BOSS, IT'S TIME FOR SOME TRAINING

Swati Anand, Bangalore
The Times of India

Training and mentoring are no longer terms restricted to entry-level employees. CEOs and top-level management too are being trained and assigned personal coaches and mentors to help them cope with the pressures of their challenging positions.

"With immense talent crunch in the market today, people are being poached from across verticals. People jump from diverse backgrounds, like petrochemicals to retail. So a certain amount of training becomes essential for the person being hired to have an overview of not just the company, but the entire sector," says J K Agrawal, head of BTI Consultants, the executive hiring arm of Kelly Services.

Internationally, companies have always placed emphasis on top-level training, but in India this is a recent phenomenon.

"CEO/CXO level training and coaching will become huge in the coming years. People are welcoming such initiatives since it gives them an objective view of their performance and helps them grow," says Ranjan Acharya, senior VP, corporate HRD, Wipro. "After all, it gets pretty lonely at the top."

Training at this level, however, is different from entry level programmes, where the period can extend to even three months. A new leader doesn't have the luxury of time.

"The initial training is conducted over a few days in the head office with other top management executives, which is usually abroad, particularly in case of an MNC. The emphasis here is more to acquaint the new candidate to the culture of the company," says Priya Chetty-Rajagopal, VP, Stanton Chase International.

After this stage, firms tailor their mentoring programme to the candidate's specific needs. Rajagopal gives the example of a pharma firm that assigned a mentor to their sales and marketing head based in Singapore when he took over India operations. "Company's mandate to the mentor was to broaden his horizons from sales and marketing to an overall outlook," she says.

Sometimes, the next level of training is not restricted to the head alone, but also includes his immediate team. "A CEO, after all, doesn't work in isolation. It's more holistic to include the immediate team, which could vary from two to twelve people, since the results then percolate across functions and to everyone in the organisation," says G Vishwanath, director, Organisations and Alternatives Consulting.

Some of the key areas of training are soft skills, public speaking, people and image management. Soft skills and people management are the most crucial areas since firms invariably land themselves with heads who're technically sound and have perfect resumes, but find it difficult to juggle various personality types in a team. This leads to poor productivity.

Companies are becoming more proactive in this area. Wipro, for instance, has a strong leadership training and executive coaching programmes in place. Some companies are also asking top-level employees to enrol for programmes at institutes like IIM, which would enable them to take on leadership roles, but such instances are still rare.

 

SIX COS EARN 30 PERCENT OF IT INDUSTRY REVENUES

Mumbai
The Financial Express

The growing IT industry saw over 29.3% of its revenues coming form top six companies Tata Consultancy Services (TCS), Wipro, Infosys Technologies, Satyam Computer Services, HCL Technologies and Tech Mahindra, says Dun and Bradstreet’s study on ‘India’s top IT companies 2008’. The firm has taken into account about 210 companies of which 86 are top listed IT firms that operate in the software development - packaged software, software services, hardware segment or IT services space and have revenue above Rs 10 crore.

This indicates the dominance of the six IT companies in the sector, while only 13.36% was contributed by remaining 44 companies. The report suggests that 60% of the companies surveyed were small size firms and accounted for 4.8% of the total turnover in FY07, and mid size firms that were about 33% and accounted for 20.8% and large size firms contributed 74.4% to the total turnover.

The report reveals that exports continue to contribute around 66% of the total revenue of $47.8 billion in FY07. Notably, services exports from India reached $81.3 billion in FY07, out of which IT & ITeS-BPO contributed over 38.5%. The study revealed that Indian IT companies expect to maintain an average annual growth of 50% in the next two years, further expanding India’s position in global services exports. Going forward, 96% of the surveyed companies displayed interest in growing through the organic or inorganic route. Offering value added services, expanding into new verticals and tapping new geographical locations among others emerged as the most popular paths to growth.

IT support & infrastructure management and IT consulting are expected to be the growing service lines for the next year and BFSI, retail & distribution services proved to be the most promising verticals. The study also focuses on challenges faced by the IT industry. While attrition and rupee appreciation remain bigger issues, competitions from countries like China and Malaysia that have low cost and better infrastructure are being seen as a major challenge for Indian IT companies.

