Archive for July, 2011

New space race: Orbital outsourcing to fill shuttle void

July 19th, 2011

When the space shuttle Atlantis launched July 1, it had one primary mission: Resupply the International Space Station. And when it returns to Earth, another spaceship is ready to take on that mission – for a profit.

A California company has both a rocket and a $1.6 billion NASA contract that could have it supplying the ISS by the end of the year. Within the next six months, ace Exploration Technologies Corp., or SpaceX, plans to make its first test dock with the orbiting lab and deliver supplies, a major step in NASA’s strategy to remain in space without a spaceship of its own.

“We see Dragon and Falcon 9 as inheriting the Shuttle’s legacy,” SpaceX spokesman Bobby Block said of the company’s capsule and rocket, both built using nearly $300 million in NASA seed money.

The shift from NASA-owned ships to essentially rented vessels has sparked a wave of worry over the future of space travel in general. Perhaps nowhere is the anxiety more pronounced than in Brevard County, the heart of Florida’s fabled Space Coast.
Through attrition, layoffs and canceled contracts in a process that began in 2008, the retirement of the shuttle program is expected to cost the region $2.8 billion in economic activity, and about 13,000 jobs. United Space Alliance, a consortium of private contractors responsible for many of the shuttle operations, told Florida regulators they plan to eliminate more than 1,900 jobs within the next six weeks alone.

NASA promises the private-sector space flights will be a temporary break in the agency’s pursuit of cosmic destinations.

A fledgling NASA program would build a new ship capable of returning to the moon or landing on an asteroid. Both are seen as potential midway points for a manned mission to Mars. That kind of undertaking would likely bring the Space Coast its third big windfall, following the heydays of the Apollo and shuttle programs.

Until then, though, a certain amount of hope rests on spaceships for hire.

“That’s our opportunity to create more opportunity for jobs post-shuttle, where in the Apollo days we didn’t have that chance,” said Lynda Weatherman, head of the Economic Development Commission for Florida’s Space Coast. She was referring to the lean years at the Kennedy Space Center, as the United States ended its Moon missions on Apollo rockets while gearing up for the shuttle trips to Earth’s orbit.

“There is work to be done,” she said. “The space station is there.”

Space “tourism” gets much of the attention when it comes to private spaceflight. Richard Branson’s Virgin Galactic has already collected $57 million in deposits for flights 60 miles into the sky, high enough to both experience weightlessness and see the Earth’s curvature, a spokeswoman said. The spacecraft is going through tests before it can make an inaugural flight; tickets cost $200,000.

But replacing the shuttle has prompted a more high-stakes space race as companies compete to snag lucrative delivery contracts – both cargo and crew. Until private firms are cleared for human space travel, NASA plans to pay Russia to bring astronauts to the space station. The cost should be about $65 million per seat. SpaceX is testing a vessel it says can do the job for about $20 million per passenger.

Even the space program’s biggest supporters concede private companies can probably put payloads and astronauts into orbit faster and cheaper than NASA can. Space flight has gotten routine enough that the margins are squeezable.

“It’s really not rocket science anymore,” said Dale Ketcham, director of the Spaceport Research & Technology Institute at Kennedy Space Center, a research center run by the University of Central Florida. “It’s still dangerous. It’s important. It’s not cheap. But we’ve been doing it for 50 years. The Russians have been doing it longer. The Chinese can do it. The Indians will be doing it in two years.”

SpaceX is run by Elon Musk, the founder of PayPal, the leading processor of online transactions. Among its competitors for NASA contracts for human spaceflight: Blue Origin LLC, a company based in Washington State and backed by Jeff Bezos, founder of Amazon.com Inc. NASA awarded Blue Origin about $25 million in seed money to help develop a spaceship for the post-shuttle era.

Two other companies are in the running to take over the shuttle’s delivery route to the ISS: Sierra Nevada Corp., of Sparks, Nev., and Boeing Co., long one of NASA’s primary contractors.

“The space shuttle had its job. It was like a big moving truck,” said Sierra Nevada Chairman Mark Sirangelo, referring to the shuttle’s central role in assembling the ISS. “Now you’ve moved into your house. You just want an SUV to get you around town.”

While workers at the Kennedy Space Center prepared Atlantis for the final journey to the ISS, heavy equipment operating just outside the gates were beginning to clear the way for the spaceport’s commercial future. Veiled in clouds of dust, bulldozers and dump trucks spread fill along a spur road called Space Commerce Parkway, laying the foundation for what NASA is calling Exploration Park.

