Archive for September, 2014

Sensex, Nifty end down; Strides Arcolab up 6%, IT gains

September 30th, 2014

The market ended volatile session on a flat note. The Sensex is down 29.21 points at 26597.11 and the Nifty down 9.95 points at 7958.90. About 1857 shares have advanced, 1088 shares declined and 100 shares were unchanged.Outsourcing41

IT and pharma stocks were on buyers radar while banks, metals and FMCG were down. TCS, Sun Pharma, GAIL, Infosys and Hindalco were top gainers in the Sensex. Among the losers were Tata Steel, Sesa Sterlite, Coal India, ICICI Bank and ITC.

03:15 pm Currency movements: The dollar hit its highest in almost two years against the euro with German inflation data expected to keep pressure on the ECB to ease monetary policy further, while unrest in Hong Kong hurt Asian-exposed European shares.

The dollar was broadly stronger, hitting a four-year high against a basket of currencies, a six-year peak against the yen and a 13-month high against the New Zealand dollar. Reserve Bank of New Zealand data showed the central bank intervened last month to speed its currency’s descent.

Data on Friday showing higher US growth in the second quarter fuelled speculation that a Federal Reserve interest rate hike may come sooner than expected, in striking contrast with the outlook for the European Central Bank.

3:00 pm Buzzing: Shares of  Strides Arcolab jumped 9 percent after board approved its merger with Shasun Pharmaceuticals . Shares of Shasun Pharma were up 5 percent intraday.

”Each equity shareholder of Shasun will be entitled to receive five equity shares of Strides in lieu of 16 equity shares held in Shasun. Based on the exchange ratio, Shasun shareholders will own 26 percent  of the combined entity.  The current promoters of Shasun will, post the approval of the merger, be categorised as promoters of the combined entity, along  with the existing promoters of Strides,” a BSE filing said.

The combined entity to be amongst the top 15 listed Indian pharmaceutical companies by revenue with a turnover in excess of Rs 2,500 crore. The board of directors of the combined entity will comprise of independent directors. The appointed date for the Scheme of Amalgamation is April 1, 2015.

The Nifty is hovering around 7950, down 12.80 points at 7956.05. The Sensex is down 32.78 points at 26593.54. About 1846 shares have advanced, 1004 shares declined, and 84 shares are unchanged.

Defensives like pharma and IT lend support while select metal and FMCG stocks correct and midcaps outperform.

Sun Pharma is the top gainer on the Nifty. Its merger with Ranbaxy is expected to be on FIPB agenda on October 1. Additionally, CNBC-TV18 learns the company is planning to focus on dermatology post Ranbaxy merger. It expects almost 38-40 percent of US sales to come from dermatology by FY18.

TCS, Infosys, BHEL, GAIL are top gainers in the Sensex. Among the laggards are the Tata Steel, ITC, Sesa Sterlite, Coal India and Bajaj Auto.

1:50 pm Market outlook: Ambit has introduced 15 stocks in its core opportunities portfolio to benefit from the economic revival. These include Bharat Forge , Ramkrishna Forgings , Alstom T&D and PTC India Financial among others. In an interview to CNBC-TV18, Andrew Holland, CEO of Ambit Investment Advisors, said manufacturing sector will play a key role in India’s economy, which this time around will be more ‘domestic-driven’ than outsourcing based, seen in 2003-2006.

Once the government’s kick starts the infrastructure reforms, it will have a multiplier effect on the economy, Holland said. Ambit is upbeat on the companies that are into supply side of this growth story. Ambit sees GDP growth to increase by 1 percent and says the country is likely to see significant FDI in insurance. It expects the road sector to see 8,500-km contract in FY15, and engineering, construction sectors to get big boost.

1:30 pm Buzzing: Shares of IDBI Bank was up 3 percent intraday after its board meeting. In the meeting held on September 26, the board has approved to increase borrowing limit to Rs 15000 crore from Rs 4000 crore.

