Expressway puts hope on fast lane in Bangalore

Devina Sengupta & Shwetha S / DNA

Bangalore: Hours before the longest elevated expressway to the Electronic City was thrown open to commuters on Friday, TV Mohandas Pai, human resource head of Infosys Technologies, was talking about how the unclogging of the traffic on the Hosur Road would improve the employability for companies housed in the city’s tech hub.
He said his company had lost 15,000-16,000 workers over the last 15 years because of bad connectivity. “We lost them (employees) because they did not want to commute to the Electronic City (because of bad infrastructure).”

The country’s second largest information technology (IT) company has a sprawling campus spread over 50,000 acres in the Electronic City, with over 50,000 people working out of it.

The HR head of country’s the second largest IT firm said the new flyover would cut the time taken to travel from the city to the tech hub by 30 minutes, which would translate into higher productivity and revenue for companies located there.

“It will save at least half an hour of travel time and that means for 100,000 employees of Infosys — 50,000 hours will (collectively) get saved. Electronic City will become the best place to work in India (with the opening up of the flyover). It will also reduce the stress levels and improve performance of the employees,” said Pai.

And it’s not just him, who can’t stop raving about the benefits that would accrue to companies because of the world class infrastructure.

Babu Rangaswamy, director, best shore application services — India Centre, Hewlett-Packard Pvt Ltd, felt that the expressway would improve the work-life balance of employees working from their office in the tech city. “Employees can now leverage their time at work and manage a healthy work-life balance. The elevated road will not only help reduce carbon emissions, but also set the tone of improved infrastructure in the city,” he said.

Wipro’s Joseph John said: “The number of Wipro busses ferrying the employees will get reduced, leading to less carbon emissions. Time gets saved and employee productivity will increase.”

Srikanth Paturi, a regular commuter to the Electronic City, said his travel would now be easier and quicker. “Though I won’t be using the expressway regularly, I can still use it when it’s required or during emergencies,” he told DNA.

He was, however, sceptical on whether the new expressway would completely end the traffic nightmare that the Hosur Road has become.

“The traffic jam problem near the Silk Board junction will persist as all the vehicles will arrive there and get clogged. Though we will be able to reach the Silk Board from Electronic City easily, we may get stuck in a jam after that,” said Paturi.

Techie Anish Ratnam, a resident of Frazer Town, however, said that the expressway would cut the travel time by more than half.
Anand Rao, a software professional with a tech firm in the Electronic City, believed the high toll fee could be dampener. “I feel the toll fixed is quite high. Most of us work only for five days in a week. It’s not worth paying Rs900 per month. We would rather take the alternative routes (than pay the toll)."

Wipro says Finland ops rejig to impact 85 staff

BANGALORE, Jan 21 (Reuters) - Wipro Ltd (WIPR.BO), India's No. 3 software exporter, said on Thursday it was planning to restructure some part of its Finland operations and the move could impact a maximum of 85 people.

The company's IT unit, which employs 300 people in Finland, will start a consultation process with the staff representatives as part of the restructuring of its telecom research and development operations there.

"After carefully considering all possible options, the company has decided to enter into a negotiation process with the employees given the challenging industry situation in telecom R&D," it said in a statement. (Reporting by Sumeet Chatterjee; Editing by Ranjit Gangadharan)

Wipro To Give Salary Hike

NEW DELHI: India's third largest software exporter Wipro said it would hike salaries across the board this quarter, but did not indicate quantum.

According to Pratik Kumar, corporate vice president, human resources, the salary hike will be given out in February. He added, “The hike will be according to the industry standards.”

Wipro beat estimates with a 19 percent rise in December quarter profit and projected growth as a global economic recovery boosts demand for outsourcing services and eases pressure on fees.

New York-listed Wipro expects its IT services revenue to rise 3.6-5.4 percent in January-March from the preceding quarter to $1.16-$1.18 billion, after it posted a 4.9 percent sequential rise in the latest quarter.

The company also announced that it will hire people from campuses. Some 7,500 people hired previously are expected to join in Q4 and early next quarter.

Last week Tata Consultancy Services also announced that it expects to increase wages in the 2011 financial year.

TCS global head of HR Ajoy Mukherjee said the company has decided to give salary increments during financial year ending March 2011, although the exact quantum of hike is yet to be decided.

