New Delhi: Hiring activities in the Indian companies rose by 4.1 percent in September with IT, BPO and real estate sectors turning bullish after a long time. The monthly 'JobSpeak index' by naukri.com stated an increase to 729 in September as compared to 701 in August this year.
"The secular trend is positive across sectors. Had it not been for an early festival season we may have seen further improvement in the index. The good news is that the IT and BPO sectors which are big employers especially at entry and junior levels seem to be in positive territory after a long time," said Hitesh Oberoi, COO and Director, Info Edge (owner of naukri.com).
The index moved from 715 in August to 719 in September. The companies' hiring activity saw a positive trend with 14 out of 41 sectors covered showing a double digit rise in hiring activities.
According to the report, IT-enabled Services (ITeS) and Business Process Outsourcing (BPO), real estate and retail sectors witnessed a significant push in September as compared to August.
The ITeS and BPO sector saw an increase of 18.3 percent in hiring activity in September, while real estate and retail witnessed a rise of 36.8 percent and 12.2 percent respectively
Saturday, October 24, 2009
Sun to cut 3000 jobs
New York: Sun Microsystems will cut 3,000 jobs over the next 12 months because of the delay in its takeover by software giant Oracle. The company is waiting for the verdict an European Union (EU) probe regarding the takeover.
Sun Microsystems in a filing with the U.S. Securities and Exchange Commission (SEC) said that the layoffs are part of a restructuring plan brought in by the delay in its acquisition by Oracle. The company said the move will result in charges of between $75 million and $125 million over the next several quarters.
The $7.4 billion deal, for a one-time Silicon Valley star and developer of the Java programming language, was approved by its shareholders in July and the U.S. Department of Justice in August. The EU is still investigating the case, and a decision is due by January 19, 2010.
Oracle had said last month that Sun was losing $100 million every month as it waited for the probe.
The EU is concerned that the deal, if approved, could breach competition rules, which will lead to rise in prices and less choice for customers. The major concern lies on Oracle having control over Sun's MySQL database business.
EU Competition Commissioner, Neelie Kroes, said the EU is obliged to investigate "when the world's biggest proprietary database company proposes to take over the world's leading open-source database company".
On the other hand, Oracle maintains that MySQL did not compete against each other, and said it would not sell MySQL to get the deal approved.
Oracle will look to strengthen its position against rival IBM, which gave up on its own attempts to buy Sun earlier this year.
Sun Microsystems in a filing with the U.S. Securities and Exchange Commission (SEC) said that the layoffs are part of a restructuring plan brought in by the delay in its acquisition by Oracle. The company said the move will result in charges of between $75 million and $125 million over the next several quarters.
The $7.4 billion deal, for a one-time Silicon Valley star and developer of the Java programming language, was approved by its shareholders in July and the U.S. Department of Justice in August. The EU is still investigating the case, and a decision is due by January 19, 2010.
Oracle had said last month that Sun was losing $100 million every month as it waited for the probe.
The EU is concerned that the deal, if approved, could breach competition rules, which will lead to rise in prices and less choice for customers. The major concern lies on Oracle having control over Sun's MySQL database business.
EU Competition Commissioner, Neelie Kroes, said the EU is obliged to investigate "when the world's biggest proprietary database company proposes to take over the world's leading open-source database company".
On the other hand, Oracle maintains that MySQL did not compete against each other, and said it would not sell MySQL to get the deal approved.
Oracle will look to strengthen its position against rival IBM, which gave up on its own attempts to buy Sun earlier this year.
Infosys Narayan Murthy sells share to set up VC Fund
Bangalore: Infosys Technologies chief mentor and chairman N.R. Narayana Murthy has sold 800,000 shares, valued at Rs.177 crore (Rs.1.77 billion/$37.9 million), from his holding in the company to fund young entrepreneurs with brilliant ideas.
"Murthy intimated to the company that the proceeds of the sale will be used as seed capital for the proposed venture capital fund to be set up in India," Infosys said in a regulatory filing to the Bombay Stock Exchange (BSE) Thursday.
The blue chip company's share of Rs.5 on par ended at Rs.2,211 on the BSE Thursday, an increase of 2.13 percent over Wednesday closing.
"The fund will primarily invest in India and may on a case-to-case basis consider investing overseas," Infosys said in the statement.
As one of the co-founders of the global software major, Murthy's holding in the company post-selling will be around 2.38 million shares.
"Murthy wants to encourage young entrepreneurs to start companies to transform India. I am sure it will inspire other industry leaders to start such funds," Infosys director T.V. Mohandas Pai told IANS.
Terming Murthy's proposal a path-breaking initiative, Pai said the venture fund would help budding entrepreneurs to set up innovative start-ups that can capitalise on the emerging opportunities.
"Murthy believe that entrepreneurship creates jobs and that is the only way to escape cycles of poverty for a country like India," Pai added.
Murthy, who is travelling in the U.S., was unavailable for comment.
"Murthy intimated to the company that the proceeds of the sale will be used as seed capital for the proposed venture capital fund to be set up in India," Infosys said in a regulatory filing to the Bombay Stock Exchange (BSE) Thursday.
The blue chip company's share of Rs.5 on par ended at Rs.2,211 on the BSE Thursday, an increase of 2.13 percent over Wednesday closing.
"The fund will primarily invest in India and may on a case-to-case basis consider investing overseas," Infosys said in the statement.
As one of the co-founders of the global software major, Murthy's holding in the company post-selling will be around 2.38 million shares.
"Murthy wants to encourage young entrepreneurs to start companies to transform India. I am sure it will inspire other industry leaders to start such funds," Infosys director T.V. Mohandas Pai told IANS.
Terming Murthy's proposal a path-breaking initiative, Pai said the venture fund would help budding entrepreneurs to set up innovative start-ups that can capitalise on the emerging opportunities.
"Murthy believe that entrepreneurship creates jobs and that is the only way to escape cycles of poverty for a country like India," Pai added.
Murthy, who is travelling in the U.S., was unavailable for comment.
Wipro bags deal from DIAL
Bangalore: Wipro has bagged a 10-year total outsourcing contract from Delhi International Airport (DIAL) to provide information technology infrastructure and services for the Indira Gandhi International Airport (IGIA). The award followed a globally competitive process which attracted several global and Indian IT partners. The company, however, declined to disclose the value of the contract.
DIAL is a joint venture comprising the Bangalore headquartered GMR Group, Airports Authority of India, Fraport and Malaysian Airports. IGI airport's new integrated terminal (T3) will be the gateway for the Commonwealth Games in New Delhi next year. IT is expected to be the driver for critical airport operations, including flight management, terminal management, ground handling and property management.
Wipro and DIAL have also signed an agreement to form a joint venture with focus on emerging business models and airport-specific applications. To be known as Wipro Airport IT Services, 74 percent of the JV will be owned by Wipro, while the rest will be held by DIAL.
Suresh Vaswani, Joint CEO and Board member, Wipro, said, "Airports and aviation industry in India require a massive infusion of IT and this unique partnership will create new industry standards in modern airport management based on world class IT and business processes powered by innovation."
As per the agreement, Wipro would be responsible for end-to-end IT management in the IGI airport's new integrated terminal (T3), which will be one of the largest terminals in the world, for 10 years.
"We are delighted to have a strong partner like Wipro with proven capabilities in delivering superior business value as our partner in realizing that vision for us," GMR Group Chairman (Airports) Kiran Kumar Grandhi said.
