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.

Indian IT New Services Tougher Times

The year that passed by was one of the toughest in the decade for the Indian IT industry, which reeled under the impact of the worst-ever global economic crisis.

It was a reality check for the industry, with companies facing huge uncertainty on their business outlook for most part of the year as customers held back or cancelled investments in new technology.

Towards the close of the year, the industry began to show early signs of recovery, with customers starting to take decisions on IT spends.

Shares move upReflecting the sentiment, shares of IT companies such as Infosys, Wipro, and HCL Technologies touched 52-week high in the past week, as against yearly-lows in January-March. The BSE IT Index also touched the year's high of 5190 on December 24 as against 1987 on February 24.

The image of the industry took a hit at the beginning of the year due to the $1.4-billion fraud at Satyam Computers. The timely government intervention did mitigate the impact resulting in buy-out of the Hyderabad-based firm by the Mahindras.

On an optimistic note, implementing the learnings from previous downturn in 2001-02, the large and mid-size vendors managed to handle the changing market dynamics effectively by continuing to invest in newer service offerings and expanded their delivery footprint overseas. The smaller firms, however, bore the brunt of the downturn.

The economic crisis, triggered in September 2008, had forced the Indian IT firms to innovate, finetune their business model and tighten the cost structures as the volatile currency movement affected the earnings and pricing power came under pressure with clients seeking hefty discounts of 5-20 per cent.

Such a trend not only exerted pressure on the profit margins, but also forced the companies to shed their flab, resulting in an increase in forced attrition. Though wage cuts and pay hike deferrals were more pronounced till the middle of the year, the situation improved over the past few months, companies have started effecting wage hikes and firmed up their hiring plans for the next year.

Vendor consolidation

Vendors do expect stability in the pricing going forward in 2010. A clearer picture on the 2010 budgets was expected by the end of January-March quarter though some players feel that the 2010 budgets may stay flat over 2009. The consolidation in the market place is expected to benefit the Indian vendors as they are still able to offer the cost arbitrage when compared their global counterparts.

The large Indian players have gained from the recent vendor consolidation exercises at large global clients such as BP Plc, Nokia Siemens Networks, Telstra and Aviva among others.

New pricing models based on fixed price, pay-by-use and ticket-based pricing gained currency in 2009 as the outsourcers demonstrated cost savings to their customers from such newer engagement models. The Indian vendors expect their share of revenues from such newer pricing models to go up as compared to the traditional time and material projects, where billing is done on an hourly basis for the number of persons deployed on the projects.

Newer services

2009 also saw the Indian vendors launch newer services offerings on pay-by-use or Software-as-a-Service model through cloud computing initiatives.

Companies like Wipro have set up private cloud to test and deploy their applications internally to showcase to their customers.

The year saw the large vendors sharpen their focus on the domestic market, where the emergence of large IT deals acted as an offset to the slump in business from traditional markets in US and Europe.

Indian vendors also expanded their global footprint by setting up delivery locations in Latin America, where they see traction in the market place. The industry witnessed merger and acquisition activity on a moderate scale where companies picked up the captive units and smaller niche firms to enhance their competencies.

Capgemini to Up Head Count in India

Outsourcing firm Capgemini is all set to increase its India headcount with the opening of a new business information centre in Bangalore, according to a report in a business daily.

The Bangalore centre will take the company's India headcount beyond 21,000, an increase from its employee strength of 20,000 in home country France.

According to the company, the new centre in Bangalore would start with a workforce of 1,000, which would scale up to 3,000 in about 18 months.

Paul Nannetti, general manager of Capgemini's global business information service line, said, "Bangalore provides plenty of application and technical skills in information management." He added, "The company can scale-up there much more quickly than in onshore locations."

India is among the most attractive outsourcing destination for global MNCs including IBM, Accenture and Microsoft, giving tough competition to domestic players TCS, Wipro and Infosys. The country offers large pool of skilled and low-cost talent for business information management services that help companies improve their collection, use and analysis of data.

TCS to hire local talent in US

To expand its U.S. operation, TCS (Tata Consultancy Services) plans to hire 1,000 local workers at its new facility near Cincinnati, Ohio, by the end of 2010, reports DNA.

The company opened a $20 million delivery and software development centre in Milford, Cincinnati in Ohio, in March last year - in a bid to win federal contracts and be closer to the headquarters of its U.S. clients. Suryakant, President of TCS North America said, "The Cincinnati region is a great place for U.S. to recruit local talent to meet the demands of our customers as they grow out of the downturn."

The ohio facility is also aimed at securing what some major Indian service providrs are chasing - defence and avionics work. TCS is reportedly in talks with Boeing and Lockheed Martin for defence and aerospace contracts. This work can only be done by American citizens or green card holders.

