50 MILLION WORKERS MAY LOSE JOBS IF CRISIS WORSENS, WARNS ILO

Aruna Viswanatha, New Delhi
Mint  DNA  Asian Age  The Financial Express  

As many as 50 million workers could be left without jobs in 2009 if the economic crisis worsens, the International Labour Organization, or ILO, said.

Unemployment this year could increase by between 18 and 50 million, the United Nations agency that works for labour rights said in a report released on Tuesday. ILO says the unemployment rate is likely to rise between 6.1% and 7.1% in 2009, compared with 5.7% in 2007.

In a warning to India’s workers, the ILO report suggests the worst hit might be the “working poor”, those who earn less than $2 (or Rs 97.80) a day, and workers in “vulnerable employment”, a term that characterizes insecure employment and low productivity.

The largest share of the newly unemployed comes from developed economies, which shed 900,000 jobs in 2008. But the layoffs that began in US financial firms and spread to retail, automobiles, manufacturing, consumer goods and information technology, are now triggering aftershocks in developing economies.

In the worst-case scenario, where the unemployment rate could rise to 7.1% in 2009, the report says almost 1.4 billion of the world’s workers may become part of the working poor, many of whom live in India and South Asia.

In 2007, four-fifths of South Asia’s workforce were classified as working poor, with almost 60% earning less than $1.25 per day.

According to some scenarios, the report argues, 95 million additional workers in South Asia could fall back into extreme poverty this year.

Any such downward spiral would put the brakes on dramatic growth, since South Asia accounted for 33% of all the new jobs created in world in 2008, the report says. Its nearest competitor sub-Saharan Africa accounted for an additional 21%.

Separately, new data suggests Indian employers are already tapping on their brakes. A quarterly employment survey released on Tuesday by staffing firm TeamLease Services Pvt. Ltd identifies telecom as the only industry showing signs of hiring growth in India. The ILO report shows that South Asia still boasts a relatively low 5.4% unemployment rate.

North Africa tops that list, at 10.3%, followed by the Middle East, at 9.4%. In sub-Saharan Africa, 7.9% of workers are unemployed, and in East Asia, the region with the lowest unemployment rate, only 3.8% of the workers is looking for jobs. Employment by sector in South Asia mimics global patterns.

The service sector now employs 43% of the world’s workforce, and 30% of South Asia’s. Agriculture, which employed almost 41% of the workforce 10 years ago, is down to 33.5% worldwide.

South Asia’s share has dropped from 60% to 47%.

 

REDEFINING THE ROLE OF THE CFO

Viveat Susan Pinto
The Financial Express

As investigators attempt to put a finger on the quantum of fraud committed at Hyderabad-based Satyam Computer Services Ltd, it is increasingly becoming clear that nothing could have happened without the knowledge of the company’s chief financial officer (CFO) Srinivas Vadlamani, despite his assertions to the contrary. The role of the CFO in general has come under scrutiny following the Satyam episode, which brings us to the question: Does it need to undergo a transformation in the changing business order?

To most, the CFO is the number-cruncher rattling off figures concerning the company at results meets and conferences. But he also has a larger role to play, say observers, in raising finance, performing audits, understanding the income and expenditure of the company, thereby helping to put in place cost efficiency measures wherever required. “It is already very broad-based,” says S K Joshi, director (finance), Bharat Petroleum Corporation Limited (BPCL). “All listed companies adhere to Clause 49 of the Listing Agreement by the Securities and Exchange Board of India. This helps the regulator monitor corporate governance levels of these companies,” he says. Adds the CFO of a prominent Indian company, “There is a framework in place to monitor disclosures made by a company. It’s required if you want to bring about overall credibility.”

Despite this, frauds still happen. Satyam is a case in point. It was the fourth largest Indian IT services provider till a few months ago. It had bluechip clients with offices all over the world. Yet, founder and chairman Ramalinga Raju, overstated accounts by his own admission for several years. This was done ostensibly to prevent a takeover attempt by rivals since the promoters held a small percentage of the company’s shares. Poor financial performance would make the company an easy target, Raju reasoned in an open letter to the Satyam board earlier this month. Of course, all of this is in the realm of investigation at the moment.