 

SURVEY LAUDS 32 PERCENT GROWTH IN IT, BPO EXPORTS

New Delhi
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IT and BPO export revenues surged 32.6 percent to touch $31.3 billion in 2006-07 helped by steady expansion into newer service lines, increased geographical presence and unprecedented rise in investments by MNCs, the pre-Budget Economic Survey said today.

The survey noted that computer software contributed Rs 1,41,800 crore, while electronics hardware accounted for Rs 11,500 crore to the total electronics exports basket of Rs 1,53,300 crore.

It observed that majority of Fortune 500 and Global 2000 corporations were sourcing IT-ITES from India, while on the hardware side a slew of electronics and telecom manufacturers such as Nokia, Motorola, Foxconn, Flextronics, Samsung, LG, Ericsson and Alcatel had either set up their units or were in the process of investing in the country.

India is also emerging as a major R&D hub, it added.

“All the top 10 global fabless design companies have operations in India and 17 of the top 25 semiconductor companies worldwide have strong presence in the country,” it said.

The sector has also registered an increase in employment numbers, with the total headcount rising from an estimated 12.87 lakh in 2005-06 to 16.21 lakh in 2006-07.

“In addition, the sector is estimated to have helped create an additional 60 lakh job opportunities through indirect and induced employment in telecom, power, construction, facility management, IT transportation, catering and others,” the Survey said.

The sectoral growth has been supported by major policy measures such as Special Incentive Package Scheme (SIPS) announced by the Government to encourage investments in semiconductor fabrication; and constitution of task force to promote growth of electronics IT hardware manufacturing industry.

 

PC SALES SOAR: SURVEY

Bangalore
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Computer sales jumped 20 percent last year, led by laptops, as falling prices prompted more consumers to log in and companies accelerated automation, a survey said Wednesday.

Personal computer sales rose to 6.5 million in the year ended December, from 5.4 million in 2006, according to the survey by the market-research firm IDC India.

Notebook PC sales surged to 1.8 million, from 980,000, as prices that fell below Rs20,000 rupees ($500) made laptops the favoured choice of young first-time buyers.

“Notebooks are reaching out to more people because of the falling price point, portability and the power back-up option they offer,” Piyush Pushkal, manager of PC Research at IDC India, said in an interview.

“Usage of computers in the education space is increasing,” he said. “You can see young students carrying computers to college these days, which is a new trend.”

An economy that has expanded at an average annual rate of 8.6 percent in the past four years has put more money in the pockets of urban Indian consumers, who are splurging on consumer durables including mobile phones and computers.

Businesses from large banks to small groceries are upgrading computer systems to cut costs and stay competitive while the government is contributing to PC sales by stepping up the automation of its departments.

The world’s biggest business management software maker, Germany’s SAP, said earlier this month that India is its fastest growing market after more than doubling customers to 3,000 in 2007, from 1,350 at the end of 2006.

“There is a lot of expansion happening in the information technology sector; banks are opening new branches and organised retail is coming up,” Pushkal said. “That’s because of the overall economic growth.”

 

BHARTI, 5 FIRMS TO LAY $300 MN US-ASIA UNDERSEA CABLE

Mumbai
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Bharti Airtel is joining five other leading telecom companies to build a high-bandwidth, undersea, fibre-optic cable linking Asia and the US, with an estimated cost of $300 million (Rs 1,200 crore). The new cable, Unity, will carry data and Internet traffic between Asia and the US.

Global Transit (Malaysia), Google (the US), KDDI Corporation (Japan), Pacnet (Singapore) and SingTel (Singapore) are the other members of the consortium.

The consortium has selected NEC Corporation and Tyco Telecommunications to construct and install the system. The construction of the cable system would begin immediately, while initial capacity would be available in the first quarter of 2010, said Bharti Airtel today in a release.

