ITonion!

Blauk.com - Comment on the strangers

2010-01-23T01:27:00.002+05:30

You were walking on the side-walk and you encounter a beautiful gal near a Pizza shop. Now, you have two options:

1. Just appraoch her and compliment her beauty (or)
2. Just walk away as you dont know the consequences when you approach her. Lets put this in simple words - 'you are scared!'

And as per the 'law of evolution', most of us fall under the second category! Probably, Samson Manickaraj would have got very desperate on such situations and found the site 'Blauk.com'. 'Blauk' is a microsite which allows comments on the strangers you encounter. You leave a comment on the person by identifying the exact location/dress/car and possibly the starnger can reply you and from thereon..he/she is not a stranger anymore!

Below is one such example of a poor soul, where he got rejected as she has a boyfriend!

Like anyother microsites ( eg twitter..), it does have limitation on the number of characters you can post. You can describe a person in 64 Characters and leave a comment in 100 characters.

On the rear side, like any other service, there are people who can misuse such sites. Few that I can think of are:
1. Stalkers...
2. If the site grows rapidly, there could be 'Product placements' messages posted on the site. Some messages can read like this: ' Guy with colored hair, near the 'Newly opened 'Best fashions' in downtown'.

This is defintely an exciting concept and is in very early stages, which has room for loads of improvements. Probably, the founder may expand the site based on its popularity. However, one must-have feature is to find the strangers based on location, which otherwise could get lost in the flood of messages.

Hope the 'Single's get benefited by this service!

Its worth while to mention, omegle.com where you can only chat with Strangers.

Internet Explorer or PDF - Who is to blame?

2010-01-20T06:44:00.016+05:30

In the whole of Google and China spat, there are two other players who took quiet a few blows. It's Microsoft and Adobe systems. when Google first reported about the Chinese intrusion into Google's servers, the blame was thrown on a vulnerable security hole in the PDF files. Researchers at VeriSign's iDefense hinted that
an infected PDF was sent over the mail and that was used as a route to hack the Google systems. However, Adobe insisted that the PDFs do not have any such vulnerability and it went on saying that Adobe is also a victim of the same attack. But, Security Analysts hit back saying that Chinese hackers attacked Adobe to understand more such loop-holes in the PDF and to exploit them in future attacks.

The blame on Adobe took a turn when McAfee released its investigative report which states that,the hackers used a vulnerability in Internet Explorer to intrude Google and other companies. The report also gave a clean chit to Adobe that PDFs were not used in the attack. On the other hand, Microsoft didn't deny the security hole and admitted that there is a weak link in IE. This admittance led Germany and France governments to warn their citizens on using internet Explorer. This came as a 'no-surprise' given the number of lawsuits that was ragged against Microsoft by the European Union.

Just when the blame lopsided on IE, India reported that it was also a victim of Chinese attack and it came in the form of a PDF attachment!

The takeaways are:

1. Malwares/Spywares comes as a document too and it need not be an .EXE file/links.
2. One more reason to use Firefox.

China - no more gimmicks!

2010-01-13T09:58:00.008+05:30

When a Company grows very rapidly outpacing its competitors and produces a balance sheet which is less transparent, an obvious suspicion will revolve around the company. The doubt arises as there is very less data to support the growth of such company and all that you can see is glowing number in the quarterly/Annual reports. This was the exact case of Enron, the biggest bankruptcy in the history of US. Now, replicate the same analogy for a country in the current economic scenario, which grows very rapidly at a time when other countries even hesitates to say that they are out of recession. This is China for you.!

In the recent days, lot of voices are being heard warning about the Chinese Bubble. This all started with the Hedge fund Investor ‘James S. Chanos’ who predicts that the China is headed for a crash, contrary to the popular belief that the country is growing at a faster pace. He is the person who predicted the fall of Enron and similar other Bankruptcies. So, nobody is daring to ignore him. After all, that is his job and has an impressive track record for years. Chanos, a hedge fund Investor simply bets against a Company/Country, as he believes that it will go down in few months. If his prediction is right, it results in an insane amount of money. (Especially, when they bet against the popular opinion). Classic example is George Soros, whose betting against ‘Bank of England’ earned him $1b in a single night. This was in 1992.

Coming back to China, Chanos suspects that “Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent”. He is planning to give a detailed speech about this at the Oxford University by end of Jan’10.

Here are few reasons which raise questions about China:

The Chinese economy is largely based on Exports to US and European countries, which means the Chinese currency ‘Yuan’ has to appreciate less against the dollar or Euros to continue the impressive GDP growth. China being a growing economy leads to appreciation of their currency, but the Chinese central bank has prevented the appreciation and has kept the exchange rate between dollar and Yuan almost the same for past few years. This largely helped them to maintain low prices for their goods in the foreign market and thus accumulating billions of foreign reserves. Now, you may think that it’s plays to the advantage of Chinese economy. But, the economy at sucha a mass scale doesn’t work this way.

When a country has huge amount of money among its people (in a manipulated market, the chinese central bank prints loads of Yuans equivalent to the dollars), the value of the currency itself decreases. This triggers an increase in inflation, as the price of the domestic goods increases over the period of time. So, to prevent inflation the Chinese government should atleast stop the surplous flow of Yuan. This can be broadly achieved by two ways:

1. Increasing the interest of the money that is been lent by the Chinese Central bank
2. Preventing the Consumer banks from lending out more money. This can be achieved by instructing the banks to increase the limit of cash reserves.

However, during the time of recession, the Chinese government infused a stimulus package of around $600 billion dollars into the economy to prevent any huge recession impact. So, this stimulus money along with the existing flows triggered a real estate boom in China, where the prices of lands/home rapidly increased every month and thus creating a ‘Real estate Boom’. Now, the government is highly worried by this boom as they have just witnessed on how the US hosing market turned into bubble and got burst.
This is clearly evident from the fact that the government has just announced that they are backing off the stimulus package and have also announced few strict measures to bank on the lending policy.

Now, the Chinese has to control the interest rates, imports and exchange rate similar to adjusting the volume equalizer in a music player. They have keep adjusting the numbers as and when the other value changes.Since the market is in a bubble stage, a small miscalculation can result in disaster.

Moreover, there is more pressure on China from world countries to stop manipulating the Yuan against foreign currencies. Recently, when China surpassed Germany as the world’s second largest exporter, Germany had put lot of political pressure against China to stop the currency manipulation. Apart from Germany, other countries are applying similar pressure, as the cheaper Chinese goods are flooding their markets which eventually slows down the growth of in-house industrial houses. Also, there are also threats from other countries that they will stop buying Chinese goods.

All one can conclude is, China will not grow at the same rate as earlier. If it continues to do so, it will not last long for even few months before which the real-estate boom market will turn into a bubble. And for sure, China can expect heavy backlashes from world countries for its continued currency manipulation.

