hyderabad: Mahindra Satyam has won an IT outsourcing contract from Swedish defence and aerospace firm, Saab, to develop its operations for the global defence and security market in India in a deal valued at around $300 million.
The contract, which is spread over a period of five years, encompasses engineering services and technology maintenance and will enable both the companies jointly to address the Battlefield Management System (BMS) for the Indian Army.
Mahindra Satyam has already initiated the setting up of a centre of excellence for network centric warfare (CoE - NCW), which will offer comprehensive skills and a repository of tools, systems, middleware, integration platforms and system showcases in the field of NCW.
The company through the CoE hopes to tap the high potential market for nationwide security, for which the Indian government has large investment plans. "This relationship will jumpstart our foray in mission critical areas of defense. Our commitment in the domestic market will be reaffirmed by this collaboration and also set the stage to enter uncharted territories in the global arena," said C P Gurnani, CEO, Mahindra Satyam.
The centre, which will be accessible to both the partners, is for mission critical applications and Command, Control, Communications, Computers, and Intelligence solutions for global opportunities. The capabilities of the centre will also span areas of homeland security to provide end to end security solutions.
"We view this relationship with Mahindra Satyam as a strategic meeting of two highly skilled teams believing in technical and engineering excellence," said Ake Svensson, President and CEO for Saab. Mahindra Satyam, which counts Citigroup, GE, GlaxoSmithKline, Cisco Systems and Nissan among its top five clients, has over 430 clients now.
Friday, November 6, 2009
Outsourcing Rises: Captives
Mumbai: The top multinationals banks continue to set up new back office units or expand their existing captive operations in India, even as the model is under criticism for being high cost and less efficient than third-party vendor operations.
Organizations such as Wells Fargo, Ingersoll Rand and Standard Chartered are setting up or expanding their back-office centres in India, reports The Economic Times.
For example, Standard Chartered is setting up a new Knowledge Process Outsourcing (KPO) centre in Bangalore, while Wells Fargo is expanding its captive operations in India for technology services and Business Process Outsourcing (BPO).
According to MarketVista, a Dallas based Everest Research Institute, these three are among the 11 firms that have set up new units or added more staff to their existing units in India during the September quarter, taking the number of captives being set up globally to an 18 month high. Around 28 firms are setting up captive operations in Asia, Europe, and Latin America with India being the most popular destination.
"The numbers of new captives being set up are far more than divestures, indicating a revival in the market," Ameet Singh, Vice President, Global Delivery, Everest. German firm Kontron, one of the world's largest manufacturers of embedded computer technology and a supplier to Original Equipment Manufacturers, is also setting up a contact centre in Bangalore to provide sale and tech support to its Asia-Pacific operations.
"Near-term economic pressures that were there earlier have been reduced. But organisations that reviewed their global sourcing agenda could still be looking at the same outcome, a modified strategy or a more intensive one," said Singh.
The September quarter also saw four captive divestures; UBS' captive to Cognizant Technology Services, AIG's to Mphasis, Schneider Logistics to EXL Services and Kyocera Wireless to MindTree.
According to Singh, the market for outsourcing transactions is seeing two counter forces; lower business volumes and opportunity to reduce costs.
"The companies are attempting to push the envelope further in terms of costs leading to offshoring and outsourcing," said Singh. Based on publicly disclosed transactions, the overall numbers of transactions have fallen to 422 in the September quarter from 467 in the past quarter but contracts from sectors such as financial services have almost doubled from the previous quarter, according to Everest's research.
Apart from financial services, sectors such as healthcare, travel and energy and utilities are also seeing significant rise in demand for offshoring.
"Although there was a marginal decline of 10 percent in the reported global transaction volumes (BPO volumes decreasing by 14 percent and IT sourcing activity reducing by 8 percent), there were signs of improvement in key geographies and verticals," said Everest in the study.
Organizations such as Wells Fargo, Ingersoll Rand and Standard Chartered are setting up or expanding their back-office centres in India, reports The Economic Times.
