Tata Consultancy Services (TCS) has signed a multi-million dollar deal with Singapore’s People’s Association, a statutory board under the Ministry of Community Development, Youth & Sports. TCS will provide annual application management services for two years to the association.
Under the agreement, TCS will develop and maintain People’s Associations' business and citizen-centric applications including mission-critical applications
Wednesday, September 30, 2009
Pressure on India Other Markets take marketshare in BPO and IT
The global information technology and business process outsourcing market will end 2009 with total revenues of $373 billion, 14.4 per cent higher than the $326 billion recorded in 2008.
India and China will remain at the top of the list, with expected revenues amounting to $48 billion and $28 billion, respectively.
India would have 44.8 per cent of the total outsourcing pie and China 25.9 per cent, according to Canadian-based ICT research and advisory firm XMG Global.
The growth rate for 2009 will be, however, less than the 19 per cent that the industry recorded in 2008 over 2007, XMG said in its annual year-end prediction of where the offshoring and global outsourcing industry will finish.
“The market share of India is similar to 2008 and has mostly to do with the Satyam accounting adjustments and the shifting of work to other offshore countries. In other words, we are seeing new levels of normalcy in which the recession has provided the opportunity to rationalise and shift work to offshore destinations other than India,” XMG Global’s Senior Analyst, Mr Vincent Altez, said in the report.
The Philippines is expected to close the year with $7.3 billion or 21.7 per cent growth — lower than the 24 per cent growth forecast due to the slower growth for IT services and the delay in expansion plans of several captive players. Foreign direct investment is also expected to slide this year as investors are streamlining capital.
Pressure on India
While South Africa, Egypt and Mexico are emerging as alternative destinations for offshoring, the Chinese and Vietnamese governments continue to attract foreign investors and build advance infrastructure, putting pressure on mature offshore countries such as India..
India and China will remain at the top of the list, with expected revenues amounting to $48 billion and $28 billion, respectively.
India would have 44.8 per cent of the total outsourcing pie and China 25.9 per cent, according to Canadian-based ICT research and advisory firm XMG Global.
The growth rate for 2009 will be, however, less than the 19 per cent that the industry recorded in 2008 over 2007, XMG said in its annual year-end prediction of where the offshoring and global outsourcing industry will finish.
“The market share of India is similar to 2008 and has mostly to do with the Satyam accounting adjustments and the shifting of work to other offshore countries. In other words, we are seeing new levels of normalcy in which the recession has provided the opportunity to rationalise and shift work to offshore destinations other than India,” XMG Global’s Senior Analyst, Mr Vincent Altez, said in the report.
The Philippines is expected to close the year with $7.3 billion or 21.7 per cent growth — lower than the 24 per cent growth forecast due to the slower growth for IT services and the delay in expansion plans of several captive players. Foreign direct investment is also expected to slide this year as investors are streamlining capital.
Pressure on India
While South Africa, Egypt and Mexico are emerging as alternative destinations for offshoring, the Chinese and Vietnamese governments continue to attract foreign investors and build advance infrastructure, putting pressure on mature offshore countries such as India..
Monday, September 28, 2009
infosys hikes pay
New Delhi: Infosys Technologies sprung a surprise for its employees by announcing that they may expect an increment in their salaries. The nations second largest software firm , Infosys also told its employees to expect limited promotions by October 1,2009.
Infosys initiated the salary increment strategy against all the other major firms in the IT sector like TCS, WIPRO, HCL Technologies who have stuck to the strategy of salary freezes in order to bring down the costs.
The company sent out an email statement on 18 September, 2009 to its workforce informing them about the firms decision of increasing salaries and offering need - based promotions . Infosys had so far abstained from extending any sort of salary increase to its employees . It had also skipped its promotion cycle in April as the employee utilisation rate was low. But with stabilising markets and better utilisation rates since then the firm planned to reward its employees.
The better utilisation rates were the result of the increased demand thereby also pushing up the operating margins of the company ahead of the target set of 30 percent.
On one hand Infosys has initiated the performance appraisal process for its 1,00,000 employees,on the other hand companies like Wipro , HCL are very strict on their actions of pay hikes. They have restricted the salary increments only to the best performers of the firm.
Infosys initiated the salary increment strategy against all the other major firms in the IT sector like TCS, WIPRO, HCL Technologies who have stuck to the strategy of salary freezes in order to bring down the costs.
The company sent out an email statement on 18 September, 2009 to its workforce informing them about the firms decision of increasing salaries and offering need - based promotions . Infosys had so far abstained from extending any sort of salary increase to its employees . It had also skipped its promotion cycle in April as the employee utilisation rate was low. But with stabilising markets and better utilisation rates since then the firm planned to reward its employees.
The better utilisation rates were the result of the increased demand thereby also pushing up the operating margins of the company ahead of the target set of 30 percent.
On one hand Infosys has initiated the performance appraisal process for its 1,00,000 employees,on the other hand companies like Wipro , HCL are very strict on their actions of pay hikes. They have restricted the salary increments only to the best performers of the firm.
Training Staff still on the agenda of Indian Companies
Indian IT majors may have tightened their belts in various areas to contain costs as a fallout of the global economic slowdown. However, most of them see continuing value when it comes to employee training, even though it skims crores of rupees off their top-lines.
Top tier IT firms — including Tata Consultancy Services (TCS), Infosys Technologies, Wipro and HCL Technologies — have identified the need to train the brains they handpick annually from India’s top engineering colleges and technical institutes as a critical task, even as the industry is seeing a degree of upturn in client demand.
India’s largest IT services provider, TCS, for instance, spends 2 per cent of its revenue every year on training new entrants. Bangalore-headquartered Infosys recently announced the opening of a grand training facility at its Mysore campus. Infosys annually spends over Rs 800 crore on training alone. Wipro spends about 2 per cent of its net sales in providing training to employees.
While Infosys and TCS have, to a certain extent, tried to centralise their training resources, Wipro’s strategy has been of a federal nature to cater to local manpower requirements. Wipro has set up an archipelago of training centres in proximity to its competency centres all over India and overseas.
“Wipro believes in taking learning as close as possible to the learner. Hence, for fresh recruits, training is conducted at the development centres where the employee is to be placed. Training happens primarily at our Talent Transformation Centres in Bangalore, Hyderabad, Pune, Chennai, Kolkata and Kochi,” says Sreekala Ramamurthy, GM (talent transformation), Wipro Technologies. Overseas recruits, she says, are either provided training at the company’s global centres like the Atlanta Development Centre or “...recruits are flown down to our India offices”.
HCL, too, has decentralised its training infrastructure across the globe because its employees are no longer confined to a particular geography or location. According to Anand Pillai, senior V-P and global head (quality, talent transformation & intrapreneurship development), HCL Technologies: “Since learners are spread across the globe, the entire training department is also spread across the world. Our programmes are standardised to cater to global learning challenges and simultaneously manage different cultural nuances and local sensitivities.”
TCS provides an Initial Learning Programme (ILP) at the company’s corporate learning centre in Thiruvananthapuram. “We invest heavily in world-class training for our employees. ILP training is primarily conducted at our corporate learning centre at Thiruvananthapuram for Indian and non-Indian trainees. We replicate our fresher training programme at Guwahati, Bhubaneswar, Coimbatore and Baroda, as well as overseas, to bring scalability to our training model,” says Ajoy Mukherjee, V-P & head (global HR), TCS.
TCS’ new facility, the Peepul Park, is spread over 12 acres of newly acquired land in Technopark. The 3.5-lakh square feet Peepul Park is snazzily designed and also houses a Leadership Development Institute. The ILP Learning Block can accommodate 1,000 employees at a time, a hostel block accommodates 500 people, with a recreation centre and library thrown in. The facility has a capacity of 1,500 people.
The ILP is replicated in overseas geographies for new hires from countries like Australia, China, India, Hungary, Uruguay, the UK and the US. TCS also ensures that it hires people with diverse educational backgrounds and across geographies.
Infosys recently expanded the company’s global training centre, located at its 337-acre Mysore campus, by setting up another dedicated facility (GEC-II) for training. However, Infosys also maintains training infrastructure at all its development centres. The company recently extended the training duration for new recruits (freshers).
“We consider training as an investment in the future. Our investments to enhance our training capabilities are in keeping with future requirements,” justifies S Gopalakrishnan, CEO and MD, Infosys Technologies.
Top tier IT firms — including Tata Consultancy Services (TCS), Infosys Technologies, Wipro and HCL Technologies — have identified the need to train the brains they handpick annually from India’s top engineering colleges and technical institutes as a critical task, even as the industry is seeing a degree of upturn in client demand.
India’s largest IT services provider, TCS, for instance, spends 2 per cent of its revenue every year on training new entrants. Bangalore-headquartered Infosys recently announced the opening of a grand training facility at its Mysore campus. Infosys annually spends over Rs 800 crore on training alone. Wipro spends about 2 per cent of its net sales in providing training to employees.
While Infosys and TCS have, to a certain extent, tried to centralise their training resources, Wipro’s strategy has been of a federal nature to cater to local manpower requirements. Wipro has set up an archipelago of training centres in proximity to its competency centres all over India and overseas.
“Wipro believes in taking learning as close as possible to the learner. Hence, for fresh recruits, training is conducted at the development centres where the employee is to be placed. Training happens primarily at our Talent Transformation Centres in Bangalore, Hyderabad, Pune, Chennai, Kolkata and Kochi,” says Sreekala Ramamurthy, GM (talent transformation), Wipro Technologies. Overseas recruits, she says, are either provided training at the company’s global centres like the Atlanta Development Centre or “...recruits are flown down to our India offices”.
HCL, too, has decentralised its training infrastructure across the globe because its employees are no longer confined to a particular geography or location. According to Anand Pillai, senior V-P and global head (quality, talent transformation & intrapreneurship development), HCL Technologies: “Since learners are spread across the globe, the entire training department is also spread across the world. Our programmes are standardised to cater to global learning challenges and simultaneously manage different cultural nuances and local sensitivities.”
TCS provides an Initial Learning Programme (ILP) at the company’s corporate learning centre in Thiruvananthapuram. “We invest heavily in world-class training for our employees. ILP training is primarily conducted at our corporate learning centre at Thiruvananthapuram for Indian and non-Indian trainees. We replicate our fresher training programme at Guwahati, Bhubaneswar, Coimbatore and Baroda, as well as overseas, to bring scalability to our training model,” says Ajoy Mukherjee, V-P & head (global HR), TCS.
TCS’ new facility, the Peepul Park, is spread over 12 acres of newly acquired land in Technopark. The 3.5-lakh square feet Peepul Park is snazzily designed and also houses a Leadership Development Institute. The ILP Learning Block can accommodate 1,000 employees at a time, a hostel block accommodates 500 people, with a recreation centre and library thrown in. The facility has a capacity of 1,500 people.
The ILP is replicated in overseas geographies for new hires from countries like Australia, China, India, Hungary, Uruguay, the UK and the US. TCS also ensures that it hires people with diverse educational backgrounds and across geographies.
Infosys recently expanded the company’s global training centre, located at its 337-acre Mysore campus, by setting up another dedicated facility (GEC-II) for training. However, Infosys also maintains training infrastructure at all its development centres. The company recently extended the training duration for new recruits (freshers).
“We consider training as an investment in the future. Our investments to enhance our training capabilities are in keeping with future requirements,” justifies S Gopalakrishnan, CEO and MD, Infosys Technologies.
Sunday, September 27, 2009
Wipro lays off 300 non performers
To power its growth during the present slowdown, Wipro, the third largest IT services company in India, has resorted to certain stringent measures. Last week, according to company sources, an indefinite number of employees have been laid off by the company. An employee, who has been laid off says, "Last week, around 300 employees were laid off on one single day."
Some had to wait for a long time to get back their documents, after being told about the company's decision. The employee illustrates, "I had to wait for more than eight hours to get back my documents, because of the long queue of employees."
Few days back, Wipro had outperformed its larger rivals Infosys and TCS both in terms of profit and revenue growth, in its Q4 results.
The move by the Bangalore-based company comes in the wake of an announcement made by Girish Paranjpe, Joint CEO of Wipro's IT business. Paranjpe had said, "For FY09, we probably have seen five to seven percent of our manpower employed with the IT business being released, as against two to three percent a year back."
According to Paranjpe, the performance criteria have become tougher now, because of the slowing economy. Last year, the company had announced, to put four to five percent of its workforce that is about 3,000 employees, under the performance scanner. Based on their performance some would be given counseling to help them improvise, while others would be asked to quit.
The spokesperson said, "Those who don't clear the �tests�, are the ones who are sent off." Pointing out to similar kinds of measures by other companies, she added, "This type of a move is taken by many companies these days, due to the economic downturn."
Courtesy: siliconindia
Some had to wait for a long time to get back their documents, after being told about the company's decision. The employee illustrates, "I had to wait for more than eight hours to get back my documents, because of the long queue of employees."
Few days back, Wipro had outperformed its larger rivals Infosys and TCS both in terms of profit and revenue growth, in its Q4 results.
The move by the Bangalore-based company comes in the wake of an announcement made by Girish Paranjpe, Joint CEO of Wipro's IT business. Paranjpe had said, "For FY09, we probably have seen five to seven percent of our manpower employed with the IT business being released, as against two to three percent a year back."
According to Paranjpe, the performance criteria have become tougher now, because of the slowing economy. Last year, the company had announced, to put four to five percent of its workforce that is about 3,000 employees, under the performance scanner. Based on their performance some would be given counseling to help them improvise, while others would be asked to quit.
The spokesperson said, "Those who don't clear the �tests�, are the ones who are sent off." Pointing out to similar kinds of measures by other companies, she added, "This type of a move is taken by many companies these days, due to the economic downturn."
Courtesy: siliconindia
Adobe freezes pay, cuts variable
Adobe Inc, the world’s biggest maker of graphic-design software, will freeze pay this year as the recession crimps sales, said Chief Financial Officer Mark Garrett. “Clearly, we aren’t going to have salary increases,” he said in an interview. “The bonus plans and variable compensation plans will pay out less. We have set ourselves up for what we think we need to do -- from a costs perspective -- for the rest of this year.”
Adobe also has cut about 8 per cent of its workforce, curbed travel and reduced its use of contractors. While US demand is now steady, overseas sales may still be dropping, Garrett said. That revenue accounted for almost 60 per cent of Adobe’s total last year.
Adobe also has cut about 8 per cent of its workforce, curbed travel and reduced its use of contractors. While US demand is now steady, overseas sales may still be dropping, Garrett said. That revenue accounted for almost 60 per cent of Adobe’s total last year.
TCS Drops plans to raise headcount in australia
Global IT major Tata Consultancy Services (TCS) is understood to have shelved plans to increase its headcount in Australia to around 2,000 by the end of this year. The reason: The ongoing financial crisis.
TCS had dropped plans to boost its headcount in Australia even though it recorded double-digit revenue growth, according to reports and blog posts from the country.
The Tata group company employed around 950 people in Australia at the end of the previous year, but around 50 have since been relocated to India. This puts TCS’ total employee base in that country at around 900, reports say.
A TCS spokesperson said: “Australia continues to be a significant growth market for TCS. Given the uncertainty in the global economy, TCS will grow its staff strength in line with the business growth there. Under the current context, with customers looking at offshoring as an effective value proposition, we are likely to see an increase in people servicing Australian customers in India.”
In January, TCS Asia-Pacific Head and Regional Director, Girija Pande, had said that the company planned to double the number of workers in Australia by the end of the year.
In Australia, TCS provides near-shore, high-profile technology services.
TCS had dropped plans to boost its headcount in Australia even though it recorded double-digit revenue growth, according to reports and blog posts from the country.
The Tata group company employed around 950 people in Australia at the end of the previous year, but around 50 have since been relocated to India. This puts TCS’ total employee base in that country at around 900, reports say.
A TCS spokesperson said: “Australia continues to be a significant growth market for TCS. Given the uncertainty in the global economy, TCS will grow its staff strength in line with the business growth there. Under the current context, with customers looking at offshoring as an effective value proposition, we are likely to see an increase in people servicing Australian customers in India.”
In January, TCS Asia-Pacific Head and Regional Director, Girija Pande, had said that the company planned to double the number of workers in Australia by the end of the year.
In Australia, TCS provides near-shore, high-profile technology services.
Top Outsourcing Comanies of the world
he International Association of Outsourcing Professionals has announced the world's best outsourcing service providers in 2008.
The Global Outsourcing 100 list has 6 Indian companies among the top ten. In the global 100 ranking, Infosys is ranked third, followed by Capgemini and TCS at fifth and sixth positions, respectively.
'Global Outsourcing 100' is an international list of companies that provide the full spectrum of outsourcing services. The selection criteria include the size and growth of the company, customer experience, depth and breadth of competencies and management capabilities.
Following are the top 10 global outsoucring companies, excluding the Indian firms in the list:
The Top 10 global outsourcing companies
Accenture (Rank 1)-- Key strength: Customer testimonials
IBM (Rank 2) -- Key strength: Size & growth
Sodexo (Rank 4) -- Key strength: Global presence
Capgemini (Rank 5) -- Key strength: Achievement recognition
Hewlett Packard (Rank 8) -- Key strength: Outsourcing experience
EDS (Rank 12) -- Key strength: Outsourcing experience
ACS (Rank 13) -- Key strength: Balanced performance
CGI group (Rank 14) -- Key strength: Customer testimonials
SPi (Rank 17) -- Key strength: Customer testimonials
Colliers International (Rank 18) -- Key strength: Global Presence
The Global Outsourcing 100 list has 6 Indian companies among the top ten. In the global 100 ranking, Infosys is ranked third, followed by Capgemini and TCS at fifth and sixth positions, respectively.
