A conversation with a relative hovered on how Non Resident Indian's and People of Indian Origin staying out of India impact the economy of the country.We as PIO's genereally talk about the merits/demerits of many sociopolitical situations in our country of origin.The question lies in the fact what differece can we make as individuals.I know that to make any impact one needs a group of people to , but do we as individuals want to be part of a group that will make a difference to the sociopolitical state of our country.
The common ramblings which we get to hear and take part in are how / when will the infrastructure of the country improve , when would we have a more stable government , when would we take more medals at the Olympics , why is population the root cause of everything so on and so forth ?
Well let me take a view on this which might sound diabolical , we as PIO'S/NRI's are one of the root causes which is slowing down the growth of the political/economic and social situation of India.I know while reading this the questions which will prop up will be WHY ?? HOW ?? IS THIS GUY INSANE....well think what you may want to but its true.....
From an macro economic perspective the barometer of success is GDP or other factors like per capita income.Now India's GDP has been clocking an amazing growth rate over the past 10 years but GDP is a myth for a country like India.Numbers like GDP , NDP etc are like bikini's they hide more than what they reveal , thats the beauty of numbers.....Well realistically if we divide the GDP by the total population we get a ratio called as per capita GDP...now in any developing country like India GDP is primarily contributed to by the middle class and the upper class population which would contribute to maybe 10% our total population.Generally all of us migrating out of India belong to this 10% , hence we hamper the numerator of the ratio substantially and the decrease in the denominator is minimal....hmm I think this might be confusing well more simply put its like the main bread earners for the country are leaving the country to take up jobs/or study outside India.
Thats the first dent which we cause to the economy , morever at the same time we are adding up positively to the economy and GDP to the adopted country in which all of us are residing...which is apt and there is nothing wrong in it as its the duty of an individual to contribute positively towards the society and economy of the country which has provided him/her with the oppurtunity to live successfully...by adding on to the growth of an developed nation one just increases the gap between India and other countries.
Off late in the past 10 years we have seen a lot of inflow in Institutional investors of Indian origin pumping in money to India to invest in projects ...however this is with the vested interest of earning profits and is a short term gain for India.
To bring in a radical revolution in the country one needs an intellectual think tank to lay down a premise for the revolution which is lacking currently or are in minorities in India.India desperately needs an intellectual revolution wherein like minded people are driven by patriotic feelings for the country rather than vested interest of monetary nature of the politburo.
If we really love our motherland there are some basic things which we can do :-
> Repatriate at some point of time (permanently/temporarily) to India for some charitable cause.
> Create a group of industrialists/entreprenuers which would support / put forth viable business plans and solutions for the betterment of our country in terms of infrastructure,sports and social and pathological improvements.
> Always put forth a positive and realistic picture of India in front of people from other cultures/countries.
> Inspire development by leveraging and sharing of good things from other cultures and countries at times we fall in the trap of reinventing the wheel.
> Try and encourage the build of manufacturing and infrastructure build up instead of setting up of a services sector.
> Learn and appreciate from China instead of criticising them....
Hence think before you talk about the demerits of certain amenities/cultural boundaries back home.
JAI HO !!!!
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Friday, July 03, 2009
Monday, May 11, 2009
Impact of H1B visas on Indian outsourcing and IT companies
The US government, as part of its stimulus plan to revive the depression in the US economy, recently decided on including an amendment that imposes a ban on firms receiving government bailouts, from hiring workers from other countries. Microsoft has recently been asked to remove foreign workers that are employed under the H-1B Visa program, resulting in the software giant announcing that 5,000 jobs will be cut in the next six months; including 1,400 immediately.
H-1B visas are offered by the US government to enable international students and highly skilled international workers, from all over the world, or who are already living in the USA, the opportunity to live and work in America legally.