”The board of directors has approved enhancement in rupee borrowing limit from the present limit of Rs. 4000 crore (approved by the shareholders on September 02, 2014) to Rs 15000 crore subject to compliance with all applicable laws, regulations & guidelines as well as the approval of shareholders to be obtained in terms of Section 42 of the Companies Act, 2013 by postal ballot,” it said in a statement.

Also, the board has approved to infuse additional capital of Rs 58.34 crore by way of equity in its subsidiary compnay IDBI Asset Management to meet its growth requirements.

The market seems to be tired on first day of week as traders are cautious ahead of RBI policy review. The Sensex is up 23.97 points at 26650.29 and the Nifty is up 2.35 points at 7971.20. About 1851 shares have advanced, 833 shares declined, and 77 shares are unchanged.

Sun Pharma, TCS, BHEL, Infosys and GAIL are top gainers while Hindalco, ITC, HUL, Tata Steel and Bajaj Auto are laggards.

Crude oil futures eased by 0.59 percent to Rs 5,741 per barrel today as speculators reduced their exposures amid a weakening trend in Asian trade. The trading sentiment eased at futures trade after crude oil prices fell in Asian trade today as the US dollar strengthened, analysts said.

Meanwhile, West Texas Intermediate (WTI) crude forNovember delivery dropped 59 cents to USD 92.95, while Brent crude for November fell 25 cents to USD 96.75 a barrel on the New York Mercantile Exchange in mid-morning trade.

1:50 pm Exclusive: While most market experts and economist don’t see an interest rate cut anytime soon, SL Bansal, CMD, Oriental Bank of Commerce hopes for some rate cut by the RBI on Tuesday, but adds that banks may not pass it to customers for a month at least. “Why there should be a rate cut beacuse all numbers favourable. Current account deficit (CAD) and commodity prices have come down substantially especially crude prices, so if you cannot cut now, it will be very difficult for you to take a call subsequently,” he says.

Meanwhile, Ashish Parthasarthy, Head Treasurer, HDFC Bank expects the central bank to oblige the market with a statutory liquidity ratio (SLR) and held-to-maturity (HTM) cut. He further adds that if these two rates cut come through then the bond yields reaction will be temporary. However, Bansal feels that cut in SLR won’t have much impact.

1:30 pm Buzzing: Shares of Patel Integrated Logistics are locked at 20 percent upper circuit, hitting Rs 54.05 intraday after it entered into a cargo alliance with e-tailing major Amazon. It has joined hands with Amazon to fast-track delivery to customers across the country.

The logistics company has begun securing exclusive bookings from airlines to ship Amazon’s products ahead of the festive season.

In an interview CNBC-TV18 Areef Patel, Executive Vice Chairman said the company fetches monthly business of around Rs 50-70 lakh and is looking to double this revenue. ”We will be looking at the margins going up as the volumes go up. Unfortunately, over the last couple of months we have had couple of rate increases with the airlines due to the high fuel cost but hopefully that will change if things settle down,” he said

The market still rangebound. The Sensex is up 25.66 points at 26651.98 and the Nifty is up 5.35 points at 7974.20. About 1728 shares have advanced, 828 shares declined and 79 shares are unchanged. Midcaps, IT and pharma stocks are supportign the indices with smart gains.

Sun Pharma, TCS, BHEL, Infosys and Cipla are top gainers while Hindalco, HUL, Tata Power, Coal India and ITC are among the laggards in the Sensex.

All eyes are now on the Reserve Bank of India as the market gears up for the policy announcement tomorrow. A CNBC-TV18 poll suggests that Raghuram Rajan may hold fire this time. Bankers, dealers and company CFOs expect no rate cut in the policy tomorrow but a tone as hawkish as august.

FIIs turn bullish on India as PM Modi wows audiences in New York. Rajeev Bhaman of Oppenheim believes Indian stock market can double over the next five years if government provides policy support. He maintains that India is the best among emerging markets.

11:55 am Oil check: Crude oil futures eased by 0.59 percent to Rs 5,741 per barrel today as speculators reduced their exposures amid a weakening trend in Asian trade.
At the Multi Commodity Exchange, crude oil for delivery in October traded Rs 34, or 0.59 per cent, to Rs 5,741 per barrel in 2,312 lots.

