Global Business |Update|
(A weekly update on Global Business )
Skyline Business School
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Issue 88

 

 

 

Global Business Update

(27th August’08---9th September’08)

Contents

 

Global Corporate

1 US Boeing workers strike over pay

2 Nokia expects market share loss

3 Nano car plant protest suspended

4 Easyjet's passenger numbers rise

5 Philips to acquire Alpha X-Ray Tech

6 HC issues notice to ITC Limited

7 Vishal Retail to add 50 stores by March

 

Global Outsourcing

 8 Pakistan an attractive IT outsourcing destination

 9 SatNav Technologies ties with Delhi-based RT Outsourcing

10 ACT Litigation Services Lauds American Bar Association's Opinion on Outsourcing

11 OSPAI to promote Indian Outsourcing Industry

12 BPO giants differ on Indian outsourcing opportunities

13 Dell outsourcing plan may be tough to execute

14 Egypt leads Middle East in global outsourcing sector

 

Global Economy

15 Bank keeps UK interest rate at 5%

16 Eurozone rates on hold at 4.25%

17 Global economy woes shake markets

18 UK food prices show 8.3% increase

19 Annual inflation seen at 12.44% on Aug 23

 

Global Markets

20 IPO market may witness slowdown: Assocham

21 European stocks extend losses in late trade

22 Rupee hits over 17-month low at 44.20/23

24 Oil slips to USD 104.70 a barrel

Global Corporate

 

1 US Boeing workers strike over pay
Production at the world's biggest aircraft manufacturer, Boeing, has halted in the US after 27,000 workers at the company went on strike over pay. Members of the Machinists Union, mainly based in Seattle, downed tools after last minute negotiations failed. Boeing says it has offered more than $34,000 (£19,200) per employee in pay and benefits. Analysts say the stoppage will cause further delays in the delivery of the new Dreamliner aircraft. The union says with that with Boeing's record profits and its members going without a pay rise for the last four years, the offer is not good enough. The BBC's Matthew Wells said no further talks were scheduled between unions and management at this stage. Union members hoisted their strike signs outside the Boeing plant in Everett, a city north of Seattle, cheering and blasting air horns at passing cars. Striking workers were told by one union member that they would not falter on the strike. We will show the company that they are going to have to go back and bargain in good faith," said the unnamed man. And we will stay out until every single member gets something in their contract", he told a cheering crowd of workers.
7th September 2008, www.bbc.co.uk

 

2 Nokia expects market share loss

Nokia has lowered its predicted market share for the third quarter, sending its shares plummeting. The statement by world's largest mobile phone maker pushed its shares down 9.6% to 14.20 euros having touched their lowest level since 2005 in trading. The Finnish company has blamed problems with the production of its new mid-range phones and aggressive pricing by rivals for the downgrade. But it remains optimistic it can recover its market share over the year. The company now believes its share of the market will be lower in the the third quarter than it was in the second quarter, when it stood at 40%. Prior to this, it had anticipated it would maintain its market share quarter-on-quarter. Nokia has also flagged up the increasingly aggressive pricing strategies of other handset makers as a reason for its revised view. But chief financial officer, Rick Simonson, said the company did not believe that such a strategy would be "sustainable". Some analysts said the share price movement was surprising. I think the share reaction is a bit much, said Greger Johansson, an analyst at Redeye.
2nd September 2008, www.bbc.co.uk

 

3 Nano car plant protest suspended
Opposition groups in the Indian state of West Bengal who have been blocking construction work at a Tata Motors plant have suspended their protests. The move came after the state government promised to return some seized land at the plant site. Tata Motors stopped work last week on the plant where it plans to build the Nano, the world's cheapest car. However the firm said that it was still reviewing the deal and work at the site was still suspended. A Tata spokesperson said the company is "distressed at the limited clarity on the outcome of the discussions between the State Government of West Bengal and the representatives of the agitators in Singur". But reacting to Tata Motor's statement, West Bengal industry minister, Nirupam Sen, said the Tata motors plant and the vendors park for the ancilliary industries would remain intact.
8th September 2008, www.bbc.co.uk