From the beginning, there has been criticism from various quarters, over the role of the H-1B program in replacing US workers. There were several instances of US staff being replaced with H-1B workers. The ploy employers used is to hire these H-1B replacements from contract job shops. This way the companies could claim that they had not applied for H-1B visas, making it possible for them to legally replace their US staff.
Another complaint was that US Employers hired H-1B workers because they pay significantly less than they would have to for US workers. This cheap labor causes depression in the overall wage structure.
Currently, 65,000 H-1B visas are granted by the US annually to Hi-technology workers from countries like China, India and Philippines.
The US government states that they are not against the H-1B program, but it has to be used in the actual spirit of why it was started in the first place – to have alternatives for specialized workers when there is no availability in the US. It was also clarified that since the 900 billion dollars for the stimulus plan is being paid by the American taxpayer, it is only fair that American workers are hired.
This decision for foreign countries could mean hundreds of thousands of foreign students studying in the US universities will not get employment and millions will be made jobless.
The US government is also planning on controlling outsourcing. American firms that move their jobs to other countries will not be eligible for any tax breaks. Obama, in his address said, “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
This will affect more than 1,000 American firms that have over the years moved their jobs outside the country. The government is doing away with a particular provision of the tax code where US companies pay lower taxes for profits earned from foreign countries. There has been opposition for this tax code for a long time, as it was seen as an encouragement for companies to send their jobs abroad, when they rightfully belong to the American workers. The government’s aim through this move is to make outsourcing unattractive to companies in the US.
However, many believe that tax breaks when compared to savings through outsourcing do not stand a chance. While the idea of tax breaks would certainly appeal to the US businesses, it would require a huge tax break to change the established trend of global outsourcing. It would be highly unlikely for companies involved in significant outsourcing to take their businesses, and the related infrastructure and human-resource costs back onshore. So, the impact of this move may be very little.
People who oppose this move say that this move will only hurt the US as outsourcing makes a lot of sense; both economic and logical. It is left to be seen what actually happens. However, with Obama focusing on the revival of the US economy, this is the kind of positive reaction that Americans expect from their new President.
H-1B visas are offered by the US government to enable international students and highly skilled international workers, from all over the world, or who are already living in the USA, the opportunity to live and work in America legally.
From the beginning, there has been criticism from various quarters, over the role of the H-1B program in replacing US workers. There were several instances of US staff being replaced with H-1B workers. The ploy employers used is to hire these H-1B replacements from contract job shops. This way the companies could claim that they had not applied for H-1B visas, making it possible for them to legally replace their US staff.
Another complaint was that US Employers hired H-1B workers because they pay significantly less than they would have to for US workers. This cheap labor causes depression in the overall wage structure.
Currently, 65,000 H-1B visas are granted by the US annually to Hi-technology workers from countries like China, India and Philippines.
The US government states that they are not against the H-1B program, but it has to be used in the actual spirit of why it was started in the first place – to have alternatives for specialized workers when there is no availability in the US. It was also clarified that since the 900 billion dollars for the stimulus plan is being paid by the American taxpayer, it is only fair that American workers are hired.
This decision for foreign countries could mean hundreds of thousands of foreign students studying in the US universities will not get employment and millions will be made jobless.
The US government is also planning on controlling outsourcing. American firms that move their jobs to other countries will not be eligible for any tax breaks. Obama, in his address said, “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
This will affect more than 1,000 American firms that have over the years moved their jobs outside the country. The government is doing away with a particular provision of the tax code where US companies pay lower taxes for profits earned from foreign countries. There has been opposition for this tax code for a long time, as it was seen as an encouragement for companies to send their jobs abroad, when they rightfully belong to the American workers. The government’s aim through this move is to make outsourcing unattractive to companies in the US.
However, many believe that tax breaks when compared to savings through outsourcing do not stand a chance. While the idea of tax breaks would certainly appeal to the US businesses, it would require a huge tax break to change the established trend of global outsourcing. It would be highly unlikely for companies involved in significant outsourcing to take their businesses, and the related infrastructure and human-resource costs back onshore. So, the impact of this move may be very little.