In a likewise fashion, oil for November delivery moved down by Rs 30, or 0.52 per cent, to Rs 5,721 per barrel in 96 lots.

11:30 am Market outlook: India received a shot in the arm as global rating agency Standard & Poor’s on Friday revised India’s credit outlook to “stable” from “negative”, acknowledging the improvement in the country’s economic environment. The revision was backed by an improvement in India’s external position and growth prospects and means it’s no longer on the brink of a “junk” rating.

S&P was the last of the three main global ratings agencies with a negative outlook on India; Moody’s never changed India’s outlook, while Fitch upgraded it to stable in 2013. Although Moody’s outlook on India remains stable, Andrew Colquhoun, Head of Asia-Pacific Sovereign Ratings Group at Fitch Ratings doesn’t see any chance of an alteration in ratings for India in the medium-term.

The Nifty starts the week in consolidation mode as traders seem to be cautious ahead of the Reserve Bank of India’s monetary policy review tomorrow. The 50-share index is down 1.20 points at 7967.65. The Sensex is up 35.34 points at 26661.66. About 1633 shares have advanced, 663 shares declined, and 66 shares are unchanged.

Defensives continue to gain as Sun Pharma builds on to Friday’s rally while banks trade mixed & metals are weak. TCS, BHEL, Cipla and Infosys are top gainers in the Sensex. On the losing side are Hindalco, M&M, Tata Power, Coal India and Bharti Airtel.

Tourism stocks are higher after the PM Narendra Modi eased visa norms for US nationals and PIO card holders.

NSE’s volatility gauge, India VIX has surged 7.3 percent and is heading towards fourth day of gains in five on fears of foreign investor sales. It has risen nearly 20 percent since September 22. Traders cite uncertainties including the Supreme Court’s cancellation of most coal blocks allotted since 1993. State elections in October are also seen weighing.

Globally, Asia is mixed while Hang Seng is at a two-month low on account of pro-democracy.
10:50 am Market cap: Amid weakening stocks, the combined market valuation of top five Sensex companies fell by Rs 45,887.6 crore last week, with RIL and ICICI Bank taking the biggest hit. While TCS , RIL, Infosys, SBI and ICICI Bank saw losses in their market capitalisation (m-cap), ONGC, ITC, CIL, HDFC Bank and Sun Pharma witnessed addition. The m-cap of RIL plunged Rs 19,728.88 crore to Rs 3,01,948.82 crore. ICICI Bank suffered a loss of Rs 10,682.94 crore to Rs 1,71,031.83 crore, while the value of SBI dipped by Rs 9,376.96 crore to Rs 1,82,380.34 crore.

10:30 am Buzzing: Shares of MTNL were up 5 percent intraday as reports suggested that the state-run company will not be privatised but will be turned around. According to a media report telecom minister Ravi Shankar Prasad has said that the loss-making state-owned telecom service providers, Bharat Sanchar Nigam (BSNL) and MTNL will not be privatised instead they will be turned around.

He was quoted as saying ‘experience in turning around loss-making PSUs and has done so with Coal India when he was coal minister during the Vajpayee government’s regime’.

However, he did not provide any fixed time-frame or share any strategy but added that he was closely monitoring them.

The Nifty is struggling below the 8000-level. The 50-share index is up 5.70 points at 7974.55 and the Sensex is up 45.89 points at 26672.21. About 1434 shares have advanced, 510 shares declined, and 48 shares are unchanged.

Both Sun Pharma and TCS are up 3 percent each. BHEL, Wipro and Infosys are top gainers in the Sensex. Among the losers are Hindalco, Tata Power, Bharti Airtel and Coal India.

The dollar hit a four-year peak against a basket of currencies in early Asian trade on Monday, bolstering Japanese shares, but other Asian shares shrugged off Friday’s Wall Street rebound in the face of political unrest in Hong Kong.

Hong Kong shares dropped 2.3 percent to three-month lows in the worst unrest since China took back control of the former British colony two decades ago.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7 percent, hitting its lowest level since mid-May. Even the usually calm Hong Kong-dollar, which is pegged to a narrow band against the US dollar, slipped 0.1 percent to 7.761 against the greenback, its lowest level since March, as the street clashes affected some banks’ operations.

