Archive for the ‘News’ category

Koramangala IT Cos bet on price tweak tactics

January 27th, 2015

In a bid to compete against global IT majors like IBM and Accenture, Koramangala-based IT majors are playing the price card on delayed risk on fees pattern.Outsourcing58

Industry experts say that milestone-related payments have become a norm in the IT industry, while, bank guarantees that the vendors need to provide upon winning projects, have increased to as much as 20 percent of the deal value from the earlier 5 percent. Their strategies include coughing up money upfront to sweeten the deal and win large contracts.

T Umakanth Rao, director, Zarlina Systems, said, “India’s top IT outsourcers, including the traditionally conservative Infosys and Wipro, are becoming increasingly risk-taking as they chase commoditised contracts. While cut-throat competition is giving more bang for the buck for customers, technology vendors are risking future cash flow and locking up resources.”

Commenting upon the risk on fees or milestone related payments, Rao said, “While bank guarantees have increased to as much as a fifth of the deal value, the aggressive pricing strategies being adopted by the IT companies in the locale and their promise of value-added offerings to win contracts have made customers cautious and they want to see results before paying up.”

“In the last year and half, we have seen customers holding back the risk-on-fees which we normally get upon completion of certain milestones,” said a bid manager working with a large IT company based out of Bengaluru. The bid manager went on to add, “Across industries, we have seen customers holding back this money which they normally give more in a staggered manner than at the time when payments are due.”

Naved Ahmed, director, MN Associates said, “Indian firms play the pricing card often these days as they battle with global majors like IBM and Accenture to win bread-and-butter outsourcing deals.” He said that in earlier years, the top Indian IT services firms in Koramangala generally avoided heated price competition with their professional brethrens both in domestic market and in global merchandise. “However, the IT services industry has definitely become more competitive, and today, we as an industry observer, see certain IT firms actively pursuing price-to-win strategies,” said Ahmed.

Giving credit to the sizeable improvement in the operating margins of the local IT outsourcing companies Sushanth K Nair, proprietor, Innova Team Software, a Koramangala-based IT company which has base in New York as well said, “Operating margins of the home grown IT outsourcers have significantly improved over the past two years. One of the biggest cost components for IT companies, is manpower, and technologies like artificial intelligence and automation for completing repetitive low-end work have helped them cut down on this cost.”

Giving caution upon the upfront payment for wining a big ticket contract, Nair said, “Delayed payment by customers and upfront spending could prove to be an issue in the event of turbulence in the markets these companies operate in, or if the customers face financial troubles. Promising tough-to-achieve milestones is another problem that could affect expected cash flow.”

“A pricing trend I’ve seen is Indian firms taking on more risk by tying more fees to contractual milestones – milestones that in a number of cases are tough to predict and achieve, especially as work assignments get more complex,” he added and continued, “This trend tends to occur on deals in which the client is large and experienced with outsourcing contracts and on deals in which an outsourcing adviser is helping the client with vendor selection and pricing.”

However, a large number of IT professionals in the locale who avoided being named confirmed the trend and said that it was more a function of maturity of the deal and depends on how effectively a customer was able to negotiate with an IT vendor. “Agreed! More customers nowadays are holding back fees in some industries but then this is more a function of what kind of contract it is. As more customers mature in their use of outsourcing and are able to manage their IT vendors, they will explore different models,” the professionals said.


Time for IT jobs to be set aside for women

January 27th, 2015

With women accounting for only a fraction of people studying computer science, there have been calls for gender-related quotas for IT roles.
With new figures showing little change in the number of women studying computer science, one industry expert is saying it’s time for radical new measures to address the problem.Outsourcing58

Gillian Arnold, head of the women’s section of UK professional computing body BCS, said from her personal point of view firms should be obliged to employ women in a proportion of IT-related roles.

Her comments follow figures showing only 3,125 women chose to study computer science-related subjects in the UK this academic year, compared with 2,925 the year before, according to university admissions organisation UCAS.

More than six times as many men chose to study computer science, with 20,460 undergraduates this year. The numbers of male computer science university students also grew faster, up from 18,785 the year before. The gender gap is similar in the US, with only 20 percent of computer science degrees earned by women.

Overall, however, women outnumbered men on two-thirds of degree courses, with 57,800 more women gaining higher education places through UCAS than men.

Arnold, chairwoman of BCSWomen and founder of an IT services company, said progress in addressing the shortfall has been slow, stressing initiatives to get women interested in technical roles had been taking place for decades.

