Global-O&O

Source: Business Standard
DATE: August 21st, 2008

Mohit Soapbox:

‘Looking beyond IT’. If I was to rephrase it I would say how does India leverage its IT/ITES industry to move beyond IT. For the past 15 years or so India has become the leader in offering a ‘low cost’ alternative to IT/Process work. The drive to be the leader  has been primarily driven by headcount growth and paralleled with revenue growth creating job opportunities for many.  The IT vendors in India have managed to create a global footprint of clients and corpoations have created operating centers in India. It started out with low cost , similar talent resources and required companies to train people, establish processes and create operational excellence.  Companies  have strived hard to be the leader but has there been too much focus on creating  ‘ another brick in the wall ‘ to conform to what the client wants rather than create innovation ?

The question now is that during this growth process did the IT industry create an ecosystem to take the next step of moving beyond IT ? Has the industry a leader in IT delivery and operational excellence, left out the framework to develop a healthy eco system for smaller firms, individuals to become entrepreneur ? Should it be the responsibility of the industry alone to create the eco system for innovation and next steps ? and is there an appetite for risk - a healthy respect for failure and ability to start again  or have we creating operating engines which tend to feed on repeatability of tasks rather than reward innovation ?

 As part of our mentoring program a number of startups we deal with which are looking to establish a presence in the US, or looking for capital we hear a story that the eco system for fostering innovation is still in a very nascent stage. The sense of optimism is very much there within these entrepreneurs and a feeling the growth story in India is for real and will offer them the awards is there. The markets these entrepreneurs look for a credibility boost is still the west. Domestic markets still prefer conformist trends for the industry. 

It is encouraging to see corporates, academia promoting innovation and willing to bear the risk/reward equation for innovation but it is going to take time for this to be a sustainable initiative requiring all concerned to participate. 

It is good to see leaders within the industry speaking about the need for the ecosystem and hopefully will help build the eco system. 

Would love to hear views from people on how do you build an entrepreneur culture in India ?

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Start looking beyond information technology and that will take the Indian economy to a higher plane. This is the song that many Indian business houses including IT giants have begun to sing aloud these days.

“In the last 15-20 years, the focus has been more on IT. It is high time we started looking beyond this technology. We need to look at promoting innovations and owner-ship of intellectual properties,” said Infosys Technologies CEO and MD K Gopalakrishnan said at a press conference convened here on Wednesday to announce TES 2008, a three-day entrepreneurial summit organised by The Indus Entrepreneurs (TiE) in Bangalore from December 16. TiE is an NGO for promoting entrepreneurship.

Contending that there is no dearth of aspiring entrepreneurs in the country, Gopalakrishnan emphasised the need for creating an eco-system for complete entrepreneurship. “There are a lot of smaller companies that are ready to take risks. Similarly, the country also has venture capitalists who can support these start-up firms. We need to think of ways to create a diverse set of industries,” he said.

Concurring with him, TES 2008 chairperson Ravi Narayan said: “The world may be going slow, but India is emerging in a big way in terms of innovations, both products and services. Another interesting trend is that several Indian IT companies, which used to look at the US market, are now focussing on India.”

He said India had the potential to emerge as leader in the cellular technology space.

Speaking on the occasion, TiE (Bangalore chapter) president Pradeep Kar said the TES summit will witness the participation of stakeholders from diverse sectors including manufacturing, social entrepreneurship, clean technology, real estate, retail and franchising, education, healthcare and sports management. The theme of the summit is 1inclusive entrepreneurship. A total of 1,500 delegates are expected to participate in the summit. “We hope to mentor about 300 aspiring entrepreneurs,” Kar added.

SOURCE: Business Standard
DATE: August 21st, 2008

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Infosys BPO, a subsidiary of Infosys Technologies, today announced restructuring of its procurement business, to leverage growing business opportunities in the market.

According to a release here, the company had reorganised its procurement business to provide end-to-end solutions across the entire ”Source-to-Pay’ cycle to address the changes in the global sourcing and procurement industry and differentiate itself vis–vis competition.  The restructuring, came to force from August one, would help the company enhance its portfolio of offerings and would emphasise its transformational capabilities. The restructuring would also help broaden the company’s service offerings and customer base.  The services under the new practice would include e-procurement Supplier Management, Contract Management, Strategic Sourcing Spend Management.  

