A. Global Environment

1.Energy firms 'holding back gas'
Some of Europe's biggest energy firms are holding back gas supplies, stifling competition and driving up prices, the European Commission has found. The findings of an investigation into the gas and electricity sectors have prompted Brussels to launch a crackdown on anti-competitive behaviour. Without naming companies at this stage, EU competition boss Neelie Kroes said a number now faced separate probes. She urged firms to look at their own practices and make necessary changes. The probe, which started last summer, looked at whether energy firms on the continent had colluded to keep prices high. "In the coming weeks and months, the Commission will launch individual anti-trust investigations," she said. "We are just at the beginning of a period of more intensive anti-trust enforcement. "I can only encourage everyone to take a close look at their practices. Prevention is always better than cure." The crackdown was welcomed by the UK energy sector, which has blamed recent price hikes - particularly for natural gas - on a lack of competition in the continental markets.
16th February 06 bbcnews.com

2.US to 'push China hard on piracy'
The US intends to push China "aggressively" to clamp down more firmly on piracy and open more of its domestic markets to foreign firms. That was the pledge of US Commerce Secretary Carlos Gutierrez, as the two countries continue to negotiate the agenda for trade talks in April. Mr Gutierrez said China had "to play by the rules" if it wished to become a "respected" global trader. China's rapid economic growth and surge in exports has antagonised the US. Washington has long accused Beijing of both failing to enforce intellectual property rights and upholding a policy of protectionism to give Chinese firms an unfair advantage. The US had a record $202bn (£116bn) trade gap with China in 2005. "China has to do more," Mr Gutierrez said. "If China ever aspires to be a legitimate, respected worldwide player and a key component of the world community, they have to play by the rules. "We are [going to be] aggressive. That's our attitude and we are focused on achieving our results." At the start of the week US Trade Representative Rob Portman said the US had set up a task force to ensure China complies with global trade requirements.
17th February 2006 bbcnews.com

3.Japanese economy picks up speed
Japan's economy grew at a faster pace than expected in the final three months of 2005, boosted by a pick-up in exports, official figures show. Gross domestic product rose by 1.4% during the fourth quarter, topping market forecasts for a figure of 1.2%. On an annualised basis, the world's second-biggest economy grew by 5.5%, the Cabinet Office reported. The upbeat GDP data provided the latest indicator pointing to a sustained recovery for the Japanese economy. A key business survey on Thursday revealed that confidence among Japan's manufacturers was continuing to grow. Earlier in the week, the government reported that Japan's current account surplus - the difference between the export and import of goods and services - rose in December for the fourth straight month. The strong GDP data will add to expectations that Japan's central bank will shift its policy of keeping interest rates close to zero per cent. Japan has been struggling against falling consumer prices, which encourage shoppers to put off spending whilst swelling the real value of companies' debt. But a recent jump in domestic demand, along with fresh figures showing that exports to Japan's main markets in China and the US rebounded, has helped turn the economy around.
17th February 06 bbcnews.com

4.British Gas raises prices by 22%
Millions of British Gas customers are facing higher bills after the firm raised its gas and electricity prices. The UK's biggest energy supplier will raise gas and electricity tariffs by 22% from 1 March 2006. The firm blamed the increase on substantial rises in wholesale prices, up more than 70% since September. On Thursday, the European Commission said some European energy firms were holding back gas supplies, driving up prices of imports into the UK. In the past few days, both EDF Energy and Scottish Power also have raised their prices. News of British Gas's move prompted consumer groups to voice concerns about the effects of the increases. Energy watch called it the bleakest day yet for energy consumers in Britain, while Age Concern said older people needed extra protection from fuel poverty. "An extra 200,000 older people are pushed into fuel poverty when a 10% increase occurs, so this particular price rise will have a wide effect on vulnerable pensioners," said Mervyn Kohler, a spokesman for Help the Aged.
17th February bbcnews.com

B. Global Corporate

5.Nike sues Adidas over shoe patent
Nike has filed a patent infringement suit against Adidas-Salomon, claiming that a number of its rival's trainers copy its technology. US giant Nike said the Adidas shoes in question infringed its "SHOX cushioning" patents and is demanding damages from its German competitor. Nike, the world's largest sportswear manufacturer, claims it has 19 separate patents protecting its SHOX system. Adidas, the second biggest, last month completed its takeover of Reebok. It paid $3.8bn (£2.2bn) for the US firm to step up its competition with Nike and improve its market share in North America. Adidas said on Friday afternoon that it was "currently examining the content of the complaint with our legal advisers and therefore we cannot comment any further". Despite Nike's patent protection, Adidas has built shoes that use Nike's technology," Nike spokesman Vada Manager said on Thursday. Nike, which last month saw former chief executive William Perez quit after a boardroom row, has filed the legal complaint against Adidas in a Texas court. The Adidas trainers Nike claims infringe its patents all use Adidas' a3 cushioning system, such as its new Kevin Garnett signature shoe, named after a popular US basketball player. Mr Perez left Nike only 13 months after joining the firm and has been replaced by a Nike veteran, Mark Parker.
17th February 06 bbcnews.com