For example, Standard Chartered is setting up a new Knowledge Process Outsourcing (KPO) centre in Bangalore, while Wells Fargo is expanding its captive operations in India for technology services and Business Process Outsourcing (BPO).
According to MarketVista, a Dallas based Everest Research Institute, these three are among the 11 firms that have set up new units or added more staff to their existing units in India during the September quarter, taking the number of captives being set up globally to an 18 month high. Around 28 firms are setting up captive operations in Asia, Europe, and Latin America with India being the most popular destination.
"The numbers of new captives being set up are far more than divestures, indicating a revival in the market," Ameet Singh, Vice President, Global Delivery, Everest. German firm Kontron, one of the world's largest manufacturers of embedded computer technology and a supplier to Original Equipment Manufacturers, is also setting up a contact centre in Bangalore to provide sale and tech support to its Asia-Pacific operations.
"Near-term economic pressures that were there earlier have been reduced. But organisations that reviewed their global sourcing agenda could still be looking at the same outcome, a modified strategy or a more intensive one," said Singh.
The September quarter also saw four captive divestures; UBS' captive to Cognizant Technology Services, AIG's to Mphasis, Schneider Logistics to EXL Services and Kyocera Wireless to MindTree.
According to Singh, the market for outsourcing transactions is seeing two counter forces; lower business volumes and opportunity to reduce costs.
"The companies are attempting to push the envelope further in terms of costs leading to offshoring and outsourcing," said Singh. Based on publicly disclosed transactions, the overall numbers of transactions have fallen to 422 in the September quarter from 467 in the past quarter but contracts from sectors such as financial services have almost doubled from the previous quarter, according to Everest's research.
Apart from financial services, sectors such as healthcare, travel and energy and utilities are also seeing significant rise in demand for offshoring.
"Although there was a marginal decline of 10 percent in the reported global transaction volumes (BPO volumes decreasing by 14 percent and IT sourcing activity reducing by 8 percent), there were signs of improvement in key geographies and verticals," said Everest in the study.
Microsoft Lays off 800
Seattle: Microsoft is going to sack at least 800 emoployees across its operations, on top of the 5,000 jobs it already eliminated under a plan to reduce costs that was announced in January. A spokesman for the software giant said that the latest job cuts are spread across the company's global operations, but about 200 are in and around its headquarters in Redmond, Washington.
According to Reuters, Microsoft originally had planned to cut 5,000 jobs, or about five percent out of 96,000, before June 2010. The Microsoft Spokesman said that the plan has been expanded with the new layoffs and is now complete, well ahead of schedule.
As of October 23, Microsoft had 91,005 employees worldwide, according to its website.
According to Reuters, Microsoft originally had planned to cut 5,000 jobs, or about five percent out of 96,000, before June 2010. The Microsoft Spokesman said that the plan has been expanded with the new layoffs and is now complete, well ahead of schedule.
As of October 23, Microsoft had 91,005 employees worldwide, according to its website.
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.
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.
IT Sector 80000 Grads
Kolkata: Software industry body, Nasscom expects at least 70,000-80,000 engineering graduates who passed out in June 2009 and were offered jobs in their 5th and 6th semesters by TCS, Infosys and Accenture, among others, to get absorbed by March 2010. Not too long ago, there were apprehensions that the appointments of these tech grads could get deferred till 2011 in the aftermath of the global slowdown. However, the perception appears to have changed.
Speaking to Economic Times, Nasscom Vice-President Sangeeta Gupta said, "There's some amount of pick-up in IT spending and clients have become active in the decision-making process. This augurs well for the IT industry and is likely to result in hiring by IT companies. Companies like TCS, Infosys and Accenture, among others, are expected to start honouring the offers they made. As a result, at least 70k-80k engineering graduates, who were issued offer letters, are expected to get absorbed by March 2010."