“There definitely will be a wage hike but the quantum is not finalised. We are considering three options,” Mukherjee said. While giving the hikes, the company will maintain the salary structure it moved to in FY10, which consists of a quarterly variable component and an annual variable component.

However, the company so far has no plans to increase the salaries of junior recruits.

Cognizant staff to get promotions, higher bonus

Measures based on company performance, client plans, talent needs.

K. Bharat Kumar

Chennai, Jan. 18

Employees of Cognizant Technology Solutions have a lot to cheer for now.

An e-mail from the company's Chief Financial Officer, Mr Gordon Coburn, and the Chief People Officer, Mr Shankar Srinivasan, has assured them, this year, of ‘significantly higher levels of bonus,' ‘accelerated promotion and pay-revision cycles' and, the taking care of ‘2006 and prior campus batches' currently with the company.

The e-mail, a copy of which is with Business Line, says it has arrived at these measures “based on a careful assessment of the performance of Cognizant, input from our clients in terms of their plans and our review of the talent market in various geographies around the globe.” Typically for large industry players, if confidence stems from “clients' plans”, then a better year ahead is expected. Given Infosys' and TCS' upbeat performance for the December 2009 quarter, with the former saying that the ‘worst is behind us', Cognizant too could be seeing greener pastures ahead.

The e-mail touches upon the company's ‘associate reward and recognition plans for 2010' across four fronts.

Bonus

The bonus payouts for the year 2009 are planned for distribution in March this year at levels ‘significantly above recent years'.

While details are not available as to how much was paid out last year, industry watchers say that across the industry, bonus payouts could, in good times, exceed 100 per cent. (For instance, if your salary is Rs 100 and the variable component of your salary is Rs 30, then your variable pay could be anywhere between Rs 0 in a bad year to Rs 30 in a good year. In boom time, variable pay has exceeded 150 per cent in some companies in the industry.)

Promotion

This year, Cognizant aims to give promotions effective across May and July.

Typically this used to be effective July. For employees currently at designation below Manager, Cognizant would announce promotions in late April, effective May 1. It would also conduct an additional promotion round for this group in late 2010. For Managers and above, it would announce promotions in June, effective July 1. Interestingly, the e-mail says, “We expect to promote a substantially larger number of people than last year.”

Compensation

The company has also committed to an accelerated company-wide pay revision cycle that would become effective at the same time as promotion cycles in May and July.

For now, no further details are available and the e-mail only says, “We will conduct market analyses to determine the scale of the revisions, taking into account overall market conditions, our revenue plans, and our clients' spending patterns.”

The company also has a word for those who joined it in 2006 and prior batches, currently at Programmer (P) and Programmer Analyst (PA) levels.

For programmers

It recognises that, “given the global economic turmoil and our slower growth over the past few years… many in this group were disproportionally impacted.”

Hence Cognizant is planning a separate, off-cycle salary increment process for the India-based portion of this population with an effective date of January 1, 2010. This initiative will occur in February once the 2009 performance ratings are finalised, it says. “In addition, a substantial number of P and PA promotions will be announced in April and will be made effective May 1 {+t},” the e-mail says.

TCS, Wipro, Infosys, loosen purse strings to retain staff

BANGALORE: Nitin M, a techie in his 30s in IT capital Bangalore, still feels a chill run down his spine as he recalls the roller coaster ride his professional life took during the economic slowdown last year. In the pre-slowdown days, he belonged to the country’s most pampered workforce, when jobs were easy to come by and perks were splashed. The storm came soon enough. The smiles thinned out, and the number of colleagues he shared his expansive office space with too began to diminish. Sodexo coupons were cut, easy rides in private taxi cabs were replaced with journeys in crowded company buses. And salary hikes were a thing of the past. As a new decade unfolds, the wheel has come full circle. Nitin, who has recently landed a job with another IT company, said his previous employers had slashed increments during the recession. “Now, the company is giving a 40% hike to hire former employees back.”

