The economic slowdown may have left scores of people with less to do, but it is paradoxically increasing the workload of some others.
Those who stand on either side of the job hunt—human resource professionals and headhunters—are finding their hands full.
While HR professionals are being forced to come up with creative ways to let go of senior staff, recruitment experts are having a tough time coping with the flood of resumes from candidates hounding them for the few openings that come up at the higher level.
For many headhunters, it’s literally sleepless nights taking calls from jobseekers, or email in-boxes clogged with CVs, from senior management executives for whom the dream of relentlessly rising salaries of the past few years year has become a nightmare this year.
“With the crisis deepening, organisations have also had to lay off perfectly well qualified people at senior levels. Going forward, only the best will survive,” says Arun Das Mahapatra, managing partner at executive search firm Heidrick and Struggles.
Thousands of executives from the so-called C-suite (CFO, CMO, CTO etc) are on the hunt, reaching out to friends and former colleagues, turning pages of their rolodex and most importantly, hounding headhunters.
“The number of senior executives seeking jobs these days has gone up exponentially,” says R Suresh, CEO of Stanton Chase, a multinational executive search firm.
Unfortunately, new job creation is not keeping pace.
As India Inc copes with a slowdown that is widely expected to cut the rate of economic growth to around 6% this year compared with the 9%-plus average growth seen between 2004/05 and 2007/08, growth plans at most companies are completely scrapped or in deep freeze.
Headhunters speak of scores of senior executives who have been shown the door, but say many more are on the fence frantically searching for jobs, watching the notice period served on them by their existing employers tick by.
Senior executives in companies such as Goldman Sachs, Citibank, Merrill Lynch, American Express and Nomura are among the worst hit, victims of the employee cull taking place wordwide in the banking and financial services sectors.
Other sectors where senior executives have been hit hard include retail, real estate, media, manufacturing, IT and consumer goods.
“There are an unprecedented number of senior professionals, both here and offshore, who have been caught on the wrong foot, and are currently having to evaluate alternative employment options,” says Sonal Agrawal, CEO of Accord, a leading headhunting firm.
“Never before have we had so many well qualified, experienced managers with successful track records reaching out to us. Unfortunately, we have relatively fewer opportunities to show them.”
The desperation levels are rising. Headhunters say they are besieged with calls from candidates who want a job at any cost, with some candidates even willing to even take a 25-30% cut in fixed salaries.
Gone is the habitual job-hopping of the boom times. Also gone are the days of bonuses — sign-on and staying on — and fixed performance incentives.
Thursday, April 30, 2009
The Middle Finger
Isn’t the picture below, of Maharashtra chief minister Ashok Chavan and his wife, marvellously illustrative of our politicians’ attitudes towards us?
The Chavans aren’t expressing their inner feelings here—they’re showing us that they have voted. The election commission has mandated that in these elections, indelible ink is to be applied to the middle finger of every voter. So if your sleazy neighbourhood politician accosts you in the street and asks you if you voted for him, show him the finger.
(Link via email from Salil. Picture courtesy ToI.)
Serial shoe strike on; slipper flung at Yeddyurappa
Bangalore: Karnataka Chief Minister B S Yeddyurappa became the latest target of the 'footwear missile' on Tuesday when a slipper was hurled at him while he was addressing an election meeting. Police said it was the handiwork of a vagabond who appeared drunk.
The incident took place while Yeddyurappa was campaigning for the Bharatiya Janata Party (BJP) in Channarayapatna in Hassan district, around 150 km from Bangalore. The slipper fell far from the dais and the man who threw it was nabbed by police and charged with assault.
"His (the slipper thrower's) name is Chandrashekar and he is aged about 34 years. He is a vagabond and appeared drunk," N Kumar, Channarayapatna police inspector, said on phone.
"He has been charged with 'assault or criminal force with intent to dishonour person, otherwise than on grave provocation' (section 355 of Indian Penal Code) and 'intentional insult with intent to provoke breach of peace (section 504). Punishment will be under section 506 (punishment for criminal intimidation)," Kumar said.
The section provides for imprisonment up to two years with or without fine.
Hassan is the stronghold of Janata Dal-Secular (JD-S) candidate and former prime minister H D Deve Gowda who is battling the BJP's K H Hanume Gowda.
This is the latest of many sensational footwear hurling incidents this election season. First a journalist threw a shoe at central Home Minister P. Chidambaram during a press meet in New Delhi, and subsequently Prime Minister Manmohan Singh, the BJP's prime ministerial candidate L K Advani and Congress leader Naveen Jindal all fell victim to what is being called "footwear missiles".
Wednesday, April 29, 2009
Recession: Worse not yet over, says RBI
Warning that the worst may not be over yet, Reserve Bank Governor D Subbarao has said the global economic recession may not only continue through 2009 but could prolong to the next year as well.
"Even with current levels of policy intensity, the trough of the global recession is not seen until the end of 2009 and could get pushed out further if the policy responses fail to gain traction," Subbarao said at the International Monetary Fund-World Bank spring meetings.
Leading the Indian delegation to the International Monetary and Financial Committee meet in Washington, he said India is expected to grow at 6.5 to 6.7 per cent in 2008-09, and the real GDP growth for 2009-10 would be about 6 per cent.
A statement by RBI further quoted Subbarao as saying, "The most frequently asked question today is whether the worst is behind us. While there are incipient signs of business confidence and consumer spending trying to gain toehold, rising unemployment, high inventories and financial stress weigh heavily on overall demand conditions," Subbarao said.
The RBI's policy response was aimed at containing the contagion from the global financial crisis while maintaining comfortable domestic and forex liquidity as it launched three fiscal stimulus packages apart from other measures, he said.
"The combined impact of these fiscal measures is about three per cent of GDP. Through the Reserve Bank's actions (rates cut), the cumulative amount of primary liquidity potentially available to the financial system is about seven per cent of the GDP," Subbarao stated.
However, he said several challenges such as implementing the fiscal stimulus packages, revival of private investment demand, maintaining the flow of credit while ensuring credit quality, and preserving financial stability were still left.
Calling for a quick and internationally coordinated approach to "a daunting, but not an insurmountable challenge", he stressed on empowering IMF's capacity to grapple with the crisis. He also suggested a radical shift within IMF in tune with the changing world.
"While the recession has intensified in the advanced economies, emerging economies have been dented by the collapse in external demand and commodity prices, the tightening constraints on access to external financing and the retrenchment of capital flows."
Asking for India's greater voice and representation in the Fund, Subbarao also said, "We call for the introduction of an open, merit-based process, irrespective of nationality and geographical preferences, for the selection of the senior management of the Fund."
Tuesday, April 28, 2009
Tech Mahindra may use benched Satyam staff
HYDERABAD/MUMBAI: Tech Mahindra is hammering out a solution that would offer relief to the bloated workforce of the beleagured Satyam Computer
Services. The workforce with a large number of unultilized but technically qualified employees has been one of the biggest concerns since the Satyam sale.
The proposed arrangement, to be modeled along the lines of ‘secondment,’ will enable Tech Mahindra to use Satyam’s workforce for its projects instead of hiring people from outside. Secondment refers to transfer of a person from their organization of work to a temporary assignment elsewhere.
“We will definitely like to optimise some of our costs and strengths but it will be done with prior approval of both the boards because they are separate listed companies,” said Tech Mahindra’s president (international operations), CP Gurnani, in a response to an ET query.
The proposed arrangement, to be modeled along the lines of ‘secondment,’ will enable Tech Mahindra to use Satyam’s workforce for its projects instead of hiring people from outside. Secondment refers to transfer of a person from their organization of work to a temporary assignment elsewhere.
“We will definitely like to optimise some of our costs and strengths but it will be done with prior approval of both the boards because they are separate listed companies,” said Tech Mahindra’s president (international operations), CP Gurnani, in a response to an ET query.
The top management of Tech Mahindra and Satyam are exploring the feasibility of an arrangement akin to ‘secondment,’ said people familiar with the development.
Tech Mahindra may have a project that needs manpower with specific skill-sets. If these skill-sets are available with Satyam, their workforce can be assigned for the project. It can work both ways as the idea is to synergise skills, said a person with knowledge of the matter.
Tech Mahindra is focussed only on providing services to telecom clients but it could leverage the technical skills of Satyam employees for its projects and also expand the range of services it currently offers to telecom clients.
“The secondment is a good move, it will, on one hand improve the resource utilisation at Satyam and on the other hand, address the resource gap at Tech Mahindra. However, more importantly, the broader significance of this move is that the Tech Mahindra’s management team has got cracking post Satyam’s acquisition and we should not be surprised to see more action forthcoming in the near term,” said Alok Shende, principal analyst, Acsendia Consulting.
The nuts and bolts of such an arrangement may have to be worked out carefully, especially since Satyam will function as a standalone entity. The relationship between the two firms would have to be on an arm’s length principle, said an IT analyst who did not wished to named.
Satyam has a work force of around 48,000. Of this, nearly 80% work off-shore and the remaining are on-site workers. The bench strength is estimated at over 12%. But investigating agencies probing the scam at Satyam reckon the bench strength of offshore employees was much higher at 40% in September 2008.
The bench consists of employees who are not working on any billable projects. In effect, the bench adds to the cost but doesn’t contribute to revenues. Managing costs and bringing in new projects are critical to revive Satyam, which had to take a working capital loan to run its operations.
Tech Mahindra may have a project that needs manpower with specific skill-sets. If these skill-sets are available with Satyam, their workforce can be assigned for the project. It can work both ways as the idea is to synergise skills, said a person with knowledge of the matter.
Tech Mahindra is focussed only on providing services to telecom clients but it could leverage the technical skills of Satyam employees for its projects and also expand the range of services it currently offers to telecom clients.
“The secondment is a good move, it will, on one hand improve the resource utilisation at Satyam and on the other hand, address the resource gap at Tech Mahindra. However, more importantly, the broader significance of this move is that the Tech Mahindra’s management team has got cracking post Satyam’s acquisition and we should not be surprised to see more action forthcoming in the near term,” said Alok Shende, principal analyst, Acsendia Consulting.
The nuts and bolts of such an arrangement may have to be worked out carefully, especially since Satyam will function as a standalone entity. The relationship between the two firms would have to be on an arm’s length principle, said an IT analyst who did not wished to named.
