NEW DELHI: Software companies, led by Infosys Technologies and Tata Consultancy Services, are set to report higher revenues for the December quarter as firms such as British Petroleum increased outsourcing, but a stronger rupee and higher wages could reduce profitability, say analysts. Although profitability may fall, industry may cheer the revival of order flow after more than four quarters of uncertainty on new businesses as companies in the West grappled with recession and credit crisis. Revenues may rise as much as 4% on quarter, some analysts say.
“The macro situation has improved. The order book is better now. Companies might outperform vis-a-vis guidance,’’ said Harit Shah, research analyst at Karvy Stock Broking. The $60-billion Indian IT sector that depends on the US and Europe for most of its revenues, has been facing tough business conditions for more than a year as their clients such as Citigroup and General Electric were cutting costs as the credit crisis reduced demand. But the situation has improved in the past few months with steady flow of orders as developed economies emerged out of recession. But the appreciation of the rupee against the US dollar, would reduce profitability.
“We are seeing stability and an improvement in demand that we had talked about the last quarter,’’ said Suresh Vaswani, joint CEO, AT Wipro Technologies. The rupee’s rise from 49-50 levels in Q2 to 46-47 levels in the third quarter will impact margins. For every 1% strengthening in rupee, margin impact can be up to 50 bps in large companies, analysts said.
The rupee has been one of the best performing currencies in the region in the December quarter as global funds poured money into India expecting a strong economic growth. The quarter saw deals like British Petroleum global vendor consolidation contract worth over $2 billion shared among others by TCS and Infosys. Also, implementation of software packages such as SAP and Oracle which were onsite heavy are now about 60% offshore. IT companies like HCL Technologies have gained from this shift and HCL’s buyout of Axon helped.
The revival of order flow has also brought in higher costs for companies as they paid more wages, in some cases as much as 11% more, to retain talent to execute orders. And companies could not raise the fees they charged for services as they had to compete aggressively for new orders. “There will be a margin impact of about 25 bps due to salary hikes and variable payout,” said Shashi Bhushan, senior research analyst at Prabhudas Lilladher. “Pricing has been muted with a positive bias that is not too bad for this year,”he said.
The revival of businesses may ensure continued order flows, but may not necessarily lead to rising profitability as the currency movements may be adverse. “Margins are not sustainable as the rupee is strengthening,” Bank of America-Merrill Lynch wrote in a report. BoA-ML sees rupee/dollar at 45 at March end and at Rs 43 at end December 2010 and this will have a negative impact on margins in coming quarters.
Wages will climb up even as pricing will be under pressure. Discretionary sales and marketing spends will also move up.
Showing posts with label Patni. Show all posts
Showing posts with label Patni. Show all posts
Monday, January 4, 2010
Friday, November 6, 2009
L&T Infotech In talks to acquire Patni
Bangalore: L&T Infotech, a part of Rs. 40,000 crore engineering and construction major Larsen & Toubro (L&T), is in advanced talks to acquire a majority shareholding in Patni Computer Services, the country's sixth largest software firm. According to sources close to the development, L&T has already completed the necessary diligence and form of the deal is being worked out, reports The Financial Express.
"L&T Infotech has been in talks with Patni for some time now. We have already completed due diligence," confirmed a senior L&T source, requesting anonymity.
The development has come after all three Patni brothers - Narendra Kumar, Gajendra Kumar and Ashok Kumar, finally decided to sell. The Patni brothers together hold around 48.30 percent stake.
In 2007, talks for a similar sale had ended in a standstill, as only Gajendra and Ashok were willing to give their holdings. Narendra has been actively involved in running the business, was not willing to give his share.
Another factor for a sale at this time is that General Atlantic also wants to exit from the company. The private equity firm has about 18 percent stake and had invested $100 million in Patni in September 2002.
The sources from industry said Patni hired Ambit Capital to conduct a valuation of the company.
The analysts said the size of the deal could vary around $1-1.5 billion. The share price of the company has been hovering at around Rs. 450 and it is likely to get Rs. 550-600 per share. Patni's scrip closed at Rs. 456.95, up 4.70 percent, on the Bombay Stock Exchange (BSE) on Wednesday.
