Richard Gordon, head of global forecasting at Gartner consultancy, said.
"The full impact of the global recession on the IT services and telecommunications sectors is still emerging," he added in a recent outlook.
Now, the National Association of Software and Service Companies, or Nasscom, India's top outsourcing body, projects the sector's export revenues will rise by just four to seven percent this year to at most 50 billion dollars.
That's down sharply from the 16 percent logged in the last financial year to March and the 30 percent rise the industry clocked annually for most of the decade as the country became a back office to the world.
Nasscom says global companies are showing reluctance to authorise new spending -- even cash that reduce costs by taking advantage of India's cheaper English-speaking educated labour force.
"Worldwide information technology spending growth is expected to come down further in 2009 and 2010," Som Mittal, head of Nasscom, said.
The outsourcing sector has been particularly hard hit by the recession in the United States, which accounts for 60 percent of the Indian industry's revenues.
The industry has made India a top business destination by offering software development and information technology, engineering and design, and business process outsourcing (BPO).
But with the global slump hitting spending, there are fewer credit card transactions and airline tickets to process and lower demand for software design, sales calls, help desks, accounting and legal services.
India's largest software exporter, Tata Consultancy Services (TCS), and other companies forecast a difficult business climate despite announcing better-than-expected quarterly profits. Their profits increased, helped by tight cost management, even though revenue growth slowed.
"Global conditions are weak," TCS chief executive S. Ramadorai said after the results. "Recovery isn't something that's going to happen very soon."
And Amitabh Chaudhry, chief executive of Infosys BPO, in a recent interview admitted the business environment was "much tougher" than in past years.
Technology Partners International, a global sourcing advisory firm, said the international banking, oil and gas, food and drink and other sectors have all slowed their outsourcing.
According to Nasscom, the industry is also facing other challenges such as rising protectionist sentiment -- especially in the United States.
Indian outsourcing companies have already started focusing on the home market to drive growth.
The domestic market is still dwarfed by the export market but it is growing at a much faster pace as India's relatively closed economy has been less hard hit by the global slowdown.
In the last financial year, the outsourcing industry racked up exports of 47 million dollars while the domestic business added another 11.8 billion dollars in revenue.
Domestic outsourcing industry revenues are expected to grow by up to 18 percent this year to reach 14 billion dollars.
The focus "is definitely on the domestic segment and unexplored markets like South America, West Asia and blocks of Europe", said Nasscom's Mittal.
The sector, which accounts for nearly six percent of India's GDP, has played a key role in fuelling the country's new middle class affluence, employing two million people directly and eight million indirectly.
Longer term, the industry is still upbeat about its prospects.
Nasscom and management consultancy firm McKinsey said in a joint report the outsourcing industry could quadruple its revenues to 225 billion dollars by 2020 with the majority coming from exports.
These are tough times for India's flagship outsourcing industry whose skilled, low-cost workforce helped plant the country on the global business map.
With the world in the grip of the worst economic slump since the 1930s, revenue growth from outsourcing -- subcontracting work to a third-party company -- is slowing sharply after years of posting scorching double-digit increases.
"IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen purse strings," Richard Gordon, head of global forecasting at Gartner consultancy, said.
"The full impact of the global recession on the IT services and telecommunications sectors is still emerging," he added in a recent outlook.
Now, the National Association of Software and Service Companies, or Nasscom, India's top outsourcing body, projects the sector's export revenues will rise by just four to seven percent this year to at most 50 billion dollars.
That's down sharply from the 16 percent logged in the last financial year to March and the 30 percent rise the industry clocked annually for most of the decade as the country became a back office to the world.
Nasscom says global companies are showing reluctance to authorise new spending -- even cash that reduce costs by taking advantage of India's cheaper English-speaking educated labour force.
"Worldwide information technology spending growth is expected to come down further in 2009 and 2010," Som Mittal, head of Nasscom, said.
The outsourcing sector has been particularly hard hit by the recession in the United States, which accounts for 60 percent of the Indian industry's revenues.
The industry has made India a top business destination by offering software development and information technology, engineering and design, and business process outsourcing (BPO).
But with the global slump hitting spending, there are fewer credit card transactions and airline tickets to process and lower demand for software design, sales calls, help desks, accounting and legal services.
India's largest software exporter, Tata Consultancy Services (TCS), and other companies forecast a difficult business climate despite announcing better-than-expected quarterly profits. Their profits increased, helped by tight cost management, even though revenue growth slowed.
"Global conditions are weak," TCS chief executive S. Ramadorai said after the results. "Recovery isn't something that's going to happen very soon."
And Amitabh Chaudhry, chief executive of Infosys BPO, in a recent interview admitted the business environment was "much tougher" than in past years.
Technology Partners International, a global sourcing advisory firm, said the international banking, oil and gas, food and drink and other sectors have all slowed their outsourcing.
According to Nasscom, the industry is also facing other challenges such as rising protectionist sentiment -- especially in the United States.
Indian outsourcing companies have already started focusing on the home market to drive growth.
The domestic market is still dwarfed by the export market but it is growing at a much faster pace as India's relatively closed economy has been less hard hit by the global slowdown.
In the last financial year, the outsourcing industry racked up exports of 47 million dollars while the domestic business added another 11.8 billion dollars in revenue.
Domestic outsourcing industry revenues are expected to grow by up to 18 percent this year to reach 14 billion dollars.
The focus "is definitely on the domestic segment and unexplored markets like South America, West Asia and blocks of Europe", said Nasscom's Mittal.
The sector, which accounts for nearly six percent of India's GDP, has played a key role in fuelling the country's new middle class affluence, employing two million people directly and eight million indirectly.
Longer term, the industry is still upbeat about its prospects.
Nasscom and management consultancy firm McKinsey said in a joint report the outsourcing industry could quadruple its revenues to 225 billion dollars by 2020 with the majority coming from exports.
Thursday, August 6, 2009
Cost cutting, Layoffs in India, Recession
With IT jobs virtual, loans are stark reality
Source: EconomicTimes
Five years ago, when 18-year-old Mithilesh proudly announced that software programming was going to be his life’s calling, the only name his father, Ramesh Kumar Sinha, could think of was Bill Gates.
“I had heard he was the richest man in the world. So I thought may be Mithilesh will someday get to work at Microsoft,” says the 53-year-old, who works in his small farm in Madhubhani in north Bihar, a district where every second person is illiterate.
Mithilesh had his own reasons to be a code-jock. In the neighbourhood, he already knew one person who “studied computers” and went on to work in the US. And his was the first house in the village to have that quintessential middle-class accouterment—a flat-screen television.