Satyam has a work force of around 48,000. Of this, nearly 80% work off-shore and the remaining are on-site workers. The bench strength is estimated at over 12%. But investigating agencies probing the scam at Satyam reckon the bench strength of offshore employees was much higher at 40% in September 2008.
The bench consists of employees who are not working on any billable projects. In effect, the bench adds to the cost but doesn’t contribute to revenues. Managing costs and bringing in new projects are critical to revive Satyam, which had to take a working capital loan to run its operations.
Cisco still circumspect on investment in Satyam unit
KOLKATA: A day before the Satyam board meets in Hyderabad , networking giantCisco indicated that it is still examining the implications of Tech Presently, Cisco and Satyam share a relationship on multiple levels. Satyam provides technical and maintenance services to Cisco, as well as being a system integration and managed services partner. Conversely, Cisco provides Satyam with networking and communication technology. “As any prudent company, we are evaluating appropriate strategies to support business continuity. Cisco’s primary aim is to see the continued delivery of services from the Satyam team to enable us to meet our business requirements ,” a Cisco spokesman told TOI in an e-mailed statement on Monday. Expressing the US-based firm’s continuing circumspect stance on investing in the Satyam subsidiary, the Cisco spokesman said: “With regard to Satyam Global Lifenet, we have no specific comments at this point, since it would be premature.” In 2007, Cisco and Satyam had announced their intention to partner in a new venture for handling medical distress situations and health management solutions for global markets . Cisco had expressed a strategic intent to make a minority investment in the venture and was pursuing the project as part of the company’s extended $100 million venture program targeting Indian innovation. In January 2009, subsequent to the revelations by Raju, a Cisco spokesman had said: “While we had held discussions to explore the possibility of a potential minority investment in one of their subsidiaries (Satyam Global Lifenet), we have not reached any final agreement and are under no contractual obligation to make an investment towards the same.” | |
GM to axe 21,000 jobs in US, 5,900 in Canada
New York/Toronto, April 28 (IANS) Troubled General Motors announced Monday to cut 21,000 US factory jobs by next year, phase out the famous Pontiac brand and offer the US government stock in lieu of half of government debt.
GM also said it planned to close six more US units to have only 34 plants by 2010, reduce dealership by 42 percent from 6,246 to 3,605 and axe more salaried job.
The auto giant, which has so for borrowed $15.4 billion to stay out of bankruptcy since December, said it could still be forced to file for bankruptcy protection unless its bondholders swapped their claims for stock.
Announcing to phase out the 83-year-old Pontiac brand, the company said its Hummer, Saturn and Saab brands could also be sold or phased out by the end of 2010.
GM also said it would need additional government borrowings to the tune of $11.6 billion to stay afloat as it fine-tunes its restructuring plan.
The auto company said its 'US hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction, and level off at about 38,000 starting in 2011.''
GM (Canada), which currently employs 10,300 hourly wage workers, also announced Monday to cut them by 57 percent to 4,400 by 2014.
The Canadian subsidiary also said it will shut down about 310 dealerships by the end of 2010.
Monday's announcements by GM are part of its restructuring plans to be eligible for long-term loans from the US and Canadian governments.
Both the governments, which rejected the automaker's previous restructuring plan as insufficient, have given it till the end of May to get the new plan okayed to become eligible for billions of government loans.
GM Canada, which accounts for a little less than 20 percent of the parent company's overall production, has car and truck plants in Oshawa near Toronto, a transmission plant at Windsor near Detroit, and an engine plant at St. Catharines just near the US border.
It also has a joint venture with Suzuki at Ingersoll, not far from the US border.
While Oshawa's truck plant ceases operations May 14, the transmission plant will also shut down next year.
Japan's economy to shrink by 3.3% this year
April 27, 2009 17:38 IST
Japan's economy, the world's second largest, is expected to shrink 3.3 per cent in 2009, its worst contraction since World War II, the government said on Monday as it presented a record supplementary budget of $155 billion to finance a new stimulus package.
Japan's economy, the world's second largest, is expected to shrink 3.3 per cent in 2009, its worst contraction since World War II, the government said on Monday as it presented a record supplementary budget of $155 billion to finance a new stimulus package.
"Exports and production are falling drastically, while employment conditions are rapidly worsening. Financing for businesses is also severe, and it is correct to say that Japan is in the middle of a financial crisis," Finance Minister Kaoru Yosano told the parliament.
His remarks came after the Cabinet Office downgraded its forecast for Japan's GDP to a contraction of 3.3 per cent for the current fiscal year through March 2010. It had previously predicted GDP would be flat for the period.
"In addition to sharp declines in exports and production, private consumption has been weakening," the office said in its latest economic estimation. The fiscal 2009 economy "will have to get started at a low in negative territory which has never been seen before."
Yosano also appealed to lawmakers to quickly pass the extra budget, which calls for a record $155 billion in government spending to finance a new stimulus package.
For fiscal 2008 that ended March 31, the economy is likely to have shrunk 3.1 per cent, a bigger contraction than the fall of 0.8 per cent projected in December by the cabinet office.
Monday, April 27, 2009
The world's cleanest countries
The declining health of Mother Earth has drawn growing attention over the last two decades, with countries coming together to fight a range of environmental threats, from declining fishing stocks to global warming.
Witness the Kyoto Protocol, the first widely adopted set of environmental protection guidelines, which emerged during the 1990s and took effect in 2005. Kyoto led to the development of the first large-scale emissions trading market, Europe's Greenhouse Gas Emission Trading Scheme, which puts caps on carbon dioxide pollution. A similar carbon market, the Regional Greenhouse Gas Initiative, began operating at the start of this year in 10 Eastern US states.
In spite of nearly universal support for a cleaner globe (the US was one of only a few countries that failed to adopt Kyoto), it's mainly the rich nations that enjoy pristine environments, according to the Environmental Performance Index. Columbia University's Center for International Earth Science Information Network and Yale University's Center for Environmental Law and Policy developed the index to highlight the cleanest countries, and give laggards the opportunity to benchmark efforts to improve their own environments and the health of their citizens.
Switzerland tops the list with an overall EPI score of 95.5 out of 100, while European countries account for 14 of the top 20 environmental performers. Europe has the infrastructure to provide clean drinking water and treat waste water, lowering the likelihood that Europeans will suffer from waterborne disease. Europe scores consistently well in EPI's environmental health ranking, which measures the effects of pollution on human health.
A second broad measure, ecosystem vitality, measures the health of fisheries, the amount of greenhouse gases a country pumps into the air and how well it preserves the diversity of its plants and animals. On this measure, the performance of developed countries diverges. Scandinavia, with its low population and vast open spaces, enjoys pristine forests and relatively little air pollution.
The US, once a leader in environmental protection, has failed to keep pace. "Starting 25 years ago, the United States started to fall behind in relative terms. Before that time, Europe always had dirtier air and drinking water," says Mark Levy, associate director of Columbia University's earth science center.
Then-President George H W Bush signed the last significant American air quality legislation in 1990, an amendment to the Clean Air Act. The US scores a meager 63.5 on the ecosystem vitality scale, vs. an average score of 74.2 for the world's richest nations. The US' overall EPI score is 81, putting it in 39th place on the list.
Improved science has led to a better understanding of the linkage between pollution and human health. "The science that's come out has shown that the harder you look for air-pollution-related health problems, the more you find," says Levy. "Scientists have recommended that environmental regulations be tightened. Europe has done that, but the US has been stuck."
Countries are also handicapped according to their locations, with sub-Saharan African countries suffering from scant and poor-quality water, and Asian countries affected by depleted fishing stocks. Switzerland's weakest marks come in agriculture, in part because farmers in the mountainous country have a tendency to overwork their limited crop land.
A few developing nations break into the top 10 of the rankings. Costa Rica has a per-capita gross domestic product of $11,600, but ranks fifth overall as it protects its forests and rich biodiversity, both lures for ecotourists.
Another Latin American country, Colombia, ranks ninth overall. The country carefully guards its coffee plantations, a source of lucrative exports. Ironically, the presence of guerrillas and drug lords also makes the countryside hard to develop, even as developers rapidly cut down rainforest in neighboring Brazil.
EPI researchers caution that the information used to develop the scale often comes from local sources and can be of less-than-ideal quality, especially in developing countries. They ranked 149 countries, and left the remaining 50 or so off the list for insufficient data.
Australian Tamils call for Govt intervention
Posted
Police have closed off part of George Street in central Sydney for a protest march by members of Australia's Tamil community.
The protesters are calling for Federal Government intervention to help stop violence between Government forces and Tamil Tiger rebels in Sri Lanka.
Several hundred demonstrators staged a sit in outside the Prime Minister's Sydney residence earlier this month.
George Street has been closed off between Circular Quay and Bathurst Streets in the city with the protesters marching to Hyde Park for a rally there.
Saturday, April 25, 2009
Slowdown: Obama's cowardice hits India too
NEW DELHI: India cannot return to rapid growth till the world economy recovers. And that cannot happen till the US economy recovers. Alas, the Obama administration is prolonging the recession by avoiding surgery to remove dead wood from its financial sector.
Some call this cowardice. Others, such as former IMF chief economist Simon Johnson, writing in The Atlantic, say Wall Street has captured the White House. This is no longer a leftist accusation. Johnson says the US now resembles Russia, where business oligarchs and government officials protect each others’ financial interests, at the expense of the economy.
This is surely an exaggeration. Yet it highlights the priority given by the Obama administration to save the titans of Wall Street rather than end the recession quickly.
It is now clear that the toxic assets-securities and loans with impaired values - of US banks are $2-2.8 trillion, while tangible assets are only $1 trillion. Technically, the financial sector is comprehensively bust.
It needs to recognise the losses, writing off trillions. But for that somebody must first inject trillions of new equity into the banks. Private investors will not do so. The market solution would be to force insolvent banks into bankruptcy, with shareholders and creditors taking a huge hit, and their good assets being auctioned (at bargain prices) to surviving financiers. Many titans of Wall Street will disappear, but others will rise to take their place.
