HP To Lays Off 6420

On Tuesday, H.P., the world’s largest technology company, reported double-digit declines in sales across its major businesses in its second quarter. H.P. also said that it would cut about 2 percent of its 321,000-person work force, or close to 6,420 people, as it tries to reduce costs.

The layoffs are on top of the tens of thousands of people already being let go as part of H.P.’s acquisition of Electronic Data Systems, a large services company.

The computer and printer maker also issued a more pessimistic full-year revenue forecast. It now expects revenue to fall from 4 percent to 5 percent from the $118.4 billion reported last year, while it had previously predicted that sales would fall from 2 percent to 5 percent.

Mark V Hurd the chief executive at H.P., pointed to better sales in China and among consumers in the United States as the only two bright spots of note. Over all, however, he remained somber about the broad economic trends that affect the technology sector.

“I just think we are going to need another quarter of data to really make a meaningful statement about any upturn or anything like that,” Mr. Hurd said in a conference call with analysts to discuss the second-quarter results. “Our guidance is meant to be a sort of ‘steady as she goes.’ ”

H.P., with a broad range of businesses spread across the globe, serves as a bellwether of the technology sector. The forecast from H.P., the world’s largest PC maker, comes in contrast to the most recent forecast from intel, the world’s largest chip maker. Intel executives have maintained that the personal computer market appears to have reached bottom weeks ago and that market conditions are better than expected midway through the second quarter.

Catherine A. Lesjak, the chief financial officer at H.P., declined to issue any similar, upbeat remarks about PC sales, saying only that “demand looks a lot like it did last quarter.”

Investors appeared rattled at least in part by H.P.’s revenue forecast that reinforced sentiment that the economy is not yet improving. Following the release of the results, H.P.’s shares dropped close to 5 percent, during after-hours trading, to $34.81. Shares of H.P. had closed in regular trading Tuesday, up more than 2 percent at $36.58.

H.P. said net income in the second quarter ended April 30 fell 17 percent to $1.7 billion, or 70 cents a share, down from a profit of $2.1 billion, or 80 cents a share, in the same period last year. Excluding charges, H.P., based in Palo Alto, Calif., earned 88 cents a share for the period ended April 30.

H.P. surpassed the earnings expectations of analysts surveyed by Thomson Reuters by 2 cents, while its revenue matched expectations.

Like other hardware makers, H.P. has had big declines in its major businesses. Notebook PC sales fell 13 percent; computer server and storage sales tumbled 28 percent; software sales fell 15 percent and sales of printers and related technology fell 23 percent.

Given such circumstances, Mr. Hurd focused on H.P.’s continued efforts to cut costs, allowing it to stay on pace with earnings expectations even while revenue was harder to find. The company reported record cash flow from operations of $5 billion in the quarter.

“The results do point to the stability of the H.P. model,” said Shannon Cross, the managing director of Cross Research, an equities research firm.

Mr. Hurd often emphasizes H.P.’s ability to alter its costs from quarter-to-quarter by making tweaks to the company’s vast supply chain. In addition, H.P.’s $13.9 billion purchase of E.D.S. last year has given it a new source revenue from services that has aided recent results.

H.P.’s services revenue increased 99 percent with the addition of E.D.S., to $8.5 billion. Since services deals often cover a number of years, the revenue tied to the agreements tends to remain steadier than hardware sales. Mr. Hurd’s focus on running such a lean organization does come with certain costs. The latest round of layoffs adds to the massive E.D.S.-related cuts and salary reductions across the company. “It all has to impact morale,” Ms. Cross said. “But I think people also understand that tough decisions need to be made.”

Infy: 1500 Resumes in Job Market

Bangalore: The slowdown has proved to be a hard ground for the survival of the employees in Infosys, who have resorted to consultancies to seek new jobs. More than 1500 employees of Infosys have filed their resumes on various placement firms, in the last two months.

"Around 1300 resumes have been posted by Infosys employees, of which many of them are in the level of project managers," said Kris Lakshmikanth, Founder CEO and Managing Director, Head Hunters. HRM Consultants, a consultancy firm have received around 60 resumes. "During the last few years, resumes from Infosys were very rare, but this year we have received quite a few," said G.S.Lakshmiprasad of HRM Consultants.

