Archive for June, 2011

IT firms Wipro, HCL look beyond software development for outsourcing

June 30th, 2011

When Thanga Thambi, a pastry chef, was offered a job by India’s third biggest software exporter last year, a role at the company’s cafeteria appeared likely. “What can I do for an outsourcing company- what is the connection?” Thambi wondered.

Thambi’s role involved baking cookies, but not for Wipro’s cafeteria. Wipro was looking to hire an expert chef for designing a microwave oven for a durables manufacturer in the US. “I never thought there could be any connection between what I knew and what a company like Wipro does. But I realised that my experience with ovens was what they’re looking for,” says Thambi.

As India’s growing outsourcing firms look beyond traditional software development and maintenance business, specialised projects that range from tracking heart beats of patients, to designing the next generation of consumer products, and even developing marketing campaigns and collaterals for US automakers, mark the beginning of a shift.

Last year, NS Bala, the head of Wipro’s $750-million manufacturing business unit was looking to start a new project for a customer. The customer, a consumer products firm wanted to build a high end micro wave oven that would meet the twin objectives of maintaining taste and speed of cooking. Most products baked in a microwave lose some taste, a concern the company wanted to address in its newer products. “Thambi’s job for the next few months involved monitoring the colour, texture and taste of cookies and cakes and give feedback to the company to fine tune the product,” Bala says.

At Aditya Birla Minacs, a company traditionally known as a low-cost BPO service provider, a team of 400 advertising and marketing professionals is helping carmakers like Honda and Hyundai US sell more vehicles. Over a year ago, Minacs helped Honda sell 33,000 more vehicles and generate an incremental profit of $ 295 million in a year.

The team makes creatives, strategy and promotions for the automak-ers. They even generate sales leads, run marketing campaigns and manage incentive programmes.

“About 25 % of our revenue comes from IT enabled BPO services such as the marketing project we do for automakers. There is an 8-10% difference in margins over the traditional BPO services. But here, we have to invest on the platform and talent.” “In three years, we want IT enabled BPO services to contribute to 50% of our revenues,” said Deepak Patel, chief executive officer for Aditya Birla Minacs.

In another instance, a group of nurses have been monitoring the heart beats of hundreds of American patients. The customer, a medical equipment maker, is testing a cardiac monitoring device through which a patient’s heartbeat is monitored thousands of miles away in Bangalore. The patient or a healthcare provider is alerted if an aberration is noticed. As proof of the greater role technology plays in daily life Wipro’s head of the medical devices division, Jyotirmay Datta, cites the example of how one these nurses saved the life of an old patient whose heart beat she was monitoring a year back.

“The nurse noticed that that the patient had not been moving at all for a few hours and realized that something was amiss as it would be the middle to the day in the US, a time when the patient would normally be active. The nurse alerted the local paramedic who in turn alerted the patient’s family member. On arriving home, the family found that the patient, an old lady, had fallen in the house and fainted,” Datta recalls.

Source:http://economictimes.indiatimes.com/tech/it-firms-wipro-hcl-look-beyond-software-development-for-outsourcing/articleshow/9045828.cms

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Nokia to shift 800 staff to Accenture

June 30th, 2011

Nokia India is about to shift 800 employees working on the Symbian platform at its R&D unit in Bangalore to management-consulting firm Accenture, a senior executive said.

Last week, the Finnish handset maker inked an outsourcing deal with Accenture wherein the world’s largest IT consulting firm will provide software development and support for Symbian till 2016. Discussions with the employees will begin next week and carry on till Octoberend. Majority of the employees are expected to shift to Accenture; the process will be completed by the year-end. Some of them are working on Nokia projects, they will finish them and move to Accenture,” a company spokesperson told ET.

Symbian is Nokia’s legacy software and one of the most widely used mobile phone operating systems, with an installed base of over 225 million phones. Earlier this year, Nokia said it would switch to Microsoft’s Windows Phone 7 software from Symbian, which will be phased out in about two years.

At the same time, Nokia will continue to invest in Symbian by bringing software upgrades and launching more smartphones on the platform, said Nokia India marketing director Viral Oza. On Wednesday, the market leader launched Symbian Anna, the upgraded version of Symbian, and two smartphones based on the new platform. Over the next 12 months, the company will introduce 10 new smartphones on the Symbian platform.

By August the company will ensure all existing Nokia smartphones users can download Symbian Anna for free and in July, the company will begin to ship the N8, E7, C7 and C6-01 phones embedded with the new software to India.

