Indian IT New Services Tougher Times

The year that passed by was one of the toughest in the decade for the Indian IT industry, which reeled under the impact of the worst-ever global economic crisis.

It was a reality check for the industry, with companies facing huge uncertainty on their business outlook for most part of the year as customers held back or cancelled investments in new technology.

Towards the close of the year, the industry began to show early signs of recovery, with customers starting to take decisions on IT spends.

Shares move upReflecting the sentiment, shares of IT companies such as Infosys, Wipro, and HCL Technologies touched 52-week high in the past week, as against yearly-lows in January-March. The BSE IT Index also touched the year's high of 5190 on December 24 as against 1987 on February 24.

The image of the industry took a hit at the beginning of the year due to the $1.4-billion fraud at Satyam Computers. The timely government intervention did mitigate the impact resulting in buy-out of the Hyderabad-based firm by the Mahindras.

On an optimistic note, implementing the learnings from previous downturn in 2001-02, the large and mid-size vendors managed to handle the changing market dynamics effectively by continuing to invest in newer service offerings and expanded their delivery footprint overseas. The smaller firms, however, bore the brunt of the downturn.

The economic crisis, triggered in September 2008, had forced the Indian IT firms to innovate, finetune their business model and tighten the cost structures as the volatile currency movement affected the earnings and pricing power came under pressure with clients seeking hefty discounts of 5-20 per cent.

Such a trend not only exerted pressure on the profit margins, but also forced the companies to shed their flab, resulting in an increase in forced attrition. Though wage cuts and pay hike deferrals were more pronounced till the middle of the year, the situation improved over the past few months, companies have started effecting wage hikes and firmed up their hiring plans for the next year.

Vendor consolidation

Vendors do expect stability in the pricing going forward in 2010. A clearer picture on the 2010 budgets was expected by the end of January-March quarter though some players feel that the 2010 budgets may stay flat over 2009. The consolidation in the market place is expected to benefit the Indian vendors as they are still able to offer the cost arbitrage when compared their global counterparts.

The large Indian players have gained from the recent vendor consolidation exercises at large global clients such as BP Plc, Nokia Siemens Networks, Telstra and Aviva among others.

New pricing models based on fixed price, pay-by-use and ticket-based pricing gained currency in 2009 as the outsourcers demonstrated cost savings to their customers from such newer engagement models. The Indian vendors expect their share of revenues from such newer pricing models to go up as compared to the traditional time and material projects, where billing is done on an hourly basis for the number of persons deployed on the projects.

Newer services

2009 also saw the Indian vendors launch newer services offerings on pay-by-use or Software-as-a-Service model through cloud computing initiatives.

Companies like Wipro have set up private cloud to test and deploy their applications internally to showcase to their customers.

The year saw the large vendors sharpen their focus on the domestic market, where the emergence of large IT deals acted as an offset to the slump in business from traditional markets in US and Europe.

Indian vendors also expanded their global footprint by setting up delivery locations in Latin America, where they see traction in the market place. The industry witnessed merger and acquisition activity on a moderate scale where companies picked up the captive units and smaller niche firms to enhance their competencies.

Indian IT Sector the New Reality 2010

NEW DELHI: India’s $60-billion technology services industry may have hoped for a rebound in 2010 after gloomy 2009, but days into the New Year,the initial optimism is fast wearing thin.

Industry officials, analysts and other experts believe that India’s IT sector, a habitual growth monster until the crisis period last year, is unlikely to return to the ‘business as usual’ situation that existed before the crisis and will have to soon recalibrate itself to a new reality and new growth strategies.

The US and European markets, which account for about 80% of Indian software exports, are yet to show signs of a pickup in demand for outsourcing that was expected in the run-up to New Year. Taking note, industry lobby group Nasscom said it does not see any immediate upward revision in the exports growth target, which it had pegged to an all-time low of 4-7% in mid-2009.

“It’s a demand environment that appears permanently damaged,’’ said Vineet Nayar, CEO, HCL Technologies. Other business services providers like Infosys Technologies, Wipro Technologies and Genpact share the same sentiment.

After a compounded growth of over 30% since the 2003-04 dotcom bust, software export growth fell to 16.3% at $46 billion last fiscal against 27% at $40 billion in 2007-08. Last year saw Indian companies embracing survival strategies, moving to fixed costs and bundling software services with back-office operations and remote infrastructure management, to retain customers and fuel growth.

HCL’s Nayar calls it coping with a new ‘normal’ where, “we will see lower ‘normal’ levels of expenditure, lower volumes, hard costs, lower margins and lower annual increases”.

Besides tough global headwinds, Indian providers are also up against a stronger rupee that will erode margins. A Bank of America-Merrill Lynch (BoA-ML) tech sector report expects the Indian currency, which has appreciated about 4% vis-à-vis the dollar in the last quarter, to strengthen further over the next few quarters at Rs 45 by March-end and Rs 43 by December 2010.

That is bad news for Indian providers, already coping with higher costs due to wage hikes and increased sales and marketing spends.

“Budgets could remain flat for sometime,” says Suresh Vaswani, joint CEO, Wipro Technologies adding that customers continue to demand more for less.

