Saturday, May 9, 2009

Is US tightening of H-1B visa rules for Indians justified?

Indian professionals aspiring to go to the US to work may now find it more difficult to get H-1B visas with Washington deciding on stricter screening following complaints of misuse of the facility.

Acting on the complaints, the US has adopted “fraud prevention tactics” to prevent such misuse. “We’ve added fraud prevention tactics. We’ve begun looking at other more standard fraud investigatory techniques that weren’t being used in H-1B that we are now going to employ. It includes things like sites visits and worksites visits,” Janet Napolitano, secretary of the Department of Homeland Security, said.

Testifying before the Senate Committee on Judiciary, Napolitano said over the last month, the Department has added some tools to rigorously enforce H-1B visa programme and prevent fraud.

Napolitano comment’s on H-1B visa programme came in response to a question from senator Richard Durbin, who along with senator Chuck Grassley, has introduced a legislation in the US Senate in this regard. Senator Durbin alleged that most of the H-1B visa fraud is being done by companies in India.

“The most outrageous abuses when it comes to H-1B visas include the fact that some major companies overseas, primarily in India, have successfully managed to marshal many of these H-1B visas and make a profit off them,” Durbin said.

“They charged the citizens of India coming to the US on H-1B visas and after three to six years, when they are to return to India, they charge to place them in companies which will then compete with the US,” he alleged.


Friday, May 8, 2009

Will Internet die by 2010?

Video killed the radio star. But could it also kill the Internet? New research from American analyst firm Nemertes Research Group says that by 2010, increasing Internet traffic, particularly video applications like YouTube and Hulu, will fatally clog the tubes.

This isn’t the first such prediction that has been made in the recent past: Brett Swanson of the Discovery Institute, a think tank, warned in 2007 of a coming surge of data that “today’s networks are not remotely prepared to handle”. So are the increasingly dire predictions of the demise of the Internet on the mark, or have rumours of the Net’s death been grossly exaggerated?

It is true that with the advent of Web 2.0, Internet usage has shifted to bandwidth-heavy applications like YouTube and Skype. The amount of traffic generated by YouTube in 2006 was more than that of the entire Internet in 2000. At 50-60 percent a year, the current growth of Internet traffic is enormous. However, several experts believe that the Internet is in no danger of collapsing under the weight of its own success.

Andrew Odlyzko, a computer scientist at the University of Minnesota who specialises in analysing historical trends in networking, believes that global Internet traffic is and will remain manageable with modest capacity updates.

There is some evidence to support that conclusion. For one, telecom companies in both Britain and America are already investing significant amounts in order to upgrade Internet infrastructure, including the last mile cable, to increase capacity. Secondly, the Internet was originally developed to withstand all kinds of catastrophes and has proven to be remarkably robust. It has coped with massive growth over the past 15 years. There’s no reason to suppose this can’t continue.

Anyway, engineers are preparing for the worst by working to replace the Internet with a superfast ‘grid’. So, even if capacity updates fail to keep pace with demand, an alternative will be in place. No one is suggesting that the Internet wouldn’t face operational difficulties if it was left just as it is.

The debate is over whether the rate of investment in capacity upgradation is fast enough to cope with rising demand. Studies like this can provide an impetus for telecom majors to invest in infrastructure. As of now, though, it’s safe to assume that the Net will be with us for a while more.


Oracle won't divest Sun's hardware business, assures Ellison

Oracle Corp Chief Executive Larry Ellison said he won't sell off Sun Microsystems Inc's hardware business, dispelling speculation that he only wanted the company for its software units.

Ellison shook up Silicon Valley last month by sealing a more than $7 billion deal to buy Sun, the world's No 4 maker of server computers and also the developer of Java and Solaris software. Oracle unexpectedly swooped in after Sun's talks with International Business Machines Corp broke apart.

"We are definitely not going to exit the hardware business," Ellison said in an email interview with Reuters. "If a company designs both hardware and software, it can build much better systems than if they only design the software. That's why Apple's iPhone is so much better than Microsoft phones."