Recently, the company bagged projects related to unemployment insurance for the states of Nebraska, New Mexico and Mississippi. "The U.S. by far our largest market and the seven hills park facility in Ohio plays an integral role in our strategy of putting our customers first," said Suryakant.

Currently, TCS employs 15,000 people in the U.S. The company has been shipping quite a bit of work to U.S, ignoring India's popular IT hubs.

IT Biggies after Foreign Grads

Mumbai: Indian IT companies are attracting talent from German, Swiss and Austrian universities to work in India as paid interns. Infosys, Wipro, Cognizant and Mindtree are among the nine companies that have taken the lead by joining hands with the Frankfurt-based Vibe Internships to create 50 paid internship positions in Mumbai, Chennai and Bangalore, said Dr Karl Kurbel, Project Supervisor of Vibe Internships and Head of the Business Informatics Chair at the European University Viadrina (EUV) to Business Line.


The interns will be paid between 150 euro and 600 euro (approximately Rs. 10,000-Rs. 40,000) a month for three- to six-month projects for business development, test automation, software development. Unlike U.S., European countries have been a bit reserved when it comes to sending people to India due to cultural issues and linguistic barriers.

Indian IT firms are evaluating this initiative in the context of their market development and brand building strategy for Germany. "As part of our brand building initiatives in Germany, we will get these interns to work out of our centers here as a result of which they will gain considerable exposure to the global delivery model. Our endeavor is to hire the best of these interns for client facing operations in Germany," said Nandita Gurjar, Senior Vice-President and Global HR Head, Infosys Technologies.

As of 2008, the market for IT services in Germany was 33 billion euro. While the case for offshore services is slowly registering in the minds of German managers, only a very few really believe it is a strategic imperative.

This program could help clear misgiving about offshoring causing job losses, as the participating offshore firms will create a significant number of new employment opportunities for top talent in Germany, said Peter Schumacher, President and CEO of Value Leadership Group, a strategic management consultancy firm, which advised Prof Kurbel and Vibe Internships for the initiative.

Puneet Jetli, Head, People Function, at the Bangalore-based Mindtree Consulting, said the company was still working out the stipend details for the initiative. "We will try to structure the stipend in such a way that the interns can help recover the costs as well as see a bit of India," he said.

Cognizant, Hexaware and L&T Infotech have also agreed to participate in this internship program.

TCS Hires 300 for US Center

Mumbai: Tata Consultancy Services (TCS) has hired around 300 associates for its North America Domestic Delivery Center, TCS Seven Hills Park. Seven Hills Park provides a wide-range of IT solutions, consulting, business process outsourcing and engineering services for TCS customers across industries including banking and financial services, life-science and health care, as well as manufacturing and retail.

"I welcome these new associates into the TCS family and am sure they will help our customers achieve even greater success in the future," TCS's Chief Executive Officer and Managing Director, N Chandrasekaran, said.

TCS Seven Hills Park is also the location of TCS's new North American Training Center. Over the last several months, more than 225 associates have joined the company from top universities throughout the country, the release said. TCS has over 1,40,000 trained IT consultants in 42 countries.

TCS using UK as BPO Expansion Strategy

TCS uses the UK as a BPO expansion strategy template
Tata Consultancy Service's UK division, the flagship for its BPO services business, provided a strategic update on BPO last week. TCS generates $680 million in annualised revenues from its BPO division - with more than $250 million coming from its $2.5 billion, nine-and-a-half-year deal with Citigroup, taking its global BPO delivery capability to 27,000 and boosting its financial services BPO expertise.

The template for BPO expansion
The UK, accounting for 29% of revenues, is TCS's most important market because it contains prominent clients on platform BPO deals: Pearl Group on TCS's BaNCS financial services software; media business Emap on its finance and accounting platform; Deutsche Bank on TCS investment reconciliation utility Aspire; and IATA using a proprietary data extraction hosted solution.

These impressive deals were won thanks to its focus on building a domestic business development team in the UK that can engage at a senior level with clients. TCS has also acquired onshore delivery capability. Heartened by its success, the company wants to replicate this model in the US and continental Europe.

A cautionary note on platform BPO
TCS should be proud of what it has achieved in the UK BPO market. Against its many doubters, it has managed to develop and begin the rollout of its BaNCS-based life & pensions (L&P) platform after three years of development. Though this software is the keystone for generating operational and cost efficiency in L&P BPO, the company has already achieved profitability with the Pearl operations through better people and process management, thus proving its non-IT-related BPO management skills. The platform BPO deals with Emap, IATA and Deutsche Bank further support TCS's commitment to its software-led BPO approach.