“I assure you,” said Jim Ball, the NASA executive charged with leasing Exploration Park, “there will be life at Kennedy Space Center after the shuttle retires.”

But will there be wanderlust? That’s the question looming over NASA’s move toward private spacecraft. By relying on companies like SpaceX to get astronauts into orbit, critics say, NASA risks losing the talent required to land a human on Mars. Even worse: What if China gets there first?

“There aren’t too many people in the country who can do these sort of things,” said George Cecala, news secretary to U.S. Rep. Bill Posey, a Republican from Brevard who worked as a NASA contractor in the early 1970s but was laid off when NASA ended the Apollo program.

Under pressure from lawmakers in Florida and other states with large space industries, NASA is pursuing a vehicle that would let it bring astronauts to the space station in the event a private contractor can’t. Known as Orion, the “multi-purpose” vehicle’s main function would be to transport astronauts beyond Earth’s orbit for the kind of budget-busting missions that defined America’s space program since the 1960s.

“There is no money in space exploration,” said Ritch Workman, a state representative from Melbourne and chair of the Florida Space Caucus. “There is no money for SpaceX to say, ‘You know what, let’s go check out the moon.’ ”

But advocates of NASA’s commercial contracts see the agency fueling a new wave of entrepreneurship in space. Bigelow Aerospace, owned by the founder of the Budget Suites hotel chain, is counting on a private craft to haul customers to a space station it is already trying to lease.

“We will provide a comprehensive turn-key experience including our clients’ transportation and on-orbit needs,” reads Bigelow’s website. “Whether you are a sovereign nation developing an astronaut program, a corporation interested in microgravity research, or an individual with a desire to experience space, we can help you achieve your goals.”

Spacecraft companies think they can leverage NASA dollars into a larger portfolio of private clients, from satellite operators to zero-gravity vacation homes.

Source:http://www.sacbee.com/2011/07/18/3776635/new-space-race-orbital-outsourcing.html

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IBM shows strength as all of its product lines hum

July 19th, 2011

IBM Corp. raised its income guidance for the year on Monday as earnings in the latest quarter increased 8 percent because of growth in all three of its major product categories.
The results show the strength of the 100-year-old company’s efforts to link its mainframes and other computing hardware with its newer businesses, software and services. Those two categories bring in the bulk of IBM’s income.
Signings of new contracts for services increased — a welcome sign for Wall Street after a decline last quarter.
But the company faces questions about whether its profit increases are sustainable. Some analysts worry about increased competition, specifically in outsourcing, the biggest part of IBM’s services business.
Investors gave the numbers a tepid endorsement. The stock rose 2 percent.
Net income was $3.66 billion, or $3 per share, in the second quarter compared with $3.39 billion, or $2.61 per share, a year ago. Excluding items, IBM earned $3.09 per share, ahead of the $3.02 per share analysts expected.
Revenue increased 12 percent to $26.7 billion, ahead of the $25.4 billion analyst estimate.
New contract signings in services increased 16 percent over last year to $14.3 billion. They had declined 14 percent in the first quarter, raising fears about the robustness of IBM’s pipeline of new deals.
IBM has stopped including this figure in its earnings releases; it can now only be found deep in the charts accompanying the results. Instead, IBM insists that its backlog of services deals that are already in the pipeline is a better predictor of future revenue. The backlog is now $144 billion, $15 billion higher than last year.
Guidance for 2011 calls for at least $13.25 per share, excluding items, up from the previous estimate of $13.15.
But the company’s history makes it subject to high expectations. IBM, which is based in Armonk, N.Y., has not only consistently raised its guidance, but it has also taken the rare step of setting a specific long-term profit goal – $20 per share in operating earnings by 2015. So investors now expect steady guidance increases.
Brian Marshall, an analyst with Gleacher & Co., said he was disappointed with the latest numbers. IBM’s income should have been higher considering that revenue was more than $1 billion higher than estimates, he said.

Source:http://www.chron.com/disp/story.mpl/business/7658965.html

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TCS, Wipro, Infosys and HCL focus on fixed price contracts coincides with spike in unbilled revenues

July 19th, 2011

Long blamed for shying away from risk, India’s technology firms are now beginning to take on projects linked to future milestones and are even acquiring customer staff as part of large, complex outsourcing contracts.