9:55 am Buzzing: Shares of Anant Raj jumped 8.5 percent intraday on Monday after it announced sale of its wholly-owned subsidiary Greatway Estates for Rs 304.12 crore. The real estate company aid the fund would be utilised to part repayment of debt and project development.

In a filing to the BSE, Anant Raj informed that the board at its meeting “approved the sale of 100 percent equity stake in its wholly owned subsidiary Greatway Estates for a consideration of Rs 304.12 crore.”

“The consideration received shall be utilised partly for repayment of debt and partly for development of the projects of the company,” it added.

Anant Raj posted net profit of Rs 100.38 crore on revenue of Rs 503.11 crore for 2013-14. It had a debt of about Rs 1,400 crore at the end of last fiscal.

9:35 am Market outlook: The Indian equity market is fundamentally in a bull phase, says Jaideep Goswami, Head of Equity, ICICI Securities. In an interview with CNBC-TV18, he cautions that one has to identify the triggers that can move the market on the downside. ICICI Securities has Nifty target of 9,200 for the next 12 months. On specific sectors, Goswami is positive on the FMCG space given the increasing demand in this segment. He is positive on Marico . He also likes the IT sector. With Vishal Sikka taking over Infosys and clarity on management issues, there is a possibility of a PE re-rating in the stock, he says. From the realty space, he is bullish on Sobha Developers .

The market has opened on a flat note. The Sensex is up 8.81 points at 26635.13 and the Nifty is up 9.60 points at 7978.45. About 474 shares have advanced, 127 shares declined, and 22 shares are unchanged.

Tata Steel, Wipro, Axis Bank, Reliance and Infosys are top gainers in the gainers while HUL, Coal India, ITC, Tata Motors and Bharti Airtel are major laggards in the Sensex.

Meanwhile, Prime Minister Narendra Modi received a rock star reception at Madison square garden. As a Navratara gift for a rapturous crowd of NRIs, persons of Indian origin cardholders to get lifetime Indian visa. Modi said he wants the world to ‘Make in India’, lists democracy, demographic dividend & demand as India’s biggest strengths.

Globally, US stocks rose sharply on Friday, cutting losses for the week, after the government raised its estimate of economic growth in the second quarter and consumer sentiment rose in September.

And on the economic data front, the us economy grew at an annual rate of 4.6 percent in the second quarter. In commodities, Brent crude trades close to 97 levels giving back most of their gains from the previous session as dollar strengthens. From precious metals space, gold prices fall as a dollar-driven rally encouraged by US economic growth dimmed bullion’s investment appeal.


ICT firms urged to take care of workers’ health

September 30th, 2014

INFORMATION communications technology-Business Process Outsourcing (ICT-BPO) companies are encouraged to initiate activities that will promote a healthy lifestyle for their employees, an executive said.Outsourcing40

“From an employee engagement perspective it is a responsibility of the organization, BPO, or employer to make sure they have fitness programs [for] health and wellness [that is] sustainable for their employees,” said Catherine S. Ileto, Sutherland Global Services marketing and communications director, in yesterday’s Kapehan sa Davao at SM City Davao.

She said it is important for employers to take care of their employees since they are part of a successful business.

“If you take care of your people, your people will take care of your business. For the simple reason that our people is our biggest asset [and] we should take care of them by coming up with employee engagement activies on health and wellness,” Ileto said.

She said the health of a company’s employees is important because they will become more productive in their work if they are healthy.

For instance, Ileto said one of Sutherland’s initiatives to promote health and wellness among their employees is their Sutherland Fitness Challenge. In other Sutherland branches, this is set to conclude by the end of October but for Davao branch, it is yet to start next month.

“[Through the program] we are trying to integrate fitness into the daily life of [our employees],” she said.

Ileto encourages other ICT-BPO companies to also follow their lead in coming up with employee engagement activities for the wellness of their employees.

