Indian IT industry to help in US economic recovery

India's information technology industry should start hiring in the US to help in its economic recovery as the US is always going to be its biggest market, the industry association's head has suggested.

The restrictions on H1B visas in the US "absolutely is a concern," Pramod Bhasin, president and chief executive of outsourcing firm Genpact and the new chairman of the National Association of Software and Services Companies (Nasscom), said in an interview with Forbes Asia.

"We've met the concerned people in Washington and expressed our views. Any abuse of the visa system must be stopped, and Nasscom will help to do that," he said.

"That said, I believe that we should be hiring in the US and thereby participate in its economic recovery," Bhasin was quoted as saying. "Several of our companies are already looking to create employment in the US It's the ideal time to get the best talent."

Asked about Nasscom's strategy to address the protectionist wave in the US, Bhasin said there's a lot of protectionist noise today, but the Indian industry "should respond to the reality, not the rhetoric."

"American companies are not going to turn away from global intellectual capital. The US is always going to be our biggest market," he said.

Calling backlash against outsourcing due to layoffs around the world as "a big issue that we're facing," Bhasin said Indian "industry isn't responsible for these layoffs, which have been caused by other factors."

"We're working with governments around the world to make ourselves heard. We bring real value to global companies, and it would only hurt them if they dispensed with our services," he said.

Asked about the industry outlook for this year, Bhasin said last October they had estimated an annual growth of 13 percent over the next two years after ending the last fiscal year with an overall increase of 16 percent. But that's "no longer achievable."

"Although we expect to grow at a lower pace this year, our sector will still outgrow other sectors," despite the recession as "the fundamental premise of our business remains unchanged," he said.

"We see ourselves as part of the solution to the global recession," Bhasin said noting "that ours is still a small industry; our biggest firm has revenues of only $6 billion. We still have a lot of runway ahead."

Markets rise to polls, may falter later

The stock market gets election fever too. The mercury rises on theexchanges in the run-up to the elections, and drops just as sharply after the process is complete, according to Mumbai-based brokerage KR Choksey Securities. 

However , local market movements will not defy international trends under any circumstances. This time round, says the brokerage, watch how the market starts moving up from March 23 — the polls begin on April 16 — and how it falls from May 6, a week before polling ends in most constituencies. 

The firm has analysed the  generalelections of 1996, 1998, 1999 and 2004. According to its report, 25 days before the elections, the Sensex gained an average of 8.8% and dropped by 28.8% in the 20 days following the elections. 

Punters prefer BJP or Congress-led  governments. VK Sharma, director of Ahmedabad-based Anagram Stock Broking told ET: “If the Left parties or Mayawati appear to play a predominant role in the government, the markets will react bitterly.” 

He adds that if international markets show signs of recovery, domestic markets will “discount all negative (political) news and move upwards.” 

Says DD Sharma, research head at the Mumbaibased Anand Rathi Securities , “If a BJP or Congress-led alliance comes into power, we may see a rally of about a 1000 points in the Nifty. But if we see the Third Front in the driver’s seat, markets may touch the previous low. However, all these projections are valid only for the short term. In the medium-to-long term, global movements will prevail.” 

Mr Sharma believes markets and elections may show a clearer correlation in the later stages, when the election survey and speculations start pouring in. 

Angel Stock Broking, which has also presented a report to clients on the likely scenario, post-elections , says the only concern for the markets may be a Left-led government at the Centre.

Market may correct 15% post election

MUMBAI: Over the next 6-8 weeks, Merrill Lynch expects concerns of a hung Parliament post-election and expected slowing in corporate earnings will likely worry the market. “We believe this could lead to a 15% correction in the markets,” the investment bank says in a report. 

On the elections, the brokerage believes (a) there will likely be a hung Parliament i.e. none of the three combinations - Congress-led UPA, BJP-led NDA and the Third Front - will be able to come to power (b) post-election results new alliances are likely -regional parties like BSP and AIADMK will be important (c) the probability of a Third Front government coming to power is still low but increasing in its view. 

