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The US state of Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India, raising
fears of similar moves by other American states struggling to cope with high unemployment rates.
“There are pervasive service delivery problems with offshore providers, including dissatisfaction with the quality of their services and
with the fact that services are being provided offshore,” Ohio governor Ted Strickland said in an executive order passed last month.
The move is yet another blow to the Indian IT industry, which is facing higher visa costs and rising protests against outsourcing in
other US states.
Offshoring work to India is a $50-billion industry, and the Indian tech industry has benefitted immensely from American firms wanting
to take advantage of its low wages and top-quality skills. The industry employs about three million people across India and has
largely been responsible for the sea change in the West’s perception about the country.
Last month, the US Congress passed a controversial legislation increasing visa fees for funding the country’s Mexico Border Security
program. States such as Virginia are facing a massive backlash against outsourcing that could further affect the prospects of Indian
IT firms.
Last week, the West Virginia Public Workers Union filed a lawsuit against proposed outsourcing of IT jobs by the state’s office of
technology.
Though Indian companies largely rely on private companies for the bulk of their business and orders from state governments are
rare, that approach has slowly been changing.
TCS is the only Indian company to operate in Ohio. It employs 300 people and gets $19 million in tax credit for creating local jobs.
India’s second-biggest software exporter, Infosys, has already identified the government outsourcing market as the next big
opportunity and established a focussed subsidiary-Infosys Public Services, headed by Eric Paternoster-in June this year.
Rival Wipro also has a nine-year, $407-million outsourcing contract from Missouri for delivering healthcare services.
Ohio’s move adds to the perception that outsourcing is risky and that it involves serious loss of jobs. Indian companies have been at
pains to point out that offshoring work actually improves the health and efficiency of American companies and government
departments.
They have also been making serious efforts to hire more Americans and keep much of the work stateside. But that does not seem to
have helped. The latest curb could, if replicated by other states, mean increased hiring of local staff in the US for delivering services,
affecting the profitability of Indian companies.
Such measures would also make Indian firms less attractive for awarding multi-billion-dollar government outsourcing contracts,
experts and officials tracking the sector said.
Indian IT companies were upset on Friday (August 13) over US President Barrack Obama's decision to pass a Indian
IT companies upset over Obama's decision to sign into law a Border Security Bill proposing a steep hike in H-1B and
L-1 visa fees, a move that would affect Indian IT firms which may have to shell out an additional USD 250 million
annually. Reacting to the news, President of NASSCOM, Som Mittal said, "India is receiving overwhelming support
from the US Chambers of Commerce against the bill. It is not fair to treat highly skilled labour as temps. Indian
companies create jobs in the US. It is disappointing that the US government is engaging in such election rhetoric."
The government on Thursday (July 29) said the makers of BlackBerry - Research in Motion (RIM) - has given an assurance to it on
soon addressing its security concerns and hoped that the Canadian service provider and security agencies would be on the "same
page". "BlackBerry has assured the Ministry of Home Affairs that the issue of monitoring of the BlackBerry will be sorted out soon...I
am sure we will soon be on the same page and our concerns will be addressed," Special Secretary RPT Secretary (Internal Security)
in the MHA Utthan Kumar Bansal told reporters on the sidelines of a function in New Delhi.
Government has already warned the popular smart phone company that if it does not allow it to monitor emails and SMSes to
address security concerns, it will have to close down operations in the country, spelling trouble for over a million BlackBerry users in
India. The government has said the RIM will have to address its security-related issues by allowing monitoring facility in India. Bansal
said the Department of Telecommunication was the nodal authority which makes the policy and it was working to address the issue
raised by the MHA.
The MHA has asked the DoT to tell the company in no uncertain terms that its emails and other data services must comply with
formats that can be monitored by security and intelligence agencies. There are reports that China has got a server in that country
and the MHA asked the DoT to check whether it is true. Government also wants a BlackBerry server in India but the company has
been resisting the move. Once the server is in India, it will be easier to track the messages. The MHA maintains that the RIM has
been addressing security concerns of several other countries, including the United States, where it operates and, therefore, there is
no justification to not comply with the same in India.