The lad knew the software industry was the gateway to the middle class and Bangalore the gateway to the software industry. So he zeroed in on an engineering college in India’s tech capital, secured an education loan and enrolled for a BTech course in 2004. He was hoping to join the privileged 2.5 million or so for whom software was a calling and who were the cream of India’s new middle class.
“A job with an IT company was always considered a holy cow and if you did not have this job profile, then you were lower down in the caste ladder,” says Manish Sabharwal, who heads staffing firm TeamLease.
But three years and a downturn later, Mithilesh today faces the prospect of being added to the ranks of the 70,000-odd engineering students unlikely to secure a job this year.
The global economic slowdown and the recession in the software industry’s main market in the US had forced top IT employers such as Infosys, TCS and Wipro to more or less freeze new hiring. Students with offer letters were asked to wait.
“If I had known there would be no demand for fresh engineering graduates by the time I pass my course, I would have taken up chartered accountancy,” says Mithilesh, who now looks to his farmer father to repay the Rs 3.5-lakh loan. Thoughts of flat-screen televisions are furthest from his mind.
With tech companies sneezing, businesses banking on the new entrants to the middle class such as Mithilesh to drive consumption have caught a cold. The economic reforms of the early 1990s and the IT boom of the last decade have been a significant force in the expansion of India’s middle class, estimated to have grown to 300 million people today from 150 million in the late 1980s and early 1990s.
The nouveau middle class created by the software industry drove up demand and created jobs in sectors such as autos, consumer goods, retail, housing and entertainment. They triggered property booms in cities such as Chennai, Hyderabad and Bangalore. Today, commercial and residential rentals in the IT hubs of Chennai and Bangalore have come down by nearly a third.
Those with a severe cold are India’s engineering colleges, which are seeing a steep drop in the demand for courses in information technology. According to S Mohammed Tajudeen, who handles placements at Crescent Engineering College in Chennai, there are 30% fewer applicants for courses in IT while the numbers of those opting for computer science has dropped by a tenth.
The capitation fee that private colleges used to charge for IT-related streams has dropped by over 50% this year, says another placement officer on condition of anonymity.
Mohandas Pai, HR director at Infosys, observes that what the public sector was in the 1970s and the 1980s in terms of job generation, the IT sector became starting late 1990s. Despite the troubles it is facing now, he is confident that employment in the tech industry will be the career of choice for millions of young Indians.
Shiv Visvanathan, a social scientist and senior fellow at Centre for the Study of Developing Societies, New Delhi, says IT is different from others because of its boom and bust cycles. “There are ups and downs that people need to realise,” he says.
While some of Mithilesh’s seniors from college have already taken up low-paying jobs at call centres to pay back their loans, he says he will wait. He hopes his name will figure among the 100,000 professionals that software industry group, Nasscom, says will be added by tech firms by March 2010. India’s software firms hired about a quarter of a million professionals in the year to March 2009.
Abhay Tilak, 21, who graduated in 2008 from an engineering college in Chennai, had a letter offering him a job at software company MindTree in May last year. He is still waiting for the job. To keep the home fires burning he now works at a call center for Rs 6,000 per month.
“The MindTree job will pay better, but more importantly, I can do software coding instead of mindlessly attending calls. This job helps me support my family, but this is not what I did my engineering for,” he says. Mithilesh’s father, however, will not allow him to spend his nights answering calls from across the globe.
Leading IT companies told ET that it may take at least three years more for the industry to get back to the days of mass hiring, especially with TCS, Infosys and Wipro putting in place new delivery models which will allow them to serve more customers with fewer resources.
TeamLease’s Sabharwal says the IT industry is like a pyramid in terms of growth opportunities. “It is either up or out. The path upwards is very narrow and while the industry will continue to mass recruit for the base level, those at the middle level will find it difficult to grow,” he says.
While people like Mithilesh and Abhay cope with the new reality, they face the danger of becoming obsolete in terms of skills when the economy finally recovers. “By the time I get a job, there will be a huge backlog of freshers and people with 3-5 years of experience willing to work for lower pay,” says Mithilesh.
While Mithilesh lets the grass grow under his feet, he is in danger of losing out to people like Abhay, who have at least kept working. “Rather than waiting for your dream job, it is better to take up what opportunity you have,” advises Pratik Kumar, head of HR at Wipro.
Infosys’ Pai is more blunt: “A graduate who passed out this year has higher chances of being employed, especially if the 2008 graduate did not use the one year to keep himself skillfully occupied.”
Five years ago, when 18-year-old Mithilesh proudly announced that software programming was going to be his life’s calling, the only name his father, Ramesh Kumar Sinha, could think of was Bill Gates.
“I had heard he was the richest man in the world. So I thought may be Mithilesh will someday get to work at Microsoft,” says the 53-year-old, who works in his small farm in Madhubhani in north Bihar, a district where every second person is illiterate.
Mithilesh had his own reasons to be a code-jock. In the neighbourhood, he already knew one person who “studied computers” and went on to work in the US. And his was the first house in the village to have that quintessential middle-class accouterment—a flat-screen television.
The lad knew the software industry was the gateway to the middle class and Bangalore the gateway to the software industry. So he zeroed in on an engineering college in India’s tech capital, secured an education loan and enrolled for a BTech course in 2004. He was hoping to join the privileged 2.5 million or so for whom software was a calling and who were the cream of India’s new middle class.
“A job with an IT company was always considered a holy cow and if you did not have this job profile, then you were lower down in the caste ladder,” says Manish Sabharwal, who heads staffing firm TeamLease.
But three years and a downturn later, Mithilesh today faces the prospect of being added to the ranks of the 70,000-odd engineering students unlikely to secure a job this year.
The global economic slowdown and the recession in the software industry’s main market in the US had forced top IT employers such as Infosys, TCS and Wipro to more or less freeze new hiring. Students with offer letters were asked to wait.
“If I had known there would be no demand for fresh engineering graduates by the time I pass my course, I would have taken up chartered accountancy,” says Mithilesh, who now looks to his farmer father to repay the Rs 3.5-lakh loan. Thoughts of flat-screen televisions are furthest from his mind.
With tech companies sneezing, businesses banking on the new entrants to the middle class such as Mithilesh to drive consumption have caught a cold. The economic reforms of the early 1990s and the IT boom of the last decade have been a significant force in the expansion of India’s middle class, estimated to have grown to 300 million people today from 150 million in the late 1980s and early 1990s.