'Global Outsourcing 100' is an international list of companies that provide the full spectrum of outsourcing services. The selection criteria include the size and growth of the company, customer experience, depth and breadth of competencies and management capabilities.
Following are the top 10 global outsoucring companies, excluding the Indian firms in the list:
The Top 10 global outsourcing companies
Accenture (Rank 1)-- Key strength: Customer testimonials
IBM (Rank 2) -- Key strength: Size & growth
Sodexo (Rank 4) -- Key strength: Global presence
Capgemini (Rank 5) -- Key strength: Achievement recognition
Hewlett Packard (Rank 8) -- Key strength: Outsourcing experience
EDS (Rank 12) -- Key strength: Outsourcing experience
ACS (Rank 13) -- Key strength: Balanced performance
CGI group (Rank 14) -- Key strength: Customer testimonials
SPi (Rank 17) -- Key strength: Customer testimonials
Colliers International (Rank 18) -- Key strength: Global Presence
No pay hike at wipro
Wipro has announced that it will not be giving its employees any wage hikes this fiscal year. The company also said that it would honor its commitments to fresh graduates it hired last year but on a staggered basis. The students will have to wait longer before being absorbed in the company.
Wipro had issued offer letters to over 7000 students from various universities who have graduated this year.
Pratik Kumar, vice president (human resource) at Wipro said, "We will honor our commitments made to the students last year but it will be on a staggered basics since we don't want them to sit in the bench. We will also have no wage hike during this fiscal."
Since we are not sure how many we can absorb this fiscal, some of the freshers could spill over next fiscal, he said.
Wipro will be going for fresh recruitments only during Jan-Feb of 2010. Kumar also said Wipro would go for lateral hiring depending on business generation.
The company has also made it a policy to approach students only during their last semester unlike earlier when it approached them during the 6th semester.
Wipro had issued offer letters to over 7000 students from various universities who have graduated this year.
Pratik Kumar, vice president (human resource) at Wipro said, "We will honor our commitments made to the students last year but it will be on a staggered basics since we don't want them to sit in the bench. We will also have no wage hike during this fiscal."
Since we are not sure how many we can absorb this fiscal, some of the freshers could spill over next fiscal, he said.
Wipro will be going for fresh recruitments only during Jan-Feb of 2010. Kumar also said Wipro would go for lateral hiring depending on business generation.
The company has also made it a policy to approach students only during their last semester unlike earlier when it approached them during the 6th semester.
IBM has 36% market share in India
IBM, the world’s biggest software services provider, continues to gain more business in the domestic information technology market, and is set to control almost half of the domestic outsourcing market by 2010.
At least two experts tracking India’s $5.6-billion market for software outsourcing said, requesting anonymity, that IBM currently has around 36% share, and is set to control almost half the domestic outsourcing market by 2010.
“In terms of revenues, IBM’s share will be 50-60% already,” the expert helping Indian enterprises plans their IT spend told ET. “In terms of number of contracts, the company should be able to achieve 50% share in a year or two.”
Top Indian software exporters such as TCS, Infosys and Wipro are also attempting to address the lucrative Indian market for services at a time when their key markets, the US and Europe, are seeing a slump.
However, Indian tech firms will find it tough to challenge IBM’s strengths in offering hardware, software, outsourcing and consulting, as an integrated solution to clients.
Apart from mega outsourcing contracts worth anywhere between $500 million and $1 billion from telcos such as Bharti Airtel, Idea Cellular and Vodafone, IBM has been able to remain aggressive when it comes to smaller, but strategic deals from companies like Tata Sky and HPCL.
“We helped Tata Sky differentiate and achieve a competitive positioning by offering innovative services such as prepaid recharge options for subscribers,” said Ponani Gopalakrishnan, vice-president of IBM’s India Software Labs.
Indian companies, like their counterparts in the US and Europe are seeking to bring down their operational costs by 10-30%. Customers such as Tata Sky and HPCL are increasingly turning to IBM for innovative solutions that help them achieve competitive edge.
The HPCL contract worth around $2.2 million, for implementing radio frequency identification device, will help the petroleum company streamline its processes of bottling, supplying and tracking over 500,000 LPG cylinders in the first phase.
Ms Gopalakrishnan who holds over 20 patents granted by the US patent office, along with a few hundred researchers at the lab are solving business problems and helping new businesses such as Tata Sky raise entry barriers for new entrants through innovative solutions.
“We helped Tata Sky integrate its back-end capabilities with IT infrastructure using SOA,” said Ms Gopalakrishnan. SOA, or service-oriented architecture, helps enterprises integrate their business processes, and deliver flexible IT-based services to users. Tata Sky aims to have around eight million subscribers by 2012.
While some of these outsourcing contracts are smaller in size when signed, IBM is able to evolve these engagements into bigger, multi-year contracts.
At least two experts tracking India’s $5.6-billion market for software outsourcing said, requesting anonymity, that IBM currently has around 36% share, and is set to control almost half the domestic outsourcing market by 2010.
“In terms of revenues, IBM’s share will be 50-60% already,” the expert helping Indian enterprises plans their IT spend told ET. “In terms of number of contracts, the company should be able to achieve 50% share in a year or two.”
Top Indian software exporters such as TCS, Infosys and Wipro are also attempting to address the lucrative Indian market for services at a time when their key markets, the US and Europe, are seeing a slump.
However, Indian tech firms will find it tough to challenge IBM’s strengths in offering hardware, software, outsourcing and consulting, as an integrated solution to clients.
Apart from mega outsourcing contracts worth anywhere between $500 million and $1 billion from telcos such as Bharti Airtel, Idea Cellular and Vodafone, IBM has been able to remain aggressive when it comes to smaller, but strategic deals from companies like Tata Sky and HPCL.
“We helped Tata Sky differentiate and achieve a competitive positioning by offering innovative services such as prepaid recharge options for subscribers,” said Ponani Gopalakrishnan, vice-president of IBM’s India Software Labs.
Indian companies, like their counterparts in the US and Europe are seeking to bring down their operational costs by 10-30%. Customers such as Tata Sky and HPCL are increasingly turning to IBM for innovative solutions that help them achieve competitive edge.
The HPCL contract worth around $2.2 million, for implementing radio frequency identification device, will help the petroleum company streamline its processes of bottling, supplying and tracking over 500,000 LPG cylinders in the first phase.
Ms Gopalakrishnan who holds over 20 patents granted by the US patent office, along with a few hundred researchers at the lab are solving business problems and helping new businesses such as Tata Sky raise entry barriers for new entrants through innovative solutions.
“We helped Tata Sky integrate its back-end capabilities with IT infrastructure using SOA,” said Ms Gopalakrishnan. SOA, or service-oriented architecture, helps enterprises integrate their business processes, and deliver flexible IT-based services to users. Tata Sky aims to have around eight million subscribers by 2012.
While some of these outsourcing contracts are smaller in size when signed, IBM is able to evolve these engagements into bigger, multi-year contracts.
No Hikes at Infosys
Top IT companies such as TCS, Wipro and Cognizant have kicked off promotions and salary hikes for some employees but the country’s second largest software exporter Infosys prefers to wait and watch till the environment becomes more stable, according to the company’s CEO and MD Kris Gopalakrishnan.
Talking on the sidelines of ICT event Connect 09, Gopalakrishnan also shared his views on the 3-year extension of tax benefits on STPI units proposed by Union Minister A Raja and also a possible solution to counter the recent changes in UK’s immigration norms. Excerpts from the interview:
Some companies in the top five have announced promotions and hikes. When can Infosys employees expect something similar?
The thing is the industry is still facing uncertain times. We would like to look at the situation. As it develops, as it evolves, we are constantly looking at it and then when we decide we will let you know.
Union Minister for IT and telecom A Raja said that he plans to extend the tax benefits on STPI units by another three years from 2011 to 2014. What are your views on the same?
If it is done properly, it is going to help the industry. So, what is needed is extension of the 10-year holiday to 13 or 15 years. Then it will help, because most of the STPs have come out of the 10-year holiday. The 3 year extension will also help but in a smaller way.
As the law stands today, the tax break is available for new units. When you create a SEZ it’s a new unit, when you create a STP, it’s a new unit. So the benefits are available only for new units as it stands today. You need to extend the benefit to existing units by extending the term to 13 years or 15 years.
Recently, there’s also been a lot of noise about stricter immigration norms in UK, where lobbyists are trying to work out rules that will benefit local workers. How will this impact Infosys, for which UK & Continental Europe is the second-biggest revenue generator after US?
Till now, the impact has been minimum. But definitely there is a change in attitude because unemployment is going up in these countries. So, they are looking at how they can tighten their immigration rules. This is also targeted towards illegal immigrants. And what is needed is to make sure that you work with these governments to reduce the impact. India is becoming a very attractive location for overseas people, for foreigners to work in. So we can have a counter agreement with these countries.
And we need to canvass for a different kind of visa, which is a work permit visa. Today immigrant visa is used for work permit. So, it’s confusing the issue, because most employees going there are not going to immigrate. They are just going to work and come back.
Nasscom, CII are working with the govt of India, with these governments to make sure that our perspective, our voices are heard and a proper solution is found. This is also part of the WTO discussions.
Talking on the sidelines of ICT event Connect 09, Gopalakrishnan also shared his views on the 3-year extension of tax benefits on STPI units proposed by Union Minister A Raja and also a possible solution to counter the recent changes in UK’s immigration norms. Excerpts from the interview:
Some companies in the top five have announced promotions and hikes. When can Infosys employees expect something similar?
The thing is the industry is still facing uncertain times. We would like to look at the situation. As it develops, as it evolves, we are constantly looking at it and then when we decide we will let you know.
Union Minister for IT and telecom A Raja said that he plans to extend the tax benefits on STPI units by another three years from 2011 to 2014. What are your views on the same?
If it is done properly, it is going to help the industry. So, what is needed is extension of the 10-year holiday to 13 or 15 years. Then it will help, because most of the STPs have come out of the 10-year holiday. The 3 year extension will also help but in a smaller way.
As the law stands today, the tax break is available for new units. When you create a SEZ it’s a new unit, when you create a STP, it’s a new unit. So the benefits are available only for new units as it stands today. You need to extend the benefit to existing units by extending the term to 13 years or 15 years.
Recently, there’s also been a lot of noise about stricter immigration norms in UK, where lobbyists are trying to work out rules that will benefit local workers. How will this impact Infosys, for which UK & Continental Europe is the second-biggest revenue generator after US?
Till now, the impact has been minimum. But definitely there is a change in attitude because unemployment is going up in these countries. So, they are looking at how they can tighten their immigration rules. This is also targeted towards illegal immigrants. And what is needed is to make sure that you work with these governments to reduce the impact. India is becoming a very attractive location for overseas people, for foreigners to work in. So we can have a counter agreement with these countries.
And we need to canvass for a different kind of visa, which is a work permit visa. Today immigrant visa is used for work permit. So, it’s confusing the issue, because most employees going there are not going to immigrate. They are just going to work and come back.
Nasscom, CII are working with the govt of India, with these governments to make sure that our perspective, our voices are heard and a proper solution is found. This is also part of the WTO discussions.
US Technology Industry loses 1,15,000 jobs in first half of 2009
Seems Indian techies have been luckier than their counterparts in the US. According to a study by TechAmerica Foundation, US technology industry cut 115,000 jobs in the first half of 2009, compared to the 72,900 tech jobs added in the same period in 2008.
However, in the US too, the tech sector seems better than other industry verticals. While between June 2008 to June 2009, tech lost 224,100 jobs, a 3.7% decline; the US private sector shed jobs at a higher pace of 5.1%.
The Washington-based non-profit foundation also said that high-tech manufacturing in the US continues to shed jobs, having lost 69,500 from January to June 2009. The high-tech services sectors shed 45,500 jobs from January to June 2009, a 1% drop.
The report also said that for the first time in its 5-year history, all three services sectors saw losses: engineering and tech services lost 21,500 jobs, while communications services shed 13,600 jobs. In software services the job cuts stood at 10,400.
However, in the US too, the tech sector seems better than other industry verticals. While between June 2008 to June 2009, tech lost 224,100 jobs, a 3.7% decline; the US private sector shed jobs at a higher pace of 5.1%.
The Washington-based non-profit foundation also said that high-tech manufacturing in the US continues to shed jobs, having lost 69,500 from January to June 2009. The high-tech services sectors shed 45,500 jobs from January to June 2009, a 1% drop.
The report also said that for the first time in its 5-year history, all three services sectors saw losses: engineering and tech services lost 21,500 jobs, while communications services shed 13,600 jobs. In software services the job cuts stood at 10,400.
Saturday, September 26, 2009
Google Wave
Google hasn't yet finished previewing its new Wave collaboration tool, let alone given consumers full-blown access to it.
Google Wave is a collaboration and communication tool that allows users to work on the same content object, dubbed a "wave," which can house both text and multimedia. Users can reply to messages and edit together in real-time. Beyond those features, developers can extend Wave's features through a programmable interface.
Google is, at this point, focused on polishing and popularizing the product, rather than figuring out how to monetize it.
One very real possibility: incorporating Wave into Google Apps for businesses, the suite of Web-based software tools that Google licenses to enterprises for $50 per user per year.
Wave's next milestone will come at the end of September, when Google plans to let in a pool of about 100,000 testers. Rasmussen says about a third of those will be developers with existing access, and another third will go to some of the million or so people who've applied for access through Google Wave's public site.
Google will likely carve out the remaining third to Google Apps enterprise customers, Rasmussen says. That would enable Google to solicit the kind of feedback it needs to understand what works and what doesn't for businesses--and whether the tool brought the kind of value to Google Apps that would bring new paying customers to Google.
Google Wave is a collaboration and communication tool that allows users to work on the same content object, dubbed a "wave," which can house both text and multimedia. Users can reply to messages and edit together in real-time. Beyond those features, developers can extend Wave's features through a programmable interface.
Google is, at this point, focused on polishing and popularizing the product, rather than figuring out how to monetize it.
One very real possibility: incorporating Wave into Google Apps for businesses, the suite of Web-based software tools that Google licenses to enterprises for $50 per user per year.
Wave's next milestone will come at the end of September, when Google plans to let in a pool of about 100,000 testers. Rasmussen says about a third of those will be developers with existing access, and another third will go to some of the million or so people who've applied for access through Google Wave's public site.
Google will likely carve out the remaining third to Google Apps enterprise customers, Rasmussen says. That would enable Google to solicit the kind of feedback it needs to understand what works and what doesn't for businesses--and whether the tool brought the kind of value to Google Apps that would bring new paying customers to Google.
TCS nets project from Andhra Pradesh
MUMBAI: Tata Consultancy Services (TCS), has secured a five-year project to build and operate a State Wide Area Network (SWAN) in Andhra Pradesh. The project will be based on a Build, Own, Operate and Transfer (BOOT) model. This is the fourth SWAN project TCS has bagged in a row.
Wipro, an outsourcing firm also announced that it had won a three-year IT services contract from Aquarion Water Company, one of the largest water utilities in the U.S. Financial details of the deal were not disclosed.
The project will enable the Andhra Pradesh government to start and run various e-governance projects and citizen services. This would bring about significant efficiencies in G2G and G2C services of the state, which will help in bringing complete transformation in the e-governance structure. The project would be rolled out in 12 months and TCS will then maintain it for five years.
"We are happy to partner with Tata Consultancy Services for this project. This ambitious APSWAN project is an initiative of the state government to take a wide array of government services to the common man in the remotest corner of the state," Dr. Sameer Sharma, (IAS) IT Secretary & Chairman of Andhra Pradesh Technology Services told IndiaInfoline.
TCS has however not disclosed the financial details of the contract. The IT firm is currently developing similar projects for three other regional governments in the country, it said in a statement.
"This win is yet another endorsement of TCS' capabilities in the full services space. We are extremely happy to engage further with the Andhra government. For APSWAN, we will lay a statewide network of IT infrastructure and set up common service centres for citizens to take advantage of e-government services delivered at their doorstep. TCS would set up a state-of-the-art Network Operations Centre (NOC) and helpdesk for round the clock monitoring of the facility and services," said Tanmoy Chakrabarty, Vice President and Head of government ISU.
Wipro, an outsourcing firm also announced that it had won a three-year IT services contract from Aquarion Water Company, one of the largest water utilities in the U.S. Financial details of the deal were not disclosed.
The project will enable the Andhra Pradesh government to start and run various e-governance projects and citizen services. This would bring about significant efficiencies in G2G and G2C services of the state, which will help in bringing complete transformation in the e-governance structure. The project would be rolled out in 12 months and TCS will then maintain it for five years.
"We are happy to partner with Tata Consultancy Services for this project. This ambitious APSWAN project is an initiative of the state government to take a wide array of government services to the common man in the remotest corner of the state," Dr. Sameer Sharma, (IAS) IT Secretary & Chairman of Andhra Pradesh Technology Services told IndiaInfoline.
TCS has however not disclosed the financial details of the contract. The IT firm is currently developing similar projects for three other regional governments in the country, it said in a statement.
"This win is yet another endorsement of TCS' capabilities in the full services space. We are extremely happy to engage further with the Andhra government. For APSWAN, we will lay a statewide network of IT infrastructure and set up common service centres for citizens to take advantage of e-government services delivered at their doorstep. TCS would set up a state-of-the-art Network Operations Centre (NOC) and helpdesk for round the clock monitoring of the facility and services," said Tanmoy Chakrabarty, Vice President and Head of government ISU.
Patni Targets Acquisitions in US and Continental Europe
Bangalore: Patni is eyeing two acquisitions; one each in the U.S. and Continental Europe, and plans to close at least one transaction by November 2009. The company has been negotiating with both these companies for the past three months and possibly within the next few weeks, the term sheets are likely to be exchanged. A term-sheet refers to an agreement between two companies to pursue negotiations to conclude a potential M&A (Mergers and Acquisitions) transaction.