DIAL is a joint venture comprising the Bangalore headquartered GMR Group, Airports Authority of India, Fraport and Malaysian Airports. IGI airport's new integrated terminal (T3) will be the gateway for the Commonwealth Games in New Delhi next year. IT is expected to be the driver for critical airport operations, including flight management, terminal management, ground handling and property management.
Wipro and DIAL have also signed an agreement to form a joint venture with focus on emerging business models and airport-specific applications. To be known as Wipro Airport IT Services, 74 percent of the JV will be owned by Wipro, while the rest will be held by DIAL.
Suresh Vaswani, Joint CEO and Board member, Wipro, said, "Airports and aviation industry in India require a massive infusion of IT and this unique partnership will create new industry standards in modern airport management based on world class IT and business processes powered by innovation."
As per the agreement, Wipro would be responsible for end-to-end IT management in the IGI airport's new integrated terminal (T3), which will be one of the largest terminals in the world, for 10 years.
"We are delighted to have a strong partner like Wipro with proven capabilities in delivering superior business value as our partner in realizing that vision for us," GMR Group Chairman (Airports) Kiran Kumar Grandhi said.
Aricent, Sapient to Hire
Bangalore: Aricent, a global innovation, technology and services company, and Sapient, a business and IT consulting firm are planning to hire around 1500 professionals in the next three to nine months. While Sapient will hire around 800 professionals, Aricent plans to hire at least 700.
Mid-tier and niche technology companies are returning to the employment orbit as they plan to take in 25,000 to 30,000 experienced hands in the next three to nine months, reports Economic Times. The renewed demand has been spurred by a spurt in outsourcing, better order positions and companies expanding their India operations and moving up the value chain. Other companies on the lookout for trained hands are GlobalLogic India, MindTree, CPA Global, Symphony Services, Citrix, Adobe, Persistent Solutions, nVidia, Amazon, Agilent and Vertex.
"Customers are stretching their dollars, and outsourcing helps them do that. That's what's driving demand for fresh talent at present," says Prashant Bhatnagar, Director-hiring, Sapient. "Lateral hiring is back and there's plenty of demand for those with three to eight years experience," adds Rishi Das, CEO, CareerNet Consulting, a Bangalore-based headhunter which recruits for over 200 technology companies.
Many companies which are now hiring, had no bench staff or have increased their utilization and hence now need more staff as more work is being offshored. "It's like a food chain. Mid-level companies which have invested in niche skills and started with basic tasks like technology support are now capable of delivering complex work like product design," says another Mumbai-based Head Hunter, who did not wish to be named due to client sensitivity.
"Offshoring complex work helps global customers cut costs significantly. That's driving the current demand for experienced professionals."
Companies like Applied Materials, Volvo, Boeing, Bank of America, Amazon, the United Health Group and Societe Generale have farmed out work for new enterprise applications development, R&D, engineering services and professional services - like customised software development - among others, driving demand.
Mid-tier and niche technology companies are returning to the employment orbit as they plan to take in 25,000 to 30,000 experienced hands in the next three to nine months, reports Economic Times. The renewed demand has been spurred by a spurt in outsourcing, better order positions and companies expanding their India operations and moving up the value chain. Other companies on the lookout for trained hands are GlobalLogic India, MindTree, CPA Global, Symphony Services, Citrix, Adobe, Persistent Solutions, nVidia, Amazon, Agilent and Vertex.
"Customers are stretching their dollars, and outsourcing helps them do that. That's what's driving demand for fresh talent at present," says Prashant Bhatnagar, Director-hiring, Sapient. "Lateral hiring is back and there's plenty of demand for those with three to eight years experience," adds Rishi Das, CEO, CareerNet Consulting, a Bangalore-based headhunter which recruits for over 200 technology companies.
Many companies which are now hiring, had no bench staff or have increased their utilization and hence now need more staff as more work is being offshored. "It's like a food chain. Mid-level companies which have invested in niche skills and started with basic tasks like technology support are now capable of delivering complex work like product design," says another Mumbai-based Head Hunter, who did not wish to be named due to client sensitivity.
"Offshoring complex work helps global customers cut costs significantly. That's driving the current demand for experienced professionals."
Companies like Applied Materials, Volvo, Boeing, Bank of America, Amazon, the United Health Group and Societe Generale have farmed out work for new enterprise applications development, R&D, engineering services and professional services - like customised software development - among others, driving demand.
TCS using UK as BPO Expansion Strategy
TCS uses the UK as a BPO expansion strategy template
Tata Consultancy Service's UK division, the flagship for its BPO services business, provided a strategic update on BPO last week. TCS generates $680 million in annualised revenues from its BPO division - with more than $250 million coming from its $2.5 billion, nine-and-a-half-year deal with Citigroup, taking its global BPO delivery capability to 27,000 and boosting its financial services BPO expertise.
The template for BPO expansion
The UK, accounting for 29% of revenues, is TCS's most important market because it contains prominent clients on platform BPO deals: Pearl Group on TCS's BaNCS financial services software; media business Emap on its finance and accounting platform; Deutsche Bank on TCS investment reconciliation utility Aspire; and IATA using a proprietary data extraction hosted solution.
These impressive deals were won thanks to its focus on building a domestic business development team in the UK that can engage at a senior level with clients. TCS has also acquired onshore delivery capability. Heartened by its success, the company wants to replicate this model in the US and continental Europe.
A cautionary note on platform BPO
TCS should be proud of what it has achieved in the UK BPO market. Against its many doubters, it has managed to develop and begin the rollout of its BaNCS-based life & pensions (L&P) platform after three years of development. Though this software is the keystone for generating operational and cost efficiency in L&P BPO, the company has already achieved profitability with the Pearl operations through better people and process management, thus proving its non-IT-related BPO management skills. The platform BPO deals with Emap, IATA and Deutsche Bank further support TCS's commitment to its software-led BPO approach.
However, TCS is also more aware of the challenges of selling platform BPO and, in our view, slightly de-emphasising this part of its strategy as it contends with the realities of the market. For the vast majority of BPO clients, a transition to a new software platform is not appealing. There are more contractual complexities and a broader range of stakeholders (internal and external) involved in negotiations. In most cases, BPO clients look to achieve quicker and larger cost savings through offshoring of delivery staff, leaving any significant IT transformation out of the picture.
Indeed, two of the deals came in unique circumstances. Emap was looking for a new finance and accounting platform, as the part of its business that owned the system had been sold off by its parent. Pearl Group was a strategic deal in which TCS took on the risk of IT transition, treating this as an investment that enabled it to develop a UK platform it could resell to additional L&P clients. As further proof of the difficulty in selling a platform proposition, Sun Life of Canada, TCS's only other UK L&P client win since Pearl, chose to stick with its existing platform rather than use TCS's BaNCS.
Replicating the UK model will be challenging
Mirroring the UK success in new countries will involve significant investment in local sales and delivery teams. The UK is one of the fastest-growing BPO markets, and TCS has already had to invest considerably to kick-start its BPO business there. Achieving the same in the slower-growing continental European markets, such as Germany and France, will arguably cost more.
It's worth noting that, despite its UK success, we estimate TCS's global BPO revenues to have grown by 5% organically - which is hardly groundbreaking. Most of this growth has come from winning smaller deals that rely more on offshore provision than IT platform expertise. TCS is doing the right thing by investing ahead of the curve in platform BPO, but it's going to be a long slog before these investments bring significant returns globally. We expect organic growth of the BPO business to be steady rather than stellar over the next two years.
