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Wednesday, March 4, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Now that crypto trade is legal in India, here's what happens next

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MUMBAI | BENGALURU: Crypto currency companies are expected to revive plans to invest and expand their business in India following a Supreme Court verdict overturning a Reserve Bank of India notification that had restricted banking access for virtual currency trading. ZPX will consider ramping up operations in India, said Ramani Ramachandran, CEO of the Singapore-based crypto firm. WazirX will start investing in the Indian market this year, said Nischal Shetty, cofounder of the crypto-exchange firm.India's virtual currency industry had come to a standstill following the April 2018 notification that prohibited use of banking channels for transactions of cryptocurrencies such as Bitcoin. Several exchanges shifted overseas or closed their business altogether in the last two years. "When a regulator like RBI bans, the market closes down. Six months back, we pivoted from crypto to blockchain, as we had to sustain. No investor was ready to back us amid the uncertainty of regulations," said Wilson Bright, CEO of BlockSurvey. 74485078 Investors say peer to peer (P2P) companies will see inflow of capital, similar to what has been happening globally. Crypto founders, investors and industry bodies told ET that the order would open up more avenues for a cryptocurrency ecosystem to be built. "From my perspective, hopefully the funding environment for startups gets better as funds no longer have to worry as much about regulatory clarity," said Nitin Sharma, founder of Incrypt Blockchain. The Internet and Mobile Association of India (IAMAI), an industry body representing cryptocurrency startups, had challenged the RBI circular, arguing that it was a disproportionate response by the regulator. The three judge SC bench comprising Justices RF Nariman, Aniruddha Bose and V Ramasubramanian ruled in favour of IAMAI.According to the copy of the 180-page judgement, accessed by ET, "the petitioners are entitled to succeed and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality."IAMAI is looking forward to working jointly with the RBI and the government on a constructive policy framework for cryptocurrencies in India, it said in a statement.Know your CryptoBankers said the regulator would now have a nuanced understanding of crypto technology and regulate it in a way that will encourage innovations. "They (RBI) obviously issued an advisory earlier to make sure it doesn't become the Wild Wild West of crypto and gets too systemic. Now, RBI is better prepared to address the nuances of crypto," said Akhil Handa, head — fintech and new business initiative, Bank of Baroda.RBI did not respond to an emailed query till press time Wednesday. Legal experts said the case throws up questions on the fairness of regulatory bodies. "The fact that the apex court outrightly shot down a strong policy step by the RBI against a whole industry has consequences on the fairness of our regulators, given their quasi-judicial status," said Salman Waris, partner at TechLegis Advocates and Solicitors.

