Credit Suisse and Nomura Holdings announced big job cuts on Thursday, further evidence the global financial crisis is unrelenting for an industry battered by heavy losses and weak markets.
The 5,300 layoffs by the Swiss bank and a further 1,000 in London by Japan’s biggest broker are the latest in the global financial sector which has now seen over 150,000 jobs culled since September when Lehman Brothers filed for bankruptcy.
Of these, more than 50,000 were at Citigroup, which has made more writedowns than any other bank in the world during the crisis.
While the axe had been falling for months in the industry, Lehman’s fall sparked carnage in financial markets and reshaped the industry landscape, resulting in job losses from New York to Singapore to Mumbai. “I don’t think people really know what’s next. It depends on sentiment, which will in turn drive credit markets, which in turn will weigh on banks or not,” said a London-based equities trader.
From the United States to Asian export giant Japan to European powerhouse Germany, the world’s top economies are now in recession as the global crisis deepens.
They are not the only ones with Singapore, New Zealand and Hong Kong also joining in. The losses at banks are increasing. Credit Suisse said on Thursday it made a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.
It has already cut 1,800 jobs this year and said this week it would cut 650 investment banking jobs in Britain. “Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction,” the bank said.
Credit Suisse’s shares jumped 8% in European trade in a broader market up 1.6%.
In Asia, Nomura, Japan’s biggest brokerage, said the decision to cut as much as 22% of its London staff followed an internal review after the purchase of the Asian, European and Middle Eastern assets of Lehman Brothers.
Nomura had said the purchase of parts of Lehman Brothers would help the Japanese brokerage achieve its profit target despite poor financial market conditions. “This is a natural move,” said Azuma Ohno, a brokerage analyst at Credit Suisse Securities in Japan.
“Once Nomura bought Lehman, it cannot continue Japanese-style life-time employment. It needs to be flexible in costs to be profitable.”Australia’s top investment bank, Macquarie Group, is cutting 10 to 15% of its jobs in Asia, two sources said last week.
Banks are axing jobs across Asia and even in countries such as India, where investment bankers were snapped up feverishly in the last few years in anticipation of strong initial public offerings and M&A markets. “The layoffs will come in phases and will stretch into 2009,” said Singapore-based Will Tan of Webbe International, an executive search firm specializing in the financial sector.
The job cuts from Nomura and Credit Suisse came a few hours after a report of layoffs at Bank of America. Bank of America CEO Kenneth Lewis said the bank is in the “final stage of our analysis” for planned job cuts following its purchase of Merrill Lynch, the Charlotte observer said on its website on Wednesday. Layoffs have also gathered pace at fund management firms.
State Street, one of the world’s biggest institutional money managers, said on Wednesday it plans to lay off as many as 1,800 people, or 6% of its staff, in the first three months of 2009. Private equity firm Carlyle Group is cutting about 100 jobs — around 10% of its staff — a source familiar with the situation said. The reductions are the first major cuts made by a large US private equity firm since the global economic crisis hit.
Middle market investment bank Jefferies Group will slash nearly 15% of its employees worldwide and close offices in Dubai, Singapore and Tokyo as it contends with heavy losses for 2008.
Source: Reuters
Friday, December 5, 2008
AT&T likely to cut 12,000 jobs
AT&T, the largest US phone company, will cut 12,000 jobs, striving to trim expenses as the US economy falters. The reductions amount to about 4% of the workforce, Dallas-based AT&T said on Thursday in a statement.
The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.
AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.
The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.
Source: Agencies
The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.
AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.
The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.
Source: Agencies
Recession times, HP freezes on pay hike!
Hewlett-Packard, the world’s largest personal-computer maker, is freezing salaries as part of chief executive officer Mark Hurd’s efforts to contain costs, people familiar with the plan said.
Employees have been notified by e-mail that they won’t receive a salary increase in fiscal 2009, which began in November, according to two people who asked not be identified because the message was confidential. The only exceptions will be in countries where pay freezes are illegal, the two people said.