“We’re not going to stop support to Symbian overnight because the ambition is not just to cater to existing users but also selling 150 million more Symbian devices globally. We will continue to invest in Symbian till 2016, improve the S 40 series and in parallel introduce the Windows Phone,” Oza said.

The company’s strategy has some criticism from analysts but Gartner’s principal research analyst Anshul Gupta said it may be a perfect fit for India and China, its key growth markets.

“Nokia is significantly losing market-share globally and in India but Symbian is still in great demand in India. Nokia has around 40% market share in smartphones segment in the country. It plans to sell 150 million handsets on Symbian globally, a large part of that can come from India and China because of its brand recall and prices at which it retails in these markets,” Gupta said. Nokia faces tough competition from Samsung, Apple and Blackberrymaker Research in Motion (RIM) across the world while domestic and Chinese handset makers are eating up market share in India. The world’s largest phone maker by volume in April overhauled its phone business, announced to reduce its global workforce by 7,000 apart from outsourcing Symbian software to Accenture. Nokia will launch the Windows Phone by the end of the year but the India launch has not been finalised.

Source:http://economictimes.indiatimes.com/news/nokia-to-shift-800-staff-to-accenture/articleshow/9046499.cms

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IT and BPO firms looking beyond software development and maintenance business

June 30th, 2011

When Thanga Thambi, a pastry chef, was offered a job by India’s third biggest software exporter last year, a role at the company’s cafeteria appeared likely. “What can I do for an outsourcing company- what is the connection?” Thambi wondered.

Thambi’s role involved baking cookies, but not for Wipro’s cafeteria. Wipro was looking to hire an expert chef for designing a microwave oven for a durables manufacturer in the US. “I never thought there could be any connection between what I knew and what a company like Wipro does. But I realised that my experience with ovens was what they’re looking for,” says Thambi.

As India’s growing outsourcing firms look beyond traditional software development and maintenance business, specialised projects that range from tracking heart beats of patients, to designing the next generation of consumer products, and even developing marketing campaigns and collaterals for US automakers, mark the beginning of a shift.

Last year, NS Bala, the head of Wipro’s $750-million manufacturing business unit was looking to start a new project for a customer. The customer, a consumer products firm wanted to build a high end micro wave oven that would meet the twin objectives of maintaining taste and speed of cooking. Most products baked in a microwave lose some taste, a concern the company wanted to address in its newer products. “Thambi’s job for the next few months involved monitoring the colour, texture and taste of cookies and cakes and give feedback to the company to fine tune the product,” Bala says.

At Aditya Birla Minacs, a company traditionally known as a low-cost BPO service provider, a team of 400 advertising and marketing professionals is helping carmakers like Honda and Hyundai US sell more vehicles. Over a year ago, Minacs helped Honda sell 33,000 more vehicles and generate an incremental profit of $ 295 million in a year.

The team makes creatives, strategy and promotions for the automak-ers. They even generate sales leads, run marketing campaigns and manage incentive programmes.

“About 25 % of our revenue comes from IT enabled BPO services such as the marketing project we do for automakers. There is an 8-10% difference in margins over the traditional BPO services. But here, we have to invest on the platform and talent.” “In three years, we want IT enabled BPO services to contribute to 50% of our revenues,” said Deepak Patel, chief executive officer for Aditya Birla Minacs.

In another instance, a group of nurses have been monitoring the heart beats of hundreds of American patients. The customer, a medical equipment maker, is testing a cardiac monitoring device through which a patient’s heartbeat is monitored thousands of miles away in Bangalore. The patient or a healthcare provider is alerted if an aberration is noticed. As proof of the greater role technology plays in daily life Wipro’s head of the medical devices division, Jyotirmay Datta, cites the example of how one these nurses saved the life of an old patient whose heart beat she was monitoring a year back.

“The nurse noticed that that the patient had not been moving at all for a few hours and realized that something was amiss as it would be the middle to the day in the US, a time when the patient would normally be active. The nurse alerted the local paramedic who in turn alerted the patient’s family member. On arriving home, the family found that the patient, an old lady, had fallen in the house and fainted,” Datta recalls.

Source:http://economictimes.indiatimes.com/tech/ites/it-and-bpo-firms-looking-beyond-software-development-and-maintenance-business/articleshow/9045828.cms

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Foreign investors prefer pure-play BPOs to IT stocks

June 30th, 2011

They are part of the same outsourcing industry, yet overseas investors seem to prefer pure-play BPO firms to IT service stocks.