Tata Consultancy Service's UK division, the flagship for its BPO services business, provided a strategic update on BPO last week. TCS generates $680 million in annualised revenues from its BPO division - with more than $250 million coming from its $2.5 billion, nine-and-a-half-year deal with Citigroup, taking its global BPO delivery capability to 27,000 and boosting its financial services BPO expertise.
The template for BPO expansion
The UK, accounting for 29% of revenues, is TCS's most important market because it contains prominent clients on platform BPO deals: Pearl Group on TCS's BaNCS financial services software; media business Emap on its finance and accounting platform; Deutsche Bank on TCS investment reconciliation utility Aspire; and IATA using a proprietary data extraction hosted solution.
These impressive deals were won thanks to its focus on building a domestic business development team in the UK that can engage at a senior level with clients. TCS has also acquired onshore delivery capability. Heartened by its success, the company wants to replicate this model in the US and continental Europe.
A cautionary note on platform BPO
TCS should be proud of what it has achieved in the UK BPO market. Against its many doubters, it has managed to develop and begin the rollout of its BaNCS-based life & pensions (L&P) platform after three years of development. Though this software is the keystone for generating operational and cost efficiency in L&P BPO, the company has already achieved profitability with the Pearl operations through better people and process management, thus proving its non-IT-related BPO management skills. The platform BPO deals with Emap, IATA and Deutsche Bank further support TCS's commitment to its software-led BPO approach.
However, TCS is also more aware of the challenges of selling platform BPO and, in our view, slightly de-emphasising this part of its strategy as it contends with the realities of the market. For the vast majority of BPO clients, a transition to a new software platform is not appealing. There are more contractual complexities and a broader range of stakeholders (internal and external) involved in negotiations. In most cases, BPO clients look to achieve quicker and larger cost savings through offshoring of delivery staff, leaving any significant IT transformation out of the picture.
Indeed, two of the deals came in unique circumstances. Emap was looking for a new finance and accounting platform, as the part of its business that owned the system had been sold off by its parent. Pearl Group was a strategic deal in which TCS took on the risk of IT transition, treating this as an investment that enabled it to develop a UK platform it could resell to additional L&P clients. As further proof of the difficulty in selling a platform proposition, Sun Life of Canada, TCS's only other UK L&P client win since Pearl, chose to stick with its existing platform rather than use TCS's BaNCS.
Replicating the UK model will be challenging
Mirroring the UK success in new countries will involve significant investment in local sales and delivery teams. The UK is one of the fastest-growing BPO markets, and TCS has already had to invest considerably to kick-start its BPO business there. Achieving the same in the slower-growing continental European markets, such as Germany and France, will arguably cost more.
It's worth noting that, despite its UK success, we estimate TCS's global BPO revenues to have grown by 5% organically - which is hardly groundbreaking. Most of this growth has come from winning smaller deals that rely more on offshore provision than IT platform expertise. TCS is doing the right thing by investing ahead of the curve in platform BPO, but it's going to be a long slog before these investments bring significant returns globally. We expect organic growth of the BPO business to be steady rather than stellar over the next two years.
Wipro Expands UK Office
LONDON: Wipro Technologies
, the global IT services business of Wipro Limited, announced the expansion of its facility in Reading and opening of a
new office in London.
The center at Reading was inaugurated by The Right Worshipful the Mayor of Reading. This center is an extension of the existing development center facility. This facility will be used for building centers of excellence, delivering customer projects and training purposes.
Speaking on this occasion the Mayor of Reading, Councilor Fred Pugh, said, “It is very encouraging that an international company is ready to invest in Reading in these difficult times. Wipro is a major employer in Reading and a major player in the business community the Council is pledged to support.”
Continuing its business expansion in the UK, Wipro is also inaugurating its new office premises in London. This office would be the headquarters for Wipro’s UK operations. The facility will serve as a sales office with state-of the art infrastructure.
Laxman Badiga, Chief Information Officer, Wipro Technologies said, “Taking on the ownership of the facility at Reading is the first of its kind for Wipro overseas and hence makes this occasion special. The Reading center started with just one floor and had a little over 30 employees when we began. The expansion in Reading and opening of the new office in London has only reinforced our commitment to the region.”
Ayan Mukerji, Head of Europe Operations, Wipro Technologies said, “Today, Wipro has grown to become a leading IT Services company in the UK. Both the centers at Reading and London will be a key hub for recruiting, training of local staff and also gives an opportunity to offer an onsite development center premises to more customers.”
Revenues from Wipro’s European operations account for approx 26% of the IT major’s overall IT Services revenue. UK is one of the key markets for Wipro with a large customer base. The establishment of the new offices will now facilitate Wipro’s growth strategy in the UK and the overall growth in the European region.
, the global IT services business of Wipro Limited, announced the expansion of its facility in Reading and opening of a
new office in London.
The center at Reading was inaugurated by The Right Worshipful the Mayor of Reading. This center is an extension of the existing development center facility. This facility will be used for building centers of excellence, delivering customer projects and training purposes.
Speaking on this occasion the Mayor of Reading, Councilor Fred Pugh, said, “It is very encouraging that an international company is ready to invest in Reading in these difficult times. Wipro is a major employer in Reading and a major player in the business community the Council is pledged to support.”
Continuing its business expansion in the UK, Wipro is also inaugurating its new office premises in London. This office would be the headquarters for Wipro’s UK operations. The facility will serve as a sales office with state-of the art infrastructure.
Laxman Badiga, Chief Information Officer, Wipro Technologies said, “Taking on the ownership of the facility at Reading is the first of its kind for Wipro overseas and hence makes this occasion special. The Reading center started with just one floor and had a little over 30 employees when we began. The expansion in Reading and opening of the new office in London has only reinforced our commitment to the region.”
Ayan Mukerji, Head of Europe Operations, Wipro Technologies said, “Today, Wipro has grown to become a leading IT Services company in the UK. Both the centers at Reading and London will be a key hub for recruiting, training of local staff and also gives an opportunity to offer an onsite development center premises to more customers.”
Revenues from Wipro’s European operations account for approx 26% of the IT major’s overall IT Services revenue. UK is one of the key markets for Wipro with a large customer base. The establishment of the new offices will now facilitate Wipro’s growth strategy in the UK and the overall growth in the European region.
Wipro ties up with oracle for co development
Indian IT services giant Wipro Technologies has entered into a master co-development agreement with Oracle to develop multiple industry solutions using Oracle Application Integration Architecture (AIA) - an open, standards-based platform for business process integration across Oracle, third-party and custom applications.
Under the arrangement, both partners will co-develop end-to-end industry process solutions for five different industry verticals, including communication, retail, consumer products, hi-tech, and industrial manufacturing.
Reports revealed that co-developed Oracle Process Integration Packs include campaign to cash for hi-tech, order to activate for communications and design to release for process manufacturing.
The scrip of Wipro Limited closed on Friday at Rs 567 on BSE. The counter has made 52-week-high and low of Rs 583 an Rs 182 respectively. (dpa)
Under the arrangement, both partners will co-develop end-to-end industry process solutions for five different industry verticals, including communication, retail, consumer products, hi-tech, and industrial manufacturing.
Reports revealed that co-developed Oracle Process Integration Packs include campaign to cash for hi-tech, order to activate for communications and design to release for process manufacturing.
The scrip of Wipro Limited closed on Friday at Rs 567 on BSE. The counter has made 52-week-high and low of Rs 583 an Rs 182 respectively. (dpa)
Google Docs adoption Increasing
ome big companies are starting to move their spreadsheets, word-processing and other productivity programs off of PCs and on to the Web.
