Pre-trump trouble

5,436

What is it? The drop in approved new petitions of India-based companies for HIB visas in 2016.

Why is it important? The number represents a drop of 37% at 9,356 new petitions for the top seven India-based companies seeking approval in fiscal 2016, says a report by National Foundation for American Policy. It’s an indicator that the opportunities for Indian technology workers in the US started narrowing even before Trump administration took charge. The companies affected in 2016 include TCS, Infosys, Cognizant, Wipro.

Tell me more: Indian companies have been accused of flooding the visa lottery system earlier.

 

Rs 11,000 crore

What is it? The amount State Bank of India (SBI) is looking to raise in a share sale to qualified institutional investors (or a private placement).

Why is it important? The move to raise its capital base could bring in 73% of the equity capital (Rs 15,000 crore) that was approved to be raised in FY18 at SBI’s central board meeting in March. Meeting with Basel III norms and provisioning for bad loans have necessitated raising of fresh capital by Indian banks.

Tell me more: SBI had last sold shares in 2014.

 

Rs 100 crore

What is it? The cost of redeveloping a railway station in Bhopal, Habibganj, by Bansal Group. The work will commence on June 9.

Why is it important? This is the first redevelopment of an Indian Railways (IR) station through a public-private partnership. The project marks a major step to modernise and privatise IR. Not only upgrading passenger facilities at stations, this would boost IR’s non-fare revenues, for example, through land monetisation. The Bansal Group will invest Rs 350 crore for commercial development of land parcels around the station, on a 45-year lease, according to an agreement in 2016.

Tell me more: The Bhopal-based Bansal Group will be operating and maintaining the station for a period of eight years.

 

7

What is it? The number of countries which have cut ties with Qatar, the West Asian country, accusing it of supporting Islamist terrorism. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain were the first to cut diplomatic and transport ties, followed by Yemen, Libya and Maldives.

Why is it important? The geopolitical rift among the Arab neighbours would have ripple effects on the globe, including oil prices, which dropped 1%. While both Saudi Arabia and Qatar have been accused earlier of funding Islamists and terrorists, Qatar has drawn the ire of others due to its supposed support of Iran. The boycott is being seen as a move to target Iran as well.

Tell me more: Qatar will bear the brunt of the ban as transport links with neighbours have been severed and will make food imports (40% of the nation’s supplies) and travel out of the country dearer. The Kerala Chief Minister Pinarayi Vijayan has raised his concerns for the650,000-strong Indian population in Qatar, by writing to the Centre.

 

10

What is it? The number of students whose admissions got rescinded at Harvard for posting obscene memes in a private Facebook group chat.

Why is it important? It’s an indicator of the worrying trend of social media being used to spread content which is obscene, hateful, abusive and even illegal; and how organisations are trying to tackle it. Last year, prospective students at Harvard who posted similar messages were let go with a strongly worded, but generic statement..

Tell me more: Social media platforms such as Facebook and Twitter have been making some attempts to clean up such content, but it has proven to be a difficult task. It might also be hurting these firms. Salesforce might have walked away from a Twitter acquisition deal last year because of Twitter’s inability to tackle abusive content.

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Manning Assange’s extradition

17%

What is it? The share of the 85,000 H1-B visas issued by the US each year that go to Indian companies.

Why is it important? The number (amounting to 14,450 visas) put out by the Information Technology Secretary Aruna Sundararajan aims to put into perspective the argument that Indian companies corner most of these visas, drawing criticism from the US administration.

Tell me more: Concerns over visa restrictions have turned the focus on local hirings by Indian companies. It has also highlighted how automation will be claiming jobs in the future. Some point out paring down of the IT workforce has been happening for sometime, but is only being noticed now after the visa hurdles.

 

Rs 30,000 crore

What is it? The value of social sector subsidies — like concessional fare to certain passenger profiles, discounts for certain categories of goods and uneconomic branch lines–the Indian Railways (IR) is looking to scrap.

