Pune becomes new hub for global banks’ back offices

A month ago, 30-year old Kaushik Bose (name changed), a consultant with EY in Mumbai, quit his job to relocate to Pune where he joined the back office of a global investment bank. Bose was prompted to make the shift to Pune from the city where he has lived, studied and worked for the past 10 years. The draws: a better quality of life, including cheaper rentals, a home close to the workplace, scope for more family time and net savings from the better cost of living. Several professionals across levels are making Pune their home. The city, known as a BPO hub for information technology majors, is now a hot destination for back offices of global banks, which are set to witness a hiring boom in the next 18-24 months. An estimated 5,000 people across levels will be hired at the global in-house centres (GICs) of Citibank, Deutsche Bank, Barclays, Credit Suisse, BNY Mellon among others in the period, according to executive search firm estimates. Pune has many factors working in its favour. Topping this list is its proximity to the commercial capital Mumbai – it is barely a threehour ride from the megapolis. “Pune as a destin a t i o n h a s gained growing importance in the past few years due to the development of the city’s infrastructure, which has made it an attractive location for talent as well corporates,” says Vikram Subrahmanyam, head of operations and technology at Citi South Asia.

back offices“Pune is set to see a big pick-up in hiring with about 5,000 additions to GICs in the next 18 to 24 months, says Puneet Pratap Singh, partner-incharge, New Delhi at search firm Heidrick and Struggles. He estimates that at the leadership level hires, Pune will eventually help companies to save around 10 per cent on compensation. Pune is the preferred choice for talent not only from Mumbai and other parts of Maharashtra, but also from cities like Bangalore, Gurgaon, Hyderabad and Calcutta. From the standpoint of companies, it is an attractive destination due to the cost advantage in terms of real estate, as well as people. Rentals in Pune, for instance, are 40 per cent to 50 per cent lower than those in Mumbai, says Anuj Puri, chairman and India country head of Jones Lang LaSalle, a global real estate services firm. “Mumbai is becoming untenable for most people with commuting getting increasingly tougher and a very high cost of living.With several bank back offices setting up shop in Pune and strengthening their manpower, it is good that it will set up a talent pool,” says K Sudershan, managing partner — India and regional VP — Asia, EMA Partners International. Adds Singh, “To move talent from Mumbai to Pune, companies have to offer a 15 per cent to 20 per cent hike on base compensation compared with 25 per cent to 30 per cent that they might normally offer. However, the bigger positive impact will be attrition management and real estate cost advantage.”

The city has an existing presence of IT product and services organisations, as also captives. “The willingness of the talent base to relocate to Pune is also due to the good quality of residential infrastructure and relatively lower commute time,” says Subrahmanyam. Attractive SEZs and good corporate infrastructure with the availability of quality talent has made Pune an attractive destination for corporates to set up their GICs. The city is also relatively more cosmopolitan compared with emerging locations like Chennai, Hyderabad, says Dhvani Anjaria, specialist for support functions hiring at Vito India Advisors, a BFSI search firm. For Citibank, Pune is becoming very strategic, with its global inhouse centre Citi Technology Center planning to scale up staff strength to 2,500 from 1,200. “The plan is to continue to leverage the availability of the city’s large talent base,” says Subrahmanyam. The current talent base at Citi’s GIC in Pune has professionals from Mumbai, Delhi, NCR, Bangalore, Hyderabad and other cities. Around 8 per cent employees have moved from Delhi and NCR, 10 per cent from Bangalore, 7 per cent from Hyderabad and other cities. Deutsche Bank, which is the latest to set up its back office — DBOI Global Services India — in Pune this year, has moved about 600 people from Mumbai, an industry source said. DBOI refused to share numbers though. “Pune is an attractive destination for banks’ in-house centres. We recently set up a centre in Pune and are pleased with its build out and growth. Our staffing is a mixture of local hiring of talent as well as some colleagues who relocated to Pune from our Mumbai office,” says Manoj Yadav, managing director and head of Deutsche Bank Group’s in-house centre for India.