People who oppose this move say that this move will only hurt the US as outsourcing makes a lot of sense; both economic and logical. It is left to be seen what actually happens. However, with Obama focusing on the revival of the US economy, this is the kind of positive reaction that Americans expect from their new President.
Thursday, April 16, 2009
Work Life Balance is good during Recession!
Some fellow managers are surprised when I start to talk about how important is it to maintain Work Life Balance during these tough economic times, the response is ‘Are you serious? There is a full scale recession out there and the thing you now want to talk about is work life balance!’ My simple and honest answer is: ‘Yes! Work Life Balance options have a proven record to help companies and national economies to deal with severe recessions’. Let me explain how this works. During the last severe recession in the 1980’s work life balance initiatives were used to help companies and countries to deal with the down turn and to help them to get back on their feet again. Multinational companies are looking at Work Life Balance and flexible working initiatives to help them through this down turn as the cost associated with the recruitment and training of new staff is great. Even companies who had to seriously restructure their organisation in good economic times used Work Life Balance initiatives.There are many examples of how Work Life Balance can assist an organisation during a recession but let me just give you a few: Part Time Work arrangements / Job Sharing: Giving your existing staff members the option to work part time is a very effective manner by which to boost the eiciency of your staff. Part time workers work more effectively than full time workers and have a higher output per hour then full time staff members. Research has shown that the most efficient and effective employees work 19 hours per week. It is a myth that you need to work non stop to be efficient! Furthermore, establishing part time arrangements is a very effective way to reduce your staff count. Two staff members who start to work part time (50%) have reduced your count by one full timer. This is possibly the most effective and popular manner to reduce your head count.Sabbatical Leave: Offering sabbatical leave for your staff members to go to travel the world or use it to improve their education is another way to temporarily reduce your wage bill. If you are overstaffed at the moment, but expect you need staff in a year’s time when the economy picks up why not offer your staff the option of sabbatical leave? Look at the recent example of Permanent TSB who offered their staff members even a paid break for a number of years in order to reduce the staff members for the coming period. Normally sabbaticals are unpaid. One of the benefits of such an initiative is that you keep your staff members who you have invested in through training and establishing a social network.Flexi-time: In these difficult times it can be important to extend your organisation’s opening hours without increasing cost, Flexi time could have this effect. Extending the starting and finishing times for employees has the effect of being longer available for your customers and your business hours can increase which can be of benefit to service industry organisations. Most organisations are now working in the service sector and fixed opening hours which were necessary in an organisation which was confined by the working of the production belt are no longer necessary.Term Time: Term time working is that employees work more during certain periods in order to work less during other periods. If these periods relate to your business peaks then both the organisation and the employees are on a winner. If your organisation works less during the summer months why not let your employees work less hours then and let them build up extra hours during the times when the organisation is busy in an employee Working Hours Bank.E – working: In our time of e-mails and Internet working from home can be of great benefit to the employee and organisations, especially during a recession. Working from home through an internet connection is in fact more productive than working from the office through factors of less distractions and old fashion guilt, which makes employees work extra hours to get projects finished. There is also less time wasted on talking to colleagues, traffic congestion and other disruptions.As you can see Work Life Balance provides creative solutions to meet the needs of organisations during a recession and increase the job satisfaction of your workforce. Taking time to reflect on this topic can give you solutions which suit your organisation.
Monday, April 13, 2009
Recession is a necessary evil....
They are calling this current economic crisis as unprecedented and worst in the modern times , infact some financial analysts are comparing this trough as bad as the Great Economic Depression of 1929.
The questions which arise are why do we land up in such a situation and why is it cyclical phenomenon.I like to view things in a very simplistic way in life and would like to do so now too.I feel that such an economic downturn is a blessing in disguise.
