Women campus hires power IT workforce

BANGALORE: In a landmark for the IT industry, maybe for most industries, IBM India has this year hired more women than men during its campus recruitment. This is significant because it's happened in an industry where mass recruitment is the norm.

Of the campus recruitments done by IBM India till June, 52% were women — a quantum leap from the 38% in 2011 and 32% in 2010. IBM doesn't disclose the numbers it hires, but large IT companies in India have hired over 30,000 people in recent years. Of these, about 70% have been campus hires.

Of the 265 engineers SAP Labs India hired this year, 42% are women, up from 34% last year. For Cisco India, the figure is 22% this year, down from last year's 25%, but significantly higher than 16% in 2010.

The significant jump in the number of women hired by leading IT firms is remarkable especially because, as IBM's recruitment leader for India Vardanahalli A Rangarajan notes, the average admission of women across engineering colleges in India is just 18%. Most companies have been working with placement cells in colleges to achieve these high numbers.

IBM says a major reason is awareness about facilities offered to women employees. "Our flexible work policies, the workfrom-home option, the ability to customize working hours are big attractions," says Kalpana Veeraraghavan, diversity manager in IBM India.

Rangarajan says IBM has many women role models, including CEO Virginia Rometty.

SAP Labs targets the few women's engineering colleges, including the Cummins Engineering College, Pune, and Meenakshi Engineering College, Chennai. It also conducts an online recruitment test for women across all engineering colleges on International Women's Day. "It's for women doing computer science and with a CGPA (Cumulative Grade Point Average) of about 8. This year, 3,000 took the test. We flew in over 200 women to Bangalore for the final interviews, and selected 45," says Anil Warrier, director for staffing, SAP Labs.

For the past five years, Cisco has been organizing every year a programme called Girls in Technology, where about 100 engineering graduates are invited to the company's campus in Bangalore and exposed to the labs, work environment and culture.

Protima Achaya, Cisco's lead for scaling services staffing in Asia-Pacific and Japan, says flexible workhours and excellent creche facilities are big attractions . "The number of women who join Cisco after this programme has been increasing every year. Such recruits tend to stay on for long," she adds.

Accenture doesn't disclose its women recruitment numbers. However, a spokesperson told TOI: "We have exclusive campus engagement programmes for women. We have Diversity Zones, a campus event which talks about several aspects of working at Accenture. Students get an opportunity to interact with senior women leadership and young achievers, who share their experiences about working at Accenture and how they are able to manage the work-life balance."

At HCL Technologies, the overall percentage of women is almost 25, but the campus recruitment percentage is only 12. However, Srimathi Shivashankar , AVP for diversity and sustainability, says the percentage has been steadily rising and HCL has women-focused recruitment drives.

It's increasingly acknowledged that diversity at the workplace is not only good in itself, but also has a profound influence on the operations of an organization. "Numerous studies show that increasing gender equality enhances productivity and economic growth. The best ideas flourish in a diverse environment, and companies benefit from accessing female talent," Shivashankar says.

Adds IBM's Kalpana Veeraraghavan : "When you mirror external reality at the workplace, employees feel more at home, and they behave more naturally. And that environment enables us to access a lot more talent." At IBM, the overall percentage of women still remains about 28%, but the most recent initiatives suggest that the number could quickly rise to the ideal 50%.

Source : TOI

10 biggest job cuts in 2012 by IT cos

Tough times are back in the business world, and with them the job cuts. The past few months have seen several global giants, including IT companies, shed jobs. While in some cases the reason behind these job cuts is business restructuring, in others it is the need to become more cost efficient. Here are some of the biggest IT companies which have announced job cuts in 2012.

1) HP – 27,000
In May, Hewlett Packard (HP) announced it will lay-off 27,000 employees across the globe. This included 9,000 job cuts in the USA, while CEO Meg Whitman assured that this move will not affect employees in India.

2) Nokia – 14,000
In February, Nokia stated that it planned to fire 2,300, 1,000 and 700 jobs in Hungary, Finland and Mexico, respectively, as it shifted all manufacturing operations to Asia. Then in June, Nokia declared plans to let go of 10,000 of its employees by the end of 2013 as part of the cost cutting initiative.