Facilities and living comforts apart, Pune also has a high availability of talent across business areas. “Pune has a large number of world class educational institutions and hence there is a constant supply of high quality talent which is absorbed by companies based there,” says Yadav. “Candidates from across different cities with experience in functional areas such as operations, finance and technology were open to moving to Pune,” he adds. “With urban infrastructure, moderate cost of living and good governance, Pune has all it needs to attract employees. It’s also known as the Oxford of the East, with ample colleges and schools for children’s education,” says an HSBC spokesperson.

– ET

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HRD ministry to launch e-education courses from top institutes like IIT and IIM

The HRD ministry will roll out a host of digital initiatives including free online courses from top institutions, a national e-library for students and a dedicated portal to help students make informed choices about higher education, HRD minister Smriti Irani said on Thursday. Central universities, Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) will soon start offering massive open online courses (MOOCs), or courses offered on the internet with unlimited participation, free of cost, Irani said in her first press conference after joining office. The e-library, which will be launched next year, will allow students to access content from premier educational institutions.

hrd ministryThe online portal, ‘Know Your College’, will be a repository of information related to all universities and colleges and will allow students to have their grievances redressed in case they have been misled by an institute or college. The HRD minister also announced that a national and state-level deliberation on the new education policy will begin in January next year. She did not comment on whether the new policy would incorporate the four-year format for undergraduate courses, but said, “During the national, state and regional level debates we will discuss how the courses should be structured.” Irani also said Prime Minister Narendra Modi’s interaction with children on the Teacher’s Day on September 5 was viewed by almost 9.5 crore students across 8.5 lakh schools in the country. The HRD minister evaded questions on whether a similar exercise be held on the Children’s Day on November 14, the birthday of the country’s first prime minister Jawaharlal Nehru. “You will have to wait for it till the time comes,” Irani said.

– ET

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Ingersoll Rand to invest Rs 100 crore to modernise Naroda plant

Industrial products and solutions provider Ingersoll Rand today said it will invest Rs 100 crore to upgrade its manufacturing facility in Naroda in Gujarat. This investment will support production of complete range of compressors in reciprocating, rotary and centrifugal ranging from 0.75 to 4500 kW, a release issued here said. “The strategic investment of Rs 100 crore in the facility reinforces our overall growth strategy in India that is focused on driving innovation, technology and product development and is a reflection of our long standing commitment to the country,” Ingersoll Rand Chairman and President Venkatesh Valluri said. Products and solutions manufactured at the Naroda plant will be distributed across both, domestic as well as global markets, the release said.

ingersoll rand
Technologies for air treatment, filtration solutions, storage solutions, energy saving control solutions, remote monitoring as well as energy saving modular solutions for compressed air that increases the overall efficiency of an entire manufacturing and operating system will be enhanced at this plant. In addition to these, the facility will add new product lines with high level of innovation, it said.
“Over the past few years we have been strongly focused on innovation from emerging economies and India has been at the forefront of this initiative. “As the country moves into a new era of economic realignment that will be focused on manufacturing, we are upgrading the facility by introducing new flexible production techniques, enhanced process efficiency methods and new technologies,” he said.
The modernisation will not only increase the safety practices and allow the company to deliver very cost competitive products for India and global markets, but also enhance its customers’ energy efficiency, productivity and operational efficiency, Valluri said.
Spread over 14 acres, the facility caters to markets such as industrial efficiency, transportation, food security, logistics, process, pharmaceutical, health care, cement, mining, defence and others. The planned transformation will provide the manufacturing facility with several benefits, including reduction in energy and resource consumption, the release said.

– ET

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Government likely to ban sale of loose cigarettes

The government is considering a proposal to ban the sale of loose cigarettes, a move that will hit ITC and other cigarette makers hard as 70 per cent of retail takes place in this form. This is one of the many measures proposed by an expert panel set up by the health ministry. Other suggestions include raising the age limit for consumption and increasing the fine for smoking in public spaces to Rs 20,000 from Rs 200, apart from making this a cognizable offence. If accepted, these suggestions on curbing tobacco consumption could soon be part of tougher legislation being drafted by the Modi government, which it wants to introduce in the winter session of Parliament as it looks to curb the damage caused by the habit in the form of cancers, cardiovascular diseases and other health issues. Headed by the Delhi government’s former principal secretary Ramesh Chandra, the expert panel submitted its report to the health ministry last week. The expert panel also wants the government to impose a harsher penalty of Rs 50,000, up from Rs 5,000 now, on manufacturers for violating the provision on carrying pictorial warning signs on cigarette packets. Members of the committee, who spoke to ET on condition of anonymity, said the panel also recommended raising the age limit for tobacco consumption to 25 years from 18 years, banning advertisements at the point of sale, and increasing the size of health warnings to cover almost 80 per cent of packaging.