Financial rescue: Someone will win in the process

2009-03-22T05:16:00.005+05:30

Once the Geithner plan was leaked in detail by the NYtimes, criticism started to pour in on negative aspects of the plan which heavily subsidizes the investors and the private parties. After reading the various articles attacking the plan, once thing seemed certain to me. You will always have some top economists (or) think tanks criticizing any plan that will be proposed for the rescue. There is no such thing called 'The Best Plan'. Any plan that will be proposed to get us out of this complex web, would definitely benefit a section of investor/private parties.Considering the enormity, complexity and urgency of the situation, you can't wait for a plan that is beneficial only to the tax payers and prevents even a penny to the private firms.

More the delay in rescue, will definitely worsen the economic situation and leads to more job losses. It is always better not to worry about the few hundred dollars of each tax payers money that goes to the private parties , rather than loosing out more jobs due to the delay in the rescue plan.

In the leaked out Geithner's plan, the proposed alternatives indicate that the Government is heavily dependent on the private parties to remove the toxic assets out of the banks. This clearly indicates that the government wanted to stop shelling out more tax payers money and involve private investors in the rescue plan. So, having realized this, private investors are going to exploit the situation and look out for some benefits. Since the govt has no better alternative, they are going to allow this. One of the first signs of the economic recovery is when you see the private investment firms starts showing interest in the bank's equity. On careful execution of this plan, it will win back the confidence that was lost by the investors on the banks.

If the private parties are not included, then the Govt. again has to infuse more money into these banks. It is already evident that, all the infused funds were not used for lending purposes, but were used by the banks to prevent itself from being insolvent. In order to start the lending process, banks definitely needs more money and is achievable only through the sale of these toxic assets. As per the proposed plan, it seems like Govt is taking all the risks involved in these assets, whereas the gains are shared by the private parties and the tax payers. Going by the plan, the govt. is going to auction these assets to the private parties and they will pay high prices as the downside risk will be handled by the govt. But the truth is undeniable that the private firms will handles these assets to profit than the government bodies. The risk of losing is less when it is in the hands of the private firms. But if the government dishes out the private parties in the rescue plan, it will be a highly risky bet for the govt alone to handle all these assets. It definitely need private firms' help in liquidating these assets as quickly as possible, so that the government can get back the tax payers money. But the govt should assure that, the private firms should not pool these assets and play around in packing and shipping them.

Nationalizing banks is a risky approach

2009-02-21T10:04:00.013+05:30

The stocks of Bank of America and Citigroup were hammered today after the 'Bank nationalization' rumor started to gain strength. Moreover, editorials and various publications started to raise their voice in favor of nationalizing the failing banks. Though most of the economists are not openly admitting this option, they accept that the tax payers money infused into the big banks is not working.

Considering the banks' high level of dependence on the government funds, now these banks are almost under the orders of Washington. This was clearly evident in the Congress hearing that was held last week. The CEOs of the Eight big banks were literally grilled and pounded by the Congressman. At one point of time, a congressman was asking a CEO to reduce his bank's interest rates and an other congressman asked the CEOs to sell their private jets. It almost looked like hundreds of Board of Directors were questioning the CEOs. Virtually, the bank executives resembled like the government employees of a nationalized bank.

Since these banks are in need of federal funds, it makes sense to nationalize the banks and remove the existing top management which brought the crisis at the first place. This option would be a better one, if the economic crisis is not bad as it is now.

Nationalizing these banks will serve as an additional burden to the govt which is already hands full in executing the stimulus plan. Acquiring these banks and running them successfully along with streamlining the funds of the stimulus plan is an onerous task and there is no room for failure. Considering the size of these banks, it is not an easy task to replace a new management and expect it to run the bank successfully in this tough economic situation. Any error in the nationalized banks would seriously hamper the confidence on US by the world countries. This will also add up to the already huge deficit and would heavily hamper the valuation of US currency. Then, US as a country would like a big corporation at the verge of bankrupt. On the other hand, successful execution of Bank and the stimulus plan would be a dream run. But this is not the time to test the tough waters.

Now the government would like to play safe and not worsen the current situation. But at the same time, it should avoid banks going bankrupt. Debacle of a single major consumer bank is enough to bring down the confidence and which this will eventually prolong the economic recovery process. The only way to help the failing banks is to acquire the toxic assets held by those banks. The government can aggregate these toxic assets into one entity and could alienate the banks from these assets. At the same time, it should ensure that the infused funds are used for its intended purpose. Strict transparency should be enforced in regulating the injected money. Essentially, a new regulatory environment should be setup which should have a greater control over these banks and at the same time a super regulator should be setup to oversee the interconnection between Wall street and Main street. The government can hold up these toxic assets and can sell them to the private investors in a staggered basis, thereby the spent money can be gained back.

The whole nationalization idea is widely seen as an option as the Swedish government followed this approach to recover its economy decades ago. Some say we can follow the same approach and others are against it. But, every situation is different and should be handled with its own pros and cons. US should devise its own customized model to suit the current situation. Revival of a country's economy is not so easy as copy-pasting a model from the history. It all depends on the risk capability of the government in devising an innovative approach.

Don't criticize the stimulus package

2009-02-09T07:42:00.010+05:30

There are several criticisms going rounds on the effectiveness of US stimulus package.The most prominent grumble about the amount being spent on industries which really don't need stimulus. There are also critics who are against the passage of such stimulus packages, as the amount is too big ajnd it will add more to the current US debt. But is there a better alternative than passing this stimulus bill? I don't think so.

Firstly, the president can't just allow the economy to drown without acting on it immediately. The most important thing at this juncture is to raise the confidence among the consumers and trigger the cash flow. Just proposing long-term policies would not create any impact. You have to do something which would create an immediate effect. This can be done only injecting money into the economy. Now, the next question is whether the package would help the industries to be back on track immediately? possibly not. Most of the companies don't need dollar bills, instead, they want the consumers to spend, which is directly related to the confidence. Only if the job layoffs reduce, consumers can gain some confidence. There are two ways in which the proposed developmental projects could create or save jobs. Firstly, these government projects directly create jobs for the people who were fired by the private companies. Employing them will reduce the unemployment rate. Though all of them cannot be employed, the number will reduce a bit in the initial stage. Secondly, these proposed projects requires equipments which can be purchased only from the private companies. These new orders could benefit the businesses. Though, we cannot see a dramatic increase in the job creation, it could save the existing jobs. These new orders in the private companies would also benefit other small businesses who are linked as sub-contractors.

By including every industry in the stimulus plan, you are literally bringing in some level of confidence and new jobs across every set of consumers. Increasing a little amount of share on the 'most affected' industry is less preferable than allocating the same amount to the small industries, particularly when the government wants to instill confidence across the board..

