THE BPO INDUSTRY IN INDIA- FACING THE RIVALS

Indian BPO industry is facing very significant challenges since beginning of year 2012.

According to estimates the industry may earn less than $16 billion this year (that makes it a slow growth rate of 12%).

Rival BPO industry such as that of PHILIPPINES however is projecting its growth rate to be of around 19%in 2012 and has already become the NUMBER 1 in voice operations pushing India to number 2 slots.

According to estimates, in the last two years about 75000 seats that could have been added to Indian call centers went to Philippines.

WHAT IS WORKING AGAINST INDIAN BPO INDUSTRY?

1) Manpower in India is becoming costlier, with 10% to 15% rise in salaries and training expenses for the BPO industry.

2) There is a deficiency of skilled workforce in India when compared to countries like Philippines.

3) The attrition rate in India is double of what it is with rivals.

4) Increasing pressure of US companies to keep their jobs within the country

5) The present government has not done BPO any favor by withdrawing tax incentives under the Software Technology Parks of India Scheme and imposing minimum alternative Tax on Special Economic Zone.

6) Lack of infrastructure

HOW THE INDUSTRY PLANS TO DEAL WITH THE CHALLENGES?

1) Companies like GENPACT and EXL have reported a significant rise in revenue by moving up their value chain.

2) Indian BPO industry is moving away from standard and tested procedures to more intellectually capital oriented work. There is more focus on innovative concepts like cloud computing and bundle business process with technology.

3) Industry is moving away from VOICE PROCESSES to newer platforms.non voice processes are getting increasing focus.

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INCOME TAX SLABS OVER THE YEARS

AN INTERESTING READ IN BUSINESS TODAY,HIGHLIGHTING  THE INCOME TAX TRENDS IN PAST 60 YEARS

1950s
Maximum rate of income tax reduced from 5 annas to 4 annas. Wealth tax comes in.

1960s
The highest marginal rate on unearned income cut from 88.25 per cent to 81.25 per cent and that on earned income from 82.5 per cent to 74.75 per cent.

1973-74
Eleven tax slabs, with rates from 10 to 85 per cent. The top marginal rate is effectively 97.75.

1985-87
Finance Minister V.P. Singh (1985-87) reduces number of IT slabs to four, cuts top marginal IT rate to 50 per cent.

1990-91
In five Budgets between 1991-96, FM Manmohan Singh reduces IT slabs to three (20, 30 and 40 per cent).

1997-98
P. Chidambaram's 'dream budget' cuts peak rate of income tax to 30 per cent for 150k and above. Manmohan Singh, then in Opposition, criticises the rate cut.

1998-99
Exemption limit raised to Rs 50k. Standard deduction raised to Rs 25k.

2001-02
All surcharges abolished except surcharge at the rate of 2 per cent for the National Calamity Fund.

2002-03
Two rates of personal IT slabs: 20 per cent up to Rs 4 lakh per annum and 30 per cent for income more than Rs 4 lakh.

2007-08
Basic exemption limit for all assessees raised from Rs 1 lakh to Rs 1,10,000. Similar increase provided to women and senior citizens.

2009-10
The Income Tax exemption limit raised by Rs 10,000 for general taxpayers and by Rs 15,000 for senior citizens. For general taxpayers, income of up to Rs 1.6 lakh per annum for men and Rs 1.90 lakh per annum for women is tax-exempt. Senior citizens will not have to pay tax up to an annual income of Rs 2.4 lakh.

2010-11
Under the slabs announced by Finance Minister Pranab Mukherjee, there would be no tax on income up to Rs 1.6 lakh. Incomes between Rs 1.6 lakh and Rs 5 lakh will invite a tax of 10 per cent. For incomes between Rs 5 lakh and Rs 8 lakh, a tax of 20 per cent will be levied. Incomes of Rs 8 lakh and above will invite a tax of 30 per cent. Pranab also increased the tax saving limit from Rs 1 lakh to Rs 1.2 lakh by allowing an investment of Rs 20,000 in long-term infrastructure bonds.

