Center plans 43 new IT cities in India

New Delhi: As rising cost of infrastructure and employees in big cities started threatening the Indian IT industry, the government has announced its plan to develop 43 new IT cities in the country, in order to tap the huge surge in demand for IT-enabled services over the next 10 years, while maintaining its cost effective appeal, reported The Economic Times.

The move comes when IT and BPO companies are losing their global cost advantage with the emergence of countries like Vietnam and the Philippines which offer similar services at cheaper rates and are threatening India's status as the world's back office.

The plan seeks to find a way out of the situation where companies find it difficult to recruit quality employees as the allure of BPO jobs dulls and attrition rates go up.

Infrastructure constraints in Bangalore, Gurgaon and elsewhere are other spanners in the work.

Source: SiliconIndia.com

It is felt that these new towns will provide a steady supply of workers besides being specifically geared towards the needs of the IT and BPO sectors. The proposal, suggested by a high-level group on service sector, has been cleared by the Planning Commission. "The modalities for the ambitious plan will be finalized very soon," sources said.

Indian inflation races to seven-year high

India’s inflation rate hit its highest level in seven years at the end of May, prompting speculation that the central bank would be forced to increase interest rates for the second time in a matter of weeks to contain soaring prices.
In a surprise increase, inflation jumped to an annual rate of 8.75 per cent on May 31, up from 8.24 per cent a week earlier, with economists warning it was likely to breach 10 per cent in figures to be released next week that will reflect fuel price rises at the start of June.

“Headline inflation is about to reach double digit levels,” Morgan Stanley economist Chetan Ahya said. “The RBI will likely hike the policy rate again.”
Central banks across Asia are facing off against inflation as a surge in the price of oil beyond $130 is driving up the cost of basic goods in a region that imports most of its fuel.
India’s United Progressive Alliance, the ruling coalition led by the Congress party, has taken a series of administrative measures to contain prices, ranging from curbing exports of essential commodities to suspending futures trading in key food items.

But the moves have proven largely futile in quelling inflation. Friday’s surprise increase was partly the result of a rise in the cost of some edible oils, an item whose price the government had earlier sought to control through import duty cuts and the suspension of futures trading.
Another contributor to Friday’s sharper-than-expected increase in inflation was the textile sector, an industry that is heavily dependent on petrochemicals as a raw material.
With the central government measures faltering, the RBI was forced to take emergency action, announcing after market hours on Wednesday an emergency increase in its key “repo” lending rate by 25 basis points to 8 per cent, its highest level in more than five years.
Economists now expect the RBI to increase rates by a further 25 basis points on July 29, its next scheduled policy meeting, in an effort to send a strong signal on inflation and to support the rupee, which has depreciated 8 per cent against the dollar this year.
Economists say India’s policymakers are now making a priority of controlling inflation even at the expense of growth – the economy expanded 9 per cent in the fiscal year that ended in March.
But with inflation emerging as the number one political issue ahead of a general election that must be held by May next year, that is a price India’s government is happy to pay.
India’s hundreds of millions of poor voters are highly sensitive to even minor increases in the cost of living.
Sonal Varma, an economist with Lehman Brothers, said the inflation figures for the week ended June 7, to be released next Friday, would probably reflect a government increase in India’s retail fuel prices of an average of 10 per cent as well as potentially an increase in aircraft fuel prices.
It is also likely to be driven higher by the base effect of a year earlier, when inflation dipped during the same period.
“Everything seems to be bunched up in a week where you will already have fuel prices and will already be coming off a negative base. That’s the reason why we are looking at a step increase up to 10 per cent next week,” Ms Varma said.