Commenting on the advantages of restructuring, Ravi Panchanadan, Head, S and P, Infosys BPO said ”in keeping with the company’s objectives of building a global workforce that would suit the change, Infosys BPO had also launched a ‘Sourcing and Procurement Academy’ to train the employees on the latest global practices and requirements to service clients under the new offerings.”

SOURCE: Computing UK
DATE: August 21st, 2008
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Systems integrator Logica attributed a 16 per cent year-on-year increase in revenue for the first half of 2008 to healthy spending by European energy, utility and public sector customers, whose budgets do not yet appear to have been affected by the credit crunch.

But like other IT services firms, Logica faces increased competition for its clients from suppliers in emerging countries, particularly India, and is having to restructure to compete.

Logica’s net income in the first six months of the year fell to £5.2m from £149.7m in 2007, as the company undergoes extensive re-organisation designed to cut £80m per year from its operational cost structure and present better value to customers.

Last April the company axed 1,300 European jobs, including 500 in the UK, simultaneously announcing its intention to increase offshore staff numbers in Morocco, the Philippines and Bangalore to 8,000 by the end of 2008.

The publication of Logica’s results coincided with a fresh prediction from analyst Gartner, suggesting Indian systems integrators and IT services companies will soon eclipse established European rivals in terms of revenue, market capitalisation and customer numbers.

“With the less expensive and larger workforce available in India, the India-3 providers [Tata Consultancy Services, Infosys Technologies and Wipro Technologies] were able to create the combination of low-cost, high-quality services,” said Partha Iyengar, Gartner vice president and regional director in a research note.

SOURCE: Business Standard
DATE: August 21st, 2008

Mohit Soapbox:
www.corrystone.com

Cost of doing business is increasing in India. This is a statement which echoes everytime we take a client for a visit to India either to set up back office operations or marketing operations. The cost of business is going up while the infrastructure hurdles remain the same. The tax incentives for STPI will be helpful for smaller firms to survive but the smaller firms do have a challenge on their hand to survive the global slowdown.  I understand the reusability of existing processes to reduce cost but companies still struggle to pass along those cost benefits to their customers specially the mid tier firms. So what does that mean for the industry ? The industry is not going away and we will continue to see consolidation in the industry and smaller M&A activities. The margins will continue to be affected by the slowdown and the maturity of the industry will result in a slower growth. What that means for people looking to do business in India ? The opportunity to save money and make money is still there and the firms have to plan for the cost of business in India along with a ton of other factors to create a realistic value they are looking for.  We work with a number of firms who are trying to deal with working with India and will be happy to help you with your needs. info@corrystone.com
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In April, Ganesh Natarajan, deputy chairman & managing director of Zensar, was elected chairman of software body Nasscom for the financial year 2008-09. His appointment came at a time when the fortunes of the IT industry were dipping; the rupee was violently fluctuating against the dollar; and the US sub-prime crisis was looming large. Moreover, analysts were predicting a dip in IT and banking, financial and insurance services (BFSI) spends which could impact outsourcing in a major way. In an interview with Leslie D’Monte, the Nasscom chairman put matters in perspective. Excerpts:

Given the slowdown in the US economy and the sub-prime crisis, is Nasscom still bullish on the future of this sector?

Very much. The addressable market, as Nasscom figures reveal, is huge. And it is in times such as these that foreign companies outsource more work. That said, we agree that companies come to India for cost advantages. They stay for quality, but we can retain them only if we innovate. This is precisely what Indian IT firms are doing. For instance, almost 40 per cent of the work done by Indian IT firms today is based on templates. This helps in the reuse of assets, codes, etc. Indian IT firms are also hiring younger people, and utilisation is being pushed upwards.

But there are more hurdles to be overcome. For instance, the extension of the STPI scheme…

True. The cost of doing business is increasing in India. Other governments offer more tax incentives which may compel IT firms to move a significant part of their business to other low-cost and friendly countries. We continue to believe that extension of Software Technology Parks of India (STPI) benefits will help the industry, especially smaller players. On an average, the sector’s profits will dip by around 3 per cent if the scheme is not continued, and that can be disastrous for small companies . We have suggested alternatives like turnover cut-offs for the scheme, and virtual (benefits without physical boundaries) special economic zones (SEZs) since not more than 15 per cent of companies have moved part of their businesses to SEZs.

Nasscom has often highlighted the `unemployability’ of today’s workforce. Will the steps taken by you suffice?