 

4 Easyjet's passenger numbers rise
Easyjet has said that the number of passengers it flew in August this year rose 24% on the same month last year. Europe's second-largest budget airline said it transported some 4.6 million passengers in August 2008, compared to 3.7 million in August 2007. Aer Lingus also saw an increase, flying 8.8% more passengers this August than in August 2007. On a rolling 12-month basis to August 2008, Easyjet increased passenger numbers by 16.6%.  The number of seats filled also increased to 91.3% from 87.4% last August. At Aer Lingus the load factor was 80.5% in August, a slight dip on 81.7% a year ago. Easyjet shares were down 2% at 1005 BST, while Aer Lingus shares were down 0.9%. The figures for Easyjet and Aer Lingus are relatively strong compared with those released on Friday by Scandinavian airline SAS. SAS, which is partly owned by the governments of Denmark, Sweden and Norway, said traffic for August measured in revenue passenger kilometres, fell 0.7% and demand was weakening further.
1st September 2008, www.bbc.co.uk

 

5 Philips to acquire Alpha X-Ray Tech
Global provider of healthcare, lifestyle and lighting Royal Philips Electronics on Monday announced that it has reached an agreement to acquire Mumbai-based Alpha X-Ray Techlonogies. The company hopes to close the deal in the fourth quarter of 2008 which is subject to certain contractual and other conditions such as regulatory approvals, a press release issued in Mumbai said. Upon closing the transaction, Alpha would become part of the Cardiovascular X-Ray business within Philips' healthcare sector. "The acquisition would provide us with significant presence in the high-growth economy segment for cardiovascular X-Ray systems," Philips Healthcare CEO (emerging markets), Ronald de Jong, said.
3rd September 2008, www.financialexpress.com

 

6 HC issues notice to ITC Limited
Madras High Court has suo motu issued notice to ITC Limited and Tamil Nadu Pollution Control Board (TNPCB) in an environmental pollution-related issue in Coimbatore district. Justice A Kulasekharan ordered issue of notice to Vice-President of ITC Limited's Coimbatore operations and TNPCB Chairman after both of them were suo motu impleaded as respondents in a petition filed by an ITC's vendor company, White Star Fibres Limited, seeking to quash an order of Mettupalayam Tahsildar. The Tahsildar had ordered closure of operations of White Star Fibres after it supplied non-fibre materials, segregated from imported waste material, to one Rangasamy to fill up a deep unused well. The Tahsildar also issued notice to the ITC, objecting that the filling up of the well with non-fibre materials would pollute the ground water. Though the petitioner company removed all the non-fibre materials from the well on July 17, 2008 complying with the Tahsildar's directive, its premises were sealed by the local authorities.
30th August 2008, www.financialexpress.com

 

7 Vishal Retail to add 50 stores by March
Vishal Retail will add 50 stores by March 2009, taking its network of stores to 190, its chairman told investors during the discount retailer's annual general meeting on Monday. "We will be concentrating on the franchisee model for further expansion," Ram Chandra Agarwal, who is also the firm's managing director, said.
1st September 2008, www.financialexpress.com

Global Outsourcing

 

8 Pakistan an attractive IT outsourcing destination
Prime Minister Syed Yousuf Raza Gilani said Pakistan is one of the leading outsourcing destinations of the world and offers tremendous investment opportunities to international outsourcing community in information technology sector. The Prime Minister said this while talking to Herman Wimmer, President Middle East and Africa, TERADATA Corporation (IT Company), who called on him at the PM’s House on Monday.
30th August 2008, www.tutorial-reports.com

 

