IGATE to focus on ITOPS to sustain its growth momentum

September 19th, 2014 by Rahul Jain No comments »

Outsourcing solutions firm IGATE will focus on its integrated technology and operations (ITOPS) model, besides concentrating on automation and geographies like Europe to sustain its growth momentum.Outsourcing9

Ranked among the Fortune 100 fastest growing companies in the US this year, the US-based firm in the last one year has rejigged organisational structure to strengthen capabilities, increase focus on large deals and building a team of strong professionals through on-the-job training.

“The Fortune ranking is a revalidation of what we have done in the last one year. IGATE is the only IT services firm in the list and that makes it even more special,” IGATE President & CEO Ashok Vemuri told PTI.

Vemuri, who also completes a year at IGATE, added the firm’s focus on monetising and amplifying its strengths by adding new solutions and services and increased focus on large deals have helped it achieve the milestone.

“We are better than before with a clean balance sheet, reduced debt, strong organisation structure, right leadership and niche service offerings. This will further IGATE’s reputation as a complete solutions and software services provider,” the former Infosys Head of Americas said.

For the loan of $770 million (at an interest rate of 9%), IGATE was paying $23-25 million per quarter in interest costs. Now, the firm has refinanced it and taken a loan of $685 million at an interest of 4% and will be paying $7-8 million per quarter in interest costs, which will reduce over $50 million in interest costs annually.

Its net debt stood at $475 million at the end of the second quarter.

But the one-time charge of $51.8 million on debt settlement hit its net profit for the April-June quarter, which fell by 89.6% to $3.1 million. The company had posted a net profit of $30 million in the second quarter of 2013. It follows January-December as fiscal year.

When asked about plans of the company to maintain this growth momentum, Vemuri said the deal pipeline is good and the firm is focusing on building new technologies and train its manpower on those lines.

“We have great business opportunities developing, which can be seen with our expansion plans for our delivery centres across the US, Canada, Europe and India. Besides, we have been building on new technologies and investing on training our employees so that we go ahead prepared,” he added.


TCS leads Indian peers, says global survey

September 19th, 2014 by Rahul Jain No comments »

Clients see Tata Consultancy Services (TCS) as the only local information technology (IT) company strong on two important parameters, implementation and innovation, said a study.Outsourcing8

It was conducted by America-based HfS Research and KPMG last month. The annual survey, state of services & outsourcing, covered 312 global clients, 347 advisors and consultants, and 420 participants from the companies that manage IT and business operations.

“IT-outsourced service providers, such as TCS, are leading the way in terms of buyer perceptions, both on innovation and execution, relative to their peers,” said Charles Sutherland, executive vice-president of research at HfS Research.

The country’s second- and third-largest in the sector, Infosys and Wipro, respectively, were seen as strong on implementation but weak on innovation. This could mean if their areas of execution become less significant, these may become candidates for churning, the report added.

Smaller companies iGate, Xerox, Fujitsu, Unisys and CSC scored low in the survey. “For these, the task ahead is to increase awareness of their capabilities and, in particular, to highlight investments in innovation,” said Sutherland.

Almost half the survey participants said they would look at switching their existing IT service providers for several reasons. While 15 per cent said they planned to do so at the renewal cycle, 12 per cent said they planned to move some or all of the outsourced work in-house. As many as 23 per cent said they wanted to switch their provider but were still working through the practicalities of doing so.

“Some of this (dissatisfaction) may be the result of long-standing contracts where it is harder to repeat the level of savings initially achieved and booked for first-generation contracts,” said Sutherland. “But when combined with the results of a perception study of the IT outsourcing service providers, it may be that the larger issue is the market is increasingly fragmenting and certain providers (specially some entrants like Amazon and Google) are just changing the market at such a speed, that a new level of dissatisfaction with the previous status quo is setting in.”


The benefits of outsourcing for a small business

September 19th, 2014 by Rahul Jain No comments »

So your business is flourishing, and you’re taking on an increasing workload; the question is, how do you maintain this steady growth without compromising its core values and quality of service? There comes a time in every business’s life cycle when the issue of staff constraints begins to raise its head, and the question of outsourcing becomes a serious consideration.Outsourcing7

Firstly, why do businesses outsource? One of the main reasons is simply time – or lack of it. Small businesses, ones that are growing quickly and juggling lots of plates, simply cannot afford to have key members of staff overstretched to the point of ineffectiveness. Outsourcing offers a spare pair of hands to help manage busy periods, bringing in specific skills on a temporary basis, to help support the company and maintain the success it has built from the launch onwards. Using expert outsourcing organisations essentially frees up your staff to concentrate on the core of the business and to concentrate on developing their own skills.

Outsourcing can provide further multiple benefits. It can also help control capital costs by reducing overall spend on staff; hiring a full time specialist is much more expensive than using a freelancer to do the same job, who can be hired on and off dependent on the needs of the business.

Outsourcing also allows companies to turn on new projects quickly, reacting to market demands and fulfilling customers needs much more effectively. Customers can often request work that the core business might not be able to provide – outsourcing can help to meet this demand and draw in new revenue streams, which might not have been part of the existing model in the first place.