2011-12
Tax exemption limit raised to Rs 1.8 lakh, from Rs 1.6 lakh for individual tax papers; For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh; Citizens over 80 years to have exemption limit of Rs 5 lakh. A new revised income-tax return form 'Sugam' was introduced for small tax papers.

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10 BUDGETS THAT CHANGED INDIA

BUSINESS TODAY and KPMG collaborated together and came out with a list of ten budgets that changes INDIA. Here is the list of ten budgets that had a very strong impact on the Indian economic scenario.

1947: INDEPENDENT INDIA'S FIRST BUDGET

With the Partition of India and the emergence of two independent governments, the Budget for 1947-48 passed by the Legislature the previous March ceased to be operative.

New Delhi could have authorized the expenditure necessary for the rest of the financial year, but it was felt that the newly freed country would like a budget to be presented at the earliest.

The Budget Estimate for total revenues was Rs 171.15 crore. Of this, notably, Rs 15.9 crore was to come from the Posts and Telegraphs Department.

The total expenditure for the year was estimated at Rs 197.39 crore, of which the defense budget was Rs 92.74 crore.

A large burden was thrown on this budget by the unavoidable expenditure on rehabilitating refugees of the Partition and the payment of subsidies for food grains in a year of food crisis.

The only tax proposal in the budget was an increase in the export duty of three per cent on cotton cloth and yarn by an additional amount of four annas per square yard on cotton cloth and six annas a pound on cotton yarn.

1951: THE FIRST BUDGET OF THE REPUBLIC OF INDIA

This budget laid down the roadmap for the creation of the Planning Commission. The Commission was entrusted with the responsibility of formulating phased plans for effective and balanced use of resources.

A large part of the blame or the credit - whatever way it is looked at - for the Indian growth model goes to the Planning Commission.

This budget reduced the maximum rate of income tax from five annas per rupee, or 30 per cent, to four annas or 25 per cent. Incomes above Rs 1.21 lakh attracted a super-tax rate of 8.5 annas per rupee. The maximum rate of personal taxation was 12.5 annas or about 78 per cent.

1957: THE 'KRISHNAMACHARI-KALDOR' BUDGET

Put severe restrictions on imports through an import licensing system; withdrew budgetary allocation for non-core projects, set up Export Risk Insurance Corp to protect exporters against payment risks.

 Brought in wealth tax, a tax on expenditure and a tax on railway passenger fee. Raised peak excise to 400 per cent.

First attempt to distinguish between active income (salaries or business) and passive income (interest or rent). Raised income tax rates.

1968: PEOPLE-SENSITIVE BUDGET

Ended the requirement of stamping and assessment by the Excise Department authorities of goods right at the factory gate and introduced the system of self assessment by all big and small manufacturers, a system still in use.

 Today, except for some goods such as cigarettes and alcoholic preparations most products are on the self-removal mode for the levy of excise duty.

Self removal of goods was a major procedure relaxation that went a long way in boosting manufacturing. Administrative convenience in removal of goods made the process less complicated and tedious.

1973: THE BLACK BUDGET

Provided Rs 56 crore for the nationalisation of the general insurance companies, Indian Copper Corp and coal mines. This was a huge sum: the estimate for the budget deficit for 1973-74 was Rs 550 crore.

It is argued that nationalisation of coal mines had an adverse impact on coal production in the long run. The coal assets were bundled together under a single government-owned entity with no scope for market 

competition.

 There was little incentive for deployment of efficient production techniques and introduction of new technologies. India has been a net importer of coal over the past 40 years.

1986: THE CARROT & STICK BUDGET

Introduced MODVAT credit. This allowed credit/ set-off of duty paid on raw materials against the duty on final products.

