The rate of recovery in tech spending in the US is going to be twice the rate of Western and Central Europe next year as America steps out of recession quicker.
Europe has been experiencing a deep recession and with the problems originating in the US those factors have pointed to the recovery starting on the other side of the Atlantic first before spreading to the UK and the rest of Europe.
According to Forrester research the US will see a 8% increase in technology purchases next year compared to 4% in Western and Central Europe with €297bn being spent this year in Europe with the major countries all seeing drops ranging for IT goods and services from 12% here in Britain to 3% in France and Germany in 2009.
In the Forrester report, European IT market outlook 2009 to 2010, the analyst Andrew Barels, said that the market for IT goods and services would decline in Europe by 6.3% this year and would be slow to recover: "In both regards it will lag behind the US tech market, which will have a smaller drop in 2009 and stronger growth in 2010."
"The main reason? The European economic recession has turned ouyt to be deeper than the US recession, with Europe's downturn starting later and probably lasting into 2010 . All categories of IT purchases will be down, with computer equipment and communications equipment being especially weak," he stated in the report.
There have already been sings that the US economy has stablised with plenty of CEOs and financial officers making that call in statements accompanying recent financial results. But in Europe only Germany and France have officially recently come out of recession with the UK still lagging behind.
Monday, September 14, 2009
Thursday, September 10, 2009
US Unemployment Rate in July Increases
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 Wednesday.
After falling to a 15-month 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 Inc 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 telecommunications sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
Meanwhile, the automotive sector, which leads all other industries in year-to-date job cuts with 1,22,212 layoffs has seen layoff announcements decline in each of the last three months. These companies announced 2,716 job cuts in July.
"Declining layoffs in the automotive industry may not be indicative of a turnaround. Instead, these employers simply may not have any room for additional job cuts if they hope to build new fleets of more eco-friendly cars," Challenger added.
With consumer and business spending at a standstill transportation companies have little choice but to make further cutbacks in staffing, it said, adding, that a surge in hiring could take place around the holidays.
Other sectors which saw downsizing during July are government/non-profit (7,131), industrial goods (6,548) and financial (5,030). While economic conditions and cost-cutting claimed over 58,000 jobs, voluntary severance led to 15,070 job cuts in July.
Employers also announced plans to hire a total of 17,183 employees with retail (14,200) and aerospace/defence (1,160) leading the pack.
After falling to a 15-month 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 Inc 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 telecommunications sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
Meanwhile, the automotive sector, which leads all other industries in year-to-date job cuts with 1,22,212 layoffs has seen layoff announcements decline in each of the last three months. These companies announced 2,716 job cuts in July.
"Declining layoffs in the automotive industry may not be indicative of a turnaround. Instead, these employers simply may not have any room for additional job cuts if they hope to build new fleets of more eco-friendly cars," Challenger added.
With consumer and business spending at a standstill transportation companies have little choice but to make further cutbacks in staffing, it said, adding, that a surge in hiring could take place around the holidays.
Other sectors which saw downsizing during July are government/non-profit (7,131), industrial goods (6,548) and financial (5,030). While economic conditions and cost-cutting claimed over 58,000 jobs, voluntary severance led to 15,070 job cuts in July.
Employers also announced plans to hire a total of 17,183 employees with retail (14,200) and aerospace/defence (1,160) leading the pack.
TCS to hire 25000
Bangalore: In a move that could bring a smile to many faces, Tata Consultancy Services (TCS) has announced that it will hire 25,000 people globally in 2009, with 90 percent of them in India alone. Though the number is bigger when compared to the hiring these days, it is less than last year when TCS appointed around 35,000 people.
With this recruitment drive, TCS also plans to expand its presence into the tier-II cities in India. "We will be hiring 25,000 people this year, which means roughly 25 lakh square feet of work space required and, therefore, we need to grow outside the metros. Tier-II cities are our only focus for expansion in the country as the top rung are clogged and saturated," said Tanmoy Chakrabarty, Vice-President and Head of Government Industry Solutions unit at TCS.
Following this hiring spree, the total global manpower of TCS would go up to more than 1.8 lakh. This will put the IT services provider among large private Indian employers like Tata Steel, which has the total employee strength of two lakh. Going forward, the company, which has an estimated 32 percent market share, plans to cash in on the Indian government's plan to invest Rs. 40,000 crore on IT services.