BoA-ML also notes that Indian majors will face stiffer competition from global vendors. New competitors such as Dell, which bought out Perot Systems in September 2009 to strengthen its services offering, are beginning to turn the heat on Indian IT. Dell, for instance, plans to target $20-50 million contracts, the sweet spot for Indian technology majors.

Others such as IBM, Accenture and HP now have strong low-cost service delivery options. Their deeper domain expertise also gives these firms another edge over Indian providers.

And Indian tech companies may be among the few sectors that see little hope in\ the recovery gathering pace. In any case, these companies don’t see a return to the giddy business growth of yesteryears. To corroborate this, HCL’s Nayar points to data from S&P 500 companies.

An analysis shows that 75% of S&P 500 companies recorded a negative growth in the June 2009 quarter. Though the situation is expected to reverse by this June, only 24% companies are expected to grow more than 10% from the year before compared to 50% of them in 2008.

“Clearly, we are looking at a market of different shape and size ahead,” says Mr Nayar. Increasing costs are another worry. The BoA-ML report sees wages and marketing spends climbing as companies target new service lines, markets and geographies.

So how will companies counter the likely stresses and strains of 2010?

Companies will have to evolve new business models to grow in a tough market environment, says Nasscom president Som Mittal. Wipro, for instance, sees new business coming from adoption of cloud computing, green and collaboration technologies. The company is also eyeing more business from the Indian and Middle East markets.

“Customers are not looking at just any vendor but also transformation partners who have their skin in the game,’’ says Mr Vaswani. Infosys, meanwhile, is ramping up its sales force and adding practice and product specialists to its ranks.
BoA-ML recommends that to cope with the new market dynamics, companies may require more locals onsite, better system integration skills, more contracts on pricing models like `gain sharing’ (pricing linked to revenue), automation for infrastructure services and so on.

“The way forward is disruptive innovation,” says Mr Nayar, adding that competing with established leaders in their business models can only bring incremental growth.

“Global CIOs today are not looking for technology solutions. They are looking for business solutions. So from offering new delivery models such as pay per use to taking over entire IT infrastructure of the client to large multi-year SAP implementations, we are doing it all.’’

Whatever the strategy, the beginning of 2010 is not different from that of 2009 — uncertainty dominating the minds of company heads, rather than the cautious optimism they were predicting in December.

“Countries and companies still have job losses to think about. If job losses keep rising, it’s a problem,’’ says Pramod Bhasin, president & CEO, Genpact.

IT Job Market Buzzing again

Headhunters looking out for 30,000 lateral entries in top firms
IT majors are back to hiring experienced hands after an eight-month hiatus beginning January. Counting for the early signals from headhunters in Bangalore, Hyderabad and Chennai, tech shops may be looking out for up to 30,000 lateral entries, if not more, before this calendar runs out. Recruitment agencies say they have started getting mandates for hiring in small batches.

At least two recruitment firms that FC spoke to confirmed that IT companies had mandated lateral hiring of between 20,000 and 30,000 employees in the past one month alone, though they were unwilling to hazard a guess on how the numbers might stack up by the end of 2009. They said there were still uncertainties about hiring intentions of their clients.

In the boom years of 2006, 2007 and 2008, the IT/ITeS industry created up to 400,000 new jobs every year of which about 150,000 were lateral entries. And while the global recession set in September 2008, hiring continued right through December. It was only in January-August this year that hiring trickled down to just a few hundred.

Headhunters confide that most large Indian and foreign firms, including the likes of IBM and Accenture, are back to hiring. Infosys and TCS have about more lateral hirings from the October-December quarter. So are some of the mid-sized body shops Sotware engineers with 4-8 years experience are mostly in demand.

Kris Lakshmikanth, CEO of The Head Hunters India said even tier-II IT companies were scouting for experienced personnel. “Depending on the size of the companies, the number of vacancies is generally between 50-100.”

Infosys board member T V Mohandas Pai told Financial Chronicle that his company had increased the forecast of additional headcount for financial year 2010 to 20,000 from 18,000 because it wanted to recruit more experienced people. This was needed to balance out the company’s staff pyramid, 70 per cent of which rests on freshers.

A HR industry tracker, who did not want to be named, said Infosys and TCS were also looking for business and vertical heads with over 12 years experience.

Sudhakar Balakrishnan, CEO of Adecco India, said, “There is some buoyancy now in the lateral hiring market for IT companies. Companies, though keeping the final numbers under wraps, are definitely looking to hire laterally. With revenues going up and the environment stabilising, they feel that a lot of requirements would be coming up.’’

While declining to give definite growth numbers, T Muralidharan, CMD of Hyderabad-based TMI Group said, the mandates received by his agency for filling up vacancies at top software firms in the past month was equal to what he had got in the preceding five months.

E Balaji, CEO of Chennai-based Ma Foi Management Consultants, said while the signs were good, firms were basically opening up positions that they had frozen earlier. “We have to wait and see how this scenario will pan out in the future,” he added. His opinion was shared by Gautam Sinha, CEO of TVA Allegis, a specialty IT/ITeS

hiring firm. He said, “The situation has improved but we are still 3-6 months away from lateral hiring going up to the pre-economic crisis numbers. The pipeline is good but big hirings will depend on the market condition in the US in coming months.”

He also explained that right now the companies were looking for professionals with 4-8 years experience. The big numbers would come when firms start looking out for professionals with 2-4 years experience, he said.

