Archive for August, 2011

New service launches for outsourcing scientific experiments

August 24th, 2011

Outsourcing of university science experiments has now become possible through a new online exchange that connects researchers short of resources at one institution with laboratories elsewhere with capacity to spare.

The service, Science Exchange, recently launched by a start-up based in Palo Alto, California, boasts Princeton, Duke, Stanford and Johns Hopkins universities as users. Scientists post details of an experiment they want to conduct and can then evaluate bids based on price, timeliness and the experience and equipment of those offering to carry it out.

Any contracts to carry out a piece of work are agreed between requester and provider, with Science Exchange taking a fee for hosting the arrangement and dealing with all the paying/billing administration, quality assurance and dispute resolution.

The founding scientist Elizabeth Iorns, a cancer researcher at the University of Miami, was prompted to set up the site by frustrating delays in conducting experiments within the confines of one institution.

The nascent Science Exchange service says it allows those with experiments to conduct to link up to “quality providers in the US”. But if such services do take off it seems likely that outsourcing could translate through to offshoring to providers in lower-cost economies.

In Europe, online markets for scientific experiments could contribute to development of a single European Research Area by providing publicly-funded scientist based in any country with access to leading facilities and equipment. The model could also underpin the operation of Europe’s shared large scientific infrastructures.

On Science Exchange the provider’s relationship with the scientist requesting an experiment be conducted is that of an independent contractor, and does not involve any formal partnership. The site provides tools for monitoring the progress of experiments. All experiments are carried out on a fee-for-service basis, and once the work is paid for, any intellectual property rights are the property of the scientist that requested the service.

Source:http://bulletin.sciencebusiness.net/news/75330/New-service-launches-for-outsourcing-scientific-experiments

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Satyam Gets EMC Consulting Contract

August 24th, 2011

Satyam Computer Services Ltd. has received an 18-month technology consulting contract worth about $5 million from U.S.-based EMC Corp., two people familiar with the matter said, indicating improving customer confidence in the Indian company emerging from the effects of a 2009 accounting fraud.

The recently signed deal is one of the first consulting contracts since the information-technology company’s founder and former Chairman B. Ramalinga Raju confessed in January 2009 to overstating profits and cash balances.

Several clients had left the company following the fraud. A government-appointed board sold a controlling stake in Satyam to Tech Mahindra Ltd. in April 2009 through an auction and the company is on a recovery path since.

The EMC contract requires Satyam to offer ways for the cloud-computing and security-services provider to integrate different services running on multiple devices on a single software platform, one of the people said recently.

The consulting contract may pave the way for a wider technology services deal in future, the person added.

Both people spoke on the condition of anonymity. Spokespeople at Satyam and EMC declined to comment.

India’s IT companies earn higher margins on technology consulting deals compared with usual outsourcing contracts which rely more on cost-cutting measures by clients. In certain cases, a consulting assignment allows an IT company to offer outsourcing services as one of the solutions to improve efficiency.

Since the 2009 developments, Satyam has received the highest number of big contracts, worth at least $50 million each, in the current quarter, a senior executive said on Monday.

The executive had also said that though decisions on giving large contracts were taking more time following the U.S. credit downgrade, it doesn’t foresee any impact on its business.

Source:http://online.wsj.com/article/SB10001424053111904787404576527891520715076.html?mod=googlenews_wsj

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Avanta hands Civica multimillion-pound outsourcing deal

August 24th, 2011

Civica has bagged an IT outsourcing agreement worth more £1m per year with Avanta as it bids to get one million people back into work.

The employment-focused training company is now working with Civica to provide a communications infrastructure and technical support for up to 80 Jobcentre Plus facilities across the country.

Civica will provide a WAN infrastructure, integrated service desk and onsite engineers and aims to develop a responsive IT support platform suitable for any future corporate requirements.

The programme will be delivered in May 2012 and its three phases include: the transition to the infrastructure to meet Department for Work and Pensions deadlines; delivering the IT transformation; and striving for cost-effectiveness.

The contract with Civica will support Avanta’s operations nationwide, which are designed to help people on state benefits to select, train for, obtain and retain employment that is suitable for their age and capacities.

Jon Quick, chief information officer at Avanta, said: “We have a dynamic and agile business and we needed a service model that reflected it.”

Source:http://www.channelweb.co.uk/crn-uk/news/2103983/avanta-hands-civica-multimillion-pound-outsourcing-deal

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TCS outsourcing chief sees no impact of global crisis on its business

August 24th, 2011

The business process outsourcing (BPO) arm of Tata Consultancy Services (TCS), India’s top software exporter, has seen no immediate impact of the global economic turmoil on its business, the unit’s chief said on Wednesday.