About 20% of respondents to a study by researcher IDC say Google's (GOOG) Google Docs offering is widely used in their organization, up from 5.8% a little more than a year and a half ago.
This good news for Google has not gone unnoticed at Microsoft (MSFT). The software giant last week said Office Web Apps — lightweight versions of Office programs delivered through the browser — will enter a limited technical preview. Invited participants will test Word Web App, Excel Web App, PowerPoint Web App and OneNote Web App through Windows Live.
Google markets free and paid versions of Google Docs. IDC analyst Melissa Webster surveyed 262 respondents in diverse roles at a broad range of companies; 27% said they are either already widely using Google Docs or expect to be a year from now.
The suite is proving popular as a tool that enables several co-workers to edit content in real time.
"A healthy percentage of Google Docs adoption is coming from ad hoc use," Webster says. "It's the classic case of employees making use of free consumer (online) services to get their work done, without asking permission."
No one knows how fast the market for online productivity programs will grow. IBM sells Lotus Symphony and Lotus Live as an online suite; Zoho offers free Office-like tools popular with students.
One thing is clear: Microsoft has a lot at stake. Its business division, made up primarily of Office, generated revenue of $18.9 billion and operating income of $12.4 billion in 2008.
Chris Capossela, Microsoft's business division senior vice president, says Office 2010, due early next year, will have versions that work on Web browsers — and on Windows Mobile smartphones. "We believe the future is about delivering the best experience on the PC, mobile phone and the browser," Capossela says.
Still, Microsoft must walk a fine line between staving off Google and not cannibalizing sales of its bread-and-butter Office desktop software, says Matt Rosoff, tech industry analyst at research firm Directions on Microsoft.
You can bet Office Web will work with Microsoft servers that drive many corporate networks. The look and feel will be familiar to Office desktop users. For corporations already holding Office and SharePoint licenses with upgrade rights, adding Office Web might be inexpensive, Rosoff says.
About 20% of respondents to a study by researcher IDC say Google's (GOOG) Google Docs offering is widely used in their organization, up from 5.8% a little more than a year and a half ago.
This good news for Google has not gone unnoticed at Microsoft (MSFT). The software giant last week said Office Web Apps — lightweight versions of Office programs delivered through the browser — will enter a limited technical preview. Invited participants will test Word Web App, Excel Web App, PowerPoint Web App and OneNote Web App through Windows Live.
Google markets free and paid versions of Google Docs. IDC analyst Melissa Webster surveyed 262 respondents in diverse roles at a broad range of companies; 27% said they are either already widely using Google Docs or expect to be a year from now.
The suite is proving popular as a tool that enables several co-workers to edit content in real time.
"A healthy percentage of Google Docs adoption is coming from ad hoc use," Webster says. "It's the classic case of employees making use of free consumer (online) services to get their work done, without asking permission."
No one knows how fast the market for online productivity programs will grow. IBM sells Lotus Symphony and Lotus Live as an online suite; Zoho offers free Office-like tools popular with students.
One thing is clear: Microsoft has a lot at stake. Its business division, made up primarily of Office, generated revenue of $18.9 billion and operating income of $12.4 billion in 2008.
Chris Capossela, Microsoft's business division senior vice president, says Office 2010, due early next year, will have versions that work on Web browsers — and on Windows Mobile smartphones. "We believe the future is about delivering the best experience on the PC, mobile phone and the browser," Capossela says.
Still, Microsoft must walk a fine line between staving off Google and not cannibalizing sales of its bread-and-butter Office desktop software, says Matt Rosoff, tech industry analyst at research firm Directions on Microsoft.
You can bet Office Web will work with Microsoft servers that drive many corporate networks. The look and feel will be familiar to Office desktop users. For corporations already holding Office and SharePoint licenses with upgrade rights, adding Office Web might be inexpensive, Rosoff says.
HP to ourpace the market in 2010
Hewlett-Packard executives expect sales of IT products to rebound in the coming year and they said the company is positioned to outpace the market and record overall sales growth between 3 and 4 percent in 2010.
"We think we have the best portfolio of technologies and services in the industry," said CEO Mark Hurd, speaking at a securities analyst meeting Thursday. "We're pretty well-positioned to go out in the marketplace and win. I think HP's best days are ahead of it, not behind it."
"Our current view is that the IT market returns to growth in fiscal 2010. And given the strength of our portfolio and ongoing investments in market coverage, we do expect to grow faster than the market," said CFO Cathie Lesjak.
HP is in the midst of its fourth fiscal quarter that ends Oct. 31. For the third quarter ended July 31, the company reported a 2 percent decline in sales to $27.5 billion and a 19 percent drop in earnings to $1.6 billion.
But the focus of the analyst meeting was fiscal 2010. Hurd said HP's addressable market, including PCs, servers, storage, printers, networking, software and services, is $1.3 trillion.
Hurd said he expects sales growth in the IT market to resume in 2010, then added: "We will grow faster than the IT market."
HP predicts that its sales in fiscal 2010 will reach $117 billion to $118 billion, up 3 to 4 percent over fiscal 2009, Lesjak told analysts. Earnings will be between $3.60 and $3.70 per share.
The CFO said HP is forecasting that sales from its personal systems group will grow between 3 and 5 percent in fiscal 2010, but sales from its imaging and printing group will be flat by up to 2 percent.
Enterprise systems and storage technology sales will grow between 2 and 4 percent in fiscal 2010, as will HP services. HP software sales will grow between 7 and 9 percent.
Hurd said HP's cost structure is "much improved from several years ago," but later added: "We don't quite have HP operating as effectively as we can." He said there is still "material opportunity for us" to improve the company's operating efficiencies.
One place HP is still cutting costs is in its EDS services unit, which it renamed HP Enterprise Services this week. So far this year, HP has cut $900 million in operating costs out of the operation through the company's integration efforts, Lesjak said, with plans to cut another $1.2 billion through 2010.
"We think we have the best portfolio of technologies and services in the industry," said CEO Mark Hurd, speaking at a securities analyst meeting Thursday. "We're pretty well-positioned to go out in the marketplace and win. I think HP's best days are ahead of it, not behind it."
"Our current view is that the IT market returns to growth in fiscal 2010. And given the strength of our portfolio and ongoing investments in market coverage, we do expect to grow faster than the market," said CFO Cathie Lesjak.
HP is in the midst of its fourth fiscal quarter that ends Oct. 31. For the third quarter ended July 31, the company reported a 2 percent decline in sales to $27.5 billion and a 19 percent drop in earnings to $1.6 billion.
But the focus of the analyst meeting was fiscal 2010. Hurd said HP's addressable market, including PCs, servers, storage, printers, networking, software and services, is $1.3 trillion.
Hurd said he expects sales growth in the IT market to resume in 2010, then added: "We will grow faster than the IT market."
HP predicts that its sales in fiscal 2010 will reach $117 billion to $118 billion, up 3 to 4 percent over fiscal 2009, Lesjak told analysts. Earnings will be between $3.60 and $3.70 per share.
The CFO said HP is forecasting that sales from its personal systems group will grow between 3 and 5 percent in fiscal 2010, but sales from its imaging and printing group will be flat by up to 2 percent.
Enterprise systems and storage technology sales will grow between 2 and 4 percent in fiscal 2010, as will HP services. HP software sales will grow between 7 and 9 percent.
