Posts Tagged ‘India’

TCS continues to outpace Infosys, revenue gap widens to Rs 33,313 cr

July 23rd, 2014

India’s largest IT services exporter, Tata Consultancy Services (TCS), has been outperforming its peers consistently and the gap with its rivals is continuing to widen. For instance, in FY10, the revenue difference between TCS and Infosys was Rs 7,559 crore, but by the end of FY14 it stood at Rs 33,313 crore. Similarly, the difference in net profit between the two firms in FY10 was Rs 782 crore but at the end of FY14, it has reached to Rs 8,516 crore.Outsourcing31

Though TCS always enjoyed a higher revenue base but it was Infosys which reported superior operating profit margins (OPM) setting a benchmark for the Indian IT industry. Even this index seems to be undergoing a change. From the second quarter of FY13, TCS has started to report higher margins. At the end of FY14, TCS reported an OPM of 29.1% while it was 25% for Infosys. TCS also has over 3 lakh employees now, which is roughly double that of Infosys which has 1.6 lakh employees on its rolls.

TCS has started FY15 also on a very strong note by recording a 5.5% sequential revenue growth in US dollar terms for the first quarter with volumes growing at 5.7%. Infosys on the other hand grew its revenues only by 2% in the first quarter, with volumes growing by 2.9%. TCS has already stated that it would beat the industry growth guidance of 13-15% in US dollar for the fiscal as projected by Nasscom, while Infosys has retained its revenue guidance at 7-9%.

Pradeep Mukherji, president, Avasant, an IT outsourcing advisory firm, told FE, “TCS is one of the most robust companies in terms of their depth in leadership, range of offerings and the extent of geographic reach. Their DNA is completely different.”

TCS’ revenue is more evenly spread out across the globe with North America dominating the pie at 53%. Most of its peers derive 60% of their revenues from the North American market. It generated 2.3% of its revenue from Latin America, having centres in places such as Brazil, Uruguay, Chile, Colombia, Peru and Argentina. The IT major has also made similar strides into a region like Africa.

Industry observers say that TCS chief executive office N Chandrasekaran who took over this role in October, 2009 has instilled a new dynamism to the company. “Chandrasekaran has certainly brought in new level aggression to TCS which we had not seen earlier,” said a senior industry executive, who did not want to be identified.

TCS is a cut above the rest in employee retention too despite its employee base crossing over 300,000 with people representing 118 nationalities. At the end of first quarter this fiscal, the attrition rate at TCS was 12% while it was 19.5% in the case of Infosys. Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research, said, “Employee retention and their happiness is very important to an IT company as it has a direct bearing on customer satisfaction. Here, TCS has performed really well.”
The number of $100 million clients in TCS’ kitty stood at 24 for FY14 while it was 13 for Infosys and 10 for Wipro. TCS has also morphed into a company that takes decisions in double quick time. “It is also giving certain amount of operational freedom to various units while this has not been the case with many of its rivals,” said a senior industry observer.

TCS, Infosys, Wipro and HCL Technologies together account for close to 40% of India’s IT services revenues, but the degree of separation between the four have started to tell a story of its own. TCS ended FY14 with a revenue growth of 16.2% in US dollar terms while it was 11.5% for Infosys and 6.4% for Wipro.

Partha Iyengar, vice-president and analyst at research firm Gartner said, “It has already started, you cannot talk about Indian services companies as one unit anymore. You have to talk about individual companies and talk about their fortunes in terms of how is it is evolving and how successful or not they are. You will see increasing separation between the companies.”

Source:http://indianexpress.com/article/business/companies/tcs-continues-to-outpace-infosys-revenue-gap-widens-to-rs-33313-cr/99/

India’s Infosys profit up 21% on US deals

July 11th, 2014

Indian outsourcing giant Infosys reported on Friday a better-than-expected 21 per cent jump in quarterly net profit, after winning new deals from US clients.Outsourcing18

The Nasdaq-listed firm said consolidated net profit climbed to 28.86 billion rupees ($481 million) in April-June from 23.74 billion rupees in the same period a year earlier.

Shares in the firm surged 4.16 per cent to 3429.35 rupees in response to the announcement.

India’s second largest IT services exporter by sales, which is based in the southern high-tech city of Bangalore, said it had signed 61 new clients in the quarter.

