Companies plan to dole out big bonuses this year

When your moneybags are full, your aspirations get a booster dose; so do their hopes. Marketers around the country are giving last minute touches to their plans to woo you with their goodies this festival season—and why not?

The party just got bigger this year, after three years of calm. Companies are claiming they will shower their employees with bonuses and increments as they move into higher profit zones, and you are probably more confident as a buyer than ever before.

At the country’s biggest retailer, Future Group, 24 hours in a day seem too less for the employees these days. The production, operations and marketing teams are working overtime to meet festival season deadlines. Unlike the organisers of the Commonwealth Games in Delhi, they cannot afford last-minute makeovers. They also can’t leave snags and pass the buck around. This is one opportunity they just can’t miss.

Rajan Malhotra, president (strategy) for the group, which owns retail brands such as Pantaloon, Big Bazaar and Food Bazaar, sounds confident. He has planned higher volumes of merchandising and inventory to back this bullish sentiment.

Malhotra’s optimism stems from unexpected high volume sales in Kerala during Onam last week, which he believes will replicate during the festivals in other parts of the country, over the next three-four months.

He also expects more companies to dole out bonuses and increments to their employees this year than the past two years.

“All that will enthuse the consumer to spend more, especially on high value products,” he says. If Malhotra’s assessment is correct, fast moving consumer goods (FMCG) and consumer electronics firms, jewellers and carmakers, among others, are moving into the fast lane.

Agrees Sudhanshu Vats, vice-president of the home and personal care division of Hindustan Unilever, India’s biggest FMCG firm.

“We expect consumer sentiments to be robust and bullish this festive season unlike the past two years when emotions were circumspect,” he says. The Indian arm of Unilever Plc is expecting 40% year-on-year sales growth during this year’s festival period. “We have geared production to meet the demand pull, both from urban and rural markets,” says Vats.

Seasonality in consumer buying behaviour has changed over the past few years with premium or even middle-class consumers no more waiting for the festival season to make purchases.

But consumers of mass products such as refrigerators or flat screen TVs wait for an auspicious period, especially in tier II and III cities, and that form the bulk of the market.

So, production is being ramped up at India’s biggest consumer electronics and home appliances maker, LG Electronics India. Says LK Gupta, the company’s chief marketing officer, “This is indeed a revival, with a growth of 30% after two years of circumspect spending by consumers. Salaries are rising and businesses are looking up.” Such claims by India’s top marketers may not be unfounded.

A quick survey by SundayET and consulting firm Manpower has revealed that 56% of India Inc are planning to give out bonuses this year—in the range of 10-27%. As high as 80% of the companies said their employees can expect an increment. Increments will range anywhere between 7-15%.

This wasn’t the case in the last two years, when a US-triggered recession had a rub-off effect in India. While some companies pruned workforce and cut salaries, some others decided not to give out increments and bonuses. Needless to say, this had a major impact on consumer spending.

Google buys Aardvark 'social search' service

Internet giant Google has bought Aardvark, a "social search" service that relies on a user's contacts to provide answers to questions.

"I can confirm that we have signed an agreement with Google," Aardvark co-founder and chief technology officer Damon Horowitz said. "We can't comment further at this time."

Technology blog TechCrunch put the purchase price at around $50 million.

San Francisco-based Aardvark was founded in 2007. Its co-founders include former members of Google.

Aardvark uses the contacts in a person's network to provide answers to questions via the Web at Vark.Com, instant messaging, email or Twitter.

In a recent blog post, Aardvark said it had more than 90,000 users in October 2009 and 87.7 per cent of the questions sent to Aardvark received answers from a friend or a friend of a friend.

Aardvark said 75 per cent of the users who asked Aardvark a question also answered a question for someone else.

The company boasts a technical team of "over 20 people, including engineers from each of Silicon Valley's major technology companies" and its website lists several job vacancies.

Google chief executive Eric Schmidt said in a conference call with analysts last month that the Mountain View, California, company planned to acquire about one company a month this year.

Siemens makes India R&D hub

Siemens AG, a global powerhouse in electronics, electrical engineering and health care, is making India a major hub for research and development of medical diagnostic tools, using Computer Aided Design (CAD).

The US-based Siemens Medical Solutions, which established a CAD Group in 1995, had over 60 per cent of its engineers and scientists working in Chennai and Bangalore, said Arun Krishnan, head and co-founder of CAD Group, Siemens Medical Solutions. The CAD Group employs over 100 engineers and scientists, who work together with various information technology and other diagnostics research projects of Siemens Healthcare.