The nouveau middle class created by the software industry drove up demand and created jobs in sectors such as autos, consumer goods, retail, housing and entertainment. They triggered property booms in cities such as Chennai, Hyderabad and Bangalore. Today, commercial and residential rentals in the IT hubs of Chennai and Bangalore have come down by nearly a third.
Those with a severe cold are India’s engineering colleges, which are seeing a steep drop in the demand for courses in information technology. According to S Mohammed Tajudeen, who handles placements at Crescent Engineering College in Chennai, there are 30% fewer applicants for courses in IT while the numbers of those opting for computer science has dropped by a tenth.
The capitation fee that private colleges used to charge for IT-related streams has dropped by over 50% this year, says another placement officer on condition of anonymity.
Mohandas Pai, HR director at Infosys, observes that what the public sector was in the 1970s and the 1980s in terms of job generation, the IT sector became starting late 1990s. Despite the troubles it is facing now, he is confident that employment in the tech industry will be the career of choice for millions of young Indians.
Shiv Visvanathan, a social scientist and senior fellow at Centre for the Study of Developing Societies, New Delhi, says IT is different from others because of its boom and bust cycles. “There are ups and downs that people need to realise,” he says.
While some of Mithilesh’s seniors from college have already taken up low-paying jobs at call centres to pay back their loans, he says he will wait. He hopes his name will figure among the 100,000 professionals that software industry group, Nasscom, says will be added by tech firms by March 2010. India’s software firms hired about a quarter of a million professionals in the year to March 2009.
Abhay Tilak, 21, who graduated in 2008 from an engineering college in Chennai, had a letter offering him a job at software company MindTree in May last year. He is still waiting for the job. To keep the home fires burning he now works at a call center for Rs 6,000 per month.
“The MindTree job will pay better, but more importantly, I can do software coding instead of mindlessly attending calls. This job helps me support my family, but this is not what I did my engineering for,” he says. Mithilesh’s father, however, will not allow him to spend his nights answering calls from across the globe.
Leading IT companies told ET that it may take at least three years more for the industry to get back to the days of mass hiring, especially with TCS, Infosys and Wipro putting in place new delivery models which will allow them to serve more customers with fewer resources.
TeamLease’s Sabharwal says the IT industry is like a pyramid in terms of growth opportunities. “It is either up or out. The path upwards is very narrow and while the industry will continue to mass recruit for the base level, those at the middle level will find it difficult to grow,” he says.
While people like Mithilesh and Abhay cope with the new reality, they face the danger of becoming obsolete in terms of skills when the economy finally recovers. “By the time I get a job, there will be a huge backlog of freshers and people with 3-5 years of experience willing to work for lower pay,” says Mithilesh.
While Mithilesh lets the grass grow under his feet, he is in danger of losing out to people like Abhay, who have at least kept working. “Rather than waiting for your dream job, it is better to take up what opportunity you have,” advises Pratik Kumar, head of HR at Wipro.
Infosys’ Pai is more blunt: “A graduate who passed out this year has higher chances of being employed, especially if the 2008 graduate did not use the one year to keep himself skillfully occupied.”
Recession
Skill enhancement is the mantra in slowdown time
Talk of working oneself to fitness during the lean season. As the slowdown casts a dampening shadow on placements, Keralites have turned en masse to honing their skill sets to be ready to grab the opportunities when the economy turns around.
In a state where placement agencies flourished during the boom time, including several that specialized in overseas placements, the landscape is now dotted with institutes that call themselves training, grooming or finishing schools, offering a variety of courses for skills enhancement.
Later this month, the Kerala Institute of Travel and Tourism Studies (KITTS) will roll out what is perhaps the most ambitious training programme for staffers in the hospitality sector, aiming to help thousands of professionals in the industry lift their soft skills by a few notches.
“We have reached out to about 10,000 hospitality sector employees, across all 14 districts in the state and will be offering them training to improve their skill sets, for a nominal fee”, says KITTS principal B Vijayakumar.
In stark contrast is a private sector venture, TDS, promoted by Pardeep Gopi an IIT and IIM alumnus, which puts trainees through a 2-month course that helps raise the employability of youth who have already completed professional courses.
“Finishing schools generally work on the premise that the youth are well-versed in their subjects and they need only a finishing touch before being placed. We work on the premise that there is a systemic problem and that many youth need to hone up both their subject skills as well as soft skills before they can be placed”, says Mr Gopi.
Mr Gopi’s school charges Rs 20,000 for the 60-day course, and the 20-odd seats for the inaugural batch got filled up in quick time.
Business is just as brisk in government-run grooming schools, too. The Institute of Human Resource Development, for instance, has seen over 60% of its 130-odd students trained at its Model Finishing School get placed at leading corporates across the country.
“We are now proposing to open a second school at Kochi”, says Model Finishing School director VS Arunkumar, adding that there is a good response to its employability enhancement programme that was launched specifically with the economic slowdown in mind.
Some of the grooming schools take their work seriously enough to get trainers from abroad, like the Afras Academy of Business Communication (AABC), initiated by Thiruvanathapuram MP and minister of state for foreign affairs, Shashi Tharoor.
AABC business development manager Shiny Mathai says the institute has trainers from the US and UK, and offers customized training modules in business communication, besides a corporate executive management programme.
In a state where placement agencies flourished during the boom time, including several that specialized in overseas placements, the landscape is now dotted with institutes that call themselves training, grooming or finishing schools, offering a variety of courses for skills enhancement.
Later this month, the Kerala Institute of Travel and Tourism Studies (KITTS) will roll out what is perhaps the most ambitious training programme for staffers in the hospitality sector, aiming to help thousands of professionals in the industry lift their soft skills by a few notches.
“We have reached out to about 10,000 hospitality sector employees, across all 14 districts in the state and will be offering them training to improve their skill sets, for a nominal fee”, says KITTS principal B Vijayakumar.
In stark contrast is a private sector venture, TDS, promoted by Pardeep Gopi an IIT and IIM alumnus, which puts trainees through a 2-month course that helps raise the employability of youth who have already completed professional courses.
“Finishing schools generally work on the premise that the youth are well-versed in their subjects and they need only a finishing touch before being placed. We work on the premise that there is a systemic problem and that many youth need to hone up both their subject skills as well as soft skills before they can be placed”, says Mr Gopi.
Mr Gopi’s school charges Rs 20,000 for the 60-day course, and the 20-odd seats for the inaugural batch got filled up in quick time.
Business is just as brisk in government-run grooming schools, too. The Institute of Human Resource Development, for instance, has seen over 60% of its 130-odd students trained at its Model Finishing School get placed at leading corporates across the country.