A look at the year-to-date performance of foreign-listed shares of pure-play BPO firms as well as IT service companies (which employ a significant number of Indians) shows that the value of BPO firms like the London-listed iEnergizer and its US-listed peers like Syntel, EXL, Genpact andConvergys have given decent returns so afrin 2011.

In contrast, the value of IT service firms like Infosys, iGate, Patni, Cognizant and Wipro have dropped. In some cases the drop was as much as 30 per cent. Analysts feel that IT services are hit due to macro-overhang and early- cycle benefactors, while BPO firms enjoy the general perception of being a late-cycle play on recovery in IT spending with offshore penetration levels on the rise.

Numbers tell the story better. After a stupendous 150 per cent rise in 2009 and 62 per cent gain in 2010, the stock of Cognizant is down nearly one per cent in 2011. The Nasdaq-listed American depository receipts (ADRs) of Infosys gained 124 per cent in 2009 and 38 per cent in 2010 but have dropped 16 per cent in 2011 so far.

This trend is repeated for the NYSE-listed Wipro ADRs (down 14 per cent in 2011), iGate (-16 per cent) and Patni (-30 per cent).

TCS has no overseas listing while its BSE-listed shares have been flat this calendaryear.

Barring Mahindra Satyam, which is seeing better days in terms of management and growth, overseas investors are clearly selling the titans of IT services.

Most IT service firms that are into silent period ahead of the June quarter earnings refrained from comment. Analysts were much more forthcoming. “I think the main reason for the divergence is that IT firms had a very strong stock performance and very strong financial growth quite early in the economic recovery and are viewed as more early-cycle stocks,” said David J Koning, analyst at Robert W Baird & Co. He added that most of his ratings on IT service stocks were neutral while those for BPO stocks were ‘outperform’.

While demand for offshore IT services remains healthy and the dollar-denominated revenue growth in 2011-12 is seen at 18- 25 per cent for top for IT service vendors, decibel levels have recently gone up on the sovereign debt crisis in Europe and slowing the pace of economic growth in the US. Hitesh Shah of IDFC Securities feels that micro- demand indicators (pipeline, sales cycle, win rates, etc) as also management commentaries from Indian and global technology majors still point to sustained growth in demand.

“We do not see growth at risk unless the US economy gets into a slowdown or recession,” Shah of IDFC said. But overseas investors seem to be already getting uncomfortable about IT. On the other hand, BPO firms seem to be a more attractive option.

Shares of the London-listed iEnergizer, a Noida-based Indian BPO firm, are up 7.3 per cent. Investors in the US-listed BPO firms Syntel, EXL, Genpact and even Convergys (which has a big presence in India) have not lost any money in these counters in so far 2011. Syntel has gained over 20 per cent, Genpact 12.4 per cent and EXL 8 per cent. At 3 per cent in 2011, Convergys too has seen appreciation in its stock price. The only exception in the BPO pack seems to be WNS, which is down 22 per cent.

Many believe that BPO stocks are in a sweet spot. Manish Hemrajani, senior research analyst at Oppenheimer & Co, said, “BPO tends to be a late- cycle play on a recovery in IT spending and I believe we are in the second inning of that cycle. Additionally, Genpact and EXL have clearly benefited from their recent acquisitions of Headstrong and OPI, respectively.

WNS has company specific issues of high debt and low growth that haven’t allowed it to participate in the upturn. Optimism about Convergys is due to anticipation of a restructuring with a new CEO at the helm who has a history of divesting assets.”

Followed by a sharp recovery in IT spending in 2010 and given an improving macro- economic environment in the US, investors are positive on IT / BPO outsourcing, especially offshore vendors, as companies continue to manage costs closely. “IT spending saw a sharp rebound in 2010. Coming off a weak state of affairs in 2008- 09, the year 2010 was big for IT spending, driven by a strong demand in the financial vertical and continued push towards offshoring. The outlook for BPO is stronger now with large deals set to be won from existing as well as new clients. The stock performance may be showing that investors feel BPO will still get deals but IT may not, if slowdown comes again,” said a top IBM executive, who is not authorised to speak to media.