Multiple sources familiar with Patni's acquisition plans said that the company wants to cross the $1-billion mark in revenues through inorganic growth, and compete more effectively with TCS, Infosys and Wipro for large multi-year outsourcing contracts. An anonymous source said that Patni was chasing an enterprise resource planning (ERP) services firm in continental Europe with around $400 million in revenues, while the U.S. target with expertise in insurance solutions area is closer to $150 million in revenues. Banking and financial services industry (BFSI), which includes serving customers such as Guardian Life Insurance, is one of the fastest growing businesses for Patni.
In a telephonic interview to the Economic Times, Patni CEO Jeya Kumar said that the company was indeed pursuing acquisition opportunities for accessing newer markets and scaling up existing domain capabilities. "We would either acquire a company for its pure IP within a particular domain, or for gaining access to a growing market."
According to U.S. based financial analyst, Patni should have around $400 million in cash by the end of 2009. Kumar, who joined Patni in February earlier this year, has been working on transforming Patni's internal processes. Experts such as James Friedman of Susquehanna International Group (SIG) said that the company has already moved in sync with tier-I suppliers by improving its operating margins from around 11 percent last year to almost 17.5 percent during the second quarter ended June this year.
"Patni has accomplished these goals through a combination of cost-cutting initiatives, including headcount reductions, travel controls, onsite/offshore adjustments, and utilization efficiencies. More surprisingly, the company has managed to grow again, with revenues increasing 3.5 percent quarter-over-quarter (QOQ)" said Friedman.
Multiple sources familiar with Patni's acquisition plans said that the company wants to cross the $1-billion mark in revenues through inorganic growth, and compete more effectively with TCS, Infosys and Wipro for large multi-year outsourcing contracts. An anonymous source said that Patni was chasing an enterprise resource planning (ERP) services firm in continental Europe with around $400 million in revenues, while the U.S. target with expertise in insurance solutions area is closer to $150 million in revenues. Banking and financial services industry (BFSI), which includes serving customers such as Guardian Life Insurance, is one of the fastest growing businesses for Patni.
In a telephonic interview to the Economic Times, Patni CEO Jeya Kumar said that the company was indeed pursuing acquisition opportunities for accessing newer markets and scaling up existing domain capabilities. "We would either acquire a company for its pure IP within a particular domain, or for gaining access to a growing market."
According to U.S. based financial analyst, Patni should have around $400 million in cash by the end of 2009. Kumar, who joined Patni in February earlier this year, has been working on transforming Patni's internal processes. Experts such as James Friedman of Susquehanna International Group (SIG) said that the company has already moved in sync with tier-I suppliers by improving its operating margins from around 11 percent last year to almost 17.5 percent during the second quarter ended June this year.
"Patni has accomplished these goals through a combination of cost-cutting initiatives, including headcount reductions, travel controls, onsite/offshore adjustments, and utilization efficiencies. More surprisingly, the company has managed to grow again, with revenues increasing 3.5 percent quarter-over-quarter (QOQ)" said Friedman.
HP To Cut Loose its BPO Business
A recent Channel Insider article raised the concern that HP might sell off or shutter some of its outsourcing business. Specifically, the article speculated on the BPO operations that EDS brought into the firm as part of HP’s acquisition of EDS. BPO, business process outsourcing, describes the outsourcing of entire business processes, like accounts payable, to a third party with the objective of reducing costs and/or improving the performance/outcomes of those processes.
HP bought EDS back in May this year. Selling off assets, like the BPO practice, would seem like something that would have been done earlier than now. But, HP may not be happy with the lower returns that BPO offers. That was certainly one scenario that Channel Insider offered up.
(Fellow blogger Dennis Howlett offered up an assessment of the HP EDS merger here).
Why do companies decide to get out of recently acquired businesses? They do so because:
- the businesses do not ‘fit’ their strategic game plan
- the businesses are not healthy
- the businesses cannot return the margins that the company’s shareholders demand
- the economics of that business are really messed up by competitors’ pricing
- they do not understand that space or how to operate it well
- etc.
BPO is about scale and process delivery. The more scale, theoretically, the lower the operating costs. The better designed the processes, theoretically, the lower the operating costs and improved service levels for customers. However, BPO in practice doesn’t work the same as in theory. BPO deals often include a lot of one-off processing. Few ‘best practices’ or ‘best processes’ work well across industries or work well for every company. Too often, BPO solutions are not standardized and hence more expensive to operate than in theory. I suspect that most BPO solutions look more (and are sold more) like hosted applications than the standardized, multi-tenant applications offered by SaaS (software as a service) vendors.
Another issue with BPO deals concerns the ability of the outsourcer to dramatically improve existing processes and performance levels. Some deals essentially involve the transfer of systems to another firm. No step change in improvement occurs. Other deals promise a transition to new level of performance via new systems and process designs. These deals are expensive to implement as the change management, user training, and other costs drive up the BPO cutover costs for the user firm and the outsourcer. Finally, BPO providers who promise ‘continuous’ process improvements may find that getting a customer to one step change is expensive enough. Future improvements may be too costly to justify.
BPO providers also build their business on the use of third party ERP software. Guess what, those same BPO providers better have terrific pricing with those firms as license, maintenance and support costs for these products have been growing faster than inflation, consumer price index or reason.
But the use of ERP software may not be such a great thing for these BPO firms. If every BPO provider uses the same limited set of solutions with their limited (1980s) functionality, these solutions are not innovative or delivering unique value. This is especially true for back office (i.e., accounting and HR) applications. ERP and innovation are not words often found in the same sentence. Without innovation, value is hard to deliver.
BPO doesn’t have to be a low margin business, though. If outsourcers want to get higher margins, they need to offer something more than a commodity offering. Specifically, they need to offer innovation and value. The value must be more than low cost/pricing. Innovation must be more than process designs. BPO without innovation is a commodity. Without innovation, BPO is like any other business service: janitorial, vending, delivery services, etc.
If HP can spin off this business without taking a bath, they should use the funds to re-invent BPO. BPO today should be a service offered via a SaaS solution running with a PaaS (platform as a service) in a full multi-tenant world. BPO needs to fully embrace the cloud.
BPO-based processes need a huge infusion of innovation and it won’t be coming from the usual ERP suspects. Most of these firms have become large technology portfolio managers more interested in 43% operating margins on their maintenance base than in delivering something really new or different. These ERP firms are too vested in maintaining the status quo and not in delivering something really amazing. Their inattention to innovation is hurting BPO. Maybe, this is why HP is possibly running away from BPO….
HP bought EDS back in May this year. Selling off assets, like the BPO practice, would seem like something that would have been done earlier than now. But, HP may not be happy with the lower returns that BPO offers. That was certainly one scenario that Channel Insider offered up.
(Fellow blogger Dennis Howlett offered up an assessment of the HP EDS merger here).
Why do companies decide to get out of recently acquired businesses? They do so because:
- the businesses do not ‘fit’ their strategic game plan
- the businesses are not healthy
- the businesses cannot return the margins that the company’s shareholders demand
- the economics of that business are really messed up by competitors’ pricing
- they do not understand that space or how to operate it well
- etc.
BPO is about scale and process delivery. The more scale, theoretically, the lower the operating costs. The better designed the processes, theoretically, the lower the operating costs and improved service levels for customers. However, BPO in practice doesn’t work the same as in theory. BPO deals often include a lot of one-off processing. Few ‘best practices’ or ‘best processes’ work well across industries or work well for every company. Too often, BPO solutions are not standardized and hence more expensive to operate than in theory. I suspect that most BPO solutions look more (and are sold more) like hosted applications than the standardized, multi-tenant applications offered by SaaS (software as a service) vendors.
Another issue with BPO deals concerns the ability of the outsourcer to dramatically improve existing processes and performance levels. Some deals essentially involve the transfer of systems to another firm. No step change in improvement occurs. Other deals promise a transition to new level of performance via new systems and process designs. These deals are expensive to implement as the change management, user training, and other costs drive up the BPO cutover costs for the user firm and the outsourcer. Finally, BPO providers who promise ‘continuous’ process improvements may find that getting a customer to one step change is expensive enough. Future improvements may be too costly to justify.
BPO providers also build their business on the use of third party ERP software. Guess what, those same BPO providers better have terrific pricing with those firms as license, maintenance and support costs for these products have been growing faster than inflation, consumer price index or reason.
But the use of ERP software may not be such a great thing for these BPO firms. If every BPO provider uses the same limited set of solutions with their limited (1980s) functionality, these solutions are not innovative or delivering unique value. This is especially true for back office (i.e., accounting and HR) applications. ERP and innovation are not words often found in the same sentence. Without innovation, value is hard to deliver.
BPO doesn’t have to be a low margin business, though. If outsourcers want to get higher margins, they need to offer something more than a commodity offering. Specifically, they need to offer innovation and value. The value must be more than low cost/pricing. Innovation must be more than process designs. BPO without innovation is a commodity. Without innovation, BPO is like any other business service: janitorial, vending, delivery services, etc.
If HP can spin off this business without taking a bath, they should use the funds to re-invent BPO. BPO today should be a service offered via a SaaS solution running with a PaaS (platform as a service) in a full multi-tenant world. BPO needs to fully embrace the cloud.
BPO-based processes need a huge infusion of innovation and it won’t be coming from the usual ERP suspects. Most of these firms have become large technology portfolio managers more interested in 43% operating margins on their maintenance base than in delivering something really new or different. These ERP firms are too vested in maintaining the status quo and not in delivering something really amazing. Their inattention to innovation is hurting BPO. Maybe, this is why HP is possibly running away from BPO….
HP Warns on IT Budges
Those expecting a return to pre-recessionary ordering patterns from data centre customers might have to wait slightly longer than they were expecting.
A warning was sounded by Iain Stephen, vice president of enterprise server and StorageWorks (ESS) UK and Ireland at Hewlett-Packard, as the vendor updated its blade and networking portfolio.
“I haven’t met a CIO or IT director that thinks their budget is going up in 2010,” he added “It is looking as if it is going to be as tough [as this year in terms of getting budget].”
As a result he said users would continue to look for cost savings by reducing running and maintenance costs.
But Stephen warned that delaying investment was not a decision customers could necessarily keep making as the existing infrastructure was aging and unable to cope with the increased demands.
“Most infrastructures were designed a long time ago, from two to ten years,” he said.
A warning was sounded by Iain Stephen, vice president of enterprise server and StorageWorks (ESS) UK and Ireland at Hewlett-Packard, as the vendor updated its blade and networking portfolio.
“I haven’t met a CIO or IT director that thinks their budget is going up in 2010,” he added “It is looking as if it is going to be as tough [as this year in terms of getting budget].”
As a result he said users would continue to look for cost savings by reducing running and maintenance costs.
But Stephen warned that delaying investment was not a decision customers could necessarily keep making as the existing infrastructure was aging and unable to cope with the increased demands.
“Most infrastructures were designed a long time ago, from two to ten years,” he said.
IT Companies to Pay Tax on Softawre Purchases
Bangalore: According to a new order given by the Karnataka High Court, IT companies will now have to pay tax in case of software purchases from global vendors like Microsoft.
By this order, the technology firms will have to withhold between 10-20 percent of their software purchase payments in the future, reports Economic Times.
The division bench constituting Justice D V Shylendra Kumar and Justice Arvind Kumar pronounced the judgement on Thursday afternoon while upholding an appeal by the Income Tax Department that technology firms were legally obliged to withhold tax on software purchases. The order is with retrospective effect.
The IT department argued that any software purchase amounted to royalty payment for a license to use it and it should not be taken as a mere purchase of goods that are excluded from withholding tax.
The order could impact branded software vendors such as Microsoft, their third party distributors like Sonata Software, hardware manufacturers like Samsung and GE who rolls up branded software with their products, technology firms like Infosys or even the local arms of HP and IBM which could be licensing software from their parents.
This is the first court order that has gone against the taxpayer in income tax disputes relating to withholding tax on software purchase. In fact, the Karnataka High Court intervention came after the Income Tax Tribunal had ruled in favour of taxpayers, which prompted the department to go for an appeal.
"The bench did not venture into the question whether purchase of software amounted to royalty payment or not. The court said firms buying software should not sit on judgement whether the recipient is obliged to pay tax in the country. They have to deduct tax the moment they make payments to a non resident party. To an extent, this leaves several issues open ended," said Abhishek Goenka, Partner, BMR Advisors.
More knowledge on the ruling could only be obtained when the affected parties will study the court order in detail. The certified copy on the ruling is expected in coming days.
"More than technology services firms, it is branded software distributors and hardware manufacturers who bundle the software are going to be affected in a significant way. Several companies could become interested parties with this litigation going forward, as they need to address the question whether they are obliged to pay taxes in the country for sale of software," said Goenka.
By this order, the technology firms will have to withhold between 10-20 percent of their software purchase payments in the future, reports Economic Times.
The division bench constituting Justice D V Shylendra Kumar and Justice Arvind Kumar pronounced the judgement on Thursday afternoon while upholding an appeal by the Income Tax Department that technology firms were legally obliged to withhold tax on software purchases. The order is with retrospective effect.
The IT department argued that any software purchase amounted to royalty payment for a license to use it and it should not be taken as a mere purchase of goods that are excluded from withholding tax.
The order could impact branded software vendors such as Microsoft, their third party distributors like Sonata Software, hardware manufacturers like Samsung and GE who rolls up branded software with their products, technology firms like Infosys or even the local arms of HP and IBM which could be licensing software from their parents.
This is the first court order that has gone against the taxpayer in income tax disputes relating to withholding tax on software purchase. In fact, the Karnataka High Court intervention came after the Income Tax Tribunal had ruled in favour of taxpayers, which prompted the department to go for an appeal.
"The bench did not venture into the question whether purchase of software amounted to royalty payment or not. The court said firms buying software should not sit on judgement whether the recipient is obliged to pay tax in the country. They have to deduct tax the moment they make payments to a non resident party. To an extent, this leaves several issues open ended," said Abhishek Goenka, Partner, BMR Advisors.
More knowledge on the ruling could only be obtained when the affected parties will study the court order in detail. The certified copy on the ruling is expected in coming days.
"More than technology services firms, it is branded software distributors and hardware manufacturers who bundle the software are going to be affected in a significant way. Several companies could become interested parties with this litigation going forward, as they need to address the question whether they are obliged to pay taxes in the country for sale of software," said Goenka.
Tech Mahindra, TCS competing or $400 Million Deal
New Delhi: Tech Mahindra, IBM and Tata Consultancy (TCS) are competing for a $400 million (Rs. 1,800 crore) IT outsourcing contract from Sistema Shyam Teleservices (SSTL). Negotiations are on with these companies for a 10-year deal, but the contract will contain a clause that will allow Sistema Shyam to exit after five years, said a source familiar with the matter to The Economic Times.
Sistema, a Russia-based company providing various consumer services, has a 74 percent stake in the joint venture with the Shyam Group that offers mobile services under the 'MTS' brand in India. Sistema Shyam is the only CDMA player, among the new crop of telecom operators. "A final decision on the deal is expected to be taken by the year-end," said Rajeev Batra, Chief Information Officer of SSTL. He confirmed that the three IT companies were in the reckoning for the contract, but did not confirm the value of the contract.
The proposed deal will not include the operator's BPO operations, as the company has already outsourced its customer care operations to Essar Group's Aegis BPO. The winning company will manage SSTL's IT systems across the 22 telecom circles in the country. SSTL, which is scheduled to launch telephony services in Delhi next month, plans to be a pan-India operator by the third quarter of next year. Early this year, SSTL had tied up with IBM for designing and building its green datacenters in Chennai and Gurgaon.
Sistema, a Russia-based company providing various consumer services, has a 74 percent stake in the joint venture with the Shyam Group that offers mobile services under the 'MTS' brand in India. Sistema Shyam is the only CDMA player, among the new crop of telecom operators. "A final decision on the deal is expected to be taken by the year-end," said Rajeev Batra, Chief Information Officer of SSTL. He confirmed that the three IT companies were in the reckoning for the contract, but did not confirm the value of the contract.
The proposed deal will not include the operator's BPO operations, as the company has already outsourced its customer care operations to Essar Group's Aegis BPO. The winning company will manage SSTL's IT systems across the 22 telecom circles in the country. SSTL, which is scheduled to launch telephony services in Delhi next month, plans to be a pan-India operator by the third quarter of next year. Early this year, SSTL had tied up with IBM for designing and building its green datacenters in Chennai and Gurgaon.
Wipro BPO to hire 15000
Kozhikode: Wipro BPO has announced that it will hire 15,000 employees this year, for its operations at different centers in India. The company, which is part of the IT bellwether Wipro has already recruited around 8,000 employees and is in the process of selecting another 7,000 over the next six months, for which it has been holding job fairs in association with various universities, reports The Hindu Business Line.
Out of the total recruitments, 1,200 - 1,500 people will be hired from the southern region. Praveen Kamath, Associate Vice President of Wipro-BPO, said that the company now had over 24,000 employees on its roll at 15 locations spread across Eastern Europe, China and the Philippines, apart from India. "The BPO division was one of the fastest growing businesses of Wipro and it would require about 15,000 new recruits annually," he added.
According to Kamath, the company is focusing on undergraduates for 40 percent of the requirement and graduates and post-graduates for the remaining 60 percent. Besides, the company will also provide opportunity for the further education of the selected candidates while being on the job.
Out of the total recruitments, 1,200 - 1,500 people will be hired from the southern region. Praveen Kamath, Associate Vice President of Wipro-BPO, said that the company now had over 24,000 employees on its roll at 15 locations spread across Eastern Europe, China and the Philippines, apart from India. "The BPO division was one of the fastest growing businesses of Wipro and it would require about 15,000 new recruits annually," he added.