Govt puts Vodafone Idea in a do-or-die spot

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NEW DELHI: The telecom department has asked operators to pay their balance adjusted gross revenue (AGR) dues without any further delay, increasing pressure on the likes of cash-strapped Vodafone Idea which is seeking some relief on its liabilities in a bid to survive.People familiar with the matter said that the Department of Telecommunications (DoT) wrote to all telcos, also seeking details and explanations of their self-assessment, which are needed for the government to reconcile with its calculations.The government has so far received about Rs 26,000 crore from AGR payments, including buffer amounts given by telcos to meet any reconciliation differences. This is against DoT estimated dues of over Rs 1.46 lakh crore.Of this, Vodafone Idea is the most precariously placed, having paid Rs 3,500 crore of the Rs 53,000 crores, as estimated by the DoT. It has said it will shut down if its bank guarantees are invoked to recover some part of its dues or if it doesn't get relief on its AGR dues. Its self-assessment has pegged its AGR dues at around Rs 23,000 crore.On a question in the Lok Sabha Wednesday on speculation that Vodafone Idea may shut down, minister of state for communications Sanjay Dhotre said, "no such information is available with the government".He said that against total provisional dues of Rs 1,46,336.9 crore, payments aggregating Rs 15,896.5 crore had been received. He added that the numbers could be revised once AGR figures are finalised and assessments concluded, and also subject to C&AG and special audits. 74484830 The government has placed Airtel's AGR payments (including Telenor's) at Rs 10,000 crore, noting that as much as Rs 27,740 crore is pending. This implies that DoT hasn't factored in the latest tranche of Rs 8,004 crore, including Rs 5,000 crore as the buffer payment that Airtel paid on February 29. The Sunil Mittal-led telco, which had initially paid Rs 10,000 crore, has estimated its dues at Rs 13,0004 crore, against the DoT's estimate of Rs 37,740 crore.Data shared by the government showed that the Tatas have paid Rs 2,197.3 crore, pegging their remaining AGR dues at Rs 11,625 crore, which implies that the government hasn't taken into account the Rs 2,000 crore that the company paid on March 3. Additionally, the government said that Reliance Communications and Reliance Telecom – which are undergoing insolvency proceedings - have paid Rs 3.96 crore, leaving their balance dues at Rs 21,135.6 crore.Dhotre said the Centre had directed the licencees to make AGR payments in line with the Supreme Court's October 24 verdict, in response to queries on whether the government planned to penalise telcos who had not cleared their AGR dues."As per license agreement, the government (can) take action against licensees including telecom service providers (TSPs) over non-compliance of Supreme Court order dated October 24, 2019, on payment of dues of the Department of Telecommunication (DoT)," he said.Last October, the nation's top court had ruled that AGR should include non-core items, that left Airtel, Vodafone Idea and Tata Teleservices alone collectively saddled with around Rs 1.02 lakh-crore of dues. Including the three, 15 telcos face dues worth Rs 1.46 lakh crore, as per DoT's estimates.Basis the order, the DoT had sought a cumulative Rs 2.7 lakh crore from non-telecom PSUs such as gas utility GAIL India and explorer Oil India. The demand was challenged by state-owned firms.

A silver of hope in the times of Coronavirus

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Mumbai: China's factories are beginning to come back to life after an extended lockdown in the country's industrial hubs, and that is good news for several Indian carmakers that have their supply chains located beyond the Great Wall.The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1."As of now, there is no panic. Our production is not getting affected now because of China and the coronavirus outbreak," said RC Bhargava, chairman, Maruti Suzuki.In fact, the situation is improving incrementally."Each week is better than the previous week. Almost all suppliers in China have started production, though at lower capacity utilisation," said Hemant Sikka, chief purchase officer of Mahindra. "If the improvement continues at this pace, by early April, supplies from China will be almost normal."Bhargava said that factories outside of Wuhan, a region that has seen the maximum number of deaths from Covid-19, have started working, albeit at lower capacity. 74485049 Experts say the supply disruption has also forced companies to look within and source more parts locally. This de-risking plan is expected to boost the local auto components industry."Our supplies of brakes have increased. Indian automotive suppliers are emerging as a sourcing base for components such as brakes, which were earlier imported from China," said a brakes supplier.Chinese firms supply between 10% and 30% of auto parts at various Indian carmakers. The maximum dependence is in the sourcing of braking and steering systems, engine parts and illumination systems."There has always been over-dependence on China. Now, domestic OEMs (original equipment manufacturers) will look at more localisation while increasing the dependence on other countries," said Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India.Hundreds of suppliers have factories in Hubei in China.In 2018-19, automotive components worth $4.5 billion (out of a total of $17 billion) were exported from China to India.Chinese suppliers have prioritized shipments to large Indian automakers, industry sources said.To be sure, the industry's transition to BS-VI emission norms may not have been in danger, said some analysts, as several parts sourced from the neighbour are sold in the aftermarket."While India is a net importer from China, many imported components would go into the aftermarket," said Kausik Mahadevan, head, mobility practice, Frost and Sullivan.