Hurd has cut jobs, closed offices and merged data centers to lift profit, even as he expands through acquisitions. Hewlett-Packard also is limiting travel, curtailing hiring and eliminating favorite science projects to save on research costs in 2009, chief financial officer Cathie Lesjak said last month on a conference call. Hewlett-Packard, which has 3,20,000 employees, declined to confirm the salary freeze.
In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible, said spokeswoman Emma McCulloch. HP has a longstanding and disciplined approach to managing costs in order to invest in the company’s growth.
Hurd, who became CEO in 2005, received $25.3 million in total compensation in fiscal 2007. Worldwide technology spending growth will slow to 2.6% next year, less than half the rate initially predicted, research firm IDC said last month. Growth in the US will decelerate to 0.9%, the Framingham, Massachusetts-based company estimated.
Hewlett-Packard’s PC sales, which account for about a third of revenue, rose 10% to $11.2 billion last quarter, beating some estimates. Demand for notebooks offset declining printer sales in a shrinking economy. Last month, Hurd forecast a rise in profit to as much as $4.03 a share this fiscal year, more than the $3.89 anticipated by analysts in a Bloomberg survey. Investors took that as a sign the company is prepared to squeeze more profit out of sales as customers reduce spending.
It will be a challenging environment and were planning on such, Hurd, 51, said on a November 23 conference call with reporters. We can only control the things we can control, which is our cost structure and the competitiveness of our products.
Also in India
A HP employee in Bangalore said that employees in India too had received a mail from the company saying there wouldn’t be any salary increase in fiscal 2009. Salary increases in India’s technology sector have been amongst the highest in the world in the past few years. If HP does not hike salaries in fiscal 2009, this would be the first time in many years that a major technology company in India would be avoiding a salary increment.
Source: Agencies
Employees have been notified by e-mail that they won’t receive a salary increase in fiscal 2009, which began in November, according to two people who asked not be identified because the message was confidential. The only exceptions will be in countries where pay freezes are illegal, the two people said.
Hurd has cut jobs, closed offices and merged data centers to lift profit, even as he expands through acquisitions. Hewlett-Packard also is limiting travel, curtailing hiring and eliminating favorite science projects to save on research costs in 2009, chief financial officer Cathie Lesjak said last month on a conference call. Hewlett-Packard, which has 3,20,000 employees, declined to confirm the salary freeze.
In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible, said spokeswoman Emma McCulloch. HP has a longstanding and disciplined approach to managing costs in order to invest in the company’s growth.
Hurd, who became CEO in 2005, received $25.3 million in total compensation in fiscal 2007. Worldwide technology spending growth will slow to 2.6% next year, less than half the rate initially predicted, research firm IDC said last month. Growth in the US will decelerate to 0.9%, the Framingham, Massachusetts-based company estimated.
Hewlett-Packard’s PC sales, which account for about a third of revenue, rose 10% to $11.2 billion last quarter, beating some estimates. Demand for notebooks offset declining printer sales in a shrinking economy. Last month, Hurd forecast a rise in profit to as much as $4.03 a share this fiscal year, more than the $3.89 anticipated by analysts in a Bloomberg survey. Investors took that as a sign the company is prepared to squeeze more profit out of sales as customers reduce spending.
It will be a challenging environment and were planning on such, Hurd, 51, said on a November 23 conference call with reporters. We can only control the things we can control, which is our cost structure and the competitiveness of our products.
Also in India
A HP employee in Bangalore said that employees in India too had received a mail from the company saying there wouldn’t be any salary increase in fiscal 2009. Salary increases in India’s technology sector have been amongst the highest in the world in the past few years. If HP does not hike salaries in fiscal 2009, this would be the first time in many years that a major technology company in India would be avoiding a salary increment.
