The recent performance of Indian IT majors indicates quicker recovery from recession and stronger profit growth, analyses Dilip Maitra.Sridevi Gupta is on cloud nine. The 23-year old engineering graduate from Lucknow, working for an Information Technology (IT) company in Bangalore for the last two years as a software engineer, is also a little confused. She has three job offers – two from Indian operations of American companies and one from a top five Indian IT firm, but is finding it difficult to decide which one to accept. “All three are good offers, have good career prospects and have promised to send me abroad on projects,” she said, admitting that she is seeking advice from her seniors to zero-in on one. She, in fact, had more offers but has rejected those where the final gain in compensation package was less than 30 per cent than her present job.

Sridevi Gupta is not alone. Software engineers in India, with at least two to three years of experience, are in great demand, thanks to the revival in the fortunes of the Indian IT industry. Rising from the ripple effect of the global recession from 2008 till the middle of 2010 that adversely impacted hiring of engineers, Indian IT companies are now on a massive hiring spree. Salaries too are skyrocketing as companies are vying with each other to hire and retain the best brains.

Just sample the following: at the time of its recent announcement of quarter 3 (Q3) result, the country’s largest IT firm TCS said it will hire 62,000 to 65,000 people in the financial year 2010-11 as against the company’s earlier projection of 50,000 gross additions during the year. “With this, TCS’ headcount will be more than 200,000 at the end of March 2011,” said TCS Vice-President and Global Head Human Resources Ajoy Mukherjee at the recent result announcement press meet in Mumbai.

Plenty of jobs

The other big IT firms like Infosys Technologies, Cognizant Technology Solutions, Wipro, HCL Technologies etc are also ramping up their talent pool in a big way. In fact, the top five Indian IT companies are projected to hire between 1,60,000 and 1,80,000 people in the current financial year according to Infosys CEO Kris Gopalakrishnan.

In his recent address at a seminar, Gopalakrishnan said, “Growth is back and most companies are hiring in large numbers again. Such large scale hiring was last seen in 2007 when 4,00,000 new IT jobs were created.” However, job creation dropped to 1,50,000 in 2009 and to 1,00,000 in 2010. The IT industry as a whole will employ around 20 lakh people in the current year, he said.

The new job creation will ride on huge campus recruitment drive companies are planning. TCS, for example, plans to hire 37,000 engineers from engineering colleges in 2011-12, 13,000 more than the current financial. Similarly, nearly half of Cognizant’s planned hiring of 25,000 employees in 2011 will come from engineering colleges. Cognizant’s total employee strength has already crossed 1,00,000 in December 2010. IT companies are hiring freshers in droves to keep the overall employee cost low as freshers cost much less than lateral hiring of experienced people from other companies.

As poaching has returned with the growth, IT companies are also working out new plans to meet the challenge of retaining existing workforce. TCS, according to Mukherjee, has already introduced the system of quarterly promotions of deserving junior employees and from January this year has re-introduced the system of two cycles of promotions for the seniors, one in January and the next in July. Infosys, which has nearly 1,30,000 employees on its payroll, has already hiked salaries by 17 per cent this year and plans to give another wage hike in the next three months.

Source:-http://www.deccanherald.com/content/133284/it-companies-logging-high-growth.html

India’s showpiece IT services companies are scouting for acquisitions in overseas markets as they focus on expanding geographical presence as well as client base to boost growth.

Indian outsourcers, especially the mid-sized companies, are also under pressure to add new services muscle as they compete with their bigger local rivals as well as global majors like IBM and Accenture for a share of the IT-services pie.

Tech Mahindra, which provides IT services to telecom firms, is looking to acquire companies with revenue of $50-$100 million, particularly in the business process outsourcing sector, a top company official said on Wednesday.

“(We are) looking at buys where we can quickly ramp up international BPO,” said L. Ravichandran, president of IT services at Tech Mahindra, at the Reuters India Investment Summit in Bangalore. “Prelim deal talks are going on.”

Small- and mid-cap Indian IT companies are grappling with tepid demand, high attrition rates and a rise in expenses, resulting in strain on margins.

Companies such as Hexaware Technologies, MindTree and Mastek have also seen a slump in their net profit.

Indian outsourcing firms, which count Fortune 500 companies as their clients, have shied away from making big-ticket buys despite sitting on huge cash piles due to integration worries, lagging behind global peers such as IBM and Hewlett-Packard Co.

Leaders in the $60-billion Indian outsourcing sector such as Tata Consultancy Services and Infosys Technologies, which has cash reserves of $3 billion, focus mostly on smaller buys to fill a services gap or tap a new market.

“Conceptually, what we would like to add would be in the area of remote infrastructure management,” said Rostow Ravanan, chief financial officer of MindTree.

Remote infrastructure management refers to maintenance of a company’s information technology network from offshore locations. Clients in the developed markets outsource their network management to save costs.

“It’s one of our fastest growing practices. If I can find a sensible deal, that area would be a higher priority for us to do an acquisition,” Ravanan said.

FASTTRACKING INNOVATION

Companies like MindTree are also moving up the value chain to focus on higher-margin technology services and products, as intense competition in the traditional outsourcing space puts pressure on prices and erodes profit margins.

MindTree will join a select group of Indian IT products makers when it launches its 3G smartphone based on Google Inc’s Android platform in the United States in the second half of this fiscal year.

Ravanan said MindTree was in talks with at least one major U.S carrier for the launch of its smartphone announced in April.

Source:-http://sify.com/finance/it-firms-seek-buys-to-boost-growth-news-technology-kkdk4gbbgcj.html