For instance, the country's biggest software firm Tata Consultancy Services (TCS) had made some 24,000 offers in 2008-09, according to its Q2 analyst call. The company had indicated that it would honour these offers this fiscal. In Q3, TCS is expected to absorb about 8,000-odd, and the balance, in the following quarter. Till Q2, the company had absorbed some 1,800 people.
Similarly, Infosys, in its Q2 earnings call, indicated that it would add 20,000 people instead of 18,000 indicated earlier. The additional 2,000 would be partly in BPO while the rest would make up laterals at Infosys Technologies.
Incidentally, Nasscom has urged member companies to recruit those who've completed their eighth semester to ensure that hiring is closer to the need of companies. For this fiscal, Nasscom has projected a mere 4-7 percent export growth. It is likely, that with IT sector showing signs of recovery, Nasscom will review the export target. "We can review the export target by end- December," she added.
McKinsey in its report titled 'Perspectives in the IT industry by 2020', has noted that with the current pace of reforms and expected constraints in talent and infrastructure supply, the exports component of the Indian IT industry is slated to reach $175 billion in revenues by 2020. The domestic component will contribute $50 billion in revenues by 2020, which is larger than the total export revenues for India now.
Speaking to Economic Times, Nasscom Vice-President Sangeeta Gupta said, "There's some amount of pick-up in IT spending and clients have become active in the decision-making process. This augurs well for the IT industry and is likely to result in hiring by IT companies. Companies like TCS, Infosys and Accenture, among others, are expected to start honouring the offers they made. As a result, at least 70k-80k engineering graduates, who were issued offer letters, are expected to get absorbed by March 2010."
For instance, the country's biggest software firm Tata Consultancy Services (TCS) had made some 24,000 offers in 2008-09, according to its Q2 analyst call. The company had indicated that it would honour these offers this fiscal. In Q3, TCS is expected to absorb about 8,000-odd, and the balance, in the following quarter. Till Q2, the company had absorbed some 1,800 people.
Similarly, Infosys, in its Q2 earnings call, indicated that it would add 20,000 people instead of 18,000 indicated earlier. The additional 2,000 would be partly in BPO while the rest would make up laterals at Infosys Technologies.
Incidentally, Nasscom has urged member companies to recruit those who've completed their eighth semester to ensure that hiring is closer to the need of companies. For this fiscal, Nasscom has projected a mere 4-7 percent export growth. It is likely, that with IT sector showing signs of recovery, Nasscom will review the export target. "We can review the export target by end- December," she added.
McKinsey in its report titled 'Perspectives in the IT industry by 2020', has noted that with the current pace of reforms and expected constraints in talent and infrastructure supply, the exports component of the Indian IT industry is slated to reach $175 billion in revenues by 2020. The domestic component will contribute $50 billion in revenues by 2020, which is larger than the total export revenues for India now.
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.
Wipro buys Yardley's byusiness
Bangalore: Wipro has brought 229 year old British brand Yardley's business in select markets such as India, Asia, Australiasia, Middle East and north and west Africa to stretch its personal care portfolio to the premium range.
Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has taken up Yardley business across these areas for $45.5 million (Rs. 215 crore), continuing its takeover spree that included Unza.
"We picked up a lot of debt from Unza's balance sheet when we acquired it. Yardley is a profitable brand and will add to our operating margins which are at 10-13 percent," said Vineet Agrawal, President, Wipro Consumer Care.
Being controlled by British billionaire Mike Jatania, Lornamead had acquired the Yardley brand in September 2005 for 60 million pounds. It will retain the Yardley business in Europe and America. Funded by internal accruals, this deal will enable Wipro straddle different price points and give it greater bargaining power for key accounts in certain markets.
"Yardley is a great fit for Wipro if it wants to go beyond Santoor to include more premium brands. Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range," said Anand Ramanathan, FMCG Analyst, KPMG.
Yardley's Lavender talcum-to-soap range is priced around 50 percent higher than the costliest brand in Wipro's existing portfolio, Unza's Enchanteur range. This move will also strategically surge Wipro Consumer Care's foothold in high growth markets such as the Middle East where its overall revenue is projected to double to $30-35 million. The Middle East contributes 70 percent to the acquisitions revenues, with 20 percent coming from India and the remainder from other Asian markets.