Entry Level Salaries Down by 20% in IT

Entry-level salaries down by 20% for software pros

Dhannanjay Kumar, a 25-year-old computer science graduate from a top engineering college in Bangalore, considers himself lucky to have found job in a year when India’s over $50-billion software outsourcing industry had to cope with falling demand and trim payroll by up to 10%.

“Not only I had to work twice as much for getting an interview, the annual salary of around Rs 1.7 lakh is much lower compared to my seniors who got Rs 3.5 lakh two years ago,” said Kumar who got hired by a Bangalore-based mid-tier software company last month.

Every year, around 3,00,000 computer science and engineering graduates seek employment with hundreds of tech firms, including big names such as TCS, Infosys and Wipro. This year, more than half of them were left unemployed because tech firms were already finding it tough to manage resources sitting on the bench.

A worsening economic crisis, increased availability of skilled workers and lower demand for software services have brought down the entry-level salaries for IT professionals in the country by up to 20%, according to experts tracking the sector.

“The entry-level salaries are down by at least 10-16%,” said GC Jayaprakash, principal consultant of Stanton Chase International.

Until two years ago, almost all computer and engineering graduates were absorbed by India’s outsourcing industry, comprising top tech firms such as TCS, Infosys, Wipro and many others. However, as customers delayed and shelved outsourcing projects, these tech firms also postponed campus hirings.

“Last year, a number of companies gave away offer letters but did not recruit. On top of that, there is a new pool of qualified professionals being churned out this year -- all this has created an oversupply in the entry-level IT job market where salaries typically sway between Rs 3 lakh per annum and Rs 5 lakh on the higher side,” Mr Jayaprakash added.

Many students had to approach potential employers directly, since companies did not visit their campuses for placements.

“We formed groups and toured companies, and agreed to settle at lower salaries because it’s better to be employed at lower salary than having no job at all,” said Srilekha Varma, who recently accepted a job offer from a Chennai-based IT firm specialising in banking software.

Recruitment firms such as GlobalHunt said the entry-level salaries may have dipped by up to 30% because of increased availability of skilled professionals.

“Earlier, companies were building bench strength and doing skill development, as they were expecting large business and didn’t want to run out of manpower. Fresh graduates used to have multiple offers and they were in a position to negotiate,” said Sunil Goel, director of GlobulHunt’s Indian operations.

In a normal year, computer science graduates were offered entry-level salaries of Rs 3.5-5 lakh. However, companies are now hiring freshers at Rs 1.7 to Rs 3.5 lakh.

Meanwhile, HR heads at tech firms, including Wipro, India’s third-largest software exporter, say professionals have become more realistic about what they want from their employers.

“I don’t think salaries have come down, but the environment has indeed helped us in containing salary hikes,” Pratik Kumar, head of human resources at Wipro said.

What has also changed this year is the manner in which salary offers are being structured.

“Due to an oversupply of qualified talent there is rationalisation at entry-level salary, which is based more on performance and are variable by nature. Cost-to-company is not necessarily a comparison of the past-drawn salary,” said Ashok Reddy, managing director and co-founder of staffing company TeamLease.

Indeed, professionals who lost their jobs during the past few months, are now being offered entry-level salaries by companies who can get experienced talent at lower salary levels.

“I was working as a software testing engineer and lost my job in February. Now I have a job, but the salary is similar to what is being offered to new recruits,” said Neelesh, who has around six-month experience.

“Companies are now preferring to hire professionals who missed jobs due to slowdown, were on the bench or were laid off, because they have some kind of training and are experience compared to freshers,” said Mr Goel.

TCS said it would do new campus hiring in January 2010 and will honour all 24,000 offers made for FY09. “Around 1,800 graduates have joined us in Q2 and another 8,000 will join in Q3, rest of the graduates will join based on the demand,” a TCS spokeswoman said.

Infosys said for FY10, it has made 20,000 campus offers and expects an 80% conversion rate i.e. 16,000 of these offers to join the company. “We are honouring all our hiring commitments,” an Infosys spokeswoman said.

Indian Engineers backbone of Japanese IT

Indian system engineers have emerged as the backbone of Japan's IT industry and more are flocking to the country which is witnessing a steep decline in its work force.

Indian system engineers are making their presence felt in Japan's information technology industry. Around 22,000 Indians are living in Japan at the end of 2008, nearly double the number a decade ago.

"India is already the international standard in the IT world," said Kenichi Yoshida, a director of Softbridge Solutions Japan Co., a staffing company. Its founder is an Indian-American, who set up the Japanese company in 2002.

Indian engineers are sent out to Japan after studying Japanese language for five months. In addition to operation and maintenance of financial information systems, they are in charge of systems development for computers and mobile phones, Kyodo news agency reported.

"While the number of working people is decreasing in Japan, in India the number will continue to increase until 2040. Education levels are also high. It's important for Japanese industry to work together with India," Yoshida said.

His company is also providing opportunities for Japanese engineers to undergo training in India for two to four months, and major Japanese enterprises are taking advantage of the service.

"Everything is in English there. They eat curry from same bowl and return home a lot tougher," he said.

Tokyo's Edogawa Ward has the highest number of Indian residents, at about 2,200. After visa requirements for engineers working in Japan were eased in 2001, Indians flocked to the ward because it is close to the centre of Tokyo and prices are lower than in other wards.

