Comment On Anything & Everything: October 2008

Friday, October 31, 2008

Motorola cuts 3,000 jobs

Motorola, the largest US mobile phone manufacturer, announced on Thursday the job cuts just hours after reporting a quarterly net loss of nearly USD 400 million

and said more than two-thirds of the layoffs would be in the handset division.

The Schaumburg, Illinois-based company said it suffered a net loss of USD 397 million in the third quarter of the year after reporting a net profit of USD 60 million for the same period last year.

Motorola lowered its forecast for the remainder of the year but said its cost-cutting moves would result in annual savings of some USD 800 million next year.

The ailing company had 66,000 employees worldwide at the end of 2007 and the latest job cuts bring the total number of layoffs since January 2007 to 13,000.

Bill to raise the FDI cap in insurance to 49 per cent

Finance Minister P Chidambaram on Friday announced the decision of the Union Cabinet, which met on Thursday night, to table a comprehensive bill to amend various laws relating to the insurance sector and among other things seek to raise the FDI cap to 49 per cent from 26 per cent now.

The Left parties criticised the decision as one that will demolish institutions that helped India withstand the impact of global financial crisis.

However, private sector insurers hailed the decision to amend the Insurance Regulatory and Development Act, 1999 to raise FDI limit in insurance from 26 to 49 per cent which would enable them to enhance capital for business expansion.

No meltdown job cuts, assure Tata Consultancy, Infosys

TCS and Infosys have clarified that they would not lay off any of their employees and their future recruitments would continue, Ashok Kumar C Manoli, principal secretary for information technology, biotechnology and science and technology of the Karnataka state government told reporters

Hyderabad Employs 200,000 IT Workers

It was in mid 1990s, the Andhra Pradesh government suddenly went into an introspection mode. The mission was to find out the reasons for not many IT companies willing to set up their offices in the state and they were all queuing in Bangalore for office space. The findings after a thorough research were interesting. The non-availability of human resource was one of the key reasons for companies not moving to Hyderabad despite the government willing to allot land either free or at nominal cost apart from various other incentives like concessions in power tariff. The power that be in the state government realized that the neighbouring state had several private engineering colleges and students from Andhra Pradesh too moving to the state for pursuing their engineering and finding an IT job in Bangalore. The migration of students coupled with the engineering pass-outs from Karnataka itself helped the state attract IT majors to Bangalore to set up their facilities. This helped the garden city get the distinction of being the Silicon Valley of India.
The Andhra Pradesh government too quickly moved in that direction and opened the gates for private engineering colleges and took several bold decisions to open up the state for a sort of education revolution. The information technology boom took shape in Hyderabad in 1999-2000 with the setting up an exclusive 146-acre Hitec City. The government's move was timed at making the HR readily available to the companies willing to explore the opportunities in Hitec City. And it worked. Today, the state has over 300 popular engineering colleges offering a wide range of courses including MCA. This boom in engineering education has encouraged IT and ITeS companies to shift their facilities to Hyderabad and today it estimated that the total number of companies operating in IT and ITeS space would be about 1,200 including the small and medium companies. About 2 lakh people depend directly on this sector in Hyderabad alone while the indirect employment would be about eight lakh.

Bangalore IT Jobs moving to Pune and Chennai

The growth of the IT sector in Karnataka has slowed down, lost jobs to other states and would lose more jobs in the days to come. Courtesy — the global meltdown and more importantly the apathy of the state government.

Infosys Technologies CEO S Gopalakrishnan and director (HR) T V Mohandas Pai said this on Thursday during the consultative meeting on "the implications of the global financial crisis on the state's economy'' convened by the state government.
According to Pai, the state has lost 45,000 jobs during the current fiscal year to places like Chennai and Pune. "Next year (2009-2010), around 30,000 to 35,000 jobs would be lost, if things don't change,'' he cautioned.

He compared employment generation in the IT sector in the previous year to the current year and predicted what would happen in the next financial year. "During 2007-08, 50,000 jobs were added and this year it would probably be around 35,000 jobs. But, in the next year, 30,000 to 35,000 jobs will be lost, if things don't change,'' said Pai. He said the IT industry provided direct employment to 5.5 lakh people and its exports from Karnataka stood at Rs 60,000 crore.
Gopalakrishnan admitted the IT sector had slowed down and it would affect recruitment. "IT sector will not be 'a best employer' for the next two years. Graduates in the next two years would be hit due to this. They won't find the IT sector attractive,'' he said.
What are the reasons? "IT is still growing and growth requires expansion. Growth is happening in other states, but not in Karnataka. It is this lack of growth which has impacted us,'' Gopalakrishnan said.

Pai blasted the government for the prevailing situation. He was of the view that Karnataka has a bad reputation for investments and multinational companies are not coming forward to invest here.
Both of them were of the view that clearances and regulatory mechanism was the biggest hindrance for investments. They wanted the government to remove bottlenecks, simplify procedures, including SEZ regulations, and make single window agency attractive.
Economist Sudipto Mandal said the meltdown would hit IT industry, garment exports and manufacturing industries.

Former IT secretary Vivek Kulkarni said lot of IT companies had lost money. He said technology companies with lot of intellectual property rights were not getting funds.
Mandal urged the government to spend on infrastructure and social sectors. Kulkarni felt there should an improvement in the employability of graduates and the government should come out with a policy on SMEs, spread financial literacy and speed up projects.
FICCI president Rajiv Chandrashekar said government should create infrastructure and jobs and must diversify the economy by attracting sectors that have not set shop here.