“This investment is in line with our strategy to extend our international footprint across the globe to provide seamless connectivity to our customers through partnerships with the leading global companies. The Unity cable system will address the demand for increased bandwidth between Asia and the US as more and more services migrate to an online environment. This partnership will also provide alternative routes to meet the demands of our customers for increased levels of network resilience and redundancy,” said Airtel Enterprise Services President David Nishball.

The Unity cable system will provide connectivity between Chikura, located off the coast near Tokyo, and Los Angeles and other West Coast network points of presence. At Chikura, Unity will be connected to other cable systems, enhancing connectivity to Asia.

The Unity cable system will initially increase Trans-Pacific cable capacity by about 20 percent, with the potential to add up to 7.68 Terabits a second (Tb) of bandwidth across the Pacific.

 

TECHIES MAY TIGHTEN PURSE STRINGS OVER US SLOWDOWN CONCERNS

N Shivapriya, Mumbai
The Economic Times

As he winds up a chat session with friends at the local pub on the weekend, 24-year-old software professional Vijay Shankar emerges poorer by Rs 2,000 just this week. Youngsters like him have seen their careers and pay packets skyrocket in recent years and have amply fed the consumer-driven economic boom.

This year, however, they may just be going slow. Concerns over fall in demand in the world’s largest technology market, the US, have forced Indian outsourcing companies to save every cent possible, even if it means cutting variable pay to employees and hiring less robustly than before. Therefore, the consumer class represented by the two million outsourcing workers in the country say they are whittling down their expectations and spending plans accordingly.

Vijay Shankar (name changed) has seen his employer, TCS, reducing the variable component of his salary for a quarter, and smaller companies following suit. This has left him feeling his Rs 2,000 entertainment purse is perhaps too lavish. “I do not expect to continue spending such high amounts for long. The company just cut our variable pay by 1.5 percent and I expect that the salary structures are in for a change in the coming six to eight months. Even new job offers are not offering as much salary increases as there were two to three years ago,” he says.

The mood is reflective of what employees in the IT industry, the largest employer in the organised sector with about two million employees at last count, are feeling today. The note is one of caution, and depending on whether the situation improves or worsens, it could have implications on overall spending patterns.

“I was hoping for a raise this year. But there is no hope of that now. My salary may only be enough to take care of the kids’ day care expenses,” says an employee with one of the large Indian IT services firms. For now, indications are employees have not yet started scaling back on planned investments or cutting down on their spends. But very soon, if their companies become more careful with increments and promotions, they might.

“I’m going to wait and watch,” said one employee, whose company has become strict about expenses and is ‘cutting corners wherever possible.’ “Yes, at present my job is safe but there would be tremendous emphasis on performance and ratings,” he added.

Over the past few years, riding on high global demand for technology skills and companies fighting to retain trained talent, IT professionals have been buying bigger houses, investing in the stock market and in mutual funds, buying branded clothes, and eating out more frequently. Some of this may change in 2008 depending whether fat raises continue, how much easier it is to switch jobs and what kind of ‘salary jumps’ they can expect when they shift.

Madhu Bhojwani, COO of employment services firm EmmayHR, says although job opportunities will continue to be robust, ‘some amount of realism will set in candidate expectations’ and increments will not be as good as previous years.

Smaller expenses on nice-to-have things will be the first to be affected. Larger investment decisions that are more long-term in nature and have already been taken are not being scaled back. What is prompting caution among many employees are early signs that calls from consultants and head hunters seeking to recruit them elsewhere have come down marginally.

While most employees ET spoke to indicated there were still enough job opportunities outside the company, many agreed that the frequency of these calls had reduced. “Yes, my job is safe. But career opportunities outside are not as strong as it used to be,” said one employee with a Bangalore-based multinational services firm.

“Job hopping will reduce if the slowdown persists. And hikes may be lower,” said a 24-year-old fresher, mulling a change for higher monthly pay. “The 30-50 percent hikes seen earlier may not be there, so people may stay on in their current jobs,” he added.