All the above activities would buy some time for the government to act on the toxic assets held by the banks. These assets serve as a great headache both to the Govt and the bank. Once some solution is found for those bad assets, the banks can see some stabilization and can start the lending process. Unless the consumers hear some good news from their banks, they would not do the spending. In the mean time, new regulations can be implemented in the markets, which would shun away the existing fears. One thing is sure;the recovery will definitely consume more time, but any hasty decision along the way could prolong the tough times.

On a final note, the passage of the stimulus package is certain and should be immediate. Considering the current stage, any further delay would worsen the economy. Best anyone can do is to avoid disparaging the current stimulus plan. Criticizing the plan will dampen the very purpose of instilling confidence among the consumers.

Tags: stimulus package, Recession, Stimulus pacakge criticism

IBM's alternative to layoffs -

2009-02-06T10:35:00.004+05:30

Initially IBM announced around 1200 layoffs citing the current economic crisis. The employees in the state of New york were also affected by this announcement, but IBM had earlier received around $140 million tax cuts in a pledge to create jobs in NY. This contrary move of receiving incentives and still firing employees created rage among the residents, which resulted in the reversal of the plan. But, there is a catch:

"The company has created a job-matching service it has dubbed "Project Match." Instead of firing employees, IBM is trying to sell them on the opportunity to move to exotic locales, experience new and different cultures, and participate in exciting IBM business ventures across the globe—all for just a fraction of what they'd earn back home."

The options which had more openings are: India, Brazil and China. This model of relocation from developed countries to developing countries was not expected to happen so quick. But, the current situation has brought in too many changes to Globalization. Things are happening too fast in IT industry, quicker than Friedman's prediction in his book 'The world is Flat'. But, there is also a good possibility that this model of relocation could have been brought in, considering the number of foreign employees working in IBM,USA. Some US citizens may consider this option temporarily and may move back to USA when the situation improves.

When the top economists brainstorm - WEF

2009-02-04T10:59:00.005+05:30

The other day, WEF conducted a brainstorming session on the topic "What happened to the world economy?". This was attended by renowned economists from around the world and they brainstormed on various reasons and causes for this crisis. The economists were distributed into separate groups and finally, one from each table summarized their discussions.

As expected, the biggest wrong assumption the economists had was that, the markets would self-regulate. This was endorsed by many economists. Of course, there were few who declared that the basic structure of the economy is wrong. Their point is, if a failure of a single module in an industry brings down the whole economy, then the underlying model is wrong. The other valid point made in the discussion was, that the present risk model which is purely based on past data should not be believed completely, as it wont predict the future. Also, the available data is too small to rely upon.

Though most of the points discussed were quiet common, the one blame which always received the applause was 'the greediness of the bankers and the compensation' they received . The group criticized the compensation model for the bankers, which is purely based on the revenue they generate, it doesn't matter on how you do that. An other pundit suggested that, the executives whoever is responsible should be jailed and should be set as an example for all the wrong-doers. This was also well endorsed by a group of applause. Another table cited that the regulators always believed that China would do all the savings and the rest can just spend. Few think heads blamed that the banks depended too much on Mathematics model, instead of applying common sense. One economists just simply attributed to one word "Stupidity". Even though, regulators were blamed, one group of economists differed by targeting the 'interest groups" who had the control over the regulators.

Of course, lack of corporate governance and ethics were identified as a fundamental problem, which would have prevented this at the first place.

Finally, the economists were asked to vote on the assumptions and causes. In the below order, the first point got the highest vote and so on.

1. Assumption that markets would self-regulate
2. Cheap flow of money
3.Assumption that good times last forever. ie..house rates never fall
4.Putting regulation over ethics
5.High leverage
6. Assumption of economic literacy
7. China can do the saving.

The group also concluded that the regulation of the international framework as the top action item.

Watch the full video here: ( 90 mins) - Scroll to the last 20 mins for various voting results.

World Economic Forum, WEF 2009, economists, World Economy

Minister's support for outsourcing at the WEF

2009-02-02T09:14:00.004+05:30

Among the several events hosted at the World Economic forum (Davos), a discussion was held on "Managing Global Risks", in which the Indian Union Minister Kamal Nath shared the stage with other global heads. The event host asked different questions to the participants, which revolved around the topic of various risks in the current environment. Mr.Kamal Nath was asked about the 'Protectionism' which is prevalent across the countries. Protectionism is "the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition". Kamal Nath clearly spoke against protectionism followed by various countries at the time of this economic crisis. He added that, Protectionism is kind of a panic response whenever a crisis looms in a country. He cited an hypothetical example in Auto industry. If a country is adding import duties on the auto components, it would definitely increase the price of the vehicle for the consumer.

As he was talking about the perils, he moved his topic towards Outsourcing. He told the panel and the group that, if protectionism is carried out it outsourcing, the competitiveness will definitely decrease and will affect the growth of the company, as the cost is finally transferred to the consumers. He also added that, lack of skill and better cost is pushing the companies towards outsourcing. Kamal Nath's response at a cardinal stage like WEF, is kind of response to the Obama's proposal to cut taxes for the companies which outsource the jobs. Though, the new president is not very keen on this campaign proposal at this time of crisis, the recent letter from Senator Grassley to Microsoft has started the 'protectionism' issue once again. The senator urged Microsoft to give American workers priority in the layoffs. Infact, Grassley, with Sen. Richard Durbin, D-Ill., is pushing for legislation to make employers recruit American workers first, along with other changes to the visa program.

But, Carl Guardino, the CEO of Silicon Valley's Leadership Council has a different view. Below is his response on CNBC:

He says in the tech industry today, 53 percent of the engineers are "foreign born" and half the CEOs and founders of tech companies are foreign born.

"If America ever goes against our strong roots of welcoming talents from around the world, wanting to work here, contribute here, be a part of America, that's the day that we are risking everything that this democracy is about," he says. "We cannot take an attitude in good or bad times that suddenly we should be throwing immigrants out."

The bottom line: As grim as the economy is today, and as much as we might want to protect our citizens from losing jobs to foreigners, giving US citizens the inside track because of their citizenship over their abilities is a short-term fix with long-term, negative implications. If a US worker's skills are equal to the skills of a non-US citizen's, then sure, the US worker should get the job. Go Team! If it's about salaries and money-saved, and how much more cost-effective a foreign-born worker might be over his US counterpart in a similar position, then legislators and companies need to re-work the H1B visa program.

But if it comes down to cutting your engineering team because they're all from India so you can keep your American born employees on the shipping dock, you shouldn't have to lay off your engineering team just because they're foreigners.The whole idea here should be about hiring the best and the brightest, no matter where they're from.

It's the only way US companies, or any company, can expect to compete in a global market. Period.

Easy to become xenophobic in an economic climate like this one, though we do so at the risk of not just dulling our competitive edge, but losing it completely.

Tags: outsourcing, WEF, India at WEF, World Economic Forum, Kamal Nath

What really is the Stimulus Plan?