Salary hikes in the offing IT employees and HR experts expect many companies such as Target, Cognizant, SAP, VMware, Mahindra Satyam, TCS, Wipro, Infosys, Genpact, Oracle, MindTree and Accenture to offer a pay hike of 7-15% at the operational level and 12-18% at senior levels. Abhinav Krishnan, an employee at VMware, the largest maker of software that lets computers run different operating systems, recently received a salary hike. This came as a big relief to him as he is his family’s sole breadwinner. “The company I worked with previously did not give me any hike. So I moved out, and my salary has now doubled,” says this 26-year-old employee, who was earlier with one of the world’s largest technology companies. Similarly smiles are back on the face of the 27-year-old techie working at advisory services firm Ernst & Young. He had planned to buy a car and a bigger house last year, but these dreams wilted away in the economic slowdown. “This year, I am planning to buy both. The company has announced a salary hike and a bonus of 7-10%. I am now in a better position to get a loan,” he said.

Attrition levels up
The improving market sentiments have also resulted in a rise in attrition levels, as companies have started to pay premium packages to hire skilled hands from other companies. An Infosys employee said attrition levels have gone up and most employees were going to rival firms like Tata Consultancy Services and Wipro, which are offering a 40% hike in salaries. “We are expecting a salary hike of 8% this April,” he said. He said that during the tough times, they had to put in six hours of work, which was considered a full day. “Now, spending 3.5 hours is considered to be a full day,” he said. Due to the economic meltdown, issues related to the work environment, employee benefits and innovative programmes were put on the backburner. Companies were not too transparent in informing their employees about key decisions taken in the organisation. Many employees said that some companies are exploiting the situation in the name of recession. Ajit Sivaraman, a 26-year-old techie, shifted to Tesco — one of Britain’s largest retail groups — to do the IT-related work there. The company offered him a 60-70% pay hike. He is now planning to buy his own home with an investment of around Rs 20-25 lakh. “I used to earn between Rs 1 lakh and Rs 3 lakh. Now I get Rs 3-5 lakh in the new job,” he said. He said his previous organisation even changed the cab facility to bus service for morning shift employees and offered staffers Rs 75 per day, if anyone wanted to come on their own. “It costs me Rs 200 per day to commute. They even cut our Sodexo meal card,” he said.

Talent reward programme
A Satyam professional said salary hikes were based on a model called ‘Smart’, with employees coming under the so-called ‘S-band’ receiving a salary hike of 20%, while those under the T-band received an 8% salary hike. He was expecting hike of 15% in April and plans to buy some property. “kI was earlier looking to move out as there was a lot of uncertainty and attrition levels were high. I don’t have plans to move out now,” he said. C Mahalingam, executive vice-president and chief people officer at offshore product firm Symphony Services, said his company was giving a salary hike of 7-8% to their employees and 8-9% hike to its top talent. “Companies are now hosting lunches and dinners at five-star hotels for their top talent. But the fun-and-frolic approach to keep employees happy may not come back in the near future,” he said. Mid-sized software and R&D services firm MindTree said it is focusing on a good communication network and is keeping employees informed about every development. “Employees do not expect free lunches and gifts. But they want to be treated as professionals, and their seniors to be more approachable,” says MindTree chief HR Puneet Jetli. IT services firm MphasiS has announced a recompense bonus for its staff which the company feels is possibly an innovative compensation model as it is based on the company’s performance and employee’s individual performance. “We have given a recompense bonus of 25% for the highest performer. For good performers, the bonus can be 15-25% higher than the average pay hike,” MphasiS chief human resources officer Elango R said.

According to Ajit Isaac, MD & CEO of IKYA Human Capital Solutions, many companies are planning a 12-18% fixed salary hike for senior employees and 5-15% salary hike for employees at the operations level. But captive centres, which were earlier paying lucrative salaries, won’t be able to keep the pace. “This is because outsourcing margins and billing rates are under pressure as a major chunk of outsourcing contracts are going to third party vendors,” he said. An IT employee at Keane, a technology services company, said she has received a salary hike of 10-12%. “Last year, there were lot of structural changes to combat the recession,” she said. The New Year has certainly brought some smiles back.

Tata Consultancy net profit up 34% on rising IT spends

`We have seen growth in all verticals,' says CEO N. Chandrasekaran.