Hurd said HP's cost structure is "much improved from several years ago," but later added: "We don't quite have HP operating as effectively as we can." He said there is still "material opportunity for us" to improve the company's operating efficiencies.
One place HP is still cutting costs is in its EDS services unit, which it renamed HP Enterprise Services this week. So far this year, HP has cut $900 million in operating costs out of the operation through the company's integration efforts, Lesjak said, with plans to cut another $1.2 billion through 2010.
UK to cut spending
Peter Clarke
UK public spending: Prime Minister pledges to protect 'front-line public services'
UK Prime Minister Gordon Brown has spelt out the UK government's policy for public spending until the general election and, if he wins, for the fourth term of the Labour government. Speaking at the Labour Party Conference on Tuesday, and in subsequent interviews, he confirmed that the UK government would cut public spending in order to reduce Britain's fiscal deficit “while maintaining and indeed improving front-line public services.” He claimed this was a caring approach which would protect schools, hospitals and the police. The Prime Minister announced that the government's flagship ID card scheme will be dramatically curtailed.
What will this mean to S/ITS companies?
Gordon Brown did his best to steady the public sector's nerves on the issue of public spending, but has conceded that there will be cuts in spending. Local governments, for example, are assuming that their budgets will be cut between 10% and 20% and are planning their 2010-11 budgets accordingly. Lower public spending reduces opportunities and revenues for S/ITS companies. Suppliers selling into 'front-line services', education, health and social services, the police and armed forces have less to worry about as these services are, for the moment at least, protected by the government's plans. Plans to spend over £1 billion over the two years from September 2010 to provide free care for the elderly (in England) in their own homes could provide a boost for telehealth suppliers. (This has applied to the elderly in Scotland for the past three years.)
The Prime Minister announced a Deficit Reduction Plan aimed at both increasing revenues and controlling expenditure. He said that his government “will raise tax at the very top, cut costs, have realistic public sector pay settlements, make savings we know we can and in 2011 raise National Insurance by half a percent. That will ensure that each and every year we protect and improve Britain's front-line services.” Building the post-recession UK economy as a green economy is seen as a priority.
The Conservatives have been calling for cuts in spending for some months in order to reduce the public sector's deficit, and have already announced that if they win the general election they will not stick to Labour's spending plans but will introduce their own Emergency Budget.
Sticking to the Efficiency Programme
The government has already set out its plans for the next 12 months in the November 2008 pre-budget statement and the 2009 Budget (which announced plans for 3-4% cuts in back-office and IT spending). Each of these built upon the Efficiency Programme that has been in place since 2004. Its focus has been to cut back-office costs to release funds for front-line services. The government has consistently claimed that this is the best way of protecting front-line services. Further details will be announced in November in the pre-budget statement. However, in the current febrile political atmosphere we expect a series of hints and announcements in the intervening weeks. The Chancellor of the Exchequer will announce the parameters for drawing up the Debt Reduction Plan “soon”.
The Prime Minster's announcement takes the government's spending plans beyond the current Efficiency Programme. This will confirm the suspicions of many, especially the opposition in Parliament, who have been pointing out that this is inadequate in the current circumstances. The Prime Minister is now saying that “choices have to be made”. Public sector managers know that this is the signal to prioritise their spending plans. The government wants a well thought out plan for achieving efficiency savings in 2010-11 and beyond.
'Front-line services' will be protected. These are defined as education, the health service, the police and the armed forces. Specifically, the Prime Minister pledged that the three armed forces will “always have all the equipment they need.” He also pledged to increase investment in education, which must mean that the Building Schools for the Future programme is safe.
No detail is available, but delivering these priorities will be a big task as it will involve some of the public sector's biggest budgets. It has become known that despite the Prime Minister's announcements there will be no net increase in public spending, which must mean that there will be even bigger cuts elsewhere.
Some large projects will become sacrificial lambs
The Prime Minster's announcement on ID cards indicates that other large projects could become sacrificial lambs within the Deficit Reduction Plan. Indeed the First Minister, Lord Mandleson, made it clear two weeks ago that nothing was sacrosanct.
UK public spending: Prime Minister pledges to protect 'front-line public services'
UK Prime Minister Gordon Brown has spelt out the UK government's policy for public spending until the general election and, if he wins, for the fourth term of the Labour government. Speaking at the Labour Party Conference on Tuesday, and in subsequent interviews, he confirmed that the UK government would cut public spending in order to reduce Britain's fiscal deficit “while maintaining and indeed improving front-line public services.” He claimed this was a caring approach which would protect schools, hospitals and the police. The Prime Minister announced that the government's flagship ID card scheme will be dramatically curtailed.
What will this mean to S/ITS companies?
Gordon Brown did his best to steady the public sector's nerves on the issue of public spending, but has conceded that there will be cuts in spending. Local governments, for example, are assuming that their budgets will be cut between 10% and 20% and are planning their 2010-11 budgets accordingly. Lower public spending reduces opportunities and revenues for S/ITS companies. Suppliers selling into 'front-line services', education, health and social services, the police and armed forces have less to worry about as these services are, for the moment at least, protected by the government's plans. Plans to spend over £1 billion over the two years from September 2010 to provide free care for the elderly (in England) in their own homes could provide a boost for telehealth suppliers. (This has applied to the elderly in Scotland for the past three years.)
The Prime Minister announced a Deficit Reduction Plan aimed at both increasing revenues and controlling expenditure. He said that his government “will raise tax at the very top, cut costs, have realistic public sector pay settlements, make savings we know we can and in 2011 raise National Insurance by half a percent. That will ensure that each and every year we protect and improve Britain's front-line services.” Building the post-recession UK economy as a green economy is seen as a priority.
The Conservatives have been calling for cuts in spending for some months in order to reduce the public sector's deficit, and have already announced that if they win the general election they will not stick to Labour's spending plans but will introduce their own Emergency Budget.
Sticking to the Efficiency Programme
The government has already set out its plans for the next 12 months in the November 2008 pre-budget statement and the 2009 Budget (which announced plans for 3-4% cuts in back-office and IT spending). Each of these built upon the Efficiency Programme that has been in place since 2004. Its focus has been to cut back-office costs to release funds for front-line services. The government has consistently claimed that this is the best way of protecting front-line services. Further details will be announced in November in the pre-budget statement. However, in the current febrile political atmosphere we expect a series of hints and announcements in the intervening weeks. The Chancellor of the Exchequer will announce the parameters for drawing up the Debt Reduction Plan “soon”.
The Prime Minster's announcement takes the government's spending plans beyond the current Efficiency Programme. This will confirm the suspicions of many, especially the opposition in Parliament, who have been pointing out that this is inadequate in the current circumstances. The Prime Minister is now saying that “choices have to be made”. Public sector managers know that this is the signal to prioritise their spending plans. The government wants a well thought out plan for achieving efficiency savings in 2010-11 and beyond.
'Front-line services' will be protected. These are defined as education, the health service, the police and the armed forces. Specifically, the Prime Minister pledged that the three armed forces will “always have all the equipment they need.” He also pledged to increase investment in education, which must mean that the Building Schools for the Future programme is safe.
No detail is available, but delivering these priorities will be a big task as it will involve some of the public sector's biggest budgets. It has become known that despite the Prime Minister's announcements there will be no net increase in public spending, which must mean that there will be even bigger cuts elsewhere.
Some large projects will become sacrificial lambs
The Prime Minster's announcement on ID cards indicates that other large projects could become sacrificial lambs within the Deficit Reduction Plan. Indeed the First Minister, Lord Mandleson, made it clear two weeks ago that nothing was sacrosanct.