Such projects will help local companies compete aggressively with multinational rivals. This risk-taking is beginning to show on the balance-sheets of software companies like Tata Consultancy Services , Wipro, Infosys and HCL Technologies in the form of ‘unbilled revenue’. Simply put, this pertains to work completed for which a bill has not yet been issued to clients.

Unbilled revenue has now grown from anywhere between 17% and 33% of total revenues for some leading IT firms. This coincides with a rise in fixed price contracts. “It’s a double edged sword-but with the kind of cash we have, it’s more likely to help us snatch share from established multinationals than be a drag on our balance sheets,” said the CEO at one of the top five technology firms.

He requested anonymity because his company is preparing to announce earnings later this month. Unbilled revenues are different from normal receivables as the bill is yet to be issued by software firms to clients for the work that is already completed.

They can create some pressure on cash flows. Cash flows are crucial for IT companies as monthly salary payouts account for more than 40% of revenue. Even if IT companies have no debt, a reduction in cash flow would mean revenue foregone-like interest earned from bank deposits or short term investments.

“The trend we see is that collection cycles (number of days it takes to collect money from customers) have gone up,” says Abhishek Shindakar, IT analyst with ICICI Direct. “Actually, there are a number of factors responsible for the increase in unbilled revenue but companies do not reveal any of them,” he adds.

Companies such as Infosys, the country’s second biggest exporter, say unbilled revenues creeping up are not a risk, but reflect the changing nature of the business.

“The first reason for unbilled revenue going up is fixed price contracts going up; maybe in some cases the milestones have not been reached yet. The second reason is that we are doing more transformational projects and those are also milestone based,” says V Balakrishnan, CFO of Infosys.

By moving more projects to fixed price model, tech firms like Infosys are moving beyond the traditional system wherein customers paid them based on the number of hours put in by each software engineer.

“It will not have an impact on working capital since we ensure that our milestones equate well with our costs. Fixed price contracts are beneficial because the productivity gains also come to us,” adds Balakrishnan.

Shindakar and his colleague Siddhartha Sethia have analysed unbilled revenue and receivables for the top four Indian companies since March 2009. Their conclusion ranks TCS at the top and Wipro at the bottom of the ladder.

TCS, the largest among the four with employee strength in excess of two lakh, succeeded in bringing down the share of unbilled revenue to total revenue by 6.5 percentage points between March 2009 and 2011. In contrast, for Wipro, this number worsened by more than 9 percentage points.

Source:http://economictimes.indiatimes.com/tech/ites/it-firms-focus-on-fixed-price-contracts-coincides-with-spike-in-unbilled-revenues/articleshow/9276986.cms

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Infosys eyes Gujarat for setting up new campus

July 19th, 2011

After auto makers, PSA Peugeot Citroën and Ford, IT major Infosys Limited is vying for land in Gujarat. N R Narayana Murthy, chairman and chief mentor of the company, will meet Gujarat Chief Minister Narendra Modi on Tuesday to discuss setting up of a campus in the state.

Speaking on the sidelines of the first convocation of Ahmedabad University (AU), Murthy said: “We are waiting for the Gujarat government to give us land. It is now the state’s decision to do that. I am also meeting the CM tomorrow where we will talk about it.” Murthy presided over the convocation of the first MBA batch comprising 110 students and eight BBA (Honours) graduates.

Talking about apprehensions of a slowdown in the outsourcing industry, Murthy said: “As long as the concept of value-for-money prevails, the outsourcing industry will keep going.”
Addressing the convocation Murthy said: “While India’s economic growth rate is the second highest in the world; its stock markets are on fire, FDI in the country is galloping, achievements in the field & technology are also remarkable.”

“There is also a different picture of India. People at large are not benefiting from the phenomenal progress the country has made. It has not got freedom from hunger, illiteracy and diseases. Despite having 1/6th of the total population in the world, the country does not figure in the list of top 100, when it comes to the human development index. In such a backdrop, you are a few of the blessed ones, (those) who can transform India and facilitate inclusive and equitable growth prosperity.”

“As we want to improve on the human development front, we should do it with due commitment and proactivism rather than just blaming the destiny or the system. I have full confidence in the power of youth,” Murthy added.

Source:http://www.business-standard.com/india/news/infosys-eyes-gujarat-for-settingnew-campus/443188/

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Scot Finnie: IT is not in Kansas anymore

July 18th, 2011

You may not be conscious of it, but tech has shifted several degrees in the 2000s. Trends such as server virtualization and cloud computing didn’t exactly creep up on us. It’s a good idea to chart some of the more notable developments to keep things in perspective.