But while this will clean up the mess, the financial sector will collapse, perhaps converting the recession into a depression. Politicians are unwilling to risk this. Their preferred alternative is to rescue insolvent banks to thwart systemic failure. So, they have provided billions to the very banks responsible for the initial mess. But the public has protested loudly that this helps horrible bankers rather than the economy, and is yelling for blood. A chastened Congress refuses to sanction additional rescue funds.
This has led to a troubling impasse. The government views banks as too important to fail. The public views banks as too plutocratic to be rescued with taxpayer’s trillions. Result: the US has a zombie financial sector, technically dead but kept on life support. It simply does not have the capital to increase lending and thus spark economic growth.
A plan last fall for the government to buy toxic assets at a premium was shot down as a gift to horrible bankers. Now, a private-public partnership is proposed to buy the toxic assets. This too has been widely criticised as a way of subsidising private financiers to buy with little risk and huge potential gains.
Accounting norms have been tweaked to permit zombie banks to pretend they are alive and solvent. The hope is that the public will swallow this fiction, animal spirits will revive the economy, and the consequent growth of bank profits will eventually suffice to write of the toxic assets. Very optimistic!
The obvious option is for the government to temporarily take over the insolvent banks, examine their books, and segregate their toxic assets into a “bad bank”. This will clean up the balance sheets of the banks, which can start lending again, and then be re-privatised at a profit.
This will not be a slide into socialism, and actually makes market sense. It mimics bankruptcy procedures - the owners and creditors of existing banks will take a huge hit - without causing the systemic financial collapse that formal bankruptcy would. The government will aim not to run the banks (as Indira Gandhi did), but to restructure them (as in bankruptcy) and sell them.
This solution has been suggested by the Financial Times and The Economist, which are surely not socialists. Simon Johnson writes: “The challenges the United States faces are familiar to the people at the IMF. If you hid the name of the country (USA) and just showed them the numbers, there is no doubt what old IMF hands would say: nationalise troubled banks and break them up as necessary.”
So, even the IMF, supposedly a free-market maniac, would routinely suggest temporary nationalisation in such circumstances. This is an orderly variation of bankruptcy, not socialism.
Yet the Obama administration refuses to contemplate this obvious solution. Obama has been attacked by Republicans as a closet socialist, and the US public is leery of nationalisation, even temporarily. Faced with this populist pressure, the Obama administration prefers half-measures to clean surgery of dead wood through nationalisation. It has ordered stress tests to reveal the true weaknesses of banks. Yet experts agree that the tests have been designed to hide rather than reveal. Economist Nouriel Roubini says that the macroeconomic assumptions of the stress tests are out of date.
Even this sorry tale is actually a charitable interpretation of current events. The uncharitable explanation is that Wall Street has captured the White House, so nothing will be done to imperil the politico-financial network that rules the US. Robert Rubin and Hank Paulson, treasury secretaries of Clinton and Bush, were both from Goldman Sachs. Larry Summers, the current treasury secretary, earned millions as a hedge fund consultant.
In a market economy, well-managed companies should be rewarded with profits, while mismanaged companies should go bust. This basic rule has been suspended almost entirely for the titans of Wall Street. Only one titan, Lehman Brothers, has been allowed to go bust, and Wall Street says even that was too much. This is now official policy.
It was once said that what’s good for General Motors was good for America. Today, official policy implies that what is good for Goldman Sachs is good for America. This, says Simon Johnson, is a recipe for disaster. He fears that this crony capitalism will lead to a prolonged recession, maybe another Great Depression.
I see the problem as Obama’s cowardice rather than corruption. I don’t expect another Great Depression: at worst, the US will suffer stagnation of the sort Japan had in the 1990s. Most likely, we will see a long, weak recovery. Either way, it’s bad news for India, which badly needs US resurgence.
Some call this cowardice. Others, such as former IMF chief economist Simon Johnson, writing in The Atlantic, say Wall Street has captured the White House. This is no longer a leftist accusation. Johnson says the US now resembles Russia, where business oligarchs and government officials protect each others’ financial interests, at the expense of the economy.
This is surely an exaggeration. Yet it highlights the priority given by the Obama administration to save the titans of Wall Street rather than end the recession quickly.
It is now clear that the toxic assets-securities and loans with impaired values - of US banks are $2-2.8 trillion, while tangible assets are only $1 trillion. Technically, the financial sector is comprehensively bust.
It needs to recognise the losses, writing off trillions. But for that somebody must first inject trillions of new equity into the banks. Private investors will not do so. The market solution would be to force insolvent banks into bankruptcy, with shareholders and creditors taking a huge hit, and their good assets being auctioned (at bargain prices) to surviving financiers. Many titans of Wall Street will disappear, but others will rise to take their place.
But while this will clean up the mess, the financial sector will collapse, perhaps converting the recession into a depression. Politicians are unwilling to risk this. Their preferred alternative is to rescue insolvent banks to thwart systemic failure. So, they have provided billions to the very banks responsible for the initial mess. But the public has protested loudly that this helps horrible bankers rather than the economy, and is yelling for blood. A chastened Congress refuses to sanction additional rescue funds.
This has led to a troubling impasse. The government views banks as too important to fail. The public views banks as too plutocratic to be rescued with taxpayer’s trillions. Result: the US has a zombie financial sector, technically dead but kept on life support. It simply does not have the capital to increase lending and thus spark economic growth.
A plan last fall for the government to buy toxic assets at a premium was shot down as a gift to horrible bankers. Now, a private-public partnership is proposed to buy the toxic assets. This too has been widely criticised as a way of subsidising private financiers to buy with little risk and huge potential gains.
Accounting norms have been tweaked to permit zombie banks to pretend they are alive and solvent. The hope is that the public will swallow this fiction, animal spirits will revive the economy, and the consequent growth of bank profits will eventually suffice to write of the toxic assets. Very optimistic!
The obvious option is for the government to temporarily take over the insolvent banks, examine their books, and segregate their toxic assets into a “bad bank”. This will clean up the balance sheets of the banks, which can start lending again, and then be re-privatised at a profit.
This will not be a slide into socialism, and actually makes market sense. It mimics bankruptcy procedures - the owners and creditors of existing banks will take a huge hit - without causing the systemic financial collapse that formal bankruptcy would. The government will aim not to run the banks (as Indira Gandhi did), but to restructure them (as in bankruptcy) and sell them.
This solution has been suggested by the Financial Times and The Economist, which are surely not socialists. Simon Johnson writes: “The challenges the United States faces are familiar to the people at the IMF. If you hid the name of the country (USA) and just showed them the numbers, there is no doubt what old IMF hands would say: nationalise troubled banks and break them up as necessary.”
So, even the IMF, supposedly a free-market maniac, would routinely suggest temporary nationalisation in such circumstances. This is an orderly variation of bankruptcy, not socialism.
Yet the Obama administration refuses to contemplate this obvious solution. Obama has been attacked by Republicans as a closet socialist, and the US public is leery of nationalisation, even temporarily. Faced with this populist pressure, the Obama administration prefers half-measures to clean surgery of dead wood through nationalisation. It has ordered stress tests to reveal the true weaknesses of banks. Yet experts agree that the tests have been designed to hide rather than reveal. Economist Nouriel Roubini says that the macroeconomic assumptions of the stress tests are out of date.
Even this sorry tale is actually a charitable interpretation of current events. The uncharitable explanation is that Wall Street has captured the White House, so nothing will be done to imperil the politico-financial network that rules the US. Robert Rubin and Hank Paulson, treasury secretaries of Clinton and Bush, were both from Goldman Sachs. Larry Summers, the current treasury secretary, earned millions as a hedge fund consultant.
In a market economy, well-managed companies should be rewarded with profits, while mismanaged companies should go bust. This basic rule has been suspended almost entirely for the titans of Wall Street. Only one titan, Lehman Brothers, has been allowed to go bust, and Wall Street says even that was too much. This is now official policy.
It was once said that what’s good for General Motors was good for America. Today, official policy implies that what is good for Goldman Sachs is good for America. This, says Simon Johnson, is a recipe for disaster. He fears that this crony capitalism will lead to a prolonged recession, maybe another Great Depression.
I see the problem as Obama’s cowardice rather than corruption. I don’t expect another Great Depression: at worst, the US will suffer stagnation of the sort Japan had in the 1990s. Most likely, we will see a long, weak recovery. Either way, it’s bad news for India, which badly needs US resurgence.
Friday, April 24, 2009
'I'm not here just to remain the fourth-largest IT company'
The new bosses of Satyam Computer Services [Get Quote] Tuesday took the step of directly taking questions from apprehensive employees.
In an interactive session, titled Direct From Anand Mahindra, webcast and telecast through Satyam's internal TV network, Anand Mahindra, chairman of Tech Mahindra , and Vineet Nayyar, vice-chairman and managing director, answered questions and explained what they intend to do with the scam-hit company they've acquired and its 50,000-odd staff ('associates' as they're termed).
K Rajani Kanth managed to listen.
Edited excerpts:
Operational excellence is the need of the hour. Are you looking at appointing a chief operating officer to address this?
Nayyar: It is too early to come to a conclusion. I would like the responsibility to percolate downwards. All business managers and senior managers should be responsible for the profitability of their segments.
Satyam as a brand has taken a beating in the last couple of months. What is your plan?
Mahindra: We will soon take a decision on this.
What do you think is the key challenge for us -- something like IBM or Accenture? Is it our back-office work, financial strength, history or global presence?
Mahindra: If you see the history of companies that have grown to be great, it is only their strong intention to whiteboard the industry and consulting skills to stay on top of the pyramid.
I'm not here just to remain the fourth-largest IT company in the country. What I am here for is to whiteboard this industry.
Setting a goal of becoming number one is quite ambitious. You said once that the Indian IT story's version 1 is over. Are there any areas in the 2.0 version that you feel could get the Satyam and Tech Mahindra combine to become number one?
Mahindra: I believe we can do it.
In the automobile industry, especially in components, we call it hodge-podge. We don't go to the customer and give him a clutch or a forging.
We tell them (customers) that we will come up with a design, help them conceive it and then sell it to them. Then we manage the supply chain and logistics.
I think the world is now ready for a hodge-podge in the software solutions business.