"The company has $380 million in cash and equivalents on its books, so an offer price in the range of $1-1.5 billion would be fair," said an IT analyst. Patni had reported revenues of $718.9 million in the last financial year.
"This is a rumor and we do not comment on speculation," said Surjeet Singh, CFO, Patni Computers in an email response.
"I do not want to comment on speculation in the media," said Sudip Banerjee, CEO, L&T Infotech.
According to sources, if L&T Infotech acquires Patni, it would make the combined entity the fifth-largest software firm in India. L&T Infotech is currently stands at 11th place.
However, after been hit by TechMahindra in the bidding for fraud-hit Satyam Computer Services in April, L&T Infotech is being cautious about the Patni deal. But according to analysts, it could not afford to step too cautiously. "L&T Infotech has to move fast. Once the market goes up, say beyond the 20,000 mark, Patni or any other IT company will become a difficult buy," said a source.
AM Naik, Chairman and Managing Director, had said in an interview that he plans to make L&T Infotech a $1-billion company. Facing pressure on revenues from the infrastructure and construction sectors over the last one year because of the economic slowdown, L&T has focused on new drivers of growth, including infotech, power and oil and gas.
"L&T Infotech has been in talks with Patni for some time now. We have already completed due diligence," confirmed a senior L&T source, requesting anonymity.
The development has come after all three Patni brothers - Narendra Kumar, Gajendra Kumar and Ashok Kumar, finally decided to sell. The Patni brothers together hold around 48.30 percent stake.
In 2007, talks for a similar sale had ended in a standstill, as only Gajendra and Ashok were willing to give their holdings. Narendra has been actively involved in running the business, was not willing to give his share.
Another factor for a sale at this time is that General Atlantic also wants to exit from the company. The private equity firm has about 18 percent stake and had invested $100 million in Patni in September 2002.
The sources from industry said Patni hired Ambit Capital to conduct a valuation of the company.
The analysts said the size of the deal could vary around $1-1.5 billion. The share price of the company has been hovering at around Rs. 450 and it is likely to get Rs. 550-600 per share. Patni's scrip closed at Rs. 456.95, up 4.70 percent, on the Bombay Stock Exchange (BSE) on Wednesday.
"The company has $380 million in cash and equivalents on its books, so an offer price in the range of $1-1.5 billion would be fair," said an IT analyst. Patni had reported revenues of $718.9 million in the last financial year.
"This is a rumor and we do not comment on speculation," said Surjeet Singh, CFO, Patni Computers in an email response.
"I do not want to comment on speculation in the media," said Sudip Banerjee, CEO, L&T Infotech.
According to sources, if L&T Infotech acquires Patni, it would make the combined entity the fifth-largest software firm in India. L&T Infotech is currently stands at 11th place.
However, after been hit by TechMahindra in the bidding for fraud-hit Satyam Computer Services in April, L&T Infotech is being cautious about the Patni deal. But according to analysts, it could not afford to step too cautiously. "L&T Infotech has to move fast. Once the market goes up, say beyond the 20,000 mark, Patni or any other IT company will become a difficult buy," said a source.
AM Naik, Chairman and Managing Director, had said in an interview that he plans to make L&T Infotech a $1-billion company. Facing pressure on revenues from the infrastructure and construction sectors over the last one year because of the economic slowdown, L&T has focused on new drivers of growth, including infotech, power and oil and gas.
Tuesday, November 3, 2009
Mid Tier IT Companies eye local deals worth 2 Billion USD
Mumbai: As the big companies are chasing the lucrative domestic market, the mid tier technology firms like Patni Computer Systems and Hexaware are attempting to enter the market by jointly bidding with experienced bidders, reports The Economic Times.
The Indian government departments and other state owned firms will spend around $2 billion on IT during the next 12 months. Hexaware, MindTree and Patni are among the many mid-tier technology firms seeking to explore new business with an experienced partner.