Source: FT.com

India's Business Schools Need an Upgrade

A business group study finds that most MBA programs need better faculty, texts, and certification
Business education is booming in India, but the bulk of rank-and-file programs in the country suffer from outdated textbooks, professors who don't keep up with economic trends, and narrow curriculums, according to a recently released report by an Indian business group.
The Business Barometer study was issued last month by the the Associated Chambers of Commerce & Industry of India (Assocham), the country's leading chamber of commerce organization. It found that beyond the top 30 institutions, most business school professors and lecturers in India's business schools are ignorant of the world's major economic trends and key developments, such as the subprime crisis in the U.S. Few read business publications.
The study's author, Jyoti Bhutani, called the findings "shocking," adding that Indian businesses are finding it difficult to get top-quality graduates. She said there is "a huge gap" between the pay packages offered to grads of top Indian business schools (BusinessWeek.com, 4/13/08) and those provided to grads of the lesser institutions.
Faculty Not Up to Par
The survey was done to assess the faculty's grasp on practical subject matter and general economic awareness at India's various MBA schools. The business school market in India has exploded in the past few years, with more than 1,600 business schools offering undergraduate business and MBA programs (BusinessWeek.com, 9/13/05). But their academic standards remain uneven: No single, independent regulator oversees the universities and colleges. As a result, the quality of many faculty members falls short, leaving students with a degree that is "devoid of any real value," said Bhutani, assistant director of Assocham's research bureau.
"While the top B-schools of India are increasingly getting recognized internationally, the remaining thousands of management institutes in the country have dismal standards of faculty," Bhutani said via e-mail.
The study found that only 6% of the 258 faculty members she surveyed read any business newspaper on a regular basis, with steady readership of business magazines "negligible." As a result, teachers are often unaware of key economic developments in India and the world. For example, 89% of the teachers did not know what India's gross domestic product growth rate was in 2006-07. Almost 92% weren't aware that the country's foreign exchange reserves have surpassed $300 billion. The study found that 91% of lecturers teaching a Business Environment class called did not know how to read financial documents, and 90% did not know that the U.S. might be in recession.
Additionally, most of the case studies or examples discussed in class are outdated because the library books used by lecturers are old. Many of the books are written by authors outside India, and teachers use case studies that lack Indian content.
A Patchwork of Certifying Agencies
"As the teachers themselves are ill-informed, even the students remain unaware of real-world developments," Bhutani said. "It has a direct bearing on the employability of the students."
Adding to the problem is a patchwork of more than a dozen accreditation agencies in India. The National Knowledge Commission, which serves as an advisory group to India's Prime Minister, criticized existing Indian regulators and accreditation bodies in a 2006 report.
"There are several instances where an engineering college or a business school is approved, promptly, in a small house of a metropolitan suburb without the requisite teachers, infrastructure, or facilities, but established universities experience difficulties in obtaining similar approvals," the commission wrote in the report.
M.S. Shyamsundar, deputy adviser for the government-run National Assessment & Accreditation Council, said his agency had accredited about 15 business schools, all of which adhered to his agency's strict criteria and guidelines. He acknowledged that the academic quality of business schools varies widely throughout the country. "I think we have different shades of quality institutions, ranging from very mediocre to very good," Shyamsundar said in a telephone interview.
Accreditation Must Be Improved
He said he hopes more business schools will come forward for accreditation in the next few years, a step that will go a long way to improve the reputation of these management institutions. "Quality is one of the pressing concerns," he said. "This is why we are asking them to come forward for accreditation. Once they do this, the schools can know their strengths and weaknesses."
John Fernandes, president of the U.S.-based Association to Advance Collegiate Schools of Business International (AACSB), said his agency is working with four or five of the top Indian business schools that are seeking AACSB accreditation. Most are members of the "elite" business school cadre in India, known as India Institute of Managements. None of the top Indian business schools has accreditation from AACSB, one of the leading business school accrediting agencies.
Setting a high standard for Indian business schools by satisfying a quality accrediting agency is an important step for Indian business schools, said Assocham's Bhutani. An improved accreditation process would have a ripple effect on all Indian business schools, he continued, forcing them to improve the quality of teachers, materials, and professional development.

Source: BusinessWeek

The iPhone 3G Unveiled

Apple's new mobile device features improvements galore, not the least of which is a more attractive price tag that will likely ignite demand.

Almost a year after upending the mobile-phone world with its first wireless handset, the iPhone, Apple unveiled a souped-up second version of the device, the iPhone 3G.