“We are now proposing to open a second school at Kochi”, says Model Finishing School director VS Arunkumar, adding that there is a good response to its employability enhancement programme that was launched specifically with the economic slowdown in mind.
Some of the grooming schools take their work seriously enough to get trainers from abroad, like the Afras Academy of Business Communication (AABC), initiated by Thiruvanathapuram MP and minister of state for foreign affairs, Shashi Tharoor.
AABC business development manager Shiny Mathai says the institute has trainers from the US and UK, and offers customized training modules in business communication, besides a corporate executive management programme.
Wednesday, August 5, 2009
Recession
Seagate to lay off 2,000 in Singapore
Hard disk maker Seagate Technologies said it will lay off 2,000 workers in Singapore as it shifts its manufacturing facilities from the city-state.
The move follows a slide in electronics exports from Singapore this year due to weaker consumer demand in the economic downturn.
“We are moving our hard disk operation at Ang Mo Kio (in Singapore) to other Seagate sites in other countries,” company spokesperson Lotus Tan said, but did not provide further details. She said Seagate employed a total of 8,000 workers in Singapore and would keep Seagate’s Asia headquarters, media operation as well as a product development and design centre.
Singapore’s overall unemployment rate stood at 3.3 per cent in the second quarter, but the number of people employed in Singapore fell by 12,400 in April-June, twice as much as in the first quarter.
Seagate said in a statement its affected employees will be offered severance packages. It said the majority of Seagate’s disk-drive manufacturing were spread across Thailand, China and Malaysia.
Tuesday’s announcement came after Seagate said in May it had initiated a restructuring plan that included a reduction of about 1,100 employees.
The move follows a slide in electronics exports from Singapore this year due to weaker consumer demand in the economic downturn.
“We are moving our hard disk operation at Ang Mo Kio (in Singapore) to other Seagate sites in other countries,” company spokesperson Lotus Tan said, but did not provide further details. She said Seagate employed a total of 8,000 workers in Singapore and would keep Seagate’s Asia headquarters, media operation as well as a product development and design centre.
Singapore’s overall unemployment rate stood at 3.3 per cent in the second quarter, but the number of people employed in Singapore fell by 12,400 in April-June, twice as much as in the first quarter.
Seagate said in a statement its affected employees will be offered severance packages. It said the majority of Seagate’s disk-drive manufacturing were spread across Thailand, China and Malaysia.
Tuesday’s announcement came after Seagate said in May it had initiated a restructuring plan that included a reduction of about 1,100 employees.
Outsourcing, Recession
Downturn Boosts British Outsourcing
To cut costs during the recession, U.K. companies are shuffling more IT and business process work to outsourcers at home and abroad
UK companies are stepping up their outsourcing to cut costs during the recession. Last year British businesses spent 12 per cent more on IT outsourcing and six per cent more on business process outsourcing than they did in 2007, according to a report by the National Outsourcing Association.
Commenting on the report, published yesterday, NOA chairman Martyn Hart said in a statement: "Outsourcing has traditionally been seen as a cost saving mechanism for business, so in times of economic turbulence it is not surprising that the industry is continuing to grow."
The uptake in new contracts was echoed by a separate study by Pierre Audoin Consultants, which found that software and IT services revenues from the UK in 2008 had increased by three per cent over 2007. Unfortunately when the fall in the value of the pound was taken into account it worked out as an 11 per cent fall in revenues.
Nearly 20 per cent of the 50 outsourcing suppliers surveyed by the NOA said the length of contracts had decreased over the last 12 months, while 70 per cent said the average value of contracts had stayed the same.
Hart expressed concern that increased demand for quick-win cost cutting projects could increase the number of "higher volume low cost contracts, over shorter time frames" which he said were more likely to fail.
The main source of revenue for 40 per cent of suppliers was expanding business with existing clients.
Looking ahead 40 per cent of outsourcing vendors told the NOA that they were more confident in the market place then they were in 2008.
Source: NationalOutsourcingAssociation
UK companies are stepping up their outsourcing to cut costs during the recession. Last year British businesses spent 12 per cent more on IT outsourcing and six per cent more on business process outsourcing than they did in 2007, according to a report by the National Outsourcing Association.
Commenting on the report, published yesterday, NOA chairman Martyn Hart said in a statement: "Outsourcing has traditionally been seen as a cost saving mechanism for business, so in times of economic turbulence it is not surprising that the industry is continuing to grow."
The uptake in new contracts was echoed by a separate study by Pierre Audoin Consultants, which found that software and IT services revenues from the UK in 2008 had increased by three per cent over 2007. Unfortunately when the fall in the value of the pound was taken into account it worked out as an 11 per cent fall in revenues.
Nearly 20 per cent of the 50 outsourcing suppliers surveyed by the NOA said the length of contracts had decreased over the last 12 months, while 70 per cent said the average value of contracts had stayed the same.
Hart expressed concern that increased demand for quick-win cost cutting projects could increase the number of "higher volume low cost contracts, over shorter time frames" which he said were more likely to fail.
The main source of revenue for 40 per cent of suppliers was expanding business with existing clients.
Looking ahead 40 per cent of outsourcing vendors told the NOA that they were more confident in the market place then they were in 2008.
Source: NationalOutsourcingAssociation
Layoffs in USA, Recession
Years after layoffs, many still struggle to match old salaries
Chuck Dettman said he had not really considered the notion back in 2001 that he and his friends in a job-search support group would never recover from being laid off.
The country was in a recession then, as now, and the professionals who had just lost their jobs met weekly at a local job center to network and trade advice. Despite the national economic problems, they remained confident that they would not only find work but would also be compensated as they had been in the past.
Eight years later, however, most of the people who formed the core of Dettman’s group have not made it back to their old income levels, even if they eventually landed jobs.
"I think there’s maybe only one or two that have been successful in making what they did then," Dettman said.
Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the 5.9 million people who have lost their jobs in the current recession.
"On average, most workers do not recover their old annual earnings," said Till von Wachter, an economics professor at Columbia University, who recently completed a paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s.
Wachter studied workers who had been with their companies at least three years, then lost their jobs when their employers reduced their work forces by at least 30 percent. He found that even 15 to 20 years later, most on average had not returned to their old wage levels. He also concluded that their earnings were about 15 percent to 20 percent less than they would have been had they not been laid off.
One of the main reasons for the drop-offs, according to economists, is that workers who endure a layoff are more likely to be laid off again.
"What tends to happen is the worker has to start over with a new employer, sometimes in a new industry," said Ann Huff Stevens, an economics professor at the University of California, Davis. "You’re at the bottom of the totem pole again."