It had 150 research and development locations in over 30 countries around the world, employing over 32,300 people. The Germany-based company spent over ¤3.8 billion in a year on R&D, he said.

The CAD Group will hire more scientists and engineers in the near future on a project to project basis, said the scientist, who was honoured as ‘Inventor of the Year 2009’ by Siemens. A scientist with more than 59 inventions and 21 patents to his credit, Arun Krishnan said his CAD Group has so far developed seven CAD-aided imaging tools , used in digital chest X-Ray machines, CT scanners, mammography and virtual colonography to accurately detect breast cancer, colon cancer, lung cancer and clots in the lungs.

Further, the Group is working on four more next-generation imaging tools, with CAD as the mainstay.

“In future, diagnostics imaging software will provide doctors with accurate data on the disease and its condition, analyzing the disease history of the patient, than just offering an image to the doctor. We are also working on such projects,” he said.

TCS, Infosys and Wipro hiring staff as US demand grows

Country's top three outsourcing companies are ramping up hiring and increasing pay as global corporations, mainly from the US, send more work offshore to cut costs as they emerge from the downturn.

Tata Consultancy Services, Infosys, and Wipro expanded their global workforces by an average of 5.1 per cent last quarter, together adding 16,701 employees, company documents show _ an early sign that the Great Recession may ultimately benefit India as cost-conscious companies outsource more work, just as they did after the dot-com bust.

``Our expectations are for flat to marginally stronger IT budgets with a greater share of offshore spend,'' Wipro chairman Azim Premji said in a conference call Wednesday. ``Our customers remain focused on cost reduction.''

The employment revival in India's outsourcing sector, which counts on the US for about 60 per cent of global sales, comes as unemployment in the US stagnates around 10 per cent _ near a 26-year high. Inflation-adjusted wages in the US last year fell 1.6 per cent, the biggest decline since 1990.

``When there is a downturn the compulsion to control costs increases,'' said Dipen Shah, an analyst at Mumbai's Kotak Securities. ``The demand for offshoring will increase. That will play to the advantage of Indian IT companies.''

He argues that the cost savings from offshoring has helped US companies survive _ and that's good for the American worker.

``You might say jobs in the US are getting displaced by jobs in India, but because of the value provided by Indian companies and lower costs, there are firms who are able to keep their heads above water and continue to employ their existing employees,'' he said.

TCS, Infosys and Wipro, which can do everything from call center management and claims processing to software development and consulting, all reported stronger than expected results for the December quarter. Revenues and volumes grew, signaling that the cost-cutting imperative of this last, lean year may be over for India's $60 billion software services industry.

After about a year of hiring slowdowns, all three companies are sweetening compensation as the fight to hold on to talented employees in India heats up.

Infosys offered its employees an average 8 per cent pay hike in October, their first raise since April 2008, and executives said last week they are considering another raise to combat rising attrition.

``The market is heating up and we want to retain talent,'' human resources director Mohandas Pai told reporters.

Infosys last week raised its gross hiring target for the second time this fiscal year, to 24,000 people.

Wipro executives said they plan to offer staffers a raise in February.

Tata Consultancy Services has paid out 150 per cent of performance-lined pay _ which amount to 20 to 45 per cent of compensation _ for the last two quarters, and executives say they will raise salaries next quarter, after a year-long wage freeze.

As demand for workers revives, employers have begun to worry about rising staff turnover. Employees who sat tight during the downturn have started to shop around for better jobs and better salaries.

Attrition at Wipro jumped to 13.4 per cent last quarter, up from an average of 8.9 per cent over the prior three quarters. Attrition at Infosys rose to 11.6 per cent last quarter from 10.9 percent the prior quarter. Attrition at TCS has been stable, at around 11.5 per cent, though executives say they expect that number to rise.

Indian firms say they are increasing global hiring, including in the US, as they pursue higher-end work like consulting. But US employees remain a fraction of total staff.

TCS, for example, recently finished hiring 250 Americans for its Cincinnati campus, but US employees still account for less than 0.5 percent of the company's global workforce.

TCS firms up on stellar Q3 results

TCS closed a Rs 799, stronger by Rs 7 or 0.9%, on the BSE.

The stock had opened at Rs 801 and touched a high of Rs 816 and a low of Rs 793 during the day.