But many observers are of the opinion that a fraud of this nature couldn’t have happened without the active collusion of members of Raju’s team, including CFO Vadlamani. It explains why besides Raju and his brother Rama Raju, who was the managing director of Satyam, even Vadlamani has been subjected to intense interrogation following their arrest recently. Says Bakul Dholakia, ex-director of the Indian Institute of Management, Ahmedabad, who is now director at the Adani Institute of Infrastructure Management, “Rules and regulations have been formed so that one can adhere to them. The issue is about enforcing them.” But the question is: who’s going to do this?

The position of the CFO like that of the chief executive officer is not a statutory one under the Companies Act, 1956. This means there are no rules and regulations under the Companies Act at least, which bind the conduct of the executives directly. It is the board of directors, which has been given express powers under the Companies Act to govern the conduct of the CEO and the CFO.

In the event of the board being compromised by either of the two, malafide conduct can be easily brushed under the carpet, leave aside it being penalised, say experts. That’s what seemed to be happening in the case of Satyam where Raju was allowed to overstate accounts for such a long time with no objection coming from any quarter, not even from external auditor PricewaterhouseCoopers. The audit firm’s motives have been questioned since the breakout of the episode, with some calling for its ban in the country.

 

DEALING WITH THE SLOWDOWN DILEMMA

Renuka Vembu
Express Computer

The global recession has made the job of CIOs tougher. Let us look at how they are coping up with the challenging times and what strategies they are formulating to deal with it

The economic meltdown has created ripple effects impacting industries across the globe; the IT/ ITeS, BFSI and the service sectors being the major verticals taking the hit. But with increasing security concerns, technological advancement surging at a rapid pace, the growing importance of service delivery timelines, and real-time access and decision-making, the job of CIOs, to give an optimum level of performance amidst working under pressing budgets, is a tough one. Additionally, they also have to adhere to new compliance and environmental regulations and grapple with new products and operations. Though it is an established fact that IT no longer just aids business, but is an integral part of business, in today’s scenario, IT heads are walking on tight ropes in an effort to attain a balance between the performance scale vis-à-vis the cost factor.

Under the scanner
The areas where spending can be restricted wholly depends upon the nature of business, scale of operations, need of the company, their focus for the future and the ways they have chartered out to deal with the changing scenario and the fields where amendments have been impending. While some CIOs eye the day-to-day operations to pull the budget strings, some take a medium-term view while still others adopt the long-term approach to even out the edges.

T G Dhandapani, Chief Information Officer, SCL-TVS Group, said, “As a CIO, my attention is not only on IT capex and opex control but also to look to hasten IT spend that will impact efficiency gains or cost cut elsewhere in the short run. We re-look at assumptions made on various projects and identify the fat caused by ‘over design’ and ‘changed scenario.’ This helps us in reducing non value adding cost. Any new IT enabled business investment will have a target for return, and a cross functional team from business and IT will have joint ownership to ensure flow of returns. This remodeled scenario will ensure that the IT team aligns technology initiatives to the business goals and at the same time creates ownership on business colleagues to own the IT enabled processes and get best out of them. The velocity of reporting by IT can also be enhanced, by cutting the period to shorter cycles—month to week to day to hour, to enable faster decisions and transparency that may be enhanced.”

The prudence here would be to embark on projects that will ensure maximum returns on investment with minimal risk proposition. Likewise, proposals that are under consideration and can be deferred, should be put on hold till the economic/financial situation brightens up.

Vijay Sethi, Vice President, IS and CIO, Hero Honda Motors, explained, “In the IT portfolio, there are always some ‘vital,’ some ‘essential’ and some ‘desirable’ projects. While we are continuing on ‘vital’ and most of the ‘essential’ projects, we are taking a hard look at ‘desirable’ ones and seeing what can be deferred or scaled down. Also, we are reviewing all the IT expenses to see if can defer some of them. There is an increased focus on workflows to improve efficiency in the system and reduce paper work. There is also focus on projects that would help to reduce maintenance costs, improve utilization of equipment and reduce energy costs.”

