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Wednesday, July 11, 2007

UK's Tech Firms Turn To India, China To Overcome Skill Crunch

New Delhi


Engineering and technology firms in the United Kingdom are turning to India, China and South Africa to fulfill their skills requirement, a latest survey has said.

In the UK, 48 per cent of the companies in the sector have recruited people from overseas in the last 12 months to cover specific skills shortages, a survey by Institution of Engineering and Technology said, indicating a major chunk of this was carried out in India, China and South Africa.

"UK firms are turning to countries such as India, China and South Africa to plug the skills gap," it said.

The survey cautioned that the skill shortage is unlikely to improve in the short or medium term. This is likely to drive the companies to countries like India where cheap labour is available.

Proportion of companies that are expected to face difficulties in recruiting adequate qualified engineers, technicians or technologists over the next four years had risen to 51.8 per cent in 2007 from 40.2 per cent in 2006, said the survey, which took into account 500 respondents.

"The UK desperately needs to increase the pool of engineers and technicians to meet the demand," IET Director of Professional Operations Paul Jackson said.

The IET survey builds on information from 2006 and shows that although sector is growing, only 56 per cent of respondents believed they would be able to recruit enough people into engineering and technical roles this year.

The survey also found more than 70 per cent of companies in the UK is struggling to recruit experienced or mid career level staff, which could threaten growth and competitiveness.

It revealed that recruitment of women in the UK has remained static with just seven per cent of the engineering and technology workforce represented by the fairer sex.

The proportion of women in the sector would remain the same for the coming next four years as well, IET projected.

IET provides a global knowledge network to facilitate the exchange of knowledge and ideas and promotes the positive role of science, engineering and technology in the world.
Courtesy - DNA


STRONG RUPEE WILL DENT SOFTWARE EARNINGS: NASSCOM

Kiran Karnik, President of the National Association of Software & Service Companies, comments on the impact of a strengthening rupee on the software makers’ earnings. The industry earns nearly 70 percent of its revenue from the United States and a stronger rupee lower profit. Karnik spoke to reporters in New Delhi. “For every one percentage point rise in the rupee against the dollar you see a 30 to 40 basis points change in the overall profitability of companies. There will certainly be an impact on India's long-term competitiveness vis-à-vis other countries. “The long-term factors are fairly clear. Most economists agree that the rupee will appreciate because the economy is strengthening and the industry should take that into account. The problem is volatility. If you see a long-term increase of 1 percent points every year, the industry will manage.”

Monday, July 9, 2007

No longer all work and no play

There are valuable benefits for both companies and employees from innovative offsite programmes

Posted online: Saturday, July 07, 2007 at 0000 hours IST

Sridhar Sivaram is looking forward to the upcoming Microsoft Corporate Challenge (MCC). Nowadays, it’s the treadmill monitor—not the Sensex monitor—that holds his attention as he sweats it out in the run-up to this year’s challenge. “It’s a great way to test your physical and mental abilities. It not only helps you bond with your colleagues, but also offers an opportunity to network with other companies,” he says.

Last year, the MCC saw 40 companies vying for the champion’s title. This year is expected to see even more participants with the event being held in Thailand. But what entices them to spend time, energy and personnel on such events? Explains Microsoft COO Doug Hauger: “This event is a great platform for demonstrating and inspiring people to translate their potential into achieving real goals. It exemplifies the importance of people and teamwork.”

Indeed, offsite programmes are a favourite with HR managers to nurture corporate values like team spirit, employee bonding and leadership skills. Inter-corporate events, golf tournaments, team-building sessions, leadership programmes, employee volunteer programmes, rewards and incentive programmes now draw all manner of companies from new-age start-ups to established conglomerates. These sessions not only recognise employees for their contribution, and reward them accordingly, but also provide them the necessary environment to foster fresh energy for future activities, believe experts. “In Infogain we have Toastmasters International Club that enables its members to develop effective public speaking and leadership skills. There are guests from other corporate too who come and share their experiences. All this encourages cultural exchange, allows cross learning and employees get acknowledgement of self-potential,” says a company official. Points out Mona Gupta, HR manager, Cincom Systems India, “Taking people out of a formal environment like office and enabling them to interact in an informal environment helps bring employees closer to each other and also towards the organisation.”

Sandeep Banerjee of Accor Services agrees. Through its Accentive division, Accor Services develops strategies, reward solutions and technologies to help clients create sustainable relationships with their employees to improve performance and enhance productivity. It handles the incentive and loyalty programmes for various financial services clients like ICICI and Citibank. “Motivating and retaining human capital has become very important today. These programmes provide an ideal solution for employee incentives.”