For instance, Hexaware is pursuing some large deals as part of a consortium and several smaller ones on its own. Its strategy for the Indian market will be different from its strategy for overseas markets, said Hexaware's Vice Chairman and CEO, PR Chandrasekar.
"If we treat India as just another location for our services, it will not work. It will need fairly dedicated focus and some innovation on how we source talent and price our offerings. You also need to leverage your niche capabilities, especially if you are not one of the big players," said Chandrasekar, who was earlier with Wipro.
For putting better focus on the Indian market, companies such as Hexaware and Patni have recently formed focused business units. As Narendra Upasani heads Hexaware's India business, Deepak Khosla is responsible for growing Patni's revenues from the country.
Hexaware will work as part of a consortium because the large contracts in the government and public sector projects usually require the bidder to have a track record in executing similar projects.
Guru Malladi, a Partner at Ernst & Young said it will be challenging for mid tier technology firms to take on bigger rivals. "A Rs. 5,000 crore project, for example, can never be delivered by a single player. But I do see an element of challenge for mid-size players who have so far not operated in the domestic market. Large players have to sometimes rely on small players but they may not see value in mid-size players in terms of cost or efficiency arbitrage," said Malladi.
"Globally, this kind of scale is not available anywhere, even if it may not be the largest in revenues," said Jeya Kumar, CEO, Patni Computer.
Like Hexaware, Patni is also chasing contracts in the domestic market as part of a consortium. "With the kind of large deal sizes we are seeing, you have to have a multi-vendor strategy," added Kumar. Apart from the government, Hexaware will focus on sectors like travel and transport, insurance, hospitality and logistics, and technology offerings across sectors.
According to Malladi, the mid size players have to be more strategic in their outlook using their skills to enter the market. Hexaware, along with others like Patni and MindTree are turning towards India, drawn by the large opportunity and significant growth potential.
The Indian government departments and other state owned firms will spend around $2 billion on IT during the next 12 months. Hexaware, MindTree and Patni are among the many mid-tier technology firms seeking to explore new business with an experienced partner.
For instance, Hexaware is pursuing some large deals as part of a consortium and several smaller ones on its own. Its strategy for the Indian market will be different from its strategy for overseas markets, said Hexaware's Vice Chairman and CEO, PR Chandrasekar.
"If we treat India as just another location for our services, it will not work. It will need fairly dedicated focus and some innovation on how we source talent and price our offerings. You also need to leverage your niche capabilities, especially if you are not one of the big players," said Chandrasekar, who was earlier with Wipro.
For putting better focus on the Indian market, companies such as Hexaware and Patni have recently formed focused business units. As Narendra Upasani heads Hexaware's India business, Deepak Khosla is responsible for growing Patni's revenues from the country.
Hexaware will work as part of a consortium because the large contracts in the government and public sector projects usually require the bidder to have a track record in executing similar projects.
Guru Malladi, a Partner at Ernst & Young said it will be challenging for mid tier technology firms to take on bigger rivals. "A Rs. 5,000 crore project, for example, can never be delivered by a single player. But I do see an element of challenge for mid-size players who have so far not operated in the domestic market. Large players have to sometimes rely on small players but they may not see value in mid-size players in terms of cost or efficiency arbitrage," said Malladi.
"Globally, this kind of scale is not available anywhere, even if it may not be the largest in revenues," said Jeya Kumar, CEO, Patni Computer.
Like Hexaware, Patni is also chasing contracts in the domestic market as part of a consortium. "With the kind of large deal sizes we are seeing, you have to have a multi-vendor strategy," added Kumar. Apart from the government, Hexaware will focus on sectors like travel and transport, insurance, hospitality and logistics, and technology offerings across sectors.
According to Malladi, the mid size players have to be more strategic in their outlook using their skills to enter the market. Hexaware, along with others like Patni and MindTree are turning towards India, drawn by the large opportunity and significant growth potential.
Monday, September 28, 2009
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.
Saturday, September 26, 2009
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.
Saturday, August 1, 2009
British Telecom to cut 2,750 call center jobs in India
British telecom giant BT will transfer more than 2,000 call centre jobs from India back to the UK, chief executive Ian Livingston revealed during the firm's annual general meeting at the Barbican Centre in London.