The world readily accepted the merits and success of Capitalism more after the Second World war and the fallout of the USSR in 1990 weakened the stance of Socialism all the more in the 90's and in this century.USA and her allies grew larger in stature and suddenly Capitalism was viewed as the best possible economic model with Utopian principles.With global economy becoming more interconnected with each other the dependancies of individual economies grew more on the developed nations and vice-versa.
The liberalization of some of the developing economies opened up the possibility of offshoring jobs and building up of the services sector in some developing countries.In some cases even manufacturing was getting offshored to other developing economies .Everything seemed to be picture perfect and it seemed that nothing could go wrong , but the fundamental problem laid in the fact that for any economy to sustain and grow the common man needs to have a net disposable income.By offshoring jobs to developing countries i.e India,China,Phillipines the income and spending power of the common man was eroded due to unemployment.Morever with the influx developed markets with cheaper commodities and goods from developing nations the indigenous industries suffered miserably leading to shutdown of many companies.This erosion of income took some time before it started to impact the paying power to clear off credit card debts and mortgages.
To add on to this spiral downturn the financial institutions eased of their risk models to give of loans to home buyers etc.This time period also saw a rise in the number of mortgage brokers who acted as conduits to give easy loans to individuals with a besmirched credit history.
All was still safe till this point had some regulatory body interjected and stopped the flow of blood , however to add on to this the Investment Bankers converted these bad debts as attractive investment with "ZERO" Net Present value as a future investment which would yield returns over a period of 10 years.Large institutions invested their surplus funds into these investment options to gain profit over a long term.Hence over a period time money was being lost without anyone realizing what was happening.
With the happening of this recession , I hope everyone across the world has realized about some of the demerits of capitalism.Capitalism is great when the distribution of income is equal across the realms of the society and when everyone aspires to grow at a steady pace.
The one thing which I fail to comprehend is the concept of market capitalization , its something which governs the lifeline of each sensex index across the world. I personally feel all the mad rush in share markets is in the endeavour to protect the market value of a company which is directly linked to the share prices (as the number of units remain constant).No one till date has been able to give me a concrete list of all factors which impact the share prices of a specific set of companies in an industry.Everything is based on speculation (I might be wrong here , but would be obliged if someone could enlighten me here) and prices jump up and down over a period so does my pulse in my jugular.
There are some key learnings from this recession for all the companies and leaders , and I have enlisted some of them below :-
> Growth of any company should be based on current profits and net earnings and not on future investments and projects.
> More strict guidelines need to be incorporated to ensure that audit companies comply with the standards before publishing the quarterly/yearly results of each company
> Leaders of developing nations should understand that the backbone of every strong economy is always the manufacturing sector.
> Their should be more science applied to the forecast or control the share prices and the sensex , and it should not be based on forecasting trends based on historical prices which were always speculated
> Companies just dont grow by increasing their wingspans sporadically , the growth can be achieved organically and inorganically.More controls should be levied in terms of controlling the expenses within and each investment project should be analyzed properly before being given a go ahead.
> Lastly , lay offs is not the solution to resolve the economic problem , its a problem to which the solution lies in creating more jobs by creating more infrastructure and manufacturing projects.
I would say that one should not loose hope in these times of distress and always look at the positive aspects from this dark period.Capitalism is fantastic when controlled within an achievable growth rate and thats what all of us should realize at the end.Each one of us individually is a capitalist in himself/herself , our needs and demands grow each minute and that can be explained with the number of cars we buy and the number of "investment properties" we invest in.Its time for all of us to take a break in life and slow down our pace.
Hence all of us individually can make a difference , by no means should we increase the demand of any commodity which gives rise to a false demand.
Its important to realize during such times to realize what we value the most as individuals is it money invested in locked in options or is it the peace of mind.
There are some things money cant buy for every other worry there is always a beer lying in the pub nearest to your house....
Cheers !!!!
The questions which arise are why do we land up in such a situation and why is it cyclical phenomenon.I like to view things in a very simplistic way in life and would like to do so now too.I feel that such an economic downturn is a blessing in disguise.