Mr N. Chandrasekaran, CEO and Managing Director, Tata Consultancy Services, flanked by Mr Ajoyendra Mukherjee, Head, Global HR (left), and Mr S. Mahalingam, CFO, announcing the company's results in Mumbai on Friday. - Shashi Ashiwal

Our Bureau

Mumbai, Jan. 15

Riding on the back of a revival in IT spend across industries and geographies, the country's largest software exporter, Tata Consultancy Services, beat market expectations to report a 34 per cent rise in net profit for the third quarter ended December 31, 2009.

The Mumbai-based company - which counts bellwether firms' such as Citibank, Chrysler and GE as clients - recorded a net profit of Rs 1,824 crore against Rs 1,362 crore reported in the year-ago period.

Revenues went up by 5.1 per cent to Rs 7,648 crore (Rs 7,277 crore).

"We have seen growth in all verticals, including the troubled ones such as hi-tech and telecom. Geography-wise, we see a broader recovery not only in the US, but also in Europe, Asia-Pacific and India," Mr N. Chandrasekaran, Chief Executive Officer and Managing Director, told newspersons here on Friday.

He said the demand sentiments are improving every quarter. "We are seeing deal closures happening at the same pace that we used to before the financial crisis. Even discretionary spending (IT spends on new projects) is coming back as seen by the improvement in our consulting business," said Mr Chandrasekaran. (As a percentage of overall revenues, consulting now contributes 2.1 per cent to overall revenues as against 1.6 per cent in the previous quarter.)

Through improved operational performance and cost-cutting measures, TCS was able to expand its operating profit margin for the quarter by 176 basis points. Volumes grew 6.6 per cent, the highest in the last eight quarters. In the quarter, TCS added 32 new customers for its IT and back-office outsourcing services.

TCS' domestic business, which accounts for 8.5 per cent of its revenues, grew sequentially 8 per cent. The growth has come from sectors such as government, financial services and others.

"Volatility in domestic revenues continues to be a challenge for the company. Though we are not yet at a point where we can claim to have got the business mix right, we are still seeing growth," Mr Chandrasekaran said, adding that the domestic unit's profitability has also gone up sequentially.

n deals totalling over Rs 450 crore, TCS has been selected by two States as partner for the Accelerated Power Development and Reform Programme, said a press statement.

The energy and utilities domain, as a percentage of overall company revenues, now account for 3.4 per cent as against 2.8 per cent in the second quarter.

On the forex front, the company was able to pare hedging losses to Rs 35 crore as against Rs 113 crore reported in the previous sequential quarter. For the fourth quarter, TCS has $400 million of hedges at an average rate of Rs 45.7 to the dollar, according to Mr S. Mahalingam, Chief Financial Officer and Executive Director.

In US dollar terms, cross currency movements had a positive impact of 90 basis points on the company's operating margins, Mr Mahalingam told analysts in a conference call. On being asked about which way he expects the rupee to move, Mr Mahalingam told reporters: "We are preparing for further appreciation in the rupee and are positioning ourselves accordingly."

Given the increased buoyancy in the business environment, will TCS add to its business development and sales teams?

"We have been working towards bringing down our sales and general administration costs.our endeavour is to generate more revenues from the current sales teams," Mr Mahalingam said.

TCS has announced a quarterly dividend of Rs 2 a share. Ahead of the results announcement, TCS stock hit its 52-week high of Rs 799.2, before settling at Rs 791.80 (9.6 per cent higher than the previous day's close) on the Bombay Stock Exchange.

Satyam Computer basks in IT glory

Shares of Satyam Computer are seeing a renewed burst of activity. Probably, strong quarterly numbers from Infosys Technologies could have raised expectations from other leading IT services companies as well. On Thursday, a US-based investor is said to have bought close to 30 lakh shares. Some of the bull operators too are said to be steadily building up long positions at the counter. Dealers tracking the counter say the rise in the stock price from hereon may be a bit gradual, since many players who are tired of holding on to the stock may decide to cash in. The stock had touched a high of Rs 128 in September last year, but has been moving in a narrow band ever since. On Thursday, the stock closed at Rs 120.85, up 1.2% from the previous close. On the BSE, 1.23 crore shares changed hands, with roughly a fourth of it resulting in delivery.

Infosys sacks techies for 'unethical behaviour'

MYSORE: Infosys Technologies has sacked a software engineer, Abhishek Gupta, for making a hoax call to budget carrier GoAir at Delhi airport Oct 25 to avoid missing his Bangalore-bound flight, a company official said here on Tuesday.