Coronavirus wipes $50 bn off global exports in Feb alone

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UN economists announced a likely USD 50 billion drop in the worldwide manufacturing exports in February alone as the extent of the damage to the global economy caused by the novel coronavirus (COVID-19) moved further into focus. Citing the China Manufacturing Purchasing Manager's Index (PMI), Pamela Coke-Hamilton, who heads UNCTAD's Division on International Trade and Commodities, said that it had fallen to 37.5 - a drop of about 20 points - the lowest reading since 2004. "This also correlates directly to exports and also implies a two per cent drop in overall exports," she said, with a resulting "ripple effect" worldwide "to the tune of a USD 50 billion fall in exports." Because China has become the main supplier of finished products and so-called "intermediate" products used in countless industries - from chemical for pharmaceuticals to parts for digital cameras and the car industry - concerns about the long-term disruption to supply chains there, has left many companies around the world "fearful" that their own output may soon be affected, UNCTAD said. "Of course, if the virus continues to spread and gets out of control, and we see closures not only in China but also in India and the United States and everywhere else in the world, then it would be a big problem," said Alessandro Nicita from UNCTAD's Division on International Trade and Commodities. "Ultimately, the economic impact of this virus depends on the measures that countries apply to contain the virus. So, China has done a great job in containing the virus, but it has sacrificed a little bit the economy, at least in the first few weeks. So, planned closures, restriction to movement of people, which were all necessary; but there is an economic effect when you take those measures." In addition to the falling manufacturing levels, UNCTAD also highlighted a decrease in the number of container ships leaving Shanghai in the first half of February (from around 300 a week to 180), which then returned to normal levels in the second half of the month. "Right now, the impact on the global value chains is already being felt and will continue probably for a few months," Coke-Hamilton said. "But if it rebounds, say in the next few months, then the long-term or year-long impact will be a little different and will be better. So, it depends on what happens in China." In remarks made at a joint press conference with the head of the World Bank Group, the IMF Managing Director, Kristalina Georgieva, said that the UN-backed global funds would make up the shortfall, in effect, by offering to inject around USD 50 billion into low-income and emerging market nations, pending requests for support. "Thanks to the generosity of our shareholders, we have about USD 1 trillion in overall lending capacity," she said. "For low-income countries, we have rapid-disbursing emergency financing of up to USD 10 billion (50 per cent of quota of eligible members) that can be accessed without a full-fledged IMF programme," she added. The IMF chief added that members can access emergency financing through the Rapid Financing Instrument. "This facility could provide about USD 40 billion for emerging markets that could potentially approach us for financial support. We also have the Catastrophe Containment and Relief Trust - the CCRT - which provides eligible countries with up-front grants for relief on IMF debt service falling due. "The CCRT proved to be effective during the 2014 Ebola outbreak, but is now underfunded with just over USD 200 million available against possible needs of over USD 1 billion." She called on member countries "to help ensure that this facility is fully re-charged and ready for the current crisis", and said that the Fund was "fully committed to supporting our member countries, particularly the most vulnerable. We have the tools to help and we are coordinating closely with our partner institutions."

Creditors can choose to stop supplies to companies under IBC: House Panel

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New Delhi: A parliamentary panel said suppliers of a company cannot be burdened with "overly restrictive conditions" in the hope of a probable revival under the Insolvency and Bankruptcy Code (IBC).In a report on proposed amendments to the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, the standing committee on finance, chaired by BJP member Jayant Sinha, expressed hope of recovery percentage increasing significantly in the near future.Out of claims of around Rs 8.4 lakh crore, the realisable amount is about Rs 3.57 lakh crore, or 43% of the total claims under the code, said the report.One of the proposed amendments pertains to supply of goods and services to protect a company as a going concern during the insolvency resolution period. The panel said it was concerned that the intent behind this proposed amendment might turn into a case of over-regulation of suppliers, particularly from micro, small and medium enterprises (MSME)."The committee feels that just to make the IBC process smoother and in hope of a probable revival, suppliers cannot be burdened with overly restrictive conditions," said the report.The panel said market forces should resolve whether a supplier decides to supply to a corporate debtor, since each supplier has a limited capacity which must be allocated in the best interest of the economy, instead of keeping the debtor alive.Payments due to MSME, who are operational creditors not included in the committee of creditors, should be ensured on priority during resolution process before liquidation, according to the panel. "The committee would therefore recommend that the Clause 5(b) (2A) should accordingly be deleted," it said.The clause broadly refers to the supply of goods or services that a resolution professional considers critical for managing the operations of a corporate debtor as a going concern should not be terminated during the moratorium period.The panel also said that a much more strategic approach to strengthening the insolvency framework is required and that it intends to conduct further hearings in this regard.