"Until several years ago, there were only men in their 20s whose families were back home, but recently, the number of Indians accompanied by their families is increasing," said Jagmohan Chandrani, 57, a company president who came to Japan about 30 years ago.

Chandrani imports and sells black tea, runs a guest house and also serves as leader of the Indian society in the ward, assisting his countrymen in their day-to-day lives.

Many new residents are from Bangalore, known as India's Silicon Valley. Given that tandoori chicken and nan, which are popular in Japan, are northern Indian dishes, Chandrani has opened a southern Indian restaurant and a food store for engineers yearning for the taste of home.

He also participates in local events and holds an Indian festival twice a year, inviting Japanese from neighboring areas.

Chandrani says he hopes the ward will become not an 'India town' but a place serving as bridge between the two countries.

H1B Applications Lowest since 2003

More than six months after the federal government began accepting petitions for work visas popular with Silicon Valley companies, thousands of spots remain open, a reflection of the nation's high unemployment and the political pressure to hire citizens, experts say.

As of last week, 46,700 H-1B visa applications had been submitted, thousands less than the 65,000 allocated for fiscal year 2010 and the lowest number since 2003. The cap for 20,000 additional H-1B visas reserved for foreign graduates of U.S. colleges with at least a master's degree was met, though applications are still being accepted.

Tech industry insiders say the recession is primarily responsible for the dearth of applications. "There is definitely a sense that there is a growing hostility toward some of the (visa) programs, but I don't think that is related to the downturn" in petitions, said Jenifer Verdery, Intel's director of work force policy. "You are not going to see big ramp-ups in hiring during the downturn."

But political pressure did affect hiring in other industries. The federal stimulus law includes provisions making it difficult for financial companies receiving money from the Troubled Asset Relief Program, or TARP, to hire H-1B workers. The requirement forced companies
like Bank of America to rescind job offers to foreign professionals.

Julie Pearl, a San Francisco-based corporate immigration lawyer who works with valley companies, says her firm's caseload for visa work has been cut in half. "In the financial industry, H-1B (applications) are down almost 75 percent," she added.

Sen. Charles Grassley has criticized tech companies for not protecting jobs of U.S. citizens over those of foreigners as they lay off thousands of employees at a clip. The Iowa Republican and Sen. Richard Durbin, an Illinois Democrat, in April reintroduced a bill that would require companies to do everything they can to hire Americans before seeking H-1B visas.

One technology corporate client of Pearl's declined to file petitions out of a sense of patriotism. "They felt, 'How do you hire a foreigner' " with 12 percent unemployment in California, she said.

Samta Kapoor, who will complete her master's degree in engineering management at Duke University in December, said she and other foreign-born classmates have been told by prospective employers that they are not hiring international students this year. "There are times when we are not even looked at. They say, 'We are not hiring international students this year. It's a companywide policy. Sorry,' " she said.

Silicon Valley companies, where immigrants have played prominent roles in creating startups and new technology inventions, view the H-1B visa program as a way to grab the best talent from around the world. "For most of our clients, their mantra is: Hire the best person you can," Pearl added.

Companies can spend thousands of dollars per applicant. "It's such a hard process," Verdery of Intel said. "It's a laborious, difficult, expensive endeavor to bring someone on board."

Despite the challenges, Intel has continued about the same level of H-1B hiring as in the past, she said.

In recent years, there has been some support from both parties in Congress for more H-1B visas and green cards for foreign professionals, a major goal of tech companies that has been caught up in the highly charged debate over immigration.

During the dot-com boom a decade ago, the H-1B visa cap was 195,000 a year, a reflection of the frenzied hiring of tech workers in Silicon Valley and elsewhere around the nation. That number dropped dramatically during the recession that followed.

Les French, president of WashTech, a Seattle-based union for tech professionals, which is critical of the visa program, predicts application levels will eventually rise again. "Once the economy picks up, you'll see a pickup in the applications," he said. "I think it will be lock-step with the economy."

Others, though, say the difficulties faced by foreign-born potential workers as well as the recession will deter some overseas professionals from pursuing careers here.
"The problem is, you lose the cream-of-the-crop," said Vivek Wadhwa, a researcher on immigration and labor issues at the University of California-Berkeley. "The cream of the crop can get jobs elsewhere. Before, they had to come here."

Nonetheless, students such as Kapoor say the United States is still their first choice.

"There are a lot of things happening back home," said Kapoor, who is from Mumbai, India. "There would be no lack of opportunity for me if I went back. But I've been educated here. I want to give back to the United States."

Infosys opens second development center in Mexico

Infosys Technologies has opened its second development centre in Monterrey, Mexico, serving as a near shore unit to serve the regions of North America, Latin American and Europe.

The development centre will provide technology services for clients in all industries including banking, financial services, manufacturing, retail, distribution, insurance and many others, Infosys said in a notice to the stock exchanges.

“From our first development centre opening with a few clients and a dozen employees, we now have some 30 clients and 330 professionals,” said Ashok Vemuri, senior vice president, Infosys. After examining several countries in the region, Infosys chose to establish its presence in Mexico due to the broad language skills available in the region, its geographical proximity to Canada, the US and the Europe, the notice said.

