Posts Tagged ‘India’

IT contracts worth $13 billion up for renewal this fiscal year

April 16th, 2015

Multi-billion dollar IT contracts are gearing up to be renewed. Due to this, one can expect a tough fight between Indian IT companies and global names Outsourcing26such as HP and IBM. Ovum, London-based IT research firm has made an estimate that $13 billion worth of contracts will be renewed this coming fiscal year. This will include the $3.7 billion IT outsourcing contract of NHS (National Health Service). The primary vendor of the contract is US-based CSC.

According to a Times of India report, an IT analyst at Ovum, Hansa Iyengar said a large number of these upcoming deals have a big infrastructure component. She said, “We have anecdotal evidence of Western incumbents walking out of the deals as they perceive them to be too risky for the given contract values and these are some of the deals that the Indian vendors are picking up.”

Contracts on such a large scale are usually not given to  a single entity any more, as clients choose to opt for multiple suppliers. Indian IT companies are known to lower their prices in order to win big contracts. But for this to not affect their margins, they employ automation tools as well as tweak their onsite-offshore ratios.


Philippines BPO ‘Coping Well’ with Wage Hikes

April 3rd, 2015

The Philippines is a popular destination for offshore BPO. However, experts have suggested that recent wage hikes in the BPO sector could make the country a less cost-effective outsourcing option.Outsourcing21

Roman Romulo, a district representative from the city of Pasig, said ‘we do not see the P15-increase in the daily minimum wage [for private sector workers in Metro Manila] influencing the decision of BPO players to either step up, or slow down hiring.

‘Fair wage increases will not diminish the country’s global competitiveness. If we look at India and our other competitors in the BPO space, their wages are rising faster than ours.’

In a recent study conducted by real estate consultant Cushman & Wakefield, the Philippines was named as the second most appealing destination for offshore BPO, closely following Vietnam. In terms of actual market size, India remains the world’s largest BPO destination.


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.


India’s Tech Mahindra to Acquire Lightbridge Communications

November 21st, 2014

India’s Tech Mahindra Ltd. said Thursday it has agreed to buy U.S.-based network-engineering services provider Lightbridge Communications for an enterprise value of about $240 million.Outsourcing9

Lightbridge, which helps telecommunications clients design and optimize their networks, has more than 5,000 employees in more than 50 countries. Lightbridge has annual revenue of more than $400 million, the Indian outsourcing-services company said in a statement.

Tech Mahindra said it would absorb all of Lightbridge’s employees.

Tech Mahindra earns more than 50% of its revenue from telecommunications business.

The deal would bolster Tech Mahindra’s telecommunications network-consulting and operations through Lightbridge’s tools and technology platforms to provide services to clients.

Enterprise valuation usually adds the target company’s debt as well as the value of any preferred shares, but excludes its cash and cash equivalents. Tech Mahindra didn’t provide any details on Lightbridge’s cash or its obligations.


Healthcare providers in India to spend $1.1 billion on IT in 2014: Gartner

November 10th, 2014

Healthcare providers in India are expected to spend $1.1 billion on IT products and services in 2014, a 5 per cent rise over 2013.Outsourcing23

The forecast by Gartner includes spending by healthcare providers (includes hospitals and hospital systems, as well as ambulatory service and physicians’ practices) on internal services, software, IT services, data center, devices and telecom services.

IT Services, which includes consulting, implementation, IT outsourcing and business process outsourcing, will be the largest overall spending category throughout the forecast period within the health care providers sector. It is expected to reach $300 million in 2014, up from $280 million in 2013, with consulting segment growing 10 per cent, the global research and analysis firm said in a statement.

“India has a new government, and the Ministry of Health will closely examine ways to deliver cost effective healthcare across the country. Delivering wide access to healthcare in an affordable manner will be a top priority for the wider public healthcare system,” said Anurag Gupta, research director at Gartner.

“The organised private healthcare sector will continue its expansion across Tier II and Tier III cities, as well as niche sectors like maternity and child health. We expect emphasis on eHealth, mobile health, telemedicine, public private partnership and leveraging innovative delivery models,” he added.

Internal services – salaries and benefits paid to the information services staff of an organisation – will achieve the highest growth rate amongst the spending categories – forecast to be 18 per cent in 2014.

The information services staff includes all company employees that plan, develop, implement and maintain information systems. Software will achieve a growth rate of 8.4 per cent in 2014 to reach $98 million in 2014, up from $90 million in 2013, led by growth in vertical specific software (software applications that are unique to a vertical industry. These are standalone applications that are not modules or extensions of horizontal applications).