His comments fly in the face of the belief of some analysts that Oracle, the world's largest database software maker, may divest Sun's server business and retain just its software assets, such as Java and Solaris.

Oracle's steadily rising profit margins have impressed Wall Street in recent years, and analysts say it is a risky move for it to buy Sun, which has lost $2 billion in the first three quarters of its current fiscal year.

Ellison declined to respond to a question on what he would do if efforts to turn around Sun's computer server business run into trouble. Sun's losses have piled up after losing market share to IBM as well as Hewlett-Packard Co.

His comments may reassure businesses that were hesitant to buy Sun hardware due to uncertainty over its future, said Charles King, an analyst with Pund-IT Research.

"There has been some speculation that Oracle is going to auction off Sun by bits and pieces to the highest bidder," King said. "You end up with customers, many of whom own millions or tens of millions of dollars of Sun hardware, looking for another vendor to deal with."


Ellison said he plans to boost investment in Sun's SPARC microprocessors, which serve as the brains in its line of high-end Unix computers. The biggest buyers of these servers are large corporations and government agencies.

He believes that by jointly developing Oracle's existing arsenal of software with Sun's computers and SPARC chips, they can build machines designed for specific purposes that work better than ones pulled together from separate components.

Oracle has sought to do this in the past through partnerships with hardware makers, including HP.

"Once we own Sun, we'll be able to plan and synchronize new features from silicon to software, just like IBM and the other big system suppliers," Ellison said in the interview.

Oracle plans to work with Japan's Fujitsu Ltd, which helps Sun design its SPARC microprocessors, to add new features that will improve the performance of Oracle's database software when used on Sun's servers. That will make Sun hardware more competitive versus rival products from IBM than it is today, the CEO added.

The acquisition makes Oracle the world's fourth-largest maker of servers, and puts the software maker into the No. 2 slot in the high end of the server market, which was worth about $17 billion last year.


Ellison also said he intends to hold on to Sun's data storage business and its tape backup unit, which compete with EMC Corp and IBM.

"Sun was very successful for a very long time selling computer systems based on the SPARC chip and the Solaris operating system," he said. "Now, with the added power of integrated Oracle software, we think they can be again."

Sun rose to prominence in the 1990s but never fully recovered from the dot-com bubble burst in the early 2000s, when demand for its high-end servers cratered.

Laura DiDio, an analyst with ITIC, said Oracle may be able to help Sun recapture the cache it once claimed as one of the world's most-respected technology companies.

"Sun has three decades and billions of dollars in investment in superlative hardware. They have some brilliant engineers," she said. "But Sun's marketing has not matched its technology. Larry Ellison is brilliant at marketing."


Thursday, May 7, 2009

Any kind of protectionism is harmful, says Honeywell chief

Any kind of protectionism is going to be harmful for the world economy, a top official of Honeywell International, a Fortune 100 Global diversified technology and manufacturing firm, said on Thursday.

"Any kind of protectionism in India or China or elsewhere is very harmful or worrisome for the global economy", said David Cote, Honeywell's Chairman and CEO, reacting to US President Barack Obama's
announcement about end of tax incentives to companies which create jobs overseas in places like Bangalore.

" I am not against creating jobs anywhere. I do know that anything that stops globalisation activity, any protectionism will be very harmful", he told reporters here.

"A great number of businesses would be seeing protectionism as negative, as bad. And I do hope that people in the Congress (US Congress) realise that you can't love jobs and hate people who create them", he said.

He said Honeywell's new "green diesel" has already been used in test flights in New Zealand.

"The green diesel, which is a drop-in diesel, which can be made from plants like algae has already flown test flights in New Zealand", he said to a query on the firm's speciality materials business.

"We have also come up with a new fertiliser called Ammonium Sulphate Nitrate", he said.


Have computer sales dipped by 12%; As cos cut IT spends

Personal computer (PC) sales in India fell about 11.7% during the first quarter of the calendar year to about 2.1 million units as enterprises slowed down IT spending, according to research firm Gartner.

Both desktop PC and laptop sales declined about 11% during the period, as both large enterprises and small and medium businesses delayed their IT hardware purchases.

