Archive for May, 2015

IT industry tackles lack of qualified staff

May 28th, 2015

Vu Anh Tuan, general secretary of the association, said that IT companies in HCM City by 2020 would need about 100,000 engineers who meet international standards. “This will be a challenge for the industry.”Outsourcing12

The industry especially need engineers for software outsourcing and IT services, he said.

HCM City has about 100 universities, colleges and institutes, of which half have an IT faculty.

They produce about 20,000 IT graduates a year, but only about 15 per cent of them meet companies’ needs, Tuan said at a meeting between IT lecturers and businesses held in HCM City on Thursday.

Nguyen Hong Trang, vice rector of Vien Dong College, said the IT industry played an important role in the country’s economy.

Employees in the industry require many skills to perform their work effectively, including soft skills, but the poor quality of IT graduate students remains a problem, she said.

The curricula at many schools are still far behind companies’ demand, which forces companies to re-train new IT employees.

In addition, students have neglected the study of English, she said.

Seventy-two per cent of IT students lack practical experience and 42 per cent lack soft skills and team-working skills, according to figures from the National Institute of Information and Communications Strategy under the Ministry of Information and Communications.

Only about 15 per cent of new graduates satisfy businesses’ demand, the institute said.

Trang proposed a series of measures to improve the situation, including regular updates of IT training programmes in line with global development in the field.
Foreign language and soft skills should also be taught during the training process, she said, adding that it was also important to improve the quality of lecturers.
Delegates at the conference agreed that schools and businesses should work together to train human resources.

At the event, experts from Microsoft and Acumatica spoke about global technology trends and the cloud computing market.

In a related matter, the association’s training club signed co-operation agreements with Global CyberSoft Viet Nam, Luxoft Viet Nam and Swiss Post Solutions on training programmes in the IT industry.


5 Keys to IT Scaling and Company Expansion Unlocked in New Article by PacketDrivers

May 28th, 2015

Scalable IT infrastructures are a necessary part of what allows for a safe and strong business expansion. Many businesses have begun to outgrow their IT support systems, and they don’t find out until it’s too late. In their latest article, PacketDrivers takes a look at 5 keys to business IT scaling so that business owners can identify whether their IT system needs work.Outsourcing11

The first necessary component of scalable IT infrastructure is for the business to embrace cloud-based services. Not only does this allow executives and employees to access the systems remotely, but more space can easily be added without the hassle of setting up additional servers and installing new hardware. The article explains that, “Cloud computing is cutting-edge, and even mid-sized companies are jumping on the bandwagon.”

An additional key to a scalable IT support system is a set of established deadlines for necessary computing upgrades. The article describes common scenarios, such as when, “The company wants to upgrade to Server 2012 or IE8, only to be told by their IT team that their server system won’t support those programs.” To avoid this problem, PacketDrivers suggests that scalable IT systems are run by teams that set up schedules and deadlines for old system repairs and improvements.

Scaling a business can be a difficult task if executives and employees have not established a clear workflow. The article recommends that businesses, “Build a workflow list of future upgrades, modifications that should be made down the road, plans for expansion, or new hardware to implement once the business has reached a certain operational threshold.”


India prods China on IT, ITeS access

May 28th, 2015

New Delhi will soon send a reminder to Beijing on the hurdles faced by Indian IT/ITeS firms in getting greater market access in China. This follows concerns raised by industry bodies Nasscom and CII in meetings with the Union government about the difficulties in qualifying for bids put out by Chinese government and state-owned enterprises (SOEs) for IT/ITeS projects.Outsourcing10

In the aide memoire to be sent to China, sources said, India would also urge China to strengthen its intellectual property (IP) regime to protect Indian firms’ IP rights.

As per the 2013 Nasscom-KPMG study, of the estimated $46-billion Chinese IT/ITeS market, India’s share is less than $1 billion, despite its global reputation as a major export of IT-related services. China’s IT/ITeS market could cross $84 billion by 2020.

An aide memoire in diplomatic parlance means a note summarising in an informal manner (sans the usual courtesy phrases) the discussions between both sides. It is meant as ‘an aid to memory’, and a gentle reminder, seeking the necessary action on the points discussed. Indian IT firms operating in China include TCS, Infosys, Wipro, HCL, Tech Mahindra, NIIT (Education), Zenzar, Geometric, Mphasis, Mindtree, Birlasoft and KPIT.