However, TCS is also more aware of the challenges of selling platform BPO and, in our view, slightly de-emphasising this part of its strategy as it contends with the realities of the market. For the vast majority of BPO clients, a transition to a new software platform is not appealing. There are more contractual complexities and a broader range of stakeholders (internal and external) involved in negotiations. In most cases, BPO clients look to achieve quicker and larger cost savings through offshoring of delivery staff, leaving any significant IT transformation out of the picture.

Indeed, two of the deals came in unique circumstances. Emap was looking for a new finance and accounting platform, as the part of its business that owned the system had been sold off by its parent. Pearl Group was a strategic deal in which TCS took on the risk of IT transition, treating this as an investment that enabled it to develop a UK platform it could resell to additional L&P clients. As further proof of the difficulty in selling a platform proposition, Sun Life of Canada, TCS's only other UK L&P client win since Pearl, chose to stick with its existing platform rather than use TCS's BaNCS.

Replicating the UK model will be challenging
Mirroring the UK success in new countries will involve significant investment in local sales and delivery teams. The UK is one of the fastest-growing BPO markets, and TCS has already had to invest considerably to kick-start its BPO business there. Achieving the same in the slower-growing continental European markets, such as Germany and France, will arguably cost more.

It's worth noting that, despite its UK success, we estimate TCS's global BPO revenues to have grown by 5% organically - which is hardly groundbreaking. Most of this growth has come from winning smaller deals that rely more on offshore provision than IT platform expertise. TCS is doing the right thing by investing ahead of the curve in platform BPO, but it's going to be a long slog before these investments bring significant returns globally. We expect organic growth of the BPO business to be steady rather than stellar over the next two years.

TCS bags multi million dollar deal from Singapore Govt

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

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.

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 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.

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.

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.

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.

Indian IT firms explore Belgium USD 6.5 Billion Deals

Bangalore: Indian IT firms TCS, Infosys and Wipro are exploring IT offshoring and back office projects in Belgium worth $6.5 billion from firms like AXA, Dexia Bank, Belgacom, UCB (drug maker) and car insurer Allianz, reports the Economic Times.

This year, customers in Belgium will spend around $1.8 billion on infrastructure management outsourcing, $2.6 billion on application development and maintenance and about $2 billion on BPO, according to an outsourcing advisory firm Quantum Step.

"We have recently started discussions with some Indian suppliers for pure offshoring of our ERP maintenance it would be fair to assume that until last year, we were not prepared for any such initiative," confirmed an official at one of the biggest Belgian enterprises.

As a number of Indian offshoring firms are looking to hire more local European sales professionals and project consultants, it makes out that now customers only want to deal with Indian offshore experts. "Many outsourcing dialogues these days are being spearheaded by Indian offshore delivery managers, unlike in the past when some local expert would help us gain entry into an account, the CIOs are specifically asking for Indian suppliers," said a top executive at one of the Indian IT firms pursuing outsourcing contracts in continental Europe.

TCS has informed that the company's early investments in the Belgian market are now bringing dividends. "Belgium represents one of the more mature markets for us within Continental Europe. After 15 years of operations in the country, we hold a significant share of the market and are now a prime IT partner to some of the largest BEL20 companies," said AS Lakshminarayanan, Vice President and Head, Europe, TCS.

"Our strategy to invest in localised delivery centres in Europe, particularly the ones in Eindhoven and Luxembourg, fuses well with our global network delivery model," he added. The company has around 700 professionals working for Belgian customers with around 200 working onsite. InBev, AXA and Belgacom are TCS' top customers in Belgium.

"The key European markets opening up for offshoring include BeNeLux, Nordics, Germany and France. Most of the European companies are more or less first time outsourcers. Some big multinationals had offshored previously such as ABN Amro, Ikea, Nokia and Philips. However, this did not trickle down to regional customers as many of them felt that there was cultural mismatch. Also, to a large extent, Indian providers also did not focus on this market," said Sridhar Vedala, Expert, outsourcing firm Quantum Step.

BASF AG, the world's biggest chemical company, Euroclear, Europe's largest settlement firm, and Anheuser-Busch InBev, the world's biggest brewer are looking at offshore outsourcing for the first time as they seek to lower their operational costs and cope more effectively with a new fall in demand for their products and services.

Infosys, Wipro, TCS bag BP Contract

Mumbai: Infosys, Wipro and Tata Consultancy Services (TCS) have bagged IT maintenance contracts from oil and gas giant British Petroleum (BP) Plc, the Indian IT firms said in separate statements on Wednesday.

