Retrenchment of employees is the least likely cost-cutting tool for Indian companies, compared to their global peers, and they would be the first across the world to recommence regular salary revisions, a new survey said today.
According to the joint survey by global consultancy service provider Mercer and industry body CII, Indian companies were also increasingly using "innovative" incentive tools as a substitute for salary hikes to retain the talent, but were also cutting on employee mobility and travel to cut HR costs.
"Indian companies (are) least likely to consider retrenchment as a means to cut costs compared with (its) global counterparts," the survey said.
The survey explored the implications of the current global economic situation on talent management, compensation, benefits as well as on employee concerns and the HR functions.
It further said that war for skilled talent in India is set to make a comeback towards end of 2009.
In such unprecedented times Indian companies have been resilient, Mercer Consulting India Managing Director Ravichandar R Padma said adding that most Indian companies have managed to turn the downturn into an opportunity.
Most of the companies worldwide are resorting to job cuts as part of their efforts to bring down cost.
Friday, July 31, 2009
IT market
Patni eyeing acquisitions in Europe
Software firm Patni Computer will seek acquisitions in Europe and the Asia-Pacific to help lower its dependance on the US, an official said on Thursday, boosting shares to its highest since November 2007.
The company will look at targets in the range of $50 million-$200 million, Chief Financial Officer Surjeet Singh told Reuters in an interview over the telephone.
"Having done the portfolio gap analysis now, we are also acquisitive as a firm. So, therefore, you will see inorganic activity as well," Singh said after the New York-listed Patni Computer Systems Ltd reported June-quarter results. "M&A (mergers and acquisitions) has always been a strong agenda. It is (a) much more strong agenda now and on all the dimensions ...to strengthen verticals, enhance scale of service lines and expand geographies."
The company had $350 million in cash, which would be used to fund the acquistions, he added. "If it is a good acquisition, I don't think size will be a barrier. We will go for it," he said. On the news, the shares extended gains to hit a near 20-month high of 344.35 rupees, up 18.3 percent, before easing to 333.10 rupees, up 14.4 percent at 1:32 pm. The acquisitions should enable Patni to raise, in 2-3 years, the revenue share of Europe to about 30 percent from 15-17 percent last year and that of Asia-Pacific to 10 percent from 5.6 percent, he added. Last year, Patni derived about three-fourths of its revenue from the United States.
The company will look at targets in the range of $50 million-$200 million, Chief Financial Officer Surjeet Singh told Reuters in an interview over the telephone.
"Having done the portfolio gap analysis now, we are also acquisitive as a firm. So, therefore, you will see inorganic activity as well," Singh said after the New York-listed Patni Computer Systems Ltd reported June-quarter results. "M&A (mergers and acquisitions) has always been a strong agenda. It is (a) much more strong agenda now and on all the dimensions ...to strengthen verticals, enhance scale of service lines and expand geographies."
The company had $350 million in cash, which would be used to fund the acquistions, he added. "If it is a good acquisition, I don't think size will be a barrier. We will go for it," he said. On the news, the shares extended gains to hit a near 20-month high of 344.35 rupees, up 18.3 percent, before easing to 333.10 rupees, up 14.4 percent at 1:32 pm. The acquisitions should enable Patni to raise, in 2-3 years, the revenue share of Europe to about 30 percent from 15-17 percent last year and that of Asia-Pacific to 10 percent from 5.6 percent, he added. Last year, Patni derived about three-fourths of its revenue from the United States.
IT market
Syntel net income up to 44 percent YOY
Bharat Desai founded Syntel posted quarterly results that beat estimates as more clients turned to its services with a view to cut costs, and the company raised its full-year profit view, sending its shares soaring to a new 52-week high. Syntel's total revenue for the second quarter increased four percent to $100.1 million (Rs.481 crore), compared to $96.4 million (Rs.464 crore) in the first quarter of 2009.
Net income of the company was $25.1 million (Rs.121 crore) or $0.61 per diluted share, compared to $17.4 million (Rs.84 crore) or $0.42 per diluted share in the prior-year period.
During the second quarter, Syntel added three new clients and two new 'Hunting Licenses' or preferred partnership agreements, bringing the total number to 96 strategic relationships. The company has invested close to $37 million (Rs.185 crore) in 2008 and has planned to invest approximately $25 million (Rs.120 crore) in 2009 as it makes progress on construction of its special economic zone (SEZ) campuses in Pune and Chennai.
The company stated in its quarterly report that pricing in the second quarter was flat relative to the first quarter, and expects pricing to remain stable through the balance of the year. However, Keshav R Murugesh, CEO and President, Syntel said, "While the second quarter did bring some positive signs, we are yet to see strong evidence of overall pick-up in demand." Syntel expects full-year profit of $2.40 to $2.50 a share, up from its earlier forecast of $2.12 to $2.42 a share in Q3.