“We [at the private sector] should help erase the negative perception that [being in our industry] is stressful. It is important for the companies to launch programs that they feel would be beneficial for their employees,” she said.

Ileto also said that companies should not only focus in coming up with programs for the health aspect of their employees but they should also launch other programs that will positively impact the wellness of the employees as a whole like programs on financial wellness.

She said initiating such activities will have a positive impact on their employees.

“In our recent focus group discussion with our employees, we learned from them that they are saying that ‘Yes, Sutherland cares for me’, ‘they care for my well-being’, and we encourage a culture of bayanihan,” Ileto said.


Promising signs from TMT sector reports

September 30th, 2014

Recent reports published over the summer 2014 show promising signs emanating from the TMT sector.Outsourcing39


Recent analysis of the IT sector have highlighted trends which mean TMT sector businesses can be increasingly confident in 2014.

Increased TMT M&A activity

According to the latest data from corporate finance firm Regent Partners, the number of European TMT M&A deals announced in July 2014 has reached a record of 329, with a total deal value of $30 billion.

Since September 2013 there has been a steady increase in M&A activity in the technology sector, with aqui-hire deals, large takeovers and IPOs becoming commonplace. After years of an industry-wide risk averse attitude, more and more companies are keen to grow earnings through acquisitions as confidence in the economy continues to grow.

Further demand for IT staff

Demand for IT staff continues to rise, with the ‘Report on Jobs’ carried out by KPMG and the Recruitment and Employment Confederation stating that the July 2014 index for permanent staff in the sector stands at 68.1, the highest it has been for three months and above the 67.6 average for all permanent jobs across the UK. The report has also indicated an increased need for temporary staff in the area, with this growth rate at a six-month high.

As a result IT budgets are expected to rise over the next three years. Heath Jackson, partner in the CIO Advisory practice at KPMG has noted that companies are now offering starting salaries in the sector at a rate that have risen to levels unseen during the survey’s 17 year lifetime.

UK manufacturers double outsourcing spend

Figures from Nelsonhall and BPO firm Arvato show that during the first half of 2014  UK manufacturers spent £130 million on outsourcing services, 132% more than in the first half of the previous year.

Companies which, particularly during the recession, carried out non-core functions in-house are now attempting to refocus their internal resources in order to allow expansion of their core business, another side effect of the increased confidence in the economy, with the telecoms and media, financial services and energy and utilities sectors accounting for 70% of the total spend on outsourcing deals.

So what?

With both TMT sector businesses and their customers reviewing activity within the sector as a barometer for making investment decisions, these recent reports are an encouraging indication that the sector is undergoing a stable recovery. As confidence grows and businesses see others successfully investing in upgrading their IT functionality, more businesses are likely to follow suit which will further enhance the development of the sector and present more opportunities to those individuals working within it.


Pharma Outsourcing Driving Need for Cloud-Based Services

September 30th, 2014

As demand shifts from high-margin branded drugs in Western regions to low-margin generics in emerging markets, successful bio/pharmaceutical companies are adopting new business models that include significantly more outsourcing and require a deeper understanding of costs all along the value chain. Enterprise resource planning (ERP) systems that have been effective for the internal management of sourcing and production are insufficient for managing the extended relationships and multidirectional communications needed in this new environment. Bio/pharmaceutical companies are therefore turning to cloud-based services to achieve greater transparency and facilitate collaboration.Outsourcing38

Outsourcing trend
The biggest trend driving changes in the market today is the shift from a focus on Western markets to growth areas in emerging regions, according to Diane Palmquist, vice president of product management for GT Nexus, a cloud supply-chain platform provider. “High-margin blockbuster drugs are coming off-patent and mature Western markets are experiencing limited growth. Consequently, the focus has shifted to emerging markets, where the growth rate is higher. However, the demand in these regions is greatest for low-cost, low-margin products, and buying habits are very different (buy the dose, not the bottle),” she observes. The result: bio/pharmaceutical companies need to completely transform their old business models.