"Yes, we have sacked Gupta for indulging in unethical behaviour. We have a very strict code of conduct. We take strict action against those who do not adhere to it," Infosys board member and head of HRD and education and research T.V. Mohandas Pai told media.

The 25-year-old Gupta caused a bomb scare by telling GoAir staff that there was some suspicious object on the plane after he failed to convince them earlier to delay the flight.

"He thought the hoax call will delay the flight and he could reach the airport in the meantime to catch the flight," a Delhi police official said after Gupta was taken into custody and jailed.

The IT bellwether has also suspended another software engineer, Pallav Chakraborty, after he was arrested with his wife Sinchita by the Bangalore police Dec 29 for allegedly torturing their 15-year-old domestic maid.

"Though Chakraborty joined the company 15 days before his arrest, we suspended him after an inquiry into the child abuse, which is a very sad thing to have happened," Pai said.

As the police were investigating the case and the accused was in the judicial custody, Pai said the company would take strict action against him after the law had taken its course.

"We do not condone such acts. We are saddened by such an inhuman act. We have 109,882 employees on rolls. I think as we grow bigger, we are not the sample but part of the universe," Pai said on the margins of a media briefing on the company's financial performance for the third quarter.

Pallav and Sinchita, who hail from Kolkata, brought the girl from West Bengal for household chores.

A social organisation rescued the girl after raiding the house following a tip that a young domestic maid was in a bad state with injuries on her back and cut marks on her lips.

The police did not name the victim to protect her privacy and not to hamper investigation.

The company was also forced to suspend another engineer, Krishnamurthy, working at its Mysore development centre, after the police arrested him Dec 3 on the charge of molesting a French woman.

"Krishnamurthy remains suspended as police inquiry is still on. We will not spare anyone if (his or her) behaviour is not in line with our code of conduct," Pai said.

The three incidents occurred at a time when the company was recovering from the impact of a year-long global tech meltdown.

Protecting margins a big worry for IT firms

BANGALORE: India's leading software services companies are set to report a fall in profit margins for the last quarter due to a firmer local, though demand for outsourcing is improving in a global economy on the mend. The country's $60 billion sector, which manages complex computer networks to maintaining technology operations for clients such as General Electric and Citigroup, is back to its hiring ways and is also boosting salaries. "All the negatives in the world economy are not out of the system, but the confidence level in the IT sector is better now compared to the beginning of last year," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services. "The companies are now expected to come back on the growth path, but the key challenge is the currency rate."

A global recovery, recent deal wins and stable prices have brightened the outlook for Tata Consultancy Services and Infosys Technologies, India's top two IT exporters, after the global recession hit the sector last year. The rupee, which rallied to a 15-month high on Thursday, surging wages, and intense competition from global firms such as IBM, Accenture and Hewlett-Packard are seen as key risks for the sector. The rupee is set to rise another 4 percent this year on top of its 4.7 percent increase last year, with gains driven mainly by inbound portfolio investment, according to a Reuters poll. Indian tech firms are a magnet for thousands of young jobseekers with their sprawling campuses offering pizza and Subway outlets, golf courses and fitness centres to retain employees.

The software services sector gets more than half its revenue from the United States but companies are furiously expanding in Asia Pacific, Latin America and the Middle East to reduce dependency in the market and boost growth. Infosys, India's No. 2 software exporter, a trendsetter in the showpiece industry, kicks off the earnings parade on Tuesday, followed by sector leader Tata Consultancy on Friday and third-ranked Wipro on Jan 20. Infosys is expected to post its first year-on-year drop in October-December profit, as wage rises, a stronger rupee and higher sales and marketing costs dent margins. Valued at $32 billion, Infosys, which had previously frozen salary hikes and promotions for this fiscal year, said in October it would raise pay by an average of 8 percent this year for its employees in India. Markets will be keen on the company's comments on business and pricing trends, hiring and IT budgets of its overseas clients in 2010. Last month, Accenture reported a fall in first quarter earnings and gave a sales outlook for the current quarter that was weaker than analysts' expectations.