Currently, they cover 40 per cent of the pack front.Discouraging tobacco consumption appears to be high on the government’s agenda. Just five days after being sworn in as prime minister, Modi had tweeted: “On World No Tobacco Day, let’s pledge to spread awareness on the risks of tobacco consumption & work to reduce tobacco consumption in India.” Government likely to ban sale of loose cigarettes, Rs 20000 fine for smoking in publicThis seems to have had an impact on stocks. Since Modi came to power on May 26, only ITC has moved up (3.7 per cent) while rival stocks have fallen. Godfrey Phillips has lost 6.4 per cent, VST Industries 8.5 per cent and Golden Tobacco 30 per cent. In contrast, the Sensex has gained more than 10 per cent in the same period. ITC and Godfrey Phillips represent more than 90 per cent of the industry. Tobacco Institute of India Director Syed M Ahmad refused to comment on any specific proposal since the lobby group is yet to see the panel report. He said cigarettes form the smallest segment of tobacco consumption in India and any such moves will have little effect on other forms in the unorganised sector. These are largely non-compliant with laws, evade taxes and are far more affordable for tobacco consumers, he said. “Hence, the recommendations of the panel will only increase the level of contraband and illegal trade and shift consumption of tobacco to other forms as is evident today. In the process, it will severely impact the legal domestic cigarette industry in India and the livelihoods of over 38 million people who are engaged in tobacco whilst giving a fillip to smuggling,” Ahmad said.

ET reported last month on the constitution of the expert committee by Health Minister Harsh Vardhan to propose amendments to the Cigarettes & Other Tobacco Products Act, 2003 (COTPA). The government is working toward making its laws more compliant with the World Health Organisation’s Framework Convention on Tobacco Control, or FCTC, a treaty which lays down a set of universal standards to limit the use of tobacco worldwide. India ratified the FCTC in 2004, a year after enacting its own anti-tobacco legislation. The government is currently preparing a Cabinet note based on the recommendations of the panel. According to officials, the health minister has accepted the report but not all of the committee’s suggestions might find a place in the Cabinet note. “Some of the amendments suggested are too radical. Like, for instance, the government is in favour of increasing the fine on smoking in public places but what’s been suggested by the panel is too much. It will not be as high as Rs 20,000,” said a ministry official, who didn’t want to be named as he’s not authorised to speak to the media. According to analysts, the impact on volumes could be anywhere between 10 per cent and 20 per cent as only some consumers will be able to afford the shift to packets. Some fund managers told ET that this will create an overhang on the stocks of cigarette companies such as ITC and Godfrey Phillips which until now have been shielded from the slowdown in consumption due to the inelastic nature of cigarette demand. In the year to date, ITC has gained 11 per cent while Godfrey Philips’ stock has risen 17 per cent. To be sure, ITC has embarked on a strategy of diversification into other businesses away from tobacco over the past few years.

cigarettesAny decline in sales, however, will cut both ways as the cigarette industry generates more than Rs 25,000 crore in tax revenue. Putting such steps into effect will be difficult. “It needs to be seen how the government will be able to implement this, as there are lakhs of pan shops and selling points and implementing this could be a challenge. In the past also, the government has come out with several norms related to smoking in public,” said Abneesh Roy, consumer analyst, Edelweiss Securities. “However, it has not been able to execute them entirely.” Tobacco Institute’s Ahmad said such recommendations will neither serve the government’s tobacco control aim nor maximise revenue from the sector. According to the grouping, India has a unique pattern of tobacco consumption with legal cigarettes accounting for just 12 per cent. The remaining 88 per cent is represented by illegal cigarettes and a host of traditional products such as bidis, chewing tobacco and khaini. It estimates that illegal trade in cigarettes leads to a loss of.`6,000 crore to the Indian exchequer. “As a result, while tobacco consumption in the cigarette form has declined from 21 per cent in 1981-82 to 12 per cent currently, overall tobacco consumption has increased by 42 per cent, making tobacco control policies in the country counter-productive,” Ahmad said. The government is considering a ban on the sale of electronic cigarettes, a vapour device that delivers a nicotine hit minus the smoke, ET reported last month. An expert panel on e-cigarettes constituted by the health ministry has recommended a blanket ban on the product, saying its safety has not been established.