2009-02-01T04:43:00.008+05:30

In order to avoid the recession to linger for years, the US government has announced a stimulus plan (American Recovery and Reinvestment Plan) of $819 billion, that would be invested in diverse sectors. The idea is to create more jobs in these industries, thereby jump starting the confidence and trigger spending from the consumers. But, is economy so simple to just pump in money and avoid a recession. To understand this, lets look through a brief history of this stimulus plan.

Why Stimulus plan?

During the great depression in 1930s, then president Roosevelt introduced a series of spending initiatives named 'New Deal', aimed at creating more jobs and recover the economy. These initiatives helped to create more jobs at the time when the nation unemployment was at 25%. More than the actual benefits, it raised the confidence in the consumers mind. Some of the programs that were created through the 'New deal' is still existent. Social security system, Security Exchange commission and Fannie Mae were part of the initiative. Arguably, it is believed that these programs helped US to get out of the recession. So, following the same policy, the current government also introduced the same kind of stimulus plan to stage a recovery. This model is called 'Keynesian economics'- which is named after the economist John Maynard Keynes. Its an economic theory which advocates government intervention, or demand-side management of the economy, to achieve full employment and stable prices.

Unfortunately, the government is left with no other option than injecting money through these plans. The only other way which will encourage spending is to reduce the interest rates, but that is not possible now. In December 2008, the Fed reduced it rate to almost Zero and there was no positive effect.

What is the criticism about the plan?

When the stimulus plan was brought to congress for the approval, the Republicans voted against the bill. Some of the reasons were that, the plan has lot of investments which would not really create jobs. Eg: Investment in arts, Global climate studies etc. They propose to setup a new bill with better spending areas, even if takes more time to draft one. However, they support the tax cuts for the individuals proposed in the current bill. Nevertheless, the democrats has the house majority and the bill was passed.

Risks in the stimulus plans:

Though there is no better alternative to stimulus plan, there are risks involved in it. Since the US just needs more money for these plans, this huge amount adds to the already debt deficit US, which would come to 60% of its GDP by 2010. At the same time, it should pay off the interests to the foreigners who brought its treasury bonds. Remember, just printing more money would lead to inflation. Also, it will further reduce the value of the dollar in the global market. In order to avoid all these mishaps, the stimulus plan should work as expected and once the economy recovers, the government should align its economy more towards 'saving money' and produce more goods. Else, it wont be long enough before the dollar loses its sheen in the global market and the Euro could take over the position.

What if the Stimulus plan works too fast?

When the world economy started de-stabilizing in 2008, international investment poured into US treasuries and bonds. So if the stimulus works faster, then there will huge flow of money supply leading to inflation.

Indeed, its a tricky situation. All US needs is to boost the economy by bringing in confidence to the consumers. At the same time, the market should be regulated to avoid any unforeseen crisis that may occur due to any sporadic economic activity.

Tags: Stimulus Plan

All the WEF's a stage

2009-01-30T08:34:00.012+05:30

The World Economic Forum conducts Annual Meeting in Davos (Switzerland) by inviting top business leaders, Intellectuals, political leaders to discuss on the most happening issues in the current environment.The business leaders usually try to participate in maximum number of events conducted in the 5 days period, attended by around 1000 Chairmen/CEOs of various companies. Apart from proposing constructive ideas for solving the issues, business leaders use this is as a stage to brand themselves, which in turn would help their company. Some companies have even doubled their turnover after this meeting. One such company is Enocean.

But this year, Michael Dell of Dell computers, went overboard in branding himself. To be precise, instead of branding, he tried to get some business from not another company, but from a country. In a stage shared by the Russian Prime Minister, Vladimir Putin, Dell asked this question to Mr.Putin. He offered help to Mr.Putin by asking "How can we help to expand IT in Russia", after mentioning that he felt there is room for Russia to capitalize in Intellectual and scientific sector.

And, Putin shot back by replying "we don't need any help. We are not invalids. We do not have limited capacity. People with limited capacities, abilities should be helped...developing countries should be helped". (Watch the video)

The question which could have been a big business for Dell, turned out to be a disaster.

Now, lets look at the Indian business leaders who are now in WEF, Davos:

1. Mukesh Ambani - Reliance
2. Kris Gopalakrishnan - Infosys
3. Ajit Gulabchand - Hindustan Construction Company
4. K.V.Kamath - ICICI
5. Lalit.K.Modi - Modi Enterprises
6. Nandan M. Nilekani - Infosys
7. Azim Premji - Wipro

It should be noted that, Infosys had gained some good branding in 2006, when Nandan Nilekani became one of the youngest entrepreneurs to join 20 global leaders on this World Economic Forum (WEF).

Tags: WEF, World Economic Forum, Michael Dell, Indians at WEF, Vladimir Putin

Why outsourcing will be different in 2009

2009-01-28T09:19:00.008+05:30

During this economic crisis, the IT budgets of companies have been under heavy pressure and major corporations are looking at outsourcing as a means to save money. But, the companies who have already outsourced their IT operations are looking at better deals to further reduce the cost. Here are the changes that are expected to happen in the outsourcing industry:

The traditional pricing model of time and material will be changed. Instead, the pricing will be more on transaction and results based - This model would demand more innovative approach to execute a project and will pose as a greater challenge to the project managers working in the outsourcing companies. It is not business as-usual execution for the management.
Customers are also shifting towards short-term based contracts and fixed pricing models. This model will result in high productivity and optimized resource planning by the IT companies. Here, the IT companies will witness high utilization rate, thus reducing the 'bench' strength; especially at the time, when the number of projects are less.
Customers will lean more toward multi-vendor approach, where a large portfolio will be distributed across different vendors. Though, this model is currently followed by some clients, it will gain prominence in the current year. This model ensures the distribution of risks for the customers, who are shaken by the Satyam's scam.
Multi-vendor approach will definitely invite competition pressure, but there will be an 'opportunity in waiting' for the vendors.
The projects will be more process oriented with heavy emphasis on transparency and data security. The outsourcing companies will try to avoid the data security issues that propped up in 2008.
Till date, customers concentrated only on the project outcome. Now, they will also have their eye on their vendors performance as a company. The vendor's would also need to instill confidence in customers on any issue that may arise over the period.
With allocations inclining more towards offshore., the Onsite-Offshore ratio will have an impact.
With these heavy bailouts and treasury bond purchases, there is more chance of weakening US dollar and strengthening rupee. This will lead to change in pricing rates.
There will be substantial opportunity in the consulting space. It will be a testing ground for the Indian companies.
The next tier of western companies will consider outsourcing to save money and stay in the market.
Finally, apart from India, other low cost destinations (China, Canada, Poland, Nigeria, East Asian countries..) will witness a considerable growth.

How India avoided the economic crisis?