(Although some unqualified workers are undoubtedly laid off, Wachter said he tried to correct for that possibility in his study. He focused on large-scale layoffs to ensure he was following mostly workers who lost their jobs through no fault of their own.)
The largest wage losses are typically for workers who had long tenures at their previous companies. The stability often allows them to build up skills specific to their employers or their industries and to accrue corresponding wage increases, but those skills can be worth less to other companies.
Older workers’ wages usually slide more than those of younger workers. Those with college degrees do slightly better than those without.
The networking group that Dettman helped form in 2001 was initially made up mostly of former colleagues of his from Pratt & Whitney, the jet engine maker, which laid off hundreds of workers at the end of 2000 in a restructuring. The group members were all in their 40s and 50s.
Interviews with seven early members of the group found that many had been forced to drastically change their lifestyles to cope with lower incomes. Several have struggled with long bouts of unemployment. Some were laid off several times. Many have been forced to lean heavily on spouses’ incomes.
Dettman, who was a business analyst and earned just more than $50,000 after nearly 20 years with Pratt, spent almost four years looking for work, exhausting his savings and his 401(k). He finally took a job as the chief financial officer of a drug and alcohol detox clinic run by his daughter and his son-in-law, getting paid three-quarters of what he used to make, without benefits. He quit two years ago to start his own Christian counseling service but has yet to draw a paycheck.
Jim Clark, 60, a former engineering assistant at Pratt who made about $49,000 a year, went back to school to earn a bachelor’s degree in organizational management but has still not found full-time paid employment. He now scrapes together about $20,000 a year as a cantor at his Roman Catholic parish on Sundays and by singing at weddings and funerals.
The only former group member interviewed who is now earning more than she did before is Karen Carron, a 19-year Pratt veteran and computer programmer. Carron, 49, who has a master’s degree in computer science, made about $69,000 a year as part of a team producing software for the F-35 Lightning II fighter jet.
About a year-and-a-half after being laid off, she found herself doing almost exactly what she had done before, only this time for a Pratt contractor. She now earns $80,000 a year.
Carron said she was not familiar with other programming languages that are more broadly used, so she was lucky to have found a job working on the same project. Otherwise, she said, she would almost certainly have had to take a pay cut.
In contrast, others in the group who managed to land steady paychecks have had to struggle to get back on track.
David Himmelheber, 58, worked more than 20 years at Pratt in the graphics department, earning about $54,000 a year at the end. He was one of the first members of the group to find a job, but it was in an entirely new field, as a business liaison for a vocational school, making about half his old salary. He eventually moved to teaching social studies at the school and now makes about $40,000 a year. He also found work as an adjunct professor at a local college. The two teaching assignments combined, however, bring in less than what he used to make at Pratt.
Bill Sankey, 62, a computer programmer, earned about $55,000 a year for a company that owned Pizza Hut franchises, before being laid off in 2001 when the company was sold. Since then, Sankey has been hired and laid off twice. At one point, he was making more than he did before his 2001 layoff. At his latest job, he is back to making about the same, though with inflation factored in, he is probably making less.
"I really haven’t progressed anywhere financially in eight years," he said.
The country was in a recession then, as now, and the professionals who had just lost their jobs met weekly at a local job center to network and trade advice. Despite the national economic problems, they remained confident that they would not only find work but would also be compensated as they had been in the past.
Eight years later, however, most of the people who formed the core of Dettman’s group have not made it back to their old income levels, even if they eventually landed jobs.
"I think there’s maybe only one or two that have been successful in making what they did then," Dettman said.
Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the 5.9 million people who have lost their jobs in the current recession.
"On average, most workers do not recover their old annual earnings," said Till von Wachter, an economics professor at Columbia University, who recently completed a paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s.
Wachter studied workers who had been with their companies at least three years, then lost their jobs when their employers reduced their work forces by at least 30 percent. He found that even 15 to 20 years later, most on average had not returned to their old wage levels. He also concluded that their earnings were about 15 percent to 20 percent less than they would have been had they not been laid off.
One of the main reasons for the drop-offs, according to economists, is that workers who endure a layoff are more likely to be laid off again.
"What tends to happen is the worker has to start over with a new employer, sometimes in a new industry," said Ann Huff Stevens, an economics professor at the University of California, Davis. "You’re at the bottom of the totem pole again."
(Although some unqualified workers are undoubtedly laid off, Wachter said he tried to correct for that possibility in his study. He focused on large-scale layoffs to ensure he was following mostly workers who lost their jobs through no fault of their own.)
The largest wage losses are typically for workers who had long tenures at their previous companies. The stability often allows them to build up skills specific to their employers or their industries and to accrue corresponding wage increases, but those skills can be worth less to other companies.
Older workers’ wages usually slide more than those of younger workers. Those with college degrees do slightly better than those without.
The networking group that Dettman helped form in 2001 was initially made up mostly of former colleagues of his from Pratt & Whitney, the jet engine maker, which laid off hundreds of workers at the end of 2000 in a restructuring. The group members were all in their 40s and 50s.
Interviews with seven early members of the group found that many had been forced to drastically change their lifestyles to cope with lower incomes. Several have struggled with long bouts of unemployment. Some were laid off several times. Many have been forced to lean heavily on spouses’ incomes.
Dettman, who was a business analyst and earned just more than $50,000 after nearly 20 years with Pratt, spent almost four years looking for work, exhausting his savings and his 401(k). He finally took a job as the chief financial officer of a drug and alcohol detox clinic run by his daughter and his son-in-law, getting paid three-quarters of what he used to make, without benefits. He quit two years ago to start his own Christian counseling service but has yet to draw a paycheck.
Jim Clark, 60, a former engineering assistant at Pratt who made about $49,000 a year, went back to school to earn a bachelor’s degree in organizational management but has still not found full-time paid employment. He now scrapes together about $20,000 a year as a cantor at his Roman Catholic parish on Sundays and by singing at weddings and funerals.
The only former group member interviewed who is now earning more than she did before is Karen Carron, a 19-year Pratt veteran and computer programmer. Carron, 49, who has a master’s degree in computer science, made about $69,000 a year as part of a team producing software for the F-35 Lightning II fighter jet.
About a year-and-a-half after being laid off, she found herself doing almost exactly what she had done before, only this time for a Pratt contractor. She now earns $80,000 a year.
Carron said she was not familiar with other programming languages that are more broadly used, so she was lucky to have found a job working on the same project. Otherwise, she said, she would almost certainly have had to take a pay cut.
In contrast, others in the group who managed to land steady paychecks have had to struggle to get back on track.
