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|INFOTECH INDIA | Tech Briefs:
Wipro Rushes to Plug Gap after $4M Fraud | India's IT Industry Seeks Tax Sop Extension | PC Sales Up 1 Percent to 3.7M Units | INFOSYS: Eyeing Europe | Techno Lodges | WIPRO: Deal with CAE | HITACHI: Storage Service | MAHINDRA SATYAM: Tax Dispute | e-governance | Mega Deals
Wipro Rushes to Plug Gap after $4M Fraud
A Wipro employee embezzled millions of rupees over the past three years, sending India’s third-largest software exporter scrambling to tighten internal controls in the finance division where the fraud took place.
The employee had been working with the company for the past three years in the “controllership” division within the finance department. This cell is responsible for keeping the company’s financial books and also has powers to authorize payments whenever needed. The employee is believed to have embezzled about $4 million by stealing a password and transferring money from Wipro’s account at a bank.
Wipro CFO Suresh C. Senapaty confirmed the incident. “This has been a case of embezzlement, which we discovered in December, and it’s very unfortunate that this person succumbed to this,” Senapaty said. “The company has carried out an investigation and is undertaking actions with respect to stricter adherence to processes.”
Wipro has since disbanded the controllership unit. The fraud is believed to have cost the company about $4 million. Wipro officials have succeeded in recovering about half the money, but will still face a loss of about $2 million.
Senapaty said the incident did not involve more than one Wipro staffer. “Our investigations have revealed that only this employee was involved, and nobody else in the team had any clue,” Senapaty said.
Apart from setting up an internal investigation team, Wipro has also taken help from external auditors and investigation experts. The company is already engaged with an external agency for conducting assessment of the existing audit and other processes.
The amount involved is not large, but the incident has upset people at the helm of India’s IT giant. Wipro has always taken pride in the sound work ethics of its employees and in the strictness of its controls.
India's IT Industry Seeks Tax Sop Extension
India's export-driven IT sector has sought extension of a key tax benefit scheme to beyond its 2011 deadline in the federal budget, which industry players say will help small and medium technology companies.
The software industry wants units in software technology parks or STPIs to be treated at par with special economic zones or SEZs, which are duty-free economic enclaves where units can claim tax breaks for longer than 10 years, besides other perks. "One of our demands is that STPI units get the same benefits as SEZ units keeping in mind the small and medium enterprises," said Som Mittal, president of National Association of Software and Services Cos, a software lobby.
"Large companies are already in the 21-22 percent tax bracket so they will not be impacted by the extension of the STPI scheme. There will be no loss to the exchequer too as these big companies are paying these taxes," Mittal said.
The government had introduced the Software Technology Parks of India scheme in 1991 to encourage software exports, which helped make India one of the world's leading hubs for software and business process outsourcing.
In its budget last July, the government had extended tax benefits for units in STPI by a year to March 2011. Units set up in these parks are eligible for a 10-year tax holiday, besides other perks.
Mid-sized companies such as MindTree and HCL Technologies Ltd are likely to benefit from the extension, said Harit Shah, technology analyst with Karvy Stock Broking. "We expect a further extension in light of the fact that the industry has just recovered from a severe global slowdown, with mid-sized IT companies, in particular, bearing the brunt of slowing order flows," Shah said.
PC Sales Up 1 Percent to 3.7M Units
Improving market sentiments helped sales of personal computers rise by 1percent to over 3.7 million units during the first six months of 2009-10, mostly driven by demand in the last few months. “Although the sales growth was subdued in enterprises, the overall consumption in the PC market was led by telecom, BFSI, education and household segments,” IT hardware industry body MAIT executive director Vinnie Mehta said. The total PC (including desktops, netbooks, notebooks) sales stood at 3.71 million between April and September 2009, MAIT said.
With market sentiments improving in the latter part of the fiscal, MAIT expects PC sales to pick up and cross 7.3 million units in FY10, showing a 7 percent growth, he added. On the industry body’s budget wish list, MAIT president and HP president Ravi Aggarwal said: “We want stability in policy framework and the stimulus package to continue. MAIT has strongly recommended that the 8 percent excise duty on all IT products and components be maintained.”
The body is also pushing for the removal of the 4 percent special additional duty, which will help local manufacturers compete in the market, Aggarwal added.
