[dhuli]

Originally Posted by shankar.balan

What we need is more balance by way of manufacturing, engineering and other industries as well as IT.

Surely no one will fault the balanced growth you talk about. Services + manufacturing + agriculture. The issue is that the IT lot are able to power their machines here with diesel generators when required thanks to higher margins in that industry. Manufacturing, unfortunately doesnt afford similar margins. It depends on quality, reliable power from the utility companies. There is of course also the related transportation of goods and subsidies issue that cuts the net revenue. Now, let us see how this plays out when the government eventually stops providing tax shield to the IT industry.

The rumour is, that big boys of IT will pay as much as the unknown, smaller IT service providers in and around the by lanes of our town. When the tide passes we will see who's ships still remain afloat. I hope I am wrong here, there is a viewpoint that the smaller shops will fold up and their employees sucked up by the big fishes, who only see growth and more growth! Let us see how this plays out. All this will not mean de-congestion of our roads any time soon though!

[kd7202]

Shifting to Pune ? Thousands wll get recruited, but not in Bangalore. Thank God !!

I think this is just a publicity stunt. Who is their PR agent ? He/She needs a pat on the back.

I have nothing against the company, I dont own shares in Infosys, but I'll be the first one to get up and cheer if they get out of Bangalore.

[amitk26]

Well I am surprised no one discussed billing rates , This is not just for Infy but for all outsourcing companies. It is the fact that clients are squeezing outsourced service ( OS) providers to lower billing rates.
Even in case where billing rates are not altered OS companies managers are being made non-billable resource becuase they are there primarily to take care of HR and other needs of OS company. This has happned in my company we made OS managers as unbilled and fixed a ceiling on how many managers you can have for an OS team.

Earlier these companies used to pad and bloat the numbers as billing rates were more for senior resources ( White elephants IMHO no offense to anyone) . If you compare billing rates of Tier 1 (Infy , Wipro etc) with Tier 2 and Tier 3 they were more then double now in changed business environment they will be forced to reduce the bloat.

Press does not make this noise and very few people may be knowing but today Accenture and IBM in India are comparable in numbers to Infosys.
US HQ companies like Accenture, IBM, cognizent etc do not face negative backlash , Visa issues etc in US market which infy faces and they now have same low cost advantage so can beat Infy in the game any given day.

In Bangalore with mass recruiters like IBM Global services , Accenture and Cognizent in addition to traditional rivals like Wipro and TCS infosys must be facing the heat so they are being forced to look at cheaper alternative.

As of now they know only one way out that is to lower the salary outgo so expanding in the cities where manpower is slightly cheaper, may be another 3 - 4 years when they will be really forced to give up this wage arbitration business and do something innovative to reduce the bloat and be more comptetive.

[dhuli]

Originally Posted by amitk26

may be another 3 - 4 years when they will be really forced to give up this wage arbitration business and do something innovative to reduce the bloat and be more comptetive.

Visa caps are applicable across the board and are country based. So an Accenture or IBM GS is as much disadvantaged by work permit restrictions as would a TCS or Infosys. Also, the wage bill of US based MNCs is much larger for the senior folks they have on board including their R&D activities, etc. India based MNCs if you can call Infosys etc that have a larger employee base in India than in higher wage countries. Given the nature of economies in western world vs say India, the wage arbitrage is not likely to go away for at least a couple of decades. Here I think I might be paraphrasing Mr.Azim Premji's sound bite.

But there is a trend to hire more local staff for Infosys, Cognizant, TCS etc. Similarly, the IBMs etc are reducing staff in their local geographies and hiring more in India etc. There is bound to be some normalization in terms of distribution and skills of Indian and western companies.

So Infosys might deliver a project 'near shore' say from Dallas or Toronto or even Mexico and yet its margins might be higher than the Western companies. Note that Indian software giants are still tiny when you compare with IBM etc. Infosys, CTP and TCS etc have growth on their minds and they will achieve that. There is a lot of room. They are nimbler. The local wages have stabilized (in the name of recession and global turmoil).

Finally, what innovation can one do on a human effort biased process industry? At best incremental. Nothing that will revolutionize other than saying I will generate code...just give me your business requirements > click a button and get your application. Voila! That is still fantasy. IMHO, Indian IT shops are already more competitive than the Western ones and that is why they continue to grow. While the Global Delivery Model is old hat, these companies continue to find nimble ways to deliver cost effective software. Until someone makes them redundant! That is unadulterated hope!

[amitk26]

Originally Posted by dhuli

Visa caps are applicable across the board and are country based. So an Accenture or IBM GS is as much disadvantaged by work permit restrictions as would a TCS or Infosys. Also, the wage bill of US based MNCs is much larger for the senior folks they have on board including their R&D activities, etc.

True but then being a US company they do not face backlash and have higher trust factor , With the Indian operations they can match the rates offered by Infosys or atleast ensure that rates are just a little premium.

If you look at non US market including India and China likes of IBM are more successful here bagging multi year mega projects.

Originally Posted by dhuli

But there is a trend to hire more local staff for Infosys, Cognizant, TCS etc. Similarly, the IBMs etc are reducing staff in their local geographies and hiring more in India etc. There is bound to be some normalization in terms of distribution and skills of Indian and western companies.

Finally, what innovation can one do on a human effort biased process industry?

Cognizent is a US headqurtered company with almost all staff out of India so for all political points they can say they are US company.

About innovation the biggest one is to move out of wage arbitration game.
For IBM outsourcing is one of the business but not the only business.
For Infosys this is the only business , Infosys Consulting is just a namesake organization to get press publicity.

