IT hiring could rise in Europe as deal wins surge
TCS has announced recruitment of 1,500 aspirants in the UK next year
Tata Consultancy Services (TCS), India’s largest IT services firm, has announced that it will recruit 1,500 aspirants across the UK over the next year.
The announcement followed a meeting between UK Trade Secretary Liz Truss and TCS Chief Executive Officer Rajesh Gopinathan in Mumbai on Monday, during which they discussed the company’s commitment to continue investing in the UK’S innovation, technology sectors, and in developing workforce skills.
The UK contributed £2.7 billion (~27,000 crore) to TCS’ revenue at the end of FY20. The company has had a presence in the UK for 45 years — it is the second largest software and IT services companies in the country, and the largest provider of third-party policy administration services in the life insurance and pensions industry.
“This development builds on the great work TCS is delivering to our UK customers. Our sustained investments have made TCS the preferred growth and transformation partner of our valued customers in the UK, allowing them to digitally transform their business for competitive growth,” said Gopinathan, according to a TCS statement.
Hiring mode
TCS isn’t the only firm that’s in the recruitment mode.
Indian peers such as Infosys, Wipro, and HCL Technologies, who have been winning large deals in Europe are also bulking up their onshore presence.
Analysts say that most large deals have also meant rebadging of employees, which means these deals have led to the transfer of a large number of people.
For instance, when Infosys signed one of its largest deals with German automaker Daimler, worth $3.2 billion, it also agreed to the transfer of 600 employees from the automaker.
Similarly, Wipro agreed to take over close to 1,300 employees, when Metro signed a $700 million deal.
Employees of Metro from Germany, Romania, as well as India were transferred to Wipro, as a part of the deal.
And, when TCS acquired select assets of Pramerica Systems Ireland, a subsidiary of Prudential Financials, about 1,500 employees of Pramerica were also transferred to the former.
“Continental Europe has been a challenge for Indian players due to the presence of large labour unions and language barrier. But as companies focus on their core and work closely with their IT partners and give more work to them, they are also making them transfer employees rather than firing them. Rebadging of employees is becoming an integrated part of large deals,” said Pareekh Jain, founder and lead analyst, EIIRTREND.
Reliance Jio is learnt to have made the highest earnest money deposit (EMD) for participating in the upcoming auctions in an attempt to gather the maximum amount of spectrum along with some additional airwaves for future use.
According to calculations, if the company were to buy one block of spectrum, in all 22 telecom circles, in each band, it would have deposited at least ~7,800 crore, as earnest money deposit.
Airtel is right behind Jio in terms of deposit money, followed by Vodafone Idea (Vi) with the least submission. It is learnt that Vi has evinced an interest in buying only renewal spectrum and has paid EMD commensurate to the quantity of spectrum.
EMD, or the minimum deposit for the premium 700megahertz (MHZ), to be sold in the block size of 5 MHZ (paired) is ~3,660 crore. This is the most expensive band on offer in the auctions.
Airtel is looking at some new spectrum, besides renewing the licence for the older one. Vi is only eyeing renewal spectrum in the current auctions. All the three private telcos submitted their applications for participation in the upcoming auction of airwaves by the Department of Telecommunications. MSTC has been selected to handle the spectrum auction. The public sector enterprise executed coal auctions in early 2015. They were held after the Supreme Court cancelled allocation of coal mines in September 2014. MSTC is also holding auctions for various central and state government departments.
The Telecom Regulatory Authority of India (Trai), in August 2018, came out with its recommendations on spectrum pricing, wherein the regulator reduced the base price of frequencies that went unsold in the 2016 auction.
The reserve price for the premium 700 MHZ spectrum, which went unsold in 2016, was reduced by more than 40 per cent to ~6,568 crore per MHZ (all-india), from ~11,485 crore in 2016. Trai recommended a base price of ~4,651 crore for paired spectrum in the 800-MHZ band (covering 19 circles), ~1,622 crore per MHZ for the 900-MHZ band (covering seven circles), ~3,399 crore per MHZ in the 2,100-MHZ band (covering 21 circles), and ~821 crore per MHZ in the 2,500-MHZ band (covering 12 circles). It also suggested ~960 crore per MHZ for unpaired spectrum in the 2,300-MHZ band on a pan-indian basis.
The spectrum bands from 3,300 MHZ to 3,600 MHZ, which are the 5G airwave bands, have been kept aside.
With order book visibility gaining momentum, Hindalco Industries is of the view that the demand bounceback across sectors to precovid levels is sustainable and not pent-up in nature.
“The order flow coming in is fresh three-month and six-month forward looking orders and none are old orders that are being revived. So clearly, the signs are of fresh demand coming up. These signs are across segments — aluminium as well as copper,” Satish Pai, managing director (MD) of Hindalco Industries, told Business Standard.
Hindalco Industries on Wednesday reported higher-than-expected consolidated net profit of ~1,877 crore in the October-december quarter, up 77 per cent from same period last year. This is on the back of increased revenue as business bounced back to pre-covid levels. “We have to remember that though we have come to pre-covid levels, we have started off on a lower base. So, we had to start from where we were a year ago. We haven’t exceeded that,” Pai added. The company’s top line — in the period under review — stood at ~34,958 crore, up 20 per cent from the same period last year with Novelis contributing the highest of close to ~23,960 crore to the total.
According to Bloomberg estimates, the company’s consolidated net sales was seen at ~19,671 crore in the December quarter, while the bottom line was expected to be ~983 crore. The company’s consolidated earnings before interest, taxes, depreciation and ammortisation (Ebitda) stood at ~5,242 crore in the quarter gone by, up 40 per cent from the same period last year.
“All-time high overall shipments by Novelis stood at 933,000 tonnes, up 17 per cent on a year-on-year (YOY) basis. The all-time high adjusted Ebitda was at $501 million, up 46 per cent from the same period last year,” said the Aditya Birla Group company in its release.
Meanwhile, the company’s India aluminium business Ebitda stood at ~1,323 crore, up 27 per cent YOY and up 24 per cent quarter-on-quarter (QOQ). “Nearly 80 per cent of the company’s consolidated Ebitda is not linked with the LME (the London Metal Exchange). Hence, it looks sustainable,” said Pai.
“Along with market performance, we have strengthened our balance sheet, which shows a significant improvement in the consolidated net debt-to-ebitda ratio. Inclusion of the Aleris business has positively impacted the overall top line and Ebitda,” said Pai.
The company’s consolidated net debt/ebitda stood at 3.09x as on December 31, 2020, against 3.83x as of June 30, 2020. “It was the Novelis debt that we have pre paid and resulted in lower debt/ebitda. Our India business net debt remains largely flat,” said Pai. The company’s consolidated gross debt stood at ~77,800 crore. Of this, ~53,800 crore was attributed to Novelis as on December 31, 2020.
With cash generation on track due to demand revival, Hindalco Industries is chalking out a capital allocation strategy. Here, cash generated by the business would be divided among shareholders, growing capex and lowering debt. During the quarter gone by, the company also managed to pay off $500 million of the total $1.1 billion bridge loan it had taken during Aleris acquisition. In the final quarter of FY21, the company aims to pay off the balance $600 million.