– ET

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Bharat Forge turns focus to defence technology

Flashback to 1999, and the Kargil war. The military is forced to abort missions due to heavy casualties. Then it decides to deploy the controversial Bofors gun to destroy Pakistani outposts from various vantage points. The strategy pays off, but the military realises it will soon run out of ammunition to feed the howitzers.

defence technologyAt the urging of army commanders, the defence ministry turns to Baba Kalyani and his company Bharat Forge to make shells for its Bofors 155mm howitzers. Kalyani, chairman of the Bharat Forge Group, recalls how the company got the “emergency order” to make 1 lakh shells. That’s how the company’s ability to turn out high-quality products at short notice, which helped burnish its global reputation in the auto parts industry, came to play a role in history.

More than a decade since then, the group led by flagship Bharat Forge is ready with artillery equipment that the Indian defence forces will soon start testing. This puts it nicely in place to take advantage of the Narendra Modi government’s initiative to encourage greater private participation in the defence sector. “A lot of emphasis on local manufacturing of defence products has been put by the current government. Thus, companies like us, who’ve taken defence seriously, are now production-ready,” Kalyani told ET in an exclusive interview. The government has also opened up the sector to more overseas investments to persuade foreign companies to transfer technology to Indian firms. To those who would question the competence of a forging company entering the high-tech defence space, Kalyani said manufacturers such as Bharat Forge are especially well-qualified to do so. “Companies like us from basic industries such as metallurgy and forging are the ones that are engaged in defence worldwide,” he reasoned. For its artillery equipment venture, the Indian company has a joint venture with Elbit Systems, an Israeli defence equipment maker. The venture will initially work on the 155mm howitzer modernisation programme.

Bharat Forge has also built a howitzer from scratch that Kalyani says has far greater firepower than even the Bofors gun that’s currently in use. “Our artillery gun would be better than Bofors,” he asserted. “On the operational parameter, it is better in terms that it can move at 25 km an hour on its own, and the gun would take 52 calibre rounds compared with the 39 calibre of Bofors. It would have ‘steer by wire’, which the Bofors guns do not possess,” he said.  By late September or early October, the Indian Army will start testing Bharat Forge’s artillery equipment. An ultra light gun will be ready for testing by late September while trials of the 155mm artillery gun will start by December. A 155mm ultra light gun will be ready for testing by the middle of next year. The company is also actively scouting for opportunities in the small arms space, although the government is yet to give permission to private companies to manufacture such weapons. Bharat Forge decided to diversify away from the automobile sector after the global economic turmoil hit in 2008 and plant capacity had to be idled. “We did a couple of things. We tightened costs and adopted lean manufacturing processes. We invested heavily in R&D to develop new products” to mitigate the effects of the slump. But “when the Indian economy got battered, we too got battered in the process”. This forced the company to look at sectors it could enter by leveraging its metallurgical and forging prowess. Components for the shale gas fracking, aerospace, offshore oil & gas exploration and defence industries were shortlisted.

While bets on offshore oil & gas and shale gas have paid rich dividends thanks to orders from US companies, components for aerospace equipment will need more time to develop and test. The company will focus on India for its defence equipment strategy over the next decade. “Unless we are recognised in the domestic market, who will acknowledge us abroad?” Kalyani asked. The defence market is a potentially massive one. India’s defence imports are currently worth about $20 billion a year, accounting for about 70-75 per cent of its total requirements, Kalyani said. Along with the offset clause, any other mandatory local manufacturing requirements would be a very big opportunity for Indian companies. An offset clause relates to the local-manufacturing pledge an overseas company needs to make in return for orders. Kapil Singh and Nishit Jalan of Nomura didn’t put a number to the defence opportunity in a July 30 research report. “With the focus of the Indian government on local sourcing and hike in FDI in defence to 49 per cent, the revenue opportunity for the company would be very large but difficult to build in our earnings estimates,” they said.

– ET

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