Source: Agencies
Thursday, December 4, 2008
Infosys Technologies will freeze new recruitments
Infosys Technologies will freeze recruitment after meeting this fiscal year's target of hiring 25,000 staff, a telling sign the Infosys global downturn is hitting India's $52 billion outsourcing sector.
India's second largest software services firm however has no plans to cut jobs and is sticking with its third quarter outlook, CEO Kris Gopalakrishnan told reporters.
He said the outsourcing sector's growth rate would halve next year as some customers delay orders.
"Last year the IT industry grew more than 30 percent, this year it is looking at somewhere in the region of 15 percent," Gopalakrishnan said.
India's export-driven IT sector, used to a scorching pace of growth, has been hit by the financial crisis and recession in the United States, which contributes more than half their revenue.
In the last few years, the outsourcing industry has created tens of thousands of jobs, mainly attracting young workers, as global companies look to trim labour costs.
Infosys hired 16,000-17,000 employees in the first half of the fiscal year that began in April and would honour commitments to 6,000 under training, Gopalakrishnan said.
Infosys, which counts Goldman Sachs and Philips Electronics among its clients, cut its full-year dollar revenue outlook in October due to the worsening global downturn.
Gopalakrishnan said on Thursday the company would freeze fresh recruitment, apart from meeting specific skill needs.
"We will have to look at controlling our cost, controlling our expenses making sure that we run an optimised business. We will have to look at what are things we need to do in order to prepare ourselves for the recovery."
"Growth is coming more and more from emerging markets so hese are the things we need to prepare ourselves. We should not lose momentum in this slowdown," he said.
But Infosys still expects its strong client base and a weakening rupee to help it meet a forecast for December quarter earnings of $0.57 a share. The rupee has fallen nearly six percent so far this quarter against the dollar.
"Infosys is seeing further degradation of the demand environment, with headwinds from leadership changes at customers, a shrinking large deal pipeline .... Pricing pressure has emerged," CLSA Asia-Pacific said in a report this week.
India's second largest software services firm however has no plans to cut jobs and is sticking with its third quarter outlook, CEO Kris Gopalakrishnan told reporters.
He said the outsourcing sector's growth rate would halve next year as some customers delay orders.
"Last year the IT industry grew more than 30 percent, this year it is looking at somewhere in the region of 15 percent," Gopalakrishnan said.
India's export-driven IT sector, used to a scorching pace of growth, has been hit by the financial crisis and recession in the United States, which contributes more than half their revenue.
In the last few years, the outsourcing industry has created tens of thousands of jobs, mainly attracting young workers, as global companies look to trim labour costs.
Infosys hired 16,000-17,000 employees in the first half of the fiscal year that began in April and would honour commitments to 6,000 under training, Gopalakrishnan said.
Infosys, which counts Goldman Sachs and Philips Electronics among its clients, cut its full-year dollar revenue outlook in October due to the worsening global downturn.
Gopalakrishnan said on Thursday the company would freeze fresh recruitment, apart from meeting specific skill needs.
"We will have to look at controlling our cost, controlling our expenses making sure that we run an optimised business. We will have to look at what are things we need to do in order to prepare ourselves for the recovery."
"Growth is coming more and more from emerging markets so hese are the things we need to prepare ourselves. We should not lose momentum in this slowdown," he said.
But Infosys still expects its strong client base and a weakening rupee to help it meet a forecast for December quarter earnings of $0.57 a share. The rupee has fallen nearly six percent so far this quarter against the dollar.
"Infosys is seeing further degradation of the demand environment, with headwinds from leadership changes at customers, a shrinking large deal pipeline .... Pricing pressure has emerged," CLSA Asia-Pacific said in a report this week.
Billionth mark for Logitech mouse
Even as the discussions are on whether the technology called 'mouse', which is celebrating its birthday on next Wednesday (December 10), would soon be an extinct species in another couple of years, leading mouse manufacturer Logitech announced that it has shipped its billionth mouse.