The results come after Infosys last month announced a new chief executive and said its co-founder N R Narayana Murthy was stepping down as executive chairman following a string of high-profile departures.

Vishal Sikka, a former top executive from German giant SAP, takes over as chief executive next month.

Murthy left after returning from retirement as executive chairman in June last year to help revive the company’s fortunes.

Infosys — created three decades ago by Murthy and six others around a kitchen table — has been losing market share to rivals such as Tata Consultancy Services and HCL.

In October, it said it would pay $34 million to the US government to settle an investigation into alleged visa fraud by the company.

Many of India’s IT outsourcing firms have reported subdued growth in recent years due to a global economic slowdown.

Source:http://www.channelnewsasia.com/news/business/india-s-infosys-profit-up/1254556.html

Infosys Q1 profit up 21.6 pct, retains annual forecast

July 11th, 2014

Infosys Ltd , India’s second-largest software services exporter, beat estimates with a 21.6 percent rise in quarterly net profit and retained sales growth outlook for this year on surging demand for outsourcing services.Employees walk in front of a pyramid-shaped building at the Infosys campus in the Electronic City area of Bangalore

Infosys, which named Vishal Sikka, a former senior executive at German software company SAP AG (SAPG.DE), as CEO last month, has been reeling under a staff exodus and loss of market share to rivals.

The staff departures are a major worry for the company, which saw its annualised staff attrition rate touching a record high of 19.5 percent in the quarter ended June 30 from 18.7 percent in the previous quarter.

“Employee attrition rates are worrisome and we are implementing various initiatives to retain good talent,” Chief Operating Officer U.B. Pravin Rao said in a statement to accompany the results on Friday.

Infosys, which added 61 customers in the quarter, maintained its revenue growth forecast for the year to March 2015 at 7-9 percent, as expected.

Consolidated net profit for the quarter ended June 30 rose to 28.86 billion rupees ($480.20 million) from 23.74 billion rupees in the same year-ago period, Bangalore-based Infosys said in a statement on Friday.

The profit was higher than the 26.72 billion rupee average of analyst estimates, according to Thomson Reuters data.

Revenue in the quarter rose 13.3 percent to 127.70 billion rupees.

Infosys customers include BT Group Plc, Bank of America and Volkswagen AG.

Source:http://in.reuters.com/article/2014/07/11/infosys-results-idINKBN0FG07F20140711

Software firms facing threat of losing high-value projects as clients setting up inhouse centres in India

July 2nd, 2014

For Indian software companies which are recovering from the global economic slowdown, the next big worry could be customers eating the best portion of their lunch. Increasingly, multinational clients are saying they are okay to outsource bread-and-butter work but not the jam and cream.Outsourcing26

What this means is that the country’s biggest software firms are facing the threat of losing high-value projects to customers who are setting up inhouse centres in India to ensure they keep tabs on critical work involving the latest technologies.

For example, later this year, Lowe’s —the second-biggest US home improvement chain with $53 billion (Rs 3.2 lakh crore) in annual revenue —will shift high-end analytics and ecommerce projects from companies including Cognizant, WiproBSE 0.93 % and InfosysBSE 0.38 % to a new centre in Bangalore.

Lowe’s move, which spends over $1 billion annually on IT, reflects a growing trend of customers shifting their most important work to their own centres, leaving chores such as maintenance to Indian service providers.

“This (the new Lowe’s centre) is not going to be a back office,” Robert F Hull Jr, the CFO of Lowe’s, said in an interview. For Lowe’s, the new technology capabilities in Bangalore will mean a competitive edge against rivals such as Home Depot. As more US consumers shift to the web for home improvement solutions, technology has become the new battlefront.

Lowe’s, which now gets around 2% of its revenues from online sales, has been closing in on market leader Home Depot. The new centre could potentially hire up to 1,000 engineers, and will focus on data analytics and nextgeneration online commerce projects.

Lowe’s also plans to engage with retail software startups in India, and could potentially even invest in some of them. Scores of captives were set up in the 1990s as global corporations looked to take advantage of the lower costs of operating in India without relinquishing control of their information technology systems.

Over 800 Captive Centres in India

There are more than 800 captive centres in the country and more are being added each year. In 2012, captives employed about 5 lakh people and delivered as much as $15 billion (Rs 90,000 crore) worth of work, according to Nasscom data.