 

TARGET ARCHAIC LAWS, NOT INDIVIDUALS, SAY IT COMPANIES

Deepshika Monga & PP Thimmaya, New Delhi/Bangalore
The Economic Times

Mukesh Ambani, Ratan Tata or Kumar Mangalam Birla should start consulting their lawyers. The next time some mishap takes place in their branch office in a remote location, they may have to face criminal proceedings. That's been the industry's reaction to the Supreme Court's decision upholding initiation of prosecution proceedings against Nasscom president and former HP GlobalSoft managing director Som Mittal in the case of rape and murder of a BPO employee.

The IT-BPO industry, in particular, is questioning the extent to which a CEO can be held liable. Industry players are advocating a relook at the laws, arguing it's not just an IT-BPO industry issue.

Quatrro Solutions MD Raman Roy says, "The Karnataka labour department looked at HP's processes and said that everything is fine and the same department filed a case against Som Mittal. It happened because the law requires it.

The laws were made when there were 10-people organisations. We have to initiate a debate on how good these laws are and relook at criminal liability, responsibility and negligence." The law which Mittal has fallen foul is an archaic piece of legislation called the Karnataka Shops and establishment Act 1961 which prohibits employment of women on night shifts in the establishments which it covers.

According to officials in the Karnataka Labour Department, the act was amended in 2003 to facilitate working of women employees during night shift - 8 pm to 6 am only for the IT/ITeS industry, subject to certain conditions. All IT companies which came under this purview had to provide the complete details to the local labour commissioner and there are certain conditions to be met with regard to women employees and one of them include free transportation facilities for women with adequate security. It was on this count that HP Globalsoft and its CEO is being prosecuted. Source say there is no such precedent in Karnataka.

According to the law, explains Supreme Court lawyer Pavan Duggal, if there is contravention by a company, the person "running the company" is held liable. The management has two exit routes: either claim to have no knowledge of the contravention or submit that it took place despite exercise of due diligence. "The law is currently vague and it needs to specify what 'knowledge' means as well as parameters of due diligence. Since the IT industry has different requirements, the laws need to be sensitive to it or it will hamper the growth of the industry," Duggal added.

Infosys Technologies' director HR, T V Mohandas Pai, says the current laws need to be amended so that all security issues are designated to a particular individual and a CEO should not be held responsible for all the issues of the company. This could also set a precedent as there was a similar incident involving Wipro BPO in Pune. The Indian IT industry is estimated to employ 2 million people by the end of FY08 against 1.6 million in FY07. It is estimated that women constitute around 30-35 percent of the total employees.

"We are very diligent about these issues. Under no circumstances we have a woman employee alone in a cab. Women are never the last to be dropped," says HR head of a leading IT firm. Industry players also feel that while security is an important issue, IT-BPO companies are targeted more often than others.

"The BPO industry has become a fair game for targeting. A lot of mishaps involving construction and transport workers happen but they don't get highlighted so much. In manufacturing, it's the immediate supervisor or the foreman who's questioned when something goes wrong, not the CEO. We must have a uniform law across sectors," said Cognizant vice-chairman and Nasscom chairman Lakshmi Narayanan.

Others point out that security is not just a company's concern but a larger issue. "We need to relook at the issue of liability. What's the police's responsibility? In case of a working woman, you can hold the company liable. Who is responsible for the security of a woman who's not working?" questioned an industry expert, on the condition of anonymity.

Adds Zensar Technologies CEO Ganesh Natarajan, "Security of employees is a prime concern not just for IT but every industry. There needs to be a code of best practices as we move to a 24/7 work environment which also recognises the limitation to what everyone can do. No single entity can be held responsible for security. It has to be a combined effort of the company, the transport agency and the government."

As India has become the global centre for IT offshoring and outsourcing, Indian IT companies also have to increasingly outsource a lot many of their functions like - transport, catering, facilities management among others. At the same time, employee welfare is the top most priority for all the companies be it the workplace atmosphere or providing benefits which go beyond the normal compensation.

HR heads say companies ensure there is no negligence on their part but unforeseen instances were sometimes beyond the control of processes. Because of its very prosperous image, the industry has also made IT professionals as soft targets for kidnapping. Besides, these companies are adding thousands of heads every year and the top five companies employ over 50,000 each.