3) Sony - 10,000
Sony in April said it will shed 10,000 employees as part of its 'One Sony' initiative. This means that the company will lose 6% of its global staff in a bid to once again become profitable.

4) Research In Motion – 8,000
As part of its restructuring programme, BlackBerry maker Research in Motion (RIM) said in January it will slash 5,000 jobs. In August, reports quoting insiders came that the company will fire another 3,000 staffers.

5) Sharp – 8,000
The embattled Japanese manufacturer Sharp in August announced it would cut 5,000 jobs as part of its cost cutting efforts. Later, sources said that the company will sell two plants and, thus, slash 3,000 jobs, while news reports said Sharp may eventually shed 10,000 jobs.

6) Nokia Siemens – 7,030
Nokia Siemens' restructuring programme includes 2,900 job cuts in Germany in March, while 630 jobs were slashed in Finland. The company shed 3,500 jobs in Latin America as it exited a service and maintenance deal with Brazil's Oi.

7) Alcatel-Lucent – 5,000
Alcatel-Lucent decided to let go off 5,000 employees in order to lower its spending and produce more profit. All divisions except research and development will be affected by this move, which will be completed by 2013-end.

8) Motorola – 4,000
Under Google, Motorola Mobility will cut 4,000 jobs across the globe. This move, announced in August, translates into 20% employees of the company being laid off as part of the restructuring process. The company will also shut down approximately 30 offices across the world and 'shrink operations' in India.

9) Cisco – 1,300
In July, Cisco announced that it will lay off 1,300 people from its workforce, which amounts to 2% of its total staff. The technology giant was compelled to take this step as its sales reduced under intense competition and limping economic conditions.

10) IBM – 1,202
In February, Alliance@IBM, an organisation by IBM employees, released data that IBM laid-off 1,202 employees in various business units throughout the world. It reported the data based on the severance documents it received from the staffers who were let go by the company.

Source : TOI

What Indian IT companies Infosys, Wipro, TCS, HCL are not doing right

The top IT services companies have been around for a few decades but, for all practical purposes, they came into being around Y2K, when the world took notice of the Indian technological prowess. Since that historic turning point, the industry has zoomed from under $2 billion in 2000 to $70 billion in 2012. While that growth trajectory continues, albeit at slower rates, there is something amiss.

Bellwethers Infosys and Wipro face fresh challenges, Tata Consultancy Services (TCS) has marched ahead and HCL, which looked like an also-ran prior to 2008, has risen like a phoenix. The gap between TCS and No. 2 Infosys has widened from $1 billion three years ago to more than $3 billion today. Infosys slipped to the No. 3 slot in the pecking order, with Cognizant overtaking Wipro in 2011 and Infosys exactly a year later, in the June quarter.

If Y2K was the sector's baby steps that hurled IT companies into a hyper-growth orbit, now they are finding it difficult to cope with uncertain market conditions. There are divergent commentaries: Infosys 5% growth, TCS set to beat Nasscom guidance of 11-14% growth for the year, Cognizant and HCL clocking double-digit growth. HCL, Cognizant and TCS have won more new business in the last 10 quarters than rivals. And the mid-tier, the likes of Hexaware and KPIT Cummins, are growing much like the large-tier did a decade ago.

This is in contrast to the pre-2010 period when the large companies - excess of $4-billion revenue today - grew at an average of 22-24% a year. That period saw the industry zoom on the back of labour-intensive tasks, such as applications development and maintenance and remote infrastructure management. It was the low-hanging fruit that Indian IT went for and what looked like hi-tech then is commodity business today.

Today, global technology buyers - from Fortune 500 firms spanning GE, Bank of America and Nissan to mid-tier firms across the world - are looking at new applications faster than most people change mobile phones. Typical IT cycles have shrunk from 5-7 years to six months. For example, UK-based retailer Tesco had a single buying system globally, on mainframes - in the last couple of years, it has dismantled that and built country-specific systems, say, for buying from Poland and China. There's turbulence in the market.