Tech Firms on headhunting drive

Technology firms Accenture and Infosys BPO were on Monday upbeat about hiring plans for next year, an indicator of brightening business prospects, although Microsoft India said it would go easy on new recruitments.

Information technology and consultancy were among the sectors hit by last year's global economic crisis, ripples of which are still being felt by businesses across continents.

Consultant Accenture said it would shore up its staff strength by 8,000 by next year, mainly in the analytics space. "We are 42,000 right now and we imagine we will be about 50,000 by the end of 2010," Accenture Chairman and Chief Executive Officer William D Green said on the sidelines of the India Economic Summit here.

Green added, "We believe that analytics is going to be an important trend that our customers are going to demand from us. We think India is going to be a great place for us."

Infosys BPO, the back-office unit of IT firm Infosys Technologies, said that it would hire 1,500-2,000 people by the end of the current fiscal. "We plan to hire 2,000 people in the next four-five months or by the end of this fiscal. Currently we are 16,000 people in India," Infosys BPO CEO Amitabh Chaudhry said.

Another BPO company Genpact has already hired 6,000-7,000 so far this year for its global operations. Microsoft India Chairman and Corporate Vice-President Ravi Venkatesan, however, said that "there will be no significant hiring. Microsoft has a headcount of 5,300 people in the country and had hired "a few hundreds" last year.

Most of the top domestic and transnational companies go for campus placements from the engineering and management schools around October-December.

Venkatesan said "(Steve) Ballmer (global CEO) has gone on record saying this is a period of consolidation," rather than adding to the headcount. The USD 58-billion global software leader has six business units in India, which include research centre, development centres and sales and marketing divisions.

The company, which boasts of running most of the personal computers worldwide on its operating system, has three centres in Hyderabad. The other units are in Bangaluru and Gurgaon.

Yesterday, global banking behemoth Standard Chartered said it plans to hire 3,000 employees in India by the end of 2010.

Infy to up sales staff

Infosys, the country’s second-largest information technology services exporter, plans to increase its sales and client services headcount by almost 50 per cent by the end of this financial year, most of which will happen in Europe.

“We are going to add another 100-200 people worldwide in sales and client services by the end of this fiscal on a base of 500. This doubling is in line with our interest in Europe,” said Subhash Dhar, senior vice-president, Infosys Technologies. The headcount increase could happen for sales people in infrastructure and applications services.

Moreover, the company sees its communication, media and entertainment segment to be a cash flow driver. It currently gets around 18 per cent of its overall revenues from this area, up from single-digit in 2002-03. Infosys is bullish about this segment, as many of its customers are restarting their capital expenditure on networks, which usually accounts for half of a company’s total expenditure.

“The spend had slowed down in the last one year. But handheld devices are now driving more traffic. In the media and entertainment space, we are seeing greater activity in digital media and not conventional media,” added Dhar.

He expects budgets to be better next year, too, compared with this year. “We are servicing almost 25 clients in this space and are always in talks with 10-15 more. Usually, we sign one big client per quarter and two or three small clients,” he said.

The non-US revenue is greater than the US revenue for Infosys’ communication, media and entertainment vertical. And, though India does not figure in the top countries’ list, the IT major is seeing new business coming from within India.

Wipro to hire Experienced Resources

With an increase in business, India’s third-largest IT services company Wipro is holding recruitment drives to hire experienced IT professionals (termed lateral hiring) across the country. The company said in a statement today that it plans to organise two-day walk-in interviews for experienced IT professionals in Bangalore, Chennai, Mumbai, Pune, Hyderabad, Noida and Kolkata, starting November 14.

The drive is a part of its regular hiring in line with business demands, the company said. Vice-President (Talent Acquisition) Pradeep Bahirwani said the company would hold recruitments simultaneously across the country to provide applicants a quick process to allow them to consider opportunities in other cities.

“We are looking to meet applicants across skill requirements in all business divisions with experience levels ranging from 2-14 years,” he said.

He added the company had released recruitment advertisements to inform applicants of the drive.

“We encourage applicants to apply directly to us and not fall prey to fraudsters misusing company names and duping candidates,” he added.

Wipro has also announced plans to hire BSc, BCM and BCA students graduating in 2010 for its Wipro Academy of Software Excellence.

Some Hiring Some Firing

The economic downturn may have led to heavy job losses in many sectors, but the situation perhaps isn't that gloomy when looking at all the industries together as an average of five companies expanded their workforce for every four cutting down on their staff size.

An analysis of regulatory disclosures about workforces made by companies in India shows that more than half of them hired employees- some in thousands and many in hundreds- even as many others pruned their employee-strength last fiscal.

Out of close to 450 companies for whom employee figures are available for the past two fiscals, the workforce grew for nearly 250 firms, according to an analysis of workforce details compiled by financial data provider Capitalline, which tracks these details from annual reports and other regulatory filings by the companies for their financials.

Together, these companies added more than 1.5 lakh employees during the latest financial year to their workforce, representing a growth of about 7 per cent from about 19.7 lakh in the previous fiscal.

However, this analysis does not take into account the changes in workforce in the current fiscal year which began in April 2009 for a majority of the companies and in January this year for some. There have been reports that many job losses have occurred in the current fiscal year also and these are not reflected in this analysis.

Hiring tools for Firing

With a dip in recruitments in the face of economic slowdown, skill assessment tools have now assumed a new and more ‘structured’ role — to help companies internally gauge the capabilities of an existing employee and decide whether he should be trained further, promoted or sacked.