This was a modest beginning at major indirect tax reform that will culminate in the shift to the Goods & Services Tax regime. 

With the introduction of Cenvat Credit Rules in 2004, cross credit between service tax and excise was allowed for the first time, reducing effective tax costs and boosting industry.

1987: THE GANDHI BUDGET

Introduced provisions related to minimum corporate tax, better known today as MAT or Minimum Alternate Tax.

It was brought in with the primary objective of bringing into the tax net highly profitable companies that were legally managing to avoid paying income tax.

The budget estimates for collections of this tax were modest (Rs 75 crore) but it has since become a major source of revenue, though the figures are no longer revealed.

1991: THE EPOCHAL BUDGET

Overhauled the import-export policy, slashed import licensing and went for vigorous export promotion and optimal import compression to expose Indian industry to competition from abroad.

Began rationalization of duty structures by pruning the peak customs duty from 220 per cent to 150 per cent.

Service tax in the 1994 Budget to tap into the fastest growing sector of the economy then. Service tax today fetches Rs 58,000 crore against Rs 400 crore in 1994.

1997: THE DREAM BUDGET

Made tax rates moderate for individuals as well as companies.

Allowed companies to adjust MAT paid in earlier years against tax liability in subsequent years.

Launched the Voluntary Disclosure of Income Scheme or VDIS, to bring out black money. Phased out ad hoc treasury bills used for financing the budget deficit.

2000: THE MILLENNIUM BUDGET

Had intended to promote India as a major software development centre in the world. The introduction of this tax holiday to software export sector was followed by exceptional growth in Indian IT industry.

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EMPLOYMENT WATCH

INDIA JOB MARKET PROSPECTS TO IMPROVE IN NEXT QUARTER: SURVEY

The job market outlook in the second quarter of 2012 has improved in most countries, with prospects being the best in India, according to a survey by staffing services firm Manpower Group.

A survey of 4,992 Indian employers showed that most plan to increase headcount in the April-June quarter this year. 

India's seasonally adjusted net employment outlook for the second quarter stood at 44%, one percentage up from the previous quarter.

It was 46% for the same quarter last year. The two sectors in India that may offer new opportunities are services (59%) and finance insurance and real estate (51%)

COGNIZANT REWARDS EMPLOYEES WITH 200% VARIABLE PAYOUT

After growing faster than Indian information technology (IT) industry, Cognizant Technology Solutions Corp has now rewarded its employees by giving out as much as 200% of the variable components of their 2011 salaries.

Typically, anywhere from 20 to 30% of an employee salary is labeled as variable pay, linked to a combination of overall company performance and individual performance.

"The company has done the repeat of 2010 in rewarding its top performers. The top performers got around 200% of their target bonus while the average bonus given was 150%. The bonuses were on expected lines as the company has been scoring good quarter on quarter," said a Cognizant employee in Chennai on condition of anonymity. 

TCS HAS THE MOST ENDURANCE CAPACITY AMONG IT FIRMS: HAY GROUP STUDY

 Tata Consultancy Services has topped a peer endurance study conducted by management consulting firm Hay Group among 39 IT companies in India, including MNC arms.

The study tried to capture the consistency of overall performance (financial and others) that the companies have displayed during recessions or other financially or operationally difficult times. On a scale of 10, where 10 is the highest endurance capacity, TCS scored 8.47, followed by Infosys Technologies at 8.43, Wipro 8.07, IBM and Microsoft 7.95, HP 7.81, HCL 7.74, Cognizant 7.47, Accenture 7.36 and Cisco7.5.

The study was conducted around nine parameters including talent management , corporate social responsibility and sustainability, innovation, corporate governance, performance and investor value, financial soundness, product and services quality and leadership development. 

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THE ECONOMIC SURVEY 2011-12-HIGHLIGHTS

The Economy Survey 2011-12 was tabled by the Finance Minister Pranab Mukherjee in the Parliament. Following are the highlights of Survey, a report card of the Indian economic scenario for current fiscal.