While the over-$100-billion Indian software services industry employs around 3 million staff and is forecast to grow at 13-15%, captives are growing at nearly twice that rate.

While this trend may not be very good news for IT services companies, it will open up new opportunities for employees in the software sector to work on cutting-edge technologies directly with global corporations.

Over the past year, Hull met around 38 companies having captives in India and got some of the myths busted. “We even visited some of the universities and were fully convinced that there’s going to be no scarcity of talent in the long term,” he said. “We are going to manage and develop key capabilities in-house.

The third-party providers can do maintenance and support work far more effectively; they have tens of thousands of people in place.” Lowe’s has hired Narayan Ram as managing director for India, reporting directly to Hull. Ram, an IT industry veteran who ran Sony’s technology centre, said Target, Tesco and Walmart have already set the bar high for Lowe’s India.

“We do expect a war for the right talent,” Ram said. Lalit Ahuja, a former Indian Navy commander who helped companies such as Target and several others build their captive centres in India said these centre are also beginning to manage service providers such as TCSBSE 0.65 % and Infosys on behalf of their parent organisations.

“In some ways, the captives have broken the ‘value’ barrier that Indian IT has been aspiring to address for a long time now,” said Ahuja whose company ANSR Source is helping Lowe’s and several others establish technology centres in India. “There are incredible opportunities for Indian IT to understand the games captives play to operate at the high end of value chain.”

Senior executives at some of India’s biggest software firms are watching in envy and even praying that these captives remain mere experiments and hopefully fall short of what one called “lofty adventures”. “Don’t get me wrong — we have seen these waves of captives being feverishly talked about.

But a lot of them eventually get acquired by a large service provider,” said a senior executive at one of the top India-based software firms. He was referring to how the technology captives of banks such as UBS and retailers including Supervalu ended up being acquired by Cognizant and TCS, respectively.

Source:http://economictimes.indiatimes.com/tech/ites/software-firms-facing-threat-of-losing-high-value-projects-as-clients-setting-up-inhouse-centres-in-india/articleshow/37600503.cms

Global companies boost captive tech centres in India

June 30th, 2014

Global captives or offshore delivery centres (ODCs) of multinational companies that act as technology and business process nerve centres for their global operations are back in favour with about 30 new ones coming up in the last two years.Outsourcing37

With outsourcing of IT and technology service projects  to Indian companies such as Infosys or Wipro or their global rivals such as IBM and Accenture, multinationals have in the past avoided setting up their own centres in India, called “captives” in India. This enabled cost-cutting and also circumvented the logistical headaches in setting up their own operations. However, research and development  seen as a critical in-house activity and increased faith in India as a base, captives are growing again.

Global majors including AstraZeneca, Cargill, Lowes, Mercedes Benz have set up centres in India in the recent years while Grant Thornton, Fidelity and Flextronics are expanding furiously, industry officials said.

“The trend of setting up global captives increased in the last two years with focus shifting to high-end jobs from the cost arbitrage-based model of the past,” said KSVishwanathan, vice president, industry initiatives, Nasscom.

“In the past three months three companies have set up their captives in Bangalore. Four more will come up in the coming months,” he said.

Global captives which had grown rapidly between 2005 and 2010 lost steam with outsourcing to independent vendors for cost reasons before picking up pace again.

“MNCs want to leverage the talent pool. More than cost advantage, their main driver is to retain key data and information within their own set-up and get the mundane work done through partners,” said Vinu Nair, managing partner of recruiting firm Antal International Network.

The trend could hit third-party service providers, but is seen as good news for job seekers.  According to Vishwanathan, captives alone may hire 60,000-80,000 employees in the current year.

For instance, Mercedes Benz Research and Development Centre will hire 800 staff to take its strength to over 2,000 by 2015. Auditing firm Grant Thornton has plans to hire over 3,000 and electronics design and contract manufacturing firm Flextronics 2,000 in the next two to three years.

“There is an increasing trend of high-end research and product development work getting done out of India by companies such as Cisco, GE, Facebook and Google,” Kris Lakshmikanth, founder of Head Hunters India. He said a PhD in the US would earn $150,000 a year — while an Indian counterpart gets $50,000.

India accounts for 45% of global captive centres.