“We are seeing good traction,” Abid Ali Neemuchwala, global head of business process outsourcing services at TCS , told Reuters in an interview on the sidelines of an industry conference, without providing any financial outlook.

TCS’s BPO arm had revenues of $925 million in the year that ended in March, and 34,000 employees. It has 175 clients and counts Citigroup and Dow Chemical among customers.

Source:http://economictimes.indiatimes.com/tech/ites/tcs-outsourcing-chief-sees-no-impact-of-global-crisis-on-its-business/articleshow/9720592.cms

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‘BPOs should cash in on global slowdown’

August 24th, 2011

The global economic conditions are looking challenging, but IT/BPO industry body Nasscom believes this adversity offers opportunities rather than threats for the Indian BPO sector. Excerpts from an interview with Nasscom president Som Mittal on the sidelines of the Nasscom BPO Summit in Delhi:

Do you expect the global economic woes to impact the BPO sector?
I do not believe there is any cause for concern at the moment as this is a sovereign debt crisis that is playing out in the US. Private companies, which are the major outsourcers, are continuing to grow.

We have been speaking to customers and are not seeing any revisions or re-negotiations in contracts. There are strains in Europe too but we do not expect all these troubles to turn into a full-blown crisis. In fact, we look at these difficult conditions as an opportunity for the BPO sector.

Why?
The need for cost effectiveness and process efficiency means that the role of BPOs becomes more critical. BPOs are now viewed not just as vendors but as partners. Business processes are integral to the functioning of a company and difficult to carve out.

Unlike the previous recession that emerged from nowhere, the BPO industry has now learned to become leaner and more flexible. BPOs are increasingly offering end-to-end solutions as opposed to just transactions-based work. This includes elements of consulting, process re-engineering, technology, platforms solutions etc.

Several new BPO destinations are emerging? Will this impact India’s prospects in BPO?
It is a reality now that the BPO sector is much more globalized. The need for multi-lingual skills, proximity to markets as well as cost levers is leading to this trend. But it is also an opportunity for Indian BPOs to leverage on different skillsets and skills across geographies and become global MNCs.

Moreover, India is still a leader when it comes to services at the higher end of the value chain. The new MAT tax regime on SEZs in India and expiry of STPI tax benefit could however affect the competitiveness of smaller BPOs and make other locations look more attractive.

Do you expect more M&As?
M&As will rise. PE-backed BPOs will look for exits through this mode while larger companies look for greater expertise in certain areas that a smaller BPO might offer. Nevertheless we expect specialized players in high growth areas continuing to grow if they can offer good value.

Do you expect the BPO sector to continue the strong growth it has seen over the last decade?
Yes. I think the major growth drivers would be the underpenetrated nature of the business. Even companies in developing countries are looking to outsource BPO work. There is also a lot of demand for re-engineering processes with efficiency becoming the norm. The emergence of newer verticals like healthcare and higher-end services like analytics and legal services will also be growth drivers.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/BPOs-should-cash-in-on-global-slowdown/articleshow/9719412.cms

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Weak overseas demand to hit outsourcing deals of IT companies like Infosys, TCS, Wipro, HCL Tech

August 24th, 2011

After topping new highs a few months ago, the stocks of top IT players, including Infosys, Wipro and HCL Tech now trade close to their respective 52-week low. TCS, has shed over 26% from its peak reached in April.

The recent fall in stock prices makes their current valuations look cheaper when compared with the historical trend. However, an unfavourable situation in the West makes fresh investments in stocks less attractive.

The current debt crisis in some of the EU nations and the US is likely to impact demand in these regions in the medium term. The need to reduce fiscal deficit – the gap between what governments spend and earn – would force authorities to cut on expenditure, which could result in lower economic growth in these countries.

Such a move may reduce demand from government agencies and private sector players. In addition, some of the recent announcements from large IT vendors hint at slowing demand ahead. For instance, Dell and HP, which offer hardware and enterprise solutions, have slashed revenue growth forecasts.

A shrinking demand in the West could impact Indian IT exporters, which earn close to 80% of revenue from these regions. Top IT players have so far reported a sustained traction in the order pipeline with a steady flow of large multi-year outsourcing contracts. Most have also continued to hire fresh and experienced employees in the last few quarters.