9 SatNav Technologies ties with Delhi-based RT Outsourcing
Chennai-based SatNav Technologies, a city-based provider of navigation and GPS technologies, has informed that it has tied-up with RT Outsourcing as their service partners. Under the arrangement, RT Outsourcing will serve the SatNav customers who own company’s GPS Devices. Delhi-based RT, a technical support and reverse logistics services company, has presence across several locations across India. The firm employs around 3500+ professionals. With this agreement, SatNav Technologies intends to expand its services to the clients 24/7, under which the customers from any part of India can get their devices repaired by sending it to the RT service centre.
1st September 2008, www.tutorial-reports.com

 

10 ACT Litigation Services Lauds American Bar Association's Opinion on Outsourcing
ACT Litigation Services, Inc., a leading provider of digital document management, electronic discovery and document review for corporate legal departments and law firms, commends the American Bar Association and its Standing committee on Ethics and Professional Responsibility for its recent Formal Opinion 08-451, titled "Lawyer's Obligations When Outsourcing Legal and Nonlegal Support Services." The opinion, issued on August 25, 2008, concludes that U.S. lawyers are free to outsource legal work to lawyers or nonlawyers in or outside of the country and lays out some ethical ground rules for doing so.
2nd September 2008, www.tutorial-reports.com

 

11 OSPAI to promote Indian Outsourcing Industry
The Other Service Providers Association of India (OSPAI) was formed a couple of months back. It has been registered with the Registrar of Societies. The aim of OSPAI is to promote Indian Outsourcing Industry by way of recommending and assisting in policy changes based on Industry and market needs. OSPAI will closely work with DoT, TRAI, Ministry of Law, Ministry of Labor, Ministry of Finance, STPI, SEZ, various Associations and Industry representatives to achieve growth of the Outsourcing Industry. Today, the founder membership has representatives from OSP companies like Accenture, Amex, Avaya, Citibank, Citigroup Global Services, EXL, Fidelity, GE Capital, GE Money, Genpact, HCL Tech, Quattro, Wells Fargo etc. The Office bearers of OSPAI include S.V.Ramana - President (Chief Technology Officer, Genpact), Sanjay Diwan - Vice President (Director, Avaya Global Connect), Sanjay Prasad -Vice President (Chief Information Officer, Citigroup Global Services), PV Ramadas - Treasurer (Vice President Technology - HCL Technologies Ltd.) and NL Verma - Secretary General (Industry Telecom Consultant).
4th September 2008, www.tutorial-reports.com

 

12 BPO giants differ on Indian outsourcing opportunities
With the rupee playing spoilsport and US and Europe reeling under the sub-prime crisis, Indian BPO companies have taken a fresh look at tapping the domestic outsourcing opportunity. But the approaches taken by the companies to do so couldn't differ further. Despite the bumps, the Indian economy is growing and so is the opportunity to outsource given the need to cut costs in a difficult environment. So, one would expect global BPO biggies like Infosys and TCS to go all hammer and tongs to grab a slice of the above USD 16 billion domestic outsourcing pie. Companies like Infosys BPO feels that it is not true. Amitabh Chaudhary, CEO, Infosys BPO, said, We have been very clear, it has to be profitable growth. We want growth but it has to be profitable. We don't want to stretch our model too much by getting into India business because if we get into that, it will be easy to generate revenue.
4th September 2008, www.tutorial-reports.com

 

13 Dell outsourcing plan may be tough to execute
Dell Inc plans to make fewer computers itself and rely on contract manufacturers to cut costs, but the company could find it hard to get rid of its North American factories at a good price. The world's second-largest PC maker said in April it would outsource more manufacturing, and the Wall Street Journal reported on Friday that Dell was trying to sell most of its factories within the next 18 months. Analysts said the most likely buyers of Dell's plants are big contract manufacturers, most of which are based in Asia because production costs are lower there. They questioned how much cost savings Dell can get, since it would likely have to give the buyer of its plants an accompanying personal computer manufacturing deal. They will have to lock in a long-term production contract as well because no one will buy facilities unless there's business to go with it," Cross Research analyst Shannon Cross said. I just don't know how much they get for them. They may also transfer the manufacturing assets to a partner.
5th September 2008, www.tutorial-reports.com

