Agusta Case: How Michel Van­ished with .₹ 135 Crore

Bri­ton got big money from co to buy scrapped In­dian chop­pers, but deal never hap­pened

The Economic Times - - Front Page -

Rahul Tri­pathi & Manu Pubby

New Delhi: Where did a sum of

18 mil­lion (.`135 crore) paid to Chris­tian Michel by Agus­taWest­land van­ish? This was the money Agusta sup­pos­edly paid Michel for buy­ing back dis­carded he­li­copters from Pawan Hans, the gov­ern­ment-owned civil­ian he­li­copter op­er­a­tor.

But the En­force­ment Di­rec­torate, in­ves­ti­gat­ing Michel, says Pawan Hans never sold any dis­carded chop­per to any of Michel’s com­pa­nies. ED of­fi­cials told ET that they sus­pect the 18 mil­lion was dressed up as a ser­vice pay­ment but may have been part of the fund set aside to grease the wheels of de­ci­sion-mak­ing.

The lat­est fig­ures are a clear sign that In­dia’s largest out­sourc­ing firms are suc­ceed­ing at ‘non-lin­ear’ growth where rev­enue in­creases rise dis­pro­por­tion­ately com­pared to hir­ing. While the num­bers are good news for an in­dus­try that is try­ing to de­fend profit mar­gins, it raises con­cerns over the fu­ture of hir­ing and the avail­abil­ity of en­gi­neer­ing jobs in a sec­tor that em­ploys over three mil­lion peo­ple.

“What you’re see­ing now is about 200,000 peo­ple be­ing hired in the IT in­dus­try – it’s not the 4-5 lakh that they used to hire 10 years ago. And that’s be­cause the growth has shrunk from 35-40% and the com­pe­ti­tion was for re­sources,” In­fosys co­founder Kris Gopalakr­ish­nan said in a re­cent in­ter­view. “Even now the com­pe­ti­tion is for re­sources, but it’s for slightly more ex­pe­ri­enced re­sources – peo­ple who can work on au­to­ma­tion, ar­ti­fi­cial in­tel­li­gence, ma­chine lan­guages, data scien- ces. So, it’s not hir­ing for Java cod­ing any more.”

Ac­cord­ing to data com­piled by McKin­sey & Ko­tak In­sti­tu­tional Eq­ui­ties, In­dia’s IT in­dus­try re­quired about three mil­lion en­gi­neers to add the first $100 bil­lion of rev­enue. How­ever, the num­ber of en­gi­neers re­quired to earn the next $100 bil­lion will drop sharply by about a third.

“The rate of hir­ing will slow down, but it (hir­ing) will con­tinue to rise. But not at the in­cred­i­bly rapid rate that we used to see be­cause the num­ber of peo­ple per value de­liv­ered will con­tinue to come down,” In­fosys Chief Ex­ec­u­tive Of­fi­cer Vishal Sikka said in an in­ter­view af­ter an­nounc­ing fourth-quar­ter earn­ings this month.

Ac­cord­ing to ex­perts, soft­ware firms re­quire much fewer peo­ple to gen­er­ate rev­enue from newer, high-pay­ing ser­vices such as cloud com­put­ing and data an­a­lyt­ics. They are quickly adding ca­pa­bil­i­ties in th­ese ar­eas as low-end back-of­fice ser­vices that came to de­fine In- dia’s out­sourc­ing boom through the1990s and 2000s fade into the back­ground.

Cus­tomers such as Royal Bank of Scot­land and Tar­get are in­creas­ingly ques­tion­ing the rel­e­vance of the labour ar­bi­trage model and the in­dus­try grap­ples with slow­ing rev­enue growth that is also lead­ing to lower lev­els of hir­ing.

“In the past we looked at ar­bi­trage, we looked at head­count. It was more like ‘you're told and we will do’ ver­sus look­ing at cus­tomer out­comes. Head­count is no longer a dis­cus­sion — so I think it’s more about cus­tomer-cen­tric out­comes," said Pankaj Phatarphod, man­ag­ing di­rec­tor at Royal Bank of Scot­land, which cur­rently out­sources to com­pa­nies such as In­fosys.

The likes of In­fosys and Tata Con­sul­tancy Ser­vices are also in­vest­ing in au­to­ma­tion plat­forms where soft­ware bots and ro­bots can per­form com­modi­tised IT jobs at a frac­tion of the cost and time it takes a hu­man en­gi­neer.

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