“Our best case scenario would be a Congress government but with the Left being a key ally in it,” it adds. 

According to ML, most of the present alliances are fluid and many parties would be willing to reconsider their alliances post-elections. “We think 2 regional parties - Mayawati’s BSP and Jayalalita’s AIADMK would play a crucial role in deciding the Government. The role of the Left parties, though weakened, should also be important,” ML says. 

Despite the break-down of seat sharing with Mulayam Singh’s SP in Uttar Pradesh and Laloo Yadav’s RJD in Bihar, ML thinks both will continue to be part of the Congress-led UPA. The investment bank thinks the UPA still has a slight edge since they can get Left support again. The BJP-led NDA, on the other hand, could need the support of BSP, Jayalalita’s AIADMK, Naidu’s TDP as well as its old ally BJD

How Does Inflation Impact Our Life ?

Inflation is when prices continue to creep upward, usually as a result of overheated economic growth or too much capital in the market chasing too few opportunities. Usually wages creep upwards, also, so that companies can retain good workers. Unfortunately, the wages creep upwards more slowly than do the prices, so that your standard of living can actually decrease.

Inflation hurts your standard of living because you have to pay more and more for the same goods and services. If your income doesn't increase at the same rate as inflation, you will find your standard of living declining even though you are making more. Also, inflation doesn't impact everything equally, so that some things (such as gas prices) can double while other things (your home) may lose value. For this reason, it makes financial planning more difficult.

Inflation is really bad for your retirement planning because your target will have to keep getting higher and higher to pay for the same quality of life. In other words, your savings will buy less and less, so you will need to save more and more. However, everything you buy today costs more, so you have less left-over income available to save.

Inflation has another bad side effect....once people start to expect inflation, they will spend now rather than later, because things will only cost more later. This consumer spending heats up the economy even more, leading to further inflation - this situation is known as spiraling inflation because it spirals out of control.

It is also important if you are holding bonds or Treasury notes. These fixed price assets only give a fixed return each year. As inflation spirals faster than the return on these assets, they become less valuable. As they become less valuable, people rush to sell them, further depreciating their value. As their value becomes lower, the US government is forced to offer higher interest rates to sell them at all.

What Is Deflation?

The definition of deflation is when asset and consumer prices continue to fall. This may seem like a great thing to consumers, except that the cause for deflation is a long-term drop in demand. Unfortunately, a drop in demand means that a recession is already underway, with job losses, declining wages, and an ongoing decline in the value of your home and your stock portfolio. Deflation is a result of businesses dropping prices in a desperate attempt to get people to buy their products.

Officially,deflation is measured by a decrease in the Consumer Price Index. However, the CPI does not measure stock prices, which retirees use to fund purchases, and businesses use to fund growth. It also does not measure housing prices, instead using rental equivalent. This often lags home price declines, and underestimates deflation in the CPI.

To combat deflation, the RBI executes an expansionary monetary policy. It reduces interest rates, and increases the money supply in an attempt to jump-start economic growth. In addition, the government can offset deflation with expansionary fiscal policy. It can put more money into circulation by lowering taxes, increasing government spending, and incurring a temporary deficit to do so. Of course, if the deficit is already at record levels, that tool may no longer be available.

Like inflation, deflation is very difficult to combat once it is entrenched. As businesses and people feel less wealthy, they spend less, reducing demand further. Prices drop in response, giving businesses less profit.

How Would a Recession Affect You?

In a recession, economic growth falls dramatically. The stock market declines, and usually enters a bear market. This usually causes a "flight to safety", where investors buy Treasury Bonds, which causes interest rates to fall. Employers reduce new hiring, and eventually start laying off workers.

To revive the economy, the Federal Reserve usually starts lowering interest rates to spur business lending and investment. The Federal Government may institute tax breaks to spur consumer spending.

The current economic slowdown was started by a housing market decline which itself was initiated by the Subprime Mortgage Crisis. This decline also means that existing home values have fallen by 10%. In a recession, prices could fall another 5-10%.

