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Archive for July, 2011

Virtusa in Prestigious Global Services 100 List

July 26th, 2011

Virtusa Corporation (NASDAQ: VRTU) announced that it has been named to the 2011 Global Services 100 List (GS100) by Global Services, in association with NeoGroup. Virtusa was also recognized in the category of Top Specialty Product Engineering Vendors. The GS100, which honored Virtusa in its 2011 list for the fourth consecutive year, represents companies that demonstrate excellence in delivering IT outsourcing (ITO) and business process outsourcing (BPO) services globally using matured models of service delivery. It is considered a benchmark for identifying service provider leadership because of its thorough evaluation and selection process.

Now in its sixth year, the GS100 is a rigorous assessment that evaluates organizations across multiple dimensions both quantitatively and qualitatively. The study identifies the top 100 companies based on four primary pillars: management excellence, customer maturity, global delivery maturity and breadth of services portfolio. Companies honored on the GS100 List are those that are consistently accelerating business outcomes for their customers and expanding their customer base as well as services portfolio. Virtusa was recognized as an industry leader that has experienced significant growth and increased profitability.

“We are honored to be recognized for the fourth consecutive year on the GS100 List,” said Kris Canekeratne, chairman and CEO at Virtusa. “Inclusion on this list reinforces our commitment to accelerating business outcomes for our clients through our optimized global delivery model.”
“The global services industry has gone clearly beyond the paradigm of ‘more work at lesser cost’. Companies are routinely seeking business outcomes, and in some cases, new forms of business value. Service providers who can deliver on these fronts make it to the GS100 and its categories.” said Ed Nair, Editor, Global Services.

“The firms that are recognized in the GS100 list show a higher level of focus on client needs, employee development and process improvement. They continue to be providers of choice in the market,” said Atul Vashistha, Founder and Chairman, NeoGroup.

Virtusa’s inclusion on the 2011 GS100 List comes in close succession to the company’s recognition by Zinnov Management Consulting as one of the leading R&D Service Providers for 2011. Virtusa provides high value IT services to help clients, including Global 2000 companies as well as leading software vendors, overcome industry challenges and achieve their business goals. Using its enhanced global delivery model, Virtusa focuses on providing clients high quality, innovative technology solutions which enable clients to increase productivity, improve customer service and reduce overall costs.

The GS100 List reflects the diversity and overall landscape of the service provider community in terms of company sizes, countries of origin and countries of delivery. Forty seven companies with revenues between $100M and $1B are represented on the list. The list includes companies from 18 countries with operations in 30 countries, making it truly global.

Source:http://www.coolavenues.com/news-wire/business-news/virtusa-prestigious-global-services-100-list

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Critigen Joins Re-Branded Colorado Technology Association

July 26th, 2011

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Critigen today announced its membership to the newly re-branded Colorado Technology Association (ColoTech), formerly the Colorado Software & Internet Association (CSIA), the Front Range’s largest technology association. ColoTech has grown to represent the more than 5,500 software, hardware and IT services companies, nearly 1,000 IT operations in Colorado, and more than 150,000 technology professionals. It evolved its branding to reflect its continued focus on software/hardware/IT companies, as well as IT operations in the state. Critigen, with headquarters in Denver and operations around the globe, facilitates actionable intelligence from enterprise data by developing solutions that integrate innovative visual and analytical technologies including geospatial, mapping, imagery, mobile development, private cloud computing, data management and IT outsourcing.

“Critigen has established itself as a technology leader, having been named one of the top Global 50 IT Outsourcing and Managed Hosting Providers by the Black Book of Outsourcing, alongside IBM, Microsoft, HP and others, for several consecutive years,” said Sean Feeney, Critigen CEO. “Moreover we have a rich history of having developed solutions for leading Colorado clients for over sixteen years. Our involvement with ColoTech is just an additional step in reinforcing our commitment to driving technology innovation with Colorado’s leading companies.”

Critigen, divested from Colorado-based CH2M HILL in 2009, provides market-leading IT consulting and outsourcing, managed IT services, cloud computing, remote infrastructure monitoring and management (RIMM), disaster recovery, 24×7 help desk and application management services. The company’s services help public and private clients reduce operating costs, avoid significant capital expenditures, and improve service by providing end-to-end management of IT operations and network infrastructure.

“There is significant advantage to working closely with the technology leaders in and around the state,” said Rand Knight, senior vice president of sales and marketing for Critigen. “As a company we know that working with ColoTech we not only open the doors for new clients, prospects, partners and significant opportunities to network – but we can work with other established technology companies to continue to herald Colorado’s extensive tech-friendly community.

We expect to benefit greatly from ColoTech through the association’s education series’, vertical programs (including healthcare, manufacturing, state and local government), business-to-business development, economic development and networking functions.”