Highlights

·         Economic Survey projects 6.5-7 per cent inflation for March

·         Economic Survey maintains 6.9 per cent growth for 2011-12

·         Economic Survey projects economic growth of 7.6 per cent, plus or minus 0.25%, for next financial year

·         Agriculture and Services sectors continue to perform well. 2.5 % growth in Agro sector forecast.

·         Services sector grows by 9.4%, its share in GDP goes up to 59%.

·         Industrial growth pegged at 4-5%, expected to improve as economic recovery resumes.

·         Inflation on WPI was high but showed clear slow down by the year-end; this is likely to spur investment activities leading to positive impact on growth.

·         WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012; calibrated steps initiated to rein-in inflation on top priority.

·         India remains among the fastest growing economies of the world. Country’s sovereign credit rating rose by a substantial 2.98 percent in 2007-12.

·         Fiscal consolidation on track - savings & capital formation expected to rise.

·         Exports grew @ 40.5% in the first half of this fiscal and imports grew by 30.4%. Foreign trade performance to remain a key driver of growth. Forex reserves enhanced - covering nearly the entire external debt stock.

·         Central spending on social services goes up to 18.5% this fiscal from 13.4% in 2006-07.

·         MNREGA coverage increases to 5.49 Crore households in 2010-11.

·         Sustainable development and climate change concerns on high priority.

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News Update -I.T/ ITES/ BFSI Sector

FRIDAY, MARCH16, ECONOMIC SURVEY: BANKS MAY BE INDIRECTLY AFFECTED BY EURO-ZONE CRISIS

Though Indian banks' exposure to the troubled euro zone is negligible, funding pressure could impact them, Economic Survey 2011-12 said.

"The recent regulatory prescriptions for European banks have raised fears of deleveraging. Indian banks are not expected to bear any direct impact on account of their negligible exposure to the troubled zone," the survey tabled by Finance Minister Pranab Mukherjee said.

"However, they could be indirectly affected on account of funding pressures," it said.

The scope for countercyclical financial policy could be explored in financial regulations in order to minimize negative impact of accumulated financial risks, it said.

This will go a long way in providing needed stability to the financial system, it added.

The survey noted sovereign risk concerns, particularly in the euro area, affected financial markets for the greater part of the year, with the contagion of Greece's sovereign debt problem spreading to India and other economies by way of higher-than-normal levels of volatility.

Thursday, March 15, RBI LEAVES REPO, REVERSE REPO RATES & CRR UNCHANGED, FLAGS INFLATION RISKS

RBI left interest rates unchanged  and warned of resurgent inflation risks, a hawkish stance that disappointed investors clamoring for the first rate cut since the aftermath of the global financial crisis. 

The Reserve Bank of India kept its policy repo rate on hold at 8.50 per cent, as had widely been expected. It kept the cash reserve ratio unchanged at 4.75 per cent after a 75 basis point-cut  in a surprise off-cycle move to ease tight banking system liquidity. 

While market hopes had risen that the RBI would finally begin lowering rates after 13 increases between March 2010 and October 2011, it opted not to make a move before federal budget release for the fiscal year starting April 1. 

Wednesday, March 14, INFOSYS TO DOUBLE PRODUCT R&D ENGINEERS TO 1,000 IN INDIA

Infosys on said it plans to double headcount at its product research and development (R&D) team to 1,000 in the next two years to accelerate design and development of solutions.

The team is responsible for developing products and platforms, leveraging technologies in the areas of cloud computing, mobility, analytics, and social media.