Accenture profit falls 41 %
NEW YORK — Consulting and outsourcing firm Accenture PLC posted a 41 percent drop in fiscal fourth-quarter profit Thursday, as revenue fell across nearly all business groups and the company recorded a hefty restructuring charge.
Accenture also said it will raise its cash dividend by 50 percent to 75 cents per share. Payments will be semiannual, instead of annual, starting in the third quarter of 2010, the company said. The board also authorized the repurchase of $4 billion additional shares.
For the three months ended Aug. 31, the company earned $254.7 million, or 39 cents per share. That compared with $434.8 million, or 67 cents per share, in the year-ago period. Excluding a restructuring charge of $253 million, or 24 cents per share, the company earned 63 cents per share.
Quarterly revenue slid 14 percent to $5.15 billion from $6 billion last year.
Analysts polled by Thomson Reuters expected earnings of 63 cents per share on higher revenue of $5.44 billion. Analysts typically do not include one-time charges in their estimates.
The restructuring charge was related to "the realignment of the company's work force" and to global real estate consolidation, the company said in a release. In August, Accenture said it would cut some 336 senior-level executive positions, totaling about 7 percent of its senior executives, and reduce office space.
Revenue in the fourth quarter fell across nearly all groups as a result of the global downturn, the company said in a release. In all, consulting revenue totaled $2.91 billion, a decrease of 19 percent from last year. Outsourcing revenue fell 7 percent to $2.23 billion.
For the full year, the company earned $1.59 billion, or $2.44 per share, down from $1.69 billion, or $2.65 per share, a year ago. Revenue slid 8 percent to $21.58 billion from $23.39 billion.
Accenture expects net revenue for the first quarter to range between $5.3 billion and $5.5 billion, but did not provide an earnings per share estimate. Analysts have forecast earnings of 69 cents per share on higher revenue of $5.54 billion.
For fiscal 2010, Accenture forecast profit of $2.64 to $2.72 per share. The midpoint matches analysts' $2.68-per-share average estimate. The company is targeting new bookings for the year in the range of $23 billion to $26 billion.
"We expect the first half of fiscal 2010 to be challenging year on year," Chief Financial Office Pam Craig said on a conference call with analysts. "We are assuming that the global economy and our business will improve in the second half of the fiscal year, even though it is still an uncertain and unpredictable time."
Craig said the company expects fiscal 2010 revenue to range from a 3 percent drop from 2009 levels to a 1 percent increase, as it expects the first half of its fiscal year to trend below 2009 results. That would imply a range of $20.93 billion to $21.8 billion.
Analysts have forecast higher full-year revenue of $21.99 billion, on average.
Shares of Accenture slid 56 cents, or 1.5 percent, to $35.97 in after-hours trading, after falling 74 cents to close the regular session at $36.53.
Accenture also said it will raise its cash dividend by 50 percent to 75 cents per share. Payments will be semiannual, instead of annual, starting in the third quarter of 2010, the company said. The board also authorized the repurchase of $4 billion additional shares.
For the three months ended Aug. 31, the company earned $254.7 million, or 39 cents per share. That compared with $434.8 million, or 67 cents per share, in the year-ago period. Excluding a restructuring charge of $253 million, or 24 cents per share, the company earned 63 cents per share.
Quarterly revenue slid 14 percent to $5.15 billion from $6 billion last year.
Analysts polled by Thomson Reuters expected earnings of 63 cents per share on higher revenue of $5.44 billion. Analysts typically do not include one-time charges in their estimates.
The restructuring charge was related to "the realignment of the company's work force" and to global real estate consolidation, the company said in a release. In August, Accenture said it would cut some 336 senior-level executive positions, totaling about 7 percent of its senior executives, and reduce office space.
Revenue in the fourth quarter fell across nearly all groups as a result of the global downturn, the company said in a release. In all, consulting revenue totaled $2.91 billion, a decrease of 19 percent from last year. Outsourcing revenue fell 7 percent to $2.23 billion.
For the full year, the company earned $1.59 billion, or $2.44 per share, down from $1.69 billion, or $2.65 per share, a year ago. Revenue slid 8 percent to $21.58 billion from $23.39 billion.
Accenture expects net revenue for the first quarter to range between $5.3 billion and $5.5 billion, but did not provide an earnings per share estimate. Analysts have forecast earnings of 69 cents per share on higher revenue of $5.54 billion.
For fiscal 2010, Accenture forecast profit of $2.64 to $2.72 per share. The midpoint matches analysts' $2.68-per-share average estimate. The company is targeting new bookings for the year in the range of $23 billion to $26 billion.
"We expect the first half of fiscal 2010 to be challenging year on year," Chief Financial Office Pam Craig said on a conference call with analysts. "We are assuming that the global economy and our business will improve in the second half of the fiscal year, even though it is still an uncertain and unpredictable time."
Craig said the company expects fiscal 2010 revenue to range from a 3 percent drop from 2009 levels to a 1 percent increase, as it expects the first half of its fiscal year to trend below 2009 results. That would imply a range of $20.93 billion to $21.8 billion.
Analysts have forecast higher full-year revenue of $21.99 billion, on average.
Shares of Accenture slid 56 cents, or 1.5 percent, to $35.97 in after-hours trading, after falling 74 cents to close the regular session at $36.53.
Xerox boosts BPO Buys ACS
Xerox boosts BPO offering with ACS buy
A week after Dell announced plans to acquire Perot Systems, another Texan services firm has been snapped up by a large hardware manufacturer. Xerox is paying $6.4 billion for Affiliated Computer Services (ACS), following not only in the footsteps of Dell, but HP and IBM too.
The purchase of ACS will more than triple Xerox's services revenues to an estimated $10 billion in 2010, from $3.5 billion in 2008. The combined operation, to be known as 'ACS, a Xerox Company' and led by ACS CEO Lynn Blodgett, will comfortably rank as one of the 20 largest global IT services providers, ahead of the newly expanded Dell services business, which should generate yearly sales of around $8.5 billion.
Xerox and Dell now join other hardware vendors such as IBM, HP, Fujitsu and Unisys in the list of the top 20 biggest global IT services providers. This further underlines the increased investment in services by major hardware manufacturers.
ACS finally gets the takeover deal it wanted
ACS has been flirting with potential private equity acquirers for several years now. Most recently, in 2007 founder and chairman Darwin Deason, backed by investment group Cerberus Capital Management, tabled a series of offers culminating in a bid of $62 per share. However, the proposal met shareholder opposition and did not pass.
Almost two years on, and in a very different economic environment, Xerox has succeeded in pushing its bid through and it is not difficult to see why the deal is attractive to both sides. As with Dell, IBM and HP, Xerox is looking to keep pace with the converging IT market. Simply put, hardware vendors with services arms are able to cross-sell both hardware and services, as well as diversifying their business away from hardware refresh cycles.
For ACS, which generates over 90% of its revenues from the US, Xerox intends to help it expand globally - something it did not achieve alone, despite several years of trying. ACS said in 2006 that it was planning a major expansion in Europe, but the expected large-scale acquisitions failed to materialise. Instead, the company preferred to make a number of small purchases, including UK-based infrastructure services firm Anix for $50 million and Germany's SDS Business Services for $67 million. It is therefore not surprising that Xerox intends to use its brand name and existing client relationships to grow ACS's business in Europe, Asia-Pacific and South America.