David Himmelheber, 58, worked more than 20 years at Pratt in the graphics department, earning about $54,000 a year at the end. He was one of the first members of the group to find a job, but it was in an entirely new field, as a business liaison for a vocational school, making about half his old salary. He eventually moved to teaching social studies at the school and now makes about $40,000 a year. He also found work as an adjunct professor at a local college. The two teaching assignments combined, however, bring in less than what he used to make at Pratt.
Bill Sankey, 62, a computer programmer, earned about $55,000 a year for a company that owned Pizza Hut franchises, before being laid off in 2001 when the company was sold. Since then, Sankey has been hired and laid off twice. At one point, he was making more than he did before his 2001 layoff. At his latest job, he is back to making about the same, though with inflation factored in, he is probably making less.
"I really haven’t progressed anywhere financially in eight years," he said.
Monday, August 3, 2009
Recession
US recession 'seems to be ending'; Recovery to be gradual: IMF
The sharp fall in the economic output of the world's largest economy, the United States seems to be ending but the recovery is likely to be gradual as there are still some financial strains, the International Monetary Fund has said.
IMF in its annual report on the US said: "As a result of their increasingly strong and comprehensive policy measures, the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened."
IMF has projected the real GDP for the United States for 2009 at negative 2.6 per cent, and for the year 2010, it would improve significantly and was pegged at 0.8 per cent.
However, as some financial strains are still round the corner, the recovery is likely to be gradual. "With financial strains still elevated, the recovery is likely to be gradual, and risks are tilted to the downside," the IMF report said.
The prospect in the job market however remains weak as the unemployment rate for United States is on an uptrend. The unemployment rate for US which was as low as 5.5 per cent in 2004 is likely to touch 9.3 per cent in 2009 and would further deteriorate to 10.1 per cent in the year 2010, IMF added.
As per the IMF executive board assessment, policies under the Financial Stability Plan like-- stress tests, debt guarantees, and capital injections-- have contributed to a significant improvement in financial conditions.
IMF in its annual report on the US said: "As a result of their increasingly strong and comprehensive policy measures, the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened."
IMF has projected the real GDP for the United States for 2009 at negative 2.6 per cent, and for the year 2010, it would improve significantly and was pegged at 0.8 per cent.
However, as some financial strains are still round the corner, the recovery is likely to be gradual. "With financial strains still elevated, the recovery is likely to be gradual, and risks are tilted to the downside," the IMF report said.
The prospect in the job market however remains weak as the unemployment rate for United States is on an uptrend. The unemployment rate for US which was as low as 5.5 per cent in 2004 is likely to touch 9.3 per cent in 2009 and would further deteriorate to 10.1 per cent in the year 2010, IMF added.
As per the IMF executive board assessment, policies under the Financial Stability Plan like-- stress tests, debt guarantees, and capital injections-- have contributed to a significant improvement in financial conditions.
Saturday, August 1, 2009
IT market, Recession
Virtusa's revenue drops by 12 percent
Kris Canekeratne founded Virtusa Corporation, a global IT services company has announced that its revenue for the first quarter of fiscal 2010 dropped by 12 percent year-on-year to reach $37.4 million, which was down 10 percent sequentially. Virtusa reported income from operations of $3.1 million for the first quarter of fiscal 2010, compared to $11,000 for the first quarter of fiscal 2009 and $3.9 million for the fourth quarter of fiscal 2009.
Canekeratne, the company's Chairman and CEO, stated, "Even in a challenging business environment, we started work with six new clients during the June quarter, continued to execute well against newer client expansion programs, and efficiently managed operations." The Company ended the first quarter of fiscal 2010 with $116.7 million of cash, cash equivalents, short-term investments and long-term investments. The Company generated cash from operations of $4.1 million during the first quarter of fiscal 2010.
According to the company, the second quarter 2010 revenue is expected to be in the range of $36.4 to $37.8 million, with diluted earnings per share (EPS) of $0.08 to $0.11. For fiscal year 2010, the company expects the revenue to be in the range of $154 to $162 million, with diluted EPS of $0.46 to $0.56.
Canekeratne, the company's Chairman and CEO, stated, "Even in a challenging business environment, we started work with six new clients during the June quarter, continued to execute well against newer client expansion programs, and efficiently managed operations." The Company ended the first quarter of fiscal 2010 with $116.7 million of cash, cash equivalents, short-term investments and long-term investments. The Company generated cash from operations of $4.1 million during the first quarter of fiscal 2010.
According to the company, the second quarter 2010 revenue is expected to be in the range of $36.4 to $37.8 million, with diluted earnings per share (EPS) of $0.08 to $0.11. For fiscal year 2010, the company expects the revenue to be in the range of $154 to $162 million, with diluted EPS of $0.46 to $0.56.
Friday, July 31, 2009
Layoffs in USA, Recession
US jobless claims edge up last week
The number of US workers filing new claims for unemployment benefits rose slightly more than expected last week, but the number of workers staying on jobless roles fell to the lowest in three months, government data showed on Thursday.
Initial claims for state unemployment insurance benefits rose 25,000 to a seasonally adjusted 584,000 in the week ended July 25, the Labor Department said, a touch above market expectations for a reading of 570,000.
However, the four-week moving average for new claims, considered to be a better gauge of underlying trends as it irons out week-to-week volatility, fell by 8,250 to 559,000. This was the lowest level since late January.
The weekly moving average has declined for five straight weeks. A Labor Department official said the trend in claims was now backing to where it would have been without July distortions caused by the timing of auto plant shutdowns.
US stock index futures extended gains on the data which bolstered views that the recession was starting to ebb. US government bond prices fell, while the dollar gained versus the yen.
"The headline number in the jobless claims report was slightly worse than expected, but the continuing claims component was getting better so that bodes well for the US economy going forward," said Matthew Strauss, senior currency strategist at RBC Capital in Toronto.
Continuing claims -- the number of people staying on the benefit rolls after collecting an initial week of aid -- fell by 54,000 to 6.20 million in the week ended July 18, the latest week for which the data is available.
This was the lowest since early April and marked the third straight week that this measure had declined.
Recent data, including home sales and prices, have added to growing optimism the recession is ending, but high unemployment continues to weigh on consumer sentiment, meaning that the economy's recovery will be feeble.
Analysts have been closely monitoring initial jobless claims for signs of stability in the labor market, which has been hard hit by the 19-month old recession.
The insured unemployment rate, which measures the per centage of the insured labor force who are jobless, was unchanged at 4.7 per cent.
