Nationalizm and genes — Nay.!!!

Sunaad is blogging here that Nationalizm seems to be in the gene.

I disagree. Nationalizm is an acquired characteristic and hence it can not be inherited. The concept of Nationalizm etc are passed by parents to child in the formative years and that way every person is a prisoner to his father.

In case of India, biggest change what we generation have to do to undo years of cultural programming of giving respect to anything that is ancient is to start dismantling the notions about conformity. If we feel that Gandhi family has screwed up this country let us raise our voice unlike what our parents did. If we feel that godmen need to be brought to book, let us stop visiting them unlike our parents did. Let us not be afraid to ask questions. Let us be scientific tempered.

Indians are not programmed to genuflect in front of whites. We are programmed to genuflect in front of anyone who has had the fortune of taking us for ride.

We glorify mughals and forget their misdeed
We glorify manu and forget the racial overtones in Manusmrithi
We glorify every king queen and slave who screwed our ancestors.
We glorify every custom,scarecrow, charm from yesteryears.

Glorification of British is a symptom of this larger malaise and not cause of our low esteem.
Only way to acheive self esteem is through scientific temper. Coz, Scientific inquiry improve the IQ of individual and then of the society. Our polity should strike where there is biggest bang for the buck.

Make every child of India think with scientific temper, reject the old value system that should be real vision 2020!!

Is Rahul UP’s future

Manmohan’s assertion about Rahul being UP’s future
made me remember the past. More than 2000 sikh families are yet to get justice on 1984 anti sikh pogrom carried out by congress and its supporters.
Future normally stems out of past. Readers can make their guess

Murthy’s National Anthem Issue – Was it overblown

Bloggers worldwide are now left to wonder if they made an error while reacting to Murthy’s comments on National Anthem and making him abandon his plan to plant himself in Rashtrapathi Bhavan.

We are posting this thank all the bloggers who provided support for our campaign against Murthy’s Nationala Anthem comments. But some of us are gentle souls and ask if we did right thing on picking up a fight over what could have been a slip of tongue.

Well!!! Murthy’s comment on National Anthem probably was a slip of tongue . But what made it into a a large controversy is snowball effect provided by bloggers. The resentment against Murthy Angadi was about to boil when Murthy put his foot in the mouth.The last incident may well have been a slip of tongue.

But, Murthy’s statement that he paid taxes when in effect he paid zero taxes is not a slip of tongue.
Murthy’s firm’s US arm declaring losses to avoid US taxation is not slip of tongue.
Murthy’s firm’s labor arbitrage kitty of over 700 mil USD is not slip of tongue.
Murthy’s firm paying below market salaries in US is not slip of tongue.

So bloggers. Great job.. Your target deserved every bit of bad publicity it received. Job well done and proceed now to make INFY accountable for other issues.

INFY Tax investigation

We have no issues if Murthy says he paid no taxes. But we have issues if he tries to pull wool over intelligent people of Karnataka.

Murthy on a recent clarification said that his company paid taxes and that is the statement we feel is very misleading.

We have started an investigation into tax malpractices of Murthy Angadi

As part of this we came across this interesting dialog between California State Senator Joseph Dunn and INFY head honcho Nandan, that was reported in the media in 2004.

Please find the excerpt below

On Mar. 5, California State Senator Joseph Dunn greeted an application for a tax exemption by Infosys Technologies Ltd., India’s premier software-services company, with an accusation that such companies ‘want to steal jobs’ and ‘taxpayer dollars.”‘ We would like to clarify for your readers:

Infosys pays taxes in all jurisdictions where it operates, based on domestic regulations and also using internationally recognized practices. Infosys has filed income-tax returns and paid income taxes in the state of California as per regulations laid out in the domestic tax regulations. Infosys is not requesting any tax exemption or incentives but has requested an alternative filing methodology that is permitted by the laws and regulations of the state of California. Our position to the specific case of Separate Accounting under California Revenue & Tax Code section 25137 has been mentioned in the filings with the Franchise Tax Board.

We would be grateful if you could publish this clarification, as otherwise it would give an impression that Infosys is unjustly seeking tax relief.

Nandan M. Nilekani

CEO

When California state government rejected the INFYs argument that it can not be taxed in US because it was an Indian entity and pays tax in India (It is another trick. Instead of saying that you did not pay.. You say you pay and then if someone seeks further clarification come up with explanation I pay zero tax– Wow. Indian invented zero and INFY seems to be internalized this )

Later that year INFY CEO admitted to media that they indeed had to pay tax in California but the amount is meager.