BlackBerry says the messages are encrypted. The smart phone's server is based in Canada where the encryption level is very high
and extremely difficult to crack. And any message going through a Canada server is encrypted and, therefore, cannot be accessed
by intelligence agencies in India. Senior officials of key security agencies at a recent meeting argued that the continuation of
BlackBerry services in the present format poses danger to the country. The meeting was attended by representatives of the MHA,
DoT, intelligence agencies and the National Technical Research Organisation (NTRO).
The latest development indicates that security agencies are again finding it difficult to intercept or decipher messages sent through
these phones, which use codes with an encryption of 256 bits. This encryption code first scrambles the emails sent from a
BlackBerry device and unscrambles them when the message reaches its target. In 2008, the Indian government had threatened to
block. BlackBerry services unless the RIM provided intelligence agencies here access to all data, especially emails, routed through
these handsets.
The government had also insisted that the RIM put in place a system that would allow them to intercept data sent through these
handsets as it feared that these services could be exploited by terrorists. After several rounds of talks between the government and
the RIM, the telecom department, in late 2008, had announced that the issue had been resolved. Leading telecom companies in
India such as Bharti Airtel, Vodafone Essar, Reliance Communications, Tata Teleservices, BSNL and MTNL offer BlackBerry
services.
NEW DELHI: Cairn Energy Plc on Thursday said it has no differences with the oil ministry or
with partner ONGC on sale of majority stake in its Indian arm for which it is seeking all
necessary approvals and expects to close the deal by year-end or early 2011.
"It makes good copy (to highlight differences between Cairn Energy and the government or
ONGC). But believe me their are no differences," Cairn Energy Plc Chief Executive Bill
Gammell said here today.
He said he expects Cairn to sell the majority stake in Cairn India to London-listed Vedanta
Resources and close the deal by year-end or early next year.
"We are seeking all necessary appprovals... and are working with the government and our
partner ONGC (on the issue)," he added.
ONGC has a 30 per cent interest in the 6.5 billion barrel Rajasthan fields, the centrepiece of the
Cairn-Vedanta deal
Vedanta Resources Group is yet to get market regulator SEBI's approval for an open offer to
acquire up to a 20 per cent stake from minority shareholders at a price of Rs 355 a share, Rs 50
less than what it is paying Cairn Energy for a majority stake.
The open offer, as per the schedule announced by Vedanta last month, is to open on October 11.
India and China together account for 32 of the 50 companies in Forbes' sixth annual 'Asia's
Fabulous 50 listed companies'.
The other Indian companies making it to the list are Adani Enterprises, Axis Bank, Bharat
Heavy Electricals, Dr Reddy's Laboratories, HCL Technologies, HDFC Bank, Hindalco
Industries, Jindal Steel and Power, JSW Steel, Kotak Mahindra Bank, Larsen and Toubro and
Sterlite Industries.
When the list was first compiled in 2005, only five Chinese and three Indian outfits made the
cut.
"Economies around Asia bounced back last year and so did many of our Fabulous 50 companies.
Earnings, revenues and stock prices soared almost across the board after a rocky time the
previous year," Forbes said.
Among the Indian firms, Forbes specifically talks about Axis Bank and ITC.
"The two are leaders in their industry -- Axis Bank, India's third-largest non-state-owned bank,
and ITC, led by Y C Deveshwar, who is determined to give ITC a life beyond tobacco.
"Axis, with USD 41 billion in assets and nearly 22,000 employees, is one of the fastest-growing
companies in the country," Forbes said.
Its revenues rose 29 per cent to hit USD 3.4 billion dollars in the year ended March 31, while net
profit jumped 57 per cent to USD 553 million.
"It's this performance that puts Axis on the Fab 50 for the second straight year. The bank is
looking to add 200 branches this year to the 1,055 it already has," it noted.