Source:http://www.mydigitalfc.com/news/foreign-investors-prefer-pure-play-bpos-it-stocks-897

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Basware Expands, Introduces New BPO Offering — From P2P Software to AP Outsourcing

June 30th, 2011

Basware (one of the most capable invoice automation/electronic invoice presentment payment software providers in the market) recently announced it was entering the AP outsourcing market with a new BPO offering of its own. This marks an important shift for the vendor, which has expanded into the broader P2P applications market. The announcement also creates competition for BPO firms that might be considered for similar types of transactions where companies want to hand over the tactical components of the AP equation. According to the news, Basware has launched its new InvoiceOut solution, “a process outsourcing service designed to fully automate key aspects of the Accounts Payable (AP) function.” The offering combines “process expertise” with Basware’s software capability, focusing on automation rather than labor cost arbitrage.
Specifically, the solution brings together three key elements: “access to resources that can be scaled up and down based upon business need, best practice process expertise and a flexible, [and] on demand technology infrastructure.” As a component of the resources Basware can deliver, for example, InvoiceOut includes “daily invoice related tasks such as dispute management to handle any discrepancies with the invoice as well as supplier engagement to ensure disputes are resolved quickly.” The solution relies on both Basware’s invoice automation technology as well as the Basware Open network, a supplier network that currently counts over 300,000 actively transacting buyers and suppliers.

I had the chance to trade notes with Robert Cohen, Basware’s VP for North America, asking him a number of specific questions around the launch. My first question to him was whether the services component of the outsourcing offering will primarily be delivered onshore or off. He suggested, “the services will be a combination of both. There will be local services (in local language, local time zone) in the form of a Service Manager/Account Manager and help desk. Scan & capture services are local or regional while the data validation and other manual tasks are offshored to India.”

Stay tuned as our discussion with Basware regarding their new AP outsourcing offering continues.

Source:http://www.spendmatters.com/index.cfm/2011/6/29/Basware-Expands-Introduces-New-BPO-Offering–From-P2P-Software-to-AP-Outsourcing-Part-1

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Indian IT, BPO face threat from insiders: Study

June 30th, 2011

India’s growing outsourcing sector faces security threat from company insiders, a survey by global audit firm PricewaterhouseCoopers and the Data Security Council of India shows.

Nearly 90% of all security breaches at 13 small, mid-sized and large IT/ITeS companies in 2009-10 was an insider job, the survey shows – much higher than 84% insider threats in 2008-09 and 82% in 2007- 08.

Threats are not limited to financial fraud alone and there could be cases of intellectual property theft too. For example, the vice-president of an elearning firm – sacked from the company later – was accused of stealing the source code of the company’s future product. He subsequently used the product for his new venture and the e-learning firm had to book nearly Rs 47 crore in losses due to the theft.

“Insider-led issues have increased. They know the vulnerabilities of the organization , and what is important and what is not. Partners, vendors and dissatisfied employees are also potential threats,” Sidharth Vishwanath , associate director, consulting, PwC, said. The survey says most service-provider organisations resolved cases of insider incidents internally.

The main reason for not involving outside law-enforcement agencies is insufficient level of damage done by these insiders. However, Vishwanath says companies are also afraid that such incidents if made public could lower the credibility of the company.

So, how does an insider cause a security breach? Most respondents feel insiders at service provider organisations copied sensitive information on mobile devices like USB drives or PDAs, sent out information via email and even wrote information on paper.

Kamlesh Bajaj, chief executive officer, Data Security Council of India, says: “Comparatively, our outsourcing companies have higher levels of data security. However, the threat landscape is changing fast with a multitude of end-point devices such as smartphones and tablets being added to the enterprise.” DSCI is an independent self-regulatory organisation set up by industry body Nasscom to promote data protection and develop security and privacy practices in the Indian industry.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/Indian-IT-BPO-face-threat-from-insiders-Study/articleshow/9040108.cms

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Outsourcing firm Serco set for £5bn of revenues by end of 2012

June 29th, 2011

erco expects to rack up revenues of £5bn by the end of 2012, despite admitting that it has been hampered by the scale of government austerity measures.
The outsourcing firm – which operates public services from leisure centres to prisons – said it had been encouraged by growth in international markets, adding that its recent £385m acquisition of Indian firm Intelenet will be complete within weeks.

Money spinner: Outsourcing firm Serco expects to rack up revenues of £5bn by the end of 2012, despite admitting that it has been hampered by the scale of government austerity measures
However, it warned that government austerity measures, coupled with ‘uncertainties regarding public sector reform’ meant the UK market was ‘challenging’.

Source:http://www.thisismoney.co.uk/money/markets/article-2009384/Outsourcing-firm-Serco-set-5bn-revenues-end-2012.html

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