 

IT SLOWDOWN FEARS QUICKEN AS FIRMS GO SLOW ON HIRING FROM IITS

Kalpana Pathak & Shivani Shinde, Mumbai, February 25, 2008
Business Standard

Information technology (IT) firms appear to have lost their appeal at the Indian Institutes of Technology (IIT). Campus recruitment figures by major Indian and foreign IT firms have dipped this year, raising further concerns of an industry slowdown.

Firms like IBM, HCL, Hughes Software and CSC opted out of placements this year and hiring by firms like India’s largest IT services provider Tata Consultancy Services (TCS), Infosys and Wipro has dropped.

Confirming the trend, a placement official from IIT Roorkee said: “While many companies say they have a particular number in mind and would recruit likewise, our alumni network at these companies informs us that these IT giants are exercising restraint in recruiting trainees due to a slowdown.”

Agreed a placement official from IIT Kanpur: “Like every year, the institute offered the regular number of students to these IT companies for placements but they did not pick as many students.”

Recruitment by IT companies at IIT Kanpur has gone down from 130 students in 2007 to 72 in 2008.

“Clients from IT firms are increasingly in the process of utilising their bench strength,” said Monisha Advani, managing director, Randstad India, an HR consultancy firm.

With the US slowdown and rupee appreciating against the dollar for most of 2007-08, IT firms are under tremendous pressure to manage margins and costs. IT firms have been in the news recently with TCS, IBM India, MphasiS (an Electronic Data System company) and Yahoo! India asking several hundreds of employees to leave on grounds of “poor performance or non-performance”.

“What we have been hearing these days is a clear case of skills mismatch. While non-linear growth is the way forward, it is something that will happen on a long-term basis. In the short term, IT firms will need to have volumes,” said Sudin Apte, senior analyst and country head, Forrester India.

 

STORAGE VIRTUALIZATION TAKES SHAPE

Neeraj Gandhi
Express Computer

Virtualization has been making waves in the IT industry for quite some time now. Curiosity regarding what it is all about and successful early deployments have combined to make this otherwise convoluted term an integral part of the IT lexicon.

Broadly speaking, there exist two components in the virtualization market, server and storage virtualization. While the former has been a fixture of the IT landscape for many years now, the latter is a comparatively younger phenomenon. In addition, it is server virtualization that drives storage virtualization. Collectively though, both of them are aimed at better utilization of the available resources, reducing complexity and increasing productivity. Server virtualization has hit the bull’s eye, and its market has witnessed huge year-on-year growth.

That said, changing business needs coupled with exponential growth, had fueled the demand for IT infrastructure upgradation. With storage forming a critical portion of the overall infrastructure, enterprises have started looking seriously at managing their storage requirements to support their business needs. Therefore, businesses have started looking at storage virtualization as a plausible solution.

According to Frost and Sullivan, the storage market in India is wide open. Banking on the tremendous rise of IT and ITeS companies, the country has seen an unanticipated need for storage. “Last year saw a boom in the disk storage market when revenues almost doubled, over the last couple of years. We expect to retain the same trend this year. India has not only established itself as the fastest growing disk storage market worldwide but has started necessitating improved technologies to organize these market assets. While analyzing this current trend in the Indian storage industry, the potential of virtualization is huge,” said Arun Nirmal, Research Analyst, Technical Insights, ICT Practice, Frost & Sullivan.

The storage virtualization market

No other innovation in storage has managed to grab so many eyeballs as has storage virtualization. The reason is simple, this technology enables simplified storage management in a virtualized server environment. It helps in improved recovery and provisioning, application/ storage performance and better uptime with less downtime during storage upgrades.

In terms of the market, Vishal Dhupar, MD, Symantec India & SAARC, said, “Storage virtualization is yet to pick up in India. Most Indian enterprises are either not using it or are planning to use it at a later stage. Today, only 19 percent of the enterprises have deployed storage virtualization solutions. But soon, 85 percent to 90 percent of enterprises will be using some form of virtualized storage to take full advantage of SAN technology. In the coming years storage virtualization will become a crucial factor in driving a company’s choice of storage vendor.”

