EMPLOYMENT WATCH

BUDGET 2012: JOB GUARANTEE SCHEME, MGNREGA, TO STABILIZE

 The much hyped job guarantee scheme seems to have stabilized, with the Union Budget reducing the allocation after six years of sustained hikes. 

Finance minister Pranab Mukherjee announced Rs 33,000 crore as MGNREGA allocation, down from 40,000 crore earmarked last year.

 The total allocation for rural development schemes has gone up to Rs 99,000 crore. 

INFRA SECTOR FACING HUGE SHORTAGE OF SKILLED MANPOWER: EXPERTS

There is about 40 per cent shortage of skilled manpower in the infrastructure sector, according to experts.

"The infrastructure sector is short of skilled manpower by about 40 per cent from the existing number of employed. The annual demand for civil engineers is 4.27 million against the current availability of 27, 000," President and Whole-time Director of L&T Finance Holdings, N Sivaraman, said

Infrastructure companies have been training their own manpower, so there is a need for more schools like Samvit to nurture the talent for this key sector, Sivaraman added. 

TATA COMMUNICATIONS TO HIRE 1,200 NEW STAFF MAY RAISE DEBT

Tata Communications will recruit an extra 1,200 staff over the next 12 months in its outsourcing, sales and engineering divisions as it tries to turn around nearly three years of losses, the firm's CEO said 

Kumar said two-thirds of Tata's new staff would be hired for its outsourcing business, which provides telecoms services for other operators, with 250 added to its sales division and a further 150 recruited to product and engineering. 

The increased headcount will raise its workforce to 8,900 from 7,700 at present. "The three areas where we are adding people are all related to revenue generation and continuing the turnaround to consolidated profitability," said Kumar. 

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ECONOMY UPDATE!!

INDIA IN EMERGING MARKET  TOP LIST

India has emerged as the second most promising market after China in terms of maximum opportunity for rapid growth among emerging market economies, says a survey.

According to the survey by Tata Communications in association with research company Vanson Bourne, more than half of the respondents believe China offers the maximum opportunity for rapid growth opportunities, followed by India at 46 per cent and Brazil at 26 per cent.

POVERTY LINE WORLD BANK NOT TO CUT INDIA LOANS

The World Bank will not reduce financial assistance to India for poverty alleviation measures because of the recent official data that showed a decline in the number of poor people in the country.

The international funding agency takes a long-term view on its commitments and the poverty data released on Monday will not have any bearing on those commitments.

According to the data by the Planning Commission, the number of people under the poverty line - whose daily consumption is below Rs 28.65 for urban centers and Rs 22.43 for rural areas - declined to 29.8 per cent in 2009-10, from 37.2 per cent in 2004.

FDI UP BY 92% IN JANUARY

India received USD two billion foreign direct investment (FDI) in January, showing an annual growth of 92 per cent and taking cumulative inflows to USD 26.19 billion for April-January period of the current fiscal.

In January 2011, the country received foreign direct investment (FDI) worth USD 1.04 billion.

Experts feel if reforms are pushed, there is much more potential for attracting increased foreign investment.

"There is an urgent need for strong reforms like 100 per cent FDI in sectors like multi-brand retail and insurance.

There is a need to boost investor confidence. USD 2 billion in month is not a big number," Ficci Secretary General Rajiv Kumar said.

The sectors which received large foreign FDI inflows during the 10-month period this fiscal are: services (USD 4.83 billion), pharmaceuticals (USD 3.20 billion), telecommunication (USD 1.99 billion), construction (USD 2.23 billion), power (USD 1.56 billion) and metallurgical industries (USD 1.65 billion).

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News Update -I.T/ ITES/ BFSI Sector

Friday, March 23, 2012: Indian IT industry paid $15 bn in taxes to US govt in 5 years: NASSCOM

Indian IT sector has paid over USD 15 billion in taxes to US Treasury over a period of five years and created over 2.8 lakh employment opportunities.

"Indian technology firms are deeply committed to the US marketplace. Both they and their employees are important contributors in their local communities as well as the country as a whole," NASSCOM President Som Mittal said in a statement.

The report 'India's Tech Industry in the US' said that Indian technology industry has paid more than USD 15 billion in taxes to the US Treasury in the last five years thereby aiding economic recovery in the US.

Thursday, March 22, 2012:  Aegis Expands Call Centre Operations In Costa 

Aegis expanded its business in Costa Rica by opening a call centre that cans accommodate 900 professionals.

"Costa Rica has played a vital part of our success. Aegis began operations in Costa Rica in 2006 and today we have nearly 900 employees," Aegis President for Global Customer Lifecycle Management Sandip Sen said in a statement.

The new facility is located in the Rohrmoser section of San Jose and it will be a blend of additional capacity and reduced costs, the statement said.