Currently, 70 percent of the IT segment's revenue is from India, while the rest comes from the U.S., Latin America, Africa and South East Asian countries. However, the revenue contribution from Indian government businesses to the total company revenue of $6 billion is less than five percent, which the company intends to increase to more than 10 percent in the next three years.
With this recruitment drive, TCS also plans to expand its presence into the tier-II cities in India. "We will be hiring 25,000 people this year, which means roughly 25 lakh square feet of work space required and, therefore, we need to grow outside the metros. Tier-II cities are our only focus for expansion in the country as the top rung are clogged and saturated," said Tanmoy Chakrabarty, Vice-President and Head of Government Industry Solutions unit at TCS.
Following this hiring spree, the total global manpower of TCS would go up to more than 1.8 lakh. This will put the IT services provider among large private Indian employers like Tata Steel, which has the total employee strength of two lakh. Going forward, the company, which has an estimated 32 percent market share, plans to cash in on the Indian government's plan to invest Rs. 40,000 crore on IT services.
Currently, 70 percent of the IT segment's revenue is from India, while the rest comes from the U.S., Latin America, Africa and South East Asian countries. However, the revenue contribution from Indian government businesses to the total company revenue of $6 billion is less than five percent, which the company intends to increase to more than 10 percent in the next three years.
Tough for Indian IT Pros in UK
Bangalore: The UK government has accepted recommendations for stricter immigration norms and restricting job opportunities for skilled migrant workers from countries like India, reports Economic Times.
The Migration Advisory Committee (MAC) report submitted by the committee's Chairman, Professor David Metcalf to UK's Home Office last month recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from the current 17,000 pounds. This will make it tougher to earn points needed for allocation of work permits.
With more stringent norms, companies like TCS, Infosys, Wipro and Tech Mahindra which serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short term project assignments, may now have to look for local UK workers.
"These changes will ensure that businesses can recruit the skilled workers that the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce," Home Secretary Alan Johnson said in a statement issued by the UK Border Agency. He also added that the threshold of income at which migrant workers become eligible for work permits will now be raised to 20,000 pounds.
As per rules, companies will need to advertise for available positions for four weeks before employing migrant workers. "This will mean that, from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks - extended from two weeks - before companies can seek to employ individuals from outside Europe. This will ensure that British workers not only are first in line for jobs but also have more time in which to apply," the Home Office said.
MAC's recommendations for tougher intra-company transfer rules - a route adopted by many tech firms for sending Indian workers to work with customers onsite in the country, have also been accepted.
The Migration Advisory Committee (MAC) report submitted by the committee's Chairman, Professor David Metcalf to UK's Home Office last month recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from the current 17,000 pounds. This will make it tougher to earn points needed for allocation of work permits.
With more stringent norms, companies like TCS, Infosys, Wipro and Tech Mahindra which serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short term project assignments, may now have to look for local UK workers.
"These changes will ensure that businesses can recruit the skilled workers that the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce," Home Secretary Alan Johnson said in a statement issued by the UK Border Agency. He also added that the threshold of income at which migrant workers become eligible for work permits will now be raised to 20,000 pounds.
As per rules, companies will need to advertise for available positions for four weeks before employing migrant workers. "This will mean that, from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks - extended from two weeks - before companies can seek to employ individuals from outside Europe. This will ensure that British workers not only are first in line for jobs but also have more time in which to apply," the Home Office said.
MAC's recommendations for tougher intra-company transfer rules - a route adopted by many tech firms for sending Indian workers to work with customers onsite in the country, have also been accepted.
Morgan Stanley Looking at Exiting back office ops in India
Bangalore: U.S. bank Morgan Stanley is exploring the opportunities to exit its back-office operations in India. The bank, which was bailed out by the U.S. government, is looking at its options to sell the back-office unit that does IT development as well as finance and accounting-related work, reports the Economic Times.
Knowledge Process Outsourcing (KPO), equity research, complex financial modeling and portfolio analysis are among the work done here.
According to an investment banker, the potential value of the transaction could be $150-$200 million, in which the KPO operations have a share of $50 million. These operations employ around 2,000 people, of which 500 are KPO employees. Most of the operations are based out of Mumbai and a small part out of Pune.
The value of the deal will also depend on the amount of business the bank will sell. "The annual revenue run rate for Morgan Stanley's captive operations is $70-$80 million. So, the committed business could be around $500 million for five years," said a person with knowledge of the development.
Large Indian IT firms are the expected buyers, some of which already do development work for the bank. These include Infosys, Wipro and KPO firm like eClerx, which works for investment banks, travel and retail industry.
