IT’s past, present and future: Industry and people will always be important

Layoffs have nothing to do with Trump’s visa stance; its impact will show after rules are framed

There has recently been a lot of angst about the Indian IT industry (IT LAYOFFS). The anxiety has mainly centered around two themes. First: Is the $150-billion industry, which is about 7 per cent of Indian GDP, now heading for a period of stagnation? And second: The impact of the above and other global developments such as visa restrictions on the job market for IT professionals, considering that the industry employs 4 million professionals and indirectly generates many more jobs.

The anxiety tends to breed cynicism, as witnessed by the response to a question in the Economic Times of May 15 “Are laid-off techies paying the price for IT cos’ inability to foresee the future?” A resounding 78 per cent replied “Yes”.

Even more surprising is a mast head quote in the Business Standard of May 19 from Rajat Gupta, the former head of McKinsey: “The Indian infotech industry ‘rightly’ should be in ‘panic’ mode, as it has not kept pace with rapid innovation. Code writing-testing is the most inefficient industry that existed.”

I consider both the question and response to the ET question cynical because the persons who have been let go constitute mostly between 0.5 and 1 per cent of the workforce of the larger companies, and only in the case of Cognizant it is 2-4 per cent. All these numbers are within the range of annual “weeding out” to continuously improve the quality of talent.

Rajat Gupta, for whom I otherwise have the highest regard, in my view should have known that the IT industry moved beyond cost arbitrage at the turn of the century and has progressively embraced solutions around the latest technologies. This is reflected in the fact that Indian IT industry has continued to gain market share. Here we have decline in growth, whereas some of the global leaders have had decline in revenue for multiple quarters. |READMORE…

Trump's new order: Indian IT sees red as H-1B visa window gets smaller

Analysts say the impact on Indian entities would not be immediate

 

An executive order signed by US President Donald Trump on Wednesday (Indian time) to protect American industry, has also targeted Indian information technology services firms, who depend on H-1B visas to send engineers to work on projects to the US. 

Trump has directed his top administration officials — the Secretaries of State, Labor and Homeland Security along with the Attorney General — to suggest reforms, so that the H-1B visas are given to the most skilled or highest paid beneficiaries. 

The move by Trump will help Silicon Valley-based entities such as Google, Facebook and Oracle to take advantage of the programme to get more engineers from India to work on projects back home. At the same time, it is expected to hurt outsourcing companies majors here, such as Tata Consultancy Services (TCS), Infosys and Wipro, which traditionally have used the H-1B visa programme to send engineers to work on projects at customer locations in America. 

This has riled the National Association of Software and Services Companies (Nasscom), which says there is a campaign to discredit the Indian services sector and the move would hurt the American economy, as the US faces a shortage of computer engineers. It would benefit only Silicon Valley companies at the cost of the rest of America.

“Regarding the concept of reorienting the H-1B lottery to be a system that prioritises the “most-skilled or highest-paid” visa applicants, the (US) Administration needs to be careful about unintended consequences,” it stated.

“Using salary levels as the metric is not necessarily the best indicator of benefits to the US economy. And, unless such a system reflects variations in wages in all parts of the US, it could advantage certain regions such as Silicon Valley over other regions of the US.” 

TCS, this country’s largest software exporter, says it has reduced the number of visas it has applied over the past few years, and has several local development centres in the US, hiring local engineers.

“We have to watch what the visa issues are. Are they going to be constraints for having the right people on projects? We have taken a view of this and our dependency on visas has been reducing. Our strategy is to move to a regime where our operating model should be visa-neutral,” says N G Subramaniam, chief operating officer at TCS.

(read more)

Ban on BS-III vehicles: Expect heavy discounts on cars, 2-wheeler inventory

Of this, 96,000 are commercial vehicles, 600,000 two-wheelers and 40,000 three-wheelers

Expect heavy discounts at automotive dealerships, especially two-wheeler sales outlets, over the next two days. As the clock ticks towards the deadline of a ban on the sale of BS-III vehicles after March 31, automotive dealers across the country are expected to make a last-ditch effort to sell their inventory.