Crediting Axis Bank Chief Executive Shikha Sharma for the bank's performance, Forbes said, "In
the 15 months since she took charge, Sharma has teased out the bank's strengths --
infrastructure finance, retail banking, processing payments and lending to small and medium-
size enterprises."
"She's also put more emphasis on risk management," it said, quoting Sharma as saying, "It's not
about being the biggest. We want to grow our book sensibly. We want to do something that we
are confident of executing well."
In its profile of ITC and Chairman Y C Deveshwar, Forbes says, "In Deveshwar's era, ITC has
clearly achieved more than a measure of progress. Today about half of its net revenues of USD
4.3 billion comes from cigarettes and the other half from hotels, paperboard, infotech,
agribusiness and now increasingly, foods and personal care.
RIL, RNRL sign revised gas pact
25 Jun 2010, 1835 hrs IST, AGENCIES
An Anil Ambani group firm on Friday (June 25) announced that it signed an agreement for availing of gas from Mukesh Ambani-led
Reliance Industries Limited (RIL) in accordance with a Supreme Court direction, but supply will be subject to government policy. The
announcement of the deal comes within weeks of the warring brothers signing a truce agreement for creating a "harmonious
environment of cooperation and collaboration" between their respective groups.
Shortly after the deal was signed today between Mukesh-led RIL and Anil group firm RNRL, the agreement was submitted to the
government for necessary action, Oil Ministry sources said but clarified that neither any quantity, duration of gas supply, specific
project nor price was mentioned. Although neither sides gave details of the revised gas supply agreement, sources in Reliance
Natural Resources Ltd said that it is for a period of 17 years for projects totalling 8,400 MW at a government determined price of
USD 4.2 per mmBtu. When contacted, RIL spokesperson declined to give details saying that the contract was as per the direction of
the Supreme Court and in accordance with government's policies.
The government has fixed a price of USD 4.2 per mmbtu for five years for gas from RIL's KG D-6 fields. The government sources
further clarified that it was the master agreement about the intent to supply gas and any specific details ranging from pricing to tenure
and projects could be contained only in GSPA. It may be recalled that only last week the oil ministry officials were reported to have
said that any gas supply to Anil's group firm could be only closer to commissioning of any project. They, however, said today that it
was for the Empowered Group of Ministers to see if an exception can be made for Anil Ambani group and gas could be reserved for
his project.
RNRL had gone to court against RIL in 2006, seeking 28 mmscmd of gas for its proposed Dadri plant at a rate of USD 2.34 per
mmBtu - a demand which was rejected by the Supreme Court citing that government had the last word on utilisation and pricing of
gas. The government fixed price for gas from RIL's KG-D6 fields is USD 4.20 per mmBtu. "With legal dispute (over supply and
pricing of natural gas from RIL's Krishna Godavari basin fields to Anil Ambani Group's power plants) behind us, we look forward to a
harmonious and constructive relationship with Anil Dhirubhai Ambani Group (ADAG)," Mukesh Ambani had said at RIL's Annual
General Meeting on June 18.
He had also said that "as and when the power plants of ADAG are ready to receive gas, we would commence supplies to them
subject to government granting allocation." The two brothers reconciled their differences on May 23, when they scrapped a non-
compete agreement that allowed flexibility to expand into areas hitherto reserved for each of them and aimed at "creating overall
environment of harmony, cooperation and collaboration between the two groups." Propelled by the news of a revised gas pact with
RIL, RNRL shares immediately surged 8 per cent intra-day but settled 3.29 per cent up at Rs 65.95 a piece. RIL shares were 1.14
per cent up at Rs 1,063.25 a share on the Bombay Stock Exchange.
Loans are set to get expensive as commercial banks, including Punjab National Bank, IDBI Bank (IDBIBANK.NS),
Allahabad Bank and Axis Bank, hiked their base rates on Thursday in the wake of increasing borrowing costs.