Our educational apparatus has failed to deliver what the industry needs. For a solution, the German model is a good one. Germany has introduced a dual system of vocational education, a process that we have much to learn from.

The US is also getting strict about H1-B visas…

We spent seven days at Capitol Hill, and met all the senators concerned. We impressed upon them the fact that while the H1-B numbers look huge, the visas acquired by Indian IT firms comprise only 10 per cent of the total number. Of course, there’s no general consensus but it appears the comprehensive Immigration Bill will pass muster. However, it’s aimed more at illegal immigrants .

What about the demand for separating the BPO sector from the IT industry?

Nasscom currently does not see a need for this move. We have been advocating on behalf of the BPOs strongly and working with governments of other countries to further its cause.

SOURCE: EconomicTimes
DATE: August 20th, 2008
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SAP AG and Wipro, key partner to SAP and Intel, on Wednesday announced that they have jointly launched a ready-to-use ERP solution for mid-market Indian companies.

The solution package includes SAP Business All-in-One integrated with Wipro NetBlade, modular servers based on Intel Multi-Flex technology complete with implementation services and lifecycle support services and together with operating system SUSE Linux Enterprise from Novell, a SAP release said.

“This offering is part of the SAP Business All-in-One fast-start program, which has been successfully launched in Indian market in February, and is bringing together a combination of ERP system, hardware and support services at an affordable price point”, the release said.

The new offering is tailored to the specific needs of emerging Indian midsize companies, who are facing multiple challenges of stupendous growth, shortage of in-house IT talent, and budget restraints, it said.

“The combined expertise of SAP as the worldwide leader in business applications and with an SME-specific solution portfolio, Wipro’s deep consulting knowledge of the local market, guarantees an attractive offering for Indian companies who seek to support their businesses with industry-specific, scalable and affordable solutions”, it said.

SOURCE: EconomicTimes
DATE: August 20th, 2008
ARTICLE

The demand for office space from IT and ITeS companies is likely to fall in Gurgaon and Noida during the second half of 2008 on account of economic slowdown in the US, a global realty consultant said in its report.

In its latest report for second quarter 2008, Jones Lang LaSalle Meghraj said that though Indian Office  markets have continued to post growth over the past few years, the last few quarters have seen a polarisation in the office markets in terms of growth in demand across the country.

It has categorised the office markets across six major cities - Mumbai, Delhi NCR, Bangalore, Chennai, Hyderabad and Kolkata - in three broad segments.

First segment includes markets which are likely to be “susceptible” in terms of retarded demand growth for the remaining half year of 2008, the report said.

The consultant has put Gurgaon and Noida (Delhi NCR suburbs), whitefield and electronic city (Bangalore suburbs), OMR (Chennai suburbs), Thane and New Mumbai ( Mumbai suburbs) and Rajarhat (Kolkata suburbs) in the “susceptible” category.

“In case of the susceptible markets, demand from occupiers in the IT/ITES segment, could be rationalised on the back of economic slowdown in the US.

“This coupled with the strong supply pipeline in many of these markets could lead to a potential consolidation in the respective markets, leading to relatively higher vacancies,” Jones Lang LaSalle said, adding that this might not lead to any immediate rental consolidation.

The Consultant, however, cautioned that “if the global economic slowdown sustains, we foresee the vacancies to rise in these micro-markets due to strong supply volumes. This might put pressure on the rental values next year”.

SOURCE: Business Standard
DATE: August 19th, 2008

http://www.pyxisolutions.com/
http://www.itcinfotech.com/

Pyxis Management Team:
Amar Duggal, CEO
Greg Brener, COO

ARTICLE
ITC Infotech, a global IT services company and fully owned subsidiary of ITC Limited, has acquired Pyxis Solutions, a US-based niche player offering Quality Assurance (QA) solutions and testing services.     

The deal has been closed at $25 million, ITC Infotech MD Sanjiv Puri told reporters here today. “It has been an all-cash deal and funded internally”, he said.     

Pyxis offers a full spectrum of services in software Quality Assurance ranging from user-interface testing to QA process improvements, including QA management and consulting, quantiative analysis testing and data validation testing.     

Describing it as a “strategic acquisition”, Suri said, Pyxis brings on board “differentiated capabilities, domain expertise in capital markets, unique testing methodology and an impressive roster of customers” which will compliment ITC Infotech’s service offering and will further strenghten its presence in US, in addition to building up capabilities.     