“Cost pressure seems to have kept away enterprises from spending on IT hardware during the first quarter of 2009, while there are signs of some turnaround in the consumer sentiment,” Gartner principal analyst Diptarup Chakraborti said.

Hewlett-Packard continued to lead India’s PC market, selling about 300,000 PCs in the quarter. The PC maker, however, saw an year-on-year decline in both desktop and laptop sales during the period. HCL Infosystems (200,000) and Dell (158,000) were ranked second and third, respectively. Acer was ranked fourth.

Gartner said it expects PC sales in India to decline 3.7% year-on-year to 8.98 million units this year. The firm had projected sales of 11 million units for the calendar year in the beginning of January, but the first quarter made it revise its projection downwards.

“Production of desktops and laptops has come to near a halt in manufacturing destinations such as Taiwan,” Mr Chakraborti said. PC makers say they saw some growth in new categories, such as netbooks and higher retail sales, in the first quarter but the good news is limited to the consumer space.

“Large enterprises and small and medium businesses are not buying. The e-government projects are also in a limbo with the Model Code of Conduct in place,” Acer India chief marketing officer S Rajendran said.

With the slowdown in enterprise spending, corporate buyers are expected to account for 69% of total PC sales in 2009, down from 71% last year.

The economic slowdown has resulted in a slump in PC sales across the globe. Worldwide PC shipments declined 6.5% in the first quarter of 2009 to 67.2 million units. As per Gartner, the decline could have been steeper but for low-priced laptops such as netbooks.


Wednesday, May 6, 2009

Has US companies cut 4,91,000 jobs during April 2009?

In a possible sign that the worst may be over for the country's labour market, a new report shows that American private companies slashed as many as 4,91,000 jobs in April, much less than expected.

The latest ADP National Employment Report showed that non-farm private employment fell 4,91,000 from "March to April 2009 on a seasonally adjusted basis".

Experts were expecting that the decline would be more than 6,00,000.

"The estimated change of employment from February to March was revised by 34,000, from a decline of 742,000 to a decline of 7,08,000," ADP said in a statement on Wednesday.

According to the report, private employment in the service-providing sector plunged by 2,29,000 in April. During the same period, jobs in the goods-producing segment decreased 2,62,000 while that in the manufacturing sector dropped by 1,59,000.

Last month, construction employment dropped 95,000, which was also the "smallest" in nearly six months.

"This was its twenty-seventh consecutive monthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1,261,000. April's decline, however, was the smallest since November of 2008," the statement said.

Large businesses, defined as those with 500 or more workers, witnessed their employment decline by 77,000 whereas medium-size businesses -- having between 50 and 499 workers -- skid by 2,31,000.

Further, small-size entities, which have less than 50 workers, saw a fall of 1,83,000 in employment.

"The employment declines among medium-and small-size businesses
indicate that the recession continues to spread beyond manufacturing and housing-related activities to almost every area of the economy," it noted.

The report sponsored by ADP is maintained by Macroeconomic Advisers, LLC and it is a measure of employment derived from an anonymous subset of roughly 5,00,000 US business clients.

In the last six months of 2008, the subset represented nearly 4,00,000 US business clients representing nearly 24 million American employees working in all private industrial sectors, ADP said.


Obama remark on Bangalore misinterpreted, says Nasscom chief

US President Barack Obama's remark that American firms were shipping more jobs to Bangalore than creating them in Buffalo (in New York state) had been "misinterpreted", an IT industry lobby said here on Wednesday.

"Nothing much should be read about Obama's comment on Bangalore and Buffalo. I think his remark has been misinterpreted. What he said was of the additional revenue he would get from his tax reform proposals, he would invest some of it in research and training so that more jobs get created," Som Mittal, president of the National Association of Software and Services Companies (Nasscom) told reporters.

Contending that the current US tax system gave US-based multinationals shipping jobs to places like India an unfair advantage over domestic rivals, Obama Monday announced plans to reduce tax breaks for them.