Similarly just check how many consulting assignments Accenture gets. So business generation is lot easier for them as it is not wage arbitration based.

Innovation can not be done in wage arbitration based business but look at IBM at one point it was considered soon to be dead company but then they embraced open source and shifted to open source based technologies from thier earlier legacy closed development environment.

As per one study I saw IBM invests around 100 million $ in OSS and reaps back benefit of around 1 billion dollar. They are the one who seed many OSS projects and later integrate them in products.

How many such new business model or even alternative existing business model Infosys has tried ?
Their management seem to be simply afraid to try anything other then tried and tested formula which F.C Kohli of TCS created in 1969. Innovation is not simply moving to tier 2 city
how will you compete with Bangladesh in next decade for example ? Already some companies are experimenting by setting base there what if this experiment is successful ?
Are we sure Infy will not have same problem which cotton textile exporters from India had ?

[Randhawa]

There are not moving out of Bangalore and neither will they ever move out of it. In reality they are opening up another place some 35-40 km away from Bangalore.

[vasoo]

One cannot just move their office like that and expect all their employees to follow them! I am sure its a scare tactic aimed at government officials to get their act together. I have seen them struggling to get their Bangalore based employees move to other locations where they built new facilities. For example, most Mallus refused to move to Trivandrum when they decided to move some projects/teams there. Bangalore is a gold mine for software engineers and it is not going to change in the near future.

Interestingly, most of the folks who work in this industry are ready to move from Bangalore to San Francisco any time, but not to Chennai or Hyderabad citing family issues, school admission, spouse's job etc. If Infy decide to move to other cities then it must be ready to lose thousands of its employees working out of Bangalore. End of the day, loyalty is not a big strength of any of these companies.

[fazalaliadil]

Originally Posted by vasoo

If Infy decide to move to other cities then it must be ready to lose thousands of its employees working out of Bangalore. End of the day, loyalty is not a big strength of any of these companies.

Loyalty aside, true about losing employees in thousands, but there will be tens of thousands ready to take their place. Jobs don't come easy today, that too in majors like Infosys.
It is an arm twisting tactic by Infoys, relocating entirely is a bluff we have been hearing since long, expanding to other places is possible.

[chikkars]

Originally Posted by amitk26

US HQ companies like Accenture, IBM, cognizent etc do not face negative backlash....

Small correction - Accenture was one of publicly-traded federal contractors that were incorporated in a tax haven country, Bermuda.

In 2009, the company changed its place of incorporation to Ireland from Bermuda, and is now HQ'ed at Dublin.

PS: I worked with Accenture for 5 years, so couldn't help correcting

[vishnurp99]

Don't know from where this news came but it's not accurate to best of my knowledge. For the next 3 years infosys HQ is not going to move out of bangalore for multiple reasons.

The most important reason is that all the founders and senior employees are well established be in terms of their residences or contacts in Bangalore.

The second reason is Bangalore is still the best talent pool for infy and the attrition is actually lesser in bangalore than comparable locations (in terms of employee strength) like chennai and pune. For everybody's information it's highest in chennai and anybody who knows about infy will know why it's highest in chennai.

The 3rd reason is that infy bigwigs like NRN and M D Pai have huge influence in bangalore and not so much in Tamil nadu or Maharashtra. Nandan used to be quite influential in Pune circle and even in Delhi but he is no longer part of infy.

There is currently a move to expand infy operations in Pune and more north indian cities because right now most of the work force is concentrated in the south while more than 25% of the work force comprises of North indians. This was initiated an year back actually after persistent feedback from folks from the North.

The Infy PR machine does a very good job no doubt but the infy is a darling of the investor not because of the PR but because of it's numbers. The margins of infy is substantially higher than any other company in IT services including the home grown one as well as the western companies. They maintain the margins by having a 40% variable component(for higher roles this is close to 80%) for all folks who are above say 6 years of experience (approximation). Nobody has this amount of variable pay and infy is able to do this because of a relatively loyal work force when compared to the other companies.
The margins suffered this time(quarter 3) a wee bit and you know what happened to the stock price.

[download2live]

Originally Posted by vasoo

Interestingly, most of the folks who work in this industry are ready to move from Bangalore to San Francisco any time, but not to Chennai or Hyderabad citing family issues, school admission, spouse's job etc.

End of the day, loyalty is not a big strength of any of these companies.

Now thats not rocket science. Onsite dollars. Simple.

As far as loyalty is concerned well, it takes two hands to clap. The only reason most of the employees in indian MNC stay is for onsite. And management also knows that they can pile any amount of bull**** on the employee because no matter what, he/she will stick around for that onsite. Hence this lack on loyalty.

But I also feel, Infy is not going to move out of Bangalore. but funny that their PR dept is wasting time on this. No one is going to hear them out. The CM is busy with saving his seat.

[vishnurp99]

@Vasoo Well actually getting people to travel onsite is quite difficult inspite of the onsite dollars. The people who are willing are travel are folks with experience below 3-4 years who have never travelled onsite. It's tough to get a person who has been in US for say 3 years and has come back to india in say a Team lead position to travel to onsite again. It's tough to get mature profiles for onsite roles which require prior client exposure.

[ASHISHPALLOD]

Breaking news:

After reading about possible relocation of Infy,
Bihar CM is acting fast like his Gujrati friend to attract the bird by singing...
...'' aa aa aaja, aa aa aaja, aa aa aaja, aa aa aah!''
aaja aaja, bihar me aaja, patna me aaja, gaya me aaja nahi to gorakhpur me aaja''.

So Infy guys, get ready for Bihar, ud dabang dabang''.

Source: Wild Guess.