According to Kamath, the company is focusing on undergraduates for 40 percent of the requirement and graduates and post-graduates for the remaining 60 percent. Besides, the company will also provide opportunity for the further education of the selected candidates while being on the job.
Wednesday, September 23, 2009
IT Firms See Higher Demand
Bangalore: As the effects of the economic slowdown begin to wear out, India’s information technology firms are seeing more demand for building high-value applications from customers upgrading or maintaining their business software.
Enterprise resource planning (ERP), or business software, is a high-margin segment that includes consulting as a key component and commands at least 40% higher billing rates than plain-vanilla applications and development and maintenance services. Such software is typically sold and maintained by firms such as SAP AG and Oracle Corp. Indian firms began acquiring ERP capabilities only in recent years to enter the big league of companies such as International Business Machines Corp. (IBM) and Accenture Ltd.
For instance, Infosys Technologies Ltd and HCL Technologies Ltd, India’s second and fifth largest software firms, fought a bid last year to buy British ERP implementation and consulting firm Axon Group Plc HCL won.
The impetus came during the downturn, when firms in the US and Europe, the biggest markets for Indian IT firms, slashed technology budgets and spent a bare minimum on the so-called lights-on projects for maintaining existing IT infrastructure, to keep their businesses running.
Now, with a recovery in sight, firms such as British oil explorer BP Plc. and power equipment maker ABB group are again upgrading their business applications but prefer outsourcing the work to firms in low-cost countries such as India, analysts said.
Mint could not independently verify ERP contracts won by Indian firms.
“Clients are becoming more open to discretionary IT spending, especially in areas such as enterprise resource planning, in which deep spending cuts have already happened,” Harmendra Gandhi and Pinku Pappan, analysts with brokerage Nomura Financial Advisory and Securities (India) Pvt. Ltd, wrote in a 10 September report to clients.
By discretionary spending, the analysts are referring to the money that customers keep aside to spend over their planned IT budget.
“Customers are also talking about some transformation of deals, apart from offshoring support and maintenance work. Thus, the propensity to spend out of the 2009 Budget is much more now compared with that a quarter ago,” Gandhi and Pappan said.
The shift to Indian firms was also prompted by price increases at their regular vendors.
Germany’s SAP last year raised its annual support costs to 22% of the licence fee from 17% earlier, saying this would bring down the total cost of ownership of the licence for customers.
Firms had not factored in a hike in maintenance fee during the recession and “are exploring outsourcing to Indian vendors, who can maintain at half the cost, but with the risk of losing support on upgrades from the vendor,” said Asheesh Raina, a principal research analyst at Gartner Inc. “Indian companies have also been able to demonstrate maturity in offering support.”
Spending on business software was the lowest in the five years to 2009, but is expected to pick up in 2010, Raina said.
Firms such as Wipro Ltd, HCL, Cognizant Technology Solutions Ltd and even smaller companies such as Defiance Technologies Pvt. Ltd, the IT services unit of the Hinduja group, say customers are looking to improve efficiency and integrate their business software with their core processes, and not just to cut costs. But it does help that Indian ERP firms are cheaper by at least a third than Accenture or IBM.
“Saving costs and capital continues to be the most important thing clients are discussing,” said Sangita Singh, head of enterprise application services, or EAS, for Wipro. The segment contributed a third out of the 26 customers that Wipro added in the first quarter ended June.
“You don’t have many companies spending $100-200 million (Rs482-964 crore) on new licences. It may be in the range of $50-70 million. The implementation business is three to four times on licences,” Singh said.
HCL earns nearly a quarter of its overall revenue from business software projects. EAS projects accounted for 23.6% of its fourth quarter revenue of Rs2,908 crore, up from 10.8% a year ago.
Enterprise resource planning (ERP), or business software, is a high-margin segment that includes consulting as a key component and commands at least 40% higher billing rates than plain-vanilla applications and development and maintenance services. Such software is typically sold and maintained by firms such as SAP AG and Oracle Corp. Indian firms began acquiring ERP capabilities only in recent years to enter the big league of companies such as International Business Machines Corp. (IBM) and Accenture Ltd.
For instance, Infosys Technologies Ltd and HCL Technologies Ltd, India’s second and fifth largest software firms, fought a bid last year to buy British ERP implementation and consulting firm Axon Group Plc HCL won.
The impetus came during the downturn, when firms in the US and Europe, the biggest markets for Indian IT firms, slashed technology budgets and spent a bare minimum on the so-called lights-on projects for maintaining existing IT infrastructure, to keep their businesses running.
Now, with a recovery in sight, firms such as British oil explorer BP Plc. and power equipment maker ABB group are again upgrading their business applications but prefer outsourcing the work to firms in low-cost countries such as India, analysts said.
Mint could not independently verify ERP contracts won by Indian firms.
“Clients are becoming more open to discretionary IT spending, especially in areas such as enterprise resource planning, in which deep spending cuts have already happened,” Harmendra Gandhi and Pinku Pappan, analysts with brokerage Nomura Financial Advisory and Securities (India) Pvt. Ltd, wrote in a 10 September report to clients.
By discretionary spending, the analysts are referring to the money that customers keep aside to spend over their planned IT budget.
“Customers are also talking about some transformation of deals, apart from offshoring support and maintenance work. Thus, the propensity to spend out of the 2009 Budget is much more now compared with that a quarter ago,” Gandhi and Pappan said.
The shift to Indian firms was also prompted by price increases at their regular vendors.
Germany’s SAP last year raised its annual support costs to 22% of the licence fee from 17% earlier, saying this would bring down the total cost of ownership of the licence for customers.
Firms had not factored in a hike in maintenance fee during the recession and “are exploring outsourcing to Indian vendors, who can maintain at half the cost, but with the risk of losing support on upgrades from the vendor,” said Asheesh Raina, a principal research analyst at Gartner Inc. “Indian companies have also been able to demonstrate maturity in offering support.”
Spending on business software was the lowest in the five years to 2009, but is expected to pick up in 2010, Raina said.
Firms such as Wipro Ltd, HCL, Cognizant Technology Solutions Ltd and even smaller companies such as Defiance Technologies Pvt. Ltd, the IT services unit of the Hinduja group, say customers are looking to improve efficiency and integrate their business software with their core processes, and not just to cut costs. But it does help that Indian ERP firms are cheaper by at least a third than Accenture or IBM.
“Saving costs and capital continues to be the most important thing clients are discussing,” said Sangita Singh, head of enterprise application services, or EAS, for Wipro. The segment contributed a third out of the 26 customers that Wipro added in the first quarter ended June.
“You don’t have many companies spending $100-200 million (Rs482-964 crore) on new licences. It may be in the range of $50-70 million. The implementation business is three to four times on licences,” Singh said.
HCL earns nearly a quarter of its overall revenue from business software projects. EAS projects accounted for 23.6% of its fourth quarter revenue of Rs2,908 crore, up from 10.8% a year ago.
Monday, September 14, 2009
Google Chrome OS by 2010
Google is gearing up for an assault next year on Microsoft's dominance in PC operating systems, yet the companies that would have to be complicit in the battle are keeping quiet.
Judging by their public reactions to Google's news, much of the top tier of consumer PC makers appear caught off guard by Google's announcement on Tuesday of Chrome OS, an open-source operating system the company is preparing for launch in 2010. Google specifically noted in its announcement that its operating system would be lightweight enough to work on netbooks, low-cost mini laptops that almost all PC makers have flocked to in the past year. According to a person familiar with the operating system, Google is talking to Asus, Lenovo, as well as other original equipment manufacturers, and chipset makers about using Chrome OS.
Neither Asus nor Lenovo responded to requests for comment.
Photo story
PHOTO: click to view The top 10 alternatives to Google search
The top 10 alternatives to Google search
* More Photos
It makes sense that Google would target Asus. It's the pioneer of then movement and dominates the market. But there are other potential partners too, whose names have not come up yet: Acer and MSI. Along with Asus, they've been happy to cut Microsoft at least partly out of the equation of building a computer. The three have led the charge in netbooks, and while they have offered versions with Windows XP, they also were early to make Linux versions available. Adding Chrome OS as an option would make sense.
But both HP and Dell, who account for 35 per cent of computers sold worldwide, were guarded about Chrome OS.
HP said that while it is "studying Chrome", it had no comment on whether it would incorporate it into forthcoming netbook models, or any other HP computers.
"HP wants to understand all the OS choices in the marketplace that may be used by its competitors, and remains open to considering various approaches to meet its own customer needs," a company spokeswoman said in a statement on Wednesday.
A Dell spokeswoman said: "Dell constantly assesses new technologies as part of managing our product development process and for consideration in future products."
Of course they do. But a Google OS could completely change the long-established process of putting together a consumer PC and would totally change how it is priced. Acer, which is the fastest-growing PC maker right now, said it "had no answer" yet.
Reading between the lines, it appears the top three hardware vendors have little or no relationship with the search and online advertising giant. But if Google plans to make inroads into netbooks and eventually lapops, that will have to change very soon. Every consumer desktop and notebook, and most netbooks today (excluding computers from Apple) are designed to run Windows. Microsoft has deep hooks in the manufacturers' design and engineering processes, and the hardware companies' marketing and product launch cycles always take Microsoft's plans into account.
More recently, Asus, Acer, and Samsung have said they plan to offer Google's Android, which is really an operating system for mobile devices like smartphones, on netbooks.
The flip side is that even if Google does develop a closer relationship with PC makers, it's consumer demand that matters most. Computer vendors have already seen that while Linux-based netbooks sold in small amounts to early adopters, the form factor didn't morph into a mainstream phenomenon until Windows XP began to be more widely available on the devices. Just a year ago, XP was on 10 per cent of netbooks. Now it's on 96 per cent.
Judging by their public reactions to Google's news, much of the top tier of consumer PC makers appear caught off guard by Google's announcement on Tuesday of Chrome OS, an open-source operating system the company is preparing for launch in 2010. Google specifically noted in its announcement that its operating system would be lightweight enough to work on netbooks, low-cost mini laptops that almost all PC makers have flocked to in the past year. According to a person familiar with the operating system, Google is talking to Asus, Lenovo, as well as other original equipment manufacturers, and chipset makers about using Chrome OS.
Neither Asus nor Lenovo responded to requests for comment.
Photo story
PHOTO: click to view The top 10 alternatives to Google search
The top 10 alternatives to Google search
* More Photos
It makes sense that Google would target Asus. It's the pioneer of then movement and dominates the market. But there are other potential partners too, whose names have not come up yet: Acer and MSI. Along with Asus, they've been happy to cut Microsoft at least partly out of the equation of building a computer. The three have led the charge in netbooks, and while they have offered versions with Windows XP, they also were early to make Linux versions available. Adding Chrome OS as an option would make sense.
But both HP and Dell, who account for 35 per cent of computers sold worldwide, were guarded about Chrome OS.
HP said that while it is "studying Chrome", it had no comment on whether it would incorporate it into forthcoming netbook models, or any other HP computers.
"HP wants to understand all the OS choices in the marketplace that may be used by its competitors, and remains open to considering various approaches to meet its own customer needs," a company spokeswoman said in a statement on Wednesday.
A Dell spokeswoman said: "Dell constantly assesses new technologies as part of managing our product development process and for consideration in future products."
Of course they do. But a Google OS could completely change the long-established process of putting together a consumer PC and would totally change how it is priced. Acer, which is the fastest-growing PC maker right now, said it "had no answer" yet.
Reading between the lines, it appears the top three hardware vendors have little or no relationship with the search and online advertising giant. But if Google plans to make inroads into netbooks and eventually lapops, that will have to change very soon. Every consumer desktop and notebook, and most netbooks today (excluding computers from Apple) are designed to run Windows. Microsoft has deep hooks in the manufacturers' design and engineering processes, and the hardware companies' marketing and product launch cycles always take Microsoft's plans into account.
More recently, Asus, Acer, and Samsung have said they plan to offer Google's Android, which is really an operating system for mobile devices like smartphones, on netbooks.
The flip side is that even if Google does develop a closer relationship with PC makers, it's consumer demand that matters most. Computer vendors have already seen that while Linux-based netbooks sold in small amounts to early adopters, the form factor didn't morph into a mainstream phenomenon until Windows XP began to be more widely available on the devices. Just a year ago, XP was on 10 per cent of netbooks. Now it's on 96 per cent.
HCL infosystems bags best companies dataquest
HCL Infosystems has emerged as the best employer in the information technology industry in India, according to a survey conducted by Dataquest-IDC (International Data Corporation).
1. HCL Infosystems
HCL jumped up two positions from last year, according to Dataquest-IDC Best Employers Survey 2009 covering 200 IT companies of which 31 companies were short-listed for the final round.
HCL Infosystems also climbed two ranks in the Employee Satisfaction rankings thus making it to the top spot. The only hardware manufacturer in the survey, HCL ranked among the top three companies in almost all the parameters followed by iGate, Rolta and RMSI.
HCL Infosystems also emerged as the dream company to work for with one-third of those surveyed expressing desire to work for HCL Infosystems.
Big 4 refuse to participate
However, Dataquest-IDC said that for the first time Indian's top 4 companies Tata Consultancy Services, Infosys Technologies, Wipro, and Mahindra Satyam, declined to take part as layoffs and salary re-alignment leads to dip in IT employee morale.
So check out which are India's top 20 IT employers:
1. HCL Infosystems
HCL jumped up two positions from last year, according to Dataquest-IDC Best Employers Survey 2009 covering 200 IT companies of which 31 companies were short-listed for the final round.
HCL Infosystems also climbed two ranks in the Employee Satisfaction rankings thus making it to the top spot. The only hardware manufacturer in the survey, HCL ranked among the top three companies in almost all the parameters followed by iGate, Rolta and RMSI.
HCL Infosystems also emerged as the dream company to work for with one-third of those surveyed expressing desire to work for HCL Infosystems.
Big 4 refuse to participate
However, Dataquest-IDC said that for the first time Indian's top 4 companies Tata Consultancy Services, Infosys Technologies, Wipro, and Mahindra Satyam, declined to take part as layoffs and salary re-alignment leads to dip in IT employee morale.
So check out which are India's top 20 IT employers:
Cheer Up!! Hiring and Salary Hikes are Back
Bangalore: Many were predicting six months back that the Indian IT industry would be entering its twilight zone, but now there are indications that these predictions may go wrong. Several IT companies have restarted hiring and are giving salary hikes to their employees.
"That phase of drastic downturn is behind us," says S Ramadorai, CEO of Tata Consultancy Services (TCS). "There's stability now. The deal pipeline is encouraging, but the time it takes to close a deal remains long. And many customers are yet to fully open up their IT budgets," Ramadorai added.
While IT majors like TCS, Wipro and Cognizant have started promotions and salary hikes, Kris Gopalakrishnan, CEO and Managing Director of Infosys feels that things are looking better now, however the company prefers to wait and watch before giving any promotions or hikes, reports The Economic Times.
The recovery of the defamed Satyam Computer Services under the new owner Mahindra Satyam has also proved to be a boon for nearly 28,000 employees across all levels, with the restoration of the variable pay. The variable component is 10 percent at the entry level, 20 percent at the middle level and 30 percent at the senior management level. IT bellwether Wipro has lifted its freeze on hikes and promotions, at least for some employees.
Manpower supply company TeamLease, which saw its open positions drop significantly from 10,000 a month to 800 post-recession, has in the past couple of months seen those numbers rise to 3,500.
With the current trend companies have also started showing more confidence in the Indian market. Information infrastructure company, EMC has announced that it will invest $1.5 billion in India over the next five years, a level of investment from a single company that the sector has not seen in close to two years. Partha Iyengar, Regional Research Director in Gartner India, says the number of calls the company gets from customers for directions and consulting has gone up sharply in the last 3-4 months.
The Indian IT industry was one of the worst hit by the recession on account of its dependence on international markets - especially the U.S. and European markets. The freeze on IT budgets by companies around the world meant that new orders dried up. Industry association Nasscom initially forecast that IT exports would grow by 22-24 percent in 2008-09, but as the recession deepened, this was revised down to 16 percent. For this fiscal, the association has projected a 4-7 percent growth to $48-50 billion.
"That phase of drastic downturn is behind us," says S Ramadorai, CEO of Tata Consultancy Services (TCS). "There's stability now. The deal pipeline is encouraging, but the time it takes to close a deal remains long. And many customers are yet to fully open up their IT budgets," Ramadorai added.
While IT majors like TCS, Wipro and Cognizant have started promotions and salary hikes, Kris Gopalakrishnan, CEO and Managing Director of Infosys feels that things are looking better now, however the company prefers to wait and watch before giving any promotions or hikes, reports The Economic Times.
The recovery of the defamed Satyam Computer Services under the new owner Mahindra Satyam has also proved to be a boon for nearly 28,000 employees across all levels, with the restoration of the variable pay. The variable component is 10 percent at the entry level, 20 percent at the middle level and 30 percent at the senior management level. IT bellwether Wipro has lifted its freeze on hikes and promotions, at least for some employees.
Manpower supply company TeamLease, which saw its open positions drop significantly from 10,000 a month to 800 post-recession, has in the past couple of months seen those numbers rise to 3,500.
With the current trend companies have also started showing more confidence in the Indian market. Information infrastructure company, EMC has announced that it will invest $1.5 billion in India over the next five years, a level of investment from a single company that the sector has not seen in close to two years. Partha Iyengar, Regional Research Director in Gartner India, says the number of calls the company gets from customers for directions and consulting has gone up sharply in the last 3-4 months.
The Indian IT industry was one of the worst hit by the recession on account of its dependence on international markets - especially the U.S. and European markets. The freeze on IT budgets by companies around the world meant that new orders dried up. Industry association Nasscom initially forecast that IT exports would grow by 22-24 percent in 2008-09, but as the recession deepened, this was revised down to 16 percent. For this fiscal, the association has projected a 4-7 percent growth to $48-50 billion.