In China, the government (at the federal and state/local levels) and SOEs are among the largest buyers of IT-related services. The Nasscom-KPMG study says by 2020 demand from SOEs is likely to be 45% of the total Chinese demand.

To qualify for bids of large projects, an applicant company needs to show that they have helped in the implementation of Chinese government/SOE projects of similar size. “We have suggested that China should ascribe more value to the experience of companies in government projects of similar sizes outside China, ” Gagan Sabharwal, director (global trade development), Nasscom said.

India had, on many occasions earlier and even during Prime Minister Narendra Modi’s recent visit to that country, taken up these issues with China. However, the fact that Beijing was yet to respond favourably to New Delhi’s concerns was recently discussed at a meeting held by the Indian commerce ministry, official sources told FE. The ministry then prepared the aide memoire and forwarded it to the Prime Minister’s Office to be sent to the Chinese authorities, they said.

Nasscom has also suggested that India and China should, on a reciprocal basis, allow easier movement of highly skilled professionals through long-term visas and work permits to enable Indian and Chinese companies to send across such experts to work in each other’s territory.

CII had pointed out that insistence on local entities in some provinces in China to avail subsidies was reducing competitiveness of Indian IT/ITeS firms. Besides, CII said, Indian IT/ITeS firms are facing challenges in staff mobility between provinces in China due to the ‘hukou’ system (a system of household registration that restricts internal mobility of people and ties their future prospects to their place of residence), necessitating local offices in each project area.

To showcase technological expertise of Indian IT firms, CII said certain pilot projects can be chosen to be jointly executed with Indian and Chinese companies. Also, both sides can jointly develop a platform on policy updates and business opportunities for Indian and Chinese companies, it said.

CII and Nasscom also want India to push for a totalisation agreement (on social security payments) with China. This, they said, will help avoid social insurance fees being paid twice by companies for Indian employees being deputed to China — once in India and then again in China. These industry bodies also want New Delhi to take up the issue of the lack of clarity in withholding tax imposed on repatriated profits. Among issues affected the Indian outsourcing firms, CII has pointed out resistance to outsourcing within China due to lack of understanding of benefits and perceived job loss fears in SOEs.

Entering the dragon
* Size of Chinese IT/ITeS market = $46 bn
* India’s current share = below $1 bn
* China’s IT/ITeS market size projected to be $84 bn by 2020
* Chinese govt & soes among potential big buyers of IT services
* By 2020, soes to make 45% of Chinese demand
* Indian IT majors in China: tcs, Infy, Wipro, hcl
* India seeks long-term work visas for IT workers in china
*  Totalisation pact with china proposed


Wipro, Infosys turn to AI, design thinking in subdued IT market

May 28th, 2015

India’s leading technology outsourcing firms Infosys Ltd and Wipro Ltd are banking on so-called design thinking and artificial intelligence (AI), respectively, to win large deals, as they struggle to raise revenue in a subdued market for information technology (IT) services.Outsourcing9

Bengaluru-based Infosys claims that design thinking, a creative and systematic approach to problem-solving by placing the user at the centre of the experience, has helped it win five large deals. Two of these orders exceed $100 million each in annual revenue. Meanwhile, cross-city rival Wipro plans to offer its AI platform Holmes to up to a third of its 1,000-plus clients in the next 24 months, claiming that it could be an “account opener and game changer”.

“We have won five big deals, two of them are over $100 million. Just in the last six weeks,” Infosys chief executive officer Vishal Sikka said in an interview last week. “We are not just responding to requests but being proactive and bringing clients to workshops. See, RFPs (requests for proposals) are controlled by third party… But then, you can always influence the client to become a strategic partner through design thinking.”

Infosys is trying to improve the effectiveness of its sales team by incorporating elements of design thinking, Mint reported on 29 April. Sikka’s push to drive more business comes after his company’s March quarter revenue fell short of forecasts.

Wipro, under chief executive T.K. Kurien, too, has been struggling to record a double-digit revenue growth for the last four years, and is now positioning Holmes in managing helpdesks for companies.