Do you see any overlapping of businesses and do you see any plus points in the Tech Mahindra-Satyam combine's competencies?
Nayyar: We bring complementary skills and I don't think we have a single customer in common.
You have 500 customers and we have 110 and there is hardly any commonality.
We are the top 10 providers in the country and you guys are leaders, especially in the enterprise solutions business. So, we have positions of leadership.
Overlapping, possibly yes with TIMES (telecom, infrastructure, media, entertainment and semiconductor). We will do it by the rules of the board.
What will make us compete with IBM or Accenture?
Nayyar: We have done it already. We won the (Satyam takeover) deal and IBM and Accenture were left behind.
On a more generic level, it is the determination and ambition and the distance we have travelled in the last 10-15 years.
The business should not be output-based functionality but outcome-based. These are the areas we should focus on.
Just lift your spirits and intelligence.
What is the key message we need to convey to our clients when we contact or interact with them?
Nayyar: Essentially, that the uncertainty has been removed and we are now working alongside.
We have been providing excellent services to our customers and we will continue to do so.
Mahindra: We need to start roadshows to our customers.
AS Murty, who is to continue as the chief executive officer of Satyam, said in his concluding remarks: "It is a rebirth for all of us. Together, we will make our dreams come true and continue to focus on customer retention and gain back some portion of the business that was lost. Please continue the delivery excellence. Tightening our belts is the need of the hour. We should tune expenses in line with our revenues."
FBI's newest 'Most Wanted' terrorist is American
WASHINGTON: For the first time, an accused domestic terrorist is being added to the FBI's list of ``Most Wanted'' terror suspects that includes
Osama bin Laden.
Daniel Andreas San Diego, a 31-year-old computer specialist from Berkeley, California, is wanted for the 2003 bombings of two corporate offices in California.
Authorities describe San Diego as an animal rights activist who turned to bomb attacks and say he has a tattoo that proclaims, ``It only takes a spark.''
A law enforcement official said the FBI was to announce Tuesday that San Diego was being added to the ``Most Wanted'' terrorist list. The official spoke on condition of anonymity because he was not authorized to discuss the announcement ahead of time.
San Diego would be the 24th person on the list, and the only domestic terror suspect.
FBI spokesman Richard Kolko declined to comment on the pending announcement.
The move to add a domestic, left-wing terrorist to the list comes only days after the Obama administration was criticised for internal reports suggesting some military veterans could be susceptible to right-wing extremist recruiters or commit lone acts of violence. That prompted angry reactions from some lawmakers and veterans groups.
An arrest warrant was issued for San Diego after the 2003 bombings in northern California of the corporate offices of Chiron Corp, a biotechnology firm, and at Shaklee Corp., a nutrition and cosmetics company. The explosions caused minor damage and no injuries.
A group calling itself ``Revolutionary Cells'' took responsibility for the blasts, telling followers in a series of e-mails that Chiron and Shaklee had been targeted for their ties to a research company that conducted drug and chemical experiments on animals.
Daniel Andreas San Diego, a 31-year-old computer specialist from Berkeley, California, is wanted for the 2003 bombings of two corporate offices in California.
Authorities describe San Diego as an animal rights activist who turned to bomb attacks and say he has a tattoo that proclaims, ``It only takes a spark.''
A law enforcement official said the FBI was to announce Tuesday that San Diego was being added to the ``Most Wanted'' terrorist list. The official spoke on condition of anonymity because he was not authorized to discuss the announcement ahead of time.
San Diego would be the 24th person on the list, and the only domestic terror suspect.
FBI spokesman Richard Kolko declined to comment on the pending announcement.
The move to add a domestic, left-wing terrorist to the list comes only days after the Obama administration was criticised for internal reports suggesting some military veterans could be susceptible to right-wing extremist recruiters or commit lone acts of violence. That prompted angry reactions from some lawmakers and veterans groups.
An arrest warrant was issued for San Diego after the 2003 bombings in northern California of the corporate offices of Chiron Corp, a biotechnology firm, and at Shaklee Corp., a nutrition and cosmetics company. The explosions caused minor damage and no injuries.
A group calling itself ``Revolutionary Cells'' took responsibility for the blasts, telling followers in a series of e-mails that Chiron and Shaklee had been targeted for their ties to a research company that conducted drug and chemical experiments on animals.
Thursday, April 23, 2009
Mayawati is India's anti-Obama: Newsweek
Uttar Pradesh Chief Minister Mayawati features on the cover of Newsweek's latest edition, with the US weekly drawing parallels between her and US President Barack Obama - in their rise to political heights though belonging to the bottom of the social ladder.
However, the weekly with the Bahujan Samaj Party (BSP) chief's photo on its cover design, says Mayawati is a "bigger underdog" and a "bigger threat" to the "established order than Obama was".
While commenting her "suspiciously ostentatious fortune" and her "limited accomplishments" on behalf of the socially oppressed Dalits, whose cause she champions, the weekly has said her possible bagging the prime ministership would "ironically end up bolstering the caste system that has kept them (Dalits) in chains".
She would "likely be a highly divisive national leader - an anti-Obama - and not only domestically".
Mayawati became the chief minister of India's most populous state of Uttar Pradesh in 2007 on her own steam. She is now gunning for the country's top job, or even as king maker, after the parliamentary elections in India get over in May.
"Her supporters are trying to position her as India's answer to America's youthful black president," the weekly said.
It said the chances of her party actually winning a majority of the seats in Parliament were unlikely. "But the likely outcome is that the two main parties, Congress and the Bharatiya Janata Party (BJP), will be forced to rely on coalitions. Mayawati's followers hope she'll emerge as kingmaker in the negotiations, with enough clout to grab the top job herself."
"There are indeed parallels between Mayawati and Obama. Like America's president, Mayawati is young - just 53 in a country where most political leaders are in their 70s.
"She is also an outsider who comes from a long-oppressed segment of society: the Dalits.
Australians told to feel lucky in recession
SYDNEY: Australia's economy will contract 1.4 per cent this year - but almost all other developed economies will shrink more, Treasurer Wayne
Swan said on Thursday.
He was commenting on an update from the International Monetary Fund (IMF) that forecasts an economic slump and Australian unemployment rising to 7.8 per cent by 2010.
Swan said the outlook "is a much milder contraction than expected in almost every other advanced economy, which combined are expected to contract by an unprecedented 3.8 per cent in 2009".
He said that a contracting economic would "take a wrecking ball" to government revenues and bump up the deficit beyond the 115 billion Australian dollars ($80 billion) already predicted.
He stuck to the government's mantra that surpluses were permanent but that deficits could only be "temporary" because the Labour Party policy was to balance budgets.
Swan chastised the opposition Liberal Party for deploring the exponential growth in government debt that accrued from successive billion-dollar stimulus packages.
"People who say that we shouldn't be running a temporary deficit in these circumstances need to explain what they would do to avoid deficits," he said. "What they'd have to do - and it would be utterly irresponsible - would be either to cut spending savagely or put up taxes in the middle of a global recession."
Swan pointed to the IMF's commendation for countries like Australia that went into debt to stoke consumer demand.
"The budget framework is to continue to provide economic stimulus, and that is certainly the recommendation of the IMF. It is also to invest in the future to set our economy up for the time that global recovery occurs," he said.
Swan has spent the surplus of 21 billion Australian dollars, which he inherited from the previous government when Labour took office in December 2007, and expects to rack up a debt of more than 200 billion Australian dollars over the next four years.
He was commenting on an update from the International Monetary Fund (IMF) that forecasts an economic slump and Australian unemployment rising to 7.8 per cent by 2010.
Swan said the outlook "is a much milder contraction than expected in almost every other advanced economy, which combined are expected to contract by an unprecedented 3.8 per cent in 2009".
He said that a contracting economic would "take a wrecking ball" to government revenues and bump up the deficit beyond the 115 billion Australian dollars ($80 billion) already predicted.
He stuck to the government's mantra that surpluses were permanent but that deficits could only be "temporary" because the Labour Party policy was to balance budgets.
Swan chastised the opposition Liberal Party for deploring the exponential growth in government debt that accrued from successive billion-dollar stimulus packages.
"People who say that we shouldn't be running a temporary deficit in these circumstances need to explain what they would do to avoid deficits," he said. "What they'd have to do - and it would be utterly irresponsible - would be either to cut spending savagely or put up taxes in the middle of a global recession."
Swan pointed to the IMF's commendation for countries like Australia that went into debt to stoke consumer demand.
"The budget framework is to continue to provide economic stimulus, and that is certainly the recommendation of the IMF. It is also to invest in the future to set our economy up for the time that global recovery occurs," he said.
Swan has spent the surplus of 21 billion Australian dollars, which he inherited from the previous government when Labour took office in December 2007, and expects to rack up a debt of more than 200 billion Australian dollars over the next four years.
First time since 1999, FIIs turn net sellers
MUMBAI: Foreign institutional investors (FIIs) disposed of shares worth $11.83 billion last fiscal, turning net sellers for the first time since
1998-99, data with the Securities and Exchange Board of India (SEBI) shows.
As on March 31, 2008, these funds had pumped in $68,007 million into the Indian equities market, but a year later, their net investment stood sharply eroded at $51,669 million - a decline of $11,826 million.
"In 2008, it was more due to liquidity pressure back home than anything else that FIIs sold out. This was the case throughout the global markets and not just Indian markets," said Shiv Kumar Goel, promoter-director of financial services and broking house Bonanza.
"They sold out even from profitable ventures. These funds tried to consolidate resources globally to ease the cash crunch of parent entities," added Goel.
SEBI data further shows that save for April, December and March, the months during which Indian equities staged some recovery, FIIs were net sellers in each of the remaining months.
The bulk of the selling during the last fiscal, worth some $3,804.60 million, was in October, followed by $2,502.9 million in June, $2,052.4 million in September, $1,242 million in May and $1,052.3 million in January.
This was the primary reason behind the sensitive index (Sensex) of the Bombay Stock Exchange falling 5,918.12 points, or 37.87 percent, between April 1, 2008 and March 31, this year.
As on date, there are 1,638 registered FIIs in India, with as many as 5,035 sub-accounts, which are dedicated investment funds maintained on behalf of overseas clients, who are themselves not registered as FIIs.