Indian Scientist Makes Encryption Faster
Bangalore: Indian scientist has developed fastest method to encrypt hard disk of a computer. Encrypting helps in keeping the data on hard disk secure even from an attack from hackers. "From a practical point of view, the requirement is actually to achieve both speed and security. Otherwise, encryption and decryption may take so much time that software which runs on computer become unacceptably slow. And, in the current state of the art, this work provides the fastest known algorithm for disk encryption," claims Palash Sarkar, creator of this unique algorithm and Professor at the Indian Statistical Institute (ISI), Kolkata.
The new algorithm encrypts the data 30 to 40 percent faster than the previous ones. The results of the research will appear in October 2009 issue of the 'IEEE Transactions on Information Theory', one of the top research journals in the field of transmission, processing and utilization of information.
Sarkar claims that this is the fastest method to encrypt hard disk and says that he has scientific evidence to prove it. "One has to see this in the context of the anonymous and strict review process of the journal 'IEEE Transactions on Information Theory.' The reviewers allowed this claim to stand because I could scientifically justify it in the paper. A hollow claim would have been struck down by the reviewers," he added.
The new algorithm encrypts the data 30 to 40 percent faster than the previous ones. The results of the research will appear in October 2009 issue of the 'IEEE Transactions on Information Theory', one of the top research journals in the field of transmission, processing and utilization of information.
Sarkar claims that this is the fastest method to encrypt hard disk and says that he has scientific evidence to prove it. "One has to see this in the context of the anonymous and strict review process of the journal 'IEEE Transactions on Information Theory.' The reviewers allowed this claim to stand because I could scientifically justify it in the paper. A hollow claim would have been struck down by the reviewers," he added.
Techie Sues Airtel
Bangalore: A techie from Bangalore has sued Airtel for Rs. 20 crores. Airtel had given wrong information to the Police which forced the techie to go to jail. "I have spent 50 horrible days in jail. You can't measure the trauma which I went through, my family went through," says Lakshman Kailash, a 28 year old engineer to CNN-IBN.
Kailash was successful software engineer with HCL and was working in Bangalore. Two years ago, Pune Police team in Bangalore had arrested him for 'defaming Shivaji' in a picture he was supposed to have put up on Orkut. Police was fed with wrong IP address by Airtel, who searched for the IP for two days. The police traced up the IP and arrested Kailash and did not let him go even after the police claimed to have caught the real culprits about two weeks after his arrest.
Maharashtra Human Rights Commission asked Airtel to cough up Rs. 2 lakh as compensation but Airtel did not do so. Now, its top executives have been summoned by a magistrate court in Bangalore. "Its a small amount for them and I really don't understand why they are not paying up. They have to follow court orders. They are citizens of India, whether they think they are guilty or not is secondary," says Kailash.
Since Airtel has not paid any kind of compensation so far, Kailash has moved to National Consumer Disputes Forum and now seeks a compensation of Rs. 20 crores. "You can't scale those horrible moments in money. I feel it's a less amount with respect to the trauma I went through because I have to carry it throughout my life," says Kailash.
Kailash was successful software engineer with HCL and was working in Bangalore. Two years ago, Pune Police team in Bangalore had arrested him for 'defaming Shivaji' in a picture he was supposed to have put up on Orkut. Police was fed with wrong IP address by Airtel, who searched for the IP for two days. The police traced up the IP and arrested Kailash and did not let him go even after the police claimed to have caught the real culprits about two weeks after his arrest.
Maharashtra Human Rights Commission asked Airtel to cough up Rs. 2 lakh as compensation but Airtel did not do so. Now, its top executives have been summoned by a magistrate court in Bangalore. "Its a small amount for them and I really don't understand why they are not paying up. They have to follow court orders. They are citizens of India, whether they think they are guilty or not is secondary," says Kailash.
Since Airtel has not paid any kind of compensation so far, Kailash has moved to National Consumer Disputes Forum and now seeks a compensation of Rs. 20 crores. "You can't scale those horrible moments in money. I feel it's a less amount with respect to the trauma I went through because I have to carry it throughout my life," says Kailash.
Accenture Layoff
Accenture said Thursday that it will thin its ranks of senior executives.
The company, which announced the layoffs in a statement, said it will cut its senior executive ranks by 7 percent. Accenture will take a charge of $128 million to cover severance and other layoff costs.
In another cost cutting move, Accenture said that it is cutting its office space to save on real estate. That move will result in a charge of $119 million.
Accenture CEO William Green said the senior executive layoffs will ensure the company “has the right people, skills and capabilities, at the right levels and in the right places.”
The cost cuts are expected to be complete in the fiscal first quarter. Accenture also stuck with its fourth quarter revenue target of $5 billion to $5.2 billion.
The company, which announced the layoffs in a statement, said it will cut its senior executive ranks by 7 percent. Accenture will take a charge of $128 million to cover severance and other layoff costs.
In another cost cutting move, Accenture said that it is cutting its office space to save on real estate. That move will result in a charge of $119 million.
Accenture CEO William Green said the senior executive layoffs will ensure the company “has the right people, skills and capabilities, at the right levels and in the right places.”
The cost cuts are expected to be complete in the fiscal first quarter. Accenture also stuck with its fourth quarter revenue target of $5 billion to $5.2 billion.
BT to cut back Graduate Trainee Intake
BT has become one of the first blue-chip companies to scrap its graduate recruitment scheme, increasing fears of shrinking job opportunities for Britain’s youth.
In a memo sent to staff last week and seen by The Sunday Times, BT said: “In light of the economic environment and headcount pressures, BT has taken the decision to cease graduate recruitment activity . . . there is no timeline for re-entry.”
The closure will add fuel to concerns over Britain’s “lost generation” of young people struggling to find work. Statistics last week showed that a record 835,000 people aged between 18 and 24 in England were not in work, education or training — a year ago the figure was 730,000.
The increased popularity of flagship recruitment schemes leaves more graduates fighting over fewer places. BT received 4,800 applications last year for 130 jobs, up from 3,800 just two years ago.
Related Links
* Former polytechnics beat Oxbridge for jobs
* Graduate unemployment hits ten year high
The company has recruited several of its top executives through the graduate scheme. Hanif Lalani, the head of BT’s Global Services arm, joined as a trainee in 1983 after attending Essex University. His successor as group finance director, Tony Chanmugam, was taken on in 1978 via a similar route.
However, the move shows that BT chief executive Ian Livingston is tackling the company’s cost base. He has already pledged to cut 30,000 jobs in two years and wants hundreds of workers to take a sabbatical in exchange for a 25% pay cut.
BT has said it is committed to this year’s graduate intake and will support those already in the scheme.
In a memo sent to staff last week and seen by The Sunday Times, BT said: “In light of the economic environment and headcount pressures, BT has taken the decision to cease graduate recruitment activity . . . there is no timeline for re-entry.”
The closure will add fuel to concerns over Britain’s “lost generation” of young people struggling to find work. Statistics last week showed that a record 835,000 people aged between 18 and 24 in England were not in work, education or training — a year ago the figure was 730,000.
The increased popularity of flagship recruitment schemes leaves more graduates fighting over fewer places. BT received 4,800 applications last year for 130 jobs, up from 3,800 just two years ago.
Related Links
* Former polytechnics beat Oxbridge for jobs
* Graduate unemployment hits ten year high
The company has recruited several of its top executives through the graduate scheme. Hanif Lalani, the head of BT’s Global Services arm, joined as a trainee in 1983 after attending Essex University. His successor as group finance director, Tony Chanmugam, was taken on in 1978 via a similar route.
However, the move shows that BT chief executive Ian Livingston is tackling the company’s cost base. He has already pledged to cut 30,000 jobs in two years and wants hundreds of workers to take a sabbatical in exchange for a 25% pay cut.
BT has said it is committed to this year’s graduate intake and will support those already in the scheme.
IT Outsourcing india to Lose the Crown by 2020
IT Outsourcing
Who will hold the offshoring crown in 2020?
How India could lose its grip on the market without an education and innovation overhaul
Noshir Kaka is a director in the Mumbai office of analyst house McKinsey & Company. In an exclusive interview, silicon.com reporter Nick Heath spoke to Kaka about his forthcoming report on how India's 50 per cent share of the global offshore technology and business services market could slip away by 2020.
To view the full article Strengthening India's offshoring industry, just published on McKinsey Quarterly, click here.
silicon.com: What will happen to India's share of global IT and BPO market by 2020?
Kaka: Dropping market share is one of scenarios that we have projected by 2020 if India chooses not to release the capacity in its education system.
India produces about three million graduates a year. The entire offshoring industry across IT and BPO is 2.1 million people, so clearly there're enough graduates - the real issue is the suitability of candidates. Effectively we are using a tenth of our workforce that is suitable for this industry. If that trend continues you will have a shortage of suitable talent.
The primary cause is the quality of communications and language skills, the second is that some people are not educated well enough to be able to serve a multinational corporation.
The combined market share of 50 to 53 per cent, which is what India has today, you could see that combined market share decline because India does not have the supply side availability.
But today the new Indian education minister has proposed a public-private partnership in India's education system, where 2,500 model schools would be created, which is something we have been shouting from the rooftops for for a long time.
When will the decline begin to happen?
We have seen an increase in India's market share in 2008.
The global financial crisis has given India a bit of breathing room, it's dropped the growth rates. In 2009/10 we will see low growth, so a supply side constraint will not come through in the next two years.
Beyond that, if gets back to original growth rate and we don't see any change in the education system, we could see those supply shortfalls happening very quickly thereafter.
Which countries look most likely to take that market share?
You have got to separate out those countries that are the volume hubs and those that offer more niche services.
When you look at the volume hubs, it's very hard to get away from China and Russia, which are two of the largest by population locations. China tends to be a lot more engineering, design and infrastructure services led, more catering to North Asia. Russia tends to be outstanding for software product development.
In Latin America, Brazil is one of the few nations that offers an emerging working population of that size. [Much of Latin America] is Spanish speaking, southern-US focused.
In Eastern Europe the talent pools are not as deep as in India and China and more fragmented by language.
Vietnam and Egypt has a reasonable talent pool and a lot of government support to promote this industry, support by real initiatives on the ground making changes to the education system and infrastructure to support this industry.
Which location will be the first offshoring destination choice for the UK and Europe in 2020?
For the Anglo Saxon world, the US and UK predominantly, India will continue to be the country of choice. Even with its talent constraints that I talked about, India continues to introduce about a third of the suitable talent in the world. I don't think that India's dominant position is by any means threatened in the near future.
Which of the global outsourcing companies will dominate by 2020?
You will see global systems integrators that will be very successful, some of them already have very large global footprints and have embraced a global delivery model and are moving to scale very rapidly.
You will also find a few of the Indian top tier companies, in the BPO and on IT services space, among the world's top ten - if you project their growth rates out.
You will see also the stabilisation in growth of the captives [inhouse offshore operations] turned third parties, such as Convergys did many years ago spinning out from Bell South. You will find you will have a few captives that have achieved the scale and size and become very successful third parties.
Will companies still be setting up their own inhouse offshore operations or captives by 2020?
As the market matures for commoditised services it gets tougher and tougher to establish the cost structure or attract the talent that would be viable in a country like India.
When you go for a commoditised service the case for outsourcing that in an offshore environment is growing as the capability of the vendor base grows.
For example there are very few IT captives on the application development and maintenance side. The ones that are there are very large, have been there for some time and can warrant the scale economies.
You will begin to see a very similar trend on the business services side.
What sectors will outsource the most work by 2020?
Fast forward to 2020 and we see almost 80 per cent of the incremental growth coming outside of today's core verticals of banking, insurance, telecoms and manufacturing. They won't decline but there are other areas that will assume greater or as much significance for outsourcers.
Today, in terms of outsourcing, government or public sector is slightly smaller than BFSI [financial sector]. The second sector we are excited about is healthcare, with the demographic changes imminent in US and most of Europe we think that healthcare provision are going to go through the roof. Automation and offshoring is one of the levers that government and companies will use to take care of that.
The two others are utilities and media.
Outside of the verticals we think the Bric [Brazil, Russia, India and China] nations are going to be a great source of domestic outsourcing growth for many companies.
The offshoring industry has largely focused on Fortune 1000 clients and we think going forward small and medium business will be a very interesting source of growth.
What type of new tech services will be being outsourced by 2020?
Energy efficiency and climate change, mobile applications and clinical products are just three examples.
In energy efficiency, another McKinsey study estimated that up to a third of the carbon abatement potential worldwide in greenhouse gases will be directly or indirectly induced by technology. If you look at the innovation around smart grids, industrial innovation or green buildings, a lot of this is technology enabled. That is a huge opportunity to innovate from a low cost environment.
Or it could be another product innovation such as the Tata Nano car.
If you look at what's happening in India or any other of the low-cost countries, a lot of the work that we do is replication of a service done somewhere else.
We have a whole new opportunity on to offer new products and services that have not been created somewhere else.
What effect will protectionism have on the offshoring industry?
We saw it in 2001 after the dot com bubble burst and we are seeing it again.
As economic cycles go up or down and unemployment grows you will see some degree of noise and bills being introduced.
We did some research showing the economic growth enabled by offshoring $1 of work from North America to India creates wealth worth more than that value in North America. It's an economic win-win.
So far I have not seen major political movements being pursued in earnest by both governments and we are very hopeful that the trade barriers stay down and we don't get a whiplash effect that will hurt both countries.
Who will hold the offshoring crown in 2020?
How India could lose its grip on the market without an education and innovation overhaul
Noshir Kaka is a director in the Mumbai office of analyst house McKinsey & Company. In an exclusive interview, silicon.com reporter Nick Heath spoke to Kaka about his forthcoming report on how India's 50 per cent share of the global offshore technology and business services market could slip away by 2020.
To view the full article Strengthening India's offshoring industry, just published on McKinsey Quarterly, click here.
silicon.com: What will happen to India's share of global IT and BPO market by 2020?
Kaka: Dropping market share is one of scenarios that we have projected by 2020 if India chooses not to release the capacity in its education system.
India produces about three million graduates a year. The entire offshoring industry across IT and BPO is 2.1 million people, so clearly there're enough graduates - the real issue is the suitability of candidates. Effectively we are using a tenth of our workforce that is suitable for this industry. If that trend continues you will have a shortage of suitable talent.
The primary cause is the quality of communications and language skills, the second is that some people are not educated well enough to be able to serve a multinational corporation.
The combined market share of 50 to 53 per cent, which is what India has today, you could see that combined market share decline because India does not have the supply side availability.
But today the new Indian education minister has proposed a public-private partnership in India's education system, where 2,500 model schools would be created, which is something we have been shouting from the rooftops for for a long time.
When will the decline begin to happen?
We have seen an increase in India's market share in 2008.
The global financial crisis has given India a bit of breathing room, it's dropped the growth rates. In 2009/10 we will see low growth, so a supply side constraint will not come through in the next two years.
Beyond that, if gets back to original growth rate and we don't see any change in the education system, we could see those supply shortfalls happening very quickly thereafter.
Which countries look most likely to take that market share?
You have got to separate out those countries that are the volume hubs and those that offer more niche services.
When you look at the volume hubs, it's very hard to get away from China and Russia, which are two of the largest by population locations. China tends to be a lot more engineering, design and infrastructure services led, more catering to North Asia. Russia tends to be outstanding for software product development.
In Latin America, Brazil is one of the few nations that offers an emerging working population of that size. [Much of Latin America] is Spanish speaking, southern-US focused.
In Eastern Europe the talent pools are not as deep as in India and China and more fragmented by language.
Vietnam and Egypt has a reasonable talent pool and a lot of government support to promote this industry, support by real initiatives on the ground making changes to the education system and infrastructure to support this industry.
Which location will be the first offshoring destination choice for the UK and Europe in 2020?
For the Anglo Saxon world, the US and UK predominantly, India will continue to be the country of choice. Even with its talent constraints that I talked about, India continues to introduce about a third of the suitable talent in the world. I don't think that India's dominant position is by any means threatened in the near future.
Which of the global outsourcing companies will dominate by 2020?
You will see global systems integrators that will be very successful, some of them already have very large global footprints and have embraced a global delivery model and are moving to scale very rapidly.
You will also find a few of the Indian top tier companies, in the BPO and on IT services space, among the world's top ten - if you project their growth rates out.
You will see also the stabilisation in growth of the captives [inhouse offshore operations] turned third parties, such as Convergys did many years ago spinning out from Bell South. You will find you will have a few captives that have achieved the scale and size and become very successful third parties.
Will companies still be setting up their own inhouse offshore operations or captives by 2020?
As the market matures for commoditised services it gets tougher and tougher to establish the cost structure or attract the talent that would be viable in a country like India.
When you go for a commoditised service the case for outsourcing that in an offshore environment is growing as the capability of the vendor base grows.
For example there are very few IT captives on the application development and maintenance side. The ones that are there are very large, have been there for some time and can warrant the scale economies.
You will begin to see a very similar trend on the business services side.
What sectors will outsource the most work by 2020?
Fast forward to 2020 and we see almost 80 per cent of the incremental growth coming outside of today's core verticals of banking, insurance, telecoms and manufacturing. They won't decline but there are other areas that will assume greater or as much significance for outsourcers.
Today, in terms of outsourcing, government or public sector is slightly smaller than BFSI [financial sector]. The second sector we are excited about is healthcare, with the demographic changes imminent in US and most of Europe we think that healthcare provision are going to go through the roof. Automation and offshoring is one of the levers that government and companies will use to take care of that.
The two others are utilities and media.
Outside of the verticals we think the Bric [Brazil, Russia, India and China] nations are going to be a great source of domestic outsourcing growth for many companies.
