Monthly Archives: June 2017

Exclusive Consultancy goliath Ernst & Young is planning to offshore hundreds of IT jobs to India in its latest wave of outsourcing.

An email from EY, seen by The Register, told staff it has decided to work with India-based Tata Consultancy Services (TCS) to deliver its application support.

It said: "We recognise this is a big change that affects our people and we have sought to minimise the impact on them. We have already notified the people impacted by this decision and we will support them during this transition.

"The majority will be redeployed within EY or offered a role at TCS to support the EY account. We are also working through the notification process for incumbent suppliers."

According to one insider, almost all the roles in the 300-strong in-house app support and developer team have been earmarked for offshoring. The team spans EMEA and the US, and works with IBM, SAP and Microsoft to deliver tax, audit and fraud investigation tools for EY globally.

This is the third round of outsourcing at EY since 2015. The company has already outsourced its help desk function to TCS, and its more in-depth support services to India and Buenos Aires. The moves will affect both the US and UK.

Before the outsourcing process started in 2015, there were around 600 IT people in the UK. By the time it ends that number is expected to be fewer than 100, said the insider.

"Outsourcing was always in the background as a cost pressure, especially as EY was advising other companies to do it," he added. "In 2012 they brought in a global CIO from Goldman Sachs who parachuted in her own people in the US firm and ripped the heart out of a global organisation, experienced people in Germany and UK were sidelined and managed out and then the cost cutting started.

"That CIO, Mo Osborne, is now leaving end of June and a chunk of her appointees are going too."

An EY spokesman said the outfit regularly reviews its processes and systems. "Following our recent, independent IT strategy review, we are in the process of transforming how we deliver IT services to provide market differentiation for our clients.

"We are still finalising the recommendations from the IT strategy review and once this has been completed we will then be able to assess the potential impact on our people."

A number of large organisations have shown renewed interest in offshoring large swathes of their workforce to India. In December, Capita said it will axe roughly 2,250 staff, which includes sending more jobs to the subcontinent.

British Airways has also offshored a chunk of its workforce to TCS.

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Consultancy titan EY to offshore hundreds of jobs to India - The Register

The Commerce Department is proposing to grant five permits to survey the Atlantic coastline's seabed, a move that activists oppose because they see it as part of President Trump's plan to expand offshore drilling.

The proposed permits, filed on Monday for publication in the Federal Register, would allow companies to use high-powered air guns to conduct seismic survey activity. But environmental groups say the survey technique is harmful to marine mammals and other sea life and should not be used.

"The threats of seismic airgun blasting alone are bad enough, but it's also the first step to offshore drilling, which could lead to the industrialization of coastal communities and the risk of another BP Deepwater Horizon-like disaster," said the large conservation group Oceana. "The time to protect our coast is now."

The Commerce Department, however, is warning that any comments submitted to the agency in opposition to, or suport of, oil and natural gas drilling will not be accepted. The agency is accepting comments on its proposed permit authorization for 30 days.

"Comments indicating general support for or opposition to hydrocarbon exploration or any comments relating to hydrocarbon development (e.g., leasing, drilling) are not relevant to this request for comments and will not be considered," the notice read.

President Trump in an April executive order began the process of reversing the Obama administration's ban on drilling off the Atlantic Coast. The proposed survey activity is the first step in opening up oil and natural gas drilling on the East Coast by assessing what lies beneath the seabed.

Although the survey actions may help in planning future drilling operations, the action being taken does not allow any actual drilling to take place. That approval is still being worked out by the Interior Department.

The Commerce Department's fisheries division issues the permits, which allow companies to incidentally harm whales, seals and other aquatic mammals through conducting their activities.

"An authorization for incidental takings shall be granted if [the National Marine Fisheries Service] finds that the taking will have a negligible impact on the species," the notice read.

The survey area will stem from northern Florida to Delaware.

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Activists: Trump's Atlantic coast survey is the 'first step to offshore drilling' - Washington Examiner

MOSCOW Some of Russia's super-rich have given up residency to escape a 2014 law requiring them to disclose offshore assets, wealthy businessmen told Reuters, a practice that could keep billions of dollars hidden from Moscow's tax authorities.

Interviews with more than a dozen people familiar with the practice -- including prominent tycoons, wealth managers, lawyers and current and former officials -- suggest a swathe of Russia's national wealth is now in the hands of a new class of semi-exiled oligarchs, who keep bases in their homeland but escape its tax net by spending fewer than 183 days a year there.

"You can scold them, call them unpatriotic, but the fact remains: the budget has lost out," Vladimir Potanin, one of Russia's ten richest men, told Reuters about the practice.

Potanin, co-owner of Arctic mining giant Norilsk Nickel, said he has remained a tax resident of Russia but watched as many of his peers moved out in response to the 2014 law.

Two other people on Forbes Magazine's list of the 100 richest Russians told Reuters they had given up Russian residency to escape the law, speaking on condition that they not be identified to avoid hurting their Russian business dealings.

Two more declined to say whether they had done so, but, like Potanin, said they also knew many fellow oligarchs who had.