Another reason for FIIs seeking to pull out of Indian markets was SEBI's move to curb participatory notes in the futures and options trading, while restricting its use in the cash segment in October 2007.
Participatory notes are instruments used by investors that are not registered with the SEBI to invest in Indian securities. FIIs issue participatory notes to individuals, who can then trade them just as stocks.
"The curb on participatory notes did have an impact on FII sentiment as it was viewed as a step backwards," associate director of KPMG advisory services, Apurva Mehta, told IANS.
The total market capitalisation of India Inc is estimated around $550 billion, down from a peak of $1.5 trillion in January 2008.
"FIIs accounted for almost 30 percent of the peak total market capitalisaion. This has gone down to about 15 percent as a result of the pressure on them to relocate funds back to parent entities," said Mehta.
However, industry watchers also feel foreign money may return to the Indian stock markets sooner than later. "The problems being faced by these funds are now getting sorted out. We can see it from the Goldman Sachs results and Citibank showing operating profits during the January-March period," said Goel.
Analysts, nevertheless, remained divided over how long it would take for foreign funds to start investing in bigger
chunks.
"A lot of FII money came in during 2003-07, when they poured in around $55 billion. For Indian bourses to see that kind of foreign money will take some time," said Jagannadham Thunuguntla, equity head at stock brokerage SMC Capitals. "It all depends on how soon western economies stage a comeback and how fast businesses generate surplus that can be deployed elsewhere."
Though economists argue that a developing country should be more interested in foreign direct investment in projects and not foreign capital through equity markets, most analysts believe FIIs have made their mark in the Indian financial system.
"The financial muscle of FIIs cannot be compared to domestic financial institutions.
They wield great influence as can be seen from the fact that the recent sell-off by FIIs led to a similar reaction from Indian investors," said Mehta.
  |
As on March 31, 2008, these funds had pumped in $68,007 million into the Indian equities market, but a year later, their net investment stood sharply eroded at $51,669 million - a decline of $11,826 million.
"In 2008, it was more due to liquidity pressure back home than anything else that FIIs sold out. This was the case throughout the global markets and not just Indian markets," said Shiv Kumar Goel, promoter-director of financial services and broking house Bonanza.
"They sold out even from profitable ventures. These funds tried to consolidate resources globally to ease the cash crunch of parent entities," added Goel.
SEBI data further shows that save for April, December and March, the months during which Indian equities staged some recovery, FIIs were net sellers in each of the remaining months.
The bulk of the selling during the last fiscal, worth some $3,804.60 million, was in October, followed by $2,502.9 million in June, $2,052.4 million in September, $1,242 million in May and $1,052.3 million in January.
This was the primary reason behind the sensitive index (Sensex) of the Bombay Stock Exchange falling 5,918.12 points, or 37.87 percent, between April 1, 2008 and March 31, this year.
As on date, there are 1,638 registered FIIs in India, with as many as 5,035 sub-accounts, which are dedicated investment funds maintained on behalf of overseas clients, who are themselves not registered as FIIs.
Another reason for FIIs seeking to pull out of Indian markets was SEBI's move to curb participatory notes in the futures and options trading, while restricting its use in the cash segment in October 2007.
Participatory notes are instruments used by investors that are not registered with the SEBI to invest in Indian securities. FIIs issue participatory notes to individuals, who can then trade them just as stocks.
"The curb on participatory notes did have an impact on FII sentiment as it was viewed as a step backwards," associate director of KPMG advisory services, Apurva Mehta, told IANS.
The total market capitalisation of India Inc is estimated around $550 billion, down from a peak of $1.5 trillion in January 2008.
"FIIs accounted for almost 30 percent of the peak total market capitalisaion. This has gone down to about 15 percent as a result of the pressure on them to relocate funds back to parent entities," said Mehta.
However, industry watchers also feel foreign money may return to the Indian stock markets sooner than later. "The problems being faced by these funds are now getting sorted out. We can see it from the Goldman Sachs results and Citibank showing operating profits during the January-March period," said Goel.
Analysts, nevertheless, remained divided over how long it would take for foreign funds to start investing in bigger
chunks.
"A lot of FII money came in during 2003-07, when they poured in around $55 billion. For Indian bourses to see that kind of foreign money will take some time," said Jagannadham Thunuguntla, equity head at stock brokerage SMC Capitals. "It all depends on how soon western economies stage a comeback and how fast businesses generate surplus that can be deployed elsewhere."
Though economists argue that a developing country should be more interested in foreign direct investment in projects and not foreign capital through equity markets, most analysts believe FIIs have made their mark in the Indian financial system.
"The financial muscle of FIIs cannot be compared to domestic financial institutions.
They wield great influence as can be seen from the fact that the recent sell-off by FIIs led to a similar reaction from Indian investors," said Mehta.
Wednesday, April 22, 2009
ExxonMobil overtakes Wal-Mart as largest US company
New York, April 21 (DPA) The global economic crisis has scrambled the pecking order among US firms, with ExxonMobil ousting Wal-Mart as the top revenue-earning company.
The energy company vaulted to the top of the business magazine Fortune 500 list, pushing the world's largest retailer to second place.
Profits among Fortune 500 companies saw the worst declines in the list's 55-year history, falling 85 percent in 2008 compared to 2007, for total losses of $99 billion.
The rankings were published Sunday on the internet. Following on the top ten list were Chevron, General Motors, ConocoPhillips, General Electric, Ford Motors, Citigroup, Bank of America and AT&TSatyam: No layoffs now, salary cuts possible
Tech Mahindra chairman Anand Mahindra on Monday ruled out immediate job losses among the 45,000-odd Satyam employees but added that an integration team "is already in place in Hyderabad to decide on the staff strength" for the acquired company. Speaking at a press conference after the first detailed meeting with the staff of the company taken over by Tech Mahindra last week, he said, "Our immediate plan would be to retain current customers, win back businesses and retain the key 100 associates."
The plans also include finding a CFO for Satyam, said Vineet Nayyar, CEO of Tech Mahindra. "We are on the lookout for a CFO, who would be decided in the next few weeks." One of the first tasks of the new incumbent could be asking for a salary cut of at least 10% across all categories, a source close to the company said.
Chairman of the government-appointed board, Kiran Karnik, said, "One cannot say anything on layoffs now. A list of key 100 employees, which was drawn by AS Murthy, and who were responsible to get businesses even during the crucial period after Raju's disclosure, has been given to Tech Mahindra and (they) have been asked to retain them for an year."
Karnik also said that more clarity about the company's financials would be known once the 20% open offer announcement is made on Tuesday and also after the restatement of accounts.
Tech Mahindra has deposited the Rs 1,756 crore towards its 31% stake on Monday. It also put Rs 1,154 crore for public offer in a separate escrow account.
Mahindra said he aims to operate Satyam as a stand-alone unit. He said Tech Mahindra now plans to expand in other verticals, including financial services, manufacturing and healthcare. Nayyar said CEO AS Murthy and Ram Mynampati would "remain with Satyam."
Mahindra's latest acquisition could, meanwhile, trigger a possible exit of British Telecom from Tech Mahindra. Analysts say Satyam acquisition could be a risk BT unwilling to take on. A Tech Mahindra official told FE, "We do not comment on market speculation."
Richard Wright, director of corporate communications and PR, Asia Pacific at BT Global Services, said, "We constantly review our investments, but there are no initials at the moment".
Tuesday, April 21, 2009
Satyam insider trading exposed
| The Serious Fraud Investigation Office (SFIO) is understood to have come across clinching evidence of insider trading of the shares of Satyam Computers, days before the scam surfaced. | ||||
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Independent directors on quitting spree
Post Satyam, independent directors have become very choosy about the companies they associate with. Many independent directors of India Inc have quit boards in the past four months, citing reasons ranging from ill-health to work pressures.
PRS Oberoi stepped down from the board of Jet Airways, Prof Nirmalya Kumar quit the ACC board, Harsh Mariwala quit Mirc Electronics, Surinder Kapoor quit Greaves Cotton and Infosys co-founder NS Raghavan quit the board of Shobha Developers.
Leading economist Isher Judge Ahluwalia recently quit Berger Paints. Many promoters and other dignitaries, who sit on multiple boards, are also restricting their board engagements for fear of their reputations being tarnished or unnecessarily getting embroiled in controversies. “I have been on five boards of Indian firms in the past eight years. On January 1, 2009, I quit the ACC board and now, I am not on any Indian company board. I like to spend 4-5 years on a board to understand the company and the sector. Then I like to move on as there is not much learning left for me,” says Professor Nirmalya Kumar of London Business School.
According to the Bombay Stock Exchange (BSE) website, more than 500 directors have quit the BSE-listed company boards since January 1 this year. “This trend will not stabilise in the short term as people are worried about company culture. Independent directors usually leave if they are not satisfied with growth and performance of the company and are unable to make any contribution to it. They also leave if meetings held by companies are not transparent enough for them to have enough confidence in the company,” says Namrata Barua, ex- regional director-India for the Conference Board, a global think-tank on governance issues.
Experts, however, say that the exit of independent directors is a healthy sign. “The fact that many independent directors have stepped down is a good first step for building accountability,” said ICICI securities CEO Madhavi Puri Buch in an ET corporate governance panel discussion last week.
Even expats who have been a part of many Indian boards in the past few years have started exiting some of them. Mark F Dziaga quit the Hexaware board, Adrianus Bernardus Voorn quit Geetanjali Gems and Lip By Tan quit Mindtreee, to name a few. Headhunters say that finding expat independent directors for Indian boards is proving to be a difficult task, post the Satyam episode.
“Foreign directors are interested in taking the opportunity to steer Indian companies forward, but they would want full liability protection and insurance, which Indian companies are not willing to give,” explains Barua.
In a matter of months, the board positions which were considered as labels to be proudly displayed have become a liability and a cause of fear for many. Some companies are, however, slowly taking steps towards creating a new board culture. “Some well-managed companies have started having a clear outline for their ideal board constitution in terms of domain and skill requirements,” said Buch. It’s high time that many boards clean up their act.
PRS Oberoi stepped down from the board of Jet Airways, Prof Nirmalya Kumar quit the ACC board, Harsh Mariwala quit Mirc Electronics, Surinder Kapoor quit Greaves Cotton and Infosys co-founder NS Raghavan quit the board of Shobha Developers.