Coronavirus impact: Indian auto makers may start getting Chinese supplies soon

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Mumbai: China's factories are beginning to come back to life after an extended lockdown in the country's industrial hubs, and that is good news for several Indian carmakers that have their supply chains located beyond the Great Wall.The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1."As of now, there is no panic. Our production is not getting affected now because of China and the coronavirus outbreak," said RC Bhargava, chairman, Maruti Suzuki.In fact, the situation is improving incrementally."Each week is better than the previous week. Almost all suppliers in China have started production, though at lower capacity utilisation," said Hemant Sikka, chief purchase officer of Mahindra. "If the improvement continues at this pace, by early April, supplies from China will be almost normal."Bhargava said that factories outside of Wuhan, a region that has seen the maximum number of deaths from Covid-19, have started working, albeit at lower capacity. 74485049 Experts say the supply disruption has also forced companies to look within and source more parts locally. This de-risking plan is expected to boost the local auto components industry."Our supplies of brakes have increased. Indian automotive suppliers are emerging as a sourcing base for components such as brakes, which were earlier imported from China," said a brakes supplier.Chinese firms supply between 10% and 30% of auto parts at various Indian carmakers. The maximum dependence is in the sourcing of braking and steering systems, engine parts and illumination systems."There has always been over-dependence on China. Now, domestic OEMs (original equipment manufacturers) will look at more localisation while increasing the dependence on other countries," said Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India.Hundreds of suppliers have factories in Hubei in China.In 2018-19, automotive components worth $4.5 billion (out of a total of $17 billion) were exported from China to India.Chinese suppliers have prioritized shipments to large Indian automakers, industry sources said.To be sure, the industry's transition to BS-VI emission norms may not have been in danger, said some analysts, as several parts sourced from the neighbour are sold in the aftermarket."While India is a net importer from China, many imported components would go into the aftermarket," said Kausik Mahadevan, head, mobility practice, Frost and Sullivan.

Indian auto makers may start getting Chinese supplies soon

Posted:

Mumbai: China's factories are beginning to come back to life after an extended lockdown in the country's industrial hubs, and that is good news for several Indian carmakers that have their supply chains located beyond the Great Wall.The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1."As of now, there is no panic. Our production is not getting affected now because of China and the coronavirus outbreak," said RC Bhargava, chairman, Maruti Suzuki.In fact, the situation is improving incrementally."Each week is better than the previous week. Almost all suppliers in China have started production, though at lower capacity utilisation," said Hemant Sikka, chief purchase officer of Mahindra. "If the improvement continues at this pace, by early April, supplies from China will be almost normal."Bhargava said that factories outside of Wuhan, a region that has seen the maximum number of deaths from Covid-19, have started working, albeit at lower capacity. 74485049 Experts say the supply disruption has also forced companies to look within and source more parts locally. This de-risking plan is expected to boost the local auto components industry."Our supplies of brakes have increased. Indian automotive suppliers are emerging as a sourcing base for components such as brakes, which were earlier imported from China," said a brakes supplier.Chinese firms supply between 10% and 30% of auto parts at various Indian carmakers. The maximum dependence is in the sourcing of braking and steering systems, engine parts and illumination systems."There has always been over-dependence on China. Now, domestic OEMs (original equipment manufacturers) will look at more localisation while increasing the dependence on other countries," said Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India.Hundreds of suppliers have factories in Hubei in China.In 2018-19, automotive components worth $4.5 billion (out of a total of $17 billion) were exported from China to India.Chinese suppliers have prioritized shipments to large Indian automakers, industry sources said.To be sure, the industry's transition to BS-VI emission norms may not have been in danger, said some analysts, as several parts sourced from the neighbour are sold in the aftermarket."While India is a net importer from China, many imported components would go into the aftermarket," said Kausik Mahadevan, head, mobility practice, Frost and Sullivan.