According to the companies , BP selected them after undertaking a programme to consolidate its IT vendors for application development and maintenance.

Infosys most admired Indian company: WSJ survey

BANGALORE, INDIA: Indian IT giant Infosys Technologies has been adjudged as the most admired Indian company, ahead of Tata Consultancy Services and Bharti Airtel, according to a says a survey.

Infosys has topped the list of 10 most admired Indian companies and is followed by IT major TCS at the second position, according to the Asian 200 survey conducted by The Wall Street Journal Asia.

Telecom giant Bharti Airtel is at the third spot, engineering major Larsen & Toubro is fourth while IT firm Wipro is at the fifth position, said a PTI report.
TCS, Bharti Airtel come second and third, while Wipro is at fifth position


Others on the list are Tata Steel, Hindustan Unilever, HDFC Bank, State Bank of India and ITC. The ranking is based on the Asian 200 survey of subscribers of The Wall Street Journal Asia and other business people.

The survey takes into account factors such as financial reputation, vision, corporate reputation, quality and innovation. Infosys has also been ranked first in terms of corporate reputation, vision and quality.

When it comes to corporate reputation, TCS and Tata Steel are at the second and third spots, respectively.

As far as innovation is concerned, TCS has topped the list followed by Bharti Airtel and Infosys.

The multinational winner of the survey would be named on September 11.

http://www.ciol.com/News/News-Reports/Infosys-most-admired-Indian-company-WSJ-survey/14809123610/0/

IT majors preparing strategy in line with revival of demand

With the first signs of recovery in the information technology (IT) sector, the three biggest IT companies — Tata Consultancy Services (TCS), Wipro Technologies and Infosys — are not only hopeful of bagging more overseas deals but have also modified their strategy to focus on near-shoring, where employees work at customer premises.


These companies are also reinforcing their product line, changing product offerings, focusing on ‘recession-proof’ sectors like pharma and healthcare, education, telecom and utilities to tide over the dip in volumes.

Wipro, for instance, is expecting a few big-ticket outsourcing deals — each valued upwards of $100 million — in the second quarter of 2009-10, in areas like IT services, consulting, remote management and business process outsourcing (BPO).

Suresh Senapaty, executive director and chief financial officer of Wipro, said, “Despite the slowdown, we expect to bag a few good deals in the second quarter, especially in the $100 million-plus range.”

Wipro had reportedly added 26 new clients in the first quarter (April-June 2009). “The total value of the new deals bagged in the first quarter works out to around $700 million, where a few are in the range of $30 million plus,” Senapaty said.

Likewise, Infosys, which posted a 17.3 per cent rise in first quarter net profit, is pursuing 12 to 15 deals worth $1 billion in the second quarter.

“We are pursuing deals worth $1 billion. The economy is gradually recovering and so we have 12-15 deals we can pursue right now. Emerging markets are a big opportunity for us, like Latin America, Europe, Japan, West Asia and Australia,” said S Gopalakrishnan, CEO and MD of Infosys.

TCS, on the other hand, is tweaking its product offerings for small and medium enterprises (SMEs).

Source:
http://www.business-standard.com/india/news/it-majors-preparing-strategy-in-linerevivaldemand/366493/

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.

TCS puts productivity bar on staff

As part of cost-cutting to tackle the current downturn, the country’s largest software exporter, Tata Consultancy Services (TCS), has imposed “travel restrictions and put a productivity bar on its employees,” says Kesav V Nori, executive vice-president and executive director (TCS innovation lab — business systems).“A lot of interchange has been made in our existing infrastructure. We have now increased the number of video conferences between people in India and web casts internally, to reduce the usage of wired lines, besides putting restrictions on travel,” Nori told Business Standard on the sidelines of a function to launch the company’s new computer-based functional literacy software in Urdu.

There was also a productivity bar to be met at various levels, he said. “Besides, there is a greater move of people from onsite to offshore,” he said, declining to give any numbers.Nori, under whose supervision the Urdu software was developed, said software in Arabic, and Spanish and other European languages, were also being developed by TCS. “While the Arabic software will be ready in a month’s time, the Spanish software will take about three months.

The idea is to provide a medium through local dialects for handling migration problems,” said Nori, who is retiring from TCS on March 31.

TCS joined the belt-tightening club of Wipro and Infosys last month, when it announced plans to review the variable component of its employees’ salaries every quarter. Variable pay accounts for 20-35 per cent of TCS employees’ gross salary. The company had cut the variable pay by around 1.5 per cent in February 2008.

Infosys has already started recalling about 25 per cent of its US-based sales teams since last year, while Wipro has announced that it has employed 30 cost-cutting measures, especially in operational efficiency, since the third quarter of this financial year.