2009-01-27T07:10:00.011+05:30

US and India were on the same boat during the real estate boom, but when the bubble burst, India was able to handle the downturn, while many of the US banks succumbed to it. What India did differently that saved its banks? NYtimes praises the former RBI governor for the effective measures that he took during his tenure, which eventually saved the Indian market. Before getting into the India story, lets briefly look at the incidents that brought down the US banks.

After the Internet bubble that burst during 2000-2001, the US stock market went down south and lost its lure as an investment platform. Many people were very reluctant to spend their money and the US was in the verge of a recession. So, to encourage spending among people and to infuse more liquidity, Fed reduced its interest rates. Eventually, the banks started giving more loans for the people to invest in houses. Those who were reluctant to invest money in the stock market, considered house as a safe-investment and invested in new houses; some bought their second house too. To attract the investors, the banks introduced the 'Adjustable Rate Mortgages' and people subscribed to it in huge numbers; loans were given to sub-prime borrowers . These were borrowers who were not eligible for the given loan amount and would default in their payment. So the loans accompanied high interest rates. Fueled by easy loans, the housing market grew rapidly over the period of time. This led to boom in the building industry which led to the over-supply. As over-supply always leads to lower prices, the housing prices started to reduce drastically followed by a few fore-closures.

So, to stabilize the market, the banks followed a different method to fund money. Here came Lehman and the other investment banks. All these mortgages were passed to these investment banks. Since these loans were generating some kind of money through high interest payments, those were considered as assets. The investment banks grouped these assets based on their Interest payment under the terms Mortgage Backed Securities (MBS) or Collateralized Debt Obligations (CDO). The CDOs were approved by credit rating agencies and were later insured by even AIG. So, these securities were sold to other investors around the world and the money generated out of those sales was shared by different parties involved in the transaction. So, these loans were generating good money. The greediness peaked here, and the investment banks needed more CDOs, which translated to more sub-prime loans to the customers. Remember, if the interest payment is high, the value of the CDO is also high. In this way, banks also benefited through these loans and it was money all over the wall street. Now, the market reached a point where the number of defaulters started to increase as the interest rates got higher and higher. This led to multiple foreclosures at a point as the loan value increased beyond the house value. This led to burst of the bubble and many banks failed as the borrowers were unable to pay the money. Now, the CDOs became worthless, so the Lehman and other investment banks too failed. Meanwhile, AIG which assured the CDOs were also in the verge of failure. It was later rescued by the government. The rest of the bad news were nothing but the domino effect.

Now coming to the India story, where did the Indian govt get it right?

India didn't encourage the concept of sub-prime loans. Mortgages were issued based on just the borrower's income.
When the land values were rising in India, then RBI governor Y.V.Reddy ordered the banks to stop issuing loans to raw lands.Without this ban, India would have got trapped in the bubble with its rising middle class income.
Loan amount were released to the customers only after the development work was started.
Indian banks were tempted heavily by the securitization method adopted by the US banks for funding money. But, the RBI governor was strict in rejecting the model. The Indian bankers who were critical of Reddy's tougher rules, later realized the reason behind the decisions. Meanwhile, the US equity firms funded the land purchases and got trapped into the bubble.
Later, when the inflation increased, the governor increased the interest rates thus halting the housing frenzy.
Apart from this, Indian regulators played a crucial in the stock market by bringing in tougher regulations. When the market was booming with voluminous funds from foreign investors, SEBI imposed tougher rules to limit and to regulate the funds.

Though, the Indian government adopted a mature approach during the real estate boom, the US crisis was felt in India and has affected the Indian industries. Globalization has its perils too!

Infosys and IBM for Fidelity - Who will win?

2009-01-25T23:53:00.011+05:30

After Citi group sold its BPO unit to TCS, it's Fidelity Investments which is filtering out the buyers for its Indian IT unit. It's now reported that, Infosys and IBM are the final runners to buy this division. Earlier Wipro, iGate and few other IT companies were also in the fray, but they moved out of the deal. Constraints in absorbing the entire 2000 fidelity employees were cited as the reason.

Now, between Infosys and IBM, the later is said to have a higher advantage as IBM has over $200mn contract with Fidelity compared to $50mn of Infosys. But, if fidelity looks for a better deal amount in this tough recession year, Infosys has a better hand to increase the deal amount with its huge cash reserves. Infy agreed to pay more for the deal amounting to $180 mn, which is $30mn more than IBM's proposal. Infosys which has just made two notable acquisitions(Expert systems and Philips BPO) , is desperate for a promising deal which is highly possible during this tough year.

It should be noted that, IBM has recently reported a over-whelming quarterly results ,which rallied the US stock market for that day. So IBM cannot be ruled out on low liquidity.

In terms of relationship, IBM has around 20 years of partnership with the company. Earlier in 2002, Fidelity and IBM formed a joint venture in providing employee benefit plans to external companies. As a part of the deal, fidelity absorbed 450 IBM employees. In this deal, IBM looked after the computer division.

But the area where Infy has some advantage is: Fidelity international has some considerable stake in Infosys. But, the stake's effect on the deal outcome is yet to be seen.

This sale came after Fidelity announced that its Gurgaon(Northern India) offshore center will be closed in the mid-September of 2008. It moved its operations to Chennai and Bangalore as it felt that the operational cost is low in the southern part of India. Also, it should be noted that Fidelity International made an announcement in 2008 that it will cut 1700 jobs in early 2009.

Tags: Infosys, IBM, Fidelity, Fidelity deal

Why IT spending will not decrease in the finance sector

2009-01-25T01:17:00.017+05:30

Finance industry being a huge contributor in the IT spending is in spotlight in this recession period. There are contradictory views in the sector on whether the IT spending will increase or not, which eventually contributes to outsourcing. Given the tight IT budget, let's see what is in the plate for the CIOs to deal with their IT division.

The biggest contributor in bank's IT spending propels from the new products, services and upgrading the IT systems to a newer technology. Considering the low consumer activity, the spending on services are now ruled out. Banks are reluctant in introducing new products, as they cannot a failure outcome. Ofcourse at this time, no bank would like to invest in the new technology or would prefer architectural change. Already, many projects which were initiated in the past year were put on hold or canceled.

All the traditional rooms of IT spending is almost closed now, but this tricky economic situation has opened up new avenues. After the housing market collapse, many banks were forced to merge with the larger banks and have contributed to consecutive mergers. Mergers would definitely require the integration of IT systems. Even if banks try to post-pone their integration plan to mitigate the cost, they cannot drag it beyond a point. Separate IT systems translate to more cost and also will reflect in their operational cost of bank centers. Apart from the expenditures on mergers, another new area is 'regulation'. Lack of regulation in the banks has been identified as the reason behind the current economic mess. The new government will definitely ensure that 'Regulation' plays a crucial role in the banks' operations. In order to comply with the new regulatory system, banks would need to alter their operating style and will definitely reflect in their IT systems. The new regulatory system may demand more transparency and interaction between the Banks and the federal regulatory agencies, which is possible only through new IT systems.