Source:http://www.benzinga.com/pressreleases/11/07/p1802054/critigen-joins-re-branded-colorado-technology-association

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Foreign companies are outsourcing here

July 26th, 2011

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Regarding Peter Chura’s July 13 letter to the editor, headlined “Nation’s jobs have gone overseas to detriment of U.S.”:

As the editor of the Outsourcing Excellence Awards, I come across quite a few instances where foreign companies send offshore work to our shore. Unilever (a British company) outsourced to IBM, a 2009 winner. But the most unexpected example was a 2007 winner. Indians sent their work to North America. Who knew?

Bharti Airtel is a leading Indian cellphone provider. In 2006 it had 30 million subscribers. It was on track to have 100 million by 2009.

Increasing call volumes had an unhappy side effect: shrinking profits. Company executives realized they had to control costs to build a sustainable business.

At the same time, the telecom provider wanted to take “a quantum leap” in customer care because management believed customer-care services would become a potent differentiator in the Indian telecom market.

So, how do you radically improve customer care and cut costs at the same time? Answer: outsource.

You would assume the Indians would select an Indian company. But they needed the best interactive voice response technology available and it wasn’t in India. The Indian cellphone carrier outsourced to Nortel Networks, a Canadian company. Of course, Nortel Networks India worked on the project, too. Someone had to write the voice scripts in Hindi!

Ah, one might say, Nortel is a Canadian company. Bharti Airtel probably would have come to America if an American company had the best technology. We didn’t and won’t if we keep cutting education budgets. But that’s another story.

Source:http://www.lasvegassun.com/news/2011/jul/25/foreign-companies-are-outsourcing-here/

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Unisys Announces Second-Quarter 2011 Financial Results

July 26th, 2011

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Net loss of $11.6 million or 27 cents per share includes previously announced $45.7 million debt reduction charge

Non-GAAP EPS of 93 cents(1)

Results impacted by continued weakness in U.S. Federal marketplace and lower technology revenue

Outside the U.S. Federal business, services revenue essentially flat year over year

Sixth consecutive quarter of year-over-year growth in IT outsourcing revenue outside the U.S. Federal business

Improved services operating profit margin sequentially and year over year to 7.1 percent

Generated adjusted EBITDA(2) of $106 million

Further strengthened balance sheet; reduced debt by $179 million in quarter

Cash net of debt increased by $518 million from a year ago

Unisys Corporation UIS -3.24% today reported a second-quarter 2011 net loss of $11.6 million, or a loss of 27 cents per diluted share. The results include a previously announced charge of $45.7 million related to debt reduction and a pre-tax charge of $13.5 million related to the loss of an old non-income tax case concerning the company’s former Brazilian manufacturing operations. Excluding these charges, non-GAAP earnings per diluted share were 93 cents in the quarter. In the second quarter of 2010, the company reported net income from continuing operations of $59.2 million, or $1.36 per diluted share. Revenue in the second quarter of 2011 declined 10 percent to $937 million compared with $1.04 billion in the year-ago quarter. Foreign currency fluctuations had a five percentage-point positive impact on revenue in the quarter.

“Our second-quarter results were impacted by continued softness in the U.S. Federal marketplace and lower sales of ClearPath systems,” said Unisys Chairman and CEO Ed Coleman. “In spite of this, we made important progress in the quarter against our three-year financial goals. Outside the U.S. Federal business, our overall services revenue was essentially flat year over year and we grew our IT outsourcing revenue for the sixth consecutive quarter. We improved our services operating profit margin, both sequentially and year-over-year, to 7.1 percent as we work toward a consistent 8 to 10 percent services operating margin target. We also continued to strengthen the balance sheet in the quarter, further reducing debt by $179 million. Cash net of debt has increased $518 million from a year ago.

“The decline in ClearPath sales in the quarter followed growth last quarter and in 2010,” Coleman said. “As ClearPath sales can vary greatly from quarter to quarter, we believe the best way to measure this business is on an annual basis. We continue to focus on achieving our goal of maintaining flat ClearPath revenue compared with 2010.”

Overall Company and Business Segment Highlights

Unisys said its overall profit margins in the quarter were impacted by lower sales of ClearPath systems and a $9.9 million increase in pension expense. The company reported a second-quarter 2011 gross profit margin of 22.8 percent, down from 27.8 percent in the year-ago quarter. Operating expenses (selling, general and administrative expenses plus research and development) declined 9 percent from the year-ago quarter. Second-quarter 2011 operating profit was $48.1 million, or 5.1 percent of revenue, compared to $106.5 million, or 10.3 percent of revenue, in the second quarter of 2010.

