01-13-2009, 04:52 PM
<!--QuoteBegin-Bodhi+Jan 13 2009, 01:20 PM-->QUOTE(Bodhi @ Jan 13 2009, 01:20 PM)<!--QuoteEBegin--><!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->These Indian companies<!--QuoteEnd--><!--QuoteEEnd-->
Mudy Ji,
As far as bailing out satyam goes, the whole thing clearly shows that kangress is involved. Why bail out a fraud company? Did they bail out the delhi shop keepers last year, when kangress government lost the sealing case in supreme court and thousands of shop keepers lost their livelihoods in a single day?
What obligation does Indian taxpayer has to bail them out? What for? It must be remembered that Satyam has already been enjoying tax holidays due to software export zone acts of GoI and software technology park provisions of several states govts incl. AP, TN, OR and UP. By cooking up its fake income from exports, thereby claiming tax refunds, Satyam have cheated the taxpayers too. It is abominable that now kangress wants to bail out this company at the same tax payers money!
But that aside, lumping with this crookery of Satyam, the Indian Industry itself, something that you once again want to repeat by using terms such as "These Indian companies", is not only unhealthy but also untrue. Satyam does not represent India.
[right][snapback]93063[/snapback][/right]
<!--QuoteEnd--></div><!--QuoteEEnd-->
Dear Bodhi,
Reading your comment I couldnt help but respond although it is not directed to me.
While I fully respect and appreciate your thought on your opinion I wish to bring to your notice that Satyam case is having a far serious impact on the market than what is visible.
1) OBAMA is anti - outsourcing and wants to restore jobs to Americans and he has come on stage when IT industry is reeling under recession .This will be a shot in the arm for all anti-outsouring elements in the US to bring in regulations and legislations that will shrink the market for India.USA remains still the largest Business partner to INDIA in IT with 36% of the total exports business share.The flexibility of the US market in terms of business transaction is very comfortable for India both culturally as well as in economic terms as against Europe and Japan
2)Going by the previous post recession data in 2003-4 Lot of compliance and regulations were brought across to vendors to qualify for contracts. While the Pvt markets were suffering, the US govt was busy offloading the govt contracts to US SMEs to support them and prevent them from closing them down.This made the market too tight for Indian Software units and we had reports of nearly 268 companies either closing down or sold off.
3) If Satyam is allowed to collapse then the insecurity amongst the overseas investor will be high.Wasnt this the same reason in DHABHOL project where the performance guarantee was required and the Maharastra government wanted the Central government to stand as a counter guarantee in terms of insolvancy or non payment . Why do we have that sense of irrevocable faith in LIC (life insurance corporation) and not in ICICI or any other .Because we are sure that even if there is market meltdown we are secured.If the overseas investor hesitate to invest then it will have a severe strain on the forex reserve and also on the fiscal management. When you attract investment overseas you have to give that confidence and assurances to investment community.It will take enormous efforts to win back the market sentiments in our favour.We cannot forget the 1991 forex crisis and how we escaped being a Bankrupt country.
4)Another aspect is the IT industry itself will have a saturation of talent force as 53,000 employee force is to high a stake. With these workforce let loose in the market the way recruitment process is undertaken will change forever as abundant supply of talent exceeding demand means the valuation is falling.We are already seeing many family suicide pacts in metros due to the Stock market collapse creating financial distress.Imagine what can happen if these Satyam employees are not accomodate back elsewhere?? isnt it evident that recruitment across the industry halted 4 months back for want of projects and thousands are already on bench with all the IT companies put together.
<b>
What you say makes sense that Satyam is not representing INDIA INC</b>
Satyam represented India till just 5 months ago by bagging the best corporate governance awards continuesly for last 3 years.Thw world knew of India vis a vis a Satyam that was 5 months ago as factor of "Pride". We suddenly cannot disassociate the connection as it has been disgraced
But isnt it also a fact that the top 20 IT companies of India also do not represent India in whole. They are the leaders .Fine !!!
They set the bar high .Fine !!!
But why do we neglect that the SMEs in India all put together generate more revenues to the forex reserves vis Exports than the top 20.
Post Satyam collapse it will be very difficult for SMEs to meet the high compliance costs in terms of CMMi, Project management and other quality process which the top 20 or even the top 100 can spend on but the lower industry segments are unable to to do so as it doesnt make any sense in spending on all those factors when their contract value will be far lower than the cost .A CMMi implementation costs Rs 2-5 crore.A six sigma compliance cost Rs 50 lakhs to 1.5 crore while a BS certification costs around Rs 1 crore.Sometimes the regulations require to have all three of them.
