Cross Posting from Nadunudi – Rai Bahadur Sahukarru

January 26, 2008

If you read the constitution of india you know that constitution prohibits titles such as Bharat Ratna, Padma Vibhushan and so on. The intent was to do away with British custom of sycophancy. Not only constitution prohibits State from giving title, it also prohibits Indian citizens from accepting titles from other countries. (Remember Dilip Kumar and Nishan E Pakistan ). But somehow Indian State does not want to eat its own dog food!!!. Just after independence when chacha tried to subvert this by getting Azad to accept “Bharatratna” , azad steadfastly refused it. But chachaji’s chelas succeeded Azad in accepting the title posthumously!!! But these days I am told not only State is doling out titles , but it has also instituted a process to seek nominations from our new rulers!!! ( E.g. Pondicherry government’s committee for selecting nomination for “Padma” awards consists entirely of political class except for vice chancellor of pondicherry university !!) .

This year we have also enhanced the scope of constitution to include citizens of the world. There are so many “padma”s that have gone to foreigners.
This fills my heart with joy. I am so close to achieving dream of my teacher. My teacher, while I was in primary school wanted either a Nobel prize or an Olympic Medal as guru dakshina. Since my south asian physique does not stand a chance at Olympics and since Nobel committee strictly requests the nominations to be kept secret I feel I have no chance at both of those places. But definitely I will take a crack at Bharath Ratna in coming years. Since I am now outside India, I feel my chances are better.

As A first step, I tried to seek information on nomination process from horses ( donkey’s) mouth. I called sahukarru who happens to be on in Padma list.

Sahukarru’s secretary picked up the phone.
Here is the conversation.

Secretary: Hello, This is Rai Bahadur’s secretary
Me: ( Wondering I had the wrong number …was dumb for some time..) Um…. I am sorry .. I have the wrong number ..sorry maam.

I rang up again…
secretary: Hello, This is Rai Bahadur’s secretary
Me: ( Cursed AT&T .. ) Sorry Maam .. wrong number again.

I hung up and called again…
secretary:Hello, This is Rai Bahadur sahukarru’s secretary.
Me: Um.. Can I speak to sahukarru ( I did not know that Sikkapatte Important Company’s Sahukarru had started sharing his secretary with another gentleman named Rai Bahadur..may be it is the austerity after Rupee appreciation against dollar )
secretary: Yes You can speak to Rai Bahadur Sahukarru.
Me: No maam. I want to speak only to Sahukarru. I have no business with Rai Bahadur.
secretary: No!!. You should not show disrespect to my master. You should address him as Rai Bahadur Sahukarru from Jan 26th 2008.
( I looked at watch .. it was 11:56 pm on Jan 25, 2008 )
Me: It is only Jan 25.
secretary: No probably you are in US time zone.. Not only we have created a level playing field we are now ahead of you.. So my master has to be called Rai Bahadur Sahukarru..
( At this point I decided to relent..)
Me: Okay can I speak to Rai Bahadur Sahukarru?
secretary: Sure. Hang on.
(after some time)

Sahukarru: How many acres?
Me: What?
Sahukarru: Oh I am sorry I thought it was Karnataka Government on the phone..
Me: Never mind.. I wanted to congratulate you on your Padma award. So how does it feel to be a Padma Sahukarru?
Sahukarru: No.. I do not want you to call me Padma Sahukarru ? Call me Rai Bahadur Sahukarru
Me: Rai Bahadur? Did you change name.. Can I call you Padma Rai Bahadur Sahukarru?
Sahukarru: Negative. Padma and Rai Bahadur mean the same.
Me: What?
Sahukarru: My company is global company.. I have many Englishmen working for me. When they ruled India , their second highest award was Rai Bahadur. They do not know about Padma and they feel ashamed and out of place if we use that term… So to make them feel at home.. I have decided to use Rai Bahadur as my title instead of Padma.

I passed out..

Nasscom Reply is full of holes

May 31, 2007

I am commenting on the recent reply to American Senators by NASSCOM, nodal body of software companies in India . The press report on the reply is here.

Nasscom’s press release is hosted here

Predictably Nasscom replied in the nick of time. Senator wanted reply to questions by 29th of May. Nasscom not only replied when the clock struck 12 on 29th May .. but actually replied on 30th May in India..( there is time lag of 12 hours between India and US )

A copy of the letter sent by senators to one of the companies accused of fraud is here

Now back to what NASSCOM was asked and what NASSCOM supplied.

NASSCOM/ Companies were asked to provide Data on four counts namely NUMBER, WAGES, OUTSOURCING and LAYOFFs. There were 8 questions on NUMBER, 2 each on WAGES and OUTSOURCING, and 4 on LAYOFFs.

NASSCOM reply does not seem to have answered any of the questions raised by senators. I have already commented that it is a familiar tactic. If your doctor asks your temperature, you reply that your neighbor weighed 200 pounds.. What kind of logic is this.

Following are fatal flaws in NASSCOM reply

1) Pointing out that US universities applied for 20000 H1Bs last year.. US universities are cap exempt. So why does NASSCOM want to compare cap subject visas used by NASSCOM members with cap exempt visas. It gives a feeling that NASSCOM wants to downplay the visa figures used by its members. – First flaw in NASSCOM reply is that it is comparing apples and oranges

2) Claiming contribution done by H1B immigrants as its own. Remember HIBs are treated like dirt by these Indian Companies. Ron Hira has provided much more detailed analysis on labor arbitrage and short sightedness of these companies.