Companies like HCL Technologies credit this disruption for their growth: contracts came up for renewal and they have grabbed the opportunity with both hands. Global outsourcing tracker Information Services Group says 686 outsourcing IT deals with a value of at least $25 million or more are due to expire in 2012 alone. Most of them are being renegotiated at lower rates, putting pressure on margins - unattractive for some (like Infosys) but attractive for others (like HCL).

According to research firm Gartner, global IT spend grew by 15.26% between 2005 and 2008 and at a lower 13% between 2008 and 2012. With global spends ebbing, companies have been eating into each other's market share for gains.

The performance of TCS, HCL and Cognizant looks better when compared to Infosys and Wipro. But this is more due to short-term gains, such as winning business on contract renewals. Overall, the $70-billion industry will have to overcome this period of inertia if it has to return to stellar growth. Even those that gained in the slowdown - like HCL and Cognizant - need to look at new growth engines.

Indian IT has traditionally had high exposure to verticals that are stressed today - banking, retail and telecom - rather than those that are less stressed - manufacturing, auto and healthcare. For instance, post-2008 has seen spends on banking systems stagnate or decline, particularly in areas of capital markets and investment banking.

The way customers are buying technology is changing: for instance, travel, hospitality, banks and retail chains are looking at a combination of mobile, cloud and big-data analytics services.

Banks need new software applications every six to nine months, retailers want to buy systems that can sync with both online and offline worlds, helping customers buy on mobile, tablets and physical stores with equal ease. Indian IT is confused on what to bet on.

This decision becomes tougher in a challenged market environment, where IT spending is tight and given the scale at which companies are - neither too small to change path quickly nor too big to take on IBMs and Accentures. IBM can throw in a few billion dollars just to give proof of concept in, say, smart, networked cities and showcase it to buyers from Mumbai to Manhattan. Infosys, Wipro and TCS can't afford that investment. Neither can those that have ostensibly gained in recent years - HCL and Cognizant.

The first $6 billion to $10 billion was an easy run rate to clock. Now they need the savviness much like the software they help global companies run on, to identify areas they want to chase and create new markets for themselves to grow.

Source : TOI

Indian IT companies TCS, Infosys hit by denial of US visas

BANGALORE: Information technology companies are being forced to subcontract more work than ever before in the US, as the measures adopted by that country have made it harder and costlier for Indian software professionals to travel on work to their main market.

For companies such as Tata Consultancy Services and Infosys, the use of staffing firms instead of their own employees for US assignments is resulting in higher costs and lower margins, further eroding their competitive advantage in a weak demand environment. Ironically, they are being forced to subcontract work to temporary consultants when an increasing number of their own software engineers are sitting idle on the bench.

At Infosys, subcontracting costs doubled to 3% of revenue in the first quarter of fiscal 2013, its highest level. For India's largest IT company Tata Consultancy Services, they were at 5%, from less than 3% last year. Analysts expect the higher subcontracting costs to hurt margins at top IT firms by at least 30 basis points.

"We expect the impact to be industry-wide and not restricted to Infosys as the pressure to hire local talent mounts," wrote Shashi Bhushan and Pratik Shah of brokerage Prabhudas Lilladher in a client note.

The US accounts for more than half of the over $70 billion in software exports from India. Under President Barack Obama, in particular, the US has made it increasingly difficult for Indian firms to obtain visas to send employees to work on projects at client locations. Visa fees have soared under Obama's watch and so have rejection rates.

Fewer L-1 visas being approved
This is especially true for L-1 visas for intra-company transfers.

In 2011, approvals for L-1 visas were 28% lower, show data from independent public policy think tank National Foundation for American Policy. On the other hand, such visa approvals rose by 15% for applicants from the rest of the world, leading to concerns that India is being singled out for discrimination.
More than 25,000 Indians travel to the US every year to work on assignments for software companies. Up to 40% of work permits are usually under the L-1 category.

Most people in the software industry believe there is a deliberate policy of discrimination against Indians, but they are wary of voicing their opinions publicly for fear of antagonising the American government, especially when a presidential campaign is on and unemployment is a major theme. Infosys, HCL, TCS and Wipro declined to comment for this report.