What to expect?

The amount of data in businesses is increasing in an explosive manner. In turn, it is putting tremendous pressure on the limited storage infrastructure that is available. The irony of all this is that enterprises cannot afford to increase the number of data administrators at the same rate at which data is increasing. In such a scenario they are left with no option but to adopt a technology that can manage this data in an efficient manner.

According to Frost and Sullivan, developments in virtualized storage would be slow but steady, and that the concept would catch on with a lot of enterprises. Besides, there are multiple hidden factors that combine to form one big challenge for the virtualization industry. The main challenge would be the lack of trust on the virtualization front among large enterprises, which leads to improper storage planning which directly affects adoption. The second major challenge in this domain is from OEMs. “The general consensus among OEMs is that success in virtualization could lead to possible cannibalization of their other storage products. This creates a state of OEM noncompliance in making virtualization as a standard. Therefore, the onus is on the small manufacturers to demonstrate virtualization as a mainstream technology,” added Nirmal.

“Factors like data growth, increased storage needs prompt changes in the storage environment. There are a growing number of situations where building a SAN alone is not sufficient in terms of efficiency and system flexibility, and a virtualized solution is needed. Virtualized storage addresses typical enterprise concerns in the face of growing business challenges like manageability, scalability and availability. It reduces downtime due to failures or configuration changes,” said Venugopal.

 

EUROPEAN VENDORS EYE INDIA FOR MORE REVENUES, IT DELIVERY

Vishwanath Kulkarni, Mumbai
Mint

Large and mid-sized European information technology (IT) vendors such as Atos Origin SA, Logica CMG Plc and Groupe Steria SCA see India as a source for new revenues even as they strengthen their service delivery capabilities by leveraging their presence here.

Armed with consulting and systems integration capabilities, these vendors plan to chase contracts in India from customers in telecom, transportation, utilities, retail and, potentially, nuclear power businesses.

India has emerged as the top outsourcing market in the Asia-Pacific region in the December quarter, according to outsourcing advisory firm Technology Partners International Inc. Traditionally, vendors such as IBM Corp. and Accenture Ltd have dominated this market, which is now being pursued by local rivals such as Infosys Technologies Ltd and Wipro Ltd.

“We are planning to use India to leapfrog into Asia Pacific,” said Francois Enaud, chairman and CEO of Steria group, on the sidelines of the Nasscom Leadership Summit in Mumbai.

Last year, Steria bought UK-based Xansa Plc. for £472 million, or about Rs3,880 crore, acquiring 5,000 employees in India.

Steria has now a fourth of its workforce in India. “We plan to move more work offshore leveraging our presence in India,” said Enaud, adding European clients now want services delivered from offshore destinations that are priced competitively and boast of better skills.

Steria, which serves clients such as BT Plc., British Broadcasting Corp., BNP Paribas SA and Deutsche Telecom AG, earns about 2 percent revenues from the Asia-Pacific market, which it services from its Singapore offices. The company earns about 45 percent of its revenues from the UK and the rest from Europe.

In September, Steria announced it had made revenues of euro 956.2 million or $1.36 billion in the preceding 12-month period.

“We expect our revenues from Asia Pacific, led by India, Singapore and Australia, to touch about 10 percent in three to five years,” Enaud said.

Atos Origin, a French IT firm, aims to serve Indian banking and financial services, telecom and retail customers. The firm will bid for IT systems contracts for nuclear plants in India as and when they come up, said Hubert Tardieu, executive vice-president, global consulting and systems integration at Atos Origi

 

REMOTE INFRASTRUCTURE MANAGEMENT IS NEXT WAVE

TOP STORY

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After Application Development and Maintenance (ADM) and BPO, Remote Infrastructure Management (RIM) could be the next big offshore opportunity for India. According to a report released by Nasscom on Thursday, India is strongly positioned to capture $13-15 billion of global opportunity in RIM by 2013, leading to creation of 3.25 lakh to 3.75 lakh jobs. At present, RIM services revenue for India stands at $3.2-3.6 billion.