“Collectively, all the woman’s groups I’m aware of have been doing this work since the mid-1990s, certainly. Think about the collective hours of effort that have gone into trying to encourage women to join these professions. That’s an enormous amount. We haven’t issued any quotas but maybe it’s time,” she said, stressing this was her personal opinion rather than that of BCSWomen.

“Where have we got role models who say, ‘It’s cool to be a technical woman?’. There are so very few of them. If we could fix that, I think that would be a huge change. Personally, I would like to see quotas but I recognise not everybody feels that way.”

Once a critical mass of women work in IT-related fields, the gap between the sexes could close naturally, she said.

“There’s an academic in the states, Virginia Valian, who said once you’ve got about 30 percent [of women in a type of role], it becomes a self-sustaining figure. You see the women then bringing other women into the workplace, and it becomes a more attractive field to work in,” she said.

Schemes such as e-skills UK Computer Clubs for Girls (CC4G) also have an important role to play, she said, in showing girls a side to IT beyond negative stereotypes.

“The TV image of someone in IT is The IT Crowd and that’s not brilliant is it? The other image is some geeky bloke in the middle of the night with a half-eaten pizza, who doesn’t appear to have washed in a month, so what girl aspires to be that?” she said.

Dr Sue Black, who served as a role model in the BCS women in IT campaign, agreed there is a need for more figures to inspire girls to join the IT industry, but believes progress is being made.

“It’s a shame that the numbers of people studying computer science are not going up dramatically and especially that the number of women is so low,” she said.

“On the plus side, the number of women is higher than it has been since 2007, so that shows a trend upwards which is good news.

“Everyone is gradually waking up to the fact that we need diversity at all levels of the tech industry if we want to compete in what is now a global marketplace.”

Despite the sluggish growth, she believes people are less resistant to schemes trying to encourage more women to work in IT than they once were.

“The attitude towards diversity has changed dramatically in the past few years. When I set up BCSWomen in 2001, an online network for women in tech, many people, men and women, complained to me that it was ridiculous and sexist having a group to support and encourage women in tech [asking], ‘What about the men?’.

“Thankfully, attitudes are changing and there are lots of necessary and valuable initiatives now, not just BCSWomen, encouraging and supporting women and girls in tech.

“The change in attitude and all these initiatives working together will make a difference, but Rome wasn’t built in a day. These things take time.”


Why IT Honchos are Queuing up to Meet Barack Obama

January 27th, 2015

The US is the biggest market for India’s over $100-billion outsourcing industry and it also contributes to the creation of lakhs of jobs in the IT sector. Unsurprisingly, the delegation of Indian CEOs meeting US President Barack Obama is packed with IT honchos. Infosys founder NR Narayana Murthy, current CEO Vishal Sikka, M&M chief Anand Mahindra, who is also the chairman of Tech Mahindra, and Cyrus Mistry, who as head of Tata Sons is also the chairman of India’s biggest outsourcer TCS, are all representing India Inc at the meeting with President Obama on Monday.Outsourcing57

Here’s why the IT industry is key to Indo-US trade:

1) The IT industry is estimated to contribute nearly 25 per cent to total domestic exports (merchandise plus services).

2) Indian firms get a lot of business from US, while American companies benefit from lower costs in the country; they also gain access to extensive intellectual capital, which enables them to concentrate on their core competencies.

3) Initially, Indian IT firms provided low-cost technical support and fixed software bugs, but now they optimise financial transactions and develop advance technologies. So, companies are moving up the value chain.

4) Indian firms are increasingly expanding their presence in the US by setting up onshore businesses. Most of the leading Indian IT companies have set up their sales and marketing offices and delivery operations in various US cities.

5) Till 2010-11, Indian IT-BPO sector supported 2.80 lakh jobs in the US, according to Nasscom. Over the last few years, the trend has picked up. Infosys hired 2,000 employees in Wisconsin in 2012; TCS hired 1600 in 2013-14 and plans to add another 2,000 in 2014-15.

6) The IT industry leads in total merger and acquisitions with US companies. Between October 2012 and December 2014, the IT sector led the M&A pack with 29 out of 71 total outbound acquisitions in the US, according to a study by EY on behalf of industry body Ficci.

7) US is likely to continue to be the favourite destination for Indian IT-BPO players because of large scale reforms in the healthcare segment (being undertaken by the US government) and Big Data and automation wave is luring tech companies.

8) According to a study by Egon Zehnder, in 2011 S&P 500 companies had more Indian CEOs than of any other nationality except American. Shantanu Narayen (CEO, Adobe Systems) and Satya Nadella (CEO, Microsoft) are some of the leaders heading global US tech firms.

9) People of Indian origin dominate US-based tech-start-ups funded by immigrants. According to an EY-Ficci study, India-born entrepreneurs represented 33 per cent of such companies.