“Either way, we will bear minimum impact as the tax amounts to US$1 million against a revenue of US$1 billion and it is not a federal tax, but a state tax,”
Krish Gopalkrisnan, COO and deputy MD of INFOSYS
on record in media in 2004 after California State Tax Fiasco

How come a small sum of 1 mil USD became 70 mil USD? When INFY has accepted in the Annual report this year that 96% of its revenues in India are not taxable because they have a tax holiday till 2009. ( and SEZ scheme will further this period beyond 2015 )

Another interesting observation.

After that INFY actually makes a loss in US. ( See Infosys consulting’s balance sheet ). Now they make losses in US they need not pay even those peanuts.

But when it comes to printing annual report , strangely INFOSYS reports paying international taxes.
If we can get the IRS report on how much tax was paid this year, murthy may be forced to sing National Anthem forever. ( Like Bajaj did a la swadeshi)

Now I have request for the readers of this blog.
Request for those who are in India:
If you feel that I am raising right issue please forward this blog to as many friends as you would want. I want more views from the page to convince my american friends to file an IRS public record access under freedom of information act. I heard that fees can be around 50 USDs which is a small change for my american desis. But all that they ask me is “Ningobannige Yako E Tarle”.

And, Request for those who are in the USA.
After the INFY california tax fiasco , INFY consulting in USA officially finishes it balance sheets in the red.!!! So next time when another INFY marketing manager talks about value being delivered ask them to get some of those values into Infosys Consulting. Tell them you do not trust a loss maker to teach US business how to make more profits!!. Please forward this blog to vendor management team at your organization so that INFY might be asked this question.

Response to Nikhil from Churumuri

Nikhil,

If NRN were a votary of “Marketplace Nationalism” he could have made himself unavailable to his own grandiose plans to plant himself in Rashtrapathi Bhavan. The talk started in strait times on April 3rd 2007 that NRN wanted to contest presidential elections. Marketplace Nationalist in NRN could have clarified to the world about his aim being white house instead of rastrapathi bhavan as part of this Marketplace Nationalism.

It is possible for one to have alternate view on nationalism. But NRNs comment on TV showed none of that. NRN never had what Jagadish Bhagwathi is advising . For example, Jagdish Bhagwathi has been a vocal advocate for paying your taxes. In fact he is on record to have asked for dual taxation for dual citizens!!!. (Refer this link)
My grouse is why does not NRN pay taxes? Why is he cheating poor in India of their land, Indian tax machinery its taxes, Educated Indians their due wage. Do not try to put an aura around NRN. He is just a reckless profiteer and his hollowness comes out often with these kind of statements.

Regarding the statements from Patil, I agree Patil is no saint. But in democracy each one needs to be there. When a business man who profited immensely at India’s expense forgets the sacrifice the country men have done for him, he has to be threatened with deportation.

It is another matter , that NRN will fight nail and tooth any deportation. Because he wants to eat free and it is possible only in India. He knows that very well .. that explains why the minority interest on INFY balance sheet is negative. I do not know any other company that has such peculiar accounting.

I have done enough analysis on NRN’s nefarious schemes at

http://muthry4prez.wordpress.com

Do not forget to read the latest blog on tax issues at INFY here .
It will make your blood boil because you know the taxation in US.

INFY TAX: Need help from tax experts!!!!!

Muthry’s job is very interesting. Cleaning the dirt all the time. But the dirt Murthy leaves behind is so overhelming that sometimes I feel hopeless.

But I am getting lot of encouragement from readers response and hence decided to dish out next analysis.

This time let us check through following statement made by Murthy recently.

Reproduced in part here.

“IT companies pay Income Tax to the government and their employees spend a major portion of their income in the place they live. We have paid for it. Nobody is doing anybody a favour,”

Please read through analysis and then decide for yourself if Murthy’s statement that he paid taxes makes any sense.

First let us check out who pays what tax. INFY has lot of brand image that it is doing a lot to the society. So I will be happy if INFY does marginally better than any other company. But let me be very kind to INFY so I will lower the bar. INFY would win even if it manages to beat companies who do not have good social image. Arbitrarily I chose some companies from America, because America is the land of a devil called capitalist. A capitalist would only worry about profit and nothing else we shall say this for the time being.

INFY makes software and you can get INFY’s latest Income statement from here

Similarly you can get income statement of Microsoft from here and IBM from here.