6.Mercedes-Benz boost for Daimler
DaimlerChrysler says it expects its profitability to increase further in 2006, helped by an improved performance by luxury unit Mercedes-Benz. Reporting its 2005 results, the German-US group saw its net profit rise by 15% to 2.85bn euros ($3.4bn; £2bn). Annual sales rose 2.7% to 4.8 million cars worldwide. Mercedes made a loss of 505m euros for the year, hampered by its struggling Smart subsidiary, but returned to profit in the fourth quarter. It made an operating profit of 1m euros in the last three months of 2005. This may not appear a lot, but it is significantly better than the 119m average quarterly losses expected by analysts. Mercedes' return to profitability has been helped by 8,500 job losses. "DaimlerChrysler made significant progress in 2005," said chairman Dieter Zetsche. Profits at the group's US Chrysler unit were up 7.5% for the year to 1.5bn euros. "DaimlerChrysler expects an improvement in profitability in 2006, with continuous increases in operating profit during the following years," it said. DaimlerChrysler announced at the end of last month that it was cutting 6,000 management jobs over the next three years, in an effort to achieve 1.5bn euros of savings a year.
16th February 06 bbcnews.com

7.RIL in talks with Sea King to join bidding for city sea link project
The Mukesh Ambani-controlled Reliance Industries (RIL) is in talks with Sea King Infrastructure (SKIL) to join the bidding for the Rs 4,000-crore Mumbai Trans Harbour Link (MTHL) project. Sources said SKIL, which is one of the three short listed bidders for the long-pending MTHL project along with the two consortium members IL&FS and UK-based construction major Laing O’Rourke, is in final talks with RIL. The other two short listed bidders are the L&T-Gammon India-Bouygues Enterprises consortium and the Italthai Engineering (Thailand)-Skanska consortium. The three bidders are left after the bids of a consortium led by the Anil Ambani-controlled Reliance Energy (REL) and two others were rejected by the project-implementing agency Maharashtra State Road Development Corporation (MSRDC).
TIMES NEWS NETWORK [SATURDAY, FEBRUARY 18, 2006]

8.Kinetic plans to ride on an all-terrain vehicle
Kinetic Engineering Ltd (KEL) is indigenously developing an all-terrain vehicle (ATV) — a four-wheeled quad bike. It is interesting to note that its erstwhile JV partner Honda was the first to develop ATVs in 1970, popularized by the James Bond flick ‘Diamonds Are Forever’. ATV is an open motorized tricycle or quadricycle bike or buggy designed for off-road use like recreational and sports activities including hunting, hill climbing and dirt-track/ice racing.
TIMES NEWS NETWORK [SATURDAY, FEBRUARY 18, 2006]

9.BMW has record '05 Asia car sales
Germany's BMW, the world's biggest premium carmaker, said on Thursday it achieved a 17 per cent rise in sales in Asia in 2005 to a record 111,571 cars and reiterated its goal to hit sales of 150,000 by 2008. The Munich-based company said sales of BMW cars rose 18 per cent in 2005 from the previous year to 95,116 units, which it attributed to rising sales of its new 7 series model. Sales of its popular Mini in Asia rose 10.7 per cent to 16,353 vehicles, while its ultra-luxury Rolls-Royce Phantoms sold 102 times in Asia -- four less than in 2004. Sales of BMW motorbikes dropped 4 per cent to 3,662 units in 2005.
REUTERS [THURSDAY, FEBRUARY 16, 2006]

10.Dubai is Samsonite's logistics hub for Asia
Samsonite South Asia, headquartered in India, has taken charge of a 20,000 sqft logistics center in Dubai for soft luggage, said EPS Menon, VP-marketing, Samsonite South Asia. The center will handle the logistics of soft luggage movement in South Asia and the Middle East. Earlier, this region was handled from Belgium. Production of soft luggage for Samsonite is predominantly in S-E Asia, but the luggage used to be shipped to Europe and then distributed to the Middle East and Asia. The new logistics center in Dubai would cut short inventory cycles. Under the new set up, the India office would control the planning, logistics, marketing plans and products for the two regions. Soft luggage would be shipped to Dubai, which will take about a month. From Dubai, as per marketing plans prepared by the Indian office, luggage’s would be shipped all over the region.
TIMES NEWS NETWORK [SATURDAY, FEBRUARY 18, 2000]