10) A significant number of workforce in tech companies such as Google and Microsoft are of Indian origin. Sundar Pichai is leading Google’s Android, Chrome and Google app divisions; Amit Singhal is heading Google’s core ranking team and Krishna Bharat is leading Google’s news product team.


The big three IT trends for 2015

January 27th, 2015

Digitalisation, Internet of Things and engineering services outsourcing will make businesses smarter than everOutsourcing56

It’s time to get over the squeamishness. The digital age is here and 2015 will not be a year for the weak-hearted. We watched 2014 change the rules of the game in business with the dawn of a new era. The new year is likely to enforce these new rules, without a safety net. So, if you’ve been watching tentatively from the sidelines so far, get ready to dive into the deep.

Let’s take a step back and look at some underlying changes in our business landscape. Presenting their assessment of the top strategic technology trends for 2015, research firm Gartner identified 10 diverse projections.

But, as pointed out by David Cearley, Vice-President and Gartner Fellow, these covered three broad themes: the merging of the real and virtual worlds, the advent of intelligence everywhere and the technology impact of the digital business shift.

These lie at the very core of the transformation we are witnessing around us. Keeping these seismic shifts in mind, here’s what I see ahead.

Enterprise digitalisation
Any lingering doubt that enterprise digitalisation is the way forward has been removed by the phenomenal success stories of digital giants such as Google, Amazon, Netflix, as well as new and nifty digital startups such as Airbnb. Most business leaders acknowledge this too.

Yet, only a small percentage has embraced digitalisation in a comprehensive manner so far. The majority have just dipped their toes in the new waters with digital experiments and ‘bolt on’ SMAC technologies (social, mobile, analytics and cloud technologies), while some are still in denial.

In a global survey of chief information officers, Gartner found that “51 per cent CIOs are concerned that the digital torrent is coming faster than they can cope” and “42 per cent CIOs feel that they don’t have the talent needed to face this future”.

This explains the erratic approach so far. However, 2015 will demand smart and decisive action to avoid falling off the radar. Business leaders will have to undertake digitalisation in a systematic and comprehensive manner.

According to Forrester Research, “Confused ownership of digital strategy, a lack of critical skills, and an ill-defined vendor landscape will leave many firms floundering over half-hearted digital strategies.” To stay in the game, they will have to commit themselves to being reborn as full digital businesses.

So, as I see it, 2015 will be the time for a total transformation through enterprise digitalisation across companies, industries, countries and continents.

And this transformation will envision collaboration across customers, employees, partners, suppliers and broader ecosystems.

Internet of Things
The Internet of Things (IoT) is promising to redefine every aspect of our lives. It is already connecting and embedding intelligence in billions of objects, affecting billions of people around the world. And yet, we’re just scratching the surface here.

The real giant wave in 2015 would be the Industrial Internet of Things (IIoT). While it may sound like it’s just the Internet of Things in an industrial setting, it is much more.

IIoT refers to a seamless integration of the physical and digital worlds through a set of actuators, sensors, embedded hardware and software that can track, optimise, predict and actuate.

Going beyond IoT, it weaves the power of Big Data with machine-to-machine communication to analyse the data being received so as to trigger improvement in operations, often in real time.

It is being touted as the next industrial revolution, with a potential to transform business and impact our lives far more than the Internet as we know it.

As companies across the board begin explore the limitless possibilities of Internet of Things, GE estimates that the IIoT could add as much as $12 trillion to global gross domestic product.

However, as in all things new, there will have to be cross-industry collaboration to build and adhere to the right standards for security and privacy.

Engineering services
That brings us to the third and final trend that I believe will see a huge upward swing in 2015: Engineering services outsourcing. In a product-centric world, R&D has traditionally been perceived as intellectual property.

It carried a halo of confidentiality, leaving little room for collaborative or complementary R&D. This bastion is now opening out. We are now entering into an era of ‘Software Defined Everything’ following a shift in focus from the product itself to an ecosystem of services focused on end user experience around the product.

There is need for development of the product, associated platforms, and industry and geo specific variants for companies to go to market.

Global competition and reducing product lifecycles are forcing companies to leverage their value chains to retain market share.

And, unlike earlier, cost and labour arbitrage are no longer the primary drivers. Several engineering engagements are being recast as win-win partnerships to leverage collaborative growth opportunities.

As companies begin to realise that 70 per cent of product development activities are domain neutral with only 30 per cent focused on product differentiation functionality, more and more businesses are opening up to outsourcing parts of their product development work.

