Wipro Limited Downgraded to “Sell” at Zacks (WIT)

May 27th, 2015 by Rahul Jain No comments »

Zacks cut shares of Wipro Limited (NYSE:WIT) from a hold rating to a sell rating in a research report sent to investors on Tuesday morning.Outsourcing7

Zacks’ analyst wrote, “WIPRO LTD-ADR provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level certified IT Services Company globally. “

Zacks has also updated their ratings on a number of other information technology stocks in the last week. The firm downgraded shares of Siliconware Precision Industries from a hold rating to a sell rating. Also, Zacks downgraded shares of Pixelworks, Inc. from a hold rating to a sell rating. Finally, Zacks downgraded shares of pSivida Corp. from a hold rating to a sell rating.

Wipro Limited (NYSE:WIT) traded up 0.09% on Tuesday, hitting $11.66. 509,679 shares of the company’s stock traded hands. Wipro Limited has a 52-week low of $10.86 and a 52-week high of $14.18. The stock’s 50-day moving average is $12. and its 200-day moving average is $12.. The company has a market cap of $28.62 billion and a P/E ratio of 21.16.

Wipro Limited (NYSE:WIT) last announced its earnings results on Tuesday, April 21st. The company reported $0.15 earnings per share for the quarter, meeting the analysts’ consensus estimate of $0.15. The company had revenue of $121.42 billion for the quarter, compared to the consensus estimate of $121.27 billion. During the same quarter last year, the company posted $9.04 earnings per share. Wipro Limited’s revenue was up 4.2% compared to the same quarter last year. On average, analysts predict that Wipro Limited will post $0.59 earnings per share for the current fiscal year.

Wipro Limited is a global information technology (NYSE:WIT), services Provider. The Company develops and integrates solutions that enable its clients to leverage IT in achieving their business objectives at competitive costs. The Company uses its quality processes and global talent pool to deliver time to development advantages, cost savings and productivity improvements.


CVC leads race for $400m Serco arm

May 27th, 2015 by Rahul Jain No comments »

CVC Capital Partners, a global private equity house managing $71 billion in funds, has emerged the preferred bidder to acquire the Indian unit of business process outsourcing (BPO) major Serco Plc, valued at about $400 million, or Rs 2,500 crore, multiple people familiar with the matter said.Outsourcing7

CVC Capital and world’s largest private equity manager Blackstone Group had fired binding offers to acquire Serco’s Indian operations (formerly Intelenet) last month. Blackstone was making a strong bid to buy back Intelenet which it sold to Serco for $634 million four years ago, TOI reported in February this year.

In context, CVC Capital’s emergence as preferred bidder is surprising given that Intelenet still garners almost 15% revenue from some Blackstone portfolio companies like Hilton Hotels and Travelport. “CVC Capital is clearly the top bidder to clinch the deal, though Blackstone remains in the fray,” one of the sources cited earlier in the report said.

Senior executives from CVC Capital and its portfolio company — Philippines largest BPO company SPi Global —were in India recently to conduct due diligence on Intelenet’s centers and interact with the management. “We do not comment on transactions,” Serco Plc spokesperson Marcus Deville said in an emailed response. CVC Capital Partners could not be reached for immediate comments.

Sources said CVC Capital is exploring the possibility of merging Serco’s Indian unit with SPi Global to expand its footprint in India and the UK. The bid for Intelenet comes almost two years after it acquired Philippines’ largest BPO company SPi for over $300 million. This deal will be CVC Capital’s their first big bet on the Indian market, if they close the transaction without hiccups.

SPi operates an offshore-based model primarily serving US and Europe-based customers with more than 20,000 employees worldwide across 17 delivery locations in six countries including the Philippines, India, US, China, Vietnam and Nicaragua. It also operates a voice customer relationship management (CRM) business servicing both domestic and international customers.

Serco runs India’s third largest BPO operations after Genpact and TCS, employing over 40,000 people. It caters to customers in banking and financial services, insurance, retail, travel, telecom, healthcare, utilities and media. In November last year, Serco had announced it would divest private sector BPO businesses as part of a business restructuring plan that would see it focus on being a business to government providers across five core areas. The sale proceeds would be used to lower the net debt of the parent company.