Misfired Fed ‘Bazooka’ opens doors to global bond yield slide

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By Liz Capo McCormick, Vivien Lou Chen and Anooja DebnathThere's no bottom in sight for Treasury yields after the Federal Reserve's aggressive rate cut failed to quell fears that the coronavirus is wrecking the global economy.Before Tuesday, the 10-year note had never yielded less than 1 per cent. Once that historic level was breached, less than 30 minutes later the rate was threatening 0.90 per cent -- or half the amount it yielded at the end of 2019. Such is the new normal in the world's benchmark bond market, where anxiety has taken hold to a degree last seen during the 2008 financial crisis.The slide in bond yields persisted across Europe on Wednesday with 10-year yields in the UK dropping to a record low on bets the Bank of England will follow the Federal Reserve."There is some sense that the Fed is kind of shooting their bazooka off and might know something else, that this pandemic might get substantially worse in the US," said Donald Ellenberger, a senior portfolio manager at Federated Investors Inc. "This is a market that is simply being driven by fear."74476244 The Fed cut its main policy rate by a half-point in an emergency inter-meeting move on Tuesday. It came barely two hours after Group-of-Seven finance chiefs said in a statement that they were ready to act, which also failed to alleviate concern in markets.Following the Fed's emergency decision, a swoon in stock prices and sanguine comments from Chairman Jerome Powell emboldened traders to bet on the risk of a major economic slowdown that triggers even more easing -- possibly later this month. The Fed has a scheduled meeting on March 17-18."I would expect Fed fund rates to be at or close to zero six months from now as a base case," said Michael Riddell, a portfolio manager at Allianz Global Investors in London. "I think the virus is going to spread in coming months and that will cause substantial economic damage."The yield on benchmark US 10-year notes sank as much as 25.9 basis points to 0.9043 per cent on Tuesday. It was at 0.95 per cent as of 9:50 a.m. in London on Wednesday. The yield could slide further, said Riddell, whose strategic bond fund has outperformed 98 per cent of its peers in the past month.In a sign of deep concern about the growth outlook, the yield on 30-year inflation-linked Treasuries fell below zero for the first time. Swap spreads tightened, possibly a sign that mortgage investors were forced to hedge their portfolios once the 10-year breached 1 per cent, exacerbating the move in Treasuries. In the UK, 10-year yields fell to a record low of 0.335 per cent."The market was expecting a more coordinated and decisive response and not just one from the Fed," said Solita Marcelli, deputy chief investment officer for the Americas at UBS Global Wealth Management. People "are overlooking that the Fed is being proactive and are focused on whether the Fed sees the impact on the economy from the virus as being worse" than most expect now, she added.The Fed chief acknowledged the central bank doesn't have all the answers, adding that it would take a multi-faceted response from governments, health-care professionals, central bankers and others to stem the human and economic damage from the virus."Powell didn't sound very upbeat, and is part of what is spooking markets," said Roberto Perli, a partner at Cornerstone Macro LLC and former Fed economist. "The driver of yields is also what the market expects the Fed to do, and they keep pulling expectations for the funds rate further down."Yields on two-year Treasuries dropped as much as 28.1 basis points to 0.6223 per cent on Tuesday -- still well above the record low of 0.14 per cent set in 2011.The Fed move followed public pressure for a cut by President Donald Trump, whose stewardship of the economy is central to his re-election campaign this year. After Tuesday's cut, Trump called for more, tweeting that the Fed "must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA."Treasury yields slid as the pile of negative-yielding debt around the world continued to grow amid a worsening economic backdrop and mounting fears of a pandemic. And the list of strategists and investors warning that US government debt could join those abroad yielding less than zero is growing.JPMorgan Chase & Co.'s Jan Loeys said the US is trapped in a scenario that will pull Treasury yields down toward zero or even below as soon as this year."The more you move with rate cuts, the faster you go down into the quicksand," Loeys said. "The more medium-term issue is that the Fed is running out of ammunition and is spending it now. We see a 50-50 chance that we are at zero interest rates at the end of year -- and then that's it."