There will always be a certain amount that organizations will incur as their IT spend. The objective here should be to use the money prudently, towards identifying potential areas where there are chances of a slip-up and then working out ways towards rectifying it.

Remodeling the process
Upal Chakraborty, CIO, DLF Limited, pointed out the aspects that need to be considered while remodeling:

- Look at doing more with less
- Use tools to reduce manpower requirement
- Re-look at bandwidth/server costs (through consolidation)/ reduction of power costs
- Outsource areas where core competency is not there


Identifying areas of waste, aiming for reasonable and attainable profits/revenues, curbing wasteful expenses, can help organizations and CIOs scrape through the rough tide. Sethi added, “We need to review our equipment refresh policy and look where we can extend life of assets. Other areas are projects like application or infrastructure consolidation to reduce maintenance costs and putting technologies like e-learning to supplement training and reduce travel. I think economic conditions like this give us all an opportunity to have a closer and harder look at our way of working and take measures to remove inefficiencies in our systems and processes. I think another thing could be that we need to ensure that when we add expenses in our setup, we need to look at long-term impact of ‘fixed’ expenses that we may be adding in our setup.”

In some lines of business, with falling transactions, needs may not be greater. Vendors too understand that if they want to ‘partner’ and not just ‘sell,’ they cannot increase rates. Certain ROI does not change, for example, if return was in terms of saving in manpower or avoiding duplication of effort or benefits of a new integrated platform, such return does not change. Implementation of processes and procedures helps to streamline operations and leads to greater efficiency which indirectly contributes to cost saving and better ROI. Sharing of resources or phasing out expenditure will reduce the pressure on cash flow.

 

HOW WE FOUND 'THE BEST EMPLOYERS'

Business Today (Edition: January25, 2009)

The approach… This is the fifth year that the BT-Mercer-TNS team has conducted the survey to identify the Best Companies to Work For in India. The response was overwhelming with strong participation from a cross-section of industries. The core of how the study was done remains the same: we invited companies to participate, gathered data, contacted various stakeholders for feedback, and finally, analysed and ranked the Top 10 companies to work for in the country.

The unique tripartite approach to the survey continues to work successfully. Mercer defines the selection criteria, provides knowledge management support and result analysis, and proposes the ranking order. TNS coordinates all front-end interfaces with the participants through the study web site as well as through regular interaction. All the company-specific information is communicated to Mercer in coded formats. This arrangement ensures that Mercer, at no point and time, gets to know the company names till the final rankings are proposed, thereby avoiding any possibility of conflict of interest and bias. There are four stages to the study:

Study launch and registration: Business Today announced the study for 2008 through an article in its May 2008 issue. Interested companies were asked to register through the survey site, keeping in mind the eligibility criteria of four years of operations in the country and 200 white-collar employees. The eligibility criteria ensured a threshold level of complexity in people management based on headcount, as well as a degree of stabilisation of the processes based on the age of the organisation.

Data collection: The methodology was the same as the previous year. The initial contact with registered companies was established through a company overview questionnaire, through which the participants provided financial information, manpower statistics, demographic data, and the contact details for its employees, alumni, campuses etc. In the next step, the HR representative of the company was contacted and a comprehensive HR process and policy review questionnaire was handed to them so as to gain an insight into their human resource management policies and practices.

Data analysis: The company information on each of the above was collected by TNS in predefined formats and given unique company codes. This coded information was then given to Mercer for analysis. The Mercer team carried out the analysis of the responses across the four quadrants based on the company data. This analysis was conducted only for the top quartile of companies which received the highest scores on the internal employee perception questionnaire.

Scores and proposed rankings: The analysis of the company information resulted in scores on a 100-point rating scale for the four quadrants of the study. HR metrics were evaluated based on the complexity of the people management agenda, nature of industry, investments in people processes, including training and development, attrition, robustness of the budgeting processes and career velocity.