Davos (Switzerland):Worries over the impact of a US slowdown on India’s software services sector are exaggerated and clients of the country’s third largest software services exporter, Wipro Ltd, are showing no signs of reducing outsourcing, its top official said.
“I don’t think it’s a situation of gloom for the industry. I think it’s a situation of cautiousness for the industry,” said Azim Premji, chairman of Wipro.
Realistic outlook: Chairman of Wipro Azim Premji. (Photo: Hemant Mishra/ Mint)
“Don’t get carried away. Run a tight ship. Have realistic expectations,” Premji said during the annual meeting of the World Economic Forum in the Swiss resort of Davos.
Earlier this month, New York-listed Wipro reported a lower-than-expected 11% rise in quarterly profit, its slowest growth in four years and said higher billing rates should help offset rising costs from wage hikes and a firm local currency.
Bangalore-based Wipro counts Cisco Systems Inc., Nortel Networks and Credit Suisse among its clients.
Premji said Wipro’s customers in the banking and financial services industry, hit by the subprime worries and wobbly markets, were likely to drive global outsourcing even more aggressively in an uncertain economic environment.
“Trying to drive more offshore work on IT is one fairly effective methodology of cost takeouts without much risk because they are used to it, they are used to their partners, they are familiar with the system.” “We are sitting pretty. I think global delivery companies such as ours will be the last affected,” Premji said, echoing similar comments made by other leading Indian software firms. The banking and financial services industry accounts for about 25% of Wipro’s total IT revenue.
Shares in Indian IT firms were among the worst performers in a booming local market last year, hurt by concerns over the impact of a slowdown in the US, rising local wages and an appreciating currency.
“I think there is undue pessimism vis-a-vis the IT sector and I think it’ll correct itself sooner than later,” Premji said.
-Anshuman Daga/ Reuters
Schumacher to develop Dubai skyscraper
Dubai:Michael Schumacher, the seven-time world champion Formula 1 racing driver, will develop a 1 billion dirham (Rs1,070 crore) skyscraper in Dubai, as the emirate seeks to sell branded real-estate projects backed by sporting celebrities.
“We felt this was the right place to start and there could be follow-ups in other cities,” Schumacher said in an interview in Dubai on Sunday. “It is unique to be able to put your name to a physical building.”
The United Arab Emirates, home to about 8% of the world’s oil reserves, is seeking to diversify its economy by boosting tourism and developing real-estate projects backed by international celebrities and brands, including Donald Trump. Alternative Capital Invest, a closely held German real-estate investment company, will build the 29-story building bearing Schumacher’s name.
Police question former French bank trader
Paris:Jerome Kerviel, the trader accused of losing €4.9 billion (Rs28,469 crore) at Societe Generale SA through unauthorized dealing, was being questioned by police for a second day after going into custody on Saturday.
Societe Generale, France’s second largest lender by market value, handed information about Kerviel on 25 January evening as part of the probe, Isabelle Montagne, spokeswoman for the Paris prosecutor, said.
Societe Generale says the positions were in balance midday on 18 January. As European stock markets fell on average almost 2% that day, the positions were making losses of €1.4 billion by the evening, when Societe Generale managers first became aware of the fraud. As the bank moved to unload the positions on 21 January, a day when fears of a US recession sent European stock markets down on average 7%, the losses ballooned to €4.9 billion. The numbers were given by Societe Generale chairman Daniel Bouton in an interview with ‘Le Figaro’ and confirmed by the bank.
Google looking at Malaysian base: report
Kuala Lumpur: US search-engine giant Google is interested in setting up a base in Malaysia, Prime Minister Abdullah Ahmad Badawi said, according to reports on Sunday.
“They want to make their presence felt in Malaysia. It will be a big boost for our ICT (information and communications technology) industry,” Abdullah said at the World Economic Forum in Davos. “I was told that Malaysians formed the highest group of Google users in South-East Asia,” Abdullah said according to ‘The Star’ daily. Earlier reports here said that Google was looking at Malaysia, India or Vietnam to establish the world’s biggest server farm—a cluster of powerful computers used to store data.
Former Indonesian dictator Suharto dies at 86
Singapore/Jakarta: Former Indonesian president Suharto, who ruled the world’s largest Muslim population for almost 32 years and was ousted amid economic strife, allegations of corruption and violent pro-democracy protests, died on Sunday in a Jakarta hospital. He was 86.
The cause of death was multiple organ failure, said Djoko Rahardjo, a doctor on Suharto’s medical team.
Tarnished image: Former Indonesian president Suharto.
Suharto’s rule, one of Asia’s longest, produced an economy dominated by family and friends and a military of unchecked influence. He was credited with holding together a sprawling archipelago of 230 million people, made up of 300 ethnic groups, and blamed for the deaths of at least 500,000 people in the chaotic years after he took power.