Leading economist Isher Judge Ahluwalia recently quit Berger Paints. Many promoters and other dignitaries, who sit on multiple boards, are also restricting their board engagements for fear of their reputations being tarnished or unnecessarily getting embroiled in controversies. “I have been on five boards of Indian firms in the past eight years. On January 1, 2009, I quit the ACC board and now, I am not on any Indian company board. I like to spend 4-5 years on a board to understand the company and the sector. Then I like to move on as there is not much learning left for me,” says Professor Nirmalya Kumar of London Business School.
According to the Bombay Stock Exchange (BSE) website, more than 500 directors have quit the BSE-listed company boards since January 1 this year. “This trend will not stabilise in the short term as people are worried about company culture. Independent directors usually leave if they are not satisfied with growth and performance of the company and are unable to make any contribution to it. They also leave if meetings held by companies are not transparent enough for them to have enough confidence in the company,” says Namrata Barua, ex- regional director-India for the Conference Board, a global think-tank on governance issues.
Experts, however, say that the exit of independent directors is a healthy sign. “The fact that many independent directors have stepped down is a good first step for building accountability,” said ICICI securities CEO Madhavi Puri Buch in an ET corporate governance panel discussion last week.
Even expats who have been a part of many Indian boards in the past few years have started exiting some of them. Mark F Dziaga quit the Hexaware board, Adrianus Bernardus Voorn quit Geetanjali Gems and Lip By Tan quit Mindtreee, to name a few. Headhunters say that finding expat independent directors for Indian boards is proving to be a difficult task, post the Satyam episode.
“Foreign directors are interested in taking the opportunity to steer Indian companies forward, but they would want full liability protection and insurance, which Indian companies are not willing to give,” explains Barua.
In a matter of months, the board positions which were considered as labels to be proudly displayed have become a liability and a cause of fear for many. Some companies are, however, slowly taking steps towards creating a new board culture. “Some well-managed companies have started having a clear outline for their ideal board constitution in terms of domain and skill requirements,” said Buch. It’s high time that many boards clean up their act.
NAB 'to shut several Vic branches'
Unions say the National Australia Bank will close several bank branches across Victoria.
Among those to be lost are branches at Balwyn North, Mitcham, Rye and Balnarring.
The branch at Donald in the Mallee may also close.
Finance Sector Union national secretary Leon Carter says his organisation knows of eight closures.
"Like the community, the Finance Sector Union is completely bewildered why an organisation that continues to make billion dollar profits needs to close down branches," he said.
"[Closing branches] is always a very, very big blow to the communities that those branches serve, as well as the workers inside the branches."
Mr Carter says the NAB staff do not deserve to lose their jobs.
"We would expect that every single one of the workers affected by these closures is found a job in a nearby branch, but the bottom line should be that a bank like the National Australia Bank that profits incredibly from the community should make sure that they're putting something back," he said.
"And putting something back doesn't mean taking away their bank branch."
Monday, April 20, 2009
Oracle to buy Sun
ORACLE has made a play for Sun Microsystems to the tune of around $US7 billion or $US9.50 per share in cash.
Talks between IBM and Sun reportedly fell apart after it was reported that IBM withdrew a $US7 billion offer for the high-tech computing firm a few weeks ago after Sun rejected a bid of up to $USS9.40 per share as too low.Oracle said the proposed merger is subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.
"Until the deal closes, each company will continue to operate independently, and it is business as usual," Oracle said.
"The acquisition combines best-in-class enterprise software and mission-critical computing systems."
Amartya's message to Mulayam: Mind your language
London: Nobel laureate Amartya Sen on Monday criticised Samajwadi Party chief Mulayam Singh Yadav's campaign pledge to banish the use of English in Uttar Pradesh, saying such a move would only deepen existing divisions between the haves and have-nots in the state.
"I don't know what Mulayam Singh Yadav has in mind... I don't really see what the problem is about because it's a language that's widely used," Sen told an international gathering of leading writers, publishers and academics at the London Book Fair.
Answering a question after delivering the 'Chairman's breakfast speech' that traditionally opens the Fair, the Harvard University professor of economics and philosophy reminded his audience that a similar attempt by West Bengal's Communist government had failed three decades ago after proving deeply unpopular.
"In the late 70s there was an attempt by the Communists to de-emphasise English and move towards a Bengali-based education, but that's all been entirely reversed for the simple practical reason that the children didn't want it and the parents didn't want it," Sen said.
However, he said, there was "a very different issue", about existing social and economic disparities in India, which had taken the form of English becoming the language of the elite.
"There is an elite which is much more familiar with English, which is not the case with many other people," he said, but added that the way to eradicate such divisions was to bring more people into education, including English education, rather than ban the use of the language.
"That's an argument why others who are excluded from it ought to have the opportunity to do it (learn English)," said Sen, who is an expert in public policy issues and has long criticised Indian politicians for not giving elementary education the same priority as higher education.
Sen said English had become the language of currency in many areas of life - from Internet surfing to job hunting.
"Now, one way of excluding people from doing English is to keep the division between the English-speaking haves and the non-English speaking have-nots.
"So rather than being an egalitarian force, the exclusion - if it is carried out - will have exactly the opposite effect: that is to keep the stratification as it is. Because obviously Mulayam Singh Yadav will not be able to prevent people from doing English in India as the language of commerce, industry, rule of law and public use."
Sen also reminded Yadav that at the end of the day English was an "Indian language" as much as any of the others that are in use.
"An Indian language would be that which is in use in India and English language has been in use for quite a long time," he said, while pointing out a lesser-known fact - that many of the other Indian languages are full of 'foreign' influences and words.
"Just look at the ancestry of our language. Sanskrit itself came from abroad in around 1500 BC. There are lots of influences coming to India. There's the influence of Persian, Arabic, Chinese.
"Arab, French, Portuguese words are quite common even today," Sen said.
This year's London Book Fair has an India focus and is being attended by some 50 Indian writers and 90 publishers.
India Satyam has 10 pct extra staff says chairman-report
MUMBAI, April 18 (Reuters) - India's fraud-hit Satyam Computer Services Ltd (SATY.BO) may have up to 10 percent excess staff, a local newspaper reported on Saturday, quoting the head of the company's government-appointed board.
Kiran Karnik told the Economic Times that 3,000 to 5,000 staff were in excess, over and above the normal 'bench' maintained at outsourcing firms.
The 'bench' refers to staff not working on any projects and is normally 10 percent of the total workforce that is usually maintained for readiness to take on new projects.
Satyam Computer was taken over by mid-sized outsourcer Tech Mahindra Ltd (TEML.BO) this week after it bid the highest for a controlling stake in the company.
Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.
The Economic Times said Karnik ruled out any government intervention to protect employees.
"It is for the board to decide and that will be Tech Mahindra," Karnik was quoted as having said. "... we (the government-appointed board) are in transition mode and we should be out soon."
(Reporting by Ruchira Singh; Editing by Sanjeev Miglani)
Sunday, April 19, 2009
Govindraj Ethiraj - The real estate cookie crumbles
The story of Sashwat Brahma is an interesting one. His story, unverified by me, appears as a post on www.consumercomplaints.in and goes like this. He applied for a 4 BHK apartment in DLF's New Town Heights in Gurgaon and put money down. A year has passed; but there is no sign of the project, launched in February 2008.
He then says that DLF delayed in sending the agreement, thanks to which there was a delay in payment of loan instalments from his bank. DLF, according to him, charged him interest for the delay, saying had the disbursal come in time, then he would have paid the finance company interest and hence he should pay DLF interest even though the delay was at their end! I am only hoping I am not getting something here.
Sashwat says he has a signed agreement with several unsigned pages and the witness page unsigned. He wants to exit, as do a few other potential apartment mates. DLF's response: “Feel free to take us to court.” “DLF has charged customers when they have not even started work. Why should I pay them if the project has not taken off?” he asks.
If you think I am being led down the garden (pun not intended) path by one biased property speculator, well, you can visit an entire Yahoo group(http://in.groups.yahoo.com/group/Newtownheights/) which has apparently rallied 300 prospective owners saying, “This (group) is to bring all future residents of DLF New Town Heights and DLF Express Greens residents together. We all need to need to be together to make it happen,” they say. The web page says there are 672 new messages.
Unitech, the other Delhi-based giant, is facing similar ire for delays over its World Spa project, delivery date for which was mid-2006, and is still not done. There are similar tales in Mumbai where scores of home buyers hold ownership papers, without the keys to their homes. And the wait has been pretty tough, particularly for those whose EMI clock has begun ticking. Though there are very few of those and more of the speculative variety. From a layman’s perspective, it was, just to recount a fantasy all over again, an amazing run. The big builders who already owned land at close to throwaway prices were getting funded both ways, by the banks, private equity players and hungry small investors on one end and the other, well, you and me, funded in turn by the banks. It’s a miracle that the banks, at least some of them, have not blown holes in their balance sheets. Or have they?
All the money, believe it or not, was being collected upfront, to fund other grandiose projects, of four and five bedrooms, with extensive landscaping, water bodies and modern security systems. And of course, most home buyers were also diving in, thinking prices would appreciate 400 per cent all over again. And most of them have first-owned homes already. So the law of the unregulated market says buyers must pay the price for trusting the DLFs and Unitechs and scores of builders across the country. Yes and no. Because rising real estate prices have created a level of arrogance in the developer community unseen or unheard of in any other business. Keep paying up buddy or go to court. Because the fine print in our contract says you have no choice.
Now this is not about disgruntled second and third home owners banding together on the internet or wherever they are. This is about how India’s real estate industry lacks any body or regulator that can haul up realtors who take buyers for a ride. And lets be fair— DLF and Unitech are soft targets because they are visible. There are hundreds of cases in Mumbai which never make it to Yahoo Groups, or anywhere, for that matter. Except in some corner of a consumer court where they can grind on unnoticed for years.
Let’s assume a regulator will not come about in a hurry because the real estate industry— which wants a return to the golden era of 7 per cent interest rates so that they can make you pay for their delays-—will howl in protest. Don't be surprised if the protests hit home because most politicians are inextricably linked to real estate, at least in the city of Mumbai where I often find it difficult to separate one from the other.