BPOs run work-from-home pilots

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BENGALURU: Over the last two decades, call centres typically meant large buildings full of young employees on headsets taking hundreds of calls. That model may be changing though. People are now taking calls from home, in what promises to be an Uber-like disruption in customer service. Global business process outsourcing (BPO) companies have begun pilot work-from-home projects with Indian ecommerce and health-tech startups. This will enable them to provide services that are cheaper and one that can be dialled-up or down based on demand.To be sure, BPO companies have long had work-at-home-agents, a group the industry calls WAHA. Several clients, however, agreed that only key employees could have that option. This was for business contingency planning or to mitigate costs in delivery locations such as the US. However, with a near shutdown of large parts of China due to the spread of the Covid-19 virus, the work-at-home call centre model is likely to spread, industry executives said. "Work-at-home has been available, but its uptake by clients was not there. Now, in China, with the coronavirus, we have 2,000 agents working from home," Bhupender Singh, President of Group Transformation at BPO giant Teleperformance, told ET. "It is an unfortunate thing, but the side-effect is that clients are now open to this.""At Startek India, we also provide WAHA for a health-tech company, as it gets more scale (when required), which means that the number of WAHA product specialists can be adjusted to the demand for seasonal labour," said Rajiv Ahuja, global chief operating officer at Startek.Teleperformance is also piloting the work-from-home model with two Indian companies, one of which is in the ecommerce space, Singh said. "Around sales, there is a need to have more agents, but it does not make sense to invest in capacity that won't get used after that period ends. Work-from-home agents help in dealing with the capacity needs."The model is also cheaper, a significant plus for clients and call centre operators in India. Experts tracking the space say the model is helping clients get better quality talent on projects and helping curb attrition. "Typically, you get older workers or householders that are interested. We have seen this in the developed markets in the US and Europe, but we are also seeing it in delivery markets such as the Philippines, China and India," Peter Ryan, Principal at Ryan Strategic Advisory, told ET. Teleperformance has shut some centres to move to a work-from-home model. Other providers such as Sitel and Sykes are also increasing work-from-home agents. Singh of Teleperformance said the shift would also help employ more women, particularly in India.

IIM Indore completes final placements with average salary of Rs 22.92 lakh

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Kolkata: Indian Institute of Management, Indore (IIMI) has completed final placements with an average salary of Rs 22.92 lakh and a 23.5% jump in highest domestic package to Rs 50 lakh. The median salary for the batch stood at Rs 22 lakh.Consulting, sales & marketing and finance were the most sought-after domains among the many roles that were offered. The batch also saw candidates get two international offers this year, as the institute completed placements for its largest outgoing batch of 578 students -- the post graduate programme (PGP) 2018-20 and the 5 year integrated programme in management (IPM) batch.More than 160 recruiters participated in the IIM Indore Placements 2019-20 including Accenture, Aditya Birla Group, Amazon, American Express, Axis Bank, Bain Capability Centre, Bajaj Auto, Boston Consulting Group, ByteDance, Credit Suisse, CRISIL, D E Shaw, Flipkart, GE, GMR Group, Goldman Sachs, Google, ICICI, ITC, JP Morgan, Maruti Suzuki, PepsiCo, Philips, PwC India, Tech Mahindra, Vodafone, Xiaomi and Zinnov.More than 45 recruiters including AB InBev, Appdynamics, Cloudtail, FIITJEE, Flipkart, Intermiles, Kohler, Payoneer and Thomson Reuters hired from the campus for the first time for multiple roles as well.In terms of offers by domain, finance led the pack with 23.3% of offers, followed closely by sales and marketing with 23% and consulting with 21.5%. IT accounted for 20.3% of the offers and operations and others for 11.8%.

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