BT will transfer at least 2,000 jobs to Britain from India, where it employs 11,000 customer service staff. However, the eventual number of job cuts in call centres will be closer to 2,750, representing half the group's 5,500 call-centre staff in India, the Times reported on Thursday.
The firm, however, insisted that its move had nothing to do with the quality of service offered in India. "This is not about customer service, as the service in our operations around the globe is of very similar standards. It is about the effective deployment of our resources. We have opportunities to bring some activities, carried out by our partners, back from outside the UK to permanent BT employees in the UK who are skilled to do this work," a company spokesperson said.
The pullout of jobs from India would be phased with no specific timescale set for the transfer of jobs. "This is part of a long-term strategy to reduce costs and the dependency on third parties globally," the spokesperson added.
Industry watchers in Bengaluru said the move would keep the local population, struggling with a deep recession, happy. Unemployment in the UK is at its highest in the last one decade and salaries have dropped - so has India's cost advantage.
Managing partner of consulting firm Browne & Mohan Dr. T.R. Madan Mohan says that while Indian firms charge about $18 per resource, in the UK charges have dropped to $22-23 per resource from $33 in December last year. "However, technology work, which requires high skills, may continue to be outsourced. BT had axed 6000 jobs last year in the UK and much of this work came to Tech Mahindra and HCL," he says.
The firm, he adds, was looking at more high-end outsourcing and may consider players such as Patni, HCL, Infosys, and Subex.
The primary hit for Indian IT services vendors - mostly the top five players - will come when low-end work contracts are not renewed next year, says engagement manager with Zinnov Karthik Ananth. A spokesperson said that by next year, approximately 4,000 less people will be contracted in India than was the case in early 2008.
"The BT Global Business Services division, which mainly offshored to APAC countries, has been a loss making unit. The rationalisation of headcount would be to cut costs and scale down operations," he says.
In May, BT had announced that it will cut 15,000 more jobs this year after it reported a pre-tax loss of £1.34bn for the 12 months till March 31.The telecom giant had cut 15,000 jobs last year.
Last year, the majority of the job cuts were in the area of indirect labour, including agency, contractors, subcontractors and offshore workers, including those based in India. The telecom giant has a global workforce of 150,000 and employs 90,000 directly in the UK.
The firm has steered clear of compulsory layoffs in Britain and hoped to cut the jobs through natural wastage and voluntary redundancies.
Source: Asian Age
BT will transfer at least 2,000 jobs to Britain from India, where it employs 11,000 customer service staff. However, the eventual number of job cuts in call centres will be closer to 2,750, representing half the group's 5,500 call-centre staff in India, the Times reported on Thursday.
The firm, however, insisted that its move had nothing to do with the quality of service offered in India. "This is not about customer service, as the service in our operations around the globe is of very similar standards. It is about the effective deployment of our resources. We have opportunities to bring some activities, carried out by our partners, back from outside the UK to permanent BT employees in the UK who are skilled to do this work," a company spokesperson said.
The pullout of jobs from India would be phased with no specific timescale set for the transfer of jobs. "This is part of a long-term strategy to reduce costs and the dependency on third parties globally," the spokesperson added.
Industry watchers in Bengaluru said the move would keep the local population, struggling with a deep recession, happy. Unemployment in the UK is at its highest in the last one decade and salaries have dropped - so has India's cost advantage.
Managing partner of consulting firm Browne & Mohan Dr. T.R. Madan Mohan says that while Indian firms charge about $18 per resource, in the UK charges have dropped to $22-23 per resource from $33 in December last year. "However, technology work, which requires high skills, may continue to be outsourced. BT had axed 6000 jobs last year in the UK and much of this work came to Tech Mahindra and HCL," he says.
The firm, he adds, was looking at more high-end outsourcing and may consider players such as Patni, HCL, Infosys, and Subex.
The primary hit for Indian IT services vendors - mostly the top five players - will come when low-end work contracts are not renewed next year, says engagement manager with Zinnov Karthik Ananth. A spokesperson said that by next year, approximately 4,000 less people will be contracted in India than was the case in early 2008.