Among the banks that have hiked deposit rates on Thursday were State Bank of India (SBIN.NS), PNB and IDBI
Bank. This is the first time since the base rate was introduced in July this year that banks are changing the
benchmark.
SS Ranjan, CFO, State Bank of India said that the lender would wait till mid-November before increasing the base
rate. "While the cost of deposits has gone up we can absorb the cost for some more time."
MV Nair, CMD, Union Bank of India (UNIONBANK.NS) said, "We will review our base rate towards the end of
October based on our funding cost."
Bank of India's asset and liability committee is set to meet on October 4 to decide on a base rate hike. While PNB,
IDBI Bank and Allahabad Bank hiked their base rate by 50 basis point to 8.5%, Axis Bank hiked its base rate by 25
basis point to 7.75%. It may be recalled that the Reserve Bank of India(RBI) raised its key lending, the repo rate, by a
quarter percentage point and the borrowing rate by half a percentage point to rein in rising inflation. The hike in the
base rate is unlikely to have an immediate impact on existing bank borrowers as about 70% of the borrowers loans
are linked to the BPLR. SBI has left its base rate unchanged at 7.5%.
Earlier, State Bank of India and ICICI Bank (ICICIBANK.NS) had raised their benchmark prime lending rates (BPLR)
by 50 basis points each after the central bank hiked key policy rates on July 27, 2010. Punjab National Bank had
hiked its BPLR by 75 basis points.
The new benchmark PLR for SBI is 12.25% while that for ICICI Bank is 16.25%.
In order to bring in more transparency and effective transmission of policy rates, the base rate was introduced as
replacement for the Benchmark Prime Lending Rate (BPLR) from July 1, 2010.
Punjab National Bank and State Bank of India also raised its deposit rates across maturities by 25 to 75 basis point
and 25 to 50 basis points across maturity, respectively. IDBI Bank has also increased its deposit rates by 15 to 50
basis point.
New home loan seekers can have some respite as SBI has extended its teaser home loan scheme till December 31,
2010
Dell switches off BlackBerry, goes for own smartphone
Reuters SAN FRANCISCO
DELL will shift thousands of its employees off Research in Motion’s Black-
Berry over to Dell’s smartphones, the company said. The money-saving
switch affects the roughly 25,000 Dell employees who carry a company-
issued BlackBerry. Dell employs around 100,000 people worldwide. Dell is
also launching an effort to convince its business customers to switch to the
company’s smartphone. News of the company’s plans was first reported by
the Wall Street Journal, and confirmed by Dell spokesman David Frink. Mr
Frink said the switch will begin soon, but said it will take some time to
complete.
RIM did not immediately respond to a request for comment. Dell’s Black-
Berry users will be shifted over to use the new Dell Venue Pro, which runs on
Microsoft’s new Windows Phone 7 software and operates on the network of
T-Mobile, the US arm of Deutsche Telekom.
Dell’s decision to move its employees off BlackBerry may come as little
surprise, given its aspirations in the mobile device market. The company has
frequently talked about using hand-held devices as a gateway to sell and
promote a broader suite of services. Dell formally entered the smartphone
market only late last year, and launched its first device in the US, the Aero,
earlier this year. The Aero runs on Google’s Android software, as does Dell’s
new 5-inch tablet, the Streak. RIM has long been the dominant player in the
corporate smartphone market, but has seen its market share erode as
companies such as Apple make gains.
ESSAR Energy of Mauritius will buy 60% of state-owned Zimbabwe Iron and
Steel, reported the Zimbabwe Independent, without saying where it got the
information.
Essar won a bid to gain control of Zisco after competing against Jindal
Steel, Sino-Z i m b a b w e and Sovereign Capital, a group of Zimbabwean
and South African investors, the Harare-based weekly newspaper said on its
website. The report added that the deal has been approved by Prime
Minister Morgan Tsvangirai, President Robert Mugabe and deputy Prime
Minister Arthur Mutambara.