We have chosen Microsoft because the rumor has it that it is very profitable and IBM because, bulk of its revenues come from consulting just like that of Infosys.

And here is the spread sheet that puts all data together so that we can compare INFY, Microsoft and IBM

Here is snap shot of the comparison in image form. Click on the thumbnail to view it.

Now let us discuss the tax.

As you can see, INFY paid a tax of 70 mil USD on an income of 599 mil USD – That is 11.69%
Microsoft paid a tax of 1.17 billion USD on an income of 3.47 billion USD – That is 33.95%
IBM paid a tax of 1.35 billion USD on an income of 5.39 billion USD – That is 25.03%

But matter does not end there. Somehow the figure 70 million USD in INFY tax sounded familiar.

I checked up INFY annual report from here.

70 million USD is equivalent to 303 crore INR shown on page 29 of INFY annual report.

But there is more to it. On page 52 there is small table that mentions that out of 303 crore INR shown as tax, around 247 crore INR is Overseas tax. Explanation of Overseas tax is that it is the tax paid by INFY when employees are deputed abroad. But Income tax regulations under section 91 allow rebates for double taxation. So what is the amount and why is this shown?

Then the wisdom strikes. Yes it is the amount contributed to payroll tax/social security tax when employees work abroad. Social security even though called a tax, it is more like contribution to provident fund. INFY can claim deduction on any contributions it makes to employee provident fund or social security. So how come this amount is shown as tax liability??? Then there is flash of wisdom. INFY does not pay any tax anywhere, just to buy respectability it shows 303 crore INR as the equivalent of world wide payroll taxes it is force to pay when employees get deputed abroad. Strange calculation. Can tax experts comment on this

More on Labor Arbitrage

Hi,

After the results of the data analysis on DOL data, many of you have evinced interest in details. Yesterday’s image did not have clear text subtitles and my sources in USA are too busy minting money for themselves than create a nice graphic to illustrate their case.

Anyway , I am posting three tables that provide details.

The first table below shows the biggest H1B users in descending order. Only those companies who applied for atleast 1000 visas last year have been considered.

You can see all the usual Indian outsourcers topping the list

Companies arranged in the descending order of number of H1Bs they applied for in 2006
Name of Company	No of H1Bs applied
INFOSYS TECHNOLOGIES LIMITED	22567
WIPRO LIMITED	19450
Cognizant Technology Solutions	10435
MPHASIS CORPORATION	9908
Patni Computer Systems, Inc.	7775
HCL AMERICA, INC.	7590
TATA CONSULTANCY SERVICES LIMITED	7528
Accenture LLP	7253
Satyam Computer Services LTD.	5497
PricewaterhouseCoopers LLP	4831
JSMN International, Inc	4793
Deloitte & Touche LLP	4698
Microsoft Corporation	4471
New York City Public Schools	3989
iGate Mastech, Inc.	3133
Covansys Corporation	3031
Tech Mahindra (Americas), Inc.	2959
Cisco Systems Inc	2461
Houston Independent School District	2171
Patni Computer Systems	1997
Deloitte Consulting LLP	1973
PricewaterhouseCoopers, LLP	1876
Satyam Computer Services, Ltd.	1738
KPMG LLP	1730
KITTY KELLY SHOE CORP.	1722
Deloitte Tax LLP	1696
Ernst & Young LLP	1475
LARSEN & TOUBRO INFOTECH LIMITED	1376
ORACLE USA, INC.	1361
Intel Corporation	1269
Rapidigm, Inc	1266
NIIT Technologies Inc.	1237
Liberty HomeCare Group II, LLC	1120
IGATE GLOBAL SOLUTIONS , AN IGATE CORP.	1100
Marlabs, Inc	1050

The above data is also available as jpeg
The next table is the average salary offered by these companies as per the H1B petition they filed. As you may know many unscrupulous companies inflate the salary on DOL data. But for the moment we would assume these companies atleast pay what they promise on H1B papers. The salaries for above employers has been arranged in ascending order to figure out who pays below the market. Now ignore the top three. They are not IT companies. Houston Independent School District and New York Citi public schools are importing teachers and Liberty Home care group is importing nurses. These salaries are commensurate with market salaries in their respective groups. Then check up who comes up. Virtually all the Indian outsourcers fight out to top this list. So much of value being delivered!!!!