The biggest impact can be seen in the higher level of outsourcing now taking place. “Pharmaceutical companies are outsourcing nearly every aspect of the business, including some research-related activities, API manufacturing, drug product formulation, packaging, and logistics,” says K.R. Karu, industry solution director for Sparta Systems, a provider of enterprise quality management solutions. Palmquist adds that currently approximately 40% of industry business is outsourced, and that number is expected to increase to 80% over the next several years.

Loss of control
As outsourcing has increased, companies have lost control over many aspects of the supply chain. “Companies are still trying to manage interactions with suppliers and service providers through personal communications, which is not only inefficient, but ineffective given the number and complexity of relationships and issues that must be managed,” Karu says. The low margins of today also do not support this approach. ERP systems, which in the past have been used to connect purchasing with production operations, are also not capable of managing the complex interactions between service providers and pharmaceutical companies, according to Palmquist. Furthermore, to meet the demand of emerging markets, pharmaceutical companies must be very responsive and need solutions quickly. ERP systems generally take about 18 months to get up and running, and often by that time the opportunity has been lost.

One of the key issues for bio/pharmaceutical companies is the lack of visibility into contract manufacturers. Often pharma companies do not find out about issues that can impact the delivery of API or finished drug product until much later because the suppliers are trying to solve the problem. The common response, according to Palmquist, is to try and stay on top of potential problems by constantly contacting the suppliers via phone or e-mail, which is not a practical, sustainable, or effective approach.

“The challenge lies in the need to manage a whole host of different suppliers at the same time that the customer base is changing dramatically and bringing an entirely new set of customer expectations. The key to this puzzle is to obtain visibility on both the supply side and the value side, from inventory to quality excursions to government fees,” Palmquist asserts.

Gaining visibility
Cloud-based services give bio/pharmaceutical companies the ability to extend their visibility into all parts of the value chain, while at the same time enabling vendors to access the information they need in order to provide optimum services. Raw materials suppliers, contract research organizations, contract manufacturers, brokers, and distributors can all interact simultaneously under very controlled conditions that ensure that important information gets to the only the right people when it needs to, according to Palmquist.

More benefits of the cloud
There are several other practical advantages of using cloud-based systems, according to Karu. Because cloud-based software systems are developed by software experts, they are consistent for all users. Maintenance and upgrades are provided on a continual basis, as well as any necessary validation procedures to meet special compliance requirements for the pharmaceutical industry. There is also no need for investments in extensive information technology infrastructure; the servers are maintained by large companies (think Google and IBM). In addition, redundant systems located around the world ensure non-stop operation.

Perhaps most importantly, though, is the controlled nature of the interactions through cloud-based systems. “Generally the information that is being shared using cloud-based systems is already being shared via phone calls and e-mails. There are, however, much stronger controls in place in cloud-based systems that ensure that information only goes to the people who should see it. There are no such controls around the use of e-mails with file attachments,” Karu explains

Achieving assurance of supply
Overall, according to Palmquist, cloud-based systems offer bio/pharmaceutical companies assistance with achieving assurance of supply. All business activities can be integrated in the cloud and important issues, exceptions, and problems flagged automatically, so that efforts are appropriately focused on resolving potential issues. Not only purchasing systems, but logistics and quality management systems can be linked through the cloud so that the bio/pharmaceutical company is always up to date on what is happening and can readily share information that impacts multiple vendors.

“Moving an established quality system to the cloud and sharing it with raw material suppliers and contract manufacturers makes it possible for these vendors to exchange information immediately. In addition, these vendors can be directly included in specific activities, such as investigations of excursions and remedial actions, leading to much more rapid resolution of problems,” Karu comments. Similarly, cloud computing can benefit other aspects of supply chain management and aid in the rapid response to any type of possible interruption in the supply, from natural disasters to manufacturing malfunctions to distribution issues.

Collaboration is key
“The key to success for bio/pharmaceutical companies with such complex supply networks is collaboration across the value chain. Cloud computing is an effective way to enable such relationships,” Karu says. “There is definitely a growing realization in the pharmaceutical industry that suppliers must be thought of as extensions of the company. To be truly successful, we believe that the relationships between bio/pharmaceutical companies and their suppliers should be viewed more like joint ventures, with real transparency of information,” adds Palmquist.