MARGIN PRESSURES
Infosys expects revenue growth in the fiscal year starting in April to be better than this year as a recovery in the global economy spurs investments by its clients, a senior official told Reuters last month. Consultant Gartner said major British and U.S. firms are focusing on a return to revenue growth in 2010 over cost-cutting, and information technology was central to their recovery strategies. Brokerage Angel Securities said Infosys profit margins are set to drop 245 basis points in Oct-Dec from the preceding quarter due to a 3.4 percent rise in the rupee and salary hikes. Tata Consultancy and Wipro should report margins fell 62 basis points and 38 basis points, respectively, it said. In the quarter, Tata Consultancy shares gained 21 percent and Infosys rose 13 percent versus a 14 percent jump in the sector index and a 2 percent rise in the broader market.

Telangana issue forces IT firms to eye neighbours

Political disturbance over the demand for a separate Telangana state is forcing information technology companies to shift. The process to shortlist office space in neighbouring states, like Tamil Nadu, is underway.

"Six companies, including top five in IT and operating in Hyderabad, want to shift before the end of January," Chennai-based Shriram Properties Managing Director M Murali said.

Software exports from Andhra Pradesh are projected to touch Rs 35,000 crore in 2009-10, and IT companies like Tata Consultancy Services , Infosys , Wipro , Tech Mahindra and HCL are present in Hyderabad.

"Besides Chennai, we have received enquires for leased properties in Visakhapatnam. All want office space for at least three-five years," Murali added.

"Two IT majors have approached us for 100 apartments on bulk lease, besides IT premises," said Chitty Babu, chairman of Akshaya Homes, a Chennai-based developer.

The IT department of Tamil Nadu confirmed that Chennai had received enquiries from Hyderabad-based IT companies. The Electronics Corporation of Tamil Nadu (Elcot), the nodal agency for IT in the state, develops special economic zones.

"We have been approached by IT companies, which are currently enquiring about availability of space in the state," an IT department official said. He added that Elcot was planning to organise roadshows -- from Hyderabad to begin with -- to promote IT in Tamil Nadu.

The move is bound to have its impact.

"About 15-20 percent of the 60,000-140,000 professionals employed globally by Tech Mahindra, Patni Computers, Satyam Computer, HCL, Wipro, Infosys and TCS globally are based in Hyderabad," P Phani Sekhar, fund manager (research arm), Angel Broking said.

J A Chowdary, managing director of NVidia Graphics India and president of The Indus Entrepreneurs, Hyderabad chapter, said if the decision on Telangana was prolonged, the IT companies would suffer. "Though we have requested the political parties to ensure law and order, students are going in for violent agitations by not allowing buses to ply and creating problems for people to reach offices."

Operation Satyam, a job half done

The government's failure in quickly bringing to trial Mr Ramalinga Raju and others involved in the Satyam scandal is as spectacular as its success in saving Satyam, the company, says RAGHUVIR SRINIVASAN.

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The singular aim was preserving Satyam, the company, and finding a new owner of repute for it.

On January 7, 2008, Mr Ramalinga Raju dropped a bombshell — confessing to a Rs 7,136-crore fraud — on an unsuspecting market, shareholders, employees and, indeed, even the government. Mr Raju's letter bomb, emailed in inconspicuous fashion to the Bombay Stock Exchange, caused massive value destruction for Satyam Computer's shareholders, created huge uncertainty for its employees and clients and posed a major challenge to the government.

A year later, the dust has settled on the company which was rescued by a brave knight in shining armour in the form of Tech Mahindra. Save for the sword of class-action suits filed by shareholders in the US hanging over its head, Mahindra Satyam, as it is now known, has weathered the worst of the storms that it faced.

There were some high-profile employee exits as also some clients moving on to competitors, but these were largely well managed. In short, Satyam, the company has been saved and is now back on its feet. The credit for this should go to the government-appointed Board, peopled by eminent personalities such as Mr Deepak Parekh, Mr Kiran Karnik and professionals such as Mr T. N. Manoharan, chartered accountant and Mr C. Achuthan, a former SEBI member.

The singular aim was preserving Satyam, the company, and finding a new owner of repute for it.

Today, the members of the government-appointed Board can look back with satisfaction at a job well done. A large part of the credit should also go to the then government which gave the new Board a free hand and facilitated the eventual sale of Satyam to Tech Mahindra by relaxing some regulations.