Second-quarter 2011 services revenue declined 6 percent year over year, primarily reflecting $50 million lower revenue in the company’s U.S. Federal business. Outside of the U.S. Federal business, services revenue was essentially flat with the second quarter of 2010 as growth in IT outsourcing and infrastructure services was offset by a decline in systems integration. Services gross profit margin improved to 20.1 percent compared with 19.3 percent a year ago, reflecting continued improvements in service delivery execution. Services operating profit margin improved to 7.1 percent compared with 6.1 percent a year ago.

Services backlog at June 30, 2011 was $5.7 billion, an increase of 3 percent from June 30, 2010. Second-quarter services orders showed double-digit declines in the quarter reflecting lower outsourcing orders.

Second-quarter 2011 technology revenue declined 35 percent from the prior-year quarter. The decline was due to lower sales of ClearPath systems following growth in the prior quarter and in 2010. Reflecting the lower ClearPath sales, technology gross profit margins declined to 49.0 percent compared with 61.2 percent in the year-ago quarter and technology operating profit margin declined to 2.4 percent compared with 26.8 percent a year ago.

Cash Flow and Balance Sheet Highlights

Unisys generated $36 million of cash from operations in the second quarter of 2011 compared with $52 million in the year-ago quarter. Excluding the debt reduction charge and the impact of the Brazilian tax matter, the company generated adjusted EBITDA of $106 million in the second quarter of 2011. Capital expenditures in the second quarter of 2011 declined to $29 million compared with $48 million in the year-ago quarter. The company generated $7 million of free cash flow (cash provided by operations less capital expenditures) in the second quarter of 2011. This compared with free cash flow of $4 million in the year-ago quarter.

As previously announced, on April 11 the company completed a cash tender offer for principal amounts of $134.8 million of its 14-1/4% Senior Secured Notes due 2015 and $44.1 million of its 12-3/4% Senior Security Notes due 2014. At June 30, 2011, Unisys reported total debt of $447 million and a cash balance of $625 million.

Non-GAAP Information

Unisys reports its results in accordance with Generally Accepted Accounting Principles (GAAP) in the United States. However, in an effort to provide investors with additional perspective regarding the company’s results as determined by GAAP, the company also discusses, in its earnings press release and/or earnings presentation materials, non-GAAP information which management believes provides useful information to investors. Our management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and assess operational alternatives. These non-GAAP measures may include non-GAAP earnings per diluted share and adjusted EBITDA.

Our non-GAAP measures are not intended to be considered in isolation or as substitutes for results determined in accordance with GAAP and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

(1) Non-GAAP earnings per diluted share – Unisys completed debt redemptions of $211.0 million in principal during the first quarter of 2011 and $178.9 million in principal during the second quarter of 2011. As a result of the debt reductions, Unisys recorded charges of $31.8 million and $45.7 million, respectively, during the first and second quarters of 2011. In addition, during the second quarter of 2011 the company recorded an after-tax charge of $8.9 million related to the Brazilian matter discussed above. In an effort to provide investors with a perspective on the company’s earnings without these unusual charges, they are excluded from the non-GAAP earnings per diluted share calculation. (See GAAP to non-GAAP reconciliation attached.)

(2) Adjusted EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is an approximate measure of a company’s operating cash flow based on data from the company’s income statement. EBITDA is calculated as earnings before the deduction of interest expenses, taxes, depreciation, and amortization. Management believes this measure may be relevant to investors due to the level of fixed assets and related depreciation charges. This measure is also of interest to the company’s creditors, since it provides a perspective on earnings available for interest payments.

In addition to the debt reduction charge in the second quarter of 2011 referenced above, the company recorded a pre-tax charge of $13.5 million related to the Brazilian matter discussed above. In order to provide investors with an understanding of the company’s operating results, these unusual charges are excluded from the Adjusted EBITDA calculation. (See GAAP to non-GAAP reconciliation attached.)

Conference Call

Unisys will hold a conference call today at 5:30 p.m. Eastern Time to discuss its results. The listen-only Webcast, as well as the accompanying presentation materials, can be accessed via a link on the Unisys Investor Web site at www.unisys.com/investor . Following the call, an audio replay of the Webcast, and accompanying presentation materials, can be accessed through the same link.

Source:http://www.marketwatch.com/story/unisys-announces-second-quarter-2011-financial-results-2011-07-25?reflink=MW_news_stmp

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Is nearshoring the new IT outsourcing?

July 26th, 2011

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Mixed results have shown that offshore IT outsourcing — all the rage for the past decade — has over-promised and under-delivered. As our ability to calculate total cost of ownership of offshore outsourcing has advanced, CIOs are beginning to evaluate alternatives, many of which may be better bargains than previously thought.