No official data has been made public on how many people have given up Russian residency to escape the law, or the overall size of the assets they have shielded from Russian tax jurisdiction through the practice.

But Russian law firm Egorov, Puginsky, Afanasiev and Partners said it had conducted a survey of around 300 wealthy Russians and found as many as 40 percent of those with offshore companies had given up residency in Russia. Another 9 percent transferred the assets to relatives who are not tax residents.

The law, popularly known in Russia as "de-offshorizatsia", requires all Russian taxpayers to declare their interest in offshore companies they control, on which they can then become liable to paying tax in Russia. It is similar to the standard practice in most western countries, but represented a change for Russia, where previously taxpayers could hold interests in companies abroad without declaring them.

The change was a high-profile initiative of President Vladimir Putin, widely interpreted as a way to force Russians to do their patriotic duty by investing in their homeland. While there is no suggestion that it is illegal to avoid the law's requirements by giving up Russian residency, those who have done so told Reuters they accepted they were thwarting the law's aim.

In response to Reuters questions, Russia's economy ministry said the de-offshorization law was in line with global practice.

It said improving the investment climate was a government priority, with positive results, as demonstrated by Russia's improved ranking in the World Bank's ease of Doing Business index. Russia is now ranked 40th, up from 92nd in 2014.

The Kremlin declined to comment. The finance ministry did not reply to a request for comment by the time of publication. In response to a list of questions, the tax service said the number of tax cases it was pursuing against Russians with foreign tax exposure was rising, but it did not directly address the questions.

The impact of tax exiles giving up Russian residency is heightened because so much of the country's wealth is concentrated in the hands of relatively few people. According to Forbes, the 200 richest Russians have $460 billion in wealth, equivalent to nearly a third of Russia's nominal GDP.

"People are forced to decide: do they keep their business in Russia or become citizens of the world and take their assets offshore," said Konstantin Korishchenko, a former deputy head of the Russian central bank.

A former official who has kept close ties to the Kremlin and talks often to Russian oligarchs said that by his estimate a third of Russia's top 500 businesspeople had left the country over the past three years, in part because of the new law.

"IT'S IMPOSSIBLE NOW"

Some familiar with the practice said wealthy Russians were giving up their residency because they feared that disclosing their offshore companies would open them to the risk of the information being leaked to business rivals, or even abused by corrupt officials for spurious prosecutions or blackmail.

"The first thing that entrepreneurs say is that there is a big sense of mistrust: mistrust toward each other, mistrust towards the state," said Andrei Sharonov, dean of the Moscow School of Management, Skolkovo, which offers an MBA program.

Sitting on the leather sofa in his office in one of Moscow's most prestigious commercial addresses, one of the tycoons who gave up his residency told Reuters he made the move reluctantly.

Leaving his homeland for most of the year was a wrench. But because of the investment climate in Russia, he and his partners were looking for buyers for their Russian businesses and focusing instead on international holdings, he said.

"I would stay here and would continue paying taxes here if it was not for this law," the businessman told Reuters. "It's impossible now."

He now spends his time mostly in a European Union country where his family has settled some time ago, or traveling to meetings around the world. Such a lifestyle, he said, has become common among his peers since the law was passed: "Lots of people lived here and paid tax. Now they don't."

Another Russian businessman, a billionaire who also gave up his Russian residency over the de-offshorization law, told Reuters he and fellow tycoons were worried that it could be followed by further measures, tougher on businesspeople.

After three years of deep recession, Russia's economy is stabilizing but has not yet returned to the steady growth needed to begin making up lost ground.

The de-offshorization law is one of several factors discouraging investment in Russia, said Chris Weafer a senior partner at Russia-focussed consultancy Macro-Advisory Ltd.

"Its completely unrealistic to talk about raising growth rates to 4 percent, as Russian officials hope, without a sharp increase in inward investment," he said.

Businesspeople who spoke to Reuters said complying with the new rules meant they incurred hefty fees to lawyers and accountants to audit their offshore assets and prepare tax returns, they had to deal with a mountain of paperwork, and at the end risked having to paying more tax.

Several said privacy was also an issue, in a country where vendors at flea markets sell CDs purported to contain leaked information from the tax authorities' databases.

In the law firm's survey, almost two third of respondents said that they or their clients had encountered problems with leaks of confidential information from state services.

Ultimately, people do not trust the authorities to keep their information safe, said the businessman on the Forbes list of 100 richest Russians who did not reveal whether he had given up his residency.

"No one wants to show the money."

(Additional reporting by Darya Korsunskaya, Oksana Kobzeva, Svetlana Reiter, Anastasia Lyrchikova, Alexander Winning, Andrey Ostroukh, Kira Zavyalova and Olga Sichkar; editing by Peter Graff)

LONDON/NEW YORK, Jun 6 Global investors are distinguishing between the UK and the rest of Europe as part of a fundamental reassessment of what investing in the region means, reflecting growing enthusiasm for Europe's broad economic prospects and nervousness about thorny and possibly protracted Brexit negotiations.

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Declare offshore wealth? Russia tycoons would rather ship themselves off s... - Reuters