"The BT Global Business Services division, which mainly offshored to APAC countries, has been a loss making unit. The rationalisation of headcount would be to cut costs and scale down operations," he says.
In May, BT had announced that it will cut 15,000 more jobs this year after it reported a pre-tax loss of £1.34bn for the 12 months till March 31.The telecom giant had cut 15,000 jobs last year.
Last year, the majority of the job cuts were in the area of indirect labour, including agency, contractors, subcontractors and offshore workers, including those based in India. The telecom giant has a global workforce of 150,000 and employs 90,000 directly in the UK.
The firm has steered clear of compulsory layoffs in Britain and hoped to cut the jobs through natural wastage and voluntary redundancies.
Source: Asian Age
Lower Salaries for Laid of Techies
Bangalore: Till a few months ago, IT professional T.V. George was earning Rs.70,000 per month, plus perks. But after losing his high-paying job, and being unemployed for three months, George, 31, has started giving tuitions in mathematics and physics to aspiring engineering students in his neighbourhood.
"Now, I am earning Rs.15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," George, who was employed with a top U.S. IT company, told IANS.
"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."
George is not alone. Recession has hit the IT sector in Bangalore, with scores of techies losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends.
Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.
Today he has a job, but as a content writer in a tech firm.
"Thankfully, writing has been my forte. So, I landed this job of a content writer. Otherwise I would have been in a soup. Since I cannot afford to stay in Bangalore without a job, I compromised and settled for the new job with a much lower pay package," said Dutta.
Scores of IT and ITES professionals in Bangalore have lost their jobs in recent times, an effect of the global economic meltdown. But there is no precise count of the numbers.
According to the latest employment and business outlook report by Bangalore-based staffing firm Teamlease, at 23 percent the attrition rate in this city is higher than in any other city in India.
The report was based on interviews with HR heads, CEOs and senior executives of 495 companies in Bangalore, Chennai, Hyderabad, Kolkata and Pune.
"The city accounted for the highest attrition rate. IT accounts for over 80 percent of the city's total labour pool. The attrition rate was 23 percent in the last quarter, against the previous quarter's 16 percent. Much of the attrition could be involuntary attrition (or layoffs)," Teamlease General Manager Surabhi Mathur-Gandhi said.
India's Silicon Valley has seen thousands of people getting pink slips in recent months. And many more are under the threat of losing their jobs.
"It's painful to lose your job, in today's expensive world. Those who have lost their jobs are desperate now, thus they are settling for low paying jobs," Karthik Shekhar, General Secretary of UNITES-Professionals, an unrecognised union of IT/Call Centre/BPO employees, told IANS.
"Every day we meet young men and women who have lost their IT jobs recently. All they want is a job. But getting a job in the IT sector is very difficult. So, they have no option but to settle for jobs outside their fields and that too with low paying packages," Shekhar added.
It's encouraging that today's youths are ready to move ahead in their lives. Instead of waiting for the economy to revive, IT professionals have started exploring other fields and this is a positive sign," said B.N. Gangadhar, professor of psychiatry at the National Institute of Mental Health and Neuro Sciences (Nimhans), Bangalore.
Mohammed Khan, a trained software engineer, told IANS: "Initially it was difficult, but I am happy with my choice. After losing my job with an IT firm, now I am working as a sales executive. I am hoping the economy will recover soon and all the techies who have lost their jobs will get new jobs in their field."
Source: IANS
"Now, I am earning Rs.15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," George, who was employed with a top U.S. IT company, told IANS.
"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."
George is not alone. Recession has hit the IT sector in Bangalore, with scores of techies losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends.
Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.
Today he has a job, but as a content writer in a tech firm.
"Thankfully, writing has been my forte. So, I landed this job of a content writer. Otherwise I would have been in a soup. Since I cannot afford to stay in Bangalore without a job, I compromised and settled for the new job with a much lower pay package," said Dutta.
Scores of IT and ITES professionals in Bangalore have lost their jobs in recent times, an effect of the global economic meltdown. But there is no precise count of the numbers.