Fun and games fit right into the strategy. Impetus Technologies, for instance, recently organised an intra-company cricket tournament. It has an in-house cultural cell called Spice that organises internal events like picnics, parties, sports competitions and movie screenings. The idea is to nurture the extracurricular skills of employees and provide opportunities to showcase their talents--be it in sport, music, dance, art or other fields. “We often participate in inter-corporate competitions like quizzes, sports or cultural competitions. This gives our employees a chance to socialise with peers from other corporates and exchange thoughts and ideas in an informal setting. Such events also help inculcate qualities like leadership, trust, team spirit and cooperation within the employees,” says Ambrish Kanungo, senior manager, HR, Impetus Technologies.

At Henkel, specific team or department meetings, sales and marketing conferences, and employee retreats are almost always held in exotic locales. “The informal setting gives employees an opportunity to interact freely with each other, and share an experience they can later discuss. Sharing best practices across regions happens best in settings such as these,” says Ashok Namboodiri, country manager, Schwarzkopf Professional, Henkel India Limited.

Early this year, the Standard Chartered Mumbai Marathon brought top executives from India Inc running the 42-km full marathon course. Though it may seem like an individual event, many participants run in groups constantly challenging and pushing each other to complete the entire distance. Remembers Kumar Anand from Standard Chartered, who has participated in several such team events, “I was part of one such event held in Singapore that required bonding with colleagues from different continents. In random teams, we were required to accomplish multifarious tasks and play to the best of the team’s strengths.”

Team dynamics is the watchword here. Strategic thinking, playing best on one’s team strengths and knowing how best to shield the team’s weakness is key to winning such professionally designed events. Those are the same values at work in the corporate world. “The MCC requires a competitive bent with spot decision-making under uncertain and trying circumstances. Winning the MCC in 2006 has truly been an exemplary team-effort and gives immense satisfaction and a sense of achievement to all of us. It shows that Standard Chartered’s philosophy of teamwork and quick thinking extends beyond board-rooms to battlegrounds,” says Anand.

To be sure, at many companies, employees spend so much time staring at computer screens they don’t have enough time to interact with others. Says Sameer Walia, MD of KPO The Smart Cube: “We have to be deliberately encouraged to talk to each other on a frequent basis. Such interaction is important as it forms the basis for creativity, innovation and, hence, competitive advantage. It is from this perspective that, at The Smart Cube, we lay a lot of stress on conducting regular corporate events and activities.”

The Smart Cube conducts outbound training programmes, quarterly intra-corporate meets and intra-company competitions, aimed at poking staff into dropping their guard and displaying their talent. “Imagine the flow of thoughts on a beach compared to that in a four-walled conference room! Moreover, such activities provide the opportunity to notice and reward employees, leading to improvement in employee morale, employee relationships and the atmosphere at workplace – all that goes into building a valuable, healthy culture,” adds Walia.

While the benefits of such activities for a company—improved morale, greater cohesion and team playing—are obvious, what’s in it for the individual? Says Sivaram, “These events teach you to think strategically, and react in a calmer manner after weighing the pros and cons. I am a funds manager and it has taught me to think through things before arriving at a decision.” Clearly, all work and no play is no longer the motto in India Inc.

Thursday, July 5, 2007

A question of duty’s flow

Despite living in nuclear families now, most of us were raised to believe in duty to our parents. Has that changed too?
Wider Angle S.Mitra Kalita

Finally, unwillingly, I have entered adulthood.

Around the world, the threshold varies: ages 13, 15, 16, puberty, graduation, first job, marriage, homeownership. But for me, and a lot of Indians I suspect, maturity really begins when we take charge of our parents’ lives.

I was initiated about a fortnight ago with a middle-of-the-night email from my brother saying my father needs an angiogram, which is basically a screening of his heart and clogged arteries. As routine as it is, I panicked and contacted every doctor I know. I googled and cried and cringed as I conjured the search terms reflecting my fears. Like “angiogram and mortality” and “heart surgery risks” and “Indian men and life expectancy”. I checked flights to the US and then decided to wait.

My fellow members of Generation X and Y—I’m right on the cusp—know this dilemma. Despite the transition to nuclear families, most of us were raised to believe in a certain duty to our parents. Has that changed, too?

Finally, unwillingly, I have entered adulthood.
Around the world, the threshold varies: ages 13, 15, 16, puberty, graduation, first job, marriage, homeownership. But for me, and a lot of Indians I suspect, maturity really begins when we take charge of our parents’ lives.
I was initiated about a fortnight ago with a middle-of-the-night email from my brother saying my father needs an angiogram, which is basically a screening of his heart and clogged arteries. As routine as it is, I panicked and contacted every doctor I know. I googled and cried and cringed as I conjured the search terms reflecting my fears. Like “angiogram and mortality” and “heart surgery risks” and “Indian men and life expectancy”. I checked flights to the US and then decided to wait.
My fellow members of Generation X and Y—I’m right on the cusp—know this dilemma. Despite the transition to nuclear families, most of us were raised to believe in a certain duty to our parents. Has that changed, too?

