Tuesday, November 25, 2008

Indian IT and BPO has an Union to take up layoffs and long working hours

Here is a story from businessstandard that caught my eye today. I did not know about such a body until today and its heartening to see it take up some of the concerns

The Indian arm of the Union for Information & Technology Enabled Services (UNITES) is planning to file a public interest litigation (PIL) against the alleged “arbitrary policy’ of many Indian and multinational IT/ITeS firms in India who have, for the past two months, reportedly been enforcing longer working hours that violate the daily eight-hour working mandate of the Indian Factories Act, 1948.

UNITES, the country’s first union in the IT-BPO sector, is affiliated to the Indian National Trade Union Congress (Intuc). It claims to have around 10 per cent of the total IT-BPO workforce of 2 million as members, and said the numbers have been dramatically rising over the last two months on the back of lay-offs in the sector. The union is also part of Union Network International (UNI), which has over 16 million workers in 13 different sectors from 163 countries.

IT firms, on their part, insist that the Act is not being violated since IT workers have to work for 48 hours a week — eight hours daily for six days. However, since most IT firms have a five-day working week, they work longer hours, hence the misconception.

But some IT-BPO employees and UNITES are not buying the story. “The labour law in India allows an eight-hour working day, whereas in most IT companies in India people are involuntarily working for over 12 hours daily,” R Karthik Shekhar, UNITES’ secretary general for India told Business Standard.

He added that the increase of daily working hours from eight to almost 10 hours by Indian and multinational companies officially is “a double standard by the IT firms, who, on the one hand are firing people saying they are not getting enough work, and on the other hand, forcing employees to work more since they are getting more work”.

He said UNITES has requested industry body Nasscom to step in to clarify the stance.

The IT sector in India was once the torchbearer of many best HR practices, including flexi-office hours.

However, the situation has changed on the back of a slowing economy. Global IT services firm Accenture, for instance, is reportedly planning to increase working hours by almost an hour with effect from January 1 next year. Infosys, India’s second-largest IT exporter, too, has asked its employees' to strictly abide by the duty hours that the company has fixed as 9.15 hours a day on all working days. Wipro also has stipulated 9.5 hours working hours a day, and is becoming much stricter in terms of timing.

On condition of anonymity, a team leader working with vCustomer, said: “In call centres people are used to long working hours. During peak season (December-January), they work even 14 hours a day. But now due to the ongoing crisis, expectation levels are very high. Performance is being monitored frequently.”

A software engineer with Satyam Computers, Hyderabad, added: “Earlier we could extend our project deliveries by a day or two. Now the management has mandated to deliver by the deadline otherwise it will be marked on performance sheet. Our performance is being evaluated every week. This was a norm from earlier times, but now the management is taking it seriously.”

An engineer from Orange (which does IT and BPO support for the telecom major), concurred, “Besides the long working hours, cost cutting measures are worrying us, and the company has started ferrying seven people in a cab against five earlier.”

An account manager placed with Barclays in Noida, said “The insecurity level is very high. Quality parameters have been raised and everything is monitored very closely, they are marking us down wherever they can.”

Shekhar alleges that most IT firms do not display a “standing order” (regarding the eight-hour duty), which is certified by the labour department, on a notice board at the entrance of every firm. Instead, they have the order posted on the company’s Intranet.

“I believe stressing on increased input is always a mistake — the industry needs to focus on more productivity and value creation on the output side,” said Ganesh Natarajan, Chairman, Nasscom, when contacted. He, however, did not comment on whether Nasscom would be working on fixing a limit on daily working hours for companies.

“The IT industry in India still follows the best practices it had introduced earlier. But this does not mean employees will work less. If they are being asked to stick to duty hours, this will increase the productivity,” explained Infosys Technologies HR head TV Mohandas Pai.

“Besides,” he added, “they are also being paid well to work hard. These are difficult times and if they don’t work hard then there will not be any industry left in coming days.”

Monday, November 17, 2008

Is TCS the worst affected Indian IT major in the ongoing financial crisis?

Is TCS the worst affected Indian IT major in the ongoing financial crisis? This is a question that came to my mind when the TCS stock was getting hammered on the bourses. I thought so since they are huge and have a larger share of their revenues coming from the Financial Services. This is reflected in the share price already. Today I saw this report that confirmed this view. According to this report TCS is likely to bring down the hikes to 0% by 2010 and it also shows how its competitors are doing in this front

For now, the other IT services majors like Wipro has already announced a 7-8% hike in wages for its offshore employees while for Infosys it has been in the range of 11-13%.
I also heard unconfirmed news about HCL not giving the hikes and, worse, even cutting the salaries. News about lay offs are not good for anyone except for the markets which is a positive since its going to cut down costs and improve profitability.

Infosys had come up with a sabbatical policy yesterday which is innovative. We have to wait and see what measures other IT majors will take to cut costs.


Sunday, November 16, 2008

Infosys asks employees to take Sabbatical!! What is the Real Intention?

We are in midst of a huge Financial Crisis, that's clear. And its also clear that the impact is not going to be limited to financial sector, the effect is now being slowly but surely felt on industries that are important to the real economy. Even though we, in India, are not part of the core crisis that started in India we still are greatly affected - markets are being hammered, foreign money is being pulled out of the country, promised investments aren't coming, companies depending on exports are closing down and people losing jobs.