Further benefits which are important for all businesses, not just those at the early stage of their lifespan, are the expertise that outsourcing tasks can bring, and the risks it can mitigate respectively. Utilising external specialists can help breathe fresh life into a venture and offer a different perspective to a particular challenge, which can be vital when maintaining growth in a small business. In terms of mitigating risk, take hosting or working in the cloud for example; if you’re a small business utilising sensitive data, it can be much more effective to use an expert cloud hosting provider to look after it. Not only will they have the skills to do this effectively, they will also be much more aware of regional regulations and legal requirements, which in turn reduces the legal risk that could threaten your company in the case of a data breach.

Pitfalls of outsourcing
So now that we’ve covered some of the benefits of outsourcing, what are some of the pitfalls that can be encountered when working with external partners at this stage in the business?

One of the first points I would raise is the loss of control to an extent. When outsourcing to a partner, you are placing a huge amount of trust in the ability of their team to deliver on your brief. If the brief is poor, misunderstood, or the team working on it are not the strongest, then you run the risk of results being delivered that are not up to par. And in many cases you will still have to pay for these. This can be hugely damaging, especially in the early stages of a business when budgets are tight.

The second are hidden costs. When outsourcing, especially to service providers, there will be a limit to the amount of work that you are paying for, and so anything extra that arises will often be subject to further outlays. Being at arm’s reach with your external partner can often mean costs are not necessarily transparent when you first begin working together.

And finally, confidentiality can be an issue. No matter how much you trust an external partner, if you share data with them then essentially you are increasing your risk by relying on their security systems. In most cases this is never an issue, but as soon you share your data with another organisation the likelihood of a breach increases as it’s now in a location that is not under your immediate control.

While outsourcing can offer risks, for most businesses in early development stages it is a vital ingredient to success. Every business needs support at certain times in its life cycle, and so choosing the right partner can be the difference between triumph and failure.


Nigeria: Minister Decries Offshore Outsourcing of Local Operations

September 19th, 2014 by Rahul Jain No comments »

The Minister of Communications Technology, Mrs. Omobola Johnson has faulted the outsourcing of operations generated locally to foreign companies under the Business Process Outsourcing (BPO) arrangement. According to the minister, local companies in Nigeria Outsourcing6have the capacities and skilled manpower to handle outsourcing within and outside Nigeria, even though Nigeria is not regarded as a destination country for BPO. She insisted that it would be a disservice to Nigeria, if local operations are outsourced to foreign companies that are established outside the country.

Johnson, who stated this in Lagos, while inspecting the operations of Communications Network Support Services Limited (CNSSL), a local BPO company with over 6,000 employees, said she was impressed with the facilities and manpower of the company. The minister told THISDAY that CNSSL has all it takes to operate outsourced services in Nigeria and still offer such services outside Nigeria, noting that it would be out of place if local BPO companies are not given the chance to do what they are capable of doing. Johnson said Nigeria has local content agenda (LCA), which dwells so much on local content implementation.

According to her, the LCA was introduced was because the government discovered that multinationals were taking over businesses in Nigeria. Although she said multinationals doing business in Nigeria is not bad, she added that there is the need to protect and support the growth of local companies through policy implementation, and the LCA would address all of that.

“The truth is that if we must create jobs and develop Nigeria to the level it should be, then we must grow successful and sustainable local industries. China, Germany and Japan are doing well today because they have over the years, developed their local industries, making them to contribute substantially to Gross Domestic Products (GDP),”Johnson said. Speaking on the operations of CNSSL, the Chief Executive Officer of the company, Mr. Gbenga Adebayo, said the company had been in operation since 2007, servicing the telecoms, oil & gas, banking & finance sectors of the economy, as well as state governments. According to him, CNSSL has been managing the operations of these companies and states, through call centre operations in some parts of the country that are driving the initiative. He however called for government policies and regulations that would protect local BPO companies since Nigeria has no such policies in place.

Adebayo said: “We are one of the local pioneers of BPO in Nigeria. When we started operations in 2007, most people thought we will not be able to deliver, but today our call centre operations are so standardised that local companies now patronise us, and international companies want to have a stake in it, which of course will increase foreign direct investments (FDI) and boost knowledge transfer. However good this may sound, there is a threat about the foreign interest, since BPO destination countries that are mostly foreign are now coming up to say that the local companies in Nigeria are not supposed to do outsourcing and that the BPO business should be carried out by the foreigners alone because it is their trade since they have the international expertise and technology.” Adabayo stated that should this be allowed, it will expose local companies to a lot of vulnerabilities, since Nigeria has no policy protecting local BPO companies.


Tech outsourcing firm HCL adding 1,237 jobs in Cary

September 19th, 2014 by Rahul Jain No comments »

HCL Technologies will add some 1,237 jobs at its operations in Cary after signing an agreement with the state of North Carolina to includes nearly $20 million in tax incentives and grant money.Outsourcing5

Gov. Pat McCrory made the announcement at HCL’s offices.

