Archive for December, 2011

Accenture has the Best Relative Performance in the IT Consulting & Other Services Industry (ACN, IBM, INFY, TDC, DOX)

December 30th, 2011

We looked at the IT Consulting & Other Services industry and measured relative performance to find the top stocks. Relative outperformance is a bullish sign of underlying fundamental and technical strength. We look at yesterday’s price action of all companies in this peer group.

Accenture (NYSE:ACN) ranks first with a loss of 0.25%; International Business Machines (NYSE:IBM) ranks second with a loss of 0.57%; and Infosys Technologies (NASDAQ:INFY) ranks third with a loss of 0.84%.

Teradata (NYSE:TDC) follows with a loss of 0.99% and Amdocs (NYSE:DOX) rounds out the top five with a loss of 1.02%.

Accenture Ltd. provides management and technology consulting services and solutions. The Company delivers a range of specialized capabilities and solutions to clients across all industries on a worldwide basis. Accenture’s network of businesses provides consulting, technology, outsourcing, and alliances.


IT sector posts US $ 250.3 m revenue in 2010

December 30th, 2011

The Sri Lankan IT sector which commands a high value addition compared with many other industries posted a revenue of US $ 250.3 million with an impressive 46% growth rate in 2010 as against the year 2009, according to a survey conducted by the Export Development Board.

“Even though the local industry is still considered to be in its nascent stage, it is happy to note that many high profile investors particularly Infosys-India and other IT related companies have expressed willingness to invest in the IT and Information Technology enabled service industry in Sri Lanka,” Export Development Board Chairman Janaka Ratnayake said.

In 2010, 147 companies contributed the export revenue of the industry while 137 companies contributed to the export revenue in 2007. It is relevant to note that some companies who had contributed to the growth in export revenue in 2007 have not exported services in 2010 while some companies have entered the export industry in 2009 and 2010.

According to the Sri Lankan Information Technology forecast, the addressable domestic IT market is expected to grow from US $ 393 million in 2011 up to over US $ 742 million over the next five year period. The survey has identified 147 ICT companies and 28 Business Process Outsourcing (BPO) companies in Sri Lanka and these two sectors consist of around 16,800 skilled workforce.

The top three markets for the Sri Lankan IT export are Europe (UK and Ireland), USA, South Asia and the major BPO markets are New Zealand, Asia mature markets, Middle East and Canada.


TN enjoys maximum share of outsourcing market in South

December 30th, 2011

Tamil Nadu has been ranked first in terms of market share of outsourcing business in the southern region in a study by the Confederation of Indian Industry (CII).

As per the study by the industry body, Tamil Nadu enjoys a 33 per cent share of the outsourcing sector in South, closely followed by Andhra Pradesh with 26 per cent, Karnataka with 25 per cent and Kerala with 16 per cent.

The report on ‘Manpower Outsourcing in Southern States’ by CII said there were an estimated 114 million employees employed in outsourced roles across various sectors in South India, accounting for 24 per cent of all-India employment.

The manufacturing sector topped the list of sectors relying on outsourcing, accounting for 44 per cent of all contracts, followed by retail (20 per cent) and the government (19 per cent) sector.

Noting that there are around 30,000 staffing providers and contractors in the southern region, it said these players are registered with the Labour Department and supply manpower to meet the requirement of various industries.

The report said the organised staffing service was valued at Rs 120 billion and there are 8,500 service providers in the southern region alone. These service providers offer staffing solutions to various industry verticals across different services, including software and engineering, and supply white, blue and grey collar workers.

Blue collar employees account for 58 per cent of the total number of employees, grey collar another 31 per cent and white collar workers for the balance 11 per cent, it added.

While small service providers use advertisements and rural campaigns to recruit candidates, large service providers use multiple sourcing channels, including online portals, job postings, posters and cable television.

Attributing cost advantages, accountability and the availability of trained manpower as the main factors driving outsourcing, the study said there has been a 30 per cent increase in the number of contract employees over the last three years.

On the challenges faced by the industry, he said competitive pressure and legislation issues were at the top, besides issues concerning employability and attrition.

“Competitive pressures, employability, high attrition rates in the business and a lack of clarity in legislations were some of the issues plaguing the industry,” the report said.

CII strongly recommended that the government play a greater role in the outsourcing sector in order to support service providers.

“The outsourced service providers are in a unique position where they can help companies and government adapt to market changes, leverage economic advantage and emerge as a prime mover for creating employability,” it recommended.

The study also suggested that the lack of monitoring by government agencies and low entry barriers in the outsourcing industry make it easy for fly-by-night operators to spawn and had also led to various malpractices in the industry.


Abu Dhabi sells property services unit to Serco

December 30th, 2011

Abu Dhabi’s Mubadala, a government investment arm, has sold its JBI property services unit to UK outsourcing company Serco as the emirate continues to rationalise its portfolio.

Mubadala, which in March bought the US developer John Buck’s 49 per cent stake in the JBI joint venture, sold the facilities management business in a deal estimated to be worth £5m to £10m ($8m to $15m), people with knowledge of the matter say.