One other area which resulted in many bankruptcies is, the failure of the bank's management in foreseeing the current situation. Proper systems were not in place to analyze the available data and to forecast (or) to understand the trends in the money flow. This will require more detailed data from the banks divisions, which means more interactions between the various IT systems present in a bank. Having understood the crucial need of such systems, banks would definitely require investment in such systems or would require to change the model of the current functionality. These investments are inevitable and should be immediate to avoid another crisis. Another important area is, Risk management. It is clearly evident that the Risk management has failed and it badly requires a new direction. Considerable spending can be expected to revamp the system.

Not to forget the mid-sized banks, they will definitely try to grab its piece when the biggies failed. They will try to lure the customers with new services and innovative products which will trigger some IT spending. Though many of the above scenarios apply to banks in US and Europe, the relatively unaffected Asian banks are expected to increase their IT spending to tune their systems in this economic downturn.

Given the tight budget to implement the above changes, CIO has to make prudent decisions in their IT investment. There are banks which will spend more in IT to reduce the overall bank's operation cost. They will identify and remove the cost incurred by dead and redundant systems. Options will be explored to merge the system's functionality, thereby reducing the cost. But it requires more innovative approach in order to reduce the cost. But in innovations, there is always a risk of failure. The question is, whether the banks will take the new route despite the risk associated with it?

Given the amount of technology activity involved and layoffs that are underway, one could also expect more work to be outsourced. But banks which are yet to explore the outsourcing option may become reluctant to try this option at this juncture. But for sure, once can expect more IT activity in the finance sector.

Tags: Banking industry, Bank IT spending, Technology spending, Outsourcing

Tech Professionals - Salary survey

2009-01-24T07:43:00.005+05:30

The job site for technology professionals 'Dice', has released its Annual salary survey for the year 2008-09 . Here are some highlights from its release:

Average pay increased by 4.5% compared to the previous ear
Highest salary increase goes to Security Analysts followed by Software Engineers and Application Developers. Professionals in computer hardware field and internet services saw a good increase in their salary.
Skills involving ABAP (Advanced Business Application Programming), ETL (Extract Transform and Load) and Business Intelligence received highest compensation.

The top worries for technology professionals in 2009 are:

Keeping skills up to date - 22%
Job elimination - 20%
Lower salary increase - 14%
Cancelled projects - 12%
Increased work load due to staff cuts - 10%

salary survey, IT professionals salary, Dice Survey, Top IT skills

Michigan following the Indian style in outsourcing

2009-01-22T06:06:00.007+05:30

IBM recently announced a new delivery center in Michigan and Iowa. This is quiet a contrary move by the big blue, which was setting up centers in India in the past years by creating around 80,000 jobs. IBM cited the low cost labors as one of the reasons in choosing the location. After this announcement, people started to wonder if outsourcing is taking a new path and Businessweek wondered if Michigan is the new India? Though, it is a good move for the local labors at the current job market, the scenarios under which IBM chose this location should be seen beyond the low cost factor.

Below are the advantages that have triggered IBM to setup centers in these states:

1. IBM is setting up this center in collaboration with Michigan state university, which means, easy availability of skilled professionals.
2. Both the states have offered IBM a incentive of $55 million over 10 years, along with a loan of $11.5 million dollars. Also, if IBM creates 1500 jobs as it pledged, then the entire loan amount will be waived.
3. IBM center will concentrate of maintaining and modernizing the government IT infrastructure.
4. IBM will operate in one of the building present in Michigan.
5. IBM will work with the Michigan University professors to include 'Application development' in the curriculum.

If you study these advantages carefully, it is the same set of points that have lured the companies to setup operation in countries like India and it would work in US too. Every IT company in India has been offered the same kind of special tax breaks, incentives, allocation of cheap lands for office space and software economic zones. The Indian IT companies are even conducting training classes in the colleges and working closely with universities, so that the students are market ready once they graduate. Probably, these two US state governments would have studied the reason for companies like IBM setting up centers in India and the support they receive from the Indian government. Having understood this, these US states have offered the same advantage to them in their home. Also, It has offered its own government projects to kick start the IT operation. It is a successful move! If every state in US follows the similar kind of approach in attracting the companies, it could create a renewed job market in the services sector for United States.It will also serve as a better alternative for companies that is resistant to move their IT operation beyond the borders. But, one pressing question here is the availability of computer science graduates that the service industry demands.

Tags:IBM, outsourcing, Michigan state university, Indian IT

Who is TN Manoharan

2009-01-17T19:19:00.006+05:30

Indian Govt has announced Mr.T.N.Manoharan as the new Satyam Chairman:

Who is Mr.T.N.Manoharan. Below are some bullets which will give some light on his background:

He is a Chennai based person who had done his UG in Law and PG in commerce at Madras University.Hails from a freedom fighter's family with agriculture background.
He was the president of ICAI, Institute of Charted Accountants of India.
Manoharan is considered as one of the few experts in the Tax Audit, He has worte many books on Tax audit and Tax laws
He had been the chairman and a board member for many accounting firms around the world.
Played an important role in the amendment of Charted Accountants Act, 1949

Is China a threat to Indian IT outsourcing industry?

2009-01-15T11:16:00.020+05:30

Amidst the buzz in the Indian IT industry, articles started to prop on whether India is a safe destination for outsourcing. The next obvious question is, whether China will use the current situation to grab a pie out of the outsourcing deals.Yesterday, Mcckinsey has reported that China has an opportunity to grow its outsourcing industry at this juncture.It cites the reason that, in this economic crisis, many companies in the world are now looking to cut the costs by outsourcing their IT operation and China can benefit by this move. Along with this opportunity, the recent happenings in the Indian IT industry can be a bonus point for China.

But, can China really pull deals that are being outsourced to India? Where exactly does it stand in the Outsourcing Industry? As of today, Chinese IT sector is relying heavily on the projects from the booming manufacturing industries in china and also from the neighboring Japan. Since, China's manufacturing sector (the heart of its economy) has slowed down due to less demand in exports, the government has identified the outsourcing industry as the next engine and has vowed to pull foreign money to China through outsourcing. Also, it has planned to improve the small sized company to grow from its current proposition by awarding them projects and by building cities and towns dedicated to the outsourcing industry. But when it comes to projects from US and Europe, Chinese companies were working on low-end applications and testing projects. When western companies releases products, Chinese companies were asked to test them before the deployment. Now, things are getting changed. Companies have started working on mid size application development projects which is very much essential for developing domain knowledge and for getting bigger deals. Today, many of these developments projects comes to China from Japan and Korea.Also, if things improve, China can be a good alternative to companies that wants to de-risk their outsourcing strategy.Earlier today, SAP North Asia chairman joined Neusoft, the biggest Chinese outsourcing company. He is expected to overlook the International business. Neusoft in its website has called graduates and professionals to undergo its SAP training program.The Chinese companies are desperate on getting multinational deals to prove their expertise. All they need now is, one success story in a complex enterprise project, which will trigger the next wave in its IT industry.