There are other placement centers like HROne, Magnum Consultants and CR Executive Search, which saw many Infosys employees posting their resumes. Adding on to the insecurity, Infosys has laid off around 2100 people owing to non-performance.

Commenting on the sudden layoff, Ruchi Gopal of Magnum Consultants said, "Companies will see their balance sheet, so, handing pink slips to the employees is fair, if they were given proper notice period prior to the layoff."

However, the layoff happened without any prior notice to the employees. According to an employee who has been fired, they were called for a meeting with HR managers, and were immediately given two options either to resign voluntarily or get terminated. "

The company is especially, getting rid of the project managers. If a project manager had been handling 25 people, now he will have to manage 50 people as they are reducing the bulk," said Lakshmikanth.

US Trade Unions: NO to Offshoring

Bangalore: As MNCs cut jobs in big numbers to rein in costs, IT workers and their unions in the U.S. are now up in arms against offshoring work to cheaper locations like India, reports The Economic Times.

Microsoft, which announced first job cuts in its history, and IBM are among those facing a backlash from tech worker unions and policymakers. Washington Alliance of Technology Workers and Alliance IBM are two organizations of IT workers at the Big Blue running a campaign against the proposed 2,800 job cuts announced recently.

Lee Conrad, national coordinator of the Alliance, said, "The Alliance is strongly urging IBM not to go forward with a new round of job cuts and to stop the off-shoring of US workers' jobs."Consulting group Challenger, Gray and Christmas said last month that electronics, computer and telecommunications companies in the U.S. have cut their workforce by around 186, 955 professionals in 2008, up almost 75 percent from 2007.

According to the US Department of Labor, the unemployment rate during December last year rose from around 6.8 to 7.2 percent with almost 2 million workers losing their job between September to December.On the other side, IBM employs over 70,000 professionals in India and has plans to increasingly serve its global customers from the country.

"There is a growing concern among employees that IBM will accelerate the off-shoring of our jobs. To offshore U.S. jobs in the middle of an economic crisis and rising unemployment is simply unacceptable," said Tom Midgley, Alliance president in a January statement."We will work with our elected representatives to push for legislation that protects U.S. jobs and calls for the full disclosure of IBM's offshoring and outsourcing of American jobs."At the same time, policymakers in the U.S. are already proposing new regulations to curb offshoring.

In his letter to Microsoft's chief executive Steve Ballmer last month, Senator Chuck Grassley asked the company to give priority to American workers. "My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers," he said in his January 22 letter. "Our immigration policy is not intended to harm the American workforce." Microsoft plans to cut around 5,000 jobs in the U.S.However, experts such as Partha Iyengar, vice president at Gartner say that unavailability of required IT skills remains a key driver for offshoring.

Senator wants Foreigners to be laid off first

Washington: An influential senator has asked U.S. companies to make efforts to fire foreign workers first while making lay-offs during the current economic downturn - a move that could affect thousands of Indian professionals.In a letter to Microsoft, which employs thousands of people through the H-1B visa programme, a majority of them Indians, senator Chuck Grassley urged the IT giant to make efforts to retain qualified American workers during its recently announced lay-offs.

Noting that last year, Microsoft had advocated for more H-1B visas in the US Congress, he said the purpose of the H-1B programme for professionals in "specialty occupation" is to help companies hire foreign guest workers on a temporary basis when there is not a sufficient qualified American workforce to meet those needs, he said.

However, the programme is not intended to replace qualified American workers, Grassley said asking questions of both American and foreign based companies about their use of the H-1B visa programme. A majority of the 60,000 professionals given H-1B visa every year are from India.

In his letter reacting to Microsoft Corporation's reported move to layoff 5,000 jobs over the next 18 months, Grassley expressed concern "that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan"."As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers," he told Microsoft Chief Executive Steve Ballmer.

It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programmes, Grassley said."

My point is that during a layoff, companies should not be retaining H-1B or other work visa programme employees over qualified American workers," he said."Our immigration policy is not intended to harm the American workforce.