The need to convert fixed costs to variable costs by moving work done at the captive unit to third party vendors is among the factors which drive the sale of many captive units. When the work is outsourced to third party vendors, there is greater flexibility to increase or decrease work without having to hire a fixed number of employees.
Knowledge Process Outsourcing (KPO), equity research, complex financial modeling and portfolio analysis are among the work done here.
According to an investment banker, the potential value of the transaction could be $150-$200 million, in which the KPO operations have a share of $50 million. These operations employ around 2,000 people, of which 500 are KPO employees. Most of the operations are based out of Mumbai and a small part out of Pune.
The value of the deal will also depend on the amount of business the bank will sell. "The annual revenue run rate for Morgan Stanley's captive operations is $70-$80 million. So, the committed business could be around $500 million for five years," said a person with knowledge of the development.
Large Indian IT firms are the expected buyers, some of which already do development work for the bank. These include Infosys, Wipro and KPO firm like eClerx, which works for investment banks, travel and retail industry.
The need to convert fixed costs to variable costs by moving work done at the captive unit to third party vendors is among the factors which drive the sale of many captive units. When the work is outsourced to third party vendors, there is greater flexibility to increase or decrease work without having to hire a fixed number of employees.
Indian IT Companies Skip Campuses
Bangalore: With Nasscom, the software industry's apex body advising its members not to go to campuses for recruitment, the placements at engineering colleges has dried up. However, although 2008-09 was a difficult year for training and placement officers (TPO) at engineering colleges, 2009-10 could be the most critical year for campus placements, reports Economic Times.
JN Pitambare, Dean of Sinhagad Institute says, "Normally, 75-80 percent of the placements used to take place by mid-August. However, this year I will be happy if I am able to place even 10-15 percent of our students by December."
SV Dravid, TPO, DY Patil College of Engineering at Akurdi, near Pune said, "Last year, we had placed 150 students by this time. This year, not a single student has been placed. I hope the situation improves by December." Normally the big software companies finish recruitment by mid-August, placing around 75 percent of the college students.The core sector companies used to come from August, but this year they are non-committal.
Companies have been telling TPOs that their placement requirements are yet to be firmed up since things are not planned yet or they do not know how many projects they will get. "Most of the core companies are in a dilemma. They have promised to come for placements by December," said TPO Federation President Professor Shital Rawandale. Not only are there fewer jobs on offer for 2009-10 but the companies are adopting various techniques to defer the joining dates of candidates recruited last year or even to reject them.
Top colleges like the College of Engineering Pune (COEP) are also facing problems. "Of the 576 students placed last year, only 150 have joined till now. For the rest of them, joining has been deferred from July to December," said Assistant TPO, COEP, SA Meshram.
Some of the selected candidates are being asked to take more tests. With the recession, singing of bonds has also returned. "Some small and medium-sized software companies now want the candidates whom they had already selected to enter into two-year bonds," said a TPO.
JN Pitambare, Dean of Sinhagad Institute says, "Normally, 75-80 percent of the placements used to take place by mid-August. However, this year I will be happy if I am able to place even 10-15 percent of our students by December."
SV Dravid, TPO, DY Patil College of Engineering at Akurdi, near Pune said, "Last year, we had placed 150 students by this time. This year, not a single student has been placed. I hope the situation improves by December." Normally the big software companies finish recruitment by mid-August, placing around 75 percent of the college students.The core sector companies used to come from August, but this year they are non-committal.
Companies have been telling TPOs that their placement requirements are yet to be firmed up since things are not planned yet or they do not know how many projects they will get. "Most of the core companies are in a dilemma. They have promised to come for placements by December," said TPO Federation President Professor Shital Rawandale. Not only are there fewer jobs on offer for 2009-10 but the companies are adopting various techniques to defer the joining dates of candidates recruited last year or even to reject them.
Top colleges like the College of Engineering Pune (COEP) are also facing problems. "Of the 576 students placed last year, only 150 have joined till now. For the rest of them, joining has been deferred from July to December," said Assistant TPO, COEP, SA Meshram.
Some of the selected candidates are being asked to take more tests. With the recession, singing of bonds has also returned. "Some small and medium-sized software companies now want the candidates whom they had already selected to enter into two-year bonds," said a TPO.
Tuesday, September 1, 2009
Indian IT firms explore Belgium USD 6.5 Billion Deals
Bangalore: Indian IT firms TCS, Infosys and Wipro are exploring IT offshoring and back office projects in Belgium worth $6.5 billion from firms like AXA, Dexia Bank, Belgacom, UCB (drug maker) and car insurer Allianz, reports the Economic Times.