The idea of allowing vendors to see into their business operations is the most challenging aspect of cloud computing for biopharmaceutical companies. “Most companies are at least initially very resistant to letting suppliers see their company information. It is not possible, however, for vendors to effectively participate in quality investigations, audits, and remediation efforts without two-way communication. He adds that the pharmaceutical industry tends to be very conservative about adopting new technology, in part due to concerns about acceptance by regulatory agencies, and cloud computing is no exception. “Both pharmaceutical companies and their suppliers are interested in cloud-based solutions, but neither is convinced that the other is willing to implement them. The greatest challenge at this point, therefore, is to convince the various members of the pharmaceutical industry supply chain to take the first step.

Early adopters
Companies that have already moved forward with the use of cloud-based services are those that have been pushed fastest towards emerging markets and have realized that ERP systems are insufficient and leave them “flying blind,” according to Palmquist. Pfizer is one example. “Pfizer needed to figure out a way to not only maintain but grow its revenue stream despite having 9 of its blockbuster drugs lose patent protection¾a Herculean task,” she says. Not only did the company need to better manage the supply side, it also needed help tracking costs (taxes, fees, etc.) on the value side in detail, something that was not a concern in the past with high-margin products.

“We expect that more companies will be in this same position and looking for solutions that enable simultaneous, multidirectional communications with numerous members of the value chain. As that occurs, there will also be greater realization that any dollars spent in the supply chain ultimately comes from the pharmaceutical company,” says Palmquist. In the past, it was easy for manufacturers to separate supplier costs from their costs because margins were high. That will no longer be the case as the industry becomes a low-margin business. “As we see in the consumer electronics industry, where every penny is tracked throughout the supply chain, it will be necessary for bio/pharmaceutical companies to look at supplier costs as their costs in order to maximize profits. Connect with suppliers through cloud-based systems will help not only control costs, but also quality and all other aspects of their operations,” she concludes.

For those reasons, Karu anticipates an explosion in demand for cloud-based services in the pharmaceutical industry. “The many-to-many relationships that are possible with cloud-based systems provide a much more efficient mechanism for processing information and managing interactions, which will be critical to the success of pharmaceutical companies in the increasingly challenging business environment they are facing,” he says.


Almost three-quarters of big companies to increase outsourcing

September 30th, 2014

Almost three quarters of global businesses will increase their investment in outsourced services, according to research by KPMG.Outsourcing37

The research also indicates that more firms are taking advantage of global delivery models including functions such as finance, procurement and HR delivered centrally, often offshore.

KPMG’s survey found that 72% of big businesses plan to increase outsourcing spending, while 61% said they will increasingly use global shared services for IT and business processes over the next two years, with offshore services accounting for a larger portion of both.

In its report, The State of Services & Outsourcing in 2014: Things Will Never be the Same, carried out with HfS Research, KPMG said that, on average, enterprises plan to increase their offshoring activities by 20% to 30% over the next year.

The report said integrated global services models that incorporate internal shared services and outsourcing are the core focus for most enterprises, with 56% are already increasing investments in centralised functions to manage a mix of service delivery models.

Dave Brown, KPMG’s head of global lead, shared services and outsourcing advisory, said outsourcing is at a “crucial juncture between providing genuine value and low-cost staff augmentation.”

He said suppliers today must go beyond providing people to carry out standard business functions.

“Providers need to prove they can do more than basic operations, otherwise outsourcing runs the risk of becoming a staff augmentation model for flexing operations as opposed to a strategic partnership between provider and buyer that can add more skill, technology, and analytical capability for clients.”

Buyers also have to consider where to have services delivered from. The global business service delivery map is changing with a wide choice of locations today.

For example, when pharmaceuticals giant AstraZeneca decided to reduce the amount of IT it outsources, the company decided to retain the advantages of the offshore delivery model through a captive centre in India. The company is also planning to open delivery centres in Eastern Europe and California.

The recent 2014 Global Services Location Index, from AT Kearney, revealed the best places to outsource services and set up global delivery operations.