“In the next two-four years, one of the biggest disruptions will be (an IT vendor having) an AI-platform. I believe this will be as big as the Internet disruption. Customers have exhausted their levers of enhancing productivity. So, IT vendors need something which can promise productivity,” said K.R. Sanjiv, chief technology officer of Wipro.

Wipro is pitching Holmes against International Business Machines Corp.’s cognitive supercomputer, Watson, but according to Thomas Reuner, managing director of IT outsourcing research at US-based HfS Research, Wipro’s new cognitive platform, built with open source tools, also has features of New York-based IPsoft’s humanoid programme Amelia. All these platforms claim to improve productivity by allowing IT vendors to deploy fewer engineers for repetitive manual tasks.

Experts believe these measures reflect underlying changes shaping outsourcing deals, as customers across industries press IT vendors to help them with more “transformative changes” to improve their business operations.

Measures like AI and design thinking are needed for survival, said Sid Pai, partner and president of outsourcing advisory ISG’s Asia Pacific division. “A firm with a strong digital story and the ability to invest ahead of the curve on product bets in this space (fully accepting that some of these bets will work, while others will fail) will be able to gain market share in the evolving marketplace”.

“These are necessary strategic steps to position themselves for sustained leadership in the digital era,” said Bill Huber, managing director at Alsbridge, a US-based outsourcing advisory firm. “Winning will require innovation, customer centricity and business outcomes. Vishal’s design thinking campaign clearly has this in mind.

Similarly, the investment in Holmes should help Wipro transcend process centrism and move toward more natural fast integration of business insights into every operational process”.

For this reason, both Infosys and Wipro believe these technologies should help them match the revenue growth recorded by larger rivals such as Tata Consultancy Services Ltd and Accenture Plc.

“It (Wipro Holmes) will be an account opener and will be one of the key solutions through which we will lead into (winning new deals),” said Sanjiv of Wipro.
However, experts believe that even after taking these measures, it will be a tall task for Infosys and Wipro to get back to Nasscom projected revenue growth of at least 12% for 2015-16 as both are struggling to record even $1 billion worth of deals in a quarter.

“For companies of their scale, they need to have to have a quarterly TCV (total contract value) of at least $1.5-2 billion. So, will these measures help them get there? Difficult. It is not like others will be just sitting and watching the game,” said the head of research at a Mumbai-based brokerage, who did not want to be named.

“It could be tricky for Holmes to jump to 25% client usage in 24 months without an established pilot programme or deep-rooted AI partner network,” said Amy McLaughlin, a research analyst at US-based Technology Business Research Inc.

Typically, pilot projects take anywhere between six and nine months before a firm outsources a large deal to an IT vendor, according to industry executives.
“In a decelerating IT services market, combined with India-centric companies’ reputation as “fast followers” as opposed to market leaders, I’m not convinced that Wipro’s Holmes platform is in position to grow at such a rapid rate,” McLaughlin said.

Some analysts, like HfS Research’s Reuner, said though initiatives such as design thinking and AI are “important sign posts for the direction of travel for both the supply and demand side”, the “efficiency of the sales engine and the access to talent” are more important.

“Many of these initiatives will enhance offerings and will help to optimize margin but won’t be sold as stand-alone offering,” said Reuner.


Queensland Government shelves IT outsourcing

May 28th, 2015

The Palaszczuk government has continued its push to de-Newmanise Queensland by scrapping plans to outsource government IT services.Outsourcing8

There were fears of job cuts when the former Liberal National Party government, led by Campbell Newman, revealed it would divest its technology services provider CITEC as part of a cost-cutting drive.

But Innovation Minister Leeanne Enoch announced on Wednesday CITEC would remain a Queensland Government-owned information and communication technology provider.

“The decision to keep CITEC in public ownership provides certainty for its 344 full-time equivalent employees, as well as security for its government and commercial customers,” she said.

Ms Enoch said she would be focused on working with CITEC management, staff, government and commercial clients to build a future-proof business model.

“While there will be no job losses we will need a strategy to ensure that staff continue to grow their skills in order to meet changing technology and customer needs so that they can deliver ICT services now and into the future,” she said.

Ms Enoch said significant transformations had already begun, including data storage and protection upgrades that would reduce government costs by more than $12 million over three years.