"It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, spelling out his proposals to close corporate tax loopholes and crack down on overseas tax havens.

Allaying fears of job losses or decline in outsourcing or off-shoring, Mittal said the Obama proposal was not about India but how American subsidiaries were structured overseas in light of the taxation method followed by US firms over the years.

Admitting that Obama's protectionist measure was a matter of concern for the industry, Mittal asserted that Nasscom would study the proposal to assess what impact it would have on outsourcing or off-shoring and do the needful if the bill got drafted.

"The good part is that we have a voice. If we see that it's impacting us in any way, as the bill gets drafted, we will do the needful," Mittal said.

The US accounts for about 60 per cent ($30 billion) of the $50-billion IT export revenue from India. About 70 per cent of the export revenue is generated by Indian firms and the remaining by multinational captives or third party vendors in the sub-continent.

Endorsing Mittal's views, former Nasscom president and Satyam board chairman Kiran Karnik said he was sceptical about Obama's tax proposal becoming a law.

"It (tax reform bill) is unlikely to become a law as US firms will be the hardest hit. Obama's proposal is of concern because it's a sign of protectionism. In the recent G-20 meeting in London, world leaders said they were against protectionism," Karnik said.

In a lighter vein, a leading IT firm head said Obama seemed to have got his geography wrong as he should have mentioned Beijing instead of Bangalore since more manufacturing jobs were shipped to China than to India over the years.

"Looks like Obama got his geography wrong. Jobs are not going to Bangalore but Beijing, as manufacturing jobs are going to China and not India. Only 1000-2000 back office jobs have come to India," the official said on anonymity.


Tuesday, May 5, 2009

Is Citigroup looking at new ways to pay employees?

Citigroup may put more employees on commission or offer them larger base salaries as it tries to retain key staffers without running afoul of laws limiting executive pay at banks that receive government funds.

Three people familiar with the matter said the bank has examined a series of possible moves, including special stock-based bonuses, or offering employees a percentage of their group's revenue.

Banks across Wall Street are struggling to reward top performers without violating an amendment to the 2009 stimulus package limiting executive pay. That amendment calls for the Treasury Secetary to review compensation of top employees at any major recipient of funds from the government's Troubled Asset Relief Program.

Bonuses are expected to face particular scrutiny after Wall Street firms paid $18.4 billion of bonuses in 2008, a year in which the U.S. financial sector required more than $1 trillion of government support.

Some banks, most notably Goldman Sachs Group Inc, hope to repay their TARP funds as soon as possible, in part to avoid having to comply with pay limits.

Citigroup, which has received $45 billion of TARP capital and is not believed to have much hope of paying the government back anytime soon, is having discussions with the government about measures that might be appropriate for retaining revenue producing employees.

A number of possibilities are under discussion, and generally are geared toward ensuring that employees are motivated to perform well. The No. 3 U.S. bank will have a better sense of how to proceed once the Treasury Department crafts more specific guidelines on pay, one person said.

Of particular concern is the Phibro business, which has been extraordinarily profitable. If Citigroup cannot find ways to compensate people there, the energy trading business may be spun off, sold, or opened to outside investors, a person familiar with the matter said. News of this possibility was first reported in the Wall Street Journal.

The Wall Street Journal also reported that Citigroup had asked the Treasury Department for permission to pay special bonuses to key employees.
One scenario discussed internally would be a one-time bonus paid to employees mainly in stock that would vest over at least three years.

Citigroup spokesman Stephen Cohen said in an emailed statement that the bank has not presented Treasury with any specific plan for staff retention or special cash payouts.

"Citi continues to examine ways to ensure its employee compensation practices are competitive in this very challenging market environment," Cohen said in the statement.

The alternatives that Citigroup is considering to standard discretionary bonuses still have flaws with them, experts said.

Commissions, for example, only work well for professionals in sales positions, and even then can lead to conflicts over which sales person was responsible for a deal. Giving percentages of revenue could result in outsized paydays
if a business outperforms, which could lead to public outcry.

"There's no perfect answer to this issue," said Michael Holland, founder of Holland & Co, which oversees more than $4 billion.