A total of 6.07 crore shares were traded on the BSE as against the two-week average of 5.33 crore shares.

Tata Consultancy Services has moved up after beating market expectations by posting a 33 per rise in net profit as against consensus estimates of 20 per cent. The stock is trading at Rs 804, higher by Rs 12 or 1.6%, on the BSE. The stock opened at RS 801 and has touched a high of Rs 816 and a low of Rs 793 thus far.

India’s largest IT services provider's net profit soared to Rs 1,824 crore for the quarter ended December 31, 2009 compared to the same period a year ago. Its revenues, too, jumped 5.1 per cent on strong volumes of 6.6 per cent to touch Rs 7,649 crore on a year-on-year basis.

On a sequential (quarter-on-quarter) basis, TCS’ net profit rose 11.1 per cent, while revenue jumped 2.9 per cent. In dollar terms, TCS performed even better; revenue was up 10.3 per cent year-on-year and 6.3 per cent sequentially, while net profit rose 38.9 per cent year-on-year and 14.2 per cent quarter-on-quarter.

Three IT firms bag $600 mn WalMart deal

Walmart has selected three IT vendors in India — Infosys Technologies, Cognizant Technology Solutions and UST Global — for multi-year contracts worth over $600 million (around Rs 2,750 crore).

The amount is roughly equivalent to the value of goods — textiles, handicrafts and other products — that the world's largest retailer sources from India every year.

This development is expected to boost the IT outsourcing landscape in India, given that Walmart typically prefers to develop its retail applications in-house. Walmart gradually started buying packaged retail applications from leading software vendors such as Oracle, HP and SAP only towards the end of 2007. It had, however, given Infosys and Cognizant pilot projects about five months ago.

Initially, the three vendors are expected to earn Rs 250 crore to Rs 300 crore, each, annually. The figure is set to grow as Walmart increases outsourcing of work from its main merchandising division. Infosys and Cognizant are expected to garner a larger share of the pie between them.

“What is more important is that these three vendors have now got a ticket to be in the club of Walmart's list of preferred vendors which will help them in growing this account in the long-run,” said a source close to the development.

According to the contract, Infosys and Cognizant will be responsible for application development and support, while UST Global will be responsible for specific testing of these applications.

Asked about the deal, Infosys and Cognizant declined to comment. “As a policy, we do not comment on speculation in the marketplace,” spokespeople from both companies said. A UST Global spokesperson in India said the company does not comment on any client specific information as “we have non-disclosure agreements with most of our clients”.

UST Global is part of the $6 billion US-based business conglomerate Comcraft Group, with a major presence in India.

Walmart's media relations director John Simley replying to an e-mailed query said: “We have a large and growing business and productive relationship with many Indian companies. We do not comment on speculations about the nature of any business relationship.”

Walmart, the largest private employer and grocery retailer in the US with revenues of $404 billion (2009), selected the vendors after a competitive bidding process in which most Indian IT services companies participated, except TCS, India’s largest IT services firm.

TCS failed to qualify for the bid because it has an exclusive partnership with Target, another American retailer, who is into direct competition with Walmart. Among the bidding companies, Walmart shortlisted six contenders of which three were finalised based on their level of competency in various processes.

Unlike other retailers, Walmart does not want to open its own captive centre in India, even though the company has established a huge sourcing office in Bangalore sometime back.

Some of the world’s leading retailers like Tesco, Target and Supervalu have their own software development centres in India. Tesco’s Hindustan Service Centre which went live in May 2004, employs close to 3,000 people. In 2006, Supervalu which is the third-largest grocery retail chain in the US, also set up a captive development centre in India for new applications development, technical operations and testing of applications.

Microsoft to launch Azure cloud service January 1

Microsoft Corp said on Tuesday it will launch its long-awaited Windows Azure cloud computing system on Jan 1, as it looks to take
advantage of the growing interest in internet-based software and services.

Azure, which provides an online platform for software developers to create their own programs, and space for customers to store data, was rolled out for experimentation a year ago.

The service will go fully live at the beginning of next year, Microsoft's chief software architect Ray Ozzie told the company's annual software developers conference on Tuesday.

The first month of the service will be free, and billing will start in February, said Ozzie.

Microsoft is expected to be a big player in the cloud computing market -- broadly the trend toward running software in remote data centers
and accessing it over the Internet -- but has lagged behind pioneering rivals such as Amazon.com Inc, which already sells cloud-based storage, and Google Inc, which offers a range of free, online software.