For Pyxis, the deal would bring on board the “benefits of scalability, a robust global delivery model, strong offshore base and institutional strengths of being part of a larger group”, to provide better services to our customers, he said.     

The synergies between the two companies is expected to create large opportunities for cross selling by leveraging existing customer relationship of both Pyxis and ITC Infotech. and help enlarging the geographic reach of services offered and create new opportunities for diversified offerings.   

Pyxis would continue to work under its founders and would be a subsidiary of ITC Infotech (USA), he said adding the deal was in line with company’s vision of actively seeking synergestic partnerships around key industry verticals, solution areas and focus technologies.

SOURCE: Business Standard
DATE: August 19th, 2008
ARTICLE

City-based Basiz Fund Services on Tuesday announced that it had received $2 million (around Rs 8.4 crore) funding from NEA-IndoUS Ventures.

Basiz, a knowledge process outsourcing (KPO) provider with offices in Chennai, Mumbai and Dubai, offers investment accounting services for mutual, hedge and private equity funds.

A V Seshadrinathan, managing director of the company, said the funding would be used for capacity augmentation, infrastructure expansion and for opening new international offices to support the company’s existing and new clients.

SOURCE: EconomicTimes
DATE: August 18th, 2008

Mohit Soapbox:
 - Aviva has 6000 employees in India
 - Deal with WNS is a billion dollar over 100 month commitment
 - Operation sold for $228 million
 - IT vendors Wipro and TCS
 - Cathryn believes that integrated BPO/IT deals is still a trend and not a practice.  (A # of IT vendors would like to be both the IT and BPO vendors and as separate offerings seem to work well. Integrating and making the IT/BPO work together is actually a challenge and involves a lot more partnership from the client vs the vendor.
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Earlier this month, in one of the more complex transactions concluded in recent times, UK insurance major Aviva that was running some of its insurance and back-office processes through build-operate-transfer contracts with three vendors in India, sold the entire operations to WNS Global Services for a consideration of $228 million. In addition, WNS also received a commitment from Aviva that is expected to generate $1 billion in revenues over a 100-month period. In an interview Aviva Global Services chairperson and Norwich Union Life COO, Cathryn Riley , talks about why Aviva decided to sell the operations rather than run them itself, and its future plans with WNS.

You initially transferred two of your facilities, one in Sri Lanka from WNS and one in Bangalore from 24×7. Why did you decide to sell instead of transferring the rest?

Let me go back in time to when we first set up in India about five years back under the build-operate-transfer model. The model enabled us to have a low-risk rapid entry and also benefit from the expertise of established partners over here. That has been a very successful venture but a lot has changed both in our market and in the BPO  market since. Over the last five years, we have seen the benefits of a hybrid-operating model because some facilities were with our partners and some, we had transferred. We felt it would be right to do a strategic review of the best model we should have for the next 5-10 years.

Was the review also part of the original plan or did something trigger it?

It came about later. Any sensible company takes the opportunity to step back and think about what the strategy should be after a period of five years. It’s a good, sensible business practice. When we started out on our journey, we had an open mind. We didn’t start the strategic review with the intention of doing this.

There have a been a couple of studies talking about the high costs of captives and captives not being as efficient as third-party operations. Did some of these factors influence your review?

As part of the review, we looked at what was going on in the marketplace with our competitors — we looked at costs but not only at that. This wasn’t only about whether we could run this as efficiently as WNS, there were other factors as well. But I think it’s fair to say we’ve seen the benefit WNS’ expertise. They’ve been helping us over the last few years to run an efficient operation and help us manage our processes — that was one of the considerations. There were others: financial, customers, people…

What are the kind of services you’ve been doing from India and what will it be going ahead?

They range from finance and accounting, actuarial services, customer services, claims, and back office administration. We don’t intend changing that. We are looking to develop Bangalore as a centre of excellence for liability claims and Pune for motor claims. We’ll see more of a trend towards centres of excellence in line with what is happening in UK. The sale to WNS in no way changes our commitment to offshoring. Signing a 100-month deal (with WNS), in fact, underlines our commitment.