Now, as a competitor to India, China has a long way to travel to catch up deals that are destined to India. Having understood the booming manufacturing sector in china, Indian companies like TCS, Infosys, Satyam has setup shops in china to pull projects from the Chinese Industries. Some Indian companies even bought the small sized Chinese companies, to understand the market and to merge themselves into the Chinese culture. These companies serve as a threatening competitor to the home grown companies. Also, though Chinese companies get projects from the western clients, the development work is more of product type (like networks, embedded systems etc..). For eg: the biggest outsourcing company Neusoft, according to its website, offers IT services on Network support, back office, data center and asset management. But, to thrive as an Indian competitor, the companies should get projects that are executed in the in-house IT department. These kind of ADM(Application, development and Maintenance) projects generates money and also help in acquiring further development projects. It also helps to gain knowledge in that particular business. Another important factor where China has both advantage and disadvantage is 'cost' The per hour rate offered by Chinese is less than India's rate, about 30% less. But there are lot of hidden costs which includes communication issues (More time, more rate), knowledge transferring time, data security protection and regulatory issues. These issues demands a completely new strategy for the western companies to kick start its outsourcing plans.

The happening issue in the Chinese industry is, the number of skilled professionals with good experience. Though, the number of computer graduates is more than India, the experienced professionals are fare less and that prevents them from acquiring the big pie. Chinese companies are badly in need of senior project managers and they are looking outside China to recruit or poach them. More than 80% of the IT professionals in China are with less than 5 yrs of experience ( 42% with less than 2 yrs). This was the situation with India, few years ago. But as the market grows, may be in another 10 years China will compete heavily with he Indian clients. At the same time, India would have produced more experienced professionals with higher domain (Finance, Retail, Telecom etc..) and architecture experience. But you cannot compare the China's current stage with India's early years. Indians' entrepreneurial approach helped to create thousands of small software companies, which later helped to produce skilled professionals. Also, the Y2K problem definitely served as a break point.Though, Chinese are growing in a steady phase, backing of Chinese government is so strong that it can be a great trigger. Working under the multiple government projects in various domains will definitely improve their skill level.

If Chinese grow in the current rate, there are more probable chances of India and China collaborating more in the future IT industry. There are two main reasons: 1) Indian IT professionals knowledge and global experience will be a great asset. Not using it will be a great mistake or it cannot be ignored 2) Indian companies presence in China. Today, Indian companies like Infosys and TCS have good reputation in Chinese markets. For example, the website www.seecoco.com is a hub for the IT pros in china. Here they discuss about their company, Salary etc. Already, Infosys is third in the satisfaction survey and even Satyam is ranked among the top 10. Here,it should be noted that, Indian companies are now only in the investment stage. In future, you can see a great level of cultural mixture in these companies.

Considering the Pros and Cons, China cannot be definitely ignored in the outsourcing industry. So is India. We will see India gaining domain and execution expertise over the years and China growing on technical side. So,it is not India or China. It is India and China. After all, dragon and elephant can never fight against each other.

Tags: chinese outsourcing, Indian IT industry, outsourcing, chinese outsourcing companies, IT industry, Infosys, TCS, indian outsourcing, Current Chinese IT outsourcing industry

Infosys results analysis

2009-01-14T05:51:00.010+05:30

Below are some notable and interesting highlights from the Infosys third quarter results 2008-2009, especially the quarter in which the economic crisis gained the strength.

Though Infy succeeded in reducing the dependency on U.S in the past quarters, this quarter revenue from US rose to 64.5% ( It was 61.5% in the prev quarter and 62.5 a year back)
Product sales saw a huge increase to 4.2% - it increased by 16% from the prev quarter
As expected, Telecom business continued its decline. Its share came down to 16.7% - a 12% decrease. Manufacturing sector also saw a minor decrease(-2.5%) in its share.
Onsite effort and revenue came down by around 1%
Reflecting the job market, addition of trainees of decreased b 4000 ( note that freshers addition is more during the previous quarter, as it coincides with the end of the academic year)
Utilization (excl. trainees) increased by 1%. Last quarter was down by 3%.
Addition of lateral employees also got decreased. At the same, attrition also decreased by 1%
Next to Bangalore, Pune has the most number of seats with 20K. Least number in India is from Jaipur with 990 seats
The Revenue ending Dec 31 is Rs.5786 crores. It projected Rs.5519 - 5730 crores in the previous quarter.
The company saw first ever sequential decline in dollar revenue from $1.17 from $1.22 billion in the prev quarter.
Net profit rose by 33% Y-o-Y

Tags: Infosys, infosys results analysis, infosys quarterly results

World Bank, Wipro, Satyam - how all this issue started suddenly?

2009-01-13T06:46:00.013+05:30

Things are getting worse for Indian IT industry with blows from Economic crisis, World bank ban on Satyam, Satyam's fraud and back to World bank ban on Wipro, Megasoft and other mid size companies. Though, the IT industry isolated Satyam as one such incident, the news on Wipro's ban made the things quiet difficult. More than the ban, which is too trivial for wipro's revenue, the timing of the news is too bad for the industry.

Also, there is quiet a misconception among the people that World Bank(WB) has just banned the wipro, which is not true. Wipro was barred from the contracts inJune 2007, but the policy of world bank not to disclose information about any investigation inside world bank prevented it from reporting and this applies to the responsible company (Wipro). Now, it has changed its policy to report such incidents and so is the today's official announcement(see the actual mail) of the ban on Satyam, Wipro, Megasoft etc. But why did world bank changed its policy all of a sudden? This dates back to corruptions involved in world bank at various stages, which was reported in 2006 that around 20% percent of the loans given by WB ioves corrupt practices. The report said that, WB doesn't have good policy to reward staffs who reports corrupt practices in the bank but instead often punished them! The report adds that, after a corruption allegation of
$600, it took six years for the bank to start official investigation. It concluded that, WB need a reform program to address it's 'Failure of accountability'.

Later, various news kept floating on the corrupt practices in world bank, until when Fox news reported the biggest news that World Bank computers were repeatedly attacked by outsiders to retrieve sensitive data. It also added that these attacks were carried out for months. This news really alarmed the world, as many countries' sensitive monetary data resides in world bank. Later Fox also reported that an employee of the Indian IT company Satyam had a spyware installed in his computer which paved the way for the attackers. The allegation can be so easy that, Satyam had a dominating presence in the IT division of world Bank. So, according to FOX, only after its revelation on WB, the whistle blowing organization - GAP( the org which reported in 2006 about corrupt practices in WB) questioned World Bank about the data theft and bribing of the top official. At the investigation, the WB official revealed about the ban on Satyam, which was reportedly involved in bribery & spyware installations. Later, GAP-the whistle blower organization revealed Satyam's involvement in its website. GAP's announcement spread around over the past two months, which means World Bank's policy of not reporting investigations was overridden. This made them to change the policy and the result is the today's announcement. So is the revelation about Wipro. Wipro said that it provided shares to the WB staffs under its SEC approved program.