More a BPO than an IT move
What makes ACS really attractive to Xerox is its business process outsourcing (BPO) capability. Of all the global IT services vendors mentioned above, ACS generates a higher proportion of its revenues from BPO (79%) than any other. It also has expertise both across horizontal functions (such as finance and accounting outsourcing) and in vertical-specific areas such as healthcare payer and insurance transactions.
The ability to further automate ACS's services using Xerox document management technology has been singled out as a major advantage for the combined company. This should result in lower cost of service and potentially the introduction of new types of BPO service where the combined company can remove or lessen manual processing.
However, the challenge of internationalising the combined business should not be underestimated. Recognisable as the Xerox name may be, it is not automatically associated with the delivery of business-critical services, especially outside North America.
A week after Dell announced plans to acquire Perot Systems, another Texan services firm has been snapped up by a large hardware manufacturer. Xerox is paying $6.4 billion for Affiliated Computer Services (ACS), following not only in the footsteps of Dell, but HP and IBM too.
The purchase of ACS will more than triple Xerox's services revenues to an estimated $10 billion in 2010, from $3.5 billion in 2008. The combined operation, to be known as 'ACS, a Xerox Company' and led by ACS CEO Lynn Blodgett, will comfortably rank as one of the 20 largest global IT services providers, ahead of the newly expanded Dell services business, which should generate yearly sales of around $8.5 billion.
Xerox and Dell now join other hardware vendors such as IBM, HP, Fujitsu and Unisys in the list of the top 20 biggest global IT services providers. This further underlines the increased investment in services by major hardware manufacturers.
ACS finally gets the takeover deal it wanted
ACS has been flirting with potential private equity acquirers for several years now. Most recently, in 2007 founder and chairman Darwin Deason, backed by investment group Cerberus Capital Management, tabled a series of offers culminating in a bid of $62 per share. However, the proposal met shareholder opposition and did not pass.
Almost two years on, and in a very different economic environment, Xerox has succeeded in pushing its bid through and it is not difficult to see why the deal is attractive to both sides. As with Dell, IBM and HP, Xerox is looking to keep pace with the converging IT market. Simply put, hardware vendors with services arms are able to cross-sell both hardware and services, as well as diversifying their business away from hardware refresh cycles.
For ACS, which generates over 90% of its revenues from the US, Xerox intends to help it expand globally - something it did not achieve alone, despite several years of trying. ACS said in 2006 that it was planning a major expansion in Europe, but the expected large-scale acquisitions failed to materialise. Instead, the company preferred to make a number of small purchases, including UK-based infrastructure services firm Anix for $50 million and Germany's SDS Business Services for $67 million. It is therefore not surprising that Xerox intends to use its brand name and existing client relationships to grow ACS's business in Europe, Asia-Pacific and South America.
More a BPO than an IT move
What makes ACS really attractive to Xerox is its business process outsourcing (BPO) capability. Of all the global IT services vendors mentioned above, ACS generates a higher proportion of its revenues from BPO (79%) than any other. It also has expertise both across horizontal functions (such as finance and accounting outsourcing) and in vertical-specific areas such as healthcare payer and insurance transactions.
The ability to further automate ACS's services using Xerox document management technology has been singled out as a major advantage for the combined company. This should result in lower cost of service and potentially the introduction of new types of BPO service where the combined company can remove or lessen manual processing.
However, the challenge of internationalising the combined business should not be underestimated. Recognisable as the Xerox name may be, it is not automatically associated with the delivery of business-critical services, especially outside North America.
India to Receive Big Pay Hike in 2010
Hong Kong: Companies in Asia are set to offer bigger pay rises next year as the region continues to rebound from global recession, notably in India where base salary levels are poised to jump nearly 10 percent. According to a survey by Hewitt Associates, salaries in Indonesia and China will also surge, by 8.7 percent and 6.7 percent respectively, whereas workers in Japan can expect a paltry 2.1 percent pay rise.
The survey, which covered more than 2,000 local and joint-venture companies in the Asia-Pacific region, also states that salaries or annual guaranteed pay this year in Asia's fast-growing economic powerhouses China and India, at 4.5 percent and 6.3 percent respectively, were the lowest since 2005.
Salaries barely grew at all in Hong Kong and Japan, this year as companies cut staff, reports Reuters. More than 60 percent of companies surveyed in Hong Kong, Japan and Singapore froze wage levels, compared with only 26.1 percent in India and 30.8 percent in China.
Next year, only six percent of companies in India and 8.3 percent in China expect to freeze pay compared with 12-14 percent of companies in Japan, Singapore, Hong Kong and Australia.
The survey, which covered more than 2,000 local and joint-venture companies in the Asia-Pacific region, also states that salaries or annual guaranteed pay this year in Asia's fast-growing economic powerhouses China and India, at 4.5 percent and 6.3 percent respectively, were the lowest since 2005.
Salaries barely grew at all in Hong Kong and Japan, this year as companies cut staff, reports Reuters. More than 60 percent of companies surveyed in Hong Kong, Japan and Singapore froze wage levels, compared with only 26.1 percent in India and 30.8 percent in China.
Next year, only six percent of companies in India and 8.3 percent in China expect to freeze pay compared with 12-14 percent of companies in Japan, Singapore, Hong Kong and Australia.
Mahindra Satyam may Layoff 5000
Chennai: Months after assuring that there would be no further lay offs, Mahindra Satyam may just lay off another 5000 benchers. Many employees on the Virtual Pool Program (VPP) of the company have been sent a formal notice of two months by e-mail.
According to the Times of India, the mail dated October 19, reads: "In our earlier communication dated June 11, 2009, you were placed on VPP for a period of six months and accordingly, your Virtual Pool Leave is due to end on December 18, 2009. It is rather unfortunate that due to the continued economic constraints and business outlook, we do not anticipate that we will have the ability to recall many of our valued associates within the VPP period."
On June 11, the company had announced the creation of the virtual pool, placing around 8,000 associates on the bench. "The surplus employees will be put in the VPP and paid basic salary, PF and medical insurance," Vineet Nayyar, CEO, Tech Mahindra, had said while ruling out any retrenchment.
However, with the six-month period of the VPP set to lapse in December, the company has served a two-month notice, as required by the employment contract, reportedly on over 5,000 employees. Sources said that the company did not have enough projects on hand and was not able to recall many associates.
A Mahindra Satyam spokesperson said that the company had absorbed about 1,500 associates from the virtual pool. The spokesperson also denied that the company was "laying off" people, even as the mail speaks of "separation of employment".
"We have given these employees an option of availing outplacement services. We will try to help them to the best of our abilities," he said.
According to the Times of India, the mail dated October 19, reads: "In our earlier communication dated June 11, 2009, you were placed on VPP for a period of six months and accordingly, your Virtual Pool Leave is due to end on December 18, 2009. It is rather unfortunate that due to the continued economic constraints and business outlook, we do not anticipate that we will have the ability to recall many of our valued associates within the VPP period."
On June 11, the company had announced the creation of the virtual pool, placing around 8,000 associates on the bench. "The surplus employees will be put in the VPP and paid basic salary, PF and medical insurance," Vineet Nayyar, CEO, Tech Mahindra, had said while ruling out any retrenchment.
However, with the six-month period of the VPP set to lapse in December, the company has served a two-month notice, as required by the employment contract, reportedly on over 5,000 employees. Sources said that the company did not have enough projects on hand and was not able to recall many associates.