It’s yet another legacy of the Newman government that the current administration has either scrapped or plans to.


Wipro Limited Downgraded to “Sell” at Zacks (WIT)

May 27th, 2015

Zacks cut shares of Wipro Limited (NYSE:WIT) from a hold rating to a sell rating in a research report sent to investors on Tuesday morning.Outsourcing7

Zacks’ analyst wrote, “WIPRO LTD-ADR provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level certified IT Services Company globally. “

Zacks has also updated their ratings on a number of other information technology stocks in the last week. The firm downgraded shares of Siliconware Precision Industries from a hold rating to a sell rating. Also, Zacks downgraded shares of Pixelworks, Inc. from a hold rating to a sell rating. Finally, Zacks downgraded shares of pSivida Corp. from a hold rating to a sell rating.

Wipro Limited (NYSE:WIT) traded up 0.09% on Tuesday, hitting $11.66. 509,679 shares of the company’s stock traded hands. Wipro Limited has a 52-week low of $10.86 and a 52-week high of $14.18. The stock’s 50-day moving average is $12. and its 200-day moving average is $12.. The company has a market cap of $28.62 billion and a P/E ratio of 21.16.

Wipro Limited (NYSE:WIT) last announced its earnings results on Tuesday, April 21st. The company reported $0.15 earnings per share for the quarter, meeting the analysts’ consensus estimate of $0.15. The company had revenue of $121.42 billion for the quarter, compared to the consensus estimate of $121.27 billion. During the same quarter last year, the company posted $9.04 earnings per share. Wipro Limited’s revenue was up 4.2% compared to the same quarter last year. On average, analysts predict that Wipro Limited will post $0.59 earnings per share for the current fiscal year.

Wipro Limited is a global information technology (NYSE:WIT), services Provider. The Company develops and integrates solutions that enable its clients to leverage IT in achieving their business objectives at competitive costs. The Company uses its quality processes and global talent pool to deliver time to development advantages, cost savings and productivity improvements.


CVC leads race for $400m Serco arm

May 27th, 2015

CVC Capital Partners, a global private equity house managing $71 billion in funds, has emerged the preferred bidder to acquire the Indian unit of business process outsourcing (BPO) major Serco Plc, valued at about $400 million, or Rs 2,500 crore, multiple people familiar with the matter said.Outsourcing7

CVC Capital and world’s largest private equity manager Blackstone Group had fired binding offers to acquire Serco’s Indian operations (formerly Intelenet) last month. Blackstone was making a strong bid to buy back Intelenet which it sold to Serco for $634 million four years ago, TOI reported in February this year.

In context, CVC Capital’s emergence as preferred bidder is surprising given that Intelenet still garners almost 15% revenue from some Blackstone portfolio companies like Hilton Hotels and Travelport. “CVC Capital is clearly the top bidder to clinch the deal, though Blackstone remains in the fray,” one of the sources cited earlier in the report said.

Senior executives from CVC Capital and its portfolio company — Philippines largest BPO company SPi Global —were in India recently to conduct due diligence on Intelenet’s centers and interact with the management. “We do not comment on transactions,” Serco Plc spokesperson Marcus Deville said in an emailed response. CVC Capital Partners could not be reached for immediate comments.

Sources said CVC Capital is exploring the possibility of merging Serco’s Indian unit with SPi Global to expand its footprint in India and the UK. The bid for Intelenet comes almost two years after it acquired Philippines’ largest BPO company SPi for over $300 million. This deal will be CVC Capital’s their first big bet on the Indian market, if they close the transaction without hiccups.

SPi operates an offshore-based model primarily serving US and Europe-based customers with more than 20,000 employees worldwide across 17 delivery locations in six countries including the Philippines, India, US, China, Vietnam and Nicaragua. It also operates a voice customer relationship management (CRM) business servicing both domestic and international customers.

Serco runs India’s third largest BPO operations after Genpact and TCS, employing over 40,000 people. It caters to customers in banking and financial services, insurance, retail, travel, telecom, healthcare, utilities and media. In November last year, Serco had announced it would divest private sector BPO businesses as part of a business restructuring plan that would see it focus on being a business to government providers across five core areas. The sale proceeds would be used to lower the net debt of the parent company.


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