“HCL has been steadily building its Wake County presence and one reason is the incredible talent pool the Triangle region has to offer IT companies,” McCrory said. “Providing a well-trained and motivated workforce that meets the real-world needs of employers is evidence of the importance that North Carolina puts on helping employers grow.”

HCL already employs several hundred people in Cary.

The state’s Economic Development Investment Committee approved $19.6 million in incentives based on how many jobs HCl does create.

The state also is awarding HCL a $123,000 One North Carolina Fund grant, which requires a local match.

“Given our core philosophy of building Relationships Beyond the Contract (RBtC), we remain committed to enhance our investments by developing nearshore capabilities in the communities we operate in,” said Anant Gupta, CEO of HCL, in a statement. “We will continue to bring global expertise and experience to accelerate growth and success for our clients, partners, employees and the communities in the region.”

SchoolDude, another IT company which recently announced plans to expand, also is based at that Cary office building.

In 2008, HCL announced plans to expand in Cary and create more than 500 jobs.

The jobs announcement follows a transportation-related project the governor is scheduled to make at Raleigh-Durham International Airport.

HCL which launched in 1999, has more than 7,000 employees in the U.S. with operations in Michigan, New Jersey, New York and Washington as well as Cary.

“We find the talent from here is as good, sometimes better, as what we see in Silicon Valley and other parts of the world,” said HCL Corporate Vice President Vikram Duvvoori.

The company is based in India and generated some $5.4 billion in revenue in 2013.

HCL offers  “IT and engineering services expertise under one roof to solve complex business problems for customers.”

The firm says on its website that “HCL’s local hiring strategy is a crucial part of our commitment to the cities and towns in which we operate.”

The JDIG agreement specifies that “HCL is eligible to receive up to twelve annual grants equal to 75 percent of the state personal income tax withholdings from the eligible new jobs created since the date of the initial award.”

The agreement would be worth some $19.6 million if all 1,237 jobs are created.


IBM to Retrain Outsourcing Employees in Bid to Boost Competitiveness

September 19th, 2014 by Rahul Jain No comments »

Technology giant IBM has reportedly asked some of its employees in its technology outsourcing business in the United States to undergo training and accept a 10% salary cut for the next six months.Outsourcing3

According to reports, IBM chose to offer them training instead of laying them off for being less competitive. But these employees, according to the New York Times, say the step is a cost-cutting tactic disguised as a training program.

It is not clear as to precisely how many employees have been told to undergo training. According to the NYT article, “a few hundred employees in the United States have been affected.”

The move, the paper says, could become a trend in retraining programs as both corporations and workers struggle to stay competitive in a fast-changing economy.

The technology service market has undergone drastic change over the past few years, with an increasing number of corporate companies adopting cutting-edge technologies such as mobility and cloud.

Some employees are obliviously struggling to keep pace with the change by acquiring the new skills that clients are looking for.

Employees receiving the offer are given little choice other than to look elsewhere in the company “for opportunities for which your skills may be a better match,” the paper said.

With hundreds of data centers and offices, IBM is one of the largest technology services provider in the world, helping companies manage their IT operations and resources. Its global business services division, which accounts for more than 50% of the company’s consolidated revenue, employs over 190,000 people across more than 160 countries.

Revenues from the Global Technology Services segment in 2012 totaled US$40.2 billion, a decrease of 2% compared with 2011.


Bangladesh 26th best destination for IT outsourcing

September 19th, 2014 by Rahul Jain No comments »

Bangladesh has been recognised by a US company as the 26th best destination for IT outsourcing globally.Outsourcing2

AT Kearney, a leading management consultancy firm with offices in more than 40 countries, has for the first time included Bangladesh in its Top 50 Global Services Location Index.

The index assessed 51 countries based on metrics under three categories — financial attractiveness, people skills and availability, and business environment.

India remains the top offshoring destination for IT companies, followed by China and Malaysia.

“This will significantly boost ICT investment and outsourcing to Bangladesh as global companies and investors follow this report and ranking for decision making,” said Shameem Ahsan, president of Bangladesh Association of Software & Information Services (BASIS).

But in terms of cost competitiveness in outsourcing services, Bangladesh ranks first, he said at a press conference at BASIS office in Dhaka yesterday.

Asia continues to dominate the global market, with six countries from the continent being among the top 10 offshore destinations in the index.


However, there are some challenges for the region. Global IT firms started outsourcing back-office operations in mid-2000s, but multinationals are reassessing their outsourcing strategies now.

There is a course correction where some functions are being repatriated from vendors back to the companies’ own service centres and employees, according to a study by AT Kearney.

These regions also face challenges from increasing digitisation and automation, which could negate cost competitiveness. Greater automation and freelance-based outsourcers are eventually making physical location less relevant.

“Automation, wherein robots are programmed to perform for even less than low-cost labour, is becoming increasingly accessible and could dent the region’s low-cost advantage,” the study said.

Although China offers an alternative to Eastern Europe for high-end IT and analytics, rising wages are limiting its cost competitiveness in lower-end functions compared with India and other Asian destinations.

Zunaid Ahmed Palak, state minister for ICT, was also present at the press conference.


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