Software industry grouping Nasscom said it is "working with" the Indian government and US authorities on the issue of rising visa rejection rates. "While some part of the work gets contracted, some IT firms are now focusing on hiring locals for domain-specific work in the US," said Ameet Nivsarkar, Nasscom's vice-president.

In mid-2010, when the US increased the fee for some types of work visas used by Indian outsourcers, Nasscom had estimated the additional cost burden on Indian IT industry at up to $250 million.

But not everyone is complaining about the turn of events. At staffing firm TeamLease, where over 70,000 employees work on contracted projects for various companies, revenue soared 30% last year due to the increase in subcontracting. Similarly, at Ikya Human Capital Solutions, another global staffing firm, demand from Indian IT firms for subcontracting work in the US rose 8-10% in the past six months.

"Any change in the economic conditions first reflects in the staffing industry. We are a springboard in good times and a shock-board in bad times," said Ashok Reddy, managing director and co-founder of TeamLease.

Source : TOI

Why IBM, TechM BPOs are dumping telcos

BANGALORE: Severe competition and nose-diving tariffs in the once-celebrated Indian telecom industry have squeezed margins out of business process outsourcing firms catering to the sector, forcing many to quit the space.

Domestic BPOs such as Tech Mahindra, Intelenet (now Serco), Firstsource and IBM BPO are either walking away from, or choosing not to bid for new, telecom-based contracts, as a steep fall in call rates coupled with a sharp rise in costs have made such projects unviable, industry insiders said.

The BPOs usually follow a Full-Time Employment (FTE) pricing model or one based on duration of calls handled. In FTE, after taking in factors like call volume and call-arrival patterns, the BPO employs a fixed number of staff in consultation with the operator. In the second model, the BPOs typically charge about Rs 3 a minute.

"The decline in call tariffs has affected revenues of the telecom operators who are reducing the payout to partners," said SV Sriram, senior vice-president at Tech Mahindra. He said this was becoming a challenge for BPOs serving the telecom sector, especially in Tier-I cities like Mumbai and Delhi, where costs are soaring.

The average revenue per user for Indian telecom operators has plummeted from about 240 in June 2008 to 96 this June - a drop of 60% in just four years.

TechM just concluded its six-year-old partnership with Tata Teleservices as talks for price renegotiation fell through. It also chose not to renew its three-year contract with Reliance Communications for similar reasons. Sriram said costs in a Tier-I city have risen about 35% in the last three-four years.

Also, the decision by telecom operators to start charging for customer care calls, which were toll-free earlier, led to a significant drop in their numbers, hurting revenues of the BPOs. In the last one year alone, call volumes dropped about 15%, the BPOs said.

Besides TechM, IBM BPO and Serco are the other leading players in the Indian telecom BPO sector, which analysts estimate to be worth about Rs 7,400 crore. All three declined to comment on the specifics of deals that were renegotiated or declined.

However, firms like Vertex, Competent Synergies and Magus, which operate mainly in smaller towns and cities, do not spend as much as their bigger rivals on rent and salaries, allowing them to save on costs. This has made it possible for them to lure customers away from the bigger players with better pricing and deals.

For instance, when Aircel wanted to reduce costs, its existing BPO partner offered to move its centre from a Tier-I city to a Tier-II city and give it a 15% discount. But the telecom company eventually opted for a mid-sized BPO with a larger presence in smaller towns to get nearly double the savings offered by its existing service provider.

But Serco sees this move towards smaller players as temporary. "These contracts are going from larger player to smaller and Tier-II companies, but there are short-term gains. There will a consolidation in the market," said Bhupender Singh, CEO for AMEAA (Africa, Middle East, Australia and Australasia) at Serco. Serco's revenue from the domestic telecom segment makes up only 40% of the total, down from 70%, three years ago.

But some analysts believe that the turn of events should prompt Indian BPOs to move up the value chain beyond plain vanilla customer care call centres. "The BPO players can leverage on the existing opportunity by moving up the value-chain and offering new services like call management, collection management," said Milan Sheth, partner, technology advisory services at Ernst & Young.