10. Microsoft’s declining clout. Microsoft is out from under federal scrutiny. But the company’s dominance of the desktop has waned, along with the possibility of it taking unfair advantage of competitors and customers.

9. China’s supercomputers. A Chinese system topped the November 2010 ranking of the world’s fastest supercomputers. It was a first for China, which took the spot held by the U.S. since 2002. (A Japanese system moved into first place last month, but China has two of the top five spots.)

8. Global outsourcing. Although it began much earlier, global outsourcing has had a much greater effect since the turn of the century. Purchasing IT services from third parties goes hand in hand with the rapidly changing role of IT in business.

7. Server virtualization. Although it wasn’t widely recognized at the time, the 2001 release of VMware’s first server product was a landmark event. Server virtualization has revolutionized the way IT purchases and provisions server horsepower.

6. Online purchasing. A decade or more after its birth, e-commerce has become pervasive enough to be a little mundane. For businesses, buying commodity goods and services no longer requires laborious research and paperwork.

5. Cloud computing. At least some IT shops are seriously considering sourcing critical IT services from the likes of Amazon and Google. Many companies source IT applications out of the cloud. Cloud computing, like global outsourcing, is a natural extension of IT’s new mission: to focus on core competencies and use technology to create unique business value aimed at increasing profit.

4. The consumerization of IT. The most notable consumer advances in this young century — digital cameras, GPS, online/mobile video, wireless broadband and lightweight, Web-based apps — are all present in tablets and smartphones. Because these devices let people take work with them wherever they go, productivity is soaring. During the recession, many businesses have come to rely on that productivity. The result is an end-user-driven technology revolution.

3. Tech market caps. It’s still difficult to believe that Apple is the second-largest company in the U.S. and the highest-valued tech company. Microsoft and IBM are neck and neck, trailing Apple by $100 billion. What alternative universe is this?

2. Tech IPOs. Pandora and LinkedIn are just two of the tech companies that have gone public recently, with Zynga, Groupon and LivingSocial expected to join them soon. Coming up: Yelp, Facebook and Twitter. There’s a specific trend to this spate of tech IPOs: They’re all Internet services, and many are social networking sites.

1. Social networking. Social networking and mobile apps are the software side of the consumerization of IT. Remember the expression “It’s not what you know, it’s who you know”? Social networking rewrites the rules of how you get to know people.

Many of us who have worked in or near the tech industry have a tendency to go with the flow of the rapid pace of technological change. But if you’re drifting along with the current, are you spending any time drawing conclusions?

For example, the consumerization of IT is a transformational change, not a fad. Social networking isn’t a useless time-waster. These trends represent a whole new way of gathering information, staying up to date on the job and doing business. If you’re not living it yet, you will be.

Source:http://www.computerworld.com/s/article/357610/IT_s_Not_in_Kansas_Anymore

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Outsourcing can improve efficiency

July 18th, 2011

Companies considering IT outsourcing in London are longer being looked upon as organisations that cannot cope with their workloads, but instead as industry pioneers looking to develop their infrastructure, it has been claimed.

According to Jagdish Dalal, managing director at the Association of Outsourcing Professionals, outsourcing is now seen as a sensible business decision which could help many firms cut their operational costs and improve their efficiency.

He told the Financial Times that IT outsourcing can also help companies focus on the things that really matter.

“Outsourcing is providing companies with alternative business models, whereby they can manage a small but market-differentiating core while engaging expert third parties to perform the necessary work,” he stated.

Mr Dalal added that outsourcing could save money during the economic downturn, as well as boosting flexibility and market strength.

In related news, online shopping platform Amazon recently expanded its cloud computing operations to Australia, setting up a data centre to boost efficiency and cut costs.

Source:http://www.ihotdesk.com/article/800624576/Outsourcing-can-improve-efficiency

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iGate Patni Gets $30 Million Order

July 18th, 2011

Patni Computer Systems Ltd. Monday said iGate Patni has received a $30 million outsourcing contract from Weyerhaeuser Co. to manage the technology infrastructure of the U.S. forest products company.

Patni Computer is 83%-owned by U.S.-listed iGate Corp. The combined entity is called iGate Patni.

Under the deal, Patni will manage Weyerhaeuser’s servers across multiple sites and provide on-demand data storage using a private cloud model, the Indian company said in a statement.

It didn’t provide any other details of the deal.

Source:http://online.wsj.com/article/SB10001424052702303661904576453191052228806.html

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