11.Icahn and Time Warner in settlement talks
Time Warner and Carl Icahn were on Thursday night discussing a settlement that would see the activist investor abandon his campaign to take control of the world's largest media conglomerate and break it into four separate In exchange for calling off his attack, Time Warner may offer Mr Icahn a number of concessions, including two new names on its board of directors, an increased pace of share buy-backs and a commitment to cut as much as $1bn in costs, according to people familiar with the discussions. Time Warner, in a statement late on Friday, said its board had agreed to repurchase as much as $20 billion in stock and would consider electing two new directors, seeking Icahn's advice in the process.Time Warner also said it would implement $1 billion in cost savings and continue to review a report commissioned by Icahn and prepared by Lazard Ltd, which investigates ways to overhaul companies. That left room for more changes, including for Time Warner Cable, the companies said.In return, Icahn Partners will not contest the company's slate of directors, Time Warner said."By agreeing to implement the critical corporate reforms we have supported for several months, Dick Parsons is making great strides toward enhancing shareholder value," Icahn said in a statement, referring to the Time Warner chief executive. Icahn last week had proposed to split Time Warner into as many as four independent companies and replace the entire board of directors. This week he said he planned a more modest approach including a slate of five directors."We are very pleased to have reached an understanding with Mr. Icahn," Parsons said in a statement.
FT.com February 16 2006

C. Global finance

12.LSE doubles investor cash payout
The London Stock Exchange has said it will return more money to shareholders as it looks to fight off a hostile bid from Australia's Macquarie Bank. To keep investors on its side, the LSE said it would double the amount of cash it was returning to £510m ($886m). It also will buy back up to £50m worth of its shares, and raise the total full-year dividend by 71% to 12 pence. At the same time, the stock exchange reiterated calls for shareholders to reject Macquarie's £1.5bn takeover bid. The LSE's shares climbed 5.5% to 803.50 pence in morning trading on Friday. Electronic share trading has increased competition between exchanges and is driving consolidation in the industry, analysts said. The LSE has become a target for a number of bidders, including rivals Euronext and Deutsche Boerse, as the exchanges vie to become the major European stock market. Macquarie has offered investors 580 pence for every LSE share, well below the stock's current 796p level. The LSE called Macquarie's offer "ill-considered". "The LSE has a unique strategic position and an exceptional customer franchise," said Chris Gibson-Smith, the company's chairman.
17th February 2006 bbcnews.com

D. Outsourcing

13.India’s Outsourcing Industry Is Facing a Labor Shortage
India’s leadership in global outsourcing may be in jeopardy unless it increases its supply of skilled workers, according to executives gathered here for an industry meeting. Experts at the meeting of Nasscom, the country’s outsourcing group, said Thursday that an incipient skills shortage was the biggest threat to the industry’s blazing growth. As the meeting opened Wednesday, Pramod Bhasin, chief executive of Genpact, a back-office outsourcing company once owned by General Electric, set the tone when he said, “If the talent in India is scarce, we will go wherever the labor pool is available.” Lower-cost centers like Eastern Europe and China could become serious rivals for outsourcing business from Western multinational companies. Until now, corporations mainly looked to India to do work from customer support to writing software code to designing chips. But the supply of India’s famed “skilled, low-cost, English-speaking” work force may not quite match the sizzling demand. India’s $23.4 billion outsourcing industry accounts for most of the country’s software and services industry, which makes up nearly 5 percent of gross domestic product. The industry employs 1.2 million workers, has sparked a consumer revolution in India, and is accelerating at more than 30 percent a year. On the sidelines of the Nasscom meeting, B. Ramalinga Raju, chairman of India’s fourth- largest outsourcing company, Satyam Computer Services, said that India produced three million college graduates every year, including nearly 400,000 engineers. “But most of these are uncut diamonds that have to go through polishing factories, as the trade requires only polished stones,” Mr. Raju said.
New York Times February 16, 2006