Do you expect outsourcing in insurance to pick up? Compared to the rest of banking and financial services, insurance is still small. I don’t think insurance  is different from any other industry. You’re right, banking has been a hit, which is fairly typical. Many of our UK competitors are now here. But one of the things that’s differentiated us is the way we’ve jointly managed our relationships. From day one, we’ve had very strong partnerships, whereas some other companies have been more hands off. It’s not just about coming here but how we’ve operated that’s given us competitive advantage. That has enabled our partners to understand what is it we want, what our strategic imperatives are, and to be able to keep pace with processes, practices, and changes at all levels. That marks us out from the competition.

Has there been a rise in the backlash against outsourcing in the US or the UK?

There has been some backlash over call centre operations, not so much in other areas. We as a company have been in the forefront of offshoring. We’ve been very public about our offshoring and very proud of it. The fact is, service speaks for itself. We continue to seek and listen to our customers’ feedback and work accordingly but I think the perception of the noise in UK is greater than what it really is.

What is the amount of offshoring you’ve done in the last five years ?

We have around 6,000 employees  here. The market was very different then from what it is now. It was a relatively immature market. We weren’t able to come in and say, this vendor is the best. We selected vendors we felt we could work in a partnership with to build something. No one vendor had one particular process. It was a low risk model for us and we were able to learn a lot from each of those of vendors. Now we’ve got something that we’re very proud of and something we intend to build on in the future.

Did you look at the option of outsourcing BPO work to your IT services vendors, Wipro and Tata Consultancy Services?

We looked into it. But we were more comfortable with the existing arrangement. We had a very successful model and we wanted to build on it. I know that is the trend to combine business outsourcing with IT, but it is more the trend in thought than in practice. I’m not sure how successful that’s been yet. But it’s something we’re aware of and which we’ll keep in mind.   

SOURCE: LiveMint
DATE: August 19th, 2008

Mohit Soapbox:
The market slowdown has brought the attrition in check in both larger and smaller vendors. Pay hikes for some of the larger vendors
Satyam: 11 -12%
TCS: 10%
Infosys: 11-13%
Wipro: 8 - 9%
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Satyam Computer Services Ltd, the country’s fourth largest software services firm by revenue, has delayed the payout of annual performance-based salary raises and expects the increases, when they happen, to be smaller than last year’s, as it attempts to ride out a slowdown in the information technology industry.

“Weak market conditions and the corresponding financial outlook is the main reason why things are getting delayed,” said S.V. Krishnan, head of human resources at Hyderabad-based Satyam.

The performance evaluation process, which used to start in April, was delayed and completed only by the first week of July. In previous years, employees had received performance-based raises along with their July pay cheque. Krishnan said the company expects to complete calculating salary increments only by the first week of September.

The delay comes in the face of an anticipated slowdown in orders from the US, the biggest market for Indian software firms, where clients are tightening their IT budgets as they weather a credit crunch.At Satyam, average hikes are expected to be about 11-12% for India-based employees compared with last years’ 16.5-18%, said Krishnan. While the company said it had managed to bring down the attrition rate to 12.6% in the three months to 30 June from 14.9% a year ago, it has slowed hiring as well. Satyam hired 651 employees, including 161 freshers, in the June quarter, its first of fiscal 2009, down from 2,716 (including 1,298 freshers) a year earlier.

Some Satyam employees said while they understand the implications of a weak market, they are unhappy that the management hadn’t kept them informed. “Basic courtesy would be to inform us about such delays,” a Satyam employee who has been with the firm for nearly 10 years said, wishing not to be named. “We were told to expect pay hikes on 14-15 August, and that (date) has already passed.”

Satyam didn’t respond to other questions from Mint. An emailed query hadn’t elicited a response till late Monday.

An analyst said it was unlikely Satyam’s move would increase attrition. “In uncertain times, attrition is normally under control and it has been stable in the past two-three quarters,” said Harit Shah, an equity analyst at Angel Broking Ltd.

Tata Consultancy Services Ltd announced a 10% salary hike for this fiscal, compared with 10-13% in the previous year, while Infosys Technologies Ltd offered a 11-13%increase against 12-15% a year ago. Wipro, which normally announces salary hikes forIndia-based employees in the September quarter, expects raises to be in the range of 8-9%.

“Moderation in wages has started ahead of the industry expectations,” said B.S. Murthy, head of Human Capital Consulting Pvt. Ltd, a Bangalore-based recruitment firm. “The industry was expecting wages to moderate with single- digit hikes in 2010 or 2011.”