I encourage Microsoft to ensure that Americans are given priority in job retention.""Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times," he said.Microsoft spokesperson in a statement said: "We care about all our employees, so we are providing services and support to try to help every affected worker, whether they are US workers or foreign nationals working in this country on a visa."

1,80,000 IT Employees may lose jobs

Washington: As many as 180,000 employees in IT and related areas will become jobless this year if the layoff announcements by companies are to maintain the current pace."At the current pace, the year-end total could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 job cuts," says a report by Challenger, Gray & Christmas, a Chicago-based global consulting firm which tracks job-cut announcements.

Telecommunications, electronics and computer industry companies had cut 140,422 jobs through October 31 this year, says the report, adding that 69,654 tech-sector jobs had been cut in the third quarter of the year alone. The report did not include major layoffs announced since October 31 such as the 5,000 to 6,000 job cuts at Sun Microsystems."

The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets," chief executive John Challenger said in a statement. "Businesses and consumers have slashed their spending and no industry is immune," he added.

The 180,000 job cuts in the tech sector would be the most since 2003 but would still be far fewer than the 695,581 jobs lost in 2001, with the bursting of the dot-com bubble. In 2007, a total of 107,295 tech-sector jobs were cut.

Perot Systems Lays off 450

Perot Systems reported earnings of $28 million, or 24 cents a share, for its first quarter as the outsourcing company reported pressure on revenue and worker layoffs.

Earnings were up just slightly from a year ago when Perot (NYSE: PER) had earnings $28 million, or 23 cents per share.

Revenue was $621 million, down from $680 million from the first quarter of 2008. The company continued to see pressure on its revenue due to declines in contract renewals and decreases in project-based services.

Perot Systems said it is mitigating its lower project-based revenue with a layoff of 450 employees. The work force reduction is expected to save $30 million annually, once fully implementyed by the third quarter.

Perot said its earnings were in line with analysts' expectations, but its revenue was below expectations. For the second quarter, the company is expecting earnings per share of 23 to 25 cents.

Obama's move to end tax breaks for US firms who outsource

New Delhi: India Inc believes the move by the Barack Obama administration to reduce tax breaks for US firms that ship jobs overseas will hit American companies more than impact on the Indian outsourcing industry.

"It's a more US-US issue rather than one aimed at stopping outsourcing, or off-shoring, or anything to do with India," said Som Mittal, president of the National Association of Software and Service Companies (Nasscom), a representative boddy for the industry.

"If you look at Indian companies operating in the US, or elsewhere, they work there and pay taxes there. Hence, it is not about stopping outsourcing, or off-shoring, but just to collect taxes," Mittal told IANS.

His comments came after President Barack Obama said Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps.

"It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens.

"I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens."

According to a McKinsey-Nasscom study, the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

The Confederation of Indian Industry also felt that the remarks were more in the nature of posturing and that it was not intended at curbing outsourcing of work by US firms to Indian companies.

"It's an internal issue. It will only reduce their competitiveness," said Hari Bhartia, vice president of the chamber. "It is a populist posture. Perhaps his (Obama's) intention was not the same. However, it sends a wrong message."

According to Girish Vanvari, a tax expert and executive director with accounting and consultancy major KPMG, the Obama administration's move was aimed at keeping American money within the country.

"I don't think this will happen. America is one of the largest free markets in the world - otherwise, you will have companies paying as much as 70 percent of their revenues as taxes," Vanvari told IANS.

Nasscom maintained that large US companies had subsidiaries across the world and that more than 50 percent of their revenues were coming from outside the US. The US move was to ensure that the large profits kept outside are also brought into the tax net.

"President Obama is intending to collect those taxes to create more jobs in US," said the industry lobby that sent a delegation to the US last month to meet lawmakers, urging them to refrain from protectionist measures.

Infosys Technologies, India's second largest software and outsourcing company, also felt that the US proposal was aimed at closing corporate tax loopholes and crack down on overseas tax havens.

"We do not believe that it has anything to do with IT outsourcing done by US corporations," a spokesperson for the company said.