The world readily accepted the merits and success of Capitalism more after the Second World war and the fallout of the USSR in 1990 weakened the stance of Socialism all the more in the 90's and in this century.USA and her allies grew larger in stature and suddenly Capitalism was viewed as the best possible economic model with Utopian principles.With global economy becoming more interconnected with each other the dependancies of individual economies grew more on the developed nations and vice-versa.
The liberalization of some of the developing economies opened up the possibility of offshoring jobs and building up of the services sector in some developing countries.In some cases even manufacturing was getting offshored to other developing economies .Everything seemed to be picture perfect and it seemed that nothing could go wrong , but the fundamental problem laid in the fact that for any economy to sustain and grow the common man needs to have a net disposable income.By offshoring jobs to developing countries i.e India,China,Phillipines the income and spending power of the common man was eroded due to unemployment.Morever with the influx developed markets with cheaper commodities and goods from developing nations the indigenous industries suffered miserably leading to shutdown of many companies.This erosion of income took some time before it started to impact the paying power to clear off credit card debts and mortgages.
To add on to this spiral downturn the financial institutions eased of their risk models to give of loans to home buyers etc.This time period also saw a rise in the number of mortgage brokers who acted as conduits to give easy loans to individuals with a besmirched credit history.
All was still safe till this point had some regulatory body interjected and stopped the flow of blood , however to add on to this the Investment Bankers converted these bad debts as attractive investment with "ZERO" Net Present value as a future investment which would yield returns over a period of 10 years.Large institutions invested their surplus funds into these investment options to gain profit over a long term.Hence over a period time money was being lost without anyone realizing what was happening.
With the happening of this recession , I hope everyone across the world has realized about some of the demerits of capitalism.Capitalism is great when the distribution of income is equal across the realms of the society and when everyone aspires to grow at a steady pace.
The one thing which I fail to comprehend is the concept of market capitalization , its something which governs the lifeline of each sensex index across the world. I personally feel all the mad rush in share markets is in the endeavour to protect the market value of a company which is directly linked to the share prices (as the number of units remain constant).No one till date has been able to give me a concrete list of all factors which impact the share prices of a specific set of companies in an industry.Everything is based on speculation (I might be wrong here , but would be obliged if someone could enlighten me here) and prices jump up and down over a period so does my pulse in my jugular.
There are some key learnings from this recession for all the companies and leaders , and I have enlisted some of them below :-
> Growth of any company should be based on current profits and net earnings and not on future investments and projects.
> More strict guidelines need to be incorporated to ensure that audit companies comply with the standards before publishing the quarterly/yearly results of each company
> Leaders of developing nations should understand that the backbone of every strong economy is always the manufacturing sector.
> Their should be more science applied to the forecast or control the share prices and the sensex , and it should not be based on forecasting trends based on historical prices which were always speculated
> Companies just dont grow by increasing their wingspans sporadically , the growth can be achieved organically and inorganically.More controls should be levied in terms of controlling the expenses within and each investment project should be analyzed properly before being given a go ahead.
> Lastly , lay offs is not the solution to resolve the economic problem , its a problem to which the solution lies in creating more jobs by creating more infrastructure and manufacturing projects.
I would say that one should not loose hope in these times of distress and always look at the positive aspects from this dark period.Capitalism is fantastic when controlled within an achievable growth rate and thats what all of us should realize at the end.Each one of us individually is a capitalist in himself/herself , our needs and demands grow each minute and that can be explained with the number of cars we buy and the number of "investment properties" we invest in.Its time for all of us to take a break in life and slow down our pace.
Hence all of us individually can make a difference , by no means should we increase the demand of any commodity which gives rise to a false demand.
Its important to realize during such times to realize what we value the most as individuals is it money invested in locked in options or is it the peace of mind.
There are some things money cant buy for every other worry there is always a beer lying in the pub nearest to your house....
Cheers !!!!
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