Introduced by Apple (AAPL) CEO Steve Jobs in a June 9 keynote address in San Francisco, the iPhone 3G will sell for $199 for an 8GB version and $299 for a 16GB version. The new prices represent a departure from a year ago when the first devices sold for $599 on the upper end. The iPhone 3G will be available in 22 countries beginning July 11, and will eventually be sold in 70 countries in all.
The new phone derives its name from the faster Internet downloads available on advanced, or third-generation (3G), wireless networks. Jobs told the audience the new iPhone downloads Web pages as much as 36% faster than comparable phones from Nokia (NOK) and Palm (PALM). The new phone also sports a feature that lets users know their location using GPS satellites. Phones that run GPS technology are able to access an array of location-aware applications, including mapping within address books. Other improvements over the original device include improved audio quality on phone calls.
Juicing Demand
Improvements to the first version of the iPhone—the lower price in particular—will likely generate greater demand for one of Apple's most successful products to date. "If anyone needed proof that Apple was ready, willing, and able to go after lots of mobile-phone users, they got it today," says Gartner (IT) analyst Mike McGuire. "Apple is showing itself to be really serious about the phone market." Apple has sold 6 million units since the iPhone was introduced at the end of June, 2007. "More people desired to buy it, but they couldn't afford it," Apple Chief Operating Officer Tim Cook says.
Demand for the iPhone also stands to benefit the wireless carriers on whose networks the device runs—although Cook says the lower price reflects a subsidy that will be absorbed by the service providers. The official iPhone provider in the U.S. is AT&T (T). "The launch of 3G iPhone will be another opportunity for [Apple's] exclusive providers to boost [revenue per user] and market share gains, continuing what 2G iPhone started," UBS (UBS) analyst John Hodulik wrote in a research report.
Apple's stock dropped during the keynote, falling as much as $7.25, or nearly 4%, by 2 p.m. Eastern time, though it later recouped losses. Apple shares had slipped $4.03, or 2.2%, to 181.61 by the close of trading.
Apple also added features designed to make this version of the iPhone more attractive to business users. These include the ability to read documents from Microsoft Office (MSFT), including documents in Word, spreadsheets in Excel, and PowerPoint presentations. "We sort of checked the boxes on everything the enterprise wanted," Cook says.
Several New Features
Another new feature is a service called MobileMe, an expansion of Apple's existing .Mac Web service, which offers hosted e-mail, online storage, and other services for users of Apple's Macintosh computers. During the presentation, Apple Senior Vice-President Phil Schiller described the service as "Exchange for the rest of us," referring to Microsoft's widely used corporate e-mail, calendar, and contact-list tools.

E-mail messages, calendar updates, and contacts are updated live via a wireless Internet connection, and data are synchronized between the iPhone and a Macintosh or Windows PC.
Google's (GOOG) map application has been integrated into contact lists. The service also lets users update their online photo albums directly from iPhones. Users will also be able to store up to 20GB of data from both their computers or their iPhones via an application called iDisk. The service will be available for $99 a year, and also available for a free 60-day trial starting in July.
Apple is able to make such a large price cut because wireless carriers including AT&T will subsidize about half the price of the new phone. Under existing arrangements, Apple takes a cut of the revenue collected by carriers for iPhone service plans. Analysts have speculated that Apple's share is as high as 30%, though precise deal terms have not been disclosed.
Under arrangements for the new iPhone, Apple is relinquishing the revenue-sharing arrangements in exchange for subsidies it hopes will move more phones off shelves. "Higher unit volumes will offset removal of carrier revenue share payments," Piper Jaffray (PJC) analyst Gene Munster wrote in a June 9 research note. AT&T said in a regulatory filing that its bottom line will take a hit as a result of the subsidies. Earnings will be cut 10¢ to 12¢ through the end of 2009, the company said. Owners of iPhones tend to generate double the monthly service revenue as owners of other devices, AT&T added.
Apple also introduced several new software applications created by third-party developers. Earlier this year, Apple made available a kit that makes it easier for software writers to create applications for the iPhone (BusinessWeek.com, 3/6/08).
New applications include an auction program from eBay (EBAY), a series of games from Sega and Pangea Software, a friend locator from wireless startup Loopt, and a pair of medical programs from Modality. The Associated Press, the global news organization, also demonstrated a service called the Mobile News Network, which gathers news content based on the phone's location, but also gives iPhone owners the ability to send photos and text to the AP when they see news happening. The blogging service TypePad also debuted an application for blogging directly from the iPhone.
Widespread Apps
Jobs said applications will be available from Apple's iTunes store and will be available in 62 countries. Small applications that require 10MB of memory or less will be downloadable over the air, while larger ones will require either a Wi-Fi connection or installation directly from iTunes. Developers who sell their software through iTunes will set the prices and will be allowed to keep 70% of the revenue from sales.
Corporate customers will be able to distribute applications to employees. Corporate technology managers will have the ability to authorize phones on their networks, and then create an approved list of applications that can run on those phones.