Source : TOI

Google, Microsoft, Yahoo, IBM, Oracle, Adobe hiring talent from small towns

BANGALORE | KOLKATA: When Sukruth KS first walked into the National Institute of Technology in the small town of Warangal in Andhra Pradesh three years ago, he was just another engineering student. When he passes out in May next year, he will be the one who Microsoft hired for a $1,00,000 (approximately Rs 60 lakh) salary for a global posting.

Anmol Kumar, Balmukund Trivedi and Dinesh Reddy, three of Sukruth's batchmates, have also snagged similar salaries from Epic Systems, a US-based company that makes software for healthcare companies. To put that in perspective, the highest pay cheques seen at top-notch IITs are in the $1,40,000 range.

Global tech and internet firms are on the prowl in small towns this placement season, looking to lure talent from NITs and good private engineering colleges. Both would rank a notch lower than IITs in the talent pecking order.

Sample this: Amazon, Google, PepsiCo, Yahoo, Cisco, Oracle, Deloitte, Adobe, DE Shaw, Flipkart, Direct-i, Caterpillar, Future First and IBM are making offers this year at non-IIT campuses in Vellore, Madurai and Mesra, and also at private colleges in Delhi and Bangalore. Placement heads at these colleges say companies are hiring more than last year.

The companies are offering higher salaries and dangling better perks, including international assignments, free holidays and joining bonuses of up to Rs 1 lakh.

Amazon, Google, PepsiCo and more such marquee employers wooed students at NIT Warangal with salaries in the Rs 8-20 lakh range. Global IT services major IBM also hired 85 students from the institute this year. "Even gaming firms such as EA Sports have come in and selected four students for Rs 12 lakh," says M Chandrasekhar, NIT's placement head.

"It's a question of supply and demand which cannot be met by going only to IITs," says Yugesh Goutam, executive director of KEC International, the infrastructure firm of the RPG Group.

"When we have to hire 1000, it is not possible to take them only from the IITs, which only have a handful," says P Thiruvengadam, senior director, Deloitte India. "Also, tier-II and III colleges are important because they give us a good mix of students from different cultures," he adds.

"We strike a healthy balance by hiring a mix of students from IITs and from tier-II and III colleges," says V Nagarajan, VP and head-HR, Times Internet. "Students from the latter come with high aptitude and a high emotional quotient." Times Internet hires 20-25% of its talent from tier-II and III colleges.

Engineering and tech firms and core product companies form part of the first wave of recruiters at such campuses. IT service giants such as Wipro, Infosys, Cognizant, TCS and HCL will start visiting campuses from September. Salaries offered by these mass recruiters are typically around Rs 3.75 lakh.

In the past few years, students have preferred product and core companies rather than the IT services sector as whispers of a downturn, delays in joining dates, etc, affect the image of the industry, sources from these colleges say.

At the Vellore Institute of Technology, Flipkart beat Amazon and Google with a Rs 12.5 lakh package, while Microsoft offered Rs 10.5 lakh. Another e-commerce firm, PayPal, hired for Rs 8.25 lakh. Others such as Schneider, Cisco and Thoughtworks are offering Rs 6-10 lakh. DE Shaw came armed with a package of Rs 14.5 lakh and Amazon has given students a retention bonus of Rs 1 lakh after a year. "We are here to compete with MNCs such as Google, Yahoo and Adobe since we need students with similar caliber," said Aparna Ballakur, HR head for Flipkart. The e-commerce company will pick up its fresh batch from IITs, BITS Pilani, NITs and VIT.

At the Birla Institute of Technology, Mesra, IT product companies alone have so far absorbed 8-10% of the 375-400 undergraduate batch. These include the likes of Microsoft, Facebook and Direct-i. Overall, packages are 15-20% higher than last year, says Saitab Sinha, deputy placement head at the institute. Bangalore-based RV College of Engineering has seen 35-40% of its 1,000 students roped in by a similar lot, and at double the pay in some cases. Salaries offered at Delhi Technological University are 30% higher than last year. "Several Korean companies have offered packages of Rs 35-40 lakh, including perks, and joining bonus amounting to Rs 1 lakh," says Neeraj Nimwal, training & placement officer for the college.