"We've just done something that makes us all very proud at Logitech – we've shipped our one billionth mouse. How cool is that!?," read a blog posting by Rory Dooley, senior vice president, Control Devices, Logitech. "When all of this started for Logitech back in the early '80s, the mouse was primarily a tool for CAD (computer-aided design applications). Since then, the mouse has become something much more – it is truly the key to the kingdom – the device that unlocked the power of the computer."
He said the mouse opened up computing to the average person by providing a simple, intuitive way to interact with the computer.
Logitech has enthusiastically driven nearly every major innovation in mouse technology – persistently refining this ubiquitous interface between people and their digital experiences, said a press release.
With more than a billion people currently using computers worldwide and another billion expected to begin using computers by 2014, according to a report by analyst firm Gartner, Logitech continues to pursue compelling innovation to delight users of the next billion mice and input devices of the future, it said.
Founded in a farmhouse in Apples, Switzerland in 1981 and shortly thereafter establishing strong ties in Silicon Valley, Logitech introduced its first retail mouse in 1985 and reached the 100 millionth mouse mark in 1996, the company said.
"Since the first click of the Logitech P4 mouse in 1982, Logitech mice have played an indispensable role in the evolution of the personal computer," said Gerald P. Quindlen, Logitech president and chief executive officer.
"During the last few decades, the way people use computers has changed dramatically – what was once strictly a business tool has become highly integrated into our personal lives," he added.
Quindlen said Logitech has continually pursued innovations to meet those changing conditions, introducing – in the last five years alone – the world's first laser mouse, hyper-fast scrolling and the nano-receiver.
In celebration of its billionth mouse, Logitech is launching a worldwide contest that invites people to follow the travels of this notable mouse – from the manufacturing line to its final destination – and to try to figure out where in the world it will end up.
Logitech also said that the mouse's journey will be chronicled on Logitech's blog, Blogitech (blog.logitech.com).
"We've just done something that makes us all very proud at Logitech – we've shipped our one billionth mouse. How cool is that!?," read a blog posting by Rory Dooley, senior vice president, Control Devices, Logitech. "When all of this started for Logitech back in the early '80s, the mouse was primarily a tool for CAD (computer-aided design applications). Since then, the mouse has become something much more – it is truly the key to the kingdom – the device that unlocked the power of the computer."
He said the mouse opened up computing to the average person by providing a simple, intuitive way to interact with the computer.
Logitech has enthusiastically driven nearly every major innovation in mouse technology – persistently refining this ubiquitous interface between people and their digital experiences, said a press release.
With more than a billion people currently using computers worldwide and another billion expected to begin using computers by 2014, according to a report by analyst firm Gartner, Logitech continues to pursue compelling innovation to delight users of the next billion mice and input devices of the future, it said.
Founded in a farmhouse in Apples, Switzerland in 1981 and shortly thereafter establishing strong ties in Silicon Valley, Logitech introduced its first retail mouse in 1985 and reached the 100 millionth mouse mark in 1996, the company said.
"Since the first click of the Logitech P4 mouse in 1982, Logitech mice have played an indispensable role in the evolution of the personal computer," said Gerald P. Quindlen, Logitech president and chief executive officer.
"During the last few decades, the way people use computers has changed dramatically – what was once strictly a business tool has become highly integrated into our personal lives," he added.
Quindlen said Logitech has continually pursued innovations to meet those changing conditions, introducing – in the last five years alone – the world's first laser mouse, hyper-fast scrolling and the nano-receiver.
In celebration of its billionth mouse, Logitech is launching a worldwide contest that invites people to follow the travels of this notable mouse – from the manufacturing line to its final destination – and to try to figure out where in the world it will end up.
Logitech also said that the mouse's journey will be chronicled on Logitech's blog, Blogitech (blog.logitech.com).
Here is how Google is cutting costs!
Feeling the pinch of the global economic slowdown and the US recession in particular, Google, the Internet search engine giant, is resorting to austerity measures, The Wall Street Journal reported.