Why is it important? The IR has been looking to improve its profitability, including turning to a more corporate form of functioning, on the Niti Aayog’s recommendation. Doing away with social sector subsidies would mean ministries offering those schemes/benefits would have to shoulder the cost.

Tell me more: The operating ratio of IR (amount spent to earn a unit of revenue) rose to 94.9% in FY17, against its stated benchmark of 80%. It also saw freight revenues, which account for three-fifths of its revenues, grow the slowest since 2010-11.

 

>700,000

What is it? The number of documents, videos, diplomatic correspondence and military information that Chelsea Manning, who was freed from a US prison on Wednesday, had furnished WikiLeaks with.

Why is it important? Freed after seven years in prison, following a presidential pardon by previous US president Barack Obama, Manning’s freedom has become dovetailed with the future of WikiLeaks founder Julian Assange. Earlier this year, Assange said he would let himself be extradited to the US if Manning was released.

Tell me more: Out of the 35,944 appeals placed before Obama, Manning’s was one of the 3.7% petitions that were granted clemency.

 

1,400

What is it? The number of jobs that automobile major Ford Motor is cutting in North America and Asia.

Why is it important? The count is around 10% of Ford’s managerial and non-production staff, and is geared to reduce costs by 10%. One of the oldest car companies is looking to shore up its financials and boost investor confidence as the auto market moves towards ride-sharing.

Tell me more: In 2016, Ford cut white-collar jobs in Europe, saving $200 million annually. This April, Ford saw its US sales fall 7.2% on a year-on-year basis, a trajectory that was also mirrored by General Motors, Toyota and Nissan.

 

7,000 MW

What is it? The addition to the installed capacity of nuclear power the Indian government cleared on Wednesday.

Why is it important? If this new capacity comes up, it will double the installed capacity of nuclear power in India. At present, nuclear power, which has been a contentious source of power, accounts for 2% of the installed capacity in power generation in India.

Tell me more: In 2016, there were 13 countries, led by France and Slovakia, that drew at least 25% of their energy from nuclear power.

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Short-staffed 👮/👮👮

50%

What is it? The vacancy in the police department in Uttar Pradesh.

Why is it important? India’s most populous state has more than double the vacancy of the national average of 24%, and also the highest. While the sanctioned strength is 363,000, there are only 181,000 police personnel deployed in the state. The vacancies in IPS ranks in UP was revealed in the Parliament a few weeks ago. While the national average vacancy in IPS was 18.9%, UP had 22% vacant posts.

Tell me more: Only Nagaland was has a surplus in their police force, with 22,264 personnel against 21,574 sanctioned posts.

 

>12%

What is it? The growth in domestic passenger vehicles sold in March, 2017 over 2016.

Why is it important? The growth rate, as per company releases, indicates robust gains. The largest car maker, Maruti Suzuki, posted an 8% and second-largest, Hyundai, a 9% growth. March has been the best month for passenger vehicle sellers since the days of demonetisation that dampened consumer spending.

Tell me more: Tata Motors and Toyota Kirloskar registered growth above 80% in March. Mahindra struggled with reported BS III inventory and saw a decline in sales.

 

72 million

What is it? The number of customers Reliance Industries claims have signed up so far for its telecom offering, Jio under the Prime offer.

Why is it important? While the number attempts to capture the rush to avail of the near-unlimited and free data and voice services offer for a year, it also highlights the Jio’ marketing coup. The hitherto free services which would eventually draw a Rs-303 monthly fee from April, 15, has made it the wireless operator with the largest subscriber additions in February. It accounted for 73% of the total 27.8 million additions in February.

Tell me more: The enrolment in Jio Prime was extended beyond the previous deadline of March, 31 to April.

 

236,000

What is it? The number of H1B visa applications United States received last year

Why is it important? The H1B cap of 85,000 got filled within a week. The application process for this year begins today, in a political environment far different from last years. Donald Trump administration is far less welcoming of foreign workers and the US congress is looking at several bills that call for H1B reforms. Thenumber of applications by Indian IT firms will be keenly tracked.