In the first six months, desktop sales fell 11 percent to 2.61 million units compared with 2.91 million units in the same period last year.
INFOSYS: Eyeing Europe
IT giant Infosys mulling acquisitions in Europe and some non-English countries across verticals.
"We are looking for acquisitions," Infosys chief executive officer and managing director Kris Gopalakrishnan told reporters here on the sidelines of the NASSCOM India Leadership Forum here in Mumbai.
The company was looking at acquisitions across Europe, and non-English-speaking countries and even in the U.S., Gopalakrishnan said.
The Infosys official said that the company had plans to recruit from campuses for the next year.
"We are already recruiting in the campuses. In the campuses, we hope to recruit 15,000 people," he said. "We already gave a raise (in salary) in October, about 8 percent on an average in India. And what we will do in April, we will wait and see because the next cycle for increment is in April."
Stating that discretionary spending was happening, the Infosys official said that it, however, remained to be seen how fast it would rise and what would be the quantum.
"Discretionary spend is happening now. But we will have to wait and see how fast it will rise, how much it will be, etc...but definitely, we are seeing signs of discretionary spending, we are seeing opportunities in transmission areas," he said.
Gopalakrishnan also said that the company had filed 200 applications for patents and they were at different levels of processing.
Financial services led the recovery and these companies were looking at emerging markets.
Keeping to its policy of broad-basing the IT industry in the state, the Kerala government has sanctioned setting up six new techno lodges. These will be located at located at Thirumarady in Ernakulam district, Veliyam, Anchal and Poothakulam in Kollam district, Kodakara in Thrissur district and Mayyil in Kannur district.
New locations for establishing techno lodges have been identified with the help of government/local bodies of small towns and rural panchayats having good accessible roads, buildings, electricity, water and other basic infrastructure the IT sector. The techno lodges are expected to provide competent IT/ITES infrastructure in rural areas, and lead to rural employment opportunities.
The techo lodge concept is being overseen by the Kerala State Information Technology Infrastructure, a state government-promoted company. KSITIL undertakes the initial investment in the techno lodges, and has already established two lodges at Kadakkal and Perinad Panchayats in Kollam district.
In establishing the new lodges, KSITIL is being assisted by Technopark, InfoPark and Cyberpark, the three leading technology parks in the state.
Kerala IT principal secretary Ajay Kumar said the plan to establish techno lodges as low-cost alternative locations for BPOs was now being realized in the state, adding that the first two techno lodges being taken over by Accentia Technologies had generated interest among other companies in the concept of low-cost operations that could also tap rural talent in the state.
WIPRO: Deal with CAE
Wipro has announced it has signed an agreement with CAE Inc to jointly address the growing simulation-based training.
Wipro and CAE will collaborate to provide training systems integration and simulation-based solutions for areas like war gaming, C4ISR and a range of defense platforms expected to be acquired by India's defense forces, the Bangalore-headquartered Wipro said in a statement.
The two companies would also work together to help original equipment manufacturers meet offset obligations in India that are required by the Defense Ministry.
"Both companies shall provide joint investments, sales support and local production support based on the respective expertise of each company", it said.
Wipro will also work closely with Bangalore-based CAE India Pvt Ltd, which is incorporated in India and is part of CAE's global family of companies serving the defense market.
CAE India is leveraging CAE's full breadth of simulation products, technologies and capabilities to address the requirements of defense forces, it said.
HITACHI: Storage Service
Sify Technologies limited has announced the launch of on-demand storage service in partnership with Hitachi Data System to manage the complete life-cycle of enterprise information, from its inception to its final disposal.
The fully-managed, utility based, on-demand, scalable storage platform is powered by Hitachi Data Systems.
"We offer On-Demand 'Cloud Infrastructure' for companies seeking dynamic scalability, business agility, high-availability and enterprise security across compute, storage, security and network platforms while reducing costs," Sify executive president Pardip J. Nath told reporters in Mumbai.
“The launch of our On-Demand Storage platform is a significant step towards Sify's journey towards building India's best Cloud Infrastructure,” he said.
Sify's On-Demand storage service reduces the complexities of deploying and managing multiple storage tiers, and lowers operational costs by automating management with flexible need based pricing, he added.