Net income of the company was $25.1 million (Rs.121 crore) or $0.61 per diluted share, compared to $17.4 million (Rs.84 crore) or $0.42 per diluted share in the prior-year period.
During the second quarter, Syntel added three new clients and two new 'Hunting Licenses' or preferred partnership agreements, bringing the total number to 96 strategic relationships. The company has invested close to $37 million (Rs.185 crore) in 2008 and has planned to invest approximately $25 million (Rs.120 crore) in 2009 as it makes progress on construction of its special economic zone (SEZ) campuses in Pune and Chennai.
The company stated in its quarterly report that pricing in the second quarter was flat relative to the first quarter, and expects pricing to remain stable through the balance of the year. However, Keshav R Murugesh, CEO and President, Syntel said, "While the second quarter did bring some positive signs, we are yet to see strong evidence of overall pick-up in demand." Syntel expects full-year profit of $2.40 to $2.50 a share, up from its earlier forecast of $2.12 to $2.42 a share in Q3.
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.
Infosys, new openings
Infosys to start hiring from next year
IT major, Infosys Technologies Limited plans to go to campus recruitment across the country next year. Chief Executive Officer and Managing director, Infosys technologies Limited, S Gopalakrishnan told reporters on the sidelines of a CII meeting that companies which skipped campus recruitment following global economic downturn this year, are looking at training about 18,000 of their employees under the extended mode till January 2010.
The recruitment and expansion would begin early next year, he said hoping that economy will revive in second quarter of the fiscal. Economic meltdown affected the growth rate of leading IT companies including Infosys, he said.
Gopalakrishnan expected better performance of IT companies including Infosys in the first quarter results. He said the IT and ITES industry would continue to grow despite the economic slowdown and its growth rate is expected to pick up by mid next year.
Gopalakrishnan said that his company has no immediate plans to expand activities in two tier cities in Andhra Pradesh.
Infosys work for the second campus at the SEZ has already begun and is expected to be complete by next year as the campus with over 10,000 employees in Hitech city was inadequate, he said.
The recruitment and expansion would begin early next year, he said hoping that economy will revive in second quarter of the fiscal. Economic meltdown affected the growth rate of leading IT companies including Infosys, he said.
Gopalakrishnan expected better performance of IT companies including Infosys in the first quarter results. He said the IT and ITES industry would continue to grow despite the economic slowdown and its growth rate is expected to pick up by mid next year.
Gopalakrishnan said that his company has no immediate plans to expand activities in two tier cities in Andhra Pradesh.
Infosys work for the second campus at the SEZ has already begun and is expected to be complete by next year as the campus with over 10,000 employees in Hitech city was inadequate, he said.
IT market, Outsourcing
IT outsourcing to pick up next year: Study
Mirroring the global trend, India’s IT outsourcing is expected to remain subdued this year, though it’s likely to pick up during the second half of the next year.
Springboard Research in its latest study, ‘Inside the End-Users’ Mind - India IT services demand side analysis’ said most enterprises have reported an impact on their IT budgets because of the economic slowdown, with nearly a third of them slowing their IT-related investments.
“For CIOs, the economic slowdown is clearly an opportunity to manage their costs and they have shown an open-minded approach towards IT outsourcing, further accelerated by an emerging emphasis on improving business performance,” said Sudip Saha, senior research analyst for IT Services at Springboard Research.
According to the research body, the Indian IT services market is expected to grow from $4.1 billion in 2007 to $8.1 billion in 2011, recording a CAGR of 18.6%.
The study said that 65% of the IT decision makers in Indian enterprises expect an increase in their investment in IT outsourcing by their company in the next two years, with 29% expecting investment to remain constant.
Mr Saha said many of the Indian companies will not be able to cut down on costs with their internal IT teams and would be looking at outsourcing for budgetary controls.
Springboard Research in its latest study, ‘Inside the End-Users’ Mind - India IT services demand side analysis’ said most enterprises have reported an impact on their IT budgets because of the economic slowdown, with nearly a third of them slowing their IT-related investments.
“For CIOs, the economic slowdown is clearly an opportunity to manage their costs and they have shown an open-minded approach towards IT outsourcing, further accelerated by an emerging emphasis on improving business performance,” said Sudip Saha, senior research analyst for IT Services at Springboard Research.
According to the research body, the Indian IT services market is expected to grow from $4.1 billion in 2007 to $8.1 billion in 2011, recording a CAGR of 18.6%.
The study said that 65% of the IT decision makers in Indian enterprises expect an increase in their investment in IT outsourcing by their company in the next two years, with 29% expecting investment to remain constant.
Mr Saha said many of the Indian companies will not be able to cut down on costs with their internal IT teams and would be looking at outsourcing for budgetary controls.
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