IT sector, which is the horsepower that drove India's growth in 90's and which is still the foreign currency earner, is not left untouched. All top Indian IT companies have a decent portion of their revenues from the US Top Financial Institutions. There is a huge concern that these companies will not be able to deliver the same results in the coming quarters as the spending from affected institutions will be cut down and the projects will be shelved. There is also an opposite point of view that thinks US problems will translate into more revenues since US companies will start pushing more work to India.

We have to wait and see which view comes true in the near future. But, right now, I could see the impact. Its not as bad as the technology bubble but its there. No salary hikes, worse some companies cut the salaries, employee weeding in the name of performance, Satyam used wrong claims that were as old as 1 year to lay down a few, and now Infosys have come up with a policy where the employees can take sabbatical from their work to get involved in philonthropic activities.

I cannot comment on their real intentions. I see it as very innovative way of cutting down costs without actually looking like you are in trouble and also earning the good name in the society for its philonthropic inclience. Ofcourse they can easily use it as a tool to increase efficiency by making some of the non-performers take it. So they are not officially laid off, they can still be happy that they get 50% of their salaries.

But this also raises the question how effective these guys are going to be when they come back after an year - will they be refreshed and raring to go or will they be out of touch and find it difficult to get going? And also what if the conditions are still bad? Can Infosys just take them and put them on bench? And will they really keep on their promise of taking them back?

I see that it can be effective tool to cut costs in the near term by retaining the guys for half of the costs and having the option of getting them as soon as situation improves. You dont have to spend time and money to recruit new resources and train them on Infosys way.

Infy, this is really a smart way of doing things!

Friday, November 14, 2008

Top Indian Stocks To Buy : Buying Axis Bank stock around Rs 475 a good choice to make some money

Axis bank is very close to its support levels at the moment and is a good choice as per me to get into for a quick trade. I put in half of my money around Rs 505 and I will put the other half after a couple to days seeing where the markets go.

Actually I did not think that the Indian Stock Market will be down today due to the low inflation numbers that came in yesterday and also the good showing by the global markets. So I put in a buy at a defensive price. I will wait for 2 days and if the markets tank I will double up the money on Axis. One of the reason why I am confident on this stock is that its in banking which are beneficiaries of lower inflation and this company has had no negative news exposure.

Wednesday, November 12, 2008

Top Indian Stocks To Buy, Stock Picks : Which companies are attractive now in the Indian Stock Market?

I like few companies that are very attractive for investing/trading on the Indian Stock Market

For investment purposes I like Bartronics (No bad news here), IDFC (I think slowdown in infra lending considered here ) and Suzlon (I think it has been battered enough and all the bad news has been incorporated). I will buy Bartronics at the current levels but will wait for IDFC and Suzlon to fall a little since they have run up quite a bit in the last week or so.

For trading purpose I like banks - Axis and ICICI. This sector again was the most affected and I think only better times are ahead for this sector esp with the falling lending/interest rates. Axis is a definitely a buy at current price but ICICI has to go down to around 350 or less to be a buying stock.


Monday, November 3, 2008

Indian Markets :- Indian Companies that are better choices for investments during this financial crisis

I came across a study on BusinessStandard that listed Indian Companies that are sitting on huge cash reserves with good business growth potential. As is often said companies with cash are expected to do better during turbulent times, like this year, where the financial crisis jolted the world economies. I believe in this saying and I do like some companies among the list from this study and I am certainly looking at putting in some money into these stocks during these times. I am sharing this list on this blog hoping it will be of use to readers.

Rs crore Cash + CE Ent Value Cash + CE/

Ent Value (%)
Mkt Cap Price

P/E (x) P/BV (x) Dividend

Yield (%)
Reliance Power 13,440 23,074 58.2 22,626 94.40 209.8 1.7


Sterlite Inds 14,074 21,467 65.6 16,392 231.30 11.6 1.2 1.7
Hind.Zinc 7,695 11,732 65.6 11,732 277.65 3.0 1.0 1.8
Aditya Birla Nuvo 6,718 11,386 59.0 4,739 498.80 18.1 1.3 1.2
MTNL 3,758 3,926 95.7 3,915 62.15 7.4 0.3 6.4
Bajaj Holdings 3,213 3,413 94.2 3,413 337.30 5.9 1.1 5.9
Indiabulls Fin 7,412 13,823 53.6 2,601 102.55 6.9 0.9 8.3
Financial Tech 1,402 2,741 51.2 2,316 504.65 2.2 1.6 4.0
Jai Corp 1,825 2,394 76.2 2,312 129.55 30.0 0.9 0.8
Max India 3,842 6,076 63.2 2,253 101.50 33.8 1.1


Edelweiss Cap 1,910 3,653 52.3 2,083 278.00 81.0 1.5 0.7
Engineers India 1,417 1,959 72.3 1,959 348.90 8.0 1.7 3.2
GTL 1,277 2,452 52.1 1,750 185.05 14.6 1.9 1.6
PTC India 1,452 1,094 132.7 1,094 48.10 14.2 0.7 2.1
TV 18 India 883 1,562 56.6 1,015 84.65 24.8 2.1 2.4
Market Price, Price/Book Value (P/BV), Price-to-earnings ratio (PE), Market Capitalisation and Dividend Yield as on October 28, 2008

CE= Cash equivalents (investments minus those in group/associate companies); Mcap=Market capitalisation; Ent Value=Enterprise value (market cap + debt)

Source: Capitaline Plus