  

14 Egypt leads Middle East in global outsourcing sector
The Middle East is making great strides in attracting outsourcing services to the region, particularly as global companies expand their presence in the region, but the countries must differentiate their offers and their potential to succeed in the growing global outsourcing space and compete on a more equal footing with the more established markets like China and India, said Yankee Group report. Of all the countries in the Middle East, Egypt has the strongest position in the outsourcing market. Some other countries including Abu Dhabi and Oman are coming on strong in the outsourcing space but others such as Jordan and Dubai face longer odds in competing for a piece of the outsourcing pie, Zeus Kerravala, Enterprise Research Senior Vice-President, Yankee Group, said.
8th September 2008, www.tutorial-reports.com

 

Global Economy

 

15 Bank keeps UK interest rate at 5%
The Bank of England has kept interest rates on hold at 5% for a fifth month as it struggles to deal with a slowing economy and soaring inflation. But with reports signalling the economy is heading for recession, expectations are rising that rates may have to be cut either this year or early in 2009. Economic growth ground to a halt in the second quarter of this year, the worst performance since the early 1990s. However, inflation is more than double the Bank's target of 2%. Ian McCafferty, CBI chief economic adviser, said the Bank's Monetary Policy Committee (MPC) decision shows that it is still concerned about inflation, which is likely to rise to around 5% in coming months. "But as the autumn unfolds, the chances of a rate cut will increase, as the slowdown improves the inflation outlook for next year," he said.
4th September 2008, www.bbc.co.uk

 

16 Eurozone rates on hold at 4.25%
The European Central Bank (ECB) has left interest rates unchanged at 4.25% amid faltering economic growth and rising inflation in the eurozone. ECB President Jean-Claude Trichet weighed up rising inflation and more evidence that some eurozone nations are on the brink of recession. A report by ECB staff predicted higher-than-expected inflation and lower economic growth this year and next. Analysts said they expect rates to remain on hold for the rest 2008. Earlier on Thursday, the Bank of England left the cost of borrowing in the UK unchanged at 5%. Inflation remains the key concern for Mr Trichet as rising food and energy prices have pushed inflation to 3.8%, well above the ECB's informal 2% target. There are also concerns that wage demands could add to the bank's woes.
3rd September 2008, www.bbc.co.uk

 

17 Global economy woes shake markets
Fears about a global economic slowdown, heightened by worsening US job figures, have continued to undermine stock markets around the world. London's FTSE 100 index lost 2.3% - taking its weekly decline to 7% - its biggest since July 2002. Markets in Paris and Frankfurt fell by 2.5% as economy concerns spread. On Wall Street the Dow Jones index clawed back early losses to edge higher despite figures showing the US economy shed 84,000 jobs last month. But the benchmark US index still had its worst week since May. Earlier, Japan's main share index fell nearly 3% while markets in Hong Kong, China, Australia and India all slid 2%.
2nd September 2008, www.bbc.co.uk

 

 

18 UK food prices show 8.3% increase
Food prices in UK supermarkets and shops have risen by 8.3% since January, an index compiled for the BBC shows. Meat and fish - up 22.9% - registered the biggest price increases for any one category in the survey, with fresh fruit and vegetables up 14.7%. Retail analysts Verdict Research also found price rises of nearly 50% for some individual food items. The figures come amid growing concern about the high cost of food, which is exceeding the official inflation rate. The BBC Food Price Index compiled by Verdict is designed to track the cost of a typical trolley of UK food items. It divides household supermarket purchases into 13 categories, including frozen foods, fresh fruit and vegetables, ready meals and dairy goods. The index showed that during the eight months from January to August, meat and fish prices went up by 22.9%, making them the fastest-rising category. General store-cupboard items, such as tinned foods, were the next most inflation-busting sector, registering a 15% increase, while fresh fruit and vegetables went up by 14.7%.
30th August 2008, www.bbc.co.uk