NAME OF COMPANY	Annual Wages
Houston Independent School District	38553.7
New York City Public Schools	42742.47
Liberty HomeCare Group II, LLC	50000
iGate Mastech, Inc.	50194.47
HCL AMERICA, INC.	51179.37
MPHASIS CORPORATION	53538.38
LARSEN & TOUBRO INFOTECH LIMITED	53594.07
JSMN International, Inc	53732.38
Deloitte Tax LLP	54771.3
Satyam Computer Services LTD.	54798.34
Patni Computer Systems, Inc.	54875
Patni Computer Systems	55350.74
INFOSYS TECHNOLOGIES LIMITED	55532.53
WIPRO LIMITED	57254.93
Tech Mahindra (Americas), Inc.	57693.08
Covansys Corporation	59089.68
Deloitte & Touche LLP	59472.88
Satyam Computer Services, Ltd.	59829.54
Cognizant Technology Solutions	60796.7
Marlabs, Inc	61499.05
TATA CONSULTANCY SERVICES LIMITED	62340.36
NIIT Technologies Inc.	62364.56
KPMG LLP	65049.14
Ernst & Young LLP	65296.56
PricewaterhouseCoopers, LLP	65463.56
IGATE GLOBAL SOLUTIONS , AN IGATE CORP.	65953.44
PricewaterhouseCoopers LLP	66341.79
Rapidigm, Inc	69284.66
Accenture LLP	69529.73
Deloitte Consulting LLP	75272.69
KITTY KELLY SHOE CORP.	75500
ORACLE USA, INC.	76483.27
Intel Corporation	78528.19
Microsoft Corporation	87274.35
Cisco Systems Inc	88161.17

The above table is also available as image here

Based on above two tables it is possible to come out with a labor arbitrage income for each of the companies and this is what the table looks like.

Labour arbitrage enjoyed by companies because of H1B
NAME	Labor Arbitrage
INFOSYS TECHNOLOGIES LIMITED	736330509.65
WIPRO LIMITED	601126491.81
MPHASIS CORPORATION	343042667.71
Cognizant Technology Solutions	285548320.96
HCL AMERICA, INC.	280691919.14
Patni Computer Systems, Inc.	258800044.37
TATA CONSULTANCY SERVICES LIMITED	194379082.21
Satyam Computer Services LTD.	183395479.19
JSMN International, Inc	165017197.64
Accenture LLP	135133901.4
Deloitte & Touche LLP	134777616.98
iGate Mastech, Inc.	118949676.06
PricewaterhouseCoopers LLP	105409445.72
Tech Mahindra (Americas), Inc.	90155096.7
Covansys Corporation	88115704.89
Patni Computer Systems	65522437.75
Deloitte Tax LLP	56629229.85
Satyam Computer Services, Ltd.	49240373.52
LARSEN & TOUBRO INFOTECH LIMITED	47564331.85
PricewaterhouseCoopers, LLP	42580721.38
KPMG LLP	39983826.55
Ernst & Young LLP	33725305.13
NIIT Technologies Inc.	31910416.38
Marlabs, Inc	27995233.2
Deloitte Consulting LLP	25428983.85
IGATE GLOBAL SOLUTIONS , AN IGATE CORP.	24428511.92
Rapidigm, Inc	23897668.87
KITTY KELLY SHOE CORP.	21802542.45
ORACLE USA, INC.	15893631.28
Intel Corporation	12224257.96
Microsoft Corporation	3964988.27
Cisco Systems Inc	0

A older version of the above table (that included non IT professions such as teachers and nurses) is provided here.

I rest the case.

Picture is worth thousand words– Vikram can read this

Hi,

My friend from Seattle sent me this picture to be posted here.

Now let me explain what I understood from the picture and from the conversation I had with my friend in Seattle.

Offlate, it has become fashionable for Murthy Angadi to claim value, six sigma, SEI CMM etc etc… Idellla Sikkapatte Mamooli .

No body has conclusively proved so far how Murthy angadi operated and what value sahukarru talked about. The analysis done by Seattle Kannadiga proves to the point what is wrong.

H1B is a type of Visa allowed by US government to bring in specialized labor. Intent of H1B is to get the knowledge workers into US. H1B is a dual intent visa. Holders of H1B can then apply for immigration.

American college kids are complaining ad infinitum about H1B route being used to bring in cheaper but not qualified labor. Whenever there is hue and cry over H1B congress asks Department of Labor to tighten labor certification process used to dole out H1Bs. Department of Labor in turn peeps into its books and discovers that biggest beneficiary in terms of number of H1 petition is Redmond Angadi. Owner of Redmond Angadi then makes a trip to Washington to present his figures on H1B. Redmond Angadi typically applies for 4000 H1Bs and typically pays in excess of $80000 for each H1B. This figure is well above the market rate and hence congress feels that there is nothing wrong going on in H1B.