On the economic front, Suharto succeeded where the rulers of other resource-rich nations, such as Angola and Zaire, now Congo, stumbled: he used oil, gas, timber and other resources to spur growth and social change.
Indonesia’s economy grew 6.1% annually during the 1980s, making it among the 10 fastest growing, according to the World Bank.
Suharto is alleged to have stolen as much as $35 billion (Rs1.3 trillion), 1.3% a year on average of Indonesia’s gross domestic product, according to a report published by the United Nations Office on Drugs and Crime in September. Mohammad Assegaf, Suharto’s lawyer, has said the UN report is “nonsense and illegitimate. There is no investigation to back the report.”
(Karima Anjani, Naila Firdausi and Arijit Ghosh in Jakarta and Mark Drajem in Washington contributed to this story.)
-Claire Leow and Berni Moestafa/ Bloomberg
IGI airport looks at July date for better services
New Delhi: The Indira Gandhi International (IGI) airport here is ready for an overhaul by July this year providing air travellers with international quality services including a reduced time span for check-in and reclaiming luggage.
“Long queues and baggage reclamation will be a thing of the past, as the number of check-in counters will be increased to 72 from present 32 and will come up in new domestic terminal building,” an airport official said.
The new terminal is likely to become functional by June end, and later, most of the low-cost carriers will be operating from there. The number of security channels will also be increased to 16 from the present four, the official said.
Besides, the airport will be the first airport in the country to have in-line baggage screening system for checking of baggage, which at present is done manually.
BJP workers urged to emulate Gujarat success
New Delhi: Bharatiya Janata Party (BJP) president Rajnath Singh urged his party workers on Sunday to emulate the success of the Narendra Modi-led government in Gujarat. Addressing the party’s national executive, which met to discuss inputs for the national council meet over the next two days, Singh said, “We have shattered the myth in Gujarat that the BJP government cannot return to power twice or thrice. Madhya Pradesh, Chhattisgarh and Rajasthan (which are due to face polls later this year) should also try to repeat this kind of success.”
Starting the first full-scale intra-party discussions since naming L.K. Advani as the party’s and the BJP-led coalition National Democratic Alliance’s prime ministerial candidate, Singh blamed the ruling United Progressive Alliance as well as the Left parties, which lend it a critical outside support, for the “irony” that “in the midst of the talk of India becoming a developed country starvation deaths are taking place and food riots are occurring.”
US hosts world’s big polluters in Hawaii
Washington: The world’s biggest greenhouse gas-polluting countries are sending delegates to Hawaii this week for a US-hosted meeting aimed at curbing climate change without stalling economic growth.
The two-day gathering, which starts on Wednesday in Honolulu, is meant to spur UN negotiations for an international climate agreement by 2009, so a pact will be ready when the current carbon-capping Kyoto Protocol expires in 2012.
In addition to the US, by many counts the biggest emitter of climate-warming carbon dioxide, the conference is expecting representatives from India, Australia, Brazil, Canada, China, France, Germany and Indonesia.
India could face export, capital flow risks: FM
Milan: India is not likely to be hit by a slowdown among developed economies, but should that happen, it could risk less competitive exports and higher capital flows, finance minister P. Chidambaram was quoted as saying on Sunday.
Slowing of the US economy has worried investors and policymakers, and concerns have also surfaced that the US downturn was spreading to the 15-nation euro zone.
“Our economy is driven by investments and by internal consumption, then by exports. We will adopt some fiscal measure but the crisis should not hit us,” Chidambaram said in an interview with Italian newspaper ‘Il Sole 24 Ore’. “As long as it does not go from one market to another: From subprime to insurance, from currencies to bonds. If it were like that, it could be a problem. But I think the crisis will be stopped in time.”
“If the dollar weakens and the rupee appreciates, exports will be less competitive; maybe capital flows will increase and we will have to keep inflation under control,” he said.
New political funding row hits Brown’s govt
London: A senior British minister faced accusations on Sunday that he had accepted illegal political donations, the latest funding row to hit Prime Minister Gordon Brown’s government. Britain’s ‘Sunday Mirror’ newspaper said a donor channelled £3,334 (Rs2.6 lakh) to health secretary Alan Johnson through a proxy, which is banned under political funding rules brought in by the ruling Labour Party to prevent sleaze. The Johnson row is the third party funding dispute to hit Brown’s government since he took office in June last year, pledging a fresh start after a Labour funding scandal that overshadowed Tony Blair’s final months in office.
Japan sets up five-year, $10 billion climate fund
Davos: Japan has set up a five-year, $10 billion (Rs39,400 crore) fund to support developing countries in their efforts to combat global warming—a move that is likely to gain priority at this year’s G-8 Summit.
Calling it the ‘Cool Earth Partnership’, Japanese Prime Minister Yasuo Fukuda, who will chair the G-8 Hokkaido Toyako Summit later in the year, said: “Japan will cooperate actively with developing countries’ efforts to reduce emissions, such as those to enhance energy efficiency.”