According to the latest employment and business outlook report by Bangalore-based staffing firm Teamlease, at 23 percent the attrition rate in this city is higher than in any other city in India.
The report was based on interviews with HR heads, CEOs and senior executives of 495 companies in Bangalore, Chennai, Hyderabad, Kolkata and Pune.
"The city accounted for the highest attrition rate. IT accounts for over 80 percent of the city's total labour pool. The attrition rate was 23 percent in the last quarter, against the previous quarter's 16 percent. Much of the attrition could be involuntary attrition (or layoffs)," Teamlease General Manager Surabhi Mathur-Gandhi said.
India's Silicon Valley has seen thousands of people getting pink slips in recent months. And many more are under the threat of losing their jobs.
"It's painful to lose your job, in today's expensive world. Those who have lost their jobs are desperate now, thus they are settling for low paying jobs," Karthik Shekhar, General Secretary of UNITES-Professionals, an unrecognised union of IT/Call Centre/BPO employees, told IANS.
"Every day we meet young men and women who have lost their IT jobs recently. All they want is a job. But getting a job in the IT sector is very difficult. So, they have no option but to settle for jobs outside their fields and that too with low paying packages," Shekhar added.
It's encouraging that today's youths are ready to move ahead in their lives. Instead of waiting for the economy to revive, IT professionals have started exploring other fields and this is a positive sign," said B.N. Gangadhar, professor of psychiatry at the National Institute of Mental Health and Neuro Sciences (Nimhans), Bangalore.
Mohammed Khan, a trained software engineer, told IANS: "Initially it was difficult, but I am happy with my choice. After losing my job with an IT firm, now I am working as a sales executive. I am hoping the economy will recover soon and all the techies who have lost their jobs will get new jobs in their field."
Source: IANS
Sunday, April 12, 2009
2009 The Year Ahead for Indian IT
With sinking profits, eroding margins, cost-cuttings and an acquisition bid gone awry, 2008 was a year with more jeers than cheers for the country's over $50 billion IT sector, which has seen nearly a decade of uninterrupted boom.
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal.
But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward.
With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.The currency volatility has also compounded the woes of the Indian IT sector.
If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.The sector also experienced slowdown in hiring.
Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal.
But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward.
With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.The currency volatility has also compounded the woes of the Indian IT sector.
If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.The sector also experienced slowdown in hiring.
Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Tuesday, March 17, 2009
TCS to Layoff More in Coming Days
Sources has revealed that the TCS, India 's largest software giant is going to take few tough steps to sustain in the present environment . Since economists and experts don't see a economy recovery in the near time , most of the customers are feeling the pain of slowdown and are pressurising the outsourcers to maximise the efficiencies .
To keep itself equipped against the global economic activity , the company has rolled out four measures which are going to be implemented with immediate effect .
The four measures are as follows :
There will be no recruitment of experienced professionals unless the company feels its extremely required .
People will be given cross skill training to manage the internal needs .
Since outsourcing means saving money by working from a low cost place , the company will concentrate more on offshore leverage . Non Critical positions on onsite will be moved to offshore .
There will be no promotions until the situation improves .
If you are in the underperforming section or in the under utilised section , the company might counsel you or might even ask you to leave .
Its not only TCS , all the companies are implementing different kind of measures to sustain in the present environment . It might not sound good to the employees , but if the companies has to sustain , they have to undertake this . The companies are trying to do everything so as to retain employees . As a employee of the organisation , its time for us to stand by them and help them sustain .
Do remember that When your company does good , it will always do good to you .
Monday, March 16, 2009
Patni Computer Systems: Layoff 400
MUMBAI / BANGALORE: After Tata Consultancy Services and IBM Global Services, Patni Computer Systems has laid off close to 400 employees citing non-performance issues. The country’s sixth-largest exporter said it was part of a routine appraisal exercise, carried out every year to weed out non-performers, and not related to any slowdown issues. “This was an absolutely regular appraisal that is important for any performance-driven organisation. It is something standard we do every year.
Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we’ve not issued any termination letters,” said Rajesh Padmanabhan, executive vice-president and head – global HR, Patni. He said the comparable figure for last year was 148.
In February this year, in the backdrop of a pronounced slowdown in the US, TCS had asked about 500 employees to leave for non-performance. Shortly afterwards, IBM was reported to have laid off 700 freshers. In case of TCS, the figure was about 0.5% of its total workforce and for IBM, about 1% of its India workforce. For Patni, the figure is closer to 3% of its 14,800 workforce. A Patni spokesperson said the company continued to be a net hirer. “Retrenchment is a word used when you are facing negative growth or no growth and cutting down on your labour costs. We continue to recruit — the number of new employees we intend to hire, according to our quarterly results communication, is about 2,000,” said a Patni spokesperson.
Industry sources said the employees were asked to leave a fortnight ago and some of them were even at the designation of project manager. “Usually, these do not happen at project manager levels. But I know in this case, a project manager working on a GE (General Electric) contract was asked to leave,” said a source, with knowledge on the development, who did not wish to be identified. Some people in the industry attributed the layoffs to the challenging business outlook Patni and other software companies were facing. “The performance index is being unfairly used on people on the bench. These employees are not working due to lack of projects,” said a person closely associated with a number of software companies. Bench is a term used to indicate employees who are not working on any available projects because they are undergoing training or are between projects. As a strategy, companies also maintain a bench in readiness for new projects. In a slowdown, because of postponement or cancellation of projects, the bench size increases more than what companies plan for. The Patni stock has risen 15% on the BSE in one month on the expectations of a buyback, which has now been announced for July 10. In the same period, the IT index has gained 2.43%.
Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we’ve not issued any termination letters,” said Rajesh Padmanabhan, executive vice-president and head – global HR, Patni. He said the comparable figure for last year was 148.
In February this year, in the backdrop of a pronounced slowdown in the US, TCS had asked about 500 employees to leave for non-performance. Shortly afterwards, IBM was reported to have laid off 700 freshers. In case of TCS, the figure was about 0.5% of its total workforce and for IBM, about 1% of its India workforce. For Patni, the figure is closer to 3% of its 14,800 workforce. A Patni spokesperson said the company continued to be a net hirer. “Retrenchment is a word used when you are facing negative growth or no growth and cutting down on your labour costs. We continue to recruit — the number of new employees we intend to hire, according to our quarterly results communication, is about 2,000,” said a Patni spokesperson.
Industry sources said the employees were asked to leave a fortnight ago and some of them were even at the designation of project manager. “Usually, these do not happen at project manager levels. But I know in this case, a project manager working on a GE (General Electric) contract was asked to leave,” said a source, with knowledge on the development, who did not wish to be identified. Some people in the industry attributed the layoffs to the challenging business outlook Patni and other software companies were facing. “The performance index is being unfairly used on people on the bench. These employees are not working due to lack of projects,” said a person closely associated with a number of software companies. Bench is a term used to indicate employees who are not working on any available projects because they are undergoing training or are between projects. As a strategy, companies also maintain a bench in readiness for new projects. In a slowdown, because of postponement or cancellation of projects, the bench size increases more than what companies plan for. The Patni stock has risen 15% on the BSE in one month on the expectations of a buyback, which has now been announced for July 10. In the same period, the IT index has gained 2.43%.
Wednesday, March 11, 2009
TCS to aid in outplacement of laid-off employees
The employees of Tata Consultancy Services (TCS), who would be the victims of the company's recent announcement of massive layoff, may find some relief as the firm plans to help them in outplacement. The company had said that it will be slashing around 1,300 employees or one percent of its workforce across its global centers.
The software giant will aid in outplacement, counseling and alternate positions in subsidiaries if available and it has also tied up with a few placement agencies across the country. It has already sacked around 100 employees in Chennai in the last two weeks.
"Recruitment of experienced professionals has been frozen unless these are approved by the respective business heads for project-specific skills. Wherever possible, we look to retain experienced professionals within the company to take on these roles," Ajoy Mukherjee, Vice President and Head, Global HR, TCS told Times of India via mail.