Prominent among them include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. Such measure from Google, which is known for its generous perks, has come as a surprise to many industry watchers.
The latest Google measures are understandable as its revenue growth has slowed down dramatically over the past one year.
“We have to behave as though we don't know what's going to happen,” Google chief executive Eric Schmidt was quoted as saying by The Wall Street Journal.
The company will curtail the “dark matter,” Schmidt said, projects that “haven't really caught on” and “aren't really that exciting.”
Schmidt said the company is “not going to give” an engineer 20 people to work with on certain experimental projects anymore. Popular social networking site Orkut was a product of this experiment by Google. Schmidt, however, promised to get this back when things improve.
Google executives had started preparing for the slowdown about a year ago, but things have now accelerated. In recent weeks, Schmidt has held meetings with top executives to determine where to focus investment more narrowly, the Journal said.
Top priorities include display ads, which use graphics and appear on Web pages; advertising on mobile phones; and the company's online business software.
Schmidt says the company is shifting more engineering and sales resources to those areas, and away from less-promising projects. Teams on projects the company is merely "fiddling with," he says, will get "naturally smaller as people get plucked off,” the report said.
The Wall Street Journal said the financial crisis has created a new sense of urgency within the company. Top executives say they remain committed to projects they believe hold long-term potential, but are prepared to “starve” lesser ones.
Prominent among them include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. Such measure from Google, which is known for its generous perks, has come as a surprise to many industry watchers.
The latest Google measures are understandable as its revenue growth has slowed down dramatically over the past one year.
“We have to behave as though we don't know what's going to happen,” Google chief executive Eric Schmidt was quoted as saying by The Wall Street Journal.
The company will curtail the “dark matter,” Schmidt said, projects that “haven't really caught on” and “aren't really that exciting.”
Schmidt said the company is “not going to give” an engineer 20 people to work with on certain experimental projects anymore. Popular social networking site Orkut was a product of this experiment by Google. Schmidt, however, promised to get this back when things improve.
Google executives had started preparing for the slowdown about a year ago, but things have now accelerated. In recent weeks, Schmidt has held meetings with top executives to determine where to focus investment more narrowly, the Journal said.
Top priorities include display ads, which use graphics and appear on Web pages; advertising on mobile phones; and the company's online business software.
Schmidt says the company is shifting more engineering and sales resources to those areas, and away from less-promising projects. Teams on projects the company is merely "fiddling with," he says, will get "naturally smaller as people get plucked off,” the report said.
The Wall Street Journal said the financial crisis has created a new sense of urgency within the company. Top executives say they remain committed to projects they believe hold long-term potential, but are prepared to “starve” lesser ones.
40pc of large businesses cut their IT budgets
More than 40 percent of large businesses have cut their IT budgets this year due to the global economic slowdown, according to a new survey by Forrester Research. The Forrester Business Data Services report surveyed nearly 950 senior IT managers across North America and Europe regarding their IT services spending and overall services strategies and priorities.
The economy’s affect on IT spending is evident in some specific data points contained in the report: Forty-three percent of firms have already cut their overall IT budgets in 2008 in reaction to the slow down in the global economy, while 24 percent of firms have put discretionary spending on hold. Twenty-eight percent of respondents said the economy has had no impact on their IT budgets.
Asked how the economy will affect IT services spending, 70 percent of respondents said they will likely negotiate lower rates with suppliers, and 16 percent said they have already cut their IT services spending.
IT departments in the financial services industry were hit hardest — 49 percent of IT shops in the financial services sector have cut their budgets. At the other end of the spectrum is the media, entertainment, and leisure industry, where only 39 percent of respondents said they have had to reduce spending.
IT departments in North America have been affected by the economy more than their European counterparts: 49 percent of North American firms have cut their IT budgets compared with 31 percent of respondents in Europe; although it should be noted that the Forrester survey was fielded in Q2 2008 prior to the deteriorating economic conditions in Europe.