IBM hired 154 students from the 2013 batch at Madurai-based Thiagarajar College of Engineering, compared to 90 last time. Amazon has selected two students for Rs 11.5 lakh and ITC, Thoughtworks, Athena Healthcare have recruited for around Rs 6 lakh and above. Automotive manufacturing companies such as Tata Motors, Maruti and SKF are ready to pay Rs 4.25-5.5 lakh to candidates.

Source : TOI

'IT companies should not over-reach themselves'

BANGALORE: India's big IT companies are building strong consulting practices that are taking them into spaces traditionally dominated by the likes of Accenture, Deloitte, PwC and even McKinsey and The Boston Consulting Group.

Infosys' $350-million acquisition of Switzerland-headquartered Lodestone, a consulting firm focused on SAP-enabled business transformation, is only the latest indication of how serious IT companies have become about consulting.

Cognizant has been organically building its consulting business but has also made five global acquisitions since 2005 that have strengthened its consulting capabilities in telecommunications , media & entertainment, IT infrastructure services , high-end programme management and IT testing.

HCL acquired UK-based Axon in 2008 that brought capabilities in SAP consulting. Wipro has been focusing on business transformation consulting and its head of consulting services Kirk Strawser has said the company intends to become "the largest pure-play business transformation consulting practice in the world" , with 5,000 consultants by 2015.
The company now has 1,750 consultants that offer advisory services on designing, adopting and operating new business models to outpace competitors.

Sundararaman Viswanathan of globalization advisory firm Zinnov Management Consulting says Indian IT companies are increasingly seen as viable options for some of the costlier offerings from global consulting companies.

For IT companies, consulting brings at least two big benefits . One is, as Gartner India's distinguished analyst Partha Iyengar says, they make for "stickier client relationships". A lot of consulting happens not with the CIO - the traditional interface for IT - but with other CXOs. This helps get mindshare in company managements and boards, which then translates into deeper and longer-term client relationships.

"We sell 40% of our consulting services through CXOs such as CEO, CFO, COO, chief medical officer, chief marketing officer, chief risk & compliance officer, and chief merchandising officer," says Nat Radhakrishnan, VP in Cognizant's business consulting division. He says in the last one year, consulting also helped to get 25 new clients for Cognizant.

The second benefit is the downstream one. Most consulting assignments will eventually translate into IT orders, because any business change and transformation today involves technology transformation or the use of technology. Iyengar notes that Cognizant has a strong application portfolio management practice.

"If a customer hires Cognizant to analyse their application portfolio, and the company spends 6 months doing it, then the customer will inevitably also give the recommended application work to Cognizant. I believe a lot of their application development and maintenance deals are a result of their strong consulting practice," he says.

Acquisitions can accelerate and add to these benefits. An acquisition not only brings new consultants with access to new customers and geographies (which will eventually help the IT business), it could also bring better tools and frameworks to diagnose problems and recommend new ways.

It is these reusable tools and frameworks that are a consulting model's strength. Ray Wang, CEO of Constellation Research, says Lodestone's methodology and culture would transform Infosys. "Lodestone brings its trademark IDEA methodology . IDEA represents insight, design, execute and achieve. This approach aligns with Six Sigma standards and SAP ASAP (the roadmap for implementing SAP solutions in a cost-effective , speedy manner ) to improve the quality of implementation outcomes," he says.

Gartner's Iyengar, however, warns that IT companies should not over-reach themselves. He says consulting's sweetspot is when a company strategizes around the work (IT services in this case) that it is doing; suggest to clients how to do their IT better, how to optimize.

"But if you try to do high end management consulting (organization design/structure, general strategy etc that the McKinseys do), it may not work out. Many clients have told us the last thing they want from India is another management consulting firm. We don't have the capability and maturity to provide such consulting. And acquisitions will not help either," he says.

He believes Infosys has tended to get into high end management consulting in the US. "The jury is out on that. There could be short to medium term challenges," he says.

Cognizant has also been reaching into those spaces. It's working with Saint-Gobain Building Distribution in the UK and Ireland to improve its business processes, and identify areas of improvement and unlock synergies among its many brands.

It's working with a publishing company to transform them into an integrated media play. Technology is just a small part of these exercises.