The offshoring industry has largely focused on Fortune 1000 clients and we think going forward small and medium business will be a very interesting source of growth.
What type of new tech services will be being outsourced by 2020?
Energy efficiency and climate change, mobile applications and clinical products are just three examples.
In energy efficiency, another McKinsey study estimated that up to a third of the carbon abatement potential worldwide in greenhouse gases will be directly or indirectly induced by technology. If you look at the innovation around smart grids, industrial innovation or green buildings, a lot of this is technology enabled. That is a huge opportunity to innovate from a low cost environment.
Or it could be another product innovation such as the Tata Nano car.
If you look at what's happening in India or any other of the low-cost countries, a lot of the work that we do is replication of a service done somewhere else.
We have a whole new opportunity on to offer new products and services that have not been created somewhere else.
What effect will protectionism have on the offshoring industry?
We saw it in 2001 after the dot com bubble burst and we are seeing it again.
As economic cycles go up or down and unemployment grows you will see some degree of noise and bills being introduced.
We did some research showing the economic growth enabled by offshoring $1 of work from North America to India creates wealth worth more than that value in North America. It's an economic win-win.
So far I have not seen major political movements being pursued in earnest by both governments and we are very hopeful that the trade barriers stay down and we don't get a whiplash effect that will hurt both countries.
Software Development moving offshore: Accenture
Software companies need to have a global presence to be where the action is -- and can't shy away from making "bold" moves even in the recession -- Accenture said in two reports released today.
"As Western markets slow and their workforces age, software manufacturing -- and hence capital -- are migrating toward Asia and Eastern Europe," the consultancy and technology outsourcer said in its 2008 Global Software Study. "The primary driver of this shift is not so much labor as it is growing markets and the need to reduce risk by building and buying in multiple locations."
In mature markets, such as the U.S., software companies will make more money from maintenance contracts than from new software sales, Accenture (NYSE: ACN) said. In contrast, in emerging markets, software companies will earn more from sales than from maintenance contracts.
Companies should also make sure that they are actually getting the maintenance fees they've earned.
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"Such an assessment can result in a boon to the top line, as one major software vendor discovered: A study the company conducted of its licenses worldwide revealed that it was owed more than $1 billion in license fees," Accenture said.
Missing out on licensing fees continues to be a significant problem, Accenture said, citing a recent study by the Business Software Alliance that claimed that the software industry lost over $50 billion to piracy in 2008.
But companies must be careful about extracting cash from customers during hard times, according to Pekka Huttunen, director of Accenture's software industry practice.
"This could be the right time to build tools and best practices so that companies are in a position to take more control of licensing when the economy returns," he told InternetNews.com.
He added that software providers could deliver technology to help companies with software asset management, gaining insight into usage while also providing that insight to the customer.
Offshoring holdouts
Meanwhile, there's also the allure of moving offshore, as software companies find better markets and younger, cheaper employees in Asia and Eastern Europe, Accenture said.
"Software development is moving offshore and the availability of software developers is declining in developed nations," the company's report said.
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Yet following the trends may not work for everyone. Huttunen added that some companies see both economic and moral value in keeping software production close -- "inshoring" or "nearshoring".
"For instance, in the U.S., there are areas where companies may have access to a relatively high skill labor pool at a lower price," he said. He added that companies may also be motivated by the moral value of helping local, disadvantaged people.
Be bold
However bad conditions may seem, software companies should remain aggressive and not focus on cost cutting, Accenture said in a second report.
"Accenture's research into the 1990-1991 recession and the dot-com meltdown reveals a clear distinction between enterprises that followed a strategy of managing their cost structures and strengthening their strategic positions and those that did not," the company said. "In fact, those that took the bolder path outperformed their industry peers for six years following the recession."
Tough times help make change happen faster and force innovation.
For some, being bold may require hopping on the latest trends. For instance, Accenture said software buying patterns will change as companies become more comfortable with Software as a Service (SaaS). Accenture also said that companies that have gone through a painful experience with at least one licensed software installation are more likely to embrace SaaS.
Huttunen said that SaaS could enable software companies to gain more customers, though it also might erode the revenue earned per customer.
Another realm for growth is around Web 2.0 technologies. For instance, as the Facebook generation enters the workforce, companies will be forced to adopt new social and collaborative technologies, while software makers will work to provide the right security for the right applications, according to Accenture.
Even the most aggressive companies will need to take a close look at their own software portfolios and decide which products will sell and which products will not.
Huttunen also explained that many software companies have acquired technology that is not yet fully integrated into the main product, so employees currently deployed to canceled projects could be re-deployed to integration.
In making acquisitions during tough times, companies could follow Oracle's example, the reports said. Its "acquisitions of PeopleSoft, Siebel, and Sun Microsystems have dramatically increased its presence in several of the areas most coveted by business software manufacturers," Accenture said.
But Huttunen warned that some companies that made acquisitions a few years ago may have paid a price that was based on revenue targets that will be difficult to meet.
And when it comes to hitting revenue targets, the channel will be more important than ever. Accenture cited Citrix's success in this area as a model for others to follow.
"Citrix currently has about 6,200 channel and alliance partners (including Microsoft, HP and Dell) in more than 100 countries," Accenture said.
Companies will need both a direct sales channel and an indirect sales channel, it added, citing two companies with big plans.
"SAP and Avaya are investing particularly heavily in their indirect sales capabilities," Accenture said.
Added Huttunen, "Even though these are challenging times, there are opportunities for software companies. Current conditions favor those vendors looking to provide more value with their software."
Despite the difficult conditions facing the industry, it may well emerge stronger, he suggested.
"Tough times help make change happen faster and force innovation," Huttunen said. "It's human nature that if you can do without change, most of us choose not to have the change."
"As Western markets slow and their workforces age, software manufacturing -- and hence capital -- are migrating toward Asia and Eastern Europe," the consultancy and technology outsourcer said in its 2008 Global Software Study. "The primary driver of this shift is not so much labor as it is growing markets and the need to reduce risk by building and buying in multiple locations."
In mature markets, such as the U.S., software companies will make more money from maintenance contracts than from new software sales, Accenture (NYSE: ACN) said. In contrast, in emerging markets, software companies will earn more from sales than from maintenance contracts.
Companies should also make sure that they are actually getting the maintenance fees they've earned.
RELATED ARTICLES
BPM Picks Up Steam as IT Readies for Recovery
PC Sales Down in Q2, Likely for All of 2009
Salesforce's Benioff Takes on Wall Street
IDC Eyes SaaS Opportunities
For more stories on this topic:
"Such an assessment can result in a boon to the top line, as one major software vendor discovered: A study the company conducted of its licenses worldwide revealed that it was owed more than $1 billion in license fees," Accenture said.
Missing out on licensing fees continues to be a significant problem, Accenture said, citing a recent study by the Business Software Alliance that claimed that the software industry lost over $50 billion to piracy in 2008.
But companies must be careful about extracting cash from customers during hard times, according to Pekka Huttunen, director of Accenture's software industry practice.
"This could be the right time to build tools and best practices so that companies are in a position to take more control of licensing when the economy returns," he told InternetNews.com.
He added that software providers could deliver technology to help companies with software asset management, gaining insight into usage while also providing that insight to the customer.
Offshoring holdouts
Meanwhile, there's also the allure of moving offshore, as software companies find better markets and younger, cheaper employees in Asia and Eastern Europe, Accenture said.
"Software development is moving offshore and the availability of software developers is declining in developed nations," the company's report said.
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Yet following the trends may not work for everyone. Huttunen added that some companies see both economic and moral value in keeping software production close -- "inshoring" or "nearshoring".
"For instance, in the U.S., there are areas where companies may have access to a relatively high skill labor pool at a lower price," he said. He added that companies may also be motivated by the moral value of helping local, disadvantaged people.
Be bold
However bad conditions may seem, software companies should remain aggressive and not focus on cost cutting, Accenture said in a second report.
"Accenture's research into the 1990-1991 recession and the dot-com meltdown reveals a clear distinction between enterprises that followed a strategy of managing their cost structures and strengthening their strategic positions and those that did not," the company said. "In fact, those that took the bolder path outperformed their industry peers for six years following the recession."
Tough times help make change happen faster and force innovation.
For some, being bold may require hopping on the latest trends. For instance, Accenture said software buying patterns will change as companies become more comfortable with Software as a Service (SaaS). Accenture also said that companies that have gone through a painful experience with at least one licensed software installation are more likely to embrace SaaS.
Huttunen said that SaaS could enable software companies to gain more customers, though it also might erode the revenue earned per customer.
Another realm for growth is around Web 2.0 technologies. For instance, as the Facebook generation enters the workforce, companies will be forced to adopt new social and collaborative technologies, while software makers will work to provide the right security for the right applications, according to Accenture.
Even the most aggressive companies will need to take a close look at their own software portfolios and decide which products will sell and which products will not.
Huttunen also explained that many software companies have acquired technology that is not yet fully integrated into the main product, so employees currently deployed to canceled projects could be re-deployed to integration.
In making acquisitions during tough times, companies could follow Oracle's example, the reports said. Its "acquisitions of PeopleSoft, Siebel, and Sun Microsystems have dramatically increased its presence in several of the areas most coveted by business software manufacturers," Accenture said.
But Huttunen warned that some companies that made acquisitions a few years ago may have paid a price that was based on revenue targets that will be difficult to meet.
And when it comes to hitting revenue targets, the channel will be more important than ever. Accenture cited Citrix's success in this area as a model for others to follow.
"Citrix currently has about 6,200 channel and alliance partners (including Microsoft, HP and Dell) in more than 100 countries," Accenture said.
Companies will need both a direct sales channel and an indirect sales channel, it added, citing two companies with big plans.
"SAP and Avaya are investing particularly heavily in their indirect sales capabilities," Accenture said.
Added Huttunen, "Even though these are challenging times, there are opportunities for software companies. Current conditions favor those vendors looking to provide more value with their software."
Despite the difficult conditions facing the industry, it may well emerge stronger, he suggested.
"Tough times help make change happen faster and force innovation," Huttunen said. "It's human nature that if you can do without change, most of us choose not to have the change."
UK Grads find it difficult to get work
The UK's IT graduates could find it even more difficult to obtain work if new government proposals making it easier for multinational companies to transfer non-European Union graduates to UK offices take effect.
The Association of Professional Staffing Companies (APSCo) said that the Home Office's Migration Advisory Committee had proposed reforms to the current point-based system which would allow the graduates to become eligible for intra-company transfers.
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The transfers would be available to graduates from non-EU companies after just three months of employment at the sponsoring organisation, without that firm having to advertise vacancies in the UK first, according to APSCo.
Under a Freedom of Information request APSCo found that 29,240 non-EU IT workers came into the UK in 2008 on intra-company transfers, more than double the 14,255 non-EU workers coming into the UK to work in all the other professional service sectors combined.
"While the intra-company transfer system might not be exploited in the financial and legal sectors, there is evidence that it is being exploited in the IT sector," said APSCo chief executive Ann Swain.
"Using the system to bring in graduates would be wrong-headed and illogical. Employers should be required by law to advertise vacancies in the UK first before transferring employees from overseas offices. We are disappointed that the Migration Advisory Committee is not recommending that this loophole be closed."
The Association of Professional Staffing Companies (APSCo) said that the Home Office's Migration Advisory Committee had proposed reforms to the current point-based system which would allow the graduates to become eligible for intra-company transfers.
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The transfers would be available to graduates from non-EU companies after just three months of employment at the sponsoring organisation, without that firm having to advertise vacancies in the UK first, according to APSCo.
Under a Freedom of Information request APSCo found that 29,240 non-EU IT workers came into the UK in 2008 on intra-company transfers, more than double the 14,255 non-EU workers coming into the UK to work in all the other professional service sectors combined.
"While the intra-company transfer system might not be exploited in the financial and legal sectors, there is evidence that it is being exploited in the IT sector," said APSCo chief executive Ann Swain.
"Using the system to bring in graduates would be wrong-headed and illogical. Employers should be required by law to advertise vacancies in the UK first before transferring employees from overseas offices. We are disappointed that the Migration Advisory Committee is not recommending that this loophole be closed."
Fujitsu Pension Trouble
A union has warned of strike action at Japanese electronics firm Fujitsu over plans to cut pension payments to its UK staff and impose a pay freeze.
Fujitsu, which employs 12,500 people in the UK, announced plans this week to cut up to 1,200 jobs and replace its final-salary pension.
The Unite union said 87% of its members taking part in a consultative ballot had voted in favour of strike action.
The firm declined to comment on the warning while consultations went on.
Unite said that if the pensions proposal went ahead, employees would be dismissed when the consultation period ends in September, and offered new contracts with the new pension arrangements.
It said some 4,000 pension scheme members would be hit by the company's plans, adding: "The union estimates that the proposed pension scheme change would reduce the total pay package of each employee by at least 15%."
Unite national officer Peter Skyte said: "Fujitsu Services is not struggling or failing. It is a highly profitable and successful company but one which is seeking to take advantage of the recession to attack jobs, pay, pensions and conditions.
"Our members are insisting that the company should pay fairly and provide decent pensions for all its employees.
"Following the announcement of 1,200 redundancies, they are now calling for the issue of job cuts to be included in any ballot for formal industrial action."
The company has 26 Information Technology (IT) services offices in England, Wales and Scotland.
Those in England are in Basingstoke, Birmingham, Blackpool, Bolton, Bracknell, Bristol, Crewe, Exeter, London, Lytham St Annes, Manchester, Newcastle upon Tyne, Slough, Solihull, Staines, Stevenage, Wakefield, Warrington, Warwick and Winnersh.
In Wales there are offices in Cardiff and Swansea and in Scotland in Dundee, Glasgow, Edinburgh and Inverness.
The company also has premises in Belfast and Londonderry, in Northern Ireland.
Fujitsu, which employs 12,500 people in the UK, announced plans this week to cut up to 1,200 jobs and replace its final-salary pension.
The Unite union said 87% of its members taking part in a consultative ballot had voted in favour of strike action.
The firm declined to comment on the warning while consultations went on.
Unite said that if the pensions proposal went ahead, employees would be dismissed when the consultation period ends in September, and offered new contracts with the new pension arrangements.
It said some 4,000 pension scheme members would be hit by the company's plans, adding: "The union estimates that the proposed pension scheme change would reduce the total pay package of each employee by at least 15%."
Unite national officer Peter Skyte said: "Fujitsu Services is not struggling or failing. It is a highly profitable and successful company but one which is seeking to take advantage of the recession to attack jobs, pay, pensions and conditions.
"Our members are insisting that the company should pay fairly and provide decent pensions for all its employees.
"Following the announcement of 1,200 redundancies, they are now calling for the issue of job cuts to be included in any ballot for formal industrial action."
The company has 26 Information Technology (IT) services offices in England, Wales and Scotland.
Those in England are in Basingstoke, Birmingham, Blackpool, Bolton, Bracknell, Bristol, Crewe, Exeter, London, Lytham St Annes, Manchester, Newcastle upon Tyne, Slough, Solihull, Staines, Stevenage, Wakefield, Warrington, Warwick and Winnersh.
In Wales there are offices in Cardiff and Swansea and in Scotland in Dundee, Glasgow, Edinburgh and Inverness.
The company also has premises in Belfast and Londonderry, in Northern Ireland.
TCS, Wipro, Infy win 1.5 Billion Contract
TCS, Infosys, Wipro win $1.5 billion outsourcing contract
With this, BP has reduced the number of its technology vendors from 40 to five and expects to save as much as $500 million over the next five years
Bangalore: India’s top three technology firms—Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd and Wipro Ltd—have each won part of a five-year software outsourcing contract valued at around $1.5 billion (Rs7,320 crore) from British oil and gas firm BP Plc.
IBM Corp. and Accenture Ltd are the other vendors.
With this, BP has reduced the number of its technology vendors from 40 to five and expects to save as much as $500 million over the next five years, a company spokesman said.
“Over the last 12 months, we undertook an effort to consolidate our technology vendor base and eliminated 35 of them. These five were selected for scale and ability to support us from around the world,” BP’s spokesman David Nicholas said over the phone from London. “Otherwise, with 40 vendors, we would have spent $2 billion.”
He declined to specify individual contract values.
IBM said in a statement it has won the largest pie of the contract to manage and run all of BP’s enterprise applications and service desk responsibilities, but did not specify the value. The three Indian vendors, which were part of the earlier line-up of 40 information technology firms, will carry out application development and maintenance work for the British firm.
“The engagement with BP underscores our ability to help global corporations become more competitive in the current economic scenario...,” N. Chandrasekaran, chief operating officer and executive director of TCS, said in a statement.
The Indian vendors may not earn significant revenue from the deal, but it will help them gain expertise in the manufacturing domain in the European market, where they are keen to expand services, said Sabyasachi Prasad, partner with Tholons Inc., an advisory firm for offshore exploration firms.
Europe accounted for around 30% of India’s software exports of $46.3 billion in fiscal 2009. BP’s chief information officer Dana Deasy said in a statement issued by Infosys that the deal would help BP simplify and streamline processes and bring down its overall cost base.
In July, BP said it had already exceeded the $2 billion reduction in cash costs targeted for 2009 and expected a further $1 billion in savings over the rest of the year.
“Our extensive capabilities and experience in oil and gas domain will enable us to deliver significant value to the energy major’s business,” Suresh Vaswani, joint chief executive at Wipro, said in a statement.
With this, BP has reduced the number of its technology vendors from 40 to five and expects to save as much as $500 million over the next five years
Bangalore: India’s top three technology firms—Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd and Wipro Ltd—have each won part of a five-year software outsourcing contract valued at around $1.5 billion (Rs7,320 crore) from British oil and gas firm BP Plc.
IBM Corp. and Accenture Ltd are the other vendors.