How It Affects You

You have probably already felt the impact on your home's value, and therefore your home equity. This reduces your wealth. You will continue to feel the impact on your retirement savings, as stock prices decline, further reducing your wealth.

The greatest risk is if you are in an industry that has layoffs, and you lose your job. If you aren't laid off, then you will probably be asked to work longer hours to compensate for the new employees who aren't hired.

As the recession continues, you may benefit from lower interest rates and tax cuts, which are applied to everyone. Normally, this would help you refinance or get a better mortgage. However, lenders have become more stringent about credit standards, so you won't benefit unless you have great credit scores.

The Art of the Layoff...!!!!

Take responsibility.Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else. In effect, she should simply say, “I’m the orifice. I made the decision. This is what we’re going to do.” If you don’t have the courage to do this, don’t be a CEO. Now, more than ever, the company will need a leader, and leaders accept responsibility.

Cut deep and cut once.Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time the miracle doesn’t materialize, and the company ends up making multiple cuts.

Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. If nothing else, it enables you to declare victory: “We’ve turned things around and we’re hiring again.” By contrast, multiple cuts are terrible for the morale of the employees who have not been laid off.

Move fast.One hour after your management team discusses the need to layoff employees, the entire company will know that something is happening. If you think you need to layoff people, then do so because it’s unlikely that a miracle will happen. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.

Clean house.Painful as it may be, a layoff is a good time to terminate marginal employees. It’s good for the company because it can take care of many personnel issues at once without having to differentiate between people who aren’t performing and positions that you’re eliminating. It’s good for the marginal employee because he’s not tainted with getting fired. Finally, it’s good for the employees who remain because they can see that you have a clue about who’s performing and who isn’t—assuming you’re not clueless in making decisions.

Whack “Freddy.”Most executive have hired a friend, a friend of a friend, or a relative as a favor. When a layoff happens, all the employees will be looking to see what happens to “Freddy.” “Did he survive the cut or did he go? Is it cronyism or competence that counts at the company?” It should be true that Fred is dead.

Share the pain.When people around you are losing their jobs, you can share the pain too. Take a smaller office. Turn in the company car. Reassign your personal assistant to a revenue generating position. Fly coach. Stay in motels. Sell the box tickets to the ball game. Give your thirty-inch, flat-panel display to a programmer who could use it to debug faster. Do something, however symbolic.

Show consistency.I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:

• Cutting headcount, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.

• We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit and loss statement look better.

• Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

None of these reasons makes sense to me. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can. If nothing else, it’s a consistent story.

Don’t ask for pity.Sometimes managers go to great lengths to show the person they’re laying off (or firing) how hard it is on them. This reminds me of the old definition ofchutzpah: a boy murders his parents and then asks the court for leniency because he’s an orphan. The person who suffers is the one being terminated, not the manager.

Provide support.The odds are the people getting laid off aren’t “at fault.” More likely, it was the fault of top management—the same top management with golden parachutes. Hence, you have a moral obligation to provide services like job counseling, resume writing assistance, and job search help. There are firms that specialize in helping employees during “transitions,” so use them.

Don’t let people self select.We had a joke at Apple during the dark days of the late eighties that went like this: We should announce that employees who want to quit should come to a big meeting. Those who wanted to stay at the company should not attend. Then we would let the people go who didn’t attend the meeting and keep the ones who wanted to quit—because they were smart enough to know that we were in bad shape or that they had better opportunities elsewhere.

The point is that if you let people choose to get laid off or retire, you might lose your best people. Deciding who to layoff should be a proactive decision: Select the go-forward team to ensure that you never have to lay people off again. You should not leave this to chance.

Show people the door.With few exceptions, all you should do is let people finish the day—maybe the week. (My theory is that Friday is the best day to do a layoff because it lets people have a weekend to decompress.) Showing people the door seems inhumane, but it’s better for both the people leaving and the people remaining.

Move forward.Let people say goodbye and then get going. This is when leadership counts because any yoyo can run the show in good times. It’s bad times when you separate the men from the boys and the women from the girls.