On the contrary, Wipro seems focused on technology-enabled business transformation consulting (transforming businesses through, say, newer technologies like mobility, cloud etc), which some find appealing.

Research firm Forrester recently analysed IT firms that are into such consulting and said that amongst the pure-play Indian IT vendors, "Wipro is the most advanced in terms of its approach and its vision for transformational consulting".

Source : TOI

National Policy on IT to create 10 million jobs by 2020

NEW DELHI: The National Policy on Information Technology 2012, which envisages the growth of the IT market to $300 billion and creation of another 10 million jobs by 2020, has been approved by the union cabinet.

A statement from the communications and IT ministry said the policy attempts also to leverage India's global edge in information and communication technology (ICT) to advance national competitiveness in other sectors, particularly those of strategic and economic importance.

The thrust areas of the policy includes encouraging adoption of ICTs in key sectors to improve their competitiveness and productivity besides providing fiscal benefits to small and medium enterprises and start-ups for adoption of IT in value creation.

It envisages creating a pool of 10 million additional skilled manpower in ICT and make at least one individual in every household e-literate.

The policy will enhance transparency, accountability, efficiency, reliability and decentralization in government and in particular, in delivery of public services.

The policy will be notified in the Gazette shortly, the ministry said.

Source : TOI

Bench employees may hurt TCS, Wipro, Infy profits

BANGALORE: The rising number of idle workers in the US and Europe for Indian software companies could drag profitability lower. This will add to troubles already caused by an uncertain business environment, where clients are delaying decisions around technology projects.

The so-called 'bench' consisting of engineers who are not working on any active projects has increased by at least seven percentage points at TCS, Infosys and Wipro, analysts said. Industry executives and analysts are of the view that the swelling bench could shave off up to 150 basis points from operating margins in the coming quarters.

Onsite utilisation rates, or the proportion of engineers in client locations assigned to billable projects, have fallen to below 90 per cent from 97 per cent at the beginning of the year. A senior industry executive, who works closely with large IT companies, said that up to 18 per cent of onsite staff are sitting idle at some firms.

"Onsite bench size has swollen across large IT firms," said Hitesh Shah, director of equity research at Mumbai-based brokerage IDFC Securities. "With every contract won, companies hired more local staff, but they are retained even after the deal matured. This adds to the bench until they find another contract."

Typically, as an outsourcing contract matures, part of the work is moved to less expensive offshore locations such as India. However, with the jobless rate staying stubbornly high in the US and outsourcing becoming caught in election-year politics, Indian IT companies would not want to be seen as adding to problems.

Infosys, TCS, Wipro and HCL declined to comment.

Over the past two years, Indian IT firms have also been hiring more aggressively in the US in anticipation of economic recovery there as well as in response to higher rates of rejection of visa applications to send workers from India. Local hiring is also being used to project a community-friendly image in the US.

For Infosys, which counts JPMorgan and Bank of America among clients, the swelling US bench has already made a dent in profits - a 210-basis-points negative impact on its operating margins during the April-June quarter, according to Barclays Equity Research, which said that Infosys saw its onsite bench rise to about 11 per cent during the period from 5 per cent earlier.

Part of reasons why workers are sitting idle is because they do not have the right skill sets that new IT projects call for.

"There is a serious mismatch between the available skill sets and the market demand," said Ajit Isaac, chief executive of Ikya Human Capital Solutions, a professional staffing company that serves the Indian IT sector.

If traditionally, application development and maintenance made up lion's share of Indian IT's work, increasingly, clients are increasing seeking services based on emerging technology areas such as enterprise mobility, cloud computing and data analytics. Employees trained in these technologies, however, are scarce, especially in the US.

Typically, about 10-15 per cent of the workforce of large IT firms is based overseas at client locations. Bangalore-headquartered Infosys has around 13,000 employees in the US while Wipro has about 10,000 employees. HCL Technologies has around 8,000 and TCS some 6,000.

Such a fall in utilisation levels and the burden of an idle workforce in expensive locations could snowball into a persistent headache, if business does not pick up in US and Europe, which together contribute about 80 per cent of revenues for large Indian IT companies.

Source : TOI