The imperatives

Yet, Operation Satyam remains a job half done. There were two clear imperatives when the scandal became public. The first was to ensure that Satyam, the company, did not collapse while the second was to get after the perpetrators and facilitators of the scandal and put them on trial. The government's failure in the second objective is as spectacular as its success in the first.

Yes, Mr Raju and a few other characters from the supporting cast are behind bars now, but do we know exactly what happened in the whole scandal other than what Mr Raju confessed to? Do we know how he managed to pull the wool over the eyes of regulators, employees and even the auditors?

Still in the dark

Talking of auditors, do we know what their roles in the scandal were — was it just benign negligence or was it tacit acquiescence? Are we aware of who were the beneficiaries of Mr Raju's swindle, apart from the man himself? In the days following the revelation of the scandal, there were dark rumours of the tentacles of the scam reaching political circles. Do we know if such rumours are true?

The answer to all these questions is a resounding No. A year after Mr Raju's confession, we are still in the dark about the extent of the scam.

But is this how it should be? Should the government not make earnest efforts to get to the bottom of the most serious corporate fraud ever perpetrated in the country's history?

Swift retribution

Corporate scandals and swindles are an integral part of free markets. The very freedom that allows enterprise to flourish and grow is often subject to misuse and abuse by unscrupulous minds. You only have to look at the list of recent scandals in that bastion of free markets, the US. Kenneth Lay and Jeffrey Skilling of Enron fame and, most recently, Bernie Madoff's $65 billion Ponzi scheme fraud and Sir Allen Stanford, are all excellent examples of scams facilitated by benign regulation.

Yet, there is a critical difference between the US and us in this respect. Retribution in the US is swift and the long hand of the law comes down hard on those caught with their fingers in the till. For instance, the Madoff scam surfaced at about the same time as Satyam but Mr Madoff was tried and convicted to 150 years in prison within six months in June 2009. The US justice system is now working to monetise whatever assets that they were able to seize to return at least a part of the money to the victims.

Contrast that with the situation in India where investigations and trials can drag on for so many years that the perpetrators are eventually administered divine justice, as had happened in the Harshad Mehta case. Indeed, How many frauds can you recall that have gone on to eventual conviction and sentencing?

Corporate governance

This situation has to change. The biggest motivator for a scamster is the secure thought that he will never be caught and, even if he is, he can keep justice at bay indefinitely. Towards end-December, the government observed what it called “India Corporate Week” and, as always in this country, it was just an occasion for industry bodies and professional associations such as the Institute of Chartered Accountants of India (ICAI) and the Institute of Cost and Works Accountants of India (ICWAI) to make the right noises about their commitment to corporate governance.

What we need are not events or shows such as this as much as action on the ground. Acting quickly in areas that have a critical bearing on corporate governance such as independent directorship and audit committees by clearly specifying their scope of responsibility and their liability is more important than events that only help professional bodies such as the ICWAI or the ICAI to prove their loyalty to the government through full-page advertisements in newspapers.

The government also probably needs to turn its attention to the ICAI, whose reputation plumbed the depths when an incident of booth-capturing was reported during elections to its central and regional councils last month.

Little is known of what the government thought about this unsavoury incident that you would generally associate with antisocial elements.

Punish the guilty

Whether the ICAI has got to the bottom of the role of its members in the Satyam scam is unclear. While Price Waterhouse, the firm that audited Satyam's accounts, has overhauled its Indian set-up, the ICAI has been sitting tight on its findings.

As we mark the first anniversary of the Satyam scandal tomorrow, it would be nice if the government redoubles its efforts to bring to trial Mr Raju and his accomplices, whoever they may be.

If future Satyams are to be avoided, the government has to act resolutely in punishing the guilty and making public the contours of the scandal.

TCS, Infy, Wipro losing contracts to Emerging rivals

BANGALORE: Emerging nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are increasingly becoming attractive for top outsourcing customers such as GE, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.

At a time when India’s top tech firms Tata Consultancy Services (TCS), Infosys and Wipro are redefining their positioning as global services providers by growing their presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals.

“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80 per cent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.

Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness Technologies, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for an outsourcing contract being fleshed out by a ‘first-time outsourcer’.