Asian countries dominate the management consultancy’s index of the top 50 global locations, with India (1), China (2) and Malaysia (3) making up the top three. Eastern and Central Europe also feature in the index: Bulgaria (9), Poland (11), Romania (18), Hungary (31), Czech Republic (33) and Slovakia (35).

Latin America has two of the top 10 outsourcing locations with Mexico (4), Brazil (8), Chile (13), Costa Rica (24) and Columbia (43) also in the index. The Middle East and North Africa region featured Egypt (10), Tunisia (28), Morocco (34) and Mauritius (36) in the index.


Swedish IT staffing company opens website development training center in Poltava

September 29th, 2014

Beetroot, a Swedish information technology staffing company, on Sept. 19 opened an academy in Poltava to train website developers on the WordPress platform. Twelve students will undergo a three-month course after which they will be fully employable within Ukraine’s expanding IT sector, reads the company news release. Outsourcing36

Called Beetroot Academy, the frontend developer center is supported by the Swedish International Development Cooperation Agency through the Swedish embassy in Ukraine.

Ukraine’s $2 billion outsourcing market has been experiencing double-digit growth in recent years. Worldwide there is a shortage of programmers, and 95 percent of the development work conducted in Ukraine is for foreign clients.

Beetroot employs some 40 people in Ukraine. Its base of operation is in Odesa, but also employs people in Kharkiv, Kyiv and now Poltava. Having roots in startups, the Swedish IT-resource company matches developers and designers from Ukraine as well as Moldova with Scandinavian and American emerging  IT-oriented companies.


New report looks into Russia’s IT market development forecast to 2019

September 29th, 2014

The report contains lists of companies that furnish hardware, software and IT services for Russian customers, with the breakdown as follows: 20 of the top software developers and vendors; 20 leading hardware manufacturers and distributors, 30 top outsourcing and IT services delivery companies and 100 of the most widely recognized IT companies active on the Russian market.Outsourcing35

Interest in Russia”s IT market increases, keeping pace with recent growth.

New publication evaluates key segments; forecasts market development for 2014-2019.

Total sales of IT products and services in Russia were worth RUB 711.6bn (€16.8bn) in 2013. Last year we observed a qualitative change in market development. Short term projects dominated the corporate sector, and cost optimisation remained among the key business objectives. Russian business customers reduced purchases of new hardware and software licences and increased their spending on IT support and outsourcing solutions.

It has published IT market in Russia 2014, development forecasts for 2014-2019 to provide direction for businesspeople interested in this market. The report examines market value and the value of each key segment – hardware, software and IT services, forecasts growth for the next six years and tracks planned expenditures for the largest business and governmental entities.

This innovative publication describes the impact of influential trends upon market development, and examines the future potential of each major segment. It reviews investment opportunities and presents breakdown of IT spending by vertical sectors and industries.

The report also contains lists of companies that furnish hardware, software and IT services for Russian customers, with the breakdown as follows: 20 of the top software developers and vendors; 20 leading hardware manufacturers and distributors, 30 top outsourcing and IT services delivery companies and 100 of the most widely recognized IT companies active on the Russian market.

This document includes a wealth of useful statistical data and KPI that describes the market and key segments accurately in terms of value, size, current level of IT expenditure, top selling IT hardware products, software innovations and service offerings. It follows through with extensive analysis and reveals growth forecasts for each segment of the market that indicate which segments will surpass the others in terms of value.
Companies that are currently active in the IT market in Russia, such as distributors and manufacturers of hardware, software solutions development specialists and telecommunications services providers will benefit from reviewing this document, as will a variety of academic, research and business consultancy professionals. It is also extremely useful to companies that invest heavily in IT products and services in order to successfully conduct their own business operations.

IT market in Russia 2014, development forecasts for 2014-2019 is especially helpful when conducting a comparative analysis between the Russian IT market and neighboring markets in Central and Eastern Europe. The report was created with businesspeople in mind and is also a handy source of useful information when estimating the growth potential of the market and its various segments, preparing budgets for IT expenditure and forecasting demand for various types of business process software and hardware.


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