Wipro is also in plans to increase the product range under the Yardley brand. "We see certain gaps in Yardley's product range such as body washes and deodorant roll-ons, which we feel could be added to increase relevance with the youth. We are also evaluating the manufacture of Yardley products such as soaps through our factories," said Agarwal.
The company plans to leverage its distribution reach across 50,000 outlets in metros and tier-I cities to grow the brand in India and sees cost efficiencies rising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.
Wipro arrived on the acquisition stage in 2003 by picking up Hindustan Unilever's glucose drink brand Glucovita. It bought Kerala based ayurvedic brand Chandrika after one year and Delhi based North West Switchgear's switches business in 2006.
Wipro Consumer Care division came into limelight in 2007 with its $246 million purchase of Singapore based personal care firm Unza Holdings, which has a significant presence across South-East Asian markets. This deal will see Wipro Consumer Care's contribution to the parent's top line growing by 50 basis points. In the second quarter, the consumer-care division notched up eight percent of Wipro's overall revenues. Wipro's stock closed at Rs. 598.30 on the Bombay Stock Exchange, a rise of 0.42 percent on Thursday.
Wipro Consumer Care and Lighting, the consumer products arm of the software firm, has taken up Yardley business across these areas for $45.5 million (Rs. 215 crore), continuing its takeover spree that included Unza.
"We picked up a lot of debt from Unza's balance sheet when we acquired it. Yardley is a profitable brand and will add to our operating margins which are at 10-13 percent," said Vineet Agrawal, President, Wipro Consumer Care.
Being controlled by British billionaire Mike Jatania, Lornamead had acquired the Yardley brand in September 2005 for 60 million pounds. It will retain the Yardley business in Europe and America. Funded by internal accruals, this deal will enable Wipro straddle different price points and give it greater bargaining power for key accounts in certain markets.
"Yardley is a great fit for Wipro if it wants to go beyond Santoor to include more premium brands. Synergies will improve if Wipro took a bottoms-up approach of gearing its sales force and partners towards this change to premium range," said Anand Ramanathan, FMCG Analyst, KPMG.
Yardley's Lavender talcum-to-soap range is priced around 50 percent higher than the costliest brand in Wipro's existing portfolio, Unza's Enchanteur range. This move will also strategically surge Wipro Consumer Care's foothold in high growth markets such as the Middle East where its overall revenue is projected to double to $30-35 million. The Middle East contributes 70 percent to the acquisitions revenues, with 20 percent coming from India and the remainder from other Asian markets.
Wipro is also in plans to increase the product range under the Yardley brand. "We see certain gaps in Yardley's product range such as body washes and deodorant roll-ons, which we feel could be added to increase relevance with the youth. We are also evaluating the manufacture of Yardley products such as soaps through our factories," said Agarwal.
The company plans to leverage its distribution reach across 50,000 outlets in metros and tier-I cities to grow the brand in India and sees cost efficiencies rising out of merging common suppliers. Wipro Consumer Care has made a series of acquisitions in the past six years.
Wipro arrived on the acquisition stage in 2003 by picking up Hindustan Unilever's glucose drink brand Glucovita. It bought Kerala based ayurvedic brand Chandrika after one year and Delhi based North West Switchgear's switches business in 2006.
Wipro Consumer Care division came into limelight in 2007 with its $246 million purchase of Singapore based personal care firm Unza Holdings, which has a significant presence across South-East Asian markets. This deal will see Wipro Consumer Care's contribution to the parent's top line growing by 50 basis points. In the second quarter, the consumer-care division notched up eight percent of Wipro's overall revenues. Wipro's stock closed at Rs. 598.30 on the Bombay Stock Exchange, a rise of 0.42 percent on Thursday.
Subscribe to:
Posts (Atom)