Initial claims for state unemployment insurance benefits rose 25,000 to a seasonally adjusted 584,000 in the week ended July 25, the Labor Department said, a touch above market expectations for a reading of 570,000.
However, the four-week moving average for new claims, considered to be a better gauge of underlying trends as it irons out week-to-week volatility, fell by 8,250 to 559,000. This was the lowest level since late January.
The weekly moving average has declined for five straight weeks. A Labor Department official said the trend in claims was now backing to where it would have been without July distortions caused by the timing of auto plant shutdowns.
US stock index futures extended gains on the data which bolstered views that the recession was starting to ebb. US government bond prices fell, while the dollar gained versus the yen.
"The headline number in the jobless claims report was slightly worse than expected, but the continuing claims component was getting better so that bodes well for the US economy going forward," said Matthew Strauss, senior currency strategist at RBC Capital in Toronto.
Continuing claims -- the number of people staying on the benefit rolls after collecting an initial week of aid -- fell by 54,000 to 6.20 million in the week ended July 18, the latest week for which the data is available.
This was the lowest since early April and marked the third straight week that this measure had declined.
Recent data, including home sales and prices, have added to growing optimism the recession is ending, but high unemployment continues to weigh on consumer sentiment, meaning that the economy's recovery will be feeble.
Analysts have been closely monitoring initial jobless claims for signs of stability in the labor market, which has been hard hit by the 19-month old recession.
The insured unemployment rate, which measures the per centage of the insured labor force who are jobless, was unchanged at 4.7 per cent.
IT market, Recession
Capgemini cuts sales target
Capgemini SA cut its 2009 sales outlook on Thursday, saying it was unsure signs that activity might be stabilising in some regions would translate into a full-blown recovery for the battered technology sector.
But its shares jumped 8 percent as investors focused on solid first-half bookings, notably in outsourcing, good cash levels and a profitability goal in-line with market expectations. Europe's largest computer consultancy told investors it would strive to limit the decline in operating margin this year to around 7 percent of sales thanks to tighter cost control. This was roughly in line with a market consensus that the French group and analysts say is at 6.9 percent for operating margin, and compares to the 8.5 percent achieved in 2009.
"We're a bit more cautious than others. The second quarter was a bit tougher than we expected," Chief Executive Paul Hermelin told a conference call. "There are signs activity is stabilising in North America and sectors such as financials are improving but we can't say these recovery signs are widespread."
Capgemini plans to hold onto its 576 million euro cash pile in the tough current economic times and resume big acquisitions only once trading activity has stabilised, Hermelin said. Capgemini, which competes for IT budgets with US giant Accenture and France's Atos Origin, now expects like-for-like 2009 sales to slip 3 to 4 percent, after they fell 2.2 percent in the first half.
It had previously forecast a sales drop of around 2 percent. Capgemini's cautious tone contrasted with SAP, the world's biggest maker of business management software, which lifted its operating margin goal on Wednesday, giving Europe's battered technology sector a glimmer of hope. Overall, Capgemini sales were expected to decline by between 4 percent and 6 percent in the second half 2009.
"Our teams feel that 2010 should a be a bit better," Hermelin said when asked about sales prospects for next year, giving no further details.
Solid bookings, cash
Capgemini shares opened down 2.5 percent but by 0925 GMT the stock was 8.4 percent higher at 31.25 euros as investors focused on what analysts deemed relatively resilient first-half results.
"Strong first-half earnings offset the slight erosion in the top-line perspective for the second half," one trader said. "Capgemini remains the best-positioned company within Europe with the most evolved global delivery model," Credit Suisse said, also pointing at "solid" first-half bookings of 4.433 billion, driven by a 35 percent jump in outsourcing.
Capgemini's half-year operating profit fell to 167 million euros from 288 million, hit notably by a 102 million euros restructuring charge. The group still forecasts restructuring charges of 220 million euros for full year but plans to curtail these charges to below 100 million euros in 2010.
Revenue reached 4.38 billion euros, with consulting taking the biggest hit, down 13.4 percent. The closely-watched operating margin fell to 6.6 percent from 7.6 percent a year ago. Analysts polled by Reuters had expected first-half sales of 4.39 billion euros and an operating margin of 6.5 percent.
But its shares jumped 8 percent as investors focused on solid first-half bookings, notably in outsourcing, good cash levels and a profitability goal in-line with market expectations. Europe's largest computer consultancy told investors it would strive to limit the decline in operating margin this year to around 7 percent of sales thanks to tighter cost control. This was roughly in line with a market consensus that the French group and analysts say is at 6.9 percent for operating margin, and compares to the 8.5 percent achieved in 2009.
"We're a bit more cautious than others. The second quarter was a bit tougher than we expected," Chief Executive Paul Hermelin told a conference call. "There are signs activity is stabilising in North America and sectors such as financials are improving but we can't say these recovery signs are widespread."
Capgemini plans to hold onto its 576 million euro cash pile in the tough current economic times and resume big acquisitions only once trading activity has stabilised, Hermelin said. Capgemini, which competes for IT budgets with US giant Accenture and France's Atos Origin, now expects like-for-like 2009 sales to slip 3 to 4 percent, after they fell 2.2 percent in the first half.
It had previously forecast a sales drop of around 2 percent. Capgemini's cautious tone contrasted with SAP, the world's biggest maker of business management software, which lifted its operating margin goal on Wednesday, giving Europe's battered technology sector a glimmer of hope. Overall, Capgemini sales were expected to decline by between 4 percent and 6 percent in the second half 2009.
"Our teams feel that 2010 should a be a bit better," Hermelin said when asked about sales prospects for next year, giving no further details.
Solid bookings, cash
Capgemini shares opened down 2.5 percent but by 0925 GMT the stock was 8.4 percent higher at 31.25 euros as investors focused on what analysts deemed relatively resilient first-half results.
"Strong first-half earnings offset the slight erosion in the top-line perspective for the second half," one trader said. "Capgemini remains the best-positioned company within Europe with the most evolved global delivery model," Credit Suisse said, also pointing at "solid" first-half bookings of 4.433 billion, driven by a 35 percent jump in outsourcing.
Capgemini's half-year operating profit fell to 167 million euros from 288 million, hit notably by a 102 million euros restructuring charge. The group still forecasts restructuring charges of 220 million euros for full year but plans to curtail these charges to below 100 million euros in 2010.
Revenue reached 4.38 billion euros, with consulting taking the biggest hit, down 13.4 percent. The closely-watched operating margin fell to 6.6 percent from 7.6 percent a year ago. Analysts polled by Reuters had expected first-half sales of 4.39 billion euros and an operating margin of 6.5 percent.