"The focus of Infosys 3.0 strategy is on creation of innovative products leveraging technologies like cloud computing, mobility, analytics, and social media. A competent team is a core requirement and therefore we are looking at expanding the present team of 500engineers to 1,000 over the next two years," said Infosys Senior Vice President and Head of Infosys Labs and Product R&D Subu Goparaju

Tuesday, march 13, INDIA INC IT SPEND TO RISE IN 2012; COS PREPARE TO TAKE ON GLOBAL RIVALS WITH SOPHISTICATED SYSTEMS

 India Inc is preparing to spend more on IT in 2012 as it goes global and takes on rivals with more sophisticated IT systems and also cater to local growth and demand. 

Asian Paints, for instance, plans to spend more on IT systems as it sets up its largest manufacturing plant this year and invest in equipping its sales people with tablets and integrating those devices with its sales force automation software. 

Firms such as these are set to boost IT spending in India in 2012 even as many of their counterparts in Europe and US hunker down and prepare for a hard year, growing their IT investments at a slower pace than before. 

Every second firm in India plans to increase IT budgets in 2012, according to researcher Gartner, with some of the priority areas for investment being customer relationship management, e-mail and calendaring, web and business intelligence tools. "India is one of the fastest growing IT services markets and has become the focus for service providers," said Arup Roy, principal analyst with Gartner.

Monday, March 12, INDIAN BANKS TO POST WEAK OPERATING PERFORMANCE IN FY'13

Indian banks is likely to post a weak operating performance in the fiscal year ending March 31, 2013, according to ratings firm Standard and Poor's because of slowdown in economic growth, a dip in credit growth, rising delinquencies, and tighter margins could cause a deterioration in performance.

"The asset quality of Indian banks is likely to remain weak, or even deteriorate, due to the moderation in economic activity, high inflation, and high interest rates," said Standard & Poor's credit analyst Geeta Chugh.

"We expect restructured loans to rise in fiscal years 2012 and 2013. Small and midsize companies are particularly vulnerable."

According to the report, credit growth in India is likely to weaken to 16%-17% in fiscal years 2012 and 2013, from about 23% in fiscal year 2011.

Standard & Poor's expects net interest margins of Indian banks to remain tight in fiscal year 2013 due to intensifying competition amid low credit growth, and borrowers' limited ability to absorb higher interest rates.

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LEADERSHIP CHANGES AND CORPORATE ANNOUNCEMENTS

L&T APPOINTS K VENKATARAMANAN AS NEW CEO; AM NAIK TO STAY AS CHAIRMAN

K Venkataramanan, the 67-year-old IIT-Delhi graduate, will take charge as managing director and CEO of the Rs 60,000-crore Larsen and Turbo Company on April 1, replacing the 70-year-old AM Naik.

Mr Naik currently holds the position of Chairman and MD at the group, a major player in engineering, manufacturing, construction and a host of other businesses including technology and financial services.

ASHOK LEYLAND APPOINTS SAM BURMAN AS CHIEF TECH OFFICER

Hinduja group flagship company Ashok Leyland  announced the appointment of Sam Burman as the Chief Technology Officer, who will see product development, advanced engineering and product planning functions. 

Burman has rich experience in commercial vehicles. Prior to his new role, Burman was working as Senior Vice-President for medium and heavy trucks with Italy based multi-national firm -- IVECO, the company said in a filing to the BSE.

INDIA INFOLINE ROPES IN NOMURA'S NIPUN GOEL AS I-BANKING PRESIDENT

Diversified financial services provider India Infoline (IIFL)  appointed Nipun Goel as president of its investment banking division.

Goel will lead the investment banking team at IIFL Capital, the company said in a statement.

Prior to joining IIFL, Goel was managing director and head of investment banking at Nomura India and has experience of over 15 years. He was also associated with DSP-Merrill Lynch as managing director. 

HSBC PROMOTES TARUN BALRAM TO DEPUTY HEAD OF GLOBAL BANKING

HSBC has elevated Tarun Balram to the position of Deputy Head of Global Banking for India. Balram was earlier head of client management for the global banking division. In his new role Balram will report into Sunil Sanghai, MD & Head of Global Banking.