IT outsourcing deal values hit 10-year low

May 27th, 2015 by Rahul Jain No comments »

Amid increasing automation and decreasing prices, the IT outsourcing industry has just recorded its worst first quarter in terms of annual contract value of deals awarded since 2004. However, the current slowness is not necessarily a negative thing.
The IT outsourcing industry just logged its worst first quarter in terms of annual contract value of deals awarded since 2004, according to analysis by outsourcing consultancy and research firm Information Services Group (ISG). Just $3.5 billion in annual contact value was awarded in the three-month period, down 27 percent from the same time last year, said ISG.

The mega-deal market showed particular softness this quarter, says ISG president John Keppel, but it was weakness in the Asia Pacific and the Europe, Middle East, and Africa (EMEA) regions that brought contract values down so significantly.

“For Asia Pacific it was really [a] tough comparison. In the first quarter last year, the region’s performance was at near record levels and this was simply impossible to repeat,” Keppel says. “Overall outsourcing activity, however, looks strong for the region so we put this largely down to timing with such a strong recent showing.”

The IT outsourcing deal slowness now is NOT a sign of things to come

After one of the strongest years yet for the IT outsourcing industry, the sluggish tempo of the quarter is unsurprising, according to ISG. Ultimately, 2014 turned into the third best year for the industry in the last decade—driven by a buyers’ market, a rise in contract restructuring, and an increase in mega relationships. But ISG’s analysts say early 2015 slowness is not necessarily a sign of things to come.

“IT outsourcing strength in the U.S. bodes well for the full year, and the first quarter dips in Asia Pacific and EMEA also suggest there should be more in the pipe,” says Keppel. “IT outsourcing solutions and client demands are changing rapidly, and as these change, they bring new opportunities for improved capabilities, improved flexibility, and lower costs—a combination we would expect most buyers to find irresistible.”

In a continuing trend from last year, buyers are testing the status quo and are willing to switch providers when they don’t think their current deals are serving them well in a dynamic technology environment. “We expect to see significant client interest in market-testing current provisions and looking to change to more modern, cloud-enabled IT outsourcing solutions,” says Keppel.

Larger deals (those worth more than $30 million annually) declined by 25 percent both in number and value over the previous year, while the volume of smaller deals continued to flow steadily, according to ISG.

An increasing push for automated solutions and robotics embedded in IT services may also help to explain this year’s early activity.  “There’s nothing surprising about the trajectory of the findings,” says Katharine Rudd, managing director of technology consultancy Alsbridge’s transformation services.

“The market has been changing over the last several years, with the automation of people and processes and with the enablement of cloud and robotic process automation. Sourcing strategies and transactions are also evolving, with non-traditional challengers in the [IT and business process outsourcing] space like Amazon Web Services changing the game on how customers procure and buy. All of this is blurring the lines and driving a migration away from the traditional outsourcing deals,” says Rudd.

The combination of more contracts being signed at lower value is an early indication that service provisions are becoming more efficient, says Keppel. That is “something we would associate with more widespread adoption of automation and robotics solutions,” he adds. “We are not seeing a massive uptick in specific automation deals, per se.  But, based on our volume and value numbers, we believe that the technology is increasingly being embedded within provider solutions.”

As the IT outsourcing price wars continue, those providers with strong automation propositions “will likely gain market share,” Keppel adds, “while others with less-well-developed capabilities will scramble to adopt the technology to remain competitive in an increasingly price-conscious marketplace.”


The dawn and dusk for IT service providers

May 27th, 2015 by Rahul Jain No comments »

In a recent post, I shared one of the questions most often asked of us at ISG: “How is the IT services landscape changing?” Most often, the questioner wants to know who is going to win at this new game.Outsourcing5

I have enough enemies already, so I won’t answer with specific service provider names, but I will share with you the insights I have about what seems to be working and what seems to be a solid foundation for success in the future.

Advances in digital technology and cloud computing mean radical and difficult changes for the service provider community, which is largely used to selling bodies although every one of them would tell you they prefer non-linear revenue.

Today, digital and cloud capabilities are also table stakes. Over 80 percent of the IT deals we advise have at least a component of digital/cloud somewhere in them. Who are the winners and losers? Here are some telltale signs, as I see them:

Winners are busy developing vertical-specific, highly robust, secure and repeatable solutions to business problems as flexible multitenant platforms. Losers sell towers, widgets and bodies. Winners make integration of these platforms to legacy systems and other platforms easy; losers try to go proprietary.