There is also growing recognition that partnering with engineering service providers (ESPs) with a global footprint can help companies reach multiple markets faster, as they offer a ready talent pool for end-to-end product engineering involving a plethora of technologies.

With this clear advantage and their ready to use components, frameworks and methodologies, ESPs can accelerate time-to-market for companies seeking to be constantly ahead of their competition.

Moreover, as the world becomes increasingly connected through disruptive technologies such as mobility and smart products being applied across industry segments, ESPs can cross germinate best practices from unrelated industries to help their partners fast forward R&D.

As I see it, 2015 will see a buzz in the backrooms of business that are traditionally away from the spotlight: the digital teams, factory floors and the R&D labs, as they lead the way forward through smart transformation, smart machines and smart collaboration.

The writer is the president and CEO of HCL Technologies


PM Modi bats for IT companies

January 27th, 2015

PM reminds Obama that Indian IT industry helped US in creating jobsOutsourcing56

Prime Minister Narendra Modi on Monday lobbied for easy norms for Indian IT companies as they are contributing to the creation of jobs in the United States.
“Indian IT companies are creating skilled jobs in the United States; and, helping US companies stay ahead. They have also helped US military veterans rebuild their lives,” Mr Modi said in his joint address with the visiting US president Barack Obama to the India-US Business Summit, attended by nearly 500 business leaders from US and Indian industry.

He said that Indians are powering US businesses.

Mr Modi’s remarks assume significance in the wake of growing opposition to outsourcing in the United States, which triggered concerns in the IT industry, whose mainstay continues to be American companies.

The proposed US Border Security Economic Opportunity and Immigration Modernisation Act, if passed by the US Congress, requires companies functioning in America to reduce their foreign workforce over the next few years.

This law is expected to force Indian companies to hire local talent in the US at a higher cost. If the bill is passed in its current form, it has the potential to hurt the margins of the Indian IT sector. India’s IT exports make up a major part of India’s services exports and a major foreign currency earner.

During his electioneering, US President Barack Obama had spoken against outsourcing. In one of his remarks, Mr Obama had said that he wanted to create jobs in Buffalo rather than in Bangalore.

During the current visit of the US President, both countries have agreed to resume talks on totalization agreement, a long pending demand of Indian IT industry.
This agreement, Indian experts say, will exempt Indians IT professionals, who are take up short-term assignments in the US, from paying social security tax.

Mr Modi noted that there are more than 1,00,000 Indian students in the United States and thousands of American students visiting India. “They are sowing the partnerships of tomorrow. And, the success of 3 million Indian Americans points to our potential,” PM said.


Wipro wins Rs 900 crore Irish contract

January 26th, 2015

Wipro has won a $150-million (Rs 900-crore) IT outsourcing deal from the Allied Irish Banks (AIB), one of the big four commercial banks in Ireland. India’s third largest IT services company will provide infrastructure management services (IMS), data centre and hosting services to AIB over five years.Outsourcing55

“We will bring our expertise to build agile and adaptive infrastructure while improving the predictability and cost effectiveness of services,” said Rajan Kohli, senior vice-president and global head (banking and financial services) in Wipro.

The deal is Wipro’s biggest win in Ireland and provides a gateway to participate in other IT deals including the Bank of Ireland contract that’s coming up for renewal later this year.


IT Outsourcing Company in Dubai Announced Promotional Rates

January 26th, 2015

IT-Serve, a Dubai based leading managed IT services and support provider in the United Arab Emirates (UAE) offer a range of managed IT services including Annual IT Support Contacts and IT Outsourcing Services. The services are already some of the most competitively priced in the market, but now enjoy a 50% discount until the end of March 2015.Outsourcing55

Ali Liaquat, Marketing Manager, said, “We are seeing a shift in the market away from the traditional in-house IT support model to IT outsourcing model. Businesses realize that the mantra of zero downtime is only possible with enterprise class IT services including quality hardware support and technical management. IT-Serve’s IT outsourcing services are designed from the ground up for SMEs and Enterprises, and therefore have significant advantages over other One-size-fits-all IT outsourcing services.”

“If you don’t have a dedicated IT person, IT outsourcing service is the perfect substitute. Rather than paying the salary and benefits for another employee, you could pay a reduced amount for IT outsourcing services. A technology professional with five years of experience may be worth AED 80,000+ a year. That AED 80,000 salary only gets you one person, not a team of professionals with expertise and knowledge. When you hire your own IT staff, there are also challenges scheduling around vacation, training, and illness. Using IT outsourcing services provides full time IT coverage and vacations, illness, and other absences don’t affect your support,” said, Nikhar Juneja, Head of SME Engineering.


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