Balram has been with HSBC for 20 years and has worked in a variety of roles including as Head of Corporate Banking for North India where he was involved in arranging funding for Bharti's $10.7 billion acquisition of Zain's Africa business. 

KK MAHESHWARI APPOINTED AS GRASIM MD

The Aditya Birla group  appointed KK Maheshwari as managing director of Grasim Industries, as the 21,600-crore cement-to-yarn company prepares to grow its businesses in India and abroad.

Mr Maheshwari, who was the whole-time director of Grasim till now, will assume charge as managing director immediately, a post created for the first time in the 65-year company which is also the world's largest maker of viscose staple yarn, a key raw material for making textiles. 

PANASONIC APPOINTS MANISH SHARMA AS MD

Japan's largest consumer electronics company, Panasonic has for the first time ever appointed an Indian to head its flagship consumer durables business in the country. 

Manish Sharma (41), erstwhile head for sales and marketing of Panasonic India, has been promoted as its managing director from April. 

VODAFONE INDIA REJIGS TOP BRASS; SUNIL SOOD IS NEW COO

Telecom giant Vodafone India has revamped its top management, appointing Sunil Soodas the new chief operating officer (COO), while Sanjoy Mukherjee has taken over as the chief commercial officer (CCO). 

In an internal communication, the company said the changes are aimed at striking "a better balance between operational intensity and the need to focus on emerging areas". 

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ECONOMY UPDATE!!

THERE'S ROOM FOR A 50-BP RATE CUT, SAYS SBI CHIEF

State Bank of India Chairman Pratip Chaudhuri a further 25-bp (basis point) cut in CRR can be expected.

The Reserve Bank of India has reduced CRR 75 bps to 4.75 per cent on Friday March 9, 2012.

The CRR cut will definitely ease the liquidity pressure and cool down money market rates -- certificates of deposit and commercial paper -- which have been crossing 11 per cent in some cases.

INDIAN ECONOMY TO GROW BY 7-7.5% IN FY13: WORLD BANK

Noting that downside risks to Indian economic growth are high, the World Bank on projected the country's GDP to expand 7-7.5 per cent in 2012-13.

"In India, the slowdown in GDP growth witnessed over the last two quarters is likely to extend into the coming fiscal year because of the weakness in investment," the World Bank said in its latest economic update for India.

According to the multilateral lender, the country is expected to see a growth of 7-7.5 per cent in the current as well as next financial years, a sharp slowdown "from 9-10 per cent growth in the run-up to the global financial crisis".

EXPORTS POST MERE 4.3 PER CENT GROWTH IN FEBRUARY

India's exports recorded the slowest pace of growth in three months at 4.3 per cent year-on-year at USD 24.6 billion in February, mainly due to the global slowdown.


In sharp contrast, imports grew at a faster rate of 20.6 per cent year-on-year to USD 39.8 billion in the month under review year-on-year, translating into a trade deficit of USD 15.2 billion.


Expressing concerns over the ballooning trade deficit, Commerce Secretary Rahul Khullar said that since October last exports are decelerating faster than imports.


"There is a large ballooning of trade deficit. October onwards, export started coming down sharply whereas the lag in imports deceleration was larger. The two big drivers for high import bill are crude oil and gold and silver," he said.

FIIS INVEST RS 12,000 CR IN EQUITIES THIS MONTH; BULLISH ON INDIA

Adopting a bullish stance on India, overseas investors have pumped over RS 12,000 Crore into the Indian equity market this month so far. 

Foreign institutional investors (FIIS) were gross buyers of shares worth RS 15,362 Crore, while they sold equities amounting to Rs 14,104.50 Crore, translating into a net investment of Rs 12,57.30 Crore (used 258 million) this  month till march 9, as per the data available with market regulator SEBI. 