Tell me more: Indian IT companies are big users of H1B, and reforms in US would force them to change their strategy, and be less dependent on H1B visas. Some firms – including Infosys and Wipro, have been moving in that direction for some time now.

 

$12 billion

What is it? The combined net worth of US president Donald Trump’s senior staff members.

Why is it important? It’s wealthiest in the modern American history. Donald Trump won the elections mostly by appealing to the anger of the middle class Americans at the elite, and the fear of job losses. Ivanka Trump and Jared Kushner, Trump’s daughter and son in law, who have important roles in the administration, have business interests worth $740 million.

Tell me more: The details of personal wealth are from disclosures made by White House starting Friday night.

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H1B visa reforms: 5 levers Indian IT firms can pull to soften the blow

After congresswoman Zoe Lofgren introduced the H1B reforms bill in the US House of Representatives, IT executives and investors in India have been worried about its impact on the country’s outsourcing sector, which is highly dependent on H1B visas to provide services at a relatively low cost.

The new minimum wage proposed by the bill could make H1B payscales even higher than local the payscale, making it economical for the companies to hire locally, but denting their margins significantly. More importantly, it’s seen as the begining of a series of protectionist measures that would make getting business from the US increasingly more difficult. (Yet another proposal, Reforming American Immigration for Strong Employment, or Raise Act, seeks to cut legal immigration by half.) What can Indian IT companies do to tide over these tough times? They have at least five levers at hand, which come with varying levels of difficulty.

1

 

1. Move more work offshore

Offshoring not only reduces regulatory burden, it is also cheaper. But, moving work offshore will not be easy, especially with new clients. They tend to prefer onsite work to gain confidence before moving work offshore. However, it’s not impossible. Infosys has been bringing onsite component down in the recent quarters. Among the tier one players, Tata Consultancy Services (which stopped sharing this metric after March 2015), Cognizant and Wipro have bigger scope for moving more work offshore.

2. Look Beyond the US

America continues to be the largest market for India-centric outsourcers. While companies have made some progress in expanding their businesses in Europe, the next big market, knowledge of local languages has been a constraint (except for United Kingdom). However, many recognize exploring other markets in Europe, South America and Asia is a key to long term success, and even survival. Visa reforms in the US will push Indian IT firms to move in this direction.

3.Increase utilization rates

IT companies tend to include unbilled employees (people who are assigned to a project, but not charged for) in ongoing projects to provide a cushion, and for projects in the pipeline so they can hit the road running. So, the utilisation of resources is never hundred percent. Utilisation rates, measured as a percentage of total employees, could vary from quarter to quarter depending on hiring season (when IT companies onboard a large number of freshers) and sales targets. However, with a broader base of employees and efficient allocation of resources, it’s still possible for IT companies to improve utilisation rates. It would help in compensating for the higher wages onsite.

4.Increase revenue per employee

Indian tech majors, including TCS and Infosys, have been talking about non-linear revenues for several years now. However, revenue per employee has remained more or less constant. What once seemed like a good thing to purse, increasingly appears to be a necessary thing to do. As in the case of increasing non-American revenues, it cannot be achieved overnight. It would demand more investment in automation, and in products and platforms. Such investments could result in lower margins and demand a higher risk appetite. This is the direction that the management would push their companies going forward.

5.Look for low-cost resources

Recent surveys by Mercer, as well as Willis Towers Watson, indicated that salaries in India are set to increase by 10% in 2017. IT sector, which has paid some of the highest salaries across sectors, has also seen higher than average pay hikes. However, increasingly, IT companies are setting up centres in smaller cities and towns to benefit from lower rents, and to hire employees at lower salaries for specific kinds of work. Salaries account for roughly 70% of cost of sales, and reducing it could have significant impact on margins.

(Notes: All data sourced from respective companies’ financial statements. Some companies don’t publish onsite / offshore break-ups, or have stopped publishing in the last few years)

 

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