“This is not an across-the-board spending slowdown; the impact of the economy on IT budgets varies widely by industry and geography,” said Forrester Research vice president and principal analyst John C. McCarthy, who is in India at present for a workshop. “With regard to the services sector, the slowdown has firms renegotiating rates, being more selective in choosing vendors, and examining spending plans more thoroughly, but they are still expecting to pay more for services. The demand for enterprise IT services has not dropped significantly.”
Regarding the state of spending on enterprise IT services, the report illustrates a number of trends: The demand for services holds steady. Forty-five percent of firms plan to increase their use of applications outsourcing, while 43 percent of firms are increasing their use of infrastructure outsourcing. Forty-three percent of respondents said they are moving more work offshore.
Infrastructure outsourcing expects to grow. Convergent telecommunications and network management is a hot area of growth as 20 percent of firms will outsource this service in 2008.
Few firms have fully tapped into offshore resources. Only 9 percent of firms use offshore resources wherever and whenever possible. A growing number of firms are interested in exploring more offshore work, with 14 percent ramping up use, 19 percent piloting, and 22 percent not using offshore but actively tracking developments. Of those firms not sending work offshore, a majority cite the questionable quality of the work done.
Satisfaction with outsourcing remains low. While overall firms are satisfied with their decision to use a third party, 52 percent say their biggest challenge with existing IT services and outsourcing relationships is that cost savings are lower than expected. Other noteworthy challenges include inconsistent or poor service quality (40 percent) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35 percent).
The economy’s affect on IT spending is evident in some specific data points contained in the report: Forty-three percent of firms have already cut their overall IT budgets in 2008 in reaction to the slow down in the global economy, while 24 percent of firms have put discretionary spending on hold. Twenty-eight percent of respondents said the economy has had no impact on their IT budgets.
Asked how the economy will affect IT services spending, 70 percent of respondents said they will likely negotiate lower rates with suppliers, and 16 percent said they have already cut their IT services spending.
IT departments in the financial services industry were hit hardest — 49 percent of IT shops in the financial services sector have cut their budgets. At the other end of the spectrum is the media, entertainment, and leisure industry, where only 39 percent of respondents said they have had to reduce spending.
IT departments in North America have been affected by the economy more than their European counterparts: 49 percent of North American firms have cut their IT budgets compared with 31 percent of respondents in Europe; although it should be noted that the Forrester survey was fielded in Q2 2008 prior to the deteriorating economic conditions in Europe.
“This is not an across-the-board spending slowdown; the impact of the economy on IT budgets varies widely by industry and geography,” said Forrester Research vice president and principal analyst John C. McCarthy, who is in India at present for a workshop. “With regard to the services sector, the slowdown has firms renegotiating rates, being more selective in choosing vendors, and examining spending plans more thoroughly, but they are still expecting to pay more for services. The demand for enterprise IT services has not dropped significantly.”
Regarding the state of spending on enterprise IT services, the report illustrates a number of trends: The demand for services holds steady. Forty-five percent of firms plan to increase their use of applications outsourcing, while 43 percent of firms are increasing their use of infrastructure outsourcing. Forty-three percent of respondents said they are moving more work offshore.
Infrastructure outsourcing expects to grow. Convergent telecommunications and network management is a hot area of growth as 20 percent of firms will outsource this service in 2008.
Few firms have fully tapped into offshore resources. Only 9 percent of firms use offshore resources wherever and whenever possible. A growing number of firms are interested in exploring more offshore work, with 14 percent ramping up use, 19 percent piloting, and 22 percent not using offshore but actively tracking developments. Of those firms not sending work offshore, a majority cite the questionable quality of the work done.
Satisfaction with outsourcing remains low. While overall firms are satisfied with their decision to use a third party, 52 percent say their biggest challenge with existing IT services and outsourcing relationships is that cost savings are lower than expected. Other noteworthy challenges include inconsistent or poor service quality (40 percent) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35 percent).
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