Ali al-Muhairi, executive director of Mubadala Real Estate and Hospitality, said JBI had “developed to a point where it could continue to prosper under private sector ownership”.

JBI has 130 staff in Abu Dhabi, managing facilities such as the Sorbonne and New York university campuses and Sowwah Square, a semi-complete business district envisioned as the capital’s financial hub.

Serco, which earns 43 per cent of its revenues overseas, has said it was looking to expand its international operations. It already operates Dubai’s metro system and the Al-Ain university campus.

Serco will now provide real estate management services to a number of Mubadala assets, some of which remain under construction. Shares in the UK company closed up 1.2p at 473.3p in London on Wednesday.

The deal comes as Abu Dhabi continues to take stock of its sprawling investment portfolio, which has been hit hard since real estate valuations halved from the peak of 2008 as planned oversupply looms over the sector. On Wednesday the government extended a second effective bail-out package to Abu Dhabi’s largest developer, Aldar Properties, bringing the cost of state aid to the struggling company to almost $10bn this year.

Mubadala, one of the emirate’s most active investment arms, is looking to refocus on core competencies, writing off poorly performing assets, bankers say.

The investment vehicle, which reported a loss of $86m in 2010, owns about 49 per cent of Aldar, according to Moody’s, as well as having interests in aviation, renewable energy, industry and financial services.

The deal comes at an uncertain time for the private sector as the emirate carries out a spending review across departments and state-related entities, putting large projects on hold.

Question marks surround initiatives such as the Guggenheim museum on Saadiyat Island as timelines are extended for a cultural district that is meant to attract more sophisticated tourists.

Abu Dhabi state-linked companies have been shedding staff in recent months as businesses try to meet savings targets.


City Weighs Outsourcing Care for Town Square Christmas Tree

December 30th, 2011

Public Works Director Greg Ramsey presented a plan to the City Council Wednesday that would outsource the care and set up for the city’s town square Christmas tree as a potential saver of staff time and money.

Universal Concepts, the company that originally sold the tree to the city, would store, put up, take down, and conduct minor repairs for $3,500 annually, Ramsey said.

“Public Works will take care of it either way, but this is just something for your consideration,” he said at Wednesday’s work session.

Council members Rosalyn Neal and Nancy Hudson quickly questioned the amount, with Hudson saying: “I mean, we’re talking about not having money to do (certain other things), and we’re talking about $3,500 for a Christmas tree?”

Ramsey said the city spends between $1,200 and $1,400 in maintenance annually.

“The Christmas tree that we have in the town square is requiring an inordinate amount of maintenance every year,” he said.

Much of this comes from the tree’s bows, which melt in the heat when the tree is stored in a trailer at the Public Works Department. Community Development spent roughly $1,000 on bows last year and will likely have to replace them again next year, he said.

Then there’s staff time from Public Works that it takes to maintain it, assemble it over the town square fountain, and take it down every year, Ramsey said.

Also, the city has to borrow Austell’s bucket truck to assemble the top section out of the four total sections. Austell has been providing the machine at no charge.

Further, the lifespan of the tree will hopefully be extended while in the care of Universal Concepts to prevent the need to purchase a new one, Ramsey said. The director said he didn’t know how much a new one would cost but would look into it.

The price range for Universal Concept’s giant Christmas trees can be seen here.

Council members weren’t sure how long ago the tree was purchased but estimated at least 10 years.


Hinduja Global on overseas expansion mode

December 30th, 2011

Business process outsourcing firm Hinduja Global Solutions (HGS) plans to expand in Latin American countries and is open to acquisitions to grow its business there.

“We are keenly exploring various options in Latin America, China and Europe. We have made a few moves in each of these geographies including Africa, and the coming year may see fructification of our efforts,” Mr Partha Desarkar – Global CEO, told Business Line.

“The mode of expansion may be a mix of green-field or inorganic or some other model depending upon local nuances and client requirements,” he added.

“We have invested in creating amergers and acquisitions team of senior professionals and we are currently evaluating some deals in different geographies and domains,” Mr Sarkar said.

Over the last year, the company has expanded its global footprint through acquisitions in North America and in West Asian market. The acquisitions include OLS in Canada, a leading contact centre provider and HCCA a leading Human Resource Outsourcing (HRO) provider.


Expanding global presence apart, the company is also looking at entering newer verticals. “In India, with the recent push towards e-governance, we expect more contracts to open up for third party providers. Public sector and Government is an area where we will act based on the merit of each opportunity. We are, however, keenly watching this space,” Mr Sarkar said.

The company, which currently operates in verticals such as healthcare, telecom, retail and media, is also working on strengthening its presence in verticals such as banking and financial services and finance and accounting, he added. HGS, with the acquisition of HCCA, also recently entered the HRO vertical, and expects it to be a major driver of growth, Mr Sarkar said.


“We are planning to offer end-to-end payroll solutions to all our clients starting from data input to credit into individual employee bank accounts with built in accounting processes,” Mr Sarkar said.

Also, with an addressable supplier side opportunity of about $20 billion, the company plans to move up the HR value chain by offering high-end solutions such as analytics, HR consulting deployment of customised learning management system and end-to-end recruitment process outsourcing.