“RIM is a mission-critical service requiring sophisticated tools and reflects high customer confidence and relationships. By increasing RIM services, the Indian IT industry is moving towards becoming a fully integrated service provider,” Som Mittal, President, Nasscom, said.

The study conducted by McKinsey & Company highlights that the $524-billion infrastructure management services (IMS) industry — that manages an enterprises’ core IT systems, including hardware, software, connectivity and people — could become as important as the ADM and BPO industries that have dominated the rise of offshoring in the last decade. The IMS industry is moving towards a remote delivery model, where services are increasingly being delivered by vendors and captives from low-cost locations.

After discounting for factors such as infrastructure management spend in low-cost countries, defence and government contracts, spend in SMEs, services that cannot be offshored, and value captured by customers, the study estimates the global addressable market for RIM to be in the range of $96-104 billion. If one takes out a $7-billion chunk that is already being addressed by vendors and captives in low-cost locations, the unaddressed RIM market pie works out to $89-97 billion.
The study concluded that RIM as an industry could realise $26-28 billion in revenue by 2013, with India capturing as much as 50-55 percent share of this.

The majority of growth is likely to come from offshoring midrange services, and network towers, likely to account for about 70 percent of the overall opportunity, during this time. In terms of industries, the banking, financial services, and insurance industries would lead this growth, followed by telecom.

“Given its leadership in IT and BPO, India has a substantial head-start over other low-cost locations such as Singapore, Malaysia, Brazil, Eastern Europe, and the Philippines. India-based vendors have increasing scale and maturity, deep customer relationships, access to sound technical infrastructure, and ability to manage a large low-cost talent pool.

Finally, it’s the convergence of factors such as evolution in technologies and IT architectures, changes in customer behaviours and demand, and developments in the vendor and offshore supply environment, that have propelled the industry at a pace faster, and will continue to accelerate RIM adoption,” Vivek Pandit, Partner, McKinsey & Company, said.

For India to sustain its leadership in offshoring and realise the full benefits of the RIM opportunity, several challenges must be addressed, the report pointed out. “The central and state governments need to act in unison to address the issues of talent supply and quality, industry benchmarking, and security enforcement, amongst others,” Vineet Nayar, CEO-HCL Technologies, and Chairman, Nasscom-RIM Forum, said.

 

500 TCS STAFFERS ASKED TO RESIGN FOR POOR PERFORMANCE

Mumbai
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Information Technology (IT) firms appear to be hardening their stance when it comes to assessing employee performance to raise employee productivity in the wake of a rising rupee.

For instance, India’s largest IT services provider, Mumbai-based Tata Consultancy Services, today said that around 500 (around 0.5 percent of its total employee strength of over 100,000) of its staff had resigned due to poor performance.

TCS’ move follows the cut that the company had effected on the portion of variable pay linked to the employees performance, reducing the salary by about 1.5 percent for the January-March 2008 quarter.

Commenting on the staff-cut, a TCS spokesperson said: “Our company has a biannual appraisal system — one between June and July, and the other in January-February — when we rate employees on a scale of 1-5 (5 being the highest). Those employees who score a low figure of 2, for instance, are asked to either repeat their training programme or are sent for counselling — depending on whether they are freshers or middle management executives. Those who cannot meet the performance requirements of our company are asked to look for another job.”

Last year too, around 500 people suffered a similar fate since they could not meet the performance rating numbers, the spokesperson pointed out.

In the third quarter ending December 31, 2007, TCS added 4,037 net staff taking its total headcount to 108,229, up from 83,500 a year ago. At the close of trade, TCS shares were down around 2.72 percent at Rs 949 on the Bombay Stock Exchange.

Meanwhile, TCS also announced that it has appointed Ajoyendra Mukherjee as the global head of human resources following incumbent S Padmanabhan’s move to Tata Power as an executive director, operations.

“S Padmanabhan (Paddy) has been an integral part of TCS’ success and growth in the last two decades. We are particularly appreciative of the tremendous leadership and contribution he has made in the area of HR, a function he took over four years back,” said S Ramadorai, CEO and MD.