Japan will start disbursing the requisite amount to the developing countries from the fund this year. It will set aside up to $8 billion for assistance in climate change mitigation, and up to $2 billion for grants, aid and technical assistance for countries switching to clean energy.
Musharraf faces new militant challenge
Islamabad: With Islamic militants now massing at the gates of Pakistan’s main north-western city, President Pervez Musharraf faces a new challenge on his return from a foreign tour, analysts and officials said.
Resolve dilemmas: Pakistan’s President Pervez Musharraf.
After a week-long charm offensive in Europe aimed at convincing Western allies he can tackle Al Qaeda, Musharraf will fly home this week to find rebels clashing with security forces just outside bustling Peshawar.
In the nearby tribal belt bordering Afghanistan, Pakistani troops are still battling fighters led by the main suspect in the killing of Benazir Bhutto, adding to global concerns for the stability of the nuclear-armed nation.
Analysts said Musharraf must resolve a long-standing dilemma—go after the militant leadership and risk even more suicide attacks in Pakistan’s big cities, or hold back and see the insurgents push further into the country.
Cerberus, Five Mile eye Northern Rock stake
London: Asset management companies, Cerberus Capital Management Lp. and Five Mile Capital Partners Llc., may purchase stakes in Northern Rock Plc. after the UK government outlined a bond-financing plan for the bank, the ‘Sunday Times’ reported.
The two companies are among several asset managers that expressed an interest in buying stakes after the government said it would guarantee bonds backed by Northern Rock’s mortgage assets, the newspaper said.
Disabled US spy satellite could hit Earth in Feb
Washington: A large US spy satellite has lost power and could hit Earth in late February or early March, government officials said on Saturday.
The satellite, which no longer can be controlled, could contain hazardous materials, and it is unknown where on the planet it might come down, they said. The officials spoke on condition of anonymity because the information is classified as secret. It was not clear how long ago the satellite lost power, or under what circumstances.
“Appropriate government agencies are monitoring the situation,” said Gordon Johndroe, a spokesman for the National Security Council, when asked about the situation after it was disclosed by other officials.
“Numerous satellites over the years have come out of orbit and fallen harmlessly. We are looking at potential options to mitigate any possible damage this satellite may cause.”
He would not comment on whether it is possible for the satellite to perhaps be shot down by a missile. He said it would be inappropriate to discuss any specifics at this time. A senior government official said other nations are being kept apprised of the situation.
Tamweel plans India, Morocco expansion
Davos: Dubai-based Islamic mortgage lender Tamweel PJSC said it plans to expand into India, Morocco and Turkey, and expects to turn a profit from Egyptian and Saudi operations next year.
“In Egypt and Saudi Arabia, it is all approved and we are just setting up,” chief executive Adel al-Shirawi said on the sidelines of the World Economic Forum in the Swiss ski resort of Davos. “We will start to earn there in 2009.”
Shirwai said Tamweel was benefiting from lower interest rates because that was widening the gap between the price at which it borrows and lends home owners.
Merck, Schering-Plough to?assist?in?Vytorin?probe
Washington: Pharmaceutical firms, Merck and Co. and Schering-Plough Corp., will cooperate in the probe of Vytorin by New York attorney general Andrew Cuomo, who wants to know if the two companies hid research on the cholesterol-lowering drug.
Cuomo’s investigation focuses on the marketing of the drug and sales of the companies’ shares before the negative results were made public, the attorney general’s office said on Saturday in an emailed statement.
A study released on 14 January showed that Vytorin, a combination of the drugs Zocor and Zetia, which had $5 billion (Rs19,800 crore) in sales in 2007, may be no more effective at reducing plaque buildup inside the arteries than Zocor alone.
New York’s Medicaid programme for those with low incomes has paid about $21 million for Vytorin in the past two years rather than buying a cheaper generic version that might be at least comparable to the name brand, Cuomo said.
India, Pak ministers discuss IPI gas pipeline
London: Petroleum ministers of India and Pakistan have held discussions on the multi-billion-dollar Iran-Pakistan-India (IPI) gas pipeline project, with both sides expressing their keenness to put it on stream.
Keen interest: Union minister for petroleum and natural gas Murli Deora.
Union petroleum and natural gas minister Murli Deora was invited by his Pakistani counterpart Ahsan Ullah Khan to visit Islamabad to sort out various issues outstanding because of which the pipeline is pending, during their meeting held at the Crowne Plaza Hotel here on Saturday.
Deora assured the Pakistani minister that “India is keen” on the 2,775km pipeline and issues like the transit fees and strategic investment should be sorted out.
Khan, who is accompanying President Pervez Musharraf during his current visit to Britain, insisted that “Pakistan is equally keen that the project is put on stream,” official sources said.