14.Outsourcing main driver of global growth
Spending on the IT-ITES sector witnessed steady growth worldwide in 2005, riding on healthier spending across key markets of the US and western Europe, and strong growth in emerging markets. Outsourcing continued to be the primary growth engine with global delivery forming an integral part of the strategies adopted by customers as well as service providers. These were the findings of Strategic Review 2006 — The IT industry in India.The Indian IT-ITES industry is expected to exceed $36 billion in annual revenue in 2005-06, a growth of nearly 28 per cent. It has grown at a CAGR of over 28 per cent since 1999-2000. Over the same period, the industry's contribution to the GDP has risen from 1.9 per cent in FY 1999-2000 to a projected 4.8 per cent in the current fiscal. The hardware, ITES-BPO, engineering and R&D services segments accounted for 21 per cent, 18 per cent and 14 percent, respectively. The segment composition of industry revenue is likely to remain unchanged — weighing towards the services and software segments — in FY 2005-06.Export earnings accounted for 64 per cent of the total IT-ITES aggregate in 2004-05. Strong fundamentals, including a large base of skilled talent, demonstrated quality and service delivery expertise at a significant cost advantage and an enabling environment have ensured that India attracts a larger share of the global IT-ITES demand for off-shored services.
February 16, 2006 offshorexperts.com

15. Is the Shine Off Offshore Outsourcing?
Offshore outsourcing is not the only way to reduce costs in customer care, but it is an important component. The political atmosphere around offshore outsourcing has perhaps pushed the perception of its role, importance and benefits beyond reality. What service providers are finding today is that offshore outsourcing is an option best applied to specific types of processes and functions, but whether it's appropriate for the customer-facing interactions that now need increasing support is a growing debate? Service providers are concerned today with consolidating operations, driving customer centricity into the IT architecture, and segmenting the customer base to identify high-value segments and treat them with special care. Some argue that because of certain limitations, offshore outsourcing is best suited to low-cost, low- touch work. On the contrary, however, more high-end customer care work is being sent offshore than many people recognize, and in some cases carriers are finding both cost and quality advantages. Ultimately, the growing need for talented contact center personnel is driving carriers to look abroad for resources as well as at home. OFFSHORING GROWS, BUT NOT ALONE
18th February, 2006 offshorexperts.com

16.GM Awards $7 Billion in IT Outsourcing Contracts -Deal includes offshore vendor Wipro
General Motors Corp. awarded IT contracts worth approximately US$7 billion over five years to six vendors, including Electronic Data Systems Corp., which is now responsible for most of GM's IT operations, as well as IBM Corp. and Indian offshore firm Wipro Ltd.The other winners of outsourcing deals from the automaker are Hewlett Packard Co., Cap Gemini and Covisint, a subsidiary of Compuware Corp. EDS will continue to have the most business at GM, but somewhat less than it has today, GM officials said in a statement, while HP and Capgemini will increase their existing business.IBM, Compuware Covisint and Wipro "will continue to be strategic IT partners to GM," the automaker said. It planned to offer more details about its IT plans later this morning." This is a significant milestone for General Motors and its Information Systems & Services Group," Ralph Szygenda, Group Vice President and CIO at General Motors, said in a statement. "Of critical importance is the focus we have had on driving innovation and supporting future globalization and digitization of the company."The exact pricing and contract splits were not immediately available. Based on current expenditures, GM would have laid out about $15 billion over the next five years on IT, but it also said the changes announced today would cut costs. "Over the next five months, we will focus our efforts on assuring a smooth transition," said Szygenda. "Our primary goals are to avoid any business disruption and ensure our efforts fully support the company's global operations."
19th February 06 offshorexperts.com

17.Next big outsourcing is in Europe, UK
The next big opportunity for outsourcing lies in Europe and the UK, and Indian companies should tap these to expand their horizon. This would also help the country post a 40 per cent growth in the outsourcing segment, according to N Chandrasekharan, executive vice-president and head global operations, Tata Consultancy Services (TCS).“The European market is the biggest opportunity for Indian companies, next only to the US. The country can post a 40 per cent growth, by taking a ‘go-direct-to-market’ approach and a combination of India and other nearshore-based delivery operations,” Chandrasekharan said, at the India Leadership Forum-Nasscom 2006.The right strategy and approach, may be acquisitions, were the right way to gain an entry into the European markets, he added. Business Standard Editor (New Media) Govindraj Ethiraj was the moderator. He opened the session by stating that Indian companies had to tap the emerging opportunities in global outsourcing. Nasscom President Kiran Karnik said, “UK is one of the major destinations, not only as a potential market but as a development centre. The industry trend in the recent years is expansion of the Indian IT industry’s presence from beyond traditional destinations to newer geographies.”
February 15, 2006 offshorexperts.com

Compiled by Madhur Ajmani
(Faculty Member)

Skyline Businss School
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