Thousands of Merrill employees to lose jobs

Thousands of employees of battered financial services firm Merrill Lynch will lose their jobs after the firm is taken over by Bank of America, a media report says.

The Financial Times quoted Merrill Lynch chief executive John Thain as saying that thousands of employees would lose their jobs when the company is taken over by Bank of America and the jobs would be lost in the corporate and services sectors, such as information technology.

Thain, speaking in Dubai while on a regional tour, added that Bank of America's (BofA) acquisition of Merrill's investment and wealth management businesses would be completed by the end of the year, the report added.

According to estimates from New York City comptroller, William Thompson, New York is bracing itself for the loss of up to 35 thousand jobs in the banking sector.

The majority of the job losses are the result of the collapse this year of Bear Stearns and Lehman Brothers. Furthermore, when the Merrill Lynch-BofA deal was announced last month, the merger was expected to result in seven billion dollars of savings, including redundancies.

Given the economic slowdown, Thain further said he expected consolidation in the financial sector. "There will be smaller institutions that need to be recapitalised or acquired," the report quoted him as saying.

Thain also said that the Middle East would not escape the global slowdown, however, the regions large accumulated capital reserves could also be mobilised to invest outside the region.

Earlier this month, John Thain was named as president of global banking, securities and wealth management at BofA following completion of Merrill Lynch's merger with the bank.

IT firms eye Japanese market

With prominent Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys Technologies, Zensar Technologies and Satyam Computer Services increasing their presence in Japan, the world's second largest IT services market is becoming a lucrative market for India.

Nasscom pegs the Japanese IT services market at $108 billion, India's share in the market being only $1-1.5 billion (around Rs 4,900-7,500 crore). Offshoring is limited to 8-10 per cent of the total market, with China being Japan's biggest offshoring partner, accounting for over 50 per cent of the total offshoring. "We see India's share of IT exports to Japan growing in the next 5-7 years. This increased diversification to Japan has got nothing to do with the current economic downturn," asserts Som Mittal, Nasscom president.

However, the task is easier said than done. Japan has low overall IT spending, with spend to sales ratio being around 1-1.5 per cent for most industries, as compared to around 3.5-4 per cent in the US. BFSI and manufacturing are the highest spenders among all industries. Zensar Technologies currently has an all Japanese team of 250 people in Japan. The company gets almost six per cent of its revenues, less than $10 million (Rs 49 crore) from Japan but sees it doubling to $20 million (Rs 98 crore) in three years.

"We have been in Japan for six years and it is a slow market in terms of culture. It is a different market and the number of young people who can take up IT jobs is very less," says Ganesh Natrajan, Global CEO, Zensar. Nucleus Software, which gets 50 per cent of its revenues from Japan, has 100 employees there but the company doesn't want to increase this number. "Japan is a tough proposition in terms of language and culture and has low tolerance for mistakes," says Vishnu R Dusad, CEO and MD of Nucleus Software.