Also Read: Now, Is China a threat to Indian IT industry?

Here's some interesting news about Mohamed Muhsin who was said to be bribed by Satyam: When the investigation on him started back in 2006 on his involvement in Satyam, this is what the bank official had to say about him: "He was a very competent guy" and "He really turned around the IT [information technology] operation. It was a mess." As I had mentioned earlier, it was Satyam which was in total control of world Bank's IT operation.

Tags: wipro, wipro world bank, satyam world bank, mohamed muhsin, world bank corruption

9 hottest IT skills

2009-01-12T04:02:00.010+05:30

Computerworld has listed out the hottest IT skills for 2009:

1.Programming/application development
2.Help desk/technical support
3.Project management
4.Networking
5.Business intelligence
6.Security
7.Web 2.0 8.Data center
9.Telecommunications

Read the full article for the desired skills for the above positions.

Tags: IT skills, Hot IT skills, top IT skills, IT skills 2009

What really happened in satyam

2009-01-11T11:39:00.013+05:30

Ramalinga Raju's confession with low revenue numbers can be interpreted as either -

The growth of satyam has drastically reduced over the time, which means less clients/projects (or)
Satyam did manage good business but the money was used inappropriately.

If Satyam's growth has reduced drastically (read as less clients), the effect would have been evident across the company. The resultant indication would be less project and more people on bench. If this is the case, then every Industry vertical manager/employees could have felt the effect in his domain. But, there were no news in the past on Satyam employees on bench in big numbers (or) atleast the employees did not feel the effect. Here, one should remember that Satyam's Chief strategy officer and Satyam BPO's CEO 'resigned' on October 2008. The reason behind their resignation was believed due to 'organizational restructurin g!'

Also read: World Bank Issue, Satyam, Wipro - How all these started suddenly?

Now on the other side: if satyam had good business( which is highly likely), the possible scenario is improper use of profits generated by satyam computers. The founder's family owned Maytas properties which was founded only in 2005, was in news for multiple projects like Residential building, ports, SEZ, harbor etc. Here raises the doubt: Did Raju invest heavily through Maytas lured by the booming real estate market in the past years?Any bad investment in the real estate sector would have sucked the money of satyam in this slowing economic growth. Apart from real estate, Raju is said to be an aggressive investor who had dropped his money in failed dotcom companies.

This is evident from one of the quarterly results announcements from satyam:

"........the Rs 152-crore provisioning covers losses posted by subsidiaries and sunk costs in dotcom ventures and start-ups. Subsidiary VisionCompass accounts for Rs 126 crore of this provisioning, investments in dotcoms and start-ups make up the rest......."

Did he use satyam's money in multiple ventures? Uday kotak of Kotak Mahindra mentioned that, Satyam didnot give a satisfactory answer on the two thousand crores of money that was present in the current account instead of 'Savings account' which would have earned good interest for satyam.

So, did Raju used the 'candid confession' in the resignation letter as a tool to divert from the actual scenario? May be there is something more than what he wrote . It is now in the hands on how effectively the interrogation proceeds.

Read: Satyam founder, Raju's Letter - Highlights
Tags: Ramalinga raju,satyam update,satyam, Satyam fraud

Irresponsible media reports - Infosys comment on Satyam

2009-01-10T06:06:00.024+05:30

This is one other example of ridiculous reporting by media on Infosys' comments on Satyam, which caused outrage by Satyam employees and readers against Infosys. Read the actual statements and the media's version:

Below are the actual statements in quotes:

Mohandas Pai, HR, Infosys: “We have asked our recruitment staff not to poach anybody from Satyam. The company is in the middle of a crisis and people will jump ship”.
Narayana Murthy, Infosys: "We will not touch such a tainted company" - on Satyam's takeover.

With these statements, the shameless media in an attempt to display a sensational headline, reported their own version. The websites and television ran headline that "Infosys will not hire Satyam employees" , "We will not hire anybody from Satyam -Infosys", which is not the actual case. Also, a media cited an unidentified source saying ".....a person familiar with the matter, who asked not to be named, said that Infosys would refrain from even hiring domain experts or project managers from Satyam"

All these modified versions caused an outrage form Satyam employees, blogs and other readers. The reporting was altered to the extent that the readers thought, Murthy referred the employees as tainted. (Evident from the article comments)

If you read Pai's statement, even a sporadic reader will understand that, Pai asked his staffs to avoid Poaching (which is the practice of recruiting people from other companies by offering inducements) .
This is something every other IT company should follow for Satyam to recover from this mess, with the help of a new management. Infosys can easily offer employment/higher salaries for client managers, project managers ( especially the skilled SAP developers/consultants, the area where Satyam has its strong hold and the same area where Infy is aspiring to outgrow).

But,employees holding these responsible positions, engages with the customer directly/indirectly. Only these people could convince their customer that, Satyam will bounce back from its current situation. Poaching these employees would easily result in losing the customers, which will directly affect the jobs of many Satyam employees who are engaged under a client.

In this scenario, Infosys and other companies can easily employ few hundreds/close to few thousands, but no one can absorb 53,000 employees. Only if the clients remain engaged, Satyam can ensure the jobs for its employees. Best anyone IT company should do is, to help satyam by not disturbing their next strategy. Having understood this, any responsible company would not poach at this juncture. Infosys had made a responsible statement and media in its desire to make a sensational news, intentionally misconstrued the statement.

Now, coming to Murthy's statement, any businessman will hesitate to takeover a company whose value is unlnown even to its top management. Infosys being a prudent company in takeover and mergers, have so far acquired only one company as a whole, in its 27 years of operation.In this economic scenario, most of the companies have either deferred/canceled their acquisition. How would anyone can expect to acquire a scandalous company completely?. In this recession period, it would be difficult for any management to stabilize and run a loss making company.

But there are very likely hood of satyam's industry verticals to be acquired by different companies. This would be the best option for the innocent employees who were brought down to this situation.

Update: Murthy clarifies his statement

Tags: Satyam, Infosys,Infosys comments, Satyam jobs, Satyam update, Satyam fraud

Satyam update -

2009-01-09T08:14:00.038+05:30

Satyam News update in chronological order:

Check this: Satyam Fact Sheet

Also Read: Now, Is China a threat to Indian IT industry?

Latest Satyam updates:

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Satyam, Ramalinga Raju,Satyam job cuts, Satyam update, Satyam updates, Satyam latest news, Satyam fraud, Satyam scandal