It was not possible to get department of labor data to sort out bad apples. But recently DOL has made the practice of putting up raw data online. You can access this raw data from here. The raw data is in .mdb format and you need to have Microsoft Access to analyse the data.

Off late Seattle Kannadiga is playing with data. Some of the interesting insights so far.

Biggest Beneficiary of H1B is not Microsoft. It is Murhty Angadi !!!!

Here is the spread sheet detailing the calculations.

As you can see Murthy Angadi applied for 22567 H1Bs last year with an average salary of around 55000 US dollars. If Murthy Angadi were to pay market salary like CISCO or Microsoft did, Murthy Angadi would have had to pay 80000 dollars in salary. So Murthy Angadi has around 25000 dollars of labor arbitrage per employee and total labor arbitrage enjoyed by Murthy Angadi when we calculated the wage differences across all the H1s for INFY the figure came to 736 million US dollars.

736 million US dollars !!!! or 2800 crores of Indian rupees for doing nothing!!!. I do not know if the figure is more than total profit of Murthy Angadi. If this figure is more than profit of Murthy Angadi there is lesson for managment types at Murthy Angadi. They can make more money if they just stick to labor arbitrage rather than on management mantras !!!!

Muthry clarifies – INFY is the H1B spoilsport

I recently got this email from a friend in Seattle.

I am reproducing the mail below.

*******************

Muthryji,

Namaskara.

After the H1B fiasco the discussion is once again on if H1B is good for America or not. H1B proponents like Bill Gates say H1B helps America attract talent. But those who are working on H1Bs always complain that they are paid slave wages and Americans who lost their job to an H1B point out that H1B is attracting slaves and not talent.

Now the H1B quota is exhausted, predictably Microsoft would make more noises in Washington on need to increase the cap on H1B. Microsoft as you know is the largest beneficiary of H1B ( Wait on this till I finish my mail)
Bill Gates routinely begs the congress to increase the H1B cap and presents to congress the data that H1Bs in Microsoft are paid significantly above market salaries. So the argument in favor of H1B cap increase would be like this. Microsoft filed largest number of H1B petitions this year and Microsoft paid salaries above the market rate. So there is no truth in the statement that H1B is exploitative.

Now it is open secret that INFY sucked blood of developers at client site and is involved in massive undercutting of wages. But how come INFY never comes up in the radar. Till recently DOL did not publish the data on H1Bs but now the data from whole year is available for any type of analysis you would like to do. You can get the 800 MB sized data file from here. There is also a web site which provides the analysis using a web hosted application. All the while I used to rely on this web application to understand the H1B dynamics. But today I decided to run some queries on the data myself and what I discovered is startling, there is a flaw in reporting. When you say Microsoft is the largest petitioner you are correct. Compared to Microsoft’s 4000 odd petitions INFY filed around 1000 petitions and hence is not significant user of H1B. That is why Murthy probably never gets called to Congress. But dig further in the data. You see that INFY typically files a single application for hundreds if not tens of programmers. Single application reduces the filing cost for INFY and also may be another strategy of INFY to stay below the radar. If you add up the number of beneficiaries for all the 1000 odd applications INFY filed the number came to .. hold your breath.. 22567 H1B .. Compare this to 4471 H1B from Microsoft.

Yes. INFY is the largest beneficiary of H1B and INFY gets never called to congress because in terms of number of petitions they are not in top 5. Another of Murthy’s tricks to cheat the system.

Muthry clarifies Murthy’s apology

After the fiasco that National Anthem would embarrass foreigners in India, Murthy tried to eat his foot again with following clarification.

Well as a clean up guy! I, muthry feel that this statement needs some clean up.

Let me take up the first statement.

We have always kept the interest of India foremost in our minds and our work speaks for itself.

Yes, Work spoke for itself. Murthy’s infy fudged tax figures and claimed that it was paying tax!!

We are a proud Indian company, with strong universal ethos of transparency, accountability and honesty.

Infy is an Indian company because of honesty, accountability.. transparency.. oh my goodness. Infy is Indian because it does not have to pay a penny in taxes in India. Had it been American he would be paying 30% of his income in taxes!!!. Murthy you are getting benefited by claiming Indianness. India is not getting a penny from your pocket. So why make it a big issue!!!