What are we doing in the meanwhile, is the question. Let’s face it. Assume the grand gong signaling the downturn went off in October 2008. But many of the projects in question, including in Mumbai, were supposed to be completed even before that. There was no real funding problem as I see it. So where were the glitches?
Well, this is where the arrogance of the builders (and the stupidity of the buyers) sets new benchmarks. Turns out the delays were more to do with land clearances, lack of occupation certificates and the like. Puneet, writing on indianconsumercomplaints, says DLF told him they have no environmental clearances. When he said he wanted to back off, they asked for a Rs 5 lakh penalty! Now, DLF is apparently willing to renegotiate with buyers. Which it should have done in the first place, without the media shindig. So this is how the real estate cookie is crumbling. But let’s assume, as we always optimistically do, we can’t do anything about anything, legal or otherwise. Surely we should not be listening to the real estate sector’s demands on interest rates. Clearly we know where the problem is.
The writer is Editor of UTVi Business. He is not chasing any half-constructed properties, for himself or anyone known to him.
He then says that DLF delayed in sending the agreement, thanks to which there was a delay in payment of loan instalments from his bank. DLF, according to him, charged him interest for the delay, saying had the disbursal come in time, then he would have paid the finance company interest and hence he should pay DLF interest even though the delay was at their end! I am only hoping I am not getting something here.
Sashwat says he has a signed agreement with several unsigned pages and the witness page unsigned. He wants to exit, as do a few other potential apartment mates. DLF's response: “Feel free to take us to court.” “DLF has charged customers when they have not even started work. Why should I pay them if the project has not taken off?” he asks.
If you think I am being led down the garden (pun not intended) path by one biased property speculator, well, you can visit an entire Yahoo group(http://in.groups.yahoo.com/group/Newtownheights/) which has apparently rallied 300 prospective owners saying, “This (group) is to bring all future residents of DLF New Town Heights and DLF Express Greens residents together. We all need to need to be together to make it happen,” they say. The web page says there are 672 new messages.
Unitech, the other Delhi-based giant, is facing similar ire for delays over its World Spa project, delivery date for which was mid-2006, and is still not done. There are similar tales in Mumbai where scores of home buyers hold ownership papers, without the keys to their homes. And the wait has been pretty tough, particularly for those whose EMI clock has begun ticking. Though there are very few of those and more of the speculative variety. From a layman’s perspective, it was, just to recount a fantasy all over again, an amazing run. The big builders who already owned land at close to throwaway prices were getting funded both ways, by the banks, private equity players and hungry small investors on one end and the other, well, you and me, funded in turn by the banks. It’s a miracle that the banks, at least some of them, have not blown holes in their balance sheets. Or have they?
All the money, believe it or not, was being collected upfront, to fund other grandiose projects, of four and five bedrooms, with extensive landscaping, water bodies and modern security systems. And of course, most home buyers were also diving in, thinking prices would appreciate 400 per cent all over again. And most of them have first-owned homes already. So the law of the unregulated market says buyers must pay the price for trusting the DLFs and Unitechs and scores of builders across the country. Yes and no. Because rising real estate prices have created a level of arrogance in the developer community unseen or unheard of in any other business. Keep paying up buddy or go to court. Because the fine print in our contract says you have no choice.
Now this is not about disgruntled second and third home owners banding together on the internet or wherever they are. This is about how India’s real estate industry lacks any body or regulator that can haul up realtors who take buyers for a ride. And lets be fair— DLF and Unitech are soft targets because they are visible. There are hundreds of cases in Mumbai which never make it to Yahoo Groups, or anywhere, for that matter. Except in some corner of a consumer court where they can grind on unnoticed for years.
Let’s assume a regulator will not come about in a hurry because the real estate industry— which wants a return to the golden era of 7 per cent interest rates so that they can make you pay for their delays-—will howl in protest. Don't be surprised if the protests hit home because most politicians are inextricably linked to real estate, at least in the city of Mumbai where I often find it difficult to separate one from the other.
What are we doing in the meanwhile, is the question. Let’s face it. Assume the grand gong signaling the downturn went off in October 2008. But many of the projects in question, including in Mumbai, were supposed to be completed even before that. There was no real funding problem as I see it. So where were the glitches?
Well, this is where the arrogance of the builders (and the stupidity of the buyers) sets new benchmarks. Turns out the delays were more to do with land clearances, lack of occupation certificates and the like. Puneet, writing on indianconsumercomplaints, says DLF told him they have no environmental clearances. When he said he wanted to back off, they asked for a Rs 5 lakh penalty! Now, DLF is apparently willing to renegotiate with buyers. Which it should have done in the first place, without the media shindig. So this is how the real estate cookie is crumbling. But let’s assume, as we always optimistically do, we can’t do anything about anything, legal or otherwise. Surely we should not be listening to the real estate sector’s demands on interest rates. Clearly we know where the problem is.
The writer is Editor of UTVi Business. He is not chasing any half-constructed properties, for himself or anyone known to him.
Saturday, April 18, 2009
MindTree restructures trainee salaries, to be paid in tranches
April 18, 2009 04:04 IST
IT services provider MindTree Consulting[Get Quote] is restructuring salary offers to its trainees over an 18-month period by staggering payments and linking these to tenure. The plan will be applicable to 250 freshers who joined the company in March this year. Another 250 people are expected to join in October this year.
IT services provider MindTree Consulting[Get Quote] is restructuring salary offers to its trainees over an 18-month period by staggering payments and linking these to tenure. The plan will be applicable to 250 freshers who joined the company in March this year. Another 250 people are expected to join in October this year.
To the batch that joined this March (and which received the offers in 2008), the company will pay 75 per cent of the monthly wages promised in its offer letters over the first seven months, 85 per cent over the next six months and the balance over the last five months.
MindTree currently offers trainees an annual salary of Rs 3.2 lakh (roughly Rs 26,700 per month) or Rs 4.8 lakh for 18 months. Back-of-the-envelope calculations suggest the restructuring would now imply that the trainees get around Rs 20,000 for the first seven months (Rs 1.4 lakh in total). This increases to around Rs 22,700 per month for the next six months (around Rs 1.36 lakh), and around Rs 40,800 for the remaining five months (around Rs 2.04 lakh). The total works out to Rs 4.8 lakh over 18 months (which is equal to Mindtree's initial offer of Rs 3.2 lakh a year).
"The idea is to start them off at a lower monthly salary and increase it progressively over an 18-month period till it matches the initial offer," said MindTree's senior vice-president (human resources), Puneet Jaitley.
He added that 95 per cent of the freshers had accepted the restructuring option and come on board. "We are now drastically reducing costs incurred by the company during the training period. If they complete 18 months, their salaries will increase progressively during the period," Jaitley said.
He maintained that the company's action did not amount to a salary cut against the promised offers. "Because of the worsening economic situation, all we have done is give our trainees an option to restructure their salaries," he said.
MindTree first considered the salary restructuring plan for entry-level employees in October last year because the deteriorating global economy compelled the company to "look at things differently".
Jaitley did not indicate the number of trainees currently on MindTree's rolls who come under the wage restructuring plan. As of March 31 this year, Bangalore-based MindTree employed 7,900 people across six strategic business units.
Meanwhile, on the assumption that customer demand will not pick up soon in key customer geographies like north America and Europe, MindTree has increased the training period for entry-level staff from three to six months. Industry peer Infosys Technologies[Get Quote] has increased the number of training days from four to seven months. Wipro [Get Quote] is also learnt to have extended its training period.
Tech grads shun regular jobs in favour of start-ups
BANGALORE: Graduates from many of India’s top technology and management institutes are turning to entrepreneurship in large numbers, unfazed by a
lack of funding in a slowing economy and seeing that the opportunity cost of foregoing regular employment in a tepid job market is not too great.
Many of the new ventures such as online education portal btechguru.com do not require large amounts of money to be set up and can get going with support from family, friends or incubation centres of educational bodies.
Btechguru, aimed mainly at engineering graduates, was started by Balaraju Kondaveeti, 26, a student of the Indian Institute of Technology-Madras who is graduating this year. The portal, which will tap remote engineering colleges in Andhra Pradesh and Tamil Nadu by providing technical and soft skills to engineering students, was incubated at IIT-Madras and is set to be launched as a commercial venture.
“Both these states have some 700 engineering colleges out of the total 1,400 in India. We will seek help from our network and friends in these states to provide the service,” says Mr Kondaveeti.
A top official of the N S Raghavan Centre for Entrepreneurial Learning (Nsrcel) says there has been growing interest in setting up businesses despite the economic downturn. While Nsrcel received 14 proposals between April and November 2008, the number has doubled in the three months since November, says its COO A Suryanarayan. Nextgen, another start-up at Nscrel, wants to implement clean technology while Radiffinity wants to use Radio Frequency Identification for asset management in large corporations.
“Despite the economic downturn and the paucity of funding, more graduates are turning entrepreneurs because the job market is down and they don’t want to do jobs that they don’t like. In the master’s course in entrepreneurship at IIT Madras, this year seven graduates are turning entrepreneurs compared to two a couple of years ago,” says btechguru’s Mr Kondaveeti.
IIT Madras’ Arul Sekar, 25, who loves mountaineering and hiking along with Sridhar L, is starting an adventure tourism company called ecologin.org which enables people visit unexplored regions and provide jobs to local people.
“We have been explaining our business model to village panchayats and the fishing community. We are talking to investors for funding of Rs 30-50 lakh,” he says. According to Sudhir Sethi, chairman and managing director, IDG Ventures India, there are 1,000 technology-based start-ups in India. IDG Ventures is investing some Rs 300 crore in early-stage start-ups with varied interests in the next three years.
“Technology students are interested in new areas like Web 2.0, cloud computing and clean technology,” says S Sadagopan, founder director of the International Institute of Information Technology- Bangalore (IIIT-B). At IIIT-B, some 12 students are starting their own ventures this year.
“The kind of innovation that bigger companies have failed to do are being done by small companies and thus major players are tying up with these companies,” observes Prof Sadagopan.