 

19 Annual inflation seen at 12.44% on Aug 23
India's annual inflation rate is expected to have inched up in the third week of August, driven by higher prices of some commodities and demand pressures in Asia's third-biggest economy, a Reuters poll showed on Tuesday. The wholesale price index was forecast by 10 economists to have risen 12.44 per cent in the 12 months to Aug. 23, a shade higher than 12.4 per cent a week earlier. The inflation rate was 12.63 per cent in early August, which was the highest reading since annual numbers in the current data series first became available in April 1995. Sonal Varma, an economist with Lehman Brothers, said higher prices of tea, sugar, textile products, non-ferrous metals, machinery and tools and paper products would have pushed inflation higher.
1st September 2008, www.bbc.co.uk

 

Global Markets

 

20 IPO market may witness slowdown: Assocham
Uncertain market conditions may dampen the growth of domestic IPO market as increasing number of foreign funds are shying away from investing here and companies are postponing their fund raising plans through primary market, says a study. FIIs and other relevant financial institutions, including retail investors, are gradually withdrawing their subscription from IPOs, given the current situation and are exploring other options such as bonds and mutual funds, a study by industry chamber Assocham said. "FIIs are pulling out of IPOs because of high inflation, debt and bond market is growing for them phenomenally. The price band of IPO is also no longer attractive for retail investors," Assocham President Sajjan Jindal said.
1st September 2008, www.financialexpress.com

 

21 European stocks extend losses in late trade
European stocks extended their losses in late trading on Thursday, losing 1.9 per cent, with banking stocks among the biggest losers, after comments by ECB President Jean-Claude Trichet fuelled concerns over growth in the euro zone. At 1445 GMT, the FTSEurofirst 300 index of top European shares was down 1.9 per cent at 1,160.52 points. Banks took a beating, with Barclays losing 4.9 per cent and Societe falling 2.8 per cent. Trichet said the euro zone economic data point to a weakening in growth at mid-year but inflation remains high and risks are to the upside. He also said new measures to come in 2009 will require some counterparties to bring forward extra collateral.
30th September 2008, www.financialexpress.com

 

22 Rupee hits over 17-month low at 44.20/23
The Indian rupee hit a 17-month low at 44.20/23, 28 paise cheaper from its last close against the greenback, during morning trading on Monday on heavy dollar demand from importers amid weak equity markets. In fairly active trade at the Interbank Foreign Exchange (forex) market, the domestic currency opened lower at 44.20/23 a dollar from its last weekend's close of 43.92/93 a dollar as oil refiners stepped dollar purchases after global crude oil prices surged in Asian trade. The rupee later recovered to 44.14/15 a dollar in late morning deals. The local unit had last touched this level on March 14 last year when it closed at 44.2450/2525 against dollar. Forex dealers said there was heavy dollar demand from oil companies following a rise in global crude prices by nearly one dollar to 116.40 dollar a barrel in Asian trade on Monday.
5th September 2008, www.economictimes.com

 

23 Oil slips to USD 104.70 a barrel
Oil prices fell back towards a five-month low on Tuesday, resuming a near two-week slide as a resurgent US dollar drove investors away from commodities and OPEC appeared set to sit tight on production policy. Concerns over another hurricane seen strengthening in the oil-rich Gulf of Mexico were countered by the greenback's surge to a one-year peak against a basket of currencies after the US government's takeover of troubled mortgage financiers. US crude for October delivery fell $1.00 a barrel by 0653 GMT, nearly hitting Monday's five-month low of $104.70 a barrel as it resumes a slump that has shaved more than 10 per cent off prices since Aug 27. London Brent crude fell 97 cents to $102.47 a barrel, threatening to dip back into double-digit territory for the first time since early April. The dollar's surge to its highest level against the euro since October 2007 prompted traders to shed commodity positions, extending a slump in commodities from corn to copper and dulling the oil market's reaction to a pair of major hurricanes.
8th September 2008, www.bbc.co.uk