Source:http://www.hindustantimes.com/business-news/global-companies-boost-captive-tech-centres-in-india/article1-1235065.aspx

Capgemini bags $25 mn order from Patterson to deploy SAP

June 25th, 2014

IT outsourcing vendor Capgemini has bagged a $25 million plus order from dental, veterinary and rehabilitation specialty distributor Patterson Companies to deploy SAP solutions.Outsourcing26

The transformation program is expected to enable Patterson to capitalize on growth abilities, utilizing a unified enterprise resource planning (ERP) platform. The ERP platform is anticipated to create a consistent operational systems foundation for the distributor.

Through Capgemini’s Blueprinting & Implementation Services for SAP solutions, St. Paul, Minn.-based Patterson Companies will replace a number of its legacy systems.

Through the implementation, Patterson Companies aims to better support growth by leveraging an enterprise design that includes automates operational processes and drives informed business value across all business units.

Capgemini will leverage its DistributionPath solution to drive industrialized delivery of services for SAP solutions interlaced with industry-leading practices relevant to the wholesale distribution industry.

With DistributionPath, mid-sized distributors can further optimize SAP solutions for various business processes, including finance, inventory, logistics, HR, marketing and CRM.

Source:http://www.infotechlead.com/2014/06/24/capgemini-bags-25-mn-order-patterson-deploy-sap-23790

Teleperformance in talks to buy Aegis

June 24th, 2014

Euronext-listed Teleperformance is in talks to acquire the Mumbai-based Aegis, the business process outsourcing (BPO) services arm of the Essar Group, sources in the know said.Outsourcing16

Founded in 1978, the Paris-headquartered Teleperformance reported $3.23 billion in revenues in 2013. The company operates 230 contact centres across 62 countries and employs over 110,000 people.

“Talks are at an initial stage. But this time Aegis’ promoters are looking to sell only the overseas centres and operations of the company. The domestic part of the business will not be sold,” said a source in the know who did not wish to be named. “The valuation of the company depends on the business components they are willing the sell,” said another source requesting anonymity.

According to Nasscom listing, Aegis is the fourth largest BPO services firm from India with revenues of $800 million. The revenue has come down from $1 billion because after an inter-company transfer, AGC Networks which used to be a subsidiary of Aegis, is now a subsidiary of Essar Group. According to the company listing with BSE on April 1 this year, Essar Telecom increased its stake in AGC Networks to 75 per cent from the earlier 29.3 per cent.

An Aegis spokesperson said, “As company policy we would not like to comment on market speculation.”

An email sent last week to Mark Pfeiffer, executive vice-president, global management, at Teleperformance who is also responsible for media queries, remained unanswered.

Aegis operates 55 centres across 13 countries, employing around 55,000 employees. According to third-party estimates, the company’s headcount in India is 24000-25000, of which 90 per cent cater to the domestic market. Outside India, the company has a large presence in the Philippines, where it has around 13,000 employees, while in the US its headcount is believed to be 5,000.

According to industry sources, North America accounts for around 40 of Aegis’ revenue, followed by the Asia-Pacific region, including India, Malaysia and Sri Lanka, at around 35-40 per cent. Europe, Middle East and Africa contribute around 15 per cent of revenue and South America 10-12 per cent.

The management of Aegis has stated the company was earlier in talks with private equity and financial investors to offload some stake. Industry sources said the talks failed over valuation, possibly because the company’s profit margin is lower than its peers. News reports said private equity players like Kohlberg Kravis Roberts and Barring were interested in acquiring stakes in the company.

In an earlier interview to Business Standard, Aparup Sengupta, the former chief executive officer of Aegis, had said the Essar Group might exit Aegis over time depending upon the value it gets. “The promoters would look at an initial dilution of minority holding in the range of 15-30 per cent. So when we go for an initial public offering, there will be no shareholder holding more than 50 per cent in the company,” he had said.

The BPO industry is undergoing consolidation. Earlier this year, the Aditya Birla Group sold its Canada-based BPO arm, Aditya Birla Minacs, to a group of strategic financial investors for Rs 1,500-1,600 crore.

Source:http://www.business-standard.com/article/companies/teleperformance-in-talks-to-buy-aegis-114062300858_1.html

Protected by تهنئة
Get Adobe Flash player