from agencies (mb)
November 12, 2007
IT workers face squeeze on hikes
There’s bad news in India’s Silicon Valley: the technology titans in Bangalore are planning to trim wage increases next year.
Leading infotech companies, including TCS, are expected to see average wage hikes head downwards to 9 to 10 per cent from 12 to 15 per cent last year.
The dynamics of the industry are changing: the companies that earn over 90 per cent of their revenues in dollars have seen their profits gouged by the surge in the value of the rupee and steep wage hikes.
They don’t have a handle on the rupee and have been scrambling to hedge their dollar earnings; so they are looking to trim the increase in the wage bills next year.
Until now, it was hard for them to do so because of mounting attrition levels which are typically between 14 to 18 per cent in the industry.
But TCS, which has one of the lowest attrition levels in the industry, reckons that the demand-supply gap in manpower requirements has started to narrow as the industry starts widening the pool from which it sources its employees.
Earlier, companies used to focus on engineering gradates and computer specialists. Now, they are ready to recruit ordinary science graduates and in some cases even those from the humanities stream who have the potential to be groomed into IT professionals.
“The IT sector has already seen the salaries peaking out. So, next year will not see any new highs,” said an industry insider.
“Although employers are reporting pay increases, the hikes are modest in comparison with previous years. This trend looks set to continue in 2007,” said Nischae Suri, author of the 8th annual Asia-Pacific Salary Increase Survey conducted by Hewitt Associates.
“But even at these levels, the wage increases in India are generous when compared with those in the US, Europe and many other markets in Asia,” Suri added.
In a study conducted along with McKinsey, the National Association of Software and Service Companies (Nasscom) had said India would need about 2.3 million IT professionals by 2010.
Based on current estimates, Nasscom said there could be a shortage of 500,000 skilled knowledge workers by 2010 if remedial action was not taken.
The salary hikes in the industry have been driven by this scare of a manpower shortage. But companies have aggressively started training raw recruits to deal with the problem and creating skill sets that didn’t exist earlier.
“While organisations are being driven to increase their spend on compensation as a result of the ongoing attraction and retention challenges, many companies are reassessing their human resources strategies and broader business goals to ensure they are getting the most out of their talent and increasing productivity. Any modest alteration in increases are a result of this performance orientation,” said Suri, who is head of Hewitt’s talent and organisation consulting analytics practice in Asia.
The big worry for the IT industry is the rupee volatility. The rupee has appreciated over 12 per cent this year against the dollar - and this has hurt bottomlines of the IT giants.
“The rupee-dollar parity will definitely have an impact on the IT industry in the coming fiscal,” said Anupam Prakash, Asia-Pacific leader at Hewitt Associates. “The salary hikes may not be as high as it was this year. The IT companies earn their revenues in dollar terms and their costs are in rupee terms. Their margins are already under pressure as a result of the rupee appreciation. The net result is lower salary hikes,” he said.
There are some reports that hiring is slowing down in some sections of the industry. However, top companies are reporting sharp increases in hiring levels.
“Hiring is slowing down in the IT sector,” said Kris Lakshmikanth, CMD at Headhunters India Ltd.
“All IT companies, specifically the Tier II and III companies, are feeling the pinch because of the weakening dollar. At the same time, the supply of manpower has increased as a lot of companies are now looking not just at engineering graduates but also simple science graduates to hire for projects,” he added.
However, not all companies are looking to pare wage increases. “Our salaries will be in the 12 to 15 per cent levels next year as well,” said a Wipro official.
Diageo May Buy Stake in United Spirits, Economic Times Says
Diageo Plc is in talks to buy as much as 13 percent of India's United Spirits Ltd., the Economic Times reported, citing people it didn't identify.
Diageo may buy the stake in United Spirits for as much as $600 million, the newspaper said. The transaction may be completed by March, it said.
United Spirits denied that it was in negotiations with Diageo to sell a stake, the report said. Asif Adil, managing director of Diageo's Indian unit, declined to comment, the newspaper said.
Bangalore-based United Spirits is India's biggest liquor maker. London-based Diageo is the maker of Smirnoff vodka, Guinness beer and Dom Perignon champagne.
Wipro may bid for Capgemini
Bangalore-based IT major Wipro may bid for the Paris-based consulting giant Capgemini, reports Economic Times.
The company is said to bid at Euro 60 a share for CapGemini, valuing the company at Euro 8 billion.
Three months ago, another Indian IT giant Infosys was looking at bidding for Capgemini.
Shares of Capgemini surged more than 3% on Friday.
Shares of Wirpo closed down Rs 9.70, or 2.07%, at Rs 460.00. The total volume of shares traded at the BSE was 34,191.
Cerebra sees potential in BPO, architectural design segments
Cerebra Integrated Technologies Ltd has identified BPO and Architectural Design segments as potential growth generators and plans to achieve its progression through inorganic route. The company has identified architectural and knowledge process outsourcing segments to grow its BPO portfolio.
Cerebra is in the process of short-listing such firms and intends to buy small- to mid sized firms in India and the US. The company plans to invest in building 200 seats strong BPO business globally.
The organic and inorganic growth plans through acquisitions would also be sound de-risking strategy for Cerebra, which now wants to be a player not just in the IT market but also in the EMS and KPO segment.
Managing director Ranganathan V said. “We see huge potential in this segment as firms globally outsource activities such as design, drawings, 3D modelling and so on to save on costs, this is a very manpower intensive segment and the cost savings arising from outsourcing for international firms would be significant.”
Now 'bed and movie' theatres in the offing
One must have heard of ‘bed and breakfast’ for budget travellers. But here is ‘bed and movie’ being offered by a Chennai cinema house. Abirami Mega Mall, a mall and multiplex with four theatres, has introduced fully reclining chairs, that might resemble seats in the first class of a luxury airline, taking moviegoers to a whole new level and giving a new dimension to watching movies at theatres. According to managing director ‘Abirami’ Ramanathan, this is the first time in India that such 100% reclining seats have been introduced in theatres.
The seats recline 165 degrees and can be adjusted to any position. They have been imported from the US while the upholstery for it has been done in India. ”We would call this a five star theatre. There are five star theatres in Malaysia and we have tried to replicate the idea,” he said This has been introduced in the US and is extremely famous there, he added. Also, the theatre has been refurbished in a thematic manner, sporting an Egyptian ambience. The passages provide a feeling of being inside an Egyptian palace and the interiors of the theatre too provide various Egyptian themes.
“Everything from the lobby and toilets are air-conditioned. There are no posters. Photo cards and banners are shown digitally," Ramanathan said. Tables will be made available before each seat in the new segment and at the press of a switch, a waiter will attend on the customer.
In a first of sorts, the theatre has introduced ‘iCount’, through which an infra-red camera has been set up inside the cinema hall which is connected to the ticketing counter. “This has been developed by Bangalore-based iMetrics and will help us find out if there is any additional person inside the theatre. For instance, if there are 200 seats and there are 202 persons inside, it will help us detect them.”
“Also, if a person buys a ticket of a lesser price and is found sitting in a vacant seat of a higher priced ticket, we can easily find out through this,” he added. “About Rs 1.25 crore has been invested for refurbishing and introducing recliner seats and the sound system”, Ramanathan said.