But banks have every incentive to figure out how to retain their top staff. On Monday, a source said two equity traders and a salesman from Bank of America Corp (BAC.N) moved to hedge fund giant Citadel Investment Group. Foreign banks such as Deutsche Bank (DBKGn.DE) have also been able to hire employees from U.S. competitors.

In fact, banks that are not profitable will likely have trouble from a political standpoint paying employees anything but stock in bonuses, while banks that are profitable will likely look to repay TARP as quickly as possible to eliminate restrictions they face.

"I just don't think all this planning for other ways to pay people will amount to anything," said Paul Sorbera, a recruiter at Alliance Consulting in New York.

But for now, banks are concerned about retaining staff, and ensuring they are properly motivated.

"If we can't pay people competitively, we can't expect them to stay here," said one bank executive.


India publishing BPO industry to cross $ 1.2 billion, says ValueNotes

A recently released report by ValueNotes estimates that the Indian publishing BPO industry is expected to grow to a value of $ 1.2 billion by 2012.

This growth is expected to come from rise in the number of publishing companies that will outsource - which include traditional segments such as STM/Academic, Educational & Legal Publishing, as well as new segments such as magazines, corporate and B2B publishing.

India continues to remain the favored publishing BPO hub - with 35,550 people in direct employment, and revenues worth $ 660 million as of end-2008. While revenues are expected to cross $ 1.2 billion by 2012, the total employee strength is estimated to cross 55,000 by 2012.

Publishing outsourcing includes a wide range of services. The four broad heads include content, design, technology and 'other' services.

Content continues to drive the industry and contributes to 72 per cent of the total industry revenues.

Over the last couple of years, services offshored have undergone a transition - from low value services such as tagging, editing existing designs, copy editing to high value services such as original designs, testing and assessment and e-learning tools.

There has been an influx of technology in the industry that has enhanced productivity, workflow management and most importantly reduced costs and turnaround time.

According to Arun Jethmalani, CEO, ValueNotes, "Most providers have access to similar technology, however the differentiator has really been the capabilities developed around workflow and innovation. Today's technology will become tomorrow's standard and constant innovation will differentiate the winners."

Aradhana Kolhatkar, lead analyst, Publishing Services, ValueNotes, said: "Indian players are shifting focus from the matured STM segment to the more lucrative segments in the publishing market. We believe that educational, magazines, corporate/B2B, trade and e-books will be attractive segments over the next 3-4 years. Indian service providers can extend their current capabilities to service these upcoming opportunities."

Based on exhaustive primary research and analysis of this sector, ValueNotes has identified and established that there are over 140 vendors in the publishing offshoring industry. Of these we have identified SPi, Aptara, Integra and Laserwords as frontrunners in the industry.

ValueNotes Database is a leading provider of business intelligence and research, with expertise across selected domains and types of customer needs. Working with clients across the globe, we have significant understanding of international markets.


Monday, May 4, 2009

Dell-Acer is attractive merger, feel analyst

The personal computer industry may be ripe for a wave of consolidation, with a marriage of Dell Inc and Acer Inc seen as a particularly smart deal, according to an influential Wall Street analyst.

"Among the 10 top PC vendors, we believe that a Dell/Acer combination makes the most sense," Sanford C. Bernstein & Co analyst Toni Sacconaghi said in a client note on Friday.

If Dell were to buy Acer for a 20 percent premium, or about $5.7 billion, it would boost Dell's annual revenue growth sharply and add 12 cents a share to annual profit, he said.

The PC industry is commoditized and remains fragmented. Consolidating could help companies score better pricing from component vendors and contract manufacturers, as well as cost savings in areas such as human resources, he said.

"We view PC vendors as analogous to retailers, where our research suggests that the largest and operationally most efficient have garnered outsized profits relative to their peers," Sacconaghi wrote in his report.

Acer has a strong share of the portable computer market outside the United States, which would provide Dell with exposure to faster growth markets, he added.

Sacconaghi said buying Acer might also be beneficial to top PC maker Hewlett-Packard Co, but not as much as it would to Dell.