Though the use of these tools for recruitment purposes has taken a back seat now, their demand for internal assessment tests has gone up, said Madan Padaki, CEO of MeriTrac Services. “The ball is now in the employer’s court. He has more choices as the availability of talent in the marketplace is more,” he said.

Skill assessment solution providers are witnessing a 20 to 25 per cent increase in demand from employers for assessing their workforce despite the fact that many of them have become leaner during the downturn, said R Kannan, CEO of Assess People.

“MertiTrac has been handling 90,000-125,000 assessments a month for the past two years. The firm has noticed a sharp rise in enquiries from IT/ITeS, BFSI and retail companies during the past six months. From around 10 enquiries in a quarter, a year ago, MeritTrac has received 25 enquiries for internal assessments each during the last two quarters,” said Padaki.

“Looking at the nature of questions framed for assessment tests, it is evident that at least 25 per cent of them were used to find non-performers, which could be used for downsizing purposes. This trend started only post-October last year,” said Padaki.

Almost 60 per cent of the demand is from IT and ITeS companies.

Organisations are focusing on three areas — effectiveness of training, a framework to determine employee retention and promotion and mapping their career path.

Infosys BPO 22 Centres in AP

Infosys BPO Limited, a subsidiary of IT major Infosys, signed an agreement with the Andhra Pradesh government to set up rural BPO centres in 22 districts of the state.

Infosys BPO Limited CEO and Managing Director Amitabh Chaudhry and State Society for Elimination of Rural Poverty CEO T Vijaya Kumar signed an MoU in this regard in the presence of Chief Minister K Rosaiah.

"The first such BPO centre will be set up in the next six weeks which will provide a testing ground for this model. The capital expenditure and other details will be worked out subsequently," Chaudhry said adding that all the 22 districts would have one BPO each.

"Over 1,000 people would get direct employment through the rural BPO centers in the next 12-15 months. Statistics suggest that direct employment generates 1.4 times indirect employment as well," he added.

Noting that Andhra Pradesh would be the first state where Infosys would be setting such facilities, Chaudhary said, "We are in talks with some other states as well for similar ventures but I can't disclose the names at this stage".

Premji Assures French Employees

Wipro Chairman Azim Premji today assured the French government that the 60-odd employees working with the company’s wireless IT division in Sophia Antipolis would receive support, even as it plans to exit the wireless intelllectual property (IP) product business.

During his discussion with Christian Estrosi, ministry of industry (Paris), Premji said: “We reiterate our commitment to France, a key growth market for Wipro. We look forward to growing our presence, serving our customers effectively and creating employment opportunities in the country.”

He explained that his company had implemented exemplary social measures to support the employees at the Sophia Antipolis centre who were affected due to Wipro’s worldwide exit from the IP connectivity business. These measures include support to encourage employment and entrepreneurship, as well as financial benefits.

During the discussion, Estrosi reiterated a “strong attachment to the fact that all the employees of Sophia’s centre can find again a professional future as quickly as possible, through solutions of employee take over and/or of company creation carried by employees”.

Talking to mediapersons during the company’s quarterly results announcement this week, Wipro officials had stated that the company had come to an amicable settlement with the affected employees in France. As a part of this, Wipro had offered the IP developed at the centre to the affected employees at Sophia Antipolis free of charge. Besides, the company had offered its office space and equipment free for charge to those employees for one year.

Since the last three years, Wipro has implemented its development plan for its IT services in the French market. Christophe Martinoli, head of France, Wipro Technologies, said the company intended to double its staff base and revenues in France in the next 18 months.

Mahindra Satyam Bags 300 Million USD Deal

hyderabad: Mahindra Satyam has won an IT outsourcing contract from Swedish defence and aerospace firm, Saab, to develop its operations for the global defence and security market in India in a deal valued at around $300 million.

The contract, which is spread over a period of five years, encompasses engineering services and technology maintenance and will enable both the companies jointly to address the Battlefield Management System (BMS) for the Indian Army.

Mahindra Satyam has already initiated the setting up of a centre of excellence for network centric warfare (CoE - NCW), which will offer comprehensive skills and a repository of tools, systems, middleware, integration platforms and system showcases in the field of NCW.

The company through the CoE hopes to tap the high potential market for nationwide security, for which the Indian government has large investment plans. "This relationship will jumpstart our foray in mission critical areas of defense. Our commitment in the domestic market will be reaffirmed by this collaboration and also set the stage to enter uncharted territories in the global arena," said C P Gurnani, CEO, Mahindra Satyam.

The centre, which will be accessible to both the partners, is for mission critical applications and Command, Control, Communications, Computers, and Intelligence solutions for global opportunities. The capabilities of the centre will also span areas of homeland security to provide end to end security solutions.

"We view this relationship with Mahindra Satyam as a strategic meeting of two highly skilled teams believing in technical and engineering excellence," said Ake Svensson, President and CEO for Saab. Mahindra Satyam, which counts Citigroup, GE, GlaxoSmithKline, Cisco Systems and Nissan among its top five clients, has over 430 clients now.