With this, BP has reduced the number of its technology vendors from 40 to five and expects to save as much as $500 million over the next five years, a company spokesman said.
“Over the last 12 months, we undertook an effort to consolidate our technology vendor base and eliminated 35 of them. These five were selected for scale and ability to support us from around the world,” BP’s spokesman David Nicholas said over the phone from London. “Otherwise, with 40 vendors, we would have spent $2 billion.”
He declined to specify individual contract values.
IBM said in a statement it has won the largest pie of the contract to manage and run all of BP’s enterprise applications and service desk responsibilities, but did not specify the value. The three Indian vendors, which were part of the earlier line-up of 40 information technology firms, will carry out application development and maintenance work for the British firm.
“The engagement with BP underscores our ability to help global corporations become more competitive in the current economic scenario...,” N. Chandrasekaran, chief operating officer and executive director of TCS, said in a statement.
The Indian vendors may not earn significant revenue from the deal, but it will help them gain expertise in the manufacturing domain in the European market, where they are keen to expand services, said Sabyasachi Prasad, partner with Tholons Inc., an advisory firm for offshore exploration firms.
Europe accounted for around 30% of India’s software exports of $46.3 billion in fiscal 2009. BP’s chief information officer Dana Deasy said in a statement issued by Infosys that the deal would help BP simplify and streamline processes and bring down its overall cost base.
In July, BP said it had already exceeded the $2 billion reduction in cash costs targeted for 2009 and expected a further $1 billion in savings over the rest of the year.
“Our extensive capabilities and experience in oil and gas domain will enable us to deliver significant value to the energy major’s business,” Suresh Vaswani, joint chief executive at Wipro, said in a statement.
Weak Server Sales in Europe
European server sales have dropped to the lowest level ever recorded by analyst IDC.
Research and analyst firm IDC has reported the lowest levels of server revenue it has ever seen in the second quarter of 2009.
According to IDC’s Quarterly Server Tracker for Europe, Middle East and Africa (EMEA), server vendor revenue in the second quarter of 2009 reached $2.9bn (£1.8bn), 35.8 per cent down on the same period last year, with the number of servers shipped dropping below half a million, 33.9 per cent down on 2008.
"Conditions remain tough because customers have been limiting IT spending to the bare essentials to keep their IT infrastructure running, and this has negatively impacted hardware investment," said IDC analyst for European Systems and Infrastructures Solutions Beatriz Valle.
"IDC sees signs of stabilisation this quarter, including modest growth in average selling prices and quasi-flat quarter-on-quarter revenue decline."
Virtualisation on x86 systems was seen as the growth engine by server vendors hoping for a traditionally strong fourth quarter, according to the research. But IDC pointed out that it would take much longer than that for EMEA server revenue to match the peak of $5.4bn (£3.3bn) seen in the fourth quarter of 2007.
IDC confirmed the market trend towards x86 servers, which outperformed non-x86 servers, taking 52.3 per cent of total revenue, declining 33 per cent from last year. This compares with a steeper 38.6 per cent decline for non-x86 systems.
IDC's European Systems and Infrastructure Solutions research analyst Giorgio Nebuloni said that blade systems are expected to be less affected by the economic downturn, due to increased consolidation within budget-constrained companies.
"[Vendors are] escalating the number of integrated, richly configured solution blocks based on a scalable layer of blade servers, in an attempt to decommoditise the upper end of the x86 business," he said.
Windows and Linux-based systems showed similar annual declines of about 32 per cent, but Windows was the only main operating system whose market share increased both quarterly and annually. Operating systems running on non-x86 hardware were worst hit, with Unix system revenue below $1bn (£611m) for the second consecutive quarter, with revenue down 38.7 per cent annually.
HP was EMEA's top server vendor for the sixth consecutive quarter, with ProLiant server sales worth around $700m (£428m), 72 per cent of its revenue, up from 66.7 per cent in the same quarter of 2008.
In second place was IBM continuing the transition from System p to Power systems, and growing its market share 1.4 per cent. Power systems revenue edged closer to $400m (£244m), accounting for 41.9 per cent of the vendor’s total. However, mainframe revenue dropped by nearly half, down 46.7 per cent annually.
Research and analyst firm IDC has reported the lowest levels of server revenue it has ever seen in the second quarter of 2009.
According to IDC’s Quarterly Server Tracker for Europe, Middle East and Africa (EMEA), server vendor revenue in the second quarter of 2009 reached $2.9bn (£1.8bn), 35.8 per cent down on the same period last year, with the number of servers shipped dropping below half a million, 33.9 per cent down on 2008.
"Conditions remain tough because customers have been limiting IT spending to the bare essentials to keep their IT infrastructure running, and this has negatively impacted hardware investment," said IDC analyst for European Systems and Infrastructures Solutions Beatriz Valle.
"IDC sees signs of stabilisation this quarter, including modest growth in average selling prices and quasi-flat quarter-on-quarter revenue decline."
Virtualisation on x86 systems was seen as the growth engine by server vendors hoping for a traditionally strong fourth quarter, according to the research. But IDC pointed out that it would take much longer than that for EMEA server revenue to match the peak of $5.4bn (£3.3bn) seen in the fourth quarter of 2007.
IDC confirmed the market trend towards x86 servers, which outperformed non-x86 servers, taking 52.3 per cent of total revenue, declining 33 per cent from last year. This compares with a steeper 38.6 per cent decline for non-x86 systems.
IDC's European Systems and Infrastructure Solutions research analyst Giorgio Nebuloni said that blade systems are expected to be less affected by the economic downturn, due to increased consolidation within budget-constrained companies.
"[Vendors are] escalating the number of integrated, richly configured solution blocks based on a scalable layer of blade servers, in an attempt to decommoditise the upper end of the x86 business," he said.
Windows and Linux-based systems showed similar annual declines of about 32 per cent, but Windows was the only main operating system whose market share increased both quarterly and annually. Operating systems running on non-x86 hardware were worst hit, with Unix system revenue below $1bn (£611m) for the second consecutive quarter, with revenue down 38.7 per cent annually.
HP was EMEA's top server vendor for the sixth consecutive quarter, with ProLiant server sales worth around $700m (£428m), 72 per cent of its revenue, up from 66.7 per cent in the same quarter of 2008.
In second place was IBM continuing the transition from System p to Power systems, and growing its market share 1.4 per cent. Power systems revenue edged closer to $400m (£244m), accounting for 41.9 per cent of the vendor’s total. However, mainframe revenue dropped by nearly half, down 46.7 per cent annually.
Whats happening on the Cloud
According to my strategy professor Gordon Walker: "The trigger point [for shakeout to begin] is when one or more firms achieve a level of productivity that neither weaker rivals nor potential entrants can match. Thus, the shift in entry and exit rates is ultimately caused by successful and sustainable growth strategies.
"Only the presence of one or more firms whose dynamic capabilities create dominant, defendable market positions can deter entrants and force weak competitors to leave the industry." (From page 137 of Modern Competitive Strategy published by McGraw-Hill/Irwin)
Now I can tell you, to be sure, that there is no shortage of entrants into the cloud application platform industry.
Force.com may have started things off a few years ago but today there are at least 40 companies, and probably more than that, who play in the space.
An upcoming Gartner report profiles many of these companies. I don't think we're in the shakeout period yet; however, I put better-than-even money on the idea that we're in the last stages of expansion before a shakeout gets started.
I submit as evidence the following:
1. CogHead, a leading (but small) technology company in the cloud application platforms space, went bust last December. Its assets were ingested by the large, enterprise-flavoured SAP. I am not sure what SAP plans to do with those assets but I don't believe they bought CogHead's stuff to put it in a museum.
2. Microsoft Azure (and .NET Services), which is kind of a hybrid approach somewhere between Amazon EC2 (cloud system infrastructure) and Google App Engine (APaaS), will hit general availability sometime soon. This will mark the first big-time enterprise software player to have their own cloud application platform offering.
3. VMWare has jumped into the fray with its planned acquisition of SpringSource - whose CloudFoundry offering constitutes a cloud application platform, which has to be the main reason the company shelled out more than $400m for what is a tiny open-source company (admittedly, Spring, around which the core business of SpringSource is built, is a great and widely-adopted framework for Java programmers).
It will be interesting to see how VMWare plans to incorporate the SpringSource and Hyperic assets into its portfolio, and what (if any) other complementary acquisitions they will make. I'm not sure what to expect but if I were a small cloud application platform start-up counting on a neutral VMWare container within which to run my 'shared-hardware' multi-tenant platform, I'd be a little bit more worried than I was a few weeks ago.
The future for application platform as a service (APaaS) and other types of cloud application platforms looks very bright to me. I'm particularly bullish on APaaS because of the productivity benefits available to developers using a combination of development of new code and composition of business-oriented services and components offered by the provider.
I don't think there's a big enough market for all of the companies producing cloud application platform software to wind up as winners, though.
I also think the time is drawing close where the other mega-vendors - IBM, Oracle, and SAP - must either launch their own cloud application platforms or acquire one, or risk being left behind.
Keep your eyes open for acceleration in the demise of cloud application platform companies, and deceleration among new entrants.
Eric Knipp is senior research analyst at Gartner.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an 'as-is' basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.
"Only the presence of one or more firms whose dynamic capabilities create dominant, defendable market positions can deter entrants and force weak competitors to leave the industry." (From page 137 of Modern Competitive Strategy published by McGraw-Hill/Irwin)
Now I can tell you, to be sure, that there is no shortage of entrants into the cloud application platform industry.
Force.com may have started things off a few years ago but today there are at least 40 companies, and probably more than that, who play in the space.
An upcoming Gartner report profiles many of these companies. I don't think we're in the shakeout period yet; however, I put better-than-even money on the idea that we're in the last stages of expansion before a shakeout gets started.
I submit as evidence the following:
1. CogHead, a leading (but small) technology company in the cloud application platforms space, went bust last December. Its assets were ingested by the large, enterprise-flavoured SAP. I am not sure what SAP plans to do with those assets but I don't believe they bought CogHead's stuff to put it in a museum.
2. Microsoft Azure (and .NET Services), which is kind of a hybrid approach somewhere between Amazon EC2 (cloud system infrastructure) and Google App Engine (APaaS), will hit general availability sometime soon. This will mark the first big-time enterprise software player to have their own cloud application platform offering.
3. VMWare has jumped into the fray with its planned acquisition of SpringSource - whose CloudFoundry offering constitutes a cloud application platform, which has to be the main reason the company shelled out more than $400m for what is a tiny open-source company (admittedly, Spring, around which the core business of SpringSource is built, is a great and widely-adopted framework for Java programmers).
It will be interesting to see how VMWare plans to incorporate the SpringSource and Hyperic assets into its portfolio, and what (if any) other complementary acquisitions they will make. I'm not sure what to expect but if I were a small cloud application platform start-up counting on a neutral VMWare container within which to run my 'shared-hardware' multi-tenant platform, I'd be a little bit more worried than I was a few weeks ago.
The future for application platform as a service (APaaS) and other types of cloud application platforms looks very bright to me. I'm particularly bullish on APaaS because of the productivity benefits available to developers using a combination of development of new code and composition of business-oriented services and components offered by the provider.
I don't think there's a big enough market for all of the companies producing cloud application platform software to wind up as winners, though.
I also think the time is drawing close where the other mega-vendors - IBM, Oracle, and SAP - must either launch their own cloud application platforms or acquire one, or risk being left behind.
Keep your eyes open for acceleration in the demise of cloud application platform companies, and deceleration among new entrants.
Eric Knipp is senior research analyst at Gartner.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an 'as-is' basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.
US should be concerned about OutSourcing
From steel to textiles, industries that once employed cities worth of Americans have disappeared, the work heading overseas. The common argument is that globalization is nothing to worry about in the long view because those lost jobs, many of them blue-collar, are being replaced with high-tech ones.
However, in this flat world, even high-tech, high-skill jobs are heading overseas — often with the United States’ urging, says Ron Hira, assistant professor of public policy at Rochester Institute of Technology.
“The narrative is offshoring doesn’t affect the total number of jobs in the U.S., what happens is the change in the mix,” said Hira, who wrote a chapter about the offshoring of research and development for Manufacturing a Better Future for America, published in July by the Alliance for American Manufacturing. “The problem with that is it’s not clear it’s only low-level jobs moving offshore. What it doesn’t talk about is the fact trade can be win/lose. When China gets better at the things the U.S. is good at, the U.S. can get poorer.”
Hira, also the author of Outsourcing America, in 2005, talked recently about his views. Here are excerpts:
On jobs moving overseas:
Hewlett-Packard Co., when it took over Electronic Data Systems, announced it was going to lay off about 24,000 workers as part of the restructuring plan. That work is not going to disappear. At least half of those jobs will end up in low-cost countries somewhere. They’ll be basically offshored.
IBM has gone from a 6,000 headcount in 2003 in India to, they won’t say exactly how many, but estimates are over 90,000. That’s a 16-fold increase in six years.
People say these are kind of the lower-wage, lower-level jobs within IBM, within EDS. But that’s not true, either. There are a number of R&D centers that are being opened up in India and China. Boeing just recently announced an R&D center opening in Bangalore (India). Google has a facility in Bangalore. Microsoft has cutting-edge basic research being done in China. The offshoring of R&D and innovation is clearly happening. Clearly, high-skill, high-wage jobs are moving offshore.
On how much of this is going on:
No one has a really good handle, in part because the companies have a strong interest in not talking about these things. They don’t want to get the bad press on it. They don’t want to get on the Lou Dobbs list, so to speak, of companies that are offshoring. They don’t want their current employees to know because they need a lot of them to train their foreign replacements. One of the main things, (they don’t) want their customers to know. Once the customer knows you’re offshoring work, they know you’re getting cost savings and they expect you to pass along some of those cost savings to them.
On how this is different from the rise of Japan in the 1980s:
They made better consumer electronics, they made better cars. They had a better management system. What did (GM) have to do? They learned the Toyota manufacturing system, they learned from Japan. This time around it’s not GM vs. Toyota. This time around it’s IBM competing its U.S. workers vs. its Indian workers. This time around, what do you do? How do you make these American workers justify their five-times salary differential?
On companies’ motivations:
From the companies’ point of view, they’re acting rationally. One of the big problems in the public discussion was really started in 2004 when presidential candidate John Kerry called CEOs who offshore and outsource “Benedict Arnolds.”
The CEOs of these companies making the decisions aren’t compensated by how many U.S. workers they have (or) how much R&D they keep in the U.S. vs. Singapore or China. They’re compensated by their profits, their focus on shareholders. We have a systems issue here, where the interest of IBM or Kodak isn’t necessarily in the interest of the U.S. They’re global companies — why should they care more about their U.S. workers than their Indian workers or their Chinese workers?
Sam Palmisano, the CEO of IBM, wrote sort of the manifesto — “The Globally Integrated Enterprise” — where he talks about companies having been restructured and the notion of a multinational corporation has become anachronistic. In the past, you set up an IBM India to serve the Indian market (and) an IBM China to serve the Chinese market. That’s no longer true. We’re going to do the design and development from wherever it makes sense geographically. So we have an integrated enterprise across these country boundaries.
On what is to be done:
We should open our eyes that there’s a problem here from a U.S. national interest point of view. Politically, we have to have countervailing forces. These companies have huge influence over policy and the political process. They have millions of dollars they spend on lobbying. They have a huge presence in Washington and rightfully so; they’re big employers.
But there’s no group that represents the national interest in any way in Washington to counterbalance this. Which is why you see no action in Washington to address these issues. Who represents American workers in this debate? Who represents accountants? Who represents engineers? No one.
However, in this flat world, even high-tech, high-skill jobs are heading overseas — often with the United States’ urging, says Ron Hira, assistant professor of public policy at Rochester Institute of Technology.
“The narrative is offshoring doesn’t affect the total number of jobs in the U.S., what happens is the change in the mix,” said Hira, who wrote a chapter about the offshoring of research and development for Manufacturing a Better Future for America, published in July by the Alliance for American Manufacturing. “The problem with that is it’s not clear it’s only low-level jobs moving offshore. What it doesn’t talk about is the fact trade can be win/lose. When China gets better at the things the U.S. is good at, the U.S. can get poorer.”
Hira, also the author of Outsourcing America, in 2005, talked recently about his views. Here are excerpts:
On jobs moving overseas:
Hewlett-Packard Co., when it took over Electronic Data Systems, announced it was going to lay off about 24,000 workers as part of the restructuring plan. That work is not going to disappear. At least half of those jobs will end up in low-cost countries somewhere. They’ll be basically offshored.
IBM has gone from a 6,000 headcount in 2003 in India to, they won’t say exactly how many, but estimates are over 90,000. That’s a 16-fold increase in six years.
People say these are kind of the lower-wage, lower-level jobs within IBM, within EDS. But that’s not true, either. There are a number of R&D centers that are being opened up in India and China. Boeing just recently announced an R&D center opening in Bangalore (India). Google has a facility in Bangalore. Microsoft has cutting-edge basic research being done in China. The offshoring of R&D and innovation is clearly happening. Clearly, high-skill, high-wage jobs are moving offshore.
On how much of this is going on:
No one has a really good handle, in part because the companies have a strong interest in not talking about these things. They don’t want to get the bad press on it. They don’t want to get on the Lou Dobbs list, so to speak, of companies that are offshoring. They don’t want their current employees to know because they need a lot of them to train their foreign replacements. One of the main things, (they don’t) want their customers to know. Once the customer knows you’re offshoring work, they know you’re getting cost savings and they expect you to pass along some of those cost savings to them.
On how this is different from the rise of Japan in the 1980s:
They made better consumer electronics, they made better cars. They had a better management system. What did (GM) have to do? They learned the Toyota manufacturing system, they learned from Japan. This time around it’s not GM vs. Toyota. This time around it’s IBM competing its U.S. workers vs. its Indian workers. This time around, what do you do? How do you make these American workers justify their five-times salary differential?