This, however, may change if the demand abates in the coming quarters. Also, even if the overall outsourcing pie increases as some analysts expect due to more number of global companies showing interest in subcontracting their processes, realisations may not improve. This is because the major objective of outsourcing decision will be to cut operating costs. Hence, higher volumes will come at lower margins.

Another point to note is the rate of growth in sales and revenue for top-tier Indian IT players. It seems to be tapering after peaking two quarters ago. In the June quarter, top four exporters listed in India recorded a 20% revenue growth and an 18% rise in the bottomline at the aggregate level.

These factors suggest that even though the stocks of top four IT players now trade at a P/E of 16-20, much lower than the range of 21-26 a few months ago, they may not attract fresh investments any time soon.

Source:http://economictimes.indiatimes.com/markets/analysis/weak-overseas-demand-to-hit-outsourcing-deals-of-it-companies-like-infosys-tcs-wipro-hcl-tech/articleshow/9713265.cms

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BPO firms eye new delivery centres in foreign markets

August 24th, 2011

Several of India’s top business process outsourcing (BPO) firms including Infosys BPO, WNS (Holdings) Ltd, Firstsource Solutions Ltd and Aegis Ltd are considering opening new delivery centres or expanding existing ones in the US, the UK and other foreign markets.

Chief executives of these firms, speaking on the sidelines of the BPO Strategy Summit 2011 organized by industry body Nasscom, said the move is driven by factors such as rising protectionism, regulatory and compliance requirements of various governments and, to a large extent, by an increase in demand from clients for near-shore or onshore centres.

Business strategy: (from left) Swami Swaminathan, CEO and MD of the BPO arm of Infosys; Matthew Vallance, MD and CEO of Firstsource Solutions; and Aparup Sengupta, MD and CEO of Aegis. Photographs by Satish Kaushik/Mint.
BPO companies typically service their clients almost entirely from low-cost destinations such as India and the Philippines while having sales offices in various countries, though information technology (IT) firms have been following a global sourcing strategy for some time now.
Swami Swaminathan, CEO and MD of the BPO arm of the country’s second-largest software services firm Infosys Ltd, said the shift is also because the industry has matured from merely carrying out transactions to driving transformation for clients. “You can do transactions from anywhere in the world but when it comes to transformation processes you have to be close to the customers.” Infosys BPO, which earned a revenue of $427 million (Rs1,950 crore today) in 2010-11, is building its first on-shore centre in Atlanta, US, and evaluating opening one in the UK.

Firstsource Solutions Ltd, a BPO backed by ICICI Bank Ltd, gets 64% of its revenue from delivery centres in the US and the UK, though a bulk of its employees are based in India and the Philippines. The reason: The services it delivers in the US and the UK are comparatively high-end in nature.

Matthew Vallance, MD and CEO of the company, said the nature of many upcoming deals in the telecom, banking and finance spaces require technology firms to carve out and take over a part of their clients’ operations, which requires onshore capability.

“There are other factors also such as compliance, government legislation, unions and the nature of the work, which means there are certain kinds of services which cannot be delivered offshore,” he said.

Onshore or nearshore presence has become a major criteria for clients in selecting service providers, he added.

Such models, though, may prove to be an impediment to a company’s operating margin. Firstsource’s operating margin fell to under 10% in 2010-11.

Aparup Sengupta, managing director and CEO of Aegis Ltd, said an onshore strategy can result in operating margins of 14-15% for BPO firms. “But it ensures that the company is immune to any emotional decisions and is shore proof.”

BPO firms that do a bulk of their work offshore may enjoy margins of 18-20% but suffer from fluctuations in currency and other factors, he added.

Aegis Ltd, which has been following a strategy of servicing companies in different countries largely from the same location through a string of acquisitions, plans to expand in Manchester, Germany and France.

“Most of the companies in Europe are averse to the idea from sending work offshore, which means they have to be served from near-shore centres,” said Sengupta.

WNS, the third-largest BPO exporter in India by Nasscom rankings, is also planning a centre in the US apart from a new facility in the UK, chief executive Keshav Murugesh said.

Asked if near-shore centres will increase the cost of doing business and hurt margins, Murugesh said the company follows a blended profit approach, which means high profits from some locations offset low profits from other centres. “This is how we structure deals for our clients to prevent margin dilution,” he said.

However, Eric Simonson, managing partner at Everest Group Research, said though BPO companies are building an onshore presence, it will never be too huge. “These centres would be like added dots on their geography charts, which may show proliferation and provide complexity in operations.”

Source:http://www.livemint.com/2011/08/23231349/BPO-firms-eye-new-delivery-cen.html

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