The company has also specified operating units to raise the performance bar and utilize resources in the most effective manner. The process for undertaking this is a detailed one and will result in some involuntary attrition. The e-mail comes in the wake of the company's Managing Director S Ramadorai admitting that the firm had lost a few clients in recent times. He has already hinted that the company might do away with employee variable pay this year, which accounts for 20 to 35 percent of salaries.
TCS, Wipro, Patni, Satyam Layoff News
TCS planning more layoffs, Wipro sacks 1000, Satyam to axe 4,500… It seems the days of pink slips have come to haunt
After delayed appraisals and cut in payouts, India’s fourth largest IT service provider, Satyam Computer is reported to downsize its workforce by a whopping 4,500 employees. This translates to a little less than 9 per cent of the 51,000 employees that the company employs. Company sources reveal that 1,500 employees have been put under the performance improvement plan (PIP), euphemism for employees put on watch list and asked to shape up or ship out. Apart from this, 3,000 others have not been given any increment in the last appraisal cycle, thereby indicating that their services are dispensable. Last Friday, company’s chief Ramalinga Raju had sent out an email to all employees warning them, especially the ones on the bench, to not bunk office and be in their best dress code, failing which they may face strict disciplinary action.
The company is reported to have handed pink slips to about 400 engineers and associates in Hyderabad, Pune and Visakhapatnam centers. The company management reportedly asked some of the employees to move out of its rolls to a contractual agreement or leave. Like its peers, Satyam too claims that the layoffs are a part of its appraisal system. Global head, human resources, SV Krishnan says, “Our experience has shown that around half of them exit the system either voluntarily or involuntarily. We have concluded our appraisal process some weeks back, and we believe we are witnessing similar trends like those in the past.”
According to a recent report Asia’s largest software exporter, Tata Consultancy Services is gearing up to another round of layoffs. The company also plans to discourage employees from staying on bench for more than two months on any of its centres. Incidentally, the company had also fired close to 500 employees, citing poor performance after its annual appraisal. It was also among the very first companies to announce a cut in the employee variable pay across the board.
The company which sees some project delays this quarter, but no cancellations, terms this as an employee utilisation exercise. The process will involve counselling employees and training them. Employees would be asked to undertake projects on which they have never worked on and will have to update their skills. Recently, TCS also retrenched 15 employees from its Australian subsidiary. Interestingly, last month too, the company had shown door to some 25 employees from its Kolkata and
The bad news has come from India’s third largest IT outsourcer, Wipro Technologies too. The company has already laid off 1,000 employees, and another 2,000 employees have been put on scanner. The company is reviewing the performance of 60,000 global IT services employees from the senior leadership team down to the person with one-year experience.
Terming it as a regular exercise, company’s corporate vice-president (human resources) Pratik Kumar said, “As the appraisal cycle gets over, a multi-layer review happens. Following that, people who have fallen in the lower quadrants of performance are put on watch. Some are asked to pull up and others are asked to move on.” He added that, “We took a closer look at our hiring and realised that we did not need to hire more, since there were people on the bench.” Many employees are being given counselling to improve their performance, others may be asked to leave.
At the end of the quarter ended June 2008, Wipro’s IT services employee base had fallen to 61,345 from 62,070 employees at the end of the previous quarter. TOP Indian Reality Shows
In July, Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance. Terming it as a routine exercise and not a slowdown setback, country’s sixth-largest exporter said that it is an effort to weed out non-performers. Rajesh Padmanabhan, vice-president and head, global HR, Patni, said, “This is an absolutely regular appraisal that is important for any performance-driven organisation. It is something standard we do every year.
Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we’ve not issued any termination letters.” However, industry sources reveal that the laid off employees included several project managers as well.
Incidentally, while in case of TCS, the retrenched number was about 0.5 per cent of the workforce, for Patni, it made for closer to 3 per cent of the 14,800-strong workforce. Narendra K Patni, Chairman and CEO, Patni Computer Systems said, “The overall market environment remains challenging with prevailing global uncertainties. We are cautious in our short-term outlook but remain positive on long-term prospects and are continuing our investments in identified areas”.
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