L&T Infotech In talks to acquire Patni

Bangalore: L&T Infotech, a part of Rs. 40,000 crore engineering and construction major Larsen & Toubro (L&T), is in advanced talks to acquire a majority shareholding in Patni Computer Services, the country's sixth largest software firm. According to sources close to the development, L&T has already completed the necessary diligence and form of the deal is being worked out, reports The Financial Express.


"L&T Infotech has been in talks with Patni for some time now. We have already completed due diligence," confirmed a senior L&T source, requesting anonymity.

The development has come after all three Patni brothers - Narendra Kumar, Gajendra Kumar and Ashok Kumar, finally decided to sell. The Patni brothers together hold around 48.30 percent stake.

In 2007, talks for a similar sale had ended in a standstill, as only Gajendra and Ashok were willing to give their holdings. Narendra has been actively involved in running the business, was not willing to give his share.

Another factor for a sale at this time is that General Atlantic also wants to exit from the company. The private equity firm has about 18 percent stake and had invested $100 million in Patni in September 2002.
The sources from industry said Patni hired Ambit Capital to conduct a valuation of the company.

The analysts said the size of the deal could vary around $1-1.5 billion. The share price of the company has been hovering at around Rs. 450 and it is likely to get Rs. 550-600 per share. Patni's scrip closed at Rs. 456.95, up 4.70 percent, on the Bombay Stock Exchange (BSE) on Wednesday.

"The company has $380 million in cash and equivalents on its books, so an offer price in the range of $1-1.5 billion would be fair," said an IT analyst. Patni had reported revenues of $718.9 million in the last financial year.

"This is a rumor and we do not comment on speculation," said Surjeet Singh, CFO, Patni Computers in an email response.

"I do not want to comment on speculation in the media," said Sudip Banerjee, CEO, L&T Infotech.

According to sources, if L&T Infotech acquires Patni, it would make the combined entity the fifth-largest software firm in India. L&T Infotech is currently stands at 11th place.

However, after been hit by TechMahindra in the bidding for fraud-hit Satyam Computer Services in April, L&T Infotech is being cautious about the Patni deal. But according to analysts, it could not afford to step too cautiously. "L&T Infotech has to move fast. Once the market goes up, say beyond the 20,000 mark, Patni or any other IT company will become a difficult buy," said a source.

AM Naik, Chairman and Managing Director, had said in an interview that he plans to make L&T Infotech a $1-billion company. Facing pressure on revenues from the infrastructure and construction sectors over the last one year because of the economic slowdown, L&T has focused on new drivers of growth, including infotech, power and oil and gas.

Wipro buys Yardley's byusiness

Bangalore: Wipro has brought 229 year old British brand Yardley's business in select markets such as India, Asia, Australiasia, Middle East and north and west Africa to stretch its personal care portfolio to the premium range.

Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has taken up Yardley business across these areas for $45.5 million (Rs. 215 crore), continuing its takeover spree that included Unza.


"We picked up a lot of debt from Unza's balance sheet when we acquired it. Yardley is a profitable brand and will add to our operating margins which are at 10-13 percent," said Vineet Agrawal, President, Wipro Consumer Care.

Being controlled by British billionaire Mike Jatania, Lornamead had acquired the Yardley brand in September 2005 for 60 million pounds. It will retain the Yardley business in Europe and America. Funded by internal accruals, this deal will enable Wipro straddle different price points and give it greater bargaining power for key accounts in certain markets.

"Yardley is a great fit for Wipro if it wants to go beyond Santoor to include more premium brands. Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range," said Anand Ramanathan, FMCG Analyst, KPMG.

Yardley's Lavender talcum-to-soap range is priced around 50 percent higher than the costliest brand in Wipro's existing portfolio, Unza's Enchanteur range. This move will also strategically surge Wipro Consumer Care's foothold in high growth markets such as the Middle East where its overall revenue is projected to double to $30-35 million. The Middle East contributes 70 percent to the acquisitions revenues, with 20 percent coming from India and the remainder from other Asian markets.

Wipro is also in plans to increase the product range under the Yardley brand. "We see certain gaps in Yardley's product range such as body washes and deodorant roll-ons, which we feel could be added to increase relevance with the youth. We are also evaluating the manufacture of Yardley products such as soaps through our factories," said Agarwal.

The company plans to leverage its distribution reach across 50,000 outlets in metros and tier-I cities to grow the brand in India and sees cost efficiencies rising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.

Wipro arrived on the acquisition stage in 2003 by picking up Hindustan Unilever's glucose drink brand Glucovita. It bought Kerala based ayurvedic brand Chandrika after one year and Delhi based North West Switchgear's switches business in 2006.

Wipro Consumer Care division came into limelight in 2007 with its $246 million purchase of Singapore based personal care firm Unza Holdings, which has a significant presence across South-East Asian markets. This deal will see Wipro Consumer Care's contribution to the parent's top line growing by 50 basis points. In the second quarter, the consumer-care division notched up eight percent of Wipro's overall revenues. Wipro's stock closed at Rs. 598.30 on the Bombay Stock Exchange, a rise of 0.42 percent on Thursday.

Wipro buys Yardley's byusiness

Bangalore: Wipro has brought 229 year old British brand Yardley's business in select markets such as India, Asia, Australiasia, Middle East and north and west Africa to stretch its personal care portfolio to the premium range.

Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has taken up Yardley business across these areas for $45.5 million (Rs. 215 crore), continuing its takeover spree that included Unza.