“When it comes to new business from the first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing at the Everest Group. Mr Singh, along with Mr Arora, researched the six emerging suppliers and found that they have been growing at an average compounded growth of around 25% annually during the past few years.

Brazilian firm CPM Braxis, for instance, which counts GE, ABN Amro and Whirlpool as clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company.

“Some customers, including Bradesco, would rather work with a local supplier, there’s nothing wrong. For large MNC customers, offshoring continues to be a priority,” said a senior executive at one of the top Indian tech firms. He requested anonymity because his company is currently in a financial silent period.

While these emerging outsourcing rivals are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value.

Meanwhile, for Indian tech firms seeking to grow their base outside their home country, these emerging companies also offer potential M&A opportunities.

“Many emerging companies we spoke with believe they can become $1-billion company on their own. However, some admitted that they would be open to inorganic opportunities too,” said Mr Arora.

Indeed, emerging service providers in countries of Brazil, Argentina and Mexico such as Globant, which counts Adidas, Linked IN and Citi among its top customer and has around $100 million in revenues, are increasingly being approached by some Indian tech firms, officials told ET on condition of anonymity.

“We have had discussions with both Softtek and Globant, but I cannot comment any further,” said a senior executive at one of the tech firms exploring inorganic growth route for expansion in the emerging markets. Experts believe such fast-growing firms always make a good acquisition target.

“Given where these companies are in terms of their size and capabilities, they do make good acquisition targets for Indian companies,” agreed Mr Singh.

What makes these firms really attractive is their strong presence in some of the fastest-growing markets for software services. For instance, Ness generates about a third, or $170 million, of its revenues from Eastern European markets of Czech Republic, Slovakia, Hungary and Romania.

“One of the more interesting prospects in this region relates to government initiatives, particularly as it relates to a ‘digitisation’ grant for the EU worth more than 10 billion euro, with ‘must use’ clauses by 2013,” observed James Friedman, analyst at the financial broking firm Susquehanna International Group (SIG).

“Ness is competing actively for this work in a number of regions, and expects Eastern Europe may improve by H2 of 2010, still targeting $300 million from this region by 2012,” he added.

Raju made gardeners, drivers rajas

HYDERABAD: In disgraced Satyam boss Ramalinga Raju’s land, even gardeners were made maharajas! Several gardeners, truck drivers and others, who were working in the mango gardens and orchards — belonging to Raju brothers — for meagre salaries of Rs 4,000 to Rs 5,000 per month, have been found to possess more than 50 acres of land worth crores of rupees.

Not only this, these workers were also made directors of several fictitious companies floated by Raju. And a majority of these lands are situated in a single village called Loyapalli of Ibrahimpatnam mandal in Ranga Reddy district.

Records with the Enforcement Directorate (ED) show that the Raju brothers had purchased as much as 4,200 acres of land in this village alone in 2006. Though official records state that the entire land was purchased for a mere Rs 30 crore, its actual price is much more and its present value is not less than Rs 4,200 crore at the rate of Rs 1 crore per acre. The ED has so far attached 312 properties acquired by the Raju brothers allegedly with the Satyam scam money.

In 2006, for example, a 54 acre plot in Loyapalli village was purchased for Rs 36 lakh and was registered in the name of Ch Suryanarayana Raju, a gardener working in the mango orchards of Raju brothers at a monthly salary of Rs 5,000. When the ED sleuths quizzed this gardener on his source of income, he revealed that the land was purchased by the Raju brothers through SRSR Holdings company and the sale deeds and other papers were also lying with them.

“They have just used my name and the question of my paying income tax for this amount does not arise because this is not my income and I never filed any IT returns nor do I possess a PAN card,” the gardener told the ED authorities. Interestingly, after this purchase, the Raju brothers made this gardener a director in several of their fictitious companies floated for holding the land.

The same is the case with K Venkatapathi Raju, another gardener in whose name 54 acres were purchased and M V Suryanarayana Raju, a garden supervisor whose name was used for registering a 56-acre land. Likewise, S V Samba Murthy Raju, a truck driver working with the Rajus has 53 acres of land registered against his name. Samba Murthy Raju was also made director of two companies — Sahayadri Green Lands Company and Devagarbha Agros.

The EDs Hyderabad Zone authorities had attached all these properties.