Mumbai/Bangalore, May 15
A breach of security at two payment card processing companies in India that led to heists at cash machines around the world has reopened questions on the risks of outsourcing sensitive financial services to the Asian nation.

Global banks that ship work to be processed in India, either in-house or to big IT services vendors, were already under pressure to step up oversight of back-office functions after a series of scandals last year.

Last week, U.S. prosecutors said a global criminal gang stole $45 million from two Middle Eastern banks by breaking into the two card processing companies based in India and raising the balances and withdrawal limits.

"India is exposed in two ways: The threat that the same theft could happen in India and the fact that the outsourcing industry will also get affected," said Arpinder Singh, partner and national director for fraud investigation and dispute services at consultancy Ernst & Young.

The episode is reopening debate on banks sending work requiring a high degree of confidentiality to offshore locations.

"It is the weakest link," said Shane Shook, an expert with U.S. cyber-security firm Cylance Inc who has helped financial firms conduct investigations into some major cyber crimes.

India's $108 billion IT services industry is the world's favoured destination for outsourcing. Over 40 percent of exports by the industry are support services for the global financial sector, ranging from investment bank back-office functions to research, risk-management and processing of insurance claims. Lured by a tech-savvy English-speaking population and wages that can be one-fifth those in the West, more than three-quarters of global banks have a direct or third-party offshore presence in India.

Indian IT firms, led by outsourcers such as TCS and Infosys, argue that security breaches are rare.

"I think if you look at the nature of the work we do and how much we do, we've actually had very very few incidents," said Nasscom president Som Mittal. — Reuters

New Delhi, May 15
Hopes of aggressive rate cuts by the central bank on falling inflation sparked a spectacular rally in the stock markets today with the BSE Sensex jumping almost 500 points to close at its highest level since 2011.

The Sensex jumped by a massive 491 points to close at 27-month high at 20,213 points with interest rate sensitive sectors like auto, property and banks leading the rally after RBI said low inflation numbers will be taken into account in its next monetary policy on June 17.

The notable part of the stock market rally in the past few months has been the absence of retail investors. Following the collapse in the stock markets in the last 4-5 years, retail investors are staying away and instead sticking to physical assets like gold and real estate or the conservative ones are flocking to debt including fixed deposits.

Foreign institutional investors have been the only drivers of this rally while the domestic institutions including mutual funds and insurance companies have been sellers.

Sanjeev Zarbade, vice president, private client group research at Kotak Securities, said global as well as domestic factors have been at play. Globally, the market sentiment for equities has improved dramatically. The Dow Jones has been very firm and so has been the Nikkei, which hit a five year high.

He said the domestic factors driving the rally include softer commodity prices, reducing under-recoveries on auto fuels and weakening inflation. WPI inflation for April came in at sub 5%, a level last seen in November 2009. Clearly, the rally has been partly fuelled by heightened expectations of further easing by the central bank going forward, he added.

Gautam Sinha Roy, VP, equities at Motilal Oswal Securities, said there was aggressive buying in the market due to favorable macroeconomic factors.

New Delhi, May 15
The Indian economy is expected to pick up and grow in the range of 5.5-6.5 per cent in 2013 even though government steps for new investments have been "relatively small in scope", Moody's said Wednesday.

Citing cautious private sector and relatively high inflation, the global rating agency also said that the country is struggling to boost investment and economic growth.

Based on its central forecast scenarios, Moody's Investors Service has estimated that Indian economy would see 5.5-6.5% growth in 2013, as against 3.9% last year. The growth is projected to improve further to 6-7% in 2014, it noted.

According to Moody's, one percentage point range in the forecast is to "avoid spurious precision" and to focus on significant changes that could potentially influence rating decisions.

"Despite the recent decline in wholesale price inflation, CPI inflation remains in double digits, which points to pricing pressures elsewhere in the economy.

"As such, while GDP growth is likely to pick up during 2013, it will probably take at least another year or two before the economy matches the pace of expansion seen during 2010 and 2011," Moody's said in a report.

The agency noted that the current account deficit (CAD) remains a persistent concern for India, "as it leaves the country vulnerable to capital exodus if investors' risk appetite starts to wane".

Concerned over widening CAD mainly due to high gold imports, both the government and the RBI are taking steps to check imports. CAD touched an all-time high of 6.7% in Oct-Dec 2012 quarter.

Noting that the growth has recently fallen short of expectations in India, Moody's said the possibility of slower-than-expected growth in key emerging markets is a serious threat to the global recovery. — PTI

Berlin/Paris, May 15
Germany's economy crept back into growth in the first quarter of the year after a sharp contraction at the end of 2012, while France slipped into recession, data showed on Wednesday.

Italy, the eurozone's third largest economy, reported its seventh consecutive quarter of decline.

Germany grew by a weaker than expected 0.1% on the quarter, just skirting recession itself as a harsh winter prevented a stronger rebound and also hampered by the ills of its eurozone peers.

"The German economy is only slowly picking up steam," the Statistics Office said in a statement. "The extreme winter weather played a role in this weak growth.

France entered a shallow downturn — its first in four years — after contracting by 0.2% in the first three months of the year, as it did in the last quarter of 2012.

The euro fell to a six-week low against a buoyant dollar, hurt by the anemic figures which traders said kept alive chances of more monetary easing by the European Central Bank.

The ECB cut rates to a record low earlier this month and its head, Mario Draghi, said it was ready to act again if the economy worsened.

For Italy, the eurozone's third biggest economy, the situation is far worse.

It shrank by more than expected in the first quarter, by 0.5%, extending the country's recession to seven straight quarters and making it the longest since quarterly records began in 1970.

Elsewhere in the currency area, the Dutch reported a 0.1 per cent contraction in GDP, remaining in recession, Austria's economy flatlined in the first quarter and Finland shrank by 0.1%, entering a technical recession in the process. — Reuters

New Delhi, May 15
Indicating a downward trend, growth in information technology spending around the world is likely to fall to 4.9 per cent this year against 5.6 per cent growth recorded in 2012, with worldwide IT spending being around US $2.06 trillion in 2013, according to International Data Corp (IDC) .

According to the research firm, the worldwide ICT spending, which includes telecom services spending, will increase by 4.5 percent to $3.7 trillion.

IT spending forecast has been lowered on account of economic uncertainty surrounding the US government, European debt crisis, and weakening GDP in China. The situation has been accentuated as a large number of IT vendors have reported difficulty in closing deals at the end of Q1 2013.

Also the weakening US dollar will continue to have an adverse impact on the reported revenues of US-based IT vendors, IDC said.

The reduction in IDC’s forecast for 2013 has also been driven by deteriorating PC shipments since the second half of 2012.

This year PC spending is expected to further decline by three per cent, representing a third successive year of declining PC revenues. The shift to mobile devices remains a key driver for overall tech spending growth, the firm said.

Excluding mobile phones and tablets, worldwide IT spending increased by only 2.8 per cent in 2012 and is expected to grow just 2.6 per cent this year. Worldwide spending on smartphones will increase by 17 per cent in 2013 while tablet spending will grow by 32 percent.

According to IDC, combined growth rate for PCs and tablets will remain stable in the range of 4-5 per cent.

IDC has forecast a 5.6% growth in worldwide software spending in 2013 and 3.8% in IT services. It also forecast a 2.4% growth in worldwide storage hardware revenues this year, down from 6.1% growth in 2012.