•••

“You give birth to children to make sure they take care of you when you need them,” says Dilip Kumar, a chartered accountant with ICICI Bank who lives in Mumbai. “I am staying miles away from my parents and I feel guilt at every moment.”

On 13 May, the 30-year-old received a call from his father, then staying in Noida, to say his mother had suffered an attack that partly paralyzed her. Still, he was told not to worry, that a full recovery was expected.

The next night, his father called again, this time sobbing. She had haemorrhaged and the situation was critical. Dilip checked flights—the last one to Delhi already had left.
With few job opportunities in their native Bihar, the family is flung across the country: Mumbai, Pune, Gurgaon, Delhi. One sister lives in Ranchi, another in Patna.

That whole night, Dilip could only think of two things: “She’s the happiest when I go to her,” the eldest son told me of his mother. “I believe she likes me more than my other siblings.”
The other was the painful realization he had never gifted his mother anything of significance. “Not even a sari,” he thought. “Oh man, God cannot do this. There’s still so much I have to do.”

•••
My first thought was how much has remained unsaid. Like many, our family is dysfunctional and imperfect—but close. My father does not ask about the weather or my feelings. We never say “I love you”, but do cook the other’s favourite foods during visits. So I desperately hope he understands what I really mean when I ask what kind of meals they serve in the hospital.

Based on hours of unscientific research, I advised him to have the procedure at a bigger facility, even if it means waiting a week or two. That’s where we are now and I have calmed down substantially. Still, there’s no going back to the innocence, the childish belief in immortality.
This waiting room is a thoughtful place to be. Many of us born in the 1960s and 1970s see parents as anchors to identity, to a past left behind but still one that shapes us and our outlook. One friend of mine recounts an American insurance agent’s laughter when he requested a heftier policy to provide for his parents in case of his death before theirs.

“No,” my friend said gravely. “You don’t understand. That’s the Indian way.”
Isn’t it?

•••

“Do you miss him?” I ask.

We are sitting in B.N.P. Sharma’s drawing room. I promised Dilip Kumar I would check on his parents.

“I cannot express this relationship between me and my eldest son,” he finally says. “He has adopted most of my principles. He wants to please everybody.”
The elder Sharma thought he would spend his retirement from the State Bank of India meditating in villages across Bihar, but it hasn’t worked out that way. Two years ago, he moved to Noida to be with a son working there. Last weekend, he moved to this flat in south Delhi to be closer to hospitals and his wife’s doctor.

He leads me into another bedroom where his wife, Yashoda Devi, 57, is getting her legs massaged by a daughter-in-law visiting from Pune. She can take little steps now, but still can’t grasp anything with her left hand.

Initially, Dilip pledged to fly to Delhi every weekend. But it got expensive and impossible between work obligations and a baby at home. His father told him there was no need anyway. What could he do? His work was more important.

“I wouldn’t like to see him without a job,” B.N.P. Sharma says, “for the sake of his future and his family.”

That’s the tricky thing about Indian parents. Our goals might have changed, but theirs seem the same, duty flowing downward.

Your comments are welcome at widerangle@livemint.com

MNC's CAPTIVES FEEL THE PINCH

MNCS' CAPTIVES FEEL THE PINCH
Reema Jose, BangaloreThe Financial Express

Even as the Indian IT industry is on course by showing a strong growth path to achieve its set target of $50 billion in revenues in the current fiscal, it is the multinational firms that have set up captives in the country that are feeling the pinch. The reason: With burdening costs of labour and operations, some of the firms have even been forced to shut shop. Over four MNC players including Apple, Pervasive, Accelrys and most recently Riya (Like.com) have had to fold up their Indian operations, while Sonim Tech, Healtheon Software and some BPO operations of Dell and Sykes had already moved out of the country citing employee-related issues.

A recent study by Bangalore-based research and consulting company Zinnov showed that high employee turnover (attrition) and wrong offshore models were the other reasons forcing these captive units to close its Indian operations. "The captives coming to India and especially, Bangalore have reduced significantly. It was at its peak in 2005, but now we get hardly any enquiries," Zinnov CEO Pari Natarajan said. He said the main reasons behind the captives moving out of India were because of low productivity from the Indian centres. "

This was mainly due to lack of project ownership, dependence on the US or the UK team for decision-making or lack of access to end customers," Natarajan said. According to Matt Simons, chief people officer at US-based software company ThoughtWorks, offshoring involves huge amount of travel and sometimes, slow project speed, causing shrinkage in projected cost differentials. "With rising costs, margins shrink further. If your captive is not in India for value propositions other than lower costs, you would start thinking whether it's worth being here any more," he said.