As of now, dealerships are sitting on a total inventory of 824,000 vehicles that are BS-III compliant. Of this, 96,000 are commercial vehicles, 600,000 two-wheelers and 40,000 three-wheelers. A judgement from the Supreme Court on Wednesday banned registration and sale of BS-III vehicles from April 1, thus rendering an inventory, estimated to be worth Rs 12,000 crore, practically worthless.

Around 20,000 automotive dealers across the country are thus staring at an uncertain future. John Paul, president, The Federation of Automobile Dealers Associations (FADA), said it had come as quite a blow for dealers. “In small towns, this might mean the end of business for many dealers and sub dealers, especially of commercial vehicles,” he said, adding that the association was waiting for the copy of the order to understand the fine print.

(READ MORE)

 

Get rid of 3-month notice period: Techies ask govt to ease quitting process

latest | The government should make it easier for IT professionals, who are expecting single-digit hikes in the coming financial year, to exit their jobs, an online petition signed by over 28,000 professionals has demanded, reported The Economic Times on Thursday.

Their complaint? The three-month non-negotiable notice period that most IT firms hold their employees to. According to the report, the petition said, "It is unrealistic for anyone to plan that far ahead for their future actions and resign in advance not knowing state of the issue in next three months." The petition has been addressed to the Union Ministry of Labour & Employment.

Speaking to the financial daily, an IT professional, who did not want to be named, said that no company would be willing to wait for three months while their new employee serves out his or her period at their old firm. Further, the report said that Tata Consultancy Services, Infosys, Tech Mahindra, HCL Technologies, Capgemini, Accenture and IBM had a three-month notice period in place.

Growing pains

Indian companies are likely to provide single digit increments to their employees in 2017, across industries, an Aon Hewitt survey said recently. “The survey projects a drop in pay increases to an average of 9.5 per cent across industries. While it’s a marginal decrease from the 2016 (10.5 per cent) spends, it reflects maturity that India Inc has displayed amid global and Indian economic and political events. This includes recent changes in the US government and the much-talked demonetisation,” the report said. Aon Hewitt, the global talent, retirement and health business of Aon plc, conducted its 21st annual survey after speaking to more than 1,000 companies.

The Indian IT sector, and its employees, will not escape this predicament either. According to ET, Tech Mahindra has already suspended the salary revision process for employees with more than six years of experience, pending a management review.

The petition comes at a time when the IT sector is gearing for a shake up. As reported earlier, Indian IT services players may have to re-skill significant chunks of their workforce to drive the digital technology transformation. A report from global advisory firm McKinsey & Company, which was presented at the Nasscom India Leadership Forum last month, said that nearly half of the workforce in the IT services firms would become “irrelevant” over the next three-four years. 

Further, digital disruption is not the only thing worrying the industry. Last month, industry body Nasscom unexpectedly postponed issuing a growth projection for 2017-18, a first in 25 years, in the wake of uncertainty due to regulatory changes in the US and the macroeconomic outlook. 

(Read more) 

TCS announces share buyback; Infosys and Wipro may follow

Investors eye a piece of the large cash kitty as growth slows

COMPANY NEWS | Barely a week after the US-based software services player Cognizant Technology Solutions, which has several delivery centres in India, announced plans to return $3.4 billion to its shareholders through buyback of shares and dividends, Tata Consultancy Services (TCS), too, said its board would be meeting on Monday to consider a buyback plan.

In a statement to stock exchanges on Thursday, TCS said, “We would like to inform you that the board of directors will consider a proposal for buyback of equity shares of the company at its meeting to be held on February 20, 2017.” If approved, this will be TCS’ first buyback since its listing in 2004.

The Street took the news positively, as stocks of domestic information technology (IT) majors - TCS, Infosys, Wipro, Tech Mahindra and HCL Technologies - were up 1.4-3 per cent on Thursday.

 

ALSO READ: Communication with shareholders vital for smooth execution: Rishad Premji

READ FULL STORY