On companies’ motivations:
From the companies’ point of view, they’re acting rationally. One of the big problems in the public discussion was really started in 2004 when presidential candidate John Kerry called CEOs who offshore and outsource “Benedict Arnolds.”
The CEOs of these companies making the decisions aren’t compensated by how many U.S. workers they have (or) how much R&D they keep in the U.S. vs. Singapore or China. They’re compensated by their profits, their focus on shareholders. We have a systems issue here, where the interest of IBM or Kodak isn’t necessarily in the interest of the U.S. They’re global companies — why should they care more about their U.S. workers than their Indian workers or their Chinese workers?
Sam Palmisano, the CEO of IBM, wrote sort of the manifesto — “The Globally Integrated Enterprise” — where he talks about companies having been restructured and the notion of a multinational corporation has become anachronistic. In the past, you set up an IBM India to serve the Indian market (and) an IBM China to serve the Chinese market. That’s no longer true. We’re going to do the design and development from wherever it makes sense geographically. So we have an integrated enterprise across these country boundaries.
On what is to be done:
We should open our eyes that there’s a problem here from a U.S. national interest point of view. Politically, we have to have countervailing forces. These companies have huge influence over policy and the political process. They have millions of dollars they spend on lobbying. They have a huge presence in Washington and rightfully so; they’re big employers.
But there’s no group that represents the national interest in any way in Washington to counterbalance this. Which is why you see no action in Washington to address these issues. Who represents American workers in this debate? Who represents accountants? Who represents engineers? No one.
Europe Lags behind US in Tech Spending
The rate of recovery in tech spending in the US is going to be twice the rate of Western and Central Europe next year as America steps out of recession quicker.
Europe has been experiencing a deep recession and with the problems originating in the US those factors have pointed to the recovery starting on the other side of the Atlantic first before spreading to the UK and the rest of Europe.
According to Forrester research the US will see a 8% increase in technology purchases next year compared to 4% in Western and Central Europe with €297bn being spent this year in Europe with the major countries all seeing drops ranging for IT goods and services from 12% here in Britain to 3% in France and Germany in 2009.
In the Forrester report, European IT market outlook 2009 to 2010, the analyst Andrew Barels, said that the market for IT goods and services would decline in Europe by 6.3% this year and would be slow to recover: "In both regards it will lag behind the US tech market, which will have a smaller drop in 2009 and stronger growth in 2010."
"The main reason? The European economic recession has turned ouyt to be deeper than the US recession, with Europe's downturn starting later and probably lasting into 2010 . All categories of IT purchases will be down, with computer equipment and communications equipment being especially weak," he stated in the report.
There have already been sings that the US economy has stablised with plenty of CEOs and financial officers making that call in statements accompanying recent financial results. But in Europe only Germany and France have officially recently come out of recession with the UK still lagging behind.
Europe has been experiencing a deep recession and with the problems originating in the US those factors have pointed to the recovery starting on the other side of the Atlantic first before spreading to the UK and the rest of Europe.
According to Forrester research the US will see a 8% increase in technology purchases next year compared to 4% in Western and Central Europe with €297bn being spent this year in Europe with the major countries all seeing drops ranging for IT goods and services from 12% here in Britain to 3% in France and Germany in 2009.
In the Forrester report, European IT market outlook 2009 to 2010, the analyst Andrew Barels, said that the market for IT goods and services would decline in Europe by 6.3% this year and would be slow to recover: "In both regards it will lag behind the US tech market, which will have a smaller drop in 2009 and stronger growth in 2010."
"The main reason? The European economic recession has turned ouyt to be deeper than the US recession, with Europe's downturn starting later and probably lasting into 2010 . All categories of IT purchases will be down, with computer equipment and communications equipment being especially weak," he stated in the report.
There have already been sings that the US economy has stablised with plenty of CEOs and financial officers making that call in statements accompanying recent financial results. But in Europe only Germany and France have officially recently come out of recession with the UK still lagging behind.
Thursday, September 10, 2009
US Unemployment Rate in July Increases
Job cuts announced by US employers jumped 31 per cent in July to over 97,000, increasing for the first time in six months, warning of a further hike in downsizing activity by the last quarter of the year, a report said on Wednesday.
After falling to a 15-month low in June planned job cuts announced by US employers jumped to 97,373 in July. It was the first increase in monthly job cuts since January, global outplacement consultancy Challenger, Gray & Christmas Inc said here in its latest report.
"After June's surprisingly low job-cut total, a July rebound was not entirely unexpected. While there are signs that the economy is stabilising and the pace of layoffs slowing, we are still a long way from a full recovery. In fact, monthly job cuts are likely to return to levels in excess of 100,000 by the fourth quarter," Challenger, Gray & Christmas CEO John Challenger said.
Job cuts had fallen 33 per cent in June to 74,393, the lowest monthly total since March 2008. The July total was 6 per cent lower than the same month a year ago, when employers announced 1,03,312 cuts. So far this year, employers have announced 9,94,048 job cuts, 72 per cent more than 5,79,260 layoffs through the first seven months of 2008.
The July surge in job cuts was led by firms in the transportation industry, which announced plans to reduce payrolls by 27,954 positions, a five-fold increase from the June layoff total of 5,587.
The telecommunications sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
Meanwhile, the automotive sector, which leads all other industries in year-to-date job cuts with 1,22,212 layoffs has seen layoff announcements decline in each of the last three months. These companies announced 2,716 job cuts in July.
"Declining layoffs in the automotive industry may not be indicative of a turnaround. Instead, these employers simply may not have any room for additional job cuts if they hope to build new fleets of more eco-friendly cars," Challenger added.
With consumer and business spending at a standstill transportation companies have little choice but to make further cutbacks in staffing, it said, adding, that a surge in hiring could take place around the holidays.
Other sectors which saw downsizing during July are government/non-profit (7,131), industrial goods (6,548) and financial (5,030). While economic conditions and cost-cutting claimed over 58,000 jobs, voluntary severance led to 15,070 job cuts in July.
Employers also announced plans to hire a total of 17,183 employees with retail (14,200) and aerospace/defence (1,160) leading the pack.
After falling to a 15-month low in June planned job cuts announced by US employers jumped to 97,373 in July. It was the first increase in monthly job cuts since January, global outplacement consultancy Challenger, Gray & Christmas Inc said here in its latest report.
"After June's surprisingly low job-cut total, a July rebound was not entirely unexpected. While there are signs that the economy is stabilising and the pace of layoffs slowing, we are still a long way from a full recovery. In fact, monthly job cuts are likely to return to levels in excess of 100,000 by the fourth quarter," Challenger, Gray & Christmas CEO John Challenger said.
Job cuts had fallen 33 per cent in June to 74,393, the lowest monthly total since March 2008. The July total was 6 per cent lower than the same month a year ago, when employers announced 1,03,312 cuts. So far this year, employers have announced 9,94,048 job cuts, 72 per cent more than 5,79,260 layoffs through the first seven months of 2008.
The July surge in job cuts was led by firms in the transportation industry, which announced plans to reduce payrolls by 27,954 positions, a five-fold increase from the June layoff total of 5,587.
The telecommunications sector also experienced an increase in layoffs last month with job cuts surging to 17,601 in July from 802 in June.
Meanwhile, the automotive sector, which leads all other industries in year-to-date job cuts with 1,22,212 layoffs has seen layoff announcements decline in each of the last three months. These companies announced 2,716 job cuts in July.
"Declining layoffs in the automotive industry may not be indicative of a turnaround. Instead, these employers simply may not have any room for additional job cuts if they hope to build new fleets of more eco-friendly cars," Challenger added.
With consumer and business spending at a standstill transportation companies have little choice but to make further cutbacks in staffing, it said, adding, that a surge in hiring could take place around the holidays.
Other sectors which saw downsizing during July are government/non-profit (7,131), industrial goods (6,548) and financial (5,030). While economic conditions and cost-cutting claimed over 58,000 jobs, voluntary severance led to 15,070 job cuts in July.
Employers also announced plans to hire a total of 17,183 employees with retail (14,200) and aerospace/defence (1,160) leading the pack.
TCS to hire 25000
Bangalore: In a move that could bring a smile to many faces, Tata Consultancy Services (TCS) has announced that it will hire 25,000 people globally in 2009, with 90 percent of them in India alone. Though the number is bigger when compared to the hiring these days, it is less than last year when TCS appointed around 35,000 people.
With this recruitment drive, TCS also plans to expand its presence into the tier-II cities in India. "We will be hiring 25,000 people this year, which means roughly 25 lakh square feet of work space required and, therefore, we need to grow outside the metros. Tier-II cities are our only focus for expansion in the country as the top rung are clogged and saturated," said Tanmoy Chakrabarty, Vice-President and Head of Government Industry Solutions unit at TCS.
Following this hiring spree, the total global manpower of TCS would go up to more than 1.8 lakh. This will put the IT services provider among large private Indian employers like Tata Steel, which has the total employee strength of two lakh. Going forward, the company, which has an estimated 32 percent market share, plans to cash in on the Indian government's plan to invest Rs. 40,000 crore on IT services.
Currently, 70 percent of the IT segment's revenue is from India, while the rest comes from the U.S., Latin America, Africa and South East Asian countries. However, the revenue contribution from Indian government businesses to the total company revenue of $6 billion is less than five percent, which the company intends to increase to more than 10 percent in the next three years.
With this recruitment drive, TCS also plans to expand its presence into the tier-II cities in India. "We will be hiring 25,000 people this year, which means roughly 25 lakh square feet of work space required and, therefore, we need to grow outside the metros. Tier-II cities are our only focus for expansion in the country as the top rung are clogged and saturated," said Tanmoy Chakrabarty, Vice-President and Head of Government Industry Solutions unit at TCS.
Following this hiring spree, the total global manpower of TCS would go up to more than 1.8 lakh. This will put the IT services provider among large private Indian employers like Tata Steel, which has the total employee strength of two lakh. Going forward, the company, which has an estimated 32 percent market share, plans to cash in on the Indian government's plan to invest Rs. 40,000 crore on IT services.
Currently, 70 percent of the IT segment's revenue is from India, while the rest comes from the U.S., Latin America, Africa and South East Asian countries. However, the revenue contribution from Indian government businesses to the total company revenue of $6 billion is less than five percent, which the company intends to increase to more than 10 percent in the next three years.
Tough for Indian IT Pros in UK
Bangalore: The UK government has accepted recommendations for stricter immigration norms and restricting job opportunities for skilled migrant workers from countries like India, reports Economic Times.
The Migration Advisory Committee (MAC) report submitted by the committee's Chairman, Professor David Metcalf to UK's Home Office last month recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from the current 17,000 pounds. This will make it tougher to earn points needed for allocation of work permits.
With more stringent norms, companies like TCS, Infosys, Wipro and Tech Mahindra which serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short term project assignments, may now have to look for local UK workers.
"These changes will ensure that businesses can recruit the skilled workers that the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce," Home Secretary Alan Johnson said in a statement issued by the UK Border Agency. He also added that the threshold of income at which migrant workers become eligible for work permits will now be raised to 20,000 pounds.
As per rules, companies will need to advertise for available positions for four weeks before employing migrant workers. "This will mean that, from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks - extended from two weeks - before companies can seek to employ individuals from outside Europe. This will ensure that British workers not only are first in line for jobs but also have more time in which to apply," the Home Office said.
MAC's recommendations for tougher intra-company transfer rules - a route adopted by many tech firms for sending Indian workers to work with customers onsite in the country, have also been accepted.
The Migration Advisory Committee (MAC) report submitted by the committee's Chairman, Professor David Metcalf to UK's Home Office last month recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from the current 17,000 pounds. This will make it tougher to earn points needed for allocation of work permits.
With more stringent norms, companies like TCS, Infosys, Wipro and Tech Mahindra which serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short term project assignments, may now have to look for local UK workers.
"These changes will ensure that businesses can recruit the skilled workers that the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce," Home Secretary Alan Johnson said in a statement issued by the UK Border Agency. He also added that the threshold of income at which migrant workers become eligible for work permits will now be raised to 20,000 pounds.
As per rules, companies will need to advertise for available positions for four weeks before employing migrant workers. "This will mean that, from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks - extended from two weeks - before companies can seek to employ individuals from outside Europe. This will ensure that British workers not only are first in line for jobs but also have more time in which to apply," the Home Office said.
MAC's recommendations for tougher intra-company transfer rules - a route adopted by many tech firms for sending Indian workers to work with customers onsite in the country, have also been accepted.
Morgan Stanley Looking at Exiting back office ops in India
Bangalore: U.S. bank Morgan Stanley is exploring the opportunities to exit its back-office operations in India. The bank, which was bailed out by the U.S. government, is looking at its options to sell the back-office unit that does IT development as well as finance and accounting-related work, reports the Economic Times.
Knowledge Process Outsourcing (KPO), equity research, complex financial modeling and portfolio analysis are among the work done here.
According to an investment banker, the potential value of the transaction could be $150-$200 million, in which the KPO operations have a share of $50 million. These operations employ around 2,000 people, of which 500 are KPO employees. Most of the operations are based out of Mumbai and a small part out of Pune.
The value of the deal will also depend on the amount of business the bank will sell. "The annual revenue run rate for Morgan Stanley's captive operations is $70-$80 million. So, the committed business could be around $500 million for five years," said a person with knowledge of the development.
Large Indian IT firms are the expected buyers, some of which already do development work for the bank. These include Infosys, Wipro and KPO firm like eClerx, which works for investment banks, travel and retail industry.
The need to convert fixed costs to variable costs by moving work done at the captive unit to third party vendors is among the factors which drive the sale of many captive units. When the work is outsourced to third party vendors, there is greater flexibility to increase or decrease work without having to hire a fixed number of employees.
Knowledge Process Outsourcing (KPO), equity research, complex financial modeling and portfolio analysis are among the work done here.
According to an investment banker, the potential value of the transaction could be $150-$200 million, in which the KPO operations have a share of $50 million. These operations employ around 2,000 people, of which 500 are KPO employees. Most of the operations are based out of Mumbai and a small part out of Pune.
The value of the deal will also depend on the amount of business the bank will sell. "The annual revenue run rate for Morgan Stanley's captive operations is $70-$80 million. So, the committed business could be around $500 million for five years," said a person with knowledge of the development.
Large Indian IT firms are the expected buyers, some of which already do development work for the bank. These include Infosys, Wipro and KPO firm like eClerx, which works for investment banks, travel and retail industry.
The need to convert fixed costs to variable costs by moving work done at the captive unit to third party vendors is among the factors which drive the sale of many captive units. When the work is outsourced to third party vendors, there is greater flexibility to increase or decrease work without having to hire a fixed number of employees.
Indian IT Companies Skip Campuses
Bangalore: With Nasscom, the software industry's apex body advising its members not to go to campuses for recruitment, the placements at engineering colleges has dried up. However, although 2008-09 was a difficult year for training and placement officers (TPO) at engineering colleges, 2009-10 could be the most critical year for campus placements, reports Economic Times.
JN Pitambare, Dean of Sinhagad Institute says, "Normally, 75-80 percent of the placements used to take place by mid-August. However, this year I will be happy if I am able to place even 10-15 percent of our students by December."
SV Dravid, TPO, DY Patil College of Engineering at Akurdi, near Pune said, "Last year, we had placed 150 students by this time. This year, not a single student has been placed. I hope the situation improves by December." Normally the big software companies finish recruitment by mid-August, placing around 75 percent of the college students.The core sector companies used to come from August, but this year they are non-committal.
Companies have been telling TPOs that their placement requirements are yet to be firmed up since things are not planned yet or they do not know how many projects they will get. "Most of the core companies are in a dilemma. They have promised to come for placements by December," said TPO Federation President Professor Shital Rawandale. Not only are there fewer jobs on offer for 2009-10 but the companies are adopting various techniques to defer the joining dates of candidates recruited last year or even to reject them.
Top colleges like the College of Engineering Pune (COEP) are also facing problems. "Of the 576 students placed last year, only 150 have joined till now. For the rest of them, joining has been deferred from July to December," said Assistant TPO, COEP, SA Meshram.
Some of the selected candidates are being asked to take more tests. With the recession, singing of bonds has also returned. "Some small and medium-sized software companies now want the candidates whom they had already selected to enter into two-year bonds," said a TPO.
JN Pitambare, Dean of Sinhagad Institute says, "Normally, 75-80 percent of the placements used to take place by mid-August. However, this year I will be happy if I am able to place even 10-15 percent of our students by December."
SV Dravid, TPO, DY Patil College of Engineering at Akurdi, near Pune said, "Last year, we had placed 150 students by this time. This year, not a single student has been placed. I hope the situation improves by December." Normally the big software companies finish recruitment by mid-August, placing around 75 percent of the college students.The core sector companies used to come from August, but this year they are non-committal.
Companies have been telling TPOs that their placement requirements are yet to be firmed up since things are not planned yet or they do not know how many projects they will get. "Most of the core companies are in a dilemma. They have promised to come for placements by December," said TPO Federation President Professor Shital Rawandale. Not only are there fewer jobs on offer for 2009-10 but the companies are adopting various techniques to defer the joining dates of candidates recruited last year or even to reject them.
Top colleges like the College of Engineering Pune (COEP) are also facing problems. "Of the 576 students placed last year, only 150 have joined till now. For the rest of them, joining has been deferred from July to December," said Assistant TPO, COEP, SA Meshram.
Some of the selected candidates are being asked to take more tests. With the recession, singing of bonds has also returned. "Some small and medium-sized software companies now want the candidates whom they had already selected to enter into two-year bonds," said a TPO.
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