In most of the contracts the forerunner clause is that a company must have a turnover of minimum $ 200,000.00 to qualify INR 1 crore. If this bar is raised and more compliances like audited balance sheet for last 4-5 years is asked then it will be very difficult for SMEs to virtually bag business .It may also become mandatory for Indian business to have a local presence in the origin of the business country to have greater legal implications to qualify that means then they have to be rated in by the DUNS & BRADSTREET to qualify which is the local norm in US.
So it is these SMEs companies that will take a direct hit and I am sure all related industry which thrive on these segments like the Cateering, Cottage industry,hospitality and transport will take a big hit as well in Metros.Retailing industry has already shown significant slump indicating consumers sentiments Other depending industries are the temp staffing and second tier IT companies who outsource their skills on select aspects of projects based on their expertise.
The breakeven for these industries are fairly long and they will not be able to take so much pressure especially when the external business environment is also reeling under recession.It will force many out of the race or into financial traps or mini Satyams phenomenon
As per some study Japan took 18 years to recover from recession and What US is currently facing is far overpowering compared to all previous 4 recessions undergone so far since 1945 and they havent hit the bottom yet .Possibilities are that this will take more than 36 months to even 5 years to START recovering.
Our economy has already slowed down and so has China . It will take a lot of time for market to correct itself and get back on the rail once more .
In the meantime what will be the cascading effect of the SATYAM factor on all of the economy is to be examined carefully while there is still time to control damage.
<b>Ultimately its the tax payer on the road who gets effected and not the babus in the Govt or the top 100 companies based on which the world see India.</b>
In North India every person from South is called or related to as a Madrasi ( Madras - chennai) irrespective to which state he/she belongs to in south.
Similarly when you pitch for business in the overseas market People will at least for some months ahead confront any Indian entrepreneur with Satyam irrespective to the market realities.Unwillingly each one of us have to explain the incident.
Again the overseas investors and Business community will look at the Indian government with double standards . Having no severe punishment mechanism in place and show us as a lenient and a corrupt country when it comes to financial frauds.The OECD country members anyway dont recognise our contractual agreements with arbitration clauses .<b>This is the image that the business houses and entrepreneurs have been fighting as an uphill task with to establish business in the NAFTA and the OECD countries for many years now.Not many are aware of this as we only see the India is shining factor </b>
Mudy Ji,
As far as bailing out satyam goes, the whole thing clearly shows that kangress is involved. Why bail out a fraud company? Did they bail out the delhi shop keepers last year, when kangress government lost the sealing case in supreme court and thousands of shop keepers lost their livelihoods in a single day?
What obligation does Indian taxpayer has to bail them out? What for? It must be remembered that Satyam has already been enjoying tax holidays due to software export zone acts of GoI and software technology park provisions of several states govts incl. AP, TN, OR and UP. By cooking up its fake income from exports, thereby claiming tax refunds, Satyam have cheated the taxpayers too. It is abominable that now kangress wants to bail out this company at the same tax payers money!
But that aside, lumping with this crookery of Satyam, the Indian Industry itself, something that you once again want to repeat by using terms such as "These Indian companies", is not only unhealthy but also untrue. Satyam does not represent India.
[right][snapback]93063[/snapback][/right]
<!--QuoteEnd--></div><!--QuoteEEnd-->
Dear Bodhi,
Reading your comment I couldnt help but respond although it is not directed to me.
While I fully respect and appreciate your thought on your opinion I wish to bring to your notice that Satyam case is having a far serious impact on the market than what is visible.
1) OBAMA is anti - outsourcing and wants to restore jobs to Americans and he has come on stage when IT industry is reeling under recession .This will be a shot in the arm for all anti-outsouring elements in the US to bring in regulations and legislations that will shrink the market for India.USA remains still the largest Business partner to INDIA in IT with 36% of the total exports business share.The flexibility of the US market in terms of business transaction is very comfortable for India both culturally as well as in economic terms as against Europe and Japan
2)Going by the previous post recession data in 2003-4 Lot of compliance and regulations were brought across to vendors to qualify for contracts. While the Pvt markets were suffering, the US govt was busy offloading the govt contracts to US SMEs to support them and prevent them from closing them down.This made the market too tight for Indian Software units and we had reports of nearly 268 companies either closing down or sold off.