Winners understand that, while a big chunk of their product is still bits and bytes, the platforms they sell are front-office solutions that fundamentally change how their clients interact with customers and make money. Losers get stuck in features and benefits rather than working to solve issues with direct impact on the income statement or balance sheet.

Winners use application-centric approaches to make sure each application in the solution can live successfully in the cloud. Losers use asset-centric approaches, essentially adopting a build-it-and-they-will-come attitude that, in our experience, tends to fail. This does not mean that the winners get a pass on high-quality services and robust infrastructure as part of their business solutions—stability and scalability are required in this game.

Winners have relationships with new buyers—from the business unit and functional VPs to the COO and even the CEO. Losers will latch on to the CIO and his or her direct reports, competing harder and harder for the diminishing dollars they have to spend.

Winners have the wherewithal to help their clients change. They have the consulting capability and credibility to guide and stabilize their clients through what is sometimes dramatic transformation. Losers will keep trying to solve business problems with technological approaches and hang on to business models that will inevitably fade out of existence.

You can draw your own conclusions as to which service providers are in it for the long haul, welcoming the new dawn of the services economy, and which ones may be headed toward a gloomy dusk.


Infosys creates healthcare unit HILife

May 26th, 2015 by Rahul Jain No comments »

In what appears to be an effort to increase its focus on healthcare, Infosys will transfer the healthcare business of its US-based, wholly-owned subsidiary Infosys Public Services to itself for a consideration of $100 million . Outsourcing4

In its latest annual report, Infosys said it has created a new business unit called HILife to provide services to healthcare, insurance and life sciences businesses. The new unit will presumably combine its existing healthcare and life sciences business, which accounts for about 7% of its overall revenue of $8.7 billion, with the healthcare business of Infosys Public Services.

The thrust in healthcare comes at a time when industry rivals like Cognizant and Wipro are aggressively focusing on the space, with Obamacare opening up outsourcing opportunities that aims to brings millions of people under the healthcare insurance fold in the US. Both healthcare providers and payers as well as life sciences customers, including pharmaceutical, biotech and medical device companies, are outsourcing work to IT service providers.
Almost a quarter of Cognizant’s revenue comes from healthcare, while for Wipro, that figure is close to 12%, both significantly higher than for Infosys. Last year, Cognizant acquired TriZetto, a healthcare IT software and solutions provider, for $2.7 billion to strengthen its healthcare capabilities. Wipro’s healthcare business is expected to touch $1 billion this fiscal.

In his note to shareholders in the annual report, Infosys CEO Vishal Sikka described the company’s full year performance as “average”. “There were hard fought battles in a difficult climate, one in which clients’ expectations are changing, new emerging technologies are rapidly coming to market and where the landscape of services companies has become vastly more competitive,” Sikka said. He said the company faced internal challenges that lagged growth and a string of senior level exits put pressure on its business and performance.

India’s second-largest IT services firm’s growth lagged those of its peers last year. Revenue grew 7.1%, just about meeting the lower end of its guidance of 7%-9%.

“When we look at Infosys today, we can see that it has been a year of great transition for the company…We are learning to work in a new environment and in new ways and it has been a difficult learning experience. But with learning comes the promise of renewing ourselves and the opportunity to pursue entirely new horizons,” Sikka said.


Tax benefits for IT sector likely to be extended

May 26th, 2015 by Rahul Jain No comments »

The government is likely to extend the tax exemption benefits for software development and information technology-enabled services (ITES) by another five years to encourage investment, said a senior official of the finance ministry.Outsourcing3

The tax waiver on income from software and ITES may be extended to 2024 from June 30, 2019 now — in line with the government’s Digital Bangladesh vision.

The proposal is likely to be made when Finance Minister AMA Muhith places the budget for fiscal 2015-16 in parliament, officials said.

The move comes after three IT related organisations — Bangladesh Association of Software and Information Services, Bangladesh Computer Council, and Internet Service Providers Association of Bangladesh — jointly demanded extension of the tax break benefits till 2024 for the sake of the sector’s growth.