Many of the new ventures such as online education portal btechguru.com do not require large amounts of money to be set up and can get going with support from family, friends or incubation centres of educational bodies.
Btechguru, aimed mainly at engineering graduates, was started by Balaraju Kondaveeti, 26, a student of the Indian Institute of Technology-Madras who is graduating this year. The portal, which will tap remote engineering colleges in Andhra Pradesh and Tamil Nadu by providing technical and soft skills to engineering students, was incubated at IIT-Madras and is set to be launched as a commercial venture.
“Both these states have some 700 engineering colleges out of the total 1,400 in India. We will seek help from our network and friends in these states to provide the service,” says Mr Kondaveeti.
A top official of the N S Raghavan Centre for Entrepreneurial Learning (Nsrcel) says there has been growing interest in setting up businesses despite the economic downturn. While Nsrcel received 14 proposals between April and November 2008, the number has doubled in the three months since November, says its COO A Suryanarayan. Nextgen, another start-up at Nscrel, wants to implement clean technology while Radiffinity wants to use Radio Frequency Identification for asset management in large corporations.
“Despite the economic downturn and the paucity of funding, more graduates are turning entrepreneurs because the job market is down and they don’t want to do jobs that they don’t like. In the master’s course in entrepreneurship at IIT Madras, this year seven graduates are turning entrepreneurs compared to two a couple of years ago,” says btechguru’s Mr Kondaveeti.
IIT Madras’ Arul Sekar, 25, who loves mountaineering and hiking along with Sridhar L, is starting an adventure tourism company called ecologin.org which enables people visit unexplored regions and provide jobs to local people.
“We have been explaining our business model to village panchayats and the fishing community. We are talking to investors for funding of Rs 30-50 lakh,” he says. According to Sudhir Sethi, chairman and managing director, IDG Ventures India, there are 1,000 technology-based start-ups in India. IDG Ventures is investing some Rs 300 crore in early-stage start-ups with varied interests in the next three years.
“Technology students are interested in new areas like Web 2.0, cloud computing and clean technology,” says S Sadagopan, founder director of the International Institute of Information Technology- Bangalore (IIIT-B). At IIIT-B, some 12 students are starting their own ventures this year.
“The kind of innovation that bigger companies have failed to do are being done by small companies and thus major players are tying up with these companies,” observes Prof Sadagopan.
Friday, April 17, 2009
65,000 H-1B visa cap still not exhausted
NEW DELHI: The demand for H-1B visas to work in the US has eased as concerns mount about a possible wave of protectionism, but the scene is different for those with advanced American degrees who are eligible for 20,000 visas over and above the 65,000 H-1B visas issued annually.
The United States Citizenship & Immigration Services (USCIS) is yet to receive enough applications to exhaust the total number of H-1B visas, which are capped at 65,000 annually. However, the agency has crossed 20,000 petitions already in the advance degree category and is still accepting applications as a lot are rejected every year in this section.
“The slowdown and job losses in the US and the Employ American Workers Act, which makes it difficult for companies that have received funds under the US government’s bailout package to hire H-1B workers are the reasons behind fewer takers for H-1B visas. However, students with masters degrees and above from the US are still attractive for US employers who are finding the right kind of skills that they require. Many of these students have also interned with US companies who are now sponsoring them for their H-1Bs,” says Sudhir Shah, an immigration lawyer based in Mumbai.
Education consultants feel that US companies still need certain specialised skills and will have to hire H-1B workers and Indian students already in the US could become the first choice.
Says Dr Vijaya Khandavilli, international educational consultant: “Many Indian students go to the US for masters courses and PhDs in specialised areas and when they finish their employability factor is very high. Most of them have very high qualifications and because of having lived in the US, they are globally employable. It is no surprise that US employers are deciding to sponsor them for H-1B visas.”
While it is too early yet for trends to emerge on the impact of the slowdown in the US on the number of students going to study there from India, the depreciation of the rupee against the dollar may hit the plans of some.
“There may not be the same kind of phenomenal growth in numbers of Indian students going to study in the US this year. While the slowdown in the corporate sector could actually provide a good opportunity for many to study further, the decline of the rupee against the dollar will make US education unaffordable,” says Ajit K Motwani, India director of Institute of International Education, the organisation that publishes Open Doors, an annual report on foreign student enrolments in the US.
Thursday, April 16, 2009
Satyam 'weeping orphan' adopted by Tech Mahindra: CLB
Calling Satyam a "weeping orphan", the Company Law Board (CLB) today said the Hyderabad-based company will now be adopted and nurtured by Venturbay, a subsidiary of Tech Mahindra.
Preferring to call its order as "Adoption of Orphan Satyam" or "Orphan Satyam Adopted", CLB Chairman S Balasubramanian said, having won various laurels, mostly in relation to corporate governance, Satyam "became a weeping orphan overnight when its promoter B Ramalinga Raju abandoned it after making a confessional statement."
Satyam's founder Raju abandoned the company after admitting accounting fraud to the tune of over Rs 7,000 crore on January 7, said the CLB order while clearing the decks for takeover of the company by Tech Mahindra.
Complementing the government-nominated board for selecting a technically and financial competent strategic investor, the CLB chief said, Venturbay will "adopt and nurture ailing Satyam."
Earlier, the order said, the government reconstituted the Satyam board "to wipe out its (Satyam's) tears and nurture the company which was necessary in the interest of all the stake holders".
The government-appointed board headed by Nasscom past president Kiran Karnik, the order said, "acted not only as directors but also like foster fathers to heal the wounds of the orphaned Satyam."
No free coffee for IBMers from May 1
MELBOURNE: IBM worldwide has begun cost cuts in order to battle the effects of the global financial crisis and will scrap office amenities such as tea and coffee, and even company-funded home internet access.
From May 1, IBM will cease to reimburse Internet access for staff working from home. Direct pay corporate managed and contracted home Internet services will also be scrapped.
"IBM will cease the reimbursement of home internet access for employees," The Australian quoted the company, as saying in an email to staff.
"Secondly, over the next several months the provision of some office amenities, including tea and coffee supplies, will be phased out. Where it makes sense, our intent is to replace this with user-paid vending machines at selected sites."
IBM said the expiring home Internet policy was developed in the 1990s, when home Internet was not the norm. The cost-cutting measures would allow IBM to continue workforce programmes including a salary bonus pool, a single-cycle salary review later in the year, funding education to support revenue generation and continuing to invest billions in research and development, it said.
IBM Australia declined to reveal how much money it expected to save from the cost-cutting initiatives.
IBM reported a 12 per cent gain to $4.4 billion in net income for the fourth quarter of 2008, but slipped 6 per cent in revenue to $27 billion when the recession hit technology spending.
In January, IBM sent layoff notices to more than 2800 people in its sales and software groups in the US. The latest round of job cuts at IBM was announced last month, when industry sources said another 5000 IBM workers in the US would lose their jobs.
Wednesday, April 15, 2009
Satyamites on bench in US asked to quit
‘Those engaged in on-going projects safe for now’.
“The non-billing staff (who are on the bench) here have been told by their managers to return to India by stating that they might also follow their team-members soon.”
G. Naga Sridhar
M. Somasekhar
Hyderabad, April 14 Satyamites currently on the bench in the US have been reportedly told to quit after the naming of Tech Mahindra as a buyer of majority stake in Satyam Computer Services.
While employees who are holding a green card have been told to quit, staffers who hold work permits have been asked to return to India, according to reliable sources.
“The non-billing staff (who are on the bench) here have been told by their managers to return to India by stating that they might also follow their team-members soon,” a Satyam employee told Business Line over phone from San Diego.
The positions of those who are engaged in on-going projects appear to be ‘safe’ for the time being as the projects cannot be discontinued in the middle, she said.
“But the general advice is to keep an early exit in mind as the continuity/renewal of projects is a matter of speculation once Tech Mahindra completes the transaction,” she added.
While Satyam has over 5,000 associates in the US, the company is not willing to disclose the exact number of people on the bench currently.
The Hyderabad-based company has been suffering attrition in the US following the exit of clients such as State Farm, an insurance agency and others such as Coca-Cola and Cisco in the last couple of months.
Meanwhile, the good news for Satyamites, both in India and abroad has been that the company has paid up all the dues with regard to perks and allowances (night duty allowance, LTA etc) since January 2009, when it was hit by the financial fraud. It has also updated payments for employee insurance and Provident Fund.
Tuesday, April 14, 2009
Wipro Technologies to honour job offers, with a rider
BANGALORE: Wipro Technologies, the third-largest IT services exporter from India, will be honouring all the remaining job offers made to the engineering graduates during 2008-09 fiscal, but with a rider.
In the letter dispatched to remaining 6,000 fresh engineering graduates, Wipro Technologies has said that these students would come onboard between May and December 2009, undergo training for two months, and if they are not engaged in any billable project, will be paid only a stipend of Rs 6,000 per month.
Wipro had made offers to 14,000 engineering graduates to join the company during 2008-09 fiscal with salaries in the range of Rs 2.75-3.25 lakh per annum and the induction of 40% has been delayed by six months.
Pradeep Bahirwani, vice-president of talent acquisition, Wipro Technologies, said that this step was taken due to the changed business environment. He further said that if these fresh hires are not put onto any billable project, they would be given further training through the web.
Of the 14,000 offers made by Wipro Technologies, it is estimated that around 6,000 have already joined the company. This changed offer status will apply to those who are joining in the next six months or so.
Mr Bahirwani said that it has also waived the Rs 75,000 bond requirement which was placed upon these students, if they leave the company within 15 months. During the training period of two months, these fresh employees are paid a stipend of Rs 15,000.
The Wipro official claimed that they have received positive response from the remaining students of the revised offer as they are being absorbed by an IT major and they would be put on a project, depending on the orders they receive.
Wipro Technologies, at the same time has already made offers to 8,000 engineering graduates for joining them during the 2009-10 fiscal.
This is the second time in the recent past, that Wipro Technologies has tweaked the hiring policies of fresh engineering graduates. Earlier, it had made a one time offer to students with the option of joining the BPO division of the company and later getting back into the IT services segment.
The process of giving offer letters to engineering graduates one year in advance by the IT companies in India has undergone a change with Nasscom saying that firms would approach colleges only during the last two months before the academic graduation.
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