A Mahindra Satyam spokesperson said that the company had absorbed about 1,500 associates from the virtual pool. The spokesperson also denied that the company was "laying off" people, even as the mail speaks of "separation of employment".
"We have given these employees an option of availing outplacement services. We will try to help them to the best of our abilities," he said.
Thursday, October 1, 2009
Cisco to acquire Tandberg
Oslo (Norway): Cisco Systems will acquire Norway's video conferencing equipment maker Tandberg ASA for $3 billion (17.2 billion Norwegian crowns) in cash, the companies informed on Thursday.
"Tandberg's board of directors have unanimously decided to recommend its shareholders to accept the offer," informed Tandberg.
The analysts had different opinions about the offer price, as some stated it fair while others said that it was too low. "This sounds like a pretty good price so I would think it will end up there. But the bid will stand for four weeks and there might be other offers," said Martin Hoff, Analyst, Arctic Securities.
"The probability for a competing bid was low, but not impossible. From an industrial perspective, this is right for the company," said Espen Torgersen, Analyst, Carnegie. He also added that the price was "highly acceptable".
Tandberg's share price rose up to 12.8 percent to a high of 156 Norwegian crowns before getting back to 154 Norwegian crowns. The shares of Cisco trading in Frankfurt were one percent lower at $23.28 (15.98 euros).
Cisco Systems informed that Fredrik Halvorsen, Chief Executive Officer, Tandberg would continue to lead the unit.
"Tandberg's board of directors have unanimously decided to recommend its shareholders to accept the offer," informed Tandberg.
The analysts had different opinions about the offer price, as some stated it fair while others said that it was too low. "This sounds like a pretty good price so I would think it will end up there. But the bid will stand for four weeks and there might be other offers," said Martin Hoff, Analyst, Arctic Securities.
"The probability for a competing bid was low, but not impossible. From an industrial perspective, this is right for the company," said Espen Torgersen, Analyst, Carnegie. He also added that the price was "highly acceptable".
Tandberg's share price rose up to 12.8 percent to a high of 156 Norwegian crowns before getting back to 154 Norwegian crowns. The shares of Cisco trading in Frankfurt were one percent lower at $23.28 (15.98 euros).
Cisco Systems informed that Fredrik Halvorsen, Chief Executive Officer, Tandberg would continue to lead the unit.
BPOs in India to Deplete
Bangalore: About one quarter of the top Business Process Outsourcing (BPO) operatives will not exist as separate entities by 2012. The rise of new vendors, acquisitions and market exits will change the BPO provider landscape in the coming years. The enterprises should look for warning signs while evaluating BPO vendors to lessen risks, states a recent report by analyst firm Gartner.
"As providers are exposed to the economic crisis, loss making contracts and an inability to adapt to standardized delivery models, many will struggle to survive in their current form. Some will be acquired and some will exit the market completely to be replaced by dynamic new players delivering BPO as automated, utility services," said Robert H. Brown, Research Vice President, Gartner.
The report "Assess and Manage Vendor Risks to Protect Your Business" has identified six key points to watch for, that might announce the predicted market shakeout. The report also identified the BPO vendors which may be the candidates for acquisition or for instant market exit.
The report suggests to look out for unprofitable portfolio BPO deals, as some BPO providers are carrying unprofitable contract portfolios, largely stemming from too much, too soon pursuit of the deals, without much thought as to how to transition them to a standardized, rationalized, profitable state of ongoing operations.
The enterprises have also been asked to gain insight into the vendor's track record of winning new businesses, particularly over a sustained period of two to three years. The report suggests that the loss of a major customer can be a leading indicator of trouble, especially if the remaining portfolio of business is small. The report suggested that some heavily leveraged vendors may be unable to obtain the necessary investment needed to bid on a business opportunity despite of attractive propositions.
The financial services sector accounts for about one-third of the total BPO market globally and provides significant amount of BPO revenue. The banking sector was the first to be exposed to the credit crunch resulting to financial meltdown. The mergers and acquisitions saw both current and prospective buyers of BPO getting out of play and this exposure could still leave many BPO providers vulnerable for long term.
Also, as per Gartner's previous BPO survey report, cancellation rates rose in 2008 as compared to 2007 data. On this basis, the report advises buyers to build exit strategies into contracts and develop contingencies for contract termination, especially before signing the deal.
"As providers are exposed to the economic crisis, loss making contracts and an inability to adapt to standardized delivery models, many will struggle to survive in their current form. Some will be acquired and some will exit the market completely to be replaced by dynamic new players delivering BPO as automated, utility services," said Robert H. Brown, Research Vice President, Gartner.
The report "Assess and Manage Vendor Risks to Protect Your Business" has identified six key points to watch for, that might announce the predicted market shakeout. The report also identified the BPO vendors which may be the candidates for acquisition or for instant market exit.
The report suggests to look out for unprofitable portfolio BPO deals, as some BPO providers are carrying unprofitable contract portfolios, largely stemming from too much, too soon pursuit of the deals, without much thought as to how to transition them to a standardized, rationalized, profitable state of ongoing operations.
The enterprises have also been asked to gain insight into the vendor's track record of winning new businesses, particularly over a sustained period of two to three years. The report suggests that the loss of a major customer can be a leading indicator of trouble, especially if the remaining portfolio of business is small. The report suggested that some heavily leveraged vendors may be unable to obtain the necessary investment needed to bid on a business opportunity despite of attractive propositions.
The financial services sector accounts for about one-third of the total BPO market globally and provides significant amount of BPO revenue. The banking sector was the first to be exposed to the credit crunch resulting to financial meltdown. The mergers and acquisitions saw both current and prospective buyers of BPO getting out of play and this exposure could still leave many BPO providers vulnerable for long term.
Also, as per Gartner's previous BPO survey report, cancellation rates rose in 2008 as compared to 2007 data. On this basis, the report advises buyers to build exit strategies into contracts and develop contingencies for contract termination, especially before signing the deal.
More HR work to be outsourced to India
Bangalore: India is likely to get a large amount of offshored HR work in the next three years. According to a study by Everest Group, a global consulting and research firm, some 111 global HRO (human resources outsourcing) contracts worth $6 billion are nearing term end in 2010-12 and 75-85 percent of these engagements are likely be extended while 15-25 percent will be repatriated or transferred to new suppliers.
The study says, "Given the maturity of India as an offshore delivery location and presence of high number of HRO suppliers, more work is going to come to the country." In the next three years, contract restructuring is likely to play a significant role as early adopters of HRO services face impending renewal cycles. HRO clients will increasingly evaluate how to drive incremental value for their organizations through the end-of-term process.
"The areas of restructuring range from modifying the number and type of in-scope processes, to enhance delivery models through global sourcing, to introduce alternative pricing models," says the study. The mid-market and large market HRO buyers, who used to be reluctant to take services from offshore locations, are expected to leverage offshoring much more in their second generation deals due to increased cost pressures in recent times.
The study says, "Given the maturity of India as an offshore delivery location and presence of high number of HRO suppliers, more work is going to come to the country." In the next three years, contract restructuring is likely to play a significant role as early adopters of HRO services face impending renewal cycles. HRO clients will increasingly evaluate how to drive incremental value for their organizations through the end-of-term process.
"The areas of restructuring range from modifying the number and type of in-scope processes, to enhance delivery models through global sourcing, to introduce alternative pricing models," says the study. The mid-market and large market HRO buyers, who used to be reluctant to take services from offshore locations, are expected to leverage offshoring much more in their second generation deals due to increased cost pressures in recent times.
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