Wednesday, March 21, 2012: GE to acquire Advanced Systek

US-based conglomerate GE said it would acquire majority stake in Vadodara-based Advanced Systek Ltd.

"GE has agreed to acquire a majority stake in the Vadodara-based Advanced Systek Private Limited, suppliers of terminal automation systems and flow metering solutions," an official statement said.

Advanced Systek offers its midstream and upstream oil and gas industry customers total terminal management and flow metering solutions, including design, engineering, supply, installation, commissioning and maintenance.

Tuesday, March 20, 2012: Psu Employee's Annual Pay Rises To Rs 6.6 Lakh In Fy11

The annual pay of a PSU employee on an average increased by 13.7 per cent to Rs 6.6 lakh in 2010-11, the Public Enterprises Survey for 2010-11 has revealed.

According to the survey tabled in Parliament the per capita emoluments of state-owned units' employees increased to Rs 6.6 lakh in 2010-11 from Rs 5.8 lakh in the previous fiscal.

Despite the increased payouts, the profit-making Central Public Sector Enterprises (CPSEs) managed to increase their net profits by 4.92 per cent to Rs 1.13 lakh crore in the fiscal, compared to Rs 1.08 lakh crore in 2009-10, it said.

Monday, March 19^TH 2012:‘Present situation not right for rate cut', HDFC BANK

The second largest private sector lender HDFC Bank has said the present situation is not conducive for rate cuts but further reduction in Cash Reserve Ratio (CRR) could lead to lower interest rates.

"As far as reduction in interest rate is concerned, if there are more CRR cuts, it will happen. Because, given the inflationary environment, we can't reduce the deposit. Also, the call rates are high due to shortage of liquidity," managing director and chief executive Aditya Puri said.

He also said if the RBI cuts the cash reserve ratio by another 1 percentage point in next one month, banks will start slashing their base rates. "In my opinion, if the RBI cuts CRR by 100 bps...the banking system on its own will reduce interest rates. So, CRR is more important at this point of time than policy rate cuts."

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Budget 2012-IMPACT ON IT/ITES SECTOR

The budget 2012-13 disappointed many as it has no fresh proposals for the USD 100 billion Indian IT-BPO sector even as the industry's request to exempt SEZ income from Minimum Alternative Tax has been ignored. 

The IT/ITeS industries have added 7.96 lakh jobs in the Indian economy during the one year period ending September 2011, according to the Economic Survey 2011-12. However, FY 2011-2012 witnessed a drop in hiring in the IT industry while ITeS remained robust with a rise in the number of jobs. 

According to the Timesjobs.com RecruiteX Quarterly Report (Jan-Mar 2012), the IT industry index dropped 13 points compared to the 5 point rise in the overall index. ITeS, on the other hand gained 17 points in the same period. The ITeS industry weathered the slowdown with a strengthening of the business in the domestic market.

Thus the budget should have focused on to bring back business confidence. The key area of focus for the IT sector in the upcoming budget should have been the stabilization/ rationalization of taxes so that these funds can be used for R&D and also retaining the talent in the company. From an indirect tax perspective, a clear-cut and rational timeline for the implementation of Goods and Services Tax was hoped for in this Budget

The budget is disappointing on various accounts

1) There is no focus on putting the economy on a high growth trajectory. Fiscal deficit reduction is through higher taxation, rather than expenditure management.

2) There is no roadmap on implementation of the Direct Tax Code and Goods and Services Tax. Issues of tax simplification, litigation too have not been addressed

3) The minimum alternate tax (MAT) introduced in the last Budget is adversely impacting the viability of investments already made, but this has not been removed.

4) Transfer pricing litigation and lack of clarity has been a major burden for the sector. The finance minister has announced introduction of the advance pricing agreement (APA) from next fiscal. However, APA is a long drawn out process and it is not clear how the current issues will be resolved. Transfer pricing regulations have now been introduced for domestic transactions, further increasing the complexity.

Here is a compilation of expert view on the impact of union budget on IT/ITES sector-

Hanuman Tripathi, Group Managing Director, Infrasoft Technologies Limited:

The Finance Minister has announced no benefits for corporates. With global downturn, IT sector should have been given some benefits so as to boost the segment. The increase of service tax from 10 percent currently to 12 percent will cause further burden. Delay in GST implementation is merely increasing problems. There is a commitment of government to IT enable several sectors like LPG distribution, payments for government schemes and continued investments in Aadhar (UID) which is heartening to note as it will create more projects in domestic IT business. All in all, the relevance of doing Annual Budgeting exercise by putting so much of government focus and expenditure is increasingly getting lost as no substantial landmark changes have come forth in budgets for years now; something that will boost corporate performance or bring prices down in the country.

Richard D’souza - CEO, Melstar Information Technologies:

The increase in the service tax rate is definitely a mood dampener for the IT industry but it may not have a significant business impact as users of IT services are essentially companies in which such services are being increasingly used in mission critical applications.

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