With such growth plans, the company is looking at a headcount growth of over 15 per cent.


‘BPO still Cebu’s growth driver’

December 30th, 2011

THE business process outsourcing (BPO) industry will continue to propel Cebu’s economy as the province’s major economic driver, industry leaders said. The BPO sector is also poised to grow even bigger in the coming years, they said.

“In 2011, BPO companies accounted for 40 percent of positions posted in a jobs listing website. The expansion of BPO operations led to the rise in the demand for office spaces. This year, the region saw property developers putting additional investments in the leasing business,” said Cebu Property Ventures Development Corp. (CPVDC) president Francis Monera.

Plan your Sinulog week ahead and find out what’s in store for Sinulog 2012.

The industry recorded a 20 percent annual growth rate.

CPVDC is the developer of Cebu IT Park. It currently has eight building under construction.


Monera said BPO companies are continually drawn to Cebu City with its workforce and healthy fiscal environment. He said Cebu is supported by nine large universities that turn out many workers for IT and BPO companies.

“The BPO industry in Cebu is fast-growing because IT/BPO companies in the US have found a viable destination in Asia where they can relocate after the 2008 global economic crash. The industry will continue to offer a lot of opportunities and will become Cebu’s main driver of economic growth,” said Cebu Chamber of Commerce and Industry (CCCI) chairman for information and communications technology (ICT) Jerry Rapes.

This year, global outsourcing firm Aegis People Support unveiled its own Aegis Tower Cebu at the Cebu IT Park. The company said their decision to build in Cebu is a sign of their “commitment to and confidence in the country’s booming BPO industry and Cebu’s workforce.”

Monera said they are anticipating an increase of 20 percent in the current 50,000 workforce with the completion of buildings within Cebu Park District.

CPVDC is looking at an estimated 11,000 additional seats with eBlock 2, Skyrise 4 and the Aegis Tower Cebu.

Stream Global, a major outsourcing company, was reported to be hiring between 60 and 70 employees weekly. Convergys, on the other hand, is also expanding with its new office in Cebu, according to Monera.

Some of the firms that expanded in Cebu this year include HP, Fluor Daniels, Dell, Convergys and JP Morgan & Chase.

Non-voice services

“Wide-spread employment is a by-product of these developments with a 35 percent increase in working population for both parks – majority in the BPO industry. (It strengthens) our bid of making Cebu the BPO capital in the Philippines next to Metro Manila,” Monera said.

Rapes, meanwhile, said Cebu is not only well-positioned for voice services but also for knowledge process outsourcing (KPO), information technology outsourcing and non-voice services.

He said it is just a matter of preparing Cebu “to get to a higher level,” particularly in terms of supplying the industry with skilled, competent and highly qualified workforce.

“There is not always enough people,” said Rapes, the president of information technology outsourcing (ITO) company Exist Global.

He said companies now move out from major call center hubs like Metro Manila and open offices in “next wave cities.”

Monera, who sits as the chairman of the board for Cebu Educational Development Foundation for Information Technology (Cedf-it) said the private sector, academe and local government have collaborated to improve the skills of potential workers for increased manpower pool via proficiency/certification, retraining and jobs-skills matching programs. The stakeholders are also intensifying programs that support infrastructure and tourism service to strengthen the investment climate in Cebu.


Monera emphasized the need for talent scalability, not only in terms of available quantity of the workforce but also in training to match the skills required by companies.

Cedf-it announced last October it will get part of the P500-million stimulus fund committed by the Aquino government to facilitate “near-hire” training programs of IT-BPO companies. It said about P5 million worth of scholarships from the Technical Education and Skills Development Authority (Tesda) will be used to conduct “near-hire” trainings for 1,000 prospective IT-BPO employees here.

Monera also cited Cebu’s “big opportunity” in higher level services or KPO. He said although, manpower requirement for this category may not be as high as voice-related jobs, these are high-value services that mean higher average compensation for the Filipino talent.

While there is continued growth ahead in the BPO industry, Rapes said “being complacent” may threaten BPOs’ rosy outlook for 2012.

“We need to create more people for the industry rather than compete with each other. We need to produce more skilled workforce for a bigger ecosystem,” he said.
Rapes also announced that the outsourcing industry will soon start the second phase of the Cebu IT/BPO roadmap so it could further maximize the potential of IT/BPO services.

What to do

He said the study will “drill down what Cebu needs to get to higher level.”

“We have to know where we are going and what to do next now that we know we have the capabilities to do more KPO,” Rapes said.

He said that while waiting for the second phase of the study, entrepreneurs should start looking at opportunities in offering KPO services.

He said India has higher revenues than the Philippines because they do difficult services. “But if the Philippines will capitalize on its KPO potential and do its homework, the IT/BPO revenues will grow eventually,” Rapes said.

The Business Process Association of the Philippines targets to grow the industry by $25 billion in revenues in 2016 and increase IT/BPO employment to more than one million.

A bill seeking to create a Department of ICT was also filed as a support to the growing industry.


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