In 2003, offshore outsourcing’s main selling point was cost. It was the next frontier in cost savings and increased efficiencies in application development and infrastructure support services. Offshoring offered a grand picture of 10-20% savings on labor arbitrage, the ability to focus on core business, and access to an unlimited source of IT experts. While much of this is marginally true, especially relative to short term costs, potential for failure of offshore IT outsourcing strategies is also high when the approach is shortsighted. As CIOs factor in issues related to regulatory compliance, protection of intellectual property, culture and language differences, political implications (such as stability and espionage) and even time zones into the outsourcing decision, many are considering other tactics.

Source:http://blogs.computerworld.com/18666/is_nearshoring_the_new_it_outsourcing

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Patni Computer Profit Falls Nearly 93%

July 26th, 2011

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Patni Computer Systems Ltd. Monday missed analysts’ expectations to report a nearly 93% fall in its second-quarter net profit as expenses rose at a faster pace than revenue.
The disappointing results caught investors unaware, as a recent change in management failed to stem the company’s inability to benefit from a revival in technology spending since 2008, analysts said.
Patni Computer–one of the pioneers of the Indian outsourcing services industry–has continued to lag behind rivals such as Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd. since India first saw demand for its services rise in the late 1990s due to concerns over the millennium bug.
For the three months through June, the outsourcing services company reported a net profit of 108 million rupees ($2.4 million), down from 1.47 billion rupees a year earlier, based on U.S. accounting rules.
This was despite a 311.8 million rupees foreign exchange-related gain, compared to a gain of 197.6 million rupees last year.
Patni Computer’s revenue grew 5.7% to 8.22 billion rupees, while its cost of revenue sans depreciation and amortization expenses rose 17.5% to 5.51 billion rupees in the past quarter.
The Mumbai-based company was expected to report a 29.3% fall in net profit at 1.04 billion rupees, while revenue was likely to rise 10.4% at 8.59 billion rupees, according to a poll of 13 analysts.
“It’s surprising to see revenues decline in a matter of two months after the new management took control,” a local analyst said, asking not to be named. Before the company’s management changed, executives had suggested a 3%-4% likely sequential growth in quarterly revenue in 2011, he added.
In May, Mr. Murthy told investors he had fired some senior executives at Patni Computer and recast its board. Four months earlier, a consortium including iGate and private equity firm Apax Partners LLP had agreed to buy a 63% stake in Patni Computer in a deal worth $1.22 billion. iGate owned an 82% stake in Patni Computer as of May 12.
Mr. Murthy, now also the chief executive at Patni Computer, expects results to stabilize in 2012 after merger-related charges are evened out, a press release said.
Patni Computer incurred a one-time severance-related charge of $17.5 million, the release added.
Staff utilization fell to 75.7% from 80.1% last year as attrition rose to 22.9% from 21.5% last year. The company had 18,372 staff at the end of June.
For the three months through June, the outsourcing services company reported a net profit of 108 million rupees ($2.4 million), compared with 1.47 billion rupees a year earlier, based on U.S. accounting rules.
Its revenue grew 5.7% to 8.22 billion rupees, while its cost of revenue sans depreciation and amortization expenses rose 17.5% to 5.51 billion rupees in the past quarter.

Source:http://online.wsj.com/article/SB10001424053111903591104576467461920759164.html

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Mecom signs €90m outsourcing deal with HCL

July 26th, 2011

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London-listed media company awards five-year, infrastructure and application management deal to Indian offshore provider
Mecom Group, a London-listed media company with operations in the Netherlands, Denmark, Norway and Poland, has awarded a €90 million, five-year IT outsourcing deal to Indian company HCL.

HCL will provide IT infrastructure management services, as well as some application management services, starting in the first half of next year.

The company expects to incur €19 million in up front cash costs and €12 million in “outsourcing-related capital costs” as a result of the deal, but predicts it will provide an annual profit improvement of €12 million.

Mecom’s chief operating officer Keith Allen commented that the deal will support the company’s transition from a publisher focused on paper-based products to a “multi-platform consumer content business”.

“This agreement will not just be financially attractive but it will also provide us with consistent IT development across our different divisions,” he said.

In its latest financial year, Mecom reported a 2% decline in overall revenues to €1.4 billion, as advertising sales dropped 4%.

HCL claims to have four of the world’s five biggest publishing companies among its customers. News International counts among its media customers, a connection that lead to the HCL’s name being mentioned during a recent emergency debate on the phone hacking scandal in the House of Commons.

“I believe that the police should ask [News International chariman] Mr James Murdoch and [former News of the World editor] Rebekah Brooks whether they know of the attempted destruction of data at the HCL storage facility in Chennai, India,” remarked MP Tom Watson.

However, HCL denied any involvement in the incident, saying that it does not store any of its customers’ data, anywhere in the world.

Source:http://www.information-age.com/channels/it-services/news/1643058/mecom-signs-90m-outsourcing-deal-with-hcl.thtml

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