Essar is expected to invest more than $60 million in Zisco, as well as cover
debts of at least $240 million, it said. Essar Energy is a unit of Essar Global.
— Bloomberg
Telecom Scam: Just Got Bigger
The 'All is well' chill-pill-in fact, the panacea for a biggy embroiled
in any raging controversy-is perhaps the fact that law will take its
own course.
For the telecom minister A Raja competing with the likes of CWG Organizing Committee headed by Suresh Kalmadi,
to top the notoriety list, this is the simplest escape route.
The telecom minister sported high confidence, complimented by a smile while he faced media queries on his
response to allegations leveled against him in the 2G spectrum scam and Supreme Court notice served to him. The
Minister was composed and the anticipated reply was, “The allegations are politically motivated, because I did not
favor a particular cartel.”
Could someone explain to Mr Raja the 'Glass half full, half
empty' theory? Minister Saheb, look at it this way. You feel
the heat of the legal notice because as you say, you did not
favor a particular cartel, perhaps you sided with another.
A Raja is not new to controversies, a Masters in Law, is
alleged to have to manipulated the
norms resulting in a `70,000-crore
scam in the grant of telecom
licences in 2008.
Dethroning Raja
The hullabaloo around Raja's
stepdown is not a recent one.
The 2G ghost hasn't vanished yet
and we hear another controversy
cracking-it is to do with the
allotment of franchisees for BSNL's
recently launched WiMaxservices to
a company owned by one of the
Minister's close associates from
Perambulur.
Then why is it difficult to dethrone
him? An industry expert has an
answer. The issue of
'gifting' 2G spectrum at throwaway
prices amidst vehement objection by
the Ministry of Finance and Telecom Regulatory Authority of India (Trai) is not just a legal issue, it is a matter of
political equations, he says on condition of anonymity. When Dayanidhi Maran was replaced by Raja as the telecom
minister in 2007, DMK was sure there was a bigger fish in store.
Raja was eager to allot 3G spectrum during his tenure. But his attempts were foiled after the Government decided
to play safer and decided to refer the 3G auction to Group of Ministers (GoM).
According to a political commentator, who wishes not to be named, the minister has little to worry as his party is in
a strong position. In the current parliament, in the UPA alliance, the DMK has some key profiles.
Ever since the worms wriggled out of the can, Raja has been defending himself stating he stuck to the rulebook,
what his predecessors had followed from 1994. His justification is that his acts were for breaking the cartelization in
the telecom sector and claimed that the aam admi would be benefited by his decisions.
He has succeeded in selling the argument to a segment of the telecom fraternity. SC Khanna, general secretary,
Association of Unified Telecom Service Providers of India (AUSPI) refuses to comment on the allegations against the
minister, but he believes that his decisions have ushered in competition in the Indian telecom space. “The Minister
has created competition in the market. He opened up the way for investments by the likes of DoCoMO in India and
brought down the prices of the telecom services in the country,” Khanna says.
“Reliance Communications entered in to the GSM profile only after the dual
policy was announced. Policy of competition was first initiated by the NDA
government. Spectrum belongs to the country, what is wrong in using it for
the good of the people?” he argues.
The recent policies have only made the market more competitive. In another
8-10 years there will be another Bharti or Vodafone in India,” Khanna adds.
However, the other lobby of the GSM service providers decline to comment.
Interestingly, it was the Supreme Court intervention that got things moving in the Sukhram controversy. Will the
apex court's involvement make a difference here as well? By the time this edition of V&D hits the stands, more
developments will have happened. We will bring you more from this scam episode as and when law takes action.
Seven big Indian corruption scandals
Published on Sat, Nov 27, 2010 at 15:21 | Updated at Sat, Nov 27, 2010 at 15:35 | Source : Reuters
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India has been rocked this year by a series of corruption scandals that have embarrassed the ruling
Congress party, rattled markets and delayed reform bills as the opposition stalls parliament.
The country, 87th in Transparency International's rankings based on perceived levels of corruption, is no
stranger to scandals.
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