MAHINDRA SATYAM: Tax Dispute
Mahindra Satyam (formerly Satyam Computer) has said it has filed a lawsuit in a New York court against its former U.K. client Upaid, seeking to make it solely responsible for any tax liability arising from an out-of-court settlement reached by them.
In December last year, Satyam had offered to settle all disputes with Upaid Systems over license of intellectual property, among others, by paying $70 million to the U.K.- based provider of mobile and online payment-transaction services.
Mahindra Satyam sources said there is a stand-off between Satyam and Upaid over the tax liabilities.
In a regulatory filing on BSE, Mahindra Satyam said: "In the lawsuit filed on February 22, 2010, Satyam is asking the New York court for a declaration that the settlement agreement is valid and enforceable... Upaid is solely responsible for any tax liability arising from that $70 million settlement payment, including responsibility for complying with tax deduction requirements."
It further said to the extent there is any tax deduction required, it shall be deducted from the $70 million, plus interest, currently in the escrow account that would otherwise be payable to Upaid.
In its court declaration, Satyam further said under the terms of the Agreements, the disbursement of funds from the escrow account must be made in accordance with Indian law, including any requirement to deduct taxes from the settlement amounts prior to disbursement.
Satyam is entitled to receive from Upaid all the benefits of the settlement agreement, including the release of claims, license of intellectual property and dismissal of pending litigation, the Indian software maker contended in the petition.
The Indian government plans to spend $10 billion on the National e-Governance Program, a senior government official said.
"The government has committed about $10 billion to this program, of which some investment is coming from private partners and also from the state governments,” S.R. Rao, an official with the Ministry of Communication & Information Technology, told reporters on the sidelines of a conference in Mumbai.
Every day more and more investments are coming in, he said.
"In this current financial year, it could be to the order of Rs 5,000-6,000-crore at the minimum but I think it would be as large as Rs 8,000-crore," Rao said.
In 2006, the government approved the National e-Governance Plan comprising of 27 Mission Mode Projects and eight components.
"e-Governance will be promoted as a centralized initiative, to the extent necessary, to ensure citizen service orientation, to realize the objective of inter-operability of various e-Governance applications and to ensure optimal utilization of ICT infrastructure/ resources," Rao said.
Public private partnerships would be promoted wherever feasible to enlarge the resource pool without compromising on the security aspects and for this purpose, he added.
This year, the government is going to offer tenders of over Rs. 5,000-crore for three major projects in the National Urban Renewal Mission for integrated development of urban infrastructure services, Crime and Criminal Tracking System (a citizen-centric project) and six pilot projects with Ministry of Agriculture.
"We are going to offer tenders for three major projects of over Rs. 5,000-crore. These projects include a pilot project with Ministry of Agriculture and citizen-centric projects," Rao added.
Large outsourcing contracts worth up to $1 billion look set for a comeback this year, as companies from segments like retail, banking, telecom and utilities, apart from government bodies, seek to cope with renewed demand for their services and also lower their operational expenses.
Outsourcing experts and industry officials say that auto customers, too, are looking to award large contracts for managing their business and IT systems this year. British Petroleum’s IT contract worth $1.5 billion awarded to Indian vendors TCS, Infosys and Wipro early this year was one such mega deal.
There are several such projects lined up in the country’s power sector as well, said Everest Group country head Gaurav Gupta. “Governments in the U.S. and other Western markets tend to account for a big chunk of mega deals, but Indian companies are not strong contenders,” he said, adding that large deals for Indian companies are typically in the range of $50-100 million, though some Indian IT services vendors currently have some mega outsourcing contracts in the pipeline.
Meanwhile, the U.S. has seen its share of total contracts awarded steadily decline over the past five years. Europe is seen as the big gainer as the U.K., France, Netherlands and Switzerland have brought the overall European tally to reasonable levels. Experts say the resurgence of mega deals may throw open more job opportunities in the sector. “Deal pipeline has picked up and 2010 is certainly a strong year compared with 2009,” said Sid Pai, managing director, global sourcing advisory firm TPI.
The latest TPI Index shows that almost $25 billion worth outsourcing contracts were awarded in the fourth quarter of 2009, up 47 percent over the third quarter.