“We would like to welcome Ajoy Mukherjee in his new role which he is well-equipped to perform given his vast experience in this company and industry.”

A graduate from BITS (Pilani), Mukherjee joined the company in 1980, and was vice-president and head of operations, eastern region. Ritu Anand has been appointed as the deputy global head of human resources and will report to Ajoy Mukherjee.

IBM too, which has 73,000 staffers in India, is working on ways to certify the skill levels of its employees. A week ago, the firm laid off 500 to 600 freshers.

Other IT firms may follow suit, said analysts. An IBM spokesperson said the move was “no hindrance to the business. It was merely based on the employees performance”, adding that IBM India today expanded its operations in UP with a new Global Delivery Centre in Noida.

The company will open another centre in the vicinity. Both centres will house close to 3,000 employees once fully staffed.

 

CITI PUTS BPO UNIT SALE ON HOLD

George Smith Alexander & N Shivapriya, Mumbai
The Economic Times

Citigroup has put the sale of its BPO operations — Citigroup Global Services (CGSL) — on hold. The move comes at a time when Citi is looking at taking a hard look at its expenses, which could lead to job cuts across the world. The group had initially started the sale process in the second quarter last year. It was in the process of choosing a partner in Genpact late last year.

Citi has outsourcing operations in China, the Philippines, Latin America and Europe, of which CGSL was one of them. Sources said the group is now looking at taking a strategic decision on all these operations globally. “Citi wanted to have a relook at all the operations and has put the sale of the Indian operations on hold,” said a source.

There has also been a change in the senior management with Vikram Pandit taking over as the CEO from Chuck Prince. Sources said with the rupee appreciating by around 12% in this financial year, most outsourcing firms have felt the pinch on their margins. Many of these have also been witnessing a higher attrition in recent times, they said.

Citigroup and Genpact were close to coming to an agreement. But differences over the term of contracts and the price could not be resolved. The market crash has ensured a major fall in valuations of most major BPO firms. At $700 million, the deal suddenly looked expensive for Genpact. When contacted, Citigroup officials said: “We decline to comment on speculations.”

Said one investment banker involved in an earlier round of bidding for the captive unit: “The (Genpact) management will not be able to justify paying a valuation higher than its own to shareholders. Valuations of all BPOs have fallen because of the uncertainty in the environment.” The Citi BPO is expected to “go off the radar” for at least another 4-6 months. An e-mail sent to Genpact did not receive any response, as did a call to its president and CEO Pramod Bhasin.

“The BPO does end-to-end work, but the crisis in the mortgage business will have a cascading effect on all services, including loan processing and credit card collections. There was a minimum guaranteed business by Citi for a period of 5 years under the deal,” the executive said. The Citi captive was valued at over $ 600 million in the final bid, according to the figures quoted at that time.

Even under Chuck Prince, there were some difference of opinion on whether CGSL needs to be put on the block as for some, it’s an integral part of the firm. Citi had, in 2004, delisted Citigroup Global Services — earlier known as e-Serve. The shares at that time were held by Citibank Overseas Investment Corporation. At the time of delisting, the company was valued at around Rs 1,200 crore. Citi was looking at a valuation of around $600 million while selling off a majority of the stake in the outsourcing firm.

CGSL handles multiple operations for Citigroup entities globally, including retail banking operations like credit cards, mortgages, personal loans and the like. It has operations in Mumbai, Chennai and Gurgaon, too. It has some 11,000-12,000 employees, of which half service the international operations of the group. It caters to operations in more than 40 countries. Citigroup is present in over 100 countries internationally.

It has a separate knowledge processing outsourcing firm that processes activities for corporate and investment banking clients. It also has a technology outsourcing — Citi Technology Services. Citigroup had recently said it was writing down $22.2 billion. It posted a $9.83 billion loss for the fourth quarter as against a profit of $5.1 billion in the previous year. For the full year, Citigroup net income dropped to $3.62 billion as against a profit of $21.53 billion in 2006.