This year, customers in Belgium will spend around $1.8 billion on infrastructure management outsourcing, $2.6 billion on application development and maintenance and about $2 billion on BPO, according to an outsourcing advisory firm Quantum Step.
"We have recently started discussions with some Indian suppliers for pure offshoring of our ERP maintenance it would be fair to assume that until last year, we were not prepared for any such initiative," confirmed an official at one of the biggest Belgian enterprises.
As a number of Indian offshoring firms are looking to hire more local European sales professionals and project consultants, it makes out that now customers only want to deal with Indian offshore experts. "Many outsourcing dialogues these days are being spearheaded by Indian offshore delivery managers, unlike in the past when some local expert would help us gain entry into an account, the CIOs are specifically asking for Indian suppliers," said a top executive at one of the Indian IT firms pursuing outsourcing contracts in continental Europe.
TCS has informed that the company's early investments in the Belgian market are now bringing dividends. "Belgium represents one of the more mature markets for us within Continental Europe. After 15 years of operations in the country, we hold a significant share of the market and are now a prime IT partner to some of the largest BEL20 companies," said AS Lakshminarayanan, Vice President and Head, Europe, TCS.
"Our strategy to invest in localised delivery centres in Europe, particularly the ones in Eindhoven and Luxembourg, fuses well with our global network delivery model," he added. The company has around 700 professionals working for Belgian customers with around 200 working onsite. InBev, AXA and Belgacom are TCS' top customers in Belgium.
"The key European markets opening up for offshoring include BeNeLux, Nordics, Germany and France. Most of the European companies are more or less first time outsourcers. Some big multinationals had offshored previously such as ABN Amro, Ikea, Nokia and Philips. However, this did not trickle down to regional customers as many of them felt that there was cultural mismatch. Also, to a large extent, Indian providers also did not focus on this market," said Sridhar Vedala, Expert, outsourcing firm Quantum Step.
BASF AG, the world's biggest chemical company, Euroclear, Europe's largest settlement firm, and Anheuser-Busch InBev, the world's biggest brewer are looking at offshore outsourcing for the first time as they seek to lower their operational costs and cope more effectively with a new fall in demand for their products and services.
This year, customers in Belgium will spend around $1.8 billion on infrastructure management outsourcing, $2.6 billion on application development and maintenance and about $2 billion on BPO, according to an outsourcing advisory firm Quantum Step.
"We have recently started discussions with some Indian suppliers for pure offshoring of our ERP maintenance it would be fair to assume that until last year, we were not prepared for any such initiative," confirmed an official at one of the biggest Belgian enterprises.
As a number of Indian offshoring firms are looking to hire more local European sales professionals and project consultants, it makes out that now customers only want to deal with Indian offshore experts. "Many outsourcing dialogues these days are being spearheaded by Indian offshore delivery managers, unlike in the past when some local expert would help us gain entry into an account, the CIOs are specifically asking for Indian suppliers," said a top executive at one of the Indian IT firms pursuing outsourcing contracts in continental Europe.
TCS has informed that the company's early investments in the Belgian market are now bringing dividends. "Belgium represents one of the more mature markets for us within Continental Europe. After 15 years of operations in the country, we hold a significant share of the market and are now a prime IT partner to some of the largest BEL20 companies," said AS Lakshminarayanan, Vice President and Head, Europe, TCS.
"Our strategy to invest in localised delivery centres in Europe, particularly the ones in Eindhoven and Luxembourg, fuses well with our global network delivery model," he added. The company has around 700 professionals working for Belgian customers with around 200 working onsite. InBev, AXA and Belgacom are TCS' top customers in Belgium.
"The key European markets opening up for offshoring include BeNeLux, Nordics, Germany and France. Most of the European companies are more or less first time outsourcers. Some big multinationals had offshored previously such as ABN Amro, Ikea, Nokia and Philips. However, this did not trickle down to regional customers as many of them felt that there was cultural mismatch. Also, to a large extent, Indian providers also did not focus on this market," said Sridhar Vedala, Expert, outsourcing firm Quantum Step.
BASF AG, the world's biggest chemical company, Euroclear, Europe's largest settlement firm, and Anheuser-Busch InBev, the world's biggest brewer are looking at offshore outsourcing for the first time as they seek to lower their operational costs and cope more effectively with a new fall in demand for their products and services.
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