"While an HP-Acer combination might provide similar scale and synergy benefits, end market complementarity would not be as high," he said.

According to research firm Gartner, Dell and Acer were in a virtual tie for second place in the first quarter in market share in the United States.


Microsoft's Windows 7 free for 13 months

Microsoft Corp released a near-final version of the Windows 7 operating system to a large group of technology-savvy testers that adds a few new features, including a way to run Windows XP applications.

The Windows 7 `release candidate' will be available for anyone to download and try out on May 5. The release candidate is typically the version used by Microsoft's corporate customers to test how the new system will work for them. Software developers, hardware makers and other partners also base their next-generation products on this version because they trust that it's stable and close to finished.

Windows 7 RC, slated for download by MSDN and TechNet subscribers by the general public on May 5, doesn't expire until June 1, 2010, Microsoft confirmed.

The spokeswoman, however, refused to comment why the company is giving users such a long free pass for the software.

The 13-month life span of Windows 7 RC is longer than the time limit Microsoft put on Vista’s release candidates.

The software giant published the Vista release candidate about five months before the final version went on sale. If Windows 7 were to follow the same trajectory, it could be available by the start of October. Officially, Microsoft expects to start selling Windows 7 by the end of January 2010, but has said this week that it is possible it could launch in time for the holiday shopping season.

The software maker is counting on Windows 7 to win over businesses that put off upgrading to Vista, which got off to a rough start because it didn't work well with many existing programs and devices.

And Microsoft drew criticism from consumers when many computers advertised beforehand as ``Vista capable'' were actually too weak to run Vista's highly touted new interface and other features. People who wanted to upgrade Windows XP computers found their graphics cards and other components weren't up to the task.

The new system is already set up for a smoother debut because it shares much of Vista's underlying technology, which means hardware and software makers have had more than two years to catch up to a more demanding set of requirements. And Microsoft has pushed the notion that the high-end version of Windows 7 will run on many more computers than Vista, including tiny, low-powered laptops called netbooks. Today, Microsoft sells Windows XP, a much less profitable version of its operating system, to PC makers like Dell Inc. and Hewlett-Packard to install on Netbooks.

Microsoft revealed that the basic requirements for running a high-end version of Windows 7 aren't much different from those needed to run the bulkier versions of Vista. However, critics said the Vista requirements for memory and other components should have been set higher, and Microsoft says Windows 7 is better at managing memory and not bogging down less-powerful machines.

Microsoft unveiled a few new features in the release candidate that didn't exist in the January beta, including something called Windows XP Mode. The feature, available for the release candidate as a separate download, will let people run many XP-era programs from a Windows 7 computer.

The release candidate also adds a way for people to access music and other media files stored on their home PC over the Internet from other Windows 7 machines.


Will major clients continue to stay with Satyam?

In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA who were on wait and watch mode have assured to continue business with the firm.

"Clients such as Nestle and Nissan has already expressed their confidence in the company and had assured us that they will continue with us," an official privy to the development said. Nestle have also given some additional business to the Satyam last month, the person added further.

One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments. Analysts had feared that post the acquisition of the firm by Tech Mahindra clients of Satyam who were sitting on the fence would jump to other vendors.

However, post the acquisition some of the companies had expressed confidence in the entity and pledged to continue business with them. Auto major Nissan for whom Satyam provides application management had also said that they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA.

Moreover, United Kingdom, Switzerland and Germany who have earlier imposed some strict norms on Satyam employees for getting Visa have eased them. Post Satyam crisis, employees of Satyam were asked to be present in person and appear for visa interviews.

However, now they have eased the norms and the employees need not be present for the interview in person. Satyam Computers plunged into crisis after its founder B Ramalinga Raju in January admitted to have cooked the books of the company for year.

In April, information technology firm Tech Mahindra announced to acquire a 51 per cent stake in the beleaguered firm for Rs 2,900 crore. Earlier, the government-appointed chairman of Satyam Kiran Karnik had said that though some clients have left the company but at the same time Satyam have got some new work as well.


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