Thursday, July 30, 2009
Recession
Banks to recover dues from your salary
In their constant pursuit of recovering dues from credit card customers, banks are empowering themselves with a tool that allows them to ask employers to deduct the outstanding amount from the salary.
ICICI (Industrial Credit and Investment Corporation of India) bank, recently amended the 'terms and conditions' for its credit card holders by including a clause that empowers the employers to recover credit card dues from employees, who have defaulted on payment. The amended 'terms and conditions' say that "no law or contract" governing either the card holder or employers prevents the bank from seeking such deduction and subsequent payment by the employer to the bank.
On the new move, ICICI's spokesman said, "This clause is applicable only for customers, who default on their credit card payments. Prior notice has already been sent to all our customers to make them aware of this clause." The deductions from the employee's salary will be made until the card issuing bank recovers entire amount due on the card. All deductions made will be remitted to the beneficiary bank.
Besides, as per the new clause, it would be the bank which would decide upon the quantum of the deduction. The revised credit card terms and conditions, after incorporating the new clause, have come into effect from July 23, 2009.
ICICI (Industrial Credit and Investment Corporation of India) bank, recently amended the 'terms and conditions' for its credit card holders by including a clause that empowers the employers to recover credit card dues from employees, who have defaulted on payment. The amended 'terms and conditions' say that "no law or contract" governing either the card holder or employers prevents the bank from seeking such deduction and subsequent payment by the employer to the bank.
On the new move, ICICI's spokesman said, "This clause is applicable only for customers, who default on their credit card payments. Prior notice has already been sent to all our customers to make them aware of this clause." The deductions from the employee's salary will be made until the card issuing bank recovers entire amount due on the card. All deductions made will be remitted to the beneficiary bank.
Besides, as per the new clause, it would be the bank which would decide upon the quantum of the deduction. The revised credit card terms and conditions, after incorporating the new clause, have come into effect from July 23, 2009.
Wednesday, July 29, 2009
IT market, new openings, Recession
Less campus recruitment at IITs, IIMs by MNCs this year: Govt
The number of students recruited by Multi National Companies (MNCs) through campus selection has gone down significantly in prestigious IITs and IIMs this year.
According to a written reply by HRD Minister Kapil Sibal in the Rajya Sabha today, a total of 3,031 students from seven IITs were recruited by MNCs through campus selection in 2008. However, the number has come down to 1,606 this year.
While 643 students were recruited from IIT Kharagpur, the number plummeted to 44 this year. Last year, 593 students were selected from IIT Bombay. But only 381 students of the institute have been selected by MNCs this year, according to the data furnished in the reply.
While 633 students from IIT Delhi were recruited by MNCs last year, the number came down to 390 this year.
The picture is no different in case of IIMs. While 920 students from six IIMs got recruited by MNCs in 2008, the number of such students this year was 497.
Against 155 students recruited from IIM Ahmedabad last year, 92 were recruited this year. The number of such students from IIM Bangalore came down from 203 in 2008 to 119 this year. While 240 students were recruited from IIM Kolkata in 2008, the number was pegged at 121 this year.
However, recruitment of students from these institutes by Indian Public Sector Companies has marginally increased during this period.
According to a written reply by HRD Minister Kapil Sibal in the Rajya Sabha today, a total of 3,031 students from seven IITs were recruited by MNCs through campus selection in 2008. However, the number has come down to 1,606 this year.
While 643 students were recruited from IIT Kharagpur, the number plummeted to 44 this year. Last year, 593 students were selected from IIT Bombay. But only 381 students of the institute have been selected by MNCs this year, according to the data furnished in the reply.
While 633 students from IIT Delhi were recruited by MNCs last year, the number came down to 390 this year.
The picture is no different in case of IIMs. While 920 students from six IIMs got recruited by MNCs in 2008, the number of such students this year was 497.
Against 155 students recruited from IIM Ahmedabad last year, 92 were recruited this year. The number of such students from IIM Bangalore came down from 203 in 2008 to 119 this year. While 240 students were recruited from IIM Kolkata in 2008, the number was pegged at 121 this year.
However, recruitment of students from these institutes by Indian Public Sector Companies has marginally increased during this period.
Infosys, IT market, Recession
Recession-hit IT industry to recover by mid-2010: Infosys
The recession hit IT industry would show positive signs of recovery by mid-2010 and Infosys will diversify into new markets then, a top company official said here on Tuesday.
On economic slowdown Infosys Chief Executive and Managing Director Kris Gopalakrishnan told reporters, "It is better to wait and understand that the recovery is real and will sustain. The developed countries have higher GDPs, so they will have a significant impact on recovery."
Infosys is looking at new markets like China, Middle East, South America and Latin America with a host of new services.
"We have launched various new services like software as a service platform for BPO industry. The opportunities which we are looking into are in health care, utility services, government and public sector. There are opportunities in each one of them", he said.
Gopalakrishnan was here to participate in the sixth edition of HR-summit 2009, organised by NASSCOM.
On RBI's review projecting a 6.5 economic growth, he said, "I believe especially for India, growth (is) coming back. India has not been much affected (due to the meltdown)".
He said despite the country's growth rate coming down from 8-9 per cent to 5-6 per cent now, it (growth) was starting to pick up, which is a good sign for India. "This will also be a signal to other countries to start seeing some recovery."
He said Infosys was also ready for acquisition across various geographies. "We are open for geographical acquisitions as well as service based acquisitions. The key is, it should happen at the right place at right time."
On economic slowdown Infosys Chief Executive and Managing Director Kris Gopalakrishnan told reporters, "It is better to wait and understand that the recovery is real and will sustain. The developed countries have higher GDPs, so they will have a significant impact on recovery."
Infosys is looking at new markets like China, Middle East, South America and Latin America with a host of new services.
"We have launched various new services like software as a service platform for BPO industry. The opportunities which we are looking into are in health care, utility services, government and public sector. There are opportunities in each one of them", he said.
Gopalakrishnan was here to participate in the sixth edition of HR-summit 2009, organised by NASSCOM.
On RBI's review projecting a 6.5 economic growth, he said, "I believe especially for India, growth (is) coming back. India has not been much affected (due to the meltdown)".
He said despite the country's growth rate coming down from 8-9 per cent to 5-6 per cent now, it (growth) was starting to pick up, which is a good sign for India. "This will also be a signal to other countries to start seeing some recovery."
He said Infosys was also ready for acquisition across various geographies. "We are open for geographical acquisitions as well as service based acquisitions. The key is, it should happen at the right place at right time."
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