RISING RUPEE, WAGES MAY CRIMP FIRST-QUARTER PROFITS

RISING RUPEE, WAGES MAY CRIMP FIRST-QUARTER PROFITS

Pankaj Mishra, BangaloreMint

India’s top three software service vendors, Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd, are likely to announce fiscal first quarter results that reflect the continuing, dual impact of a strengthening rupee and higher wage costs on profit margins. The effects of a rising rupee, which appreciated by 6.6 percent in the April-June period against the US dollar, the currency in which Indian companies bill two of every three customers, and other costs are expected to result in a sharp Ebitda margin decline of as much as 4 percent calculated on a sequential or quarter-on-quarter basis, Citigroup equity analysts Surendra Goyal and Hitesh Shah wrote in a report on 1 July. Ebitda stands for earnings before interest, depreciation, tax and amortization.

As for the bottom line, profit will shrink nearly 18 percent sequentially in the quarter for Infosys, India’s second largest software company, to Rs939.40 crore on revenues of Rs 3,821.90 crore, the Citigroup analysts predict. Even on a year-on-year basis, the April-June quarter’s net profit growth will be just 17.4 percent—one of the lowest bottom line expansions in the recent past. Infosys will be the first major technology companies to declare results on 11 July.

Sensex vs Software Stocks Infosys, which had factored Rs 43.1 for each US dollar in its original annual guidance, “may do a downward revision in future guidance as the rupee has strengthened by almost 5.5 percent since then,” Citigroup’s Goyal and Shah wrote. Moreover, TCS, Infosys and Wipro are also expected to be impacted by the wage hikes for their workers this quarter, which is traditionally a weak three months for the tech services industry. Analysts at other investment houses, including UBS, CLSA, Edelweiss Capital, Mann Financial and Pranav Securities, claimed they were not yet ready with their individual company estimates. None of the tech companies can comment on such assessments because they are all in what is known as the “quiet period” ahead of formally reporting their results. But Kiran Karnik, president of trade body National Association of Software and Services Companies, or Nasscom, said on Monday that the pace at which the rupee has been appreciating “is too much, too fast, and a cause of concern for the industry”. Software revenues of Indian vendors are predicted to reach $50 billion (Rs2.05 trillion) this year, buoyed by a strong demand for application development, maintenance and business process outsourcing from western enterprises such as General Motors Corp., British Telecom Plc. and General Electric Corp.

While the outlook for outsourced services remains strong and tech vendors may revise upward revenue growth guidance in dollar terms, “we expect the rupee revenue growth to be muted (around 3 percent) during the quarter,” said Harmendra Gandhi, an equity analyst with Mumbai-based Brics Securities. Gandhi had a marginally higher prediction for Infosys in the quarter: Rs 1,018 crore net profits on revenues of Rs 3,906 crore. TCS and Infosys could be the worse affected because wage hikes—in the range of 15 percent to 20 percent—have been announced in the companies, putting further pressure on margins. “While TCS could be impacted by around 300 basis points, Infosys would see a 270 basis point impact on its margins because both these companies hiked the salary of their employees in India this quarter,” Pankaj Kapoor, who covers tech stocks at ABN Amro India, said. A basis point is one-hundredth of a percentage point. Executives at TCS, India’s largest software exporter, said in a May interview that the rising rupee could impact margins by almost 2.5 percent this quarter as the dollar had depreciated by nearly 9 percent since the beginning of the year. TCS chief financial officer S. Mahalingam called the quarter a “killer cycle”, adding the company had maintained a $1.5 billion currency hedge for two years.

He added that for every percentage drop in the dollar-rupee exchange rates, there is an impact of around 40 basis points on the firm’s margins. Citigroup expects TCS to post Rs 1,080.3 crore in net profits on revenues of Rs 5,209.6 crore for the April-June quarter, representing a near 8 percent contraction of the bottom line quarter on quarter. Wipro, ranked No. 3 among Indian tech vendors, will likely post Rs782.2 crore quarterly net profit, more than 9 percent less than the profits for the January-March period; revenues will also be likely 3.8 percent less in the latest quarter at Rs 4,167.7 crore.

Rising rupee a blessing for China

The appreciating rupee could turn out to be a blessing for China, which has so far struggled to match India's experience and expertise in the area of Information Technology offshoring (that is, the movement of technology jobs from high-priced markets to inexpensive ones). India's IT exporters are now walking the tightrope between escalating wages and the appreciating rupee, not to speak of demanding clients. China, with its control over its yuan and rather subdued wage inflation, could turn attractive for both American companies looking to set up their own offshore operations as well as for Indian IT services companies. These were some insights that came through in a chat that Mr Lakshmi Narayanan, Chairman of Nasscom, the Indian ITBPO industry's apex body, as well as Vice-Chairman, Cognizant Technology Solutions, had with Business Line
Excerpts from the interview: http://www.thehindubusinessline.com/2007/07/05/stories/2007070550990800.htm

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