Source: BusinessWeek.

Why the Indian markets falling

It all started with the US subprime problem and the global credit crunch, which led the BSE Sensex nosediving from its peak of 21,206 on January 10, 2008 to 14,677 on March 18. A part of the fall can also be attributed to the concerns pertaining to the increase in crude oil prices and its impact on India's economic growth.
Some of the early signs were also visible from rising inflation and the slowdown in domestic industrial production numbers. This further led to concerns over high interest rates, slowdown in GDP and thus, corporate earnings as well.
Sensing these developments, foreign institutional investors were the first ones to move out of the market, and they partly became the reason for the markets to fall.
End of the bloodbath?
If the global and domestic problems persist, experts predict the Sensex to fall to 12,000-14,500 levels. Though bold and unbelievable, there are few players who are predicting that the Sensex may touch the 9,000 levels.
While we are not predicting the Sensex levels, we jot down and bring certain factors that may determine the future course of the markets and what investors should do during these uncertain times.
Crude realities
No investor will be willing to invest in an asset headed for reporting lower profits and no asset can be profitable if costs are higher than realisations.
Crude oil is one such commodity, whether it is the economy (macro) or corporate profitability (micro), which is considered to be the source of most of the problems.
While crude oil prices had corrected to $125 levels, after crossing $135 a barrel mark, it again scaled a new peak of $139.12 a barrel last week. There are reports predicting that it will go to $150 to $200 a barrel.
There are several reasons attributed to the recent spike in the crude oil prices including increased financial investments and a marginal rise in costs of oil production.
Whether the crude oil price rises to such high levels or not, experts suggest that the good old days of cheap oil may be gone for a long time to come.
Bloating deficit
According to studies, a $10 increase in the crude oil prices may reduce India's GDP growth by about 0.3 percentage points and an increase in the consumer price index by 1.2 percentage points.
India imports about 70 per cent of its oil requirements, suggesting that at current levels, it will have to pay a significantly higher amount to meet demand. It has already led to a large trade deficit (over 7 per cent of the GDP).
How they compare
Fiscal deficit, which is currently at about 3 per cent of the GDP, could reach to 10 per cent levels if the fertiliser, food, farm and oil subsidies are added.
Hence, further rise in crude oil prices will only make things worse. Not only this, rising oil will have serious consequences on others things as well.
"If crude oil touches $150 levels and sustains there, it will be a crude awakening for the global as well as for India. India's annual import bill will touch to $140 billion against the $78 billion estimated for the FY08," says Devendra Nevgi, CEO and CIO, Quantum Mutual Fund.
High inflation
High crude oil prices would have a sweeping impact on the Indian economy.
To put forth some of them: Higher inflation rate, rupee depreciation, increasing trade account and fiscal deficit, and firm interest rates. The other side of an oil shock would probably the ensuing political instability and social unrest.
Sector fortunes
The inflation rate, which is already high at over 8 per cent, could emerge as a key concern. Economists share different views with regards to inflation reaching the double digit figure in the short term, and if not, it could range at about 7-8 per cent, especially after the recent hike in the petrol and diesel prices
Source : Business Standard

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jihale masti.....