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News Update -I.T/ ITES/ BFSI Sector

MONDAY, MARCH 12, 2012: MIRA INFORM TO EXPAND PRESENCE IN AFRICAN AND GULF COUNTRIES

Mira Inform, a business and credit information company, has decided to expand its presence in African and Gulf countries and open its own offices in South Africa and Netherland. 

The company provides extensive corporate data base to help its customers take decisions on imports, exports, JVs and acquisitions across the globe. 

Established in 1983, Mira Inform caters to the needs of several national and international banks, credit insurers, factoring companies, accounting & legal firms, embassies, trade missions, consulates among others.

FRIDAY, MARCH 9, 2012: RBI CUTS CRR BY 0.75 PERCENTAGE POINTS; TO INFUSE RS 48,000 CRORE

To ease liquidity situation, the Reserve Bank today slashed CRR -- the portion of deposits banks are required to keep with the central bank -- by 0.75 percentage points, a step that will infuse Rs 48,000 Crore (Rs 480 billion) into the economy.

"This reduction (in CRR from 5.5 per cent to 4.75 per cent) will inject around Rs 48,000 Crore of primary liquidity into the banking system," the Reserve Bank of India (RBI) said in a statement.

THURSDAY, MARCH 8, 2012: INDIA’S BPO PLAYERS SEEING MORE TRACTION OVERSEAS: GARTNER

Indian entities engaged in business process outsourcing are seeing more traction and visibility overseas, especially with their flexibility to wide range of offerings for customers, according to Gartner. 

"India-based multinational companies such as Wipro and Infosys are seeing more traction and visibility overseas in the BPO segment," global IT research group Gartner's Research Director T J Singh said recently. 

Most of the Indian entities are also providing wide range of offerings for their clients, he added. 

According to him, Indian BPO players are willing to consider new 'business pricing models' and also show lot more flexibility in catering to the needs of customers. 

WEDNESDAY, MARCH 7, 2012: RRB: FINANCE MINISTRY INTENSIFIES EFFORTS TO MERGE BANKS IN STATES

Despite heavy resistance from unions, the finance ministry has intensified its efforts to merge regional rural banks (RRBs) within a state. The ministry has sought consent from state government of Tamil Nadu to merge two RRBs sponsored by Indian Overseas Bank and Indian Bank.

Also, to expedite the matter, it has directed the sponsor-banks to pursue the case of obtaining the state government's approval.

In a parallel development, the ministry has also asked sponsor-banks to transfer 20% of their staff to the RRBs and vice-versa

TUESDAY, MARCH 6, 2012: IT COMPANIES LIKE MPHASIS, TECH MAHINDRA, GENPACT FEEL THE PINCH OF HAVING A SINGLE BIG CLIENT

Indian software services firms getting a significant portion of their revenues from a single client are feeling the pinch as their clients based in US and Europe are seeking to transfer some of their pain by reducing work volumes and billing discounts.

Mid-sized IT services firm Mphasis, which announced its latest quarterly earnings a few days ago, is being squeezed by its parent Hewlett-Packard, while Tech Mahindra is struggling to maintain the volume of work it gets from its largest client British firm BT Group Plc.

Genpact is also seeing reducing business from General Electric (GE).

In 2012, Indian IT industry is expected to grow at 11-14% compared to over 16% in 2011.

MONDAY, MARCH 5, 2012: RBI REJECTS RS 5,000 CRORE LOANS BY ICICI BANK, AXIS BANK AND HDFC BANK TO COMMODITY TRADERS

The Reserve Bank of India (RBI) has rejected more than Rs 5,000 crore loans by ICICI Bank, Axis Bank and HDFC Bank to commodity traders as mandated priority sector lending, saying they are not farmers, which may force these lenders to invest in a fund that yields lower returns.

Domestic banks have to lend at least 40% of their total loans to the so-called priority sector, which includes loans to agriculture and allied activities, small-scale industries, poultry and other core economic activities in rural areas, including loans to microfinance companies. For foreign banks, it is 32% of net bank credit.

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