After the layoff, this is what the remaining employees will be wondering about:

• Guilt: “Why did I survive the cut and my colleagues didn’t?”

• Future of my job: “Will I survive the next round of cuts if there are more cuts?”

• Future of the company: “Will the company survive at all?”

So you need to set, or re-emphasize, goals, explain what everyone needs to do to get there, and get going because the best way to move beyond a layoff is to get back to work.

Circulate with the troops.You might want to retreat to your office, turn off the phones, stop answering emails, and avoid everyone. This would be the worst actions to take. This is the time for you to motivate by walking around. Employees need to see you, talk to you, and seek your help and advice. They don’t want to think their leader is cowering in some foxhole. The brave face that you put on may be a charade, but it’s an important charade.

How to avoid being an IT layoff casualty?

f you’re an IT worker, follow these steps now to avoid becoming a layoff statistic:

1. Assess your project’s business value. If the project adds substantial value to the company, you may be safe. Projects established with solid ROI, and rooted in reasonable assumptions about business requirements, are the best. Unfortunately, many projects are expensive, wasteful boondoggles that shouldn’t ever be funded. If you’re employed on one of these, then escape immediately!
2. Examine the project’s execution success. Even the best-laid plans go awry, and IT projects are no exception; in other words, even a great business case can’t compensate for lousy project delivery. If gridlock, sideways motion, and long delays characterize your project, then you’ve got to decide whether these problem are a temporary setback or a permanent state of affairs. If the latter, then get out now.
3. Evaluate yourself. Having looked at the project, look even more closely in the mirror. Does the team recognize your accomplishments and think you’re doing a great job? When it comes to personal performance in tough economic times, being merely good is just not sufficient. Yeah, I know it sucks to work all those hours and then put in more study time at home, but getting canned in a recession is worse. Trust me, I’ve been there: I was laid off as a young IT guy in the aftermath of Black Monday in 1987. It wasn’t fun.
4. Stay put or run like Hell. Based on honest analysis, decide your personal path forward. If your project is strategic and the team is executing reasonably well, then you may be okay. On the other hand, if signs point to toward project disaster, then perhaps you’d better get out. Use whatever time might be available to plan your next moves.

HCL sacked 450 employees at Delhi and bangalore....

IT services company HCL Technologies has asked 450 employees at its Delhi and Bangalore offices to leave. This is after the global downturn has impacted the revenues of clients of Indian IT companies, thereby dampening demand for software services.

According to online reports going around the company had sacked 400 people in Delhi and another 50 in Bangalore in the last one-two months. The firm had earlier asked those on the bench, the buffer of employees kept on the rolls for new projects, to get assigned to projects or face the prospect of being asked to leave the firm, he said.

The company made usual performance statement officially - “HCL follows a systematic process of performance review and development, and the expectation of the organisation is for employees to meet the stringent performance standards. This is a routine and ongoing process,”

It may be noted that HCL has about 52,957 employees. Layoffs at other cities where HCL has offices like Chennai be may on cards next?

Infosys Layoff - The IT giant Infosys Technologies fires 2100 employees - lays off fears confirmed

The fear of layoff at Infosys is finally confirmed! Infosys Technologies the blue eyed company of Indian corporate community has finally shown the boot to 2,100 of its employees across the country.

Reportadly they indicated that they have done this after an annual performance appraisal exercise concluded mid-March. This is said by none other than Mohandas Pai, head of the company’s HR, that based on the performance, 2,100 employees had left (or asked to leave?) Infosys. The company had a total headcount of 1,03,078.

“The tolerance for non-performance has come down to zero,” Mohandas Pai, HR Head Infosys

• Appraisal conducted for 60,000 employees
• Bottom 3.5% of the people were either outplaced (soft jargon for laid off) or left
• Normally the bottom size is 5%
• Trainees (about 45,000) were not part of this exercise.

What needs to be seen is that taking clue from the leader - whether other IT companies in India will follow the suite?