3) Downplaying Visa figures at one part of reply and Extrapolating Visa figure at another part of the reply. At one part the reply NASSCOM says that the cap for visas is 65000 and no more than 80% of is available for business because 20% of it is taken by US universities. Based on that figure, there should be only 52000 visas and hence fraud prevention fee collected should amount to 52000*500 = 26 million usds. ( fraud prevention fee is 500 USD per application)

However in later half of the reply NASSCOM boasts that about 300 mil USDs amounts to fraud prevention fees the businesses pay .. making it appear as though a pot of money is transferred to Uncle Sam because of these companies.

To arrive at the this new figure obviously NASSCOM has used a different number for H1Bs issued per year. Since H1B transfers are treated as separate but cap exempt applications, number of H1Bs and L1s approved last year if both cap subject and cap exempt visas are considered was actually around 600000. And figure of 300 mil was arrived probably by multiplying 600000 with 500 USD fraud fee per application.
Clearly this is akin to using different figure as and when it suited NASSCOM. .. or a fraud in reply..What more you can expect from a fraudster?

NASSCOM has done more damage to its own cause by doing these deliberate misrepresentations.

I will expose another fraud of mind boggling proportions perpetrated by NASSCOM later some times.. Meanwhile feel free to share this with others

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From here you can use the Social Web links to save Nasscom Reply is full of holes to a social bookmarking site.

Angadiyalli Atanka

May 15, 2007

Fax Received in PDF format

Murthy Angady received the much feared fax today. The text of the fax can be read from the pdf link provided. It is interesting to see that honorable senators pointing out that number of H1Bs applied from Murthy Angadi to be around 5000. However , the data from the department of labor puts that figure to be in excess of 20000.
Perhaps Murthy Angadi does rotation of H1Bs as alleged by programmers guild. That explains the mismatch in figures. 5000 is the number of new visas for year 2006 and around 15000 is the number of transfers done by Murthy Angadi in year 2006.

Now let me give an analysis.

Is INFY an H1B dependent employer?

INFY will exploit the loophole- The law stipulates that anyone who has more than 15% of its staff on H1B to be H1B dependent employer. The law is not clear if the staff to be considered is global staff of only staff based out of America. Infy will smartly answer this question taking help of liberal number of India based employees in the denominator and show that total number of H1B to staff ratio for Infy is less than 10% .. i.e 5000 H1B for a global staff strength of 50000. What Infy would not mention is almost entire US staff is on H1B and hence technically Infy would have been H1B dependent.

Average Wages Paid

Average wages bordering 55000 USD may look respectable.. But Infy hides the facts. What senator should insist is hourly wages.. INFY gives a 10 day vacation whereas typical American employers give around 20 days in vacation and sick leave. Also there is an unsubstantiated rumor that the salary quoted by INFY includes statutory contributions it makes for PF in India. So technically whatever salary INFY quotes is atleast 10% more than it actully pays.

Other questions are cake walk for INFY.

What senators should have asked..
What is the Income tax paid by INFY in India and in US?
What portion of these taxes are payroll taxes?

Murthy would have sung National Anthem then.


INFY Tax Clarification

April 27, 2007

For sometime I had posted a query here on correctness of INFY when it classified US payroll taxes as Income tax in India.

I got some clarifications from a friend.  This friend in turn got the clarification from some tax expert

Here is the crux of the matter.

  • Payroll taxes are mandatory deductions
  • These are redeemable only when a person stays in US for 10 years or more

and Here is what INFY would argue,

  • INFY employees go to US only on short term
  • INFY employees comeback after the assignment and hence payroll taxes are not redeemed by employee and are lost forever- Thus payroll taxes are more like a tax on INFY rather than a PF contributions which are owned by employee

Well that perhaps explains how INFY can get away. I see a good reasoning here.

But my original query still remains..

AmEricAdalli tax kottidakke , MurthygaLu Indiadalli YAke hArAdOdu!!

Murthy’s National Anthem Issue – Was it overblown

April 15, 2007

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: Need help from tax experts!!!!!

April 13, 2007

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.

tax comparison

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

April 12, 2007


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
Cognizant Technology Solutions 10435
Patni Computer Systems, Inc. 7775
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
Deloitte Tax LLP 1696
Ernst & Young LLP 1475
Intel Corporation 1269
Rapidigm, Inc 1266
NIIT Technologies Inc. 1237
Liberty HomeCare Group II, LLC 1120
Marlabs, Inc 1050

The above data is also available as jpeg H1B Beneficiaries (Descending Order)
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!!!!

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
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
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
NIIT Technologies Inc. 62364.56
KPMG LLP 65049.14
Ernst & Young LLP 65296.56
PricewaterhouseCoopers, LLP 65463.56
PricewaterhouseCoopers LLP 66341.79
Rapidigm, Inc 69284.66
Accenture LLP 69529.73
Deloitte Consulting LLP 75272.69
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 hereAverage Wage H1B

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
WIPRO LIMITED 601126491.81
Cognizant Technology Solutions 285548320.96
HCL AMERICA, INC. 280691919.14
Patni Computer Systems, Inc. 258800044.37
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
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
Rapidigm, Inc 23897668.87
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. Labor Arbitrage H1B

I rest the case.