"We picked up a lot of debt from Unza's balance sheet when we acquired it. Yardley is a profitable brand and will add to our operating margins which are at 10-13 percent," said Vineet Agrawal, President, Wipro Consumer Care.

Being controlled by British billionaire Mike Jatania, Lornamead had acquired the Yardley brand in September 2005 for 60 million pounds. It will retain the Yardley business in Europe and America. Funded by internal accruals, this deal will enable Wipro straddle different price points and give it greater bargaining power for key accounts in certain markets.

"Yardley is a great fit for Wipro if it wants to go beyond Santoor to include more premium brands. Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range," said Anand Ramanathan, FMCG Analyst, KPMG.

Yardley's Lavender talcum-to-soap range is priced around 50 percent higher than the costliest brand in Wipro's existing portfolio, Unza's Enchanteur range. This move will also strategically surge Wipro Consumer Care's foothold in high growth markets such as the Middle East where its overall revenue is projected to double to $30-35 million. The Middle East contributes 70 percent to the acquisitions revenues, with 20 percent coming from India and the remainder from other Asian markets.

Wipro is also in plans to increase the product range under the Yardley brand. "We see certain gaps in Yardley's product range such as body washes and deodorant roll-ons, which we feel could be added to increase relevance with the youth. We are also evaluating the manufacture of Yardley products such as soaps through our factories," said Agarwal.

The company plans to leverage its distribution reach across 50,000 outlets in metros and tier-I cities to grow the brand in India and sees cost efficiencies rising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.

Wipro arrived on the acquisition stage in 2003 by picking up Hindustan Unilever's glucose drink brand Glucovita. It bought Kerala based ayurvedic brand Chandrika after one year and Delhi based North West Switchgear's switches business in 2006.

Wipro Consumer Care division came into limelight in 2007 with its $246 million purchase of Singapore based personal care firm Unza Holdings, which has a significant presence across South-East Asian markets. This deal will see Wipro Consumer Care's contribution to the parent's top line growing by 50 basis points. In the second quarter, the consumer-care division notched up eight percent of Wipro's overall revenues. Wipro's stock closed at Rs. 598.30 on the Bombay Stock Exchange, a rise of 0.42 percent on Thursday.

TCS Hires 300 for US Center

Mumbai: Tata Consultancy Services (TCS) has hired around 300 associates for its North America Domestic Delivery Center, TCS Seven Hills Park. Seven Hills Park provides a wide-range of IT solutions, consulting, business process outsourcing and engineering services for TCS customers across industries including banking and financial services, life-science and health care, as well as manufacturing and retail.

"I welcome these new associates into the TCS family and am sure they will help our customers achieve even greater success in the future," TCS's Chief Executive Officer and Managing Director, N Chandrasekaran, said.

TCS Seven Hills Park is also the location of TCS's new North American Training Center. Over the last several months, more than 225 associates have joined the company from top universities throughout the country, the release said. TCS has over 1,40,000 trained IT consultants in 42 countries.

Mid Tier IT Companies eye local deals worth 2 Billion USD

Mumbai: As the big companies are chasing the lucrative domestic market, the mid tier technology firms like Patni Computer Systems and Hexaware are attempting to enter the market by jointly bidding with experienced bidders, reports The Economic Times.

The Indian government departments and other state owned firms will spend around $2 billion on IT during the next 12 months. Hexaware, MindTree and Patni are among the many mid-tier technology firms seeking to explore new business with an experienced partner.



For instance, Hexaware is pursuing some large deals as part of a consortium and several smaller ones on its own. Its strategy for the Indian market will be different from its strategy for overseas markets, said Hexaware's Vice Chairman and CEO, PR Chandrasekar.

"If we treat India as just another location for our services, it will not work. It will need fairly dedicated focus and some innovation on how we source talent and price our offerings. You also need to leverage your niche capabilities, especially if you are not one of the big players," said Chandrasekar, who was earlier with Wipro.

For putting better focus on the Indian market, companies such as Hexaware and Patni have recently formed focused business units. As Narendra Upasani heads Hexaware's India business, Deepak Khosla is responsible for growing Patni's revenues from the country.

Hexaware will work as part of a consortium because the large contracts in the government and public sector projects usually require the bidder to have a track record in executing similar projects.

Guru Malladi, a Partner at Ernst & Young said it will be challenging for mid tier technology firms to take on bigger rivals. "A Rs. 5,000 crore project, for example, can never be delivered by a single player. But I do see an element of challenge for mid-size players who have so far not operated in the domestic market. Large players have to sometimes rely on small players but they may not see value in mid-size players in terms of cost or efficiency arbitrage," said Malladi.

"Globally, this kind of scale is not available anywhere, even if it may not be the largest in revenues," said Jeya Kumar, CEO, Patni Computer.

Like Hexaware, Patni is also chasing contracts in the domestic market as part of a consortium. "With the kind of large deal sizes we are seeing, you have to have a multi-vendor strategy," added Kumar. Apart from the government, Hexaware will focus on sectors like travel and transport, insurance, hospitality and logistics, and technology offerings across sectors.

According to Malladi, the mid size players have to be more strategic in their outlook using their skills to enter the market. Hexaware, along with others like Patni and MindTree are turning towards India, drawn by the large opportunity and significant growth potential.