The organisations said it is imperative to increase the tax exemption period for software and ITES to ensure continued expansion and development of the IT sector and to help the government achieve the Digital Bangladesh vision by 2021.

The incentive will attract investment from foreign investors, according to the joint proposal from the three organisations to the National Board of Revenue.

ITES, also called web-enabled services or remote services, covers the entire gamut of operations which exploit IT for improving efficiency of an organisation.

The services encompass call centres, medical transcription, medical billing and coding, back office operations, revenue claims processing, legal databases, content development, payrolls, logistics management, GIS (Geographical Information System), and human resources and web services, among others.

The IT services industry, which employs more than 20,000 people, holds great potential. The sector serves both domestic and international clients from Europe, North America and East Asia.

The freelancing community has further supplemented IT exports, raking in close to $7 million in 2010, for instance.

Bangladesh appears consistently in top freelance work locations on sites like oDesk, eLance and the likes, said a study by KPMG in 2012. It said Bangladesh’s IT sector holds growth prospects owing to the international companies’ hunt for low-cost outsourcing destinations.

The country offers a vast pool of young, trained and English speaking resources — available at costs almost 40 percent lower than in established destinations like India and the Philippines.

The study said, with wages and operating costs rising in traditional outsourcing destinations like India and the Philippines, Bangladesh’s prospects are rising.

The country offers attractive business opportunities for multinationals interested in outsourcing or offshoring, the KPMG study added.


Unisys enters the software-defined data center market with Intel-based Dorado systems

May 26th, 2015 by Rahul Jain No comments »

Last week Unisys announced its most powerful Dorado systems yet. Ten years in the making, Unisys has fully converted its Dorado system to Intel XeonOutsourcing2 processors and introduced them as the 8300 ClearPath line. And ClearPath OS 2200 is a complete operating environment for ClearPath Servers that includes all of the software needed to operate a mission-critical Dorado server. The OS 2200 operating environment is fully integrated and tested together with all software and platforms to ensure the seamless operation you need for your business-critical core business applications and databases.

Unisys is a global business information technology company that offers a full spectrum of technology software, hardware, and services. This latest development proves that Unisys, perhaps the world’s oldest technology company, still innovates and moves technology forward. Unisys developed the world’s first commercially available digital computers, the BINAC and the UNIVAC.

Today, Unisys continues to lead the technology revolutions in areas of cloud computing, cybersecurity, social computing, big data, and mobility.

Unisys offers a complete portfolio of software for ClearPath OS 2200 Servers that includes software for the following areas:

Application development tools
Open source development tools
Database, query and reporting tools
System tools and utilities
Performance monitoring
Communications and networking

One of the current focuses of the ClearPath systems line is rapid deployment of distributed environments, such as service-oriented architecture (SOA) deployments. And the new systems can run applications written for earlier Intel and CMOS based Dorado systems without modification.

The new Dorado systems represent the culmination of Unisys’ decade-long initiative to transition the entire ClearPath architecture from proprietary complementary metal oxide semiconductor (CMOS) processor technology to a software-based fabric architecture running on Intel processors.

The advanced, software-based fabric infrastructure of the ClearPath 8300 Series uses high-speed interconnect technology to link all computing resources and components. Unisys secure partitioning (s‑Par®) software manages all application workloads on the system. Each partition is a software-defined blade with dedicated processing, memory and input/output resources for each workload, eliminating resource contention and enabling fast, predictable application performance with exceptional security.

“The ClearPath architectural transition is both a singular achievement and a new beginning,” said Jim Thompson, chief engineer, Unisys, who guided the 10-year evolution. “The Dorado 8300 Series and our other Intel-based ClearPath systems provide clients with an open, secure computing environment that maximizes their long-term investment in mission-critical software. Plus, by establishing the fabric infrastructure as the new core of ClearPath systems, we have laid the foundation for software-defined data centers that give our clients extraordinary flexibility to integrate new solutions as quickly as their business needs change.”

The Dorado 8300 will participate in clusters with earlier Intel-and-fabric-based Dorado models, as well as with even earlier Intel- and CMOS-based Dorado systems, providing an enriched level of availability, efficiency and integrity in high-performance transaction processing that few systems can attain.

The Dorado 8300 series servers are generally available on May 29, 2015.


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