3) If Satyam is allowed to collapse then the insecurity amongst the overseas investor will be high.Wasnt this the same reason in DHABHOL project where the performance guarantee was required and the Maharastra government wanted the Central government to stand as a counter guarantee in terms of insolvancy or non payment . Why do we have that sense of irrevocable faith in LIC (life insurance corporation) and not in ICICI or any other .Because we are sure that even if there is market meltdown we are secured.If the overseas investor hesitate to invest then it will have a severe strain on the forex reserve and also on the fiscal management. When you attract investment overseas you have to give that confidence and assurances to investment community.It will take enormous efforts to win back the market sentiments in our favour.We cannot forget the 1991 forex crisis and how we escaped being a Bankrupt country.
4)Another aspect is the IT industry itself will have a saturation of talent force as 53,000 employee force is to high a stake. With these workforce let loose in the market the way recruitment process is undertaken will change forever as abundant supply of talent exceeding demand means the valuation is falling.We are already seeing many family suicide pacts in metros due to the Stock market collapse creating financial distress.Imagine what can happen if these Satyam employees are not accomodate back elsewhere?? isnt it evident that recruitment across the industry halted 4 months back for want of projects and thousands are already on bench with all the IT companies put together.
<b>
What you say makes sense that Satyam is not representing INDIA INC</b>
Satyam represented India till just 5 months ago by bagging the best corporate governance awards continuesly for last 3 years.Thw world knew of India vis a vis a Satyam that was 5 months ago as factor of "Pride". We suddenly cannot disassociate the connection as it has been disgraced
But isnt it also a fact that the top 20 IT companies of India also do not represent India in whole. They are the leaders .Fine !!!
They set the bar high .Fine !!!
But why do we neglect that the SMEs in India all put together generate more revenues to the forex reserves vis Exports than the top 20.
Post Satyam collapse it will be very difficult for SMEs to meet the high compliance costs in terms of CMMi, Project management and other quality process which the top 20 or even the top 100 can spend on but the lower industry segments are unable to to do so as it doesnt make any sense in spending on all those factors when their contract value will be far lower than the cost .A CMMi implementation costs Rs 2-5 crore.A six sigma compliance cost Rs 50 lakhs to 1.5 crore while a BS certification costs around Rs 1 crore.Sometimes the regulations require to have all three of them.
In most of the contracts the forerunner clause is that a company must have a turnover of minimum $ 200,000.00 to qualify INR 1 crore. If this bar is raised and more compliances like audited balance sheet for last 4-5 years is asked then it will be very difficult for SMEs to virtually bag business .It may also become mandatory for Indian business to have a local presence in the origin of the business country to have greater legal implications to qualify that means then they have to be rated in by the DUNS & BRADSTREET to qualify which is the local norm in US.
So it is these SMEs companies that will take a direct hit and I am sure all related industry which thrive on these segments like the Cateering, Cottage industry,hospitality and transport will take a big hit as well in Metros.Retailing industry has already shown significant slump indicating consumers sentiments Other depending industries are the temp staffing and second tier IT companies who outsource their skills on select aspects of projects based on their expertise.
The breakeven for these industries are fairly long and they will not be able to take so much pressure especially when the external business environment is also reeling under recession.It will force many out of the race or into financial traps or mini Satyams phenomenon
As per some study Japan took 18 years to recover from recession and What US is currently facing is far overpowering compared to all previous 4 recessions undergone so far since 1945 and they havent hit the bottom yet .Possibilities are that this will take more than 36 months to even 5 years to START recovering.
Our economy has already slowed down and so has China . It will take a lot of time for market to correct itself and get back on the rail once more .
In the meantime what will be the cascading effect of the SATYAM factor on all of the economy is to be examined carefully while there is still time to control damage.
<b>Ultimately its the tax payer on the road who gets effected and not the babus in the Govt or the top 100 companies based on which the world see India.</b>
In North India every person from South is called or related to as a Madrasi ( Madras - chennai) irrespective to which state he/she belongs to in south.
Similarly when you pitch for business in the overseas market People will at least for some months ahead confront any Indian entrepreneur with Satyam irrespective to the market realities.Unwillingly each one of us have to explain the incident.
Again the overseas investors and Business community will look at the Indian government with double standards . Having no severe punishment mechanism in place and show us as a lenient and a corrupt country when it comes to financial frauds.The OECD country members anyway dont recognise our contractual agreements with arbitration clauses .<b>This is the image that the business houses and entrepreneurs have been fighting as an uphill task with to establish business in the NAFTA and the OECD countries for many years now.Not many are aware of this as we only see the India is shining factor </b>