Cognizant raises full-year revenue guidance

November 6th, 2014

Cognizant Technology Solutions Corp. raised its full-year revenue forecast after it reported an 11.9% increase in sales for the September quarter, boosted by higher demand for its healthcare and financial services. Outsourcing19

The Nasdaq-listed company said on Wednesday it now expects full-year revenue to range between $10.13 billion and $10.16 billion, compared with its earlier forecast of around $10.1 billion.

Revenue rose to $2.58 billion in the three months ended 30 September from $2.31 billion a year ago. It rose 2.5% from the preceding June quarter. Net income rose 11.3% to $355.6 million from $319.6 million a year earlier.

The increase in the revenue forecast comes three months after Cognizant disappointed investors by cutting its full-year revenue growth prediction citing client-specific challenges.

Analysts at Baird Equity Research said they were “encouraged” by the increase in guidance by Cognizant. “We think that the stock is a good value, given its discount to Infosys (despite faster revenue growth) and potential for upside to consensus 2015 estimates from the TriZetto acquisition,” the analysts wrote in a note on Wednesday.

Cognizant’s slowing healthcare business, which represented about 25.4% of its total revenue, has been a problem for the company over the past few quarters. To boost its healthcare business, Cognizant struck a deal to buy TriZetto Corp. for $2.7 billion in September.

In the latest quarter, healthcare sales rose by about 9% from a year ago, slower than its previous quarters, and 1.5% sequentially.

TriZetto’s services reach 245,000 healthcare providers, representing more than half of the insured population in the US, which is a lucrative market for IT service providers.

A January report by researcher Gartner Inc. said information technology services spending by global healthcare providers will grow by 4.33% to $31.96 billion in 2014.

The “overall demand environment remains strong”, Cognizant president Gordon Coburn said in a statement on Wednesday.

According to Francisco D’Souza, chief executive officer of Cognizant, “there is a tremendous opportunity in the marketplace as the advent of new digital technologies, global economic pressures, and an evolving regulatory environment force businesses across all industries to change and adapt faster than ever before”.

According to Gartner analyst Ian Marriott, Cognizant’s performance in the September quarter could be attributed to it performing well across all geographies. He added that discretionary spending is picking up in Cognizant’s major buying markets, which are North America and Western Europe.

Last month, India’s second largest software services exporter Infosys Ltd reported a higher-than-expected increase in its second-quarter profit as it added almost 50 new clients and benefited from favourable foreign exchange fluctuations.

However, India’s largest software provider Tata Consultancy Services Ltd posted quarterly revenue that fell short of analysts’ estimates as demand for outsourcing in Latin America was weak.

In the September quarter, consulting and technology services (formerly known as application development) and outsourcing services (formerly called application management) represented 53.5% and 46.5% of revenue, respectively. Consulting and technology services increased 5.1% sequentially and 18% from a year ago.

Outsourcing services were flat sequentially and grew 5.7% from a year ago.

The management said pricing was stable during the September quarter.

During the quarter, Cognizant added about 12,300 people and ended the quarter with nearly 200,000 employees globally.

Around 43% of gross additions for the September quarter were directly from colleges, while 57% comprised experienced professionals.


TCS sees digital services as over $5-bn opportunity

October 27th, 2014

Country’s largest IT services firm Tata Consultancy Services (TCS) expects digital platforms like cloud, Big Data and mobility solutions to bring in cumulative revenues of over $5 billion in next few years.Outsourcing34

Earlier, the Mumbai-based firm had said that it expects to do $5 billion cumulative business over the next three to four years from the “digital opportunity”.

“The way to look at it is that, when I originally said it, I said that over the next three to four years we will do $5 billion cumulative. But now, I think we will do much more than that on a cumulative basis,” TCS CEO and Managing Director N Chandrasekaran told analysts.

The run rate will not touch the $5 billion mark but it will definitely touch a few billion dollars, he added.

He said the opportunity is huge as most of the ADM work that is getting replaced or rationalised is moving into digital.

“Most of the infrastructure contracts come up with outsourcing of infrastructure to maintain the service levels in a managed services model, but with a transformation component to move to cloud infrastructure,” he said.

And commoditised applications, when they are transitioned, customers are willing to look at application platforms which are cloud-based, he added.

“So, all these three facts will definitely move things to Digital,” he said.

Chandrasekaran, who recently got a five-year extension, said at the announcement of the firm’s second quarter results that TCS is contemplating whether to disclose numbers from the digital technologies stream.

For the July-September quarter, the Mumbai-based company posted 13.2% jump in its net profit at Rs 5,244 crore as against Rs 4,653.9 crore in the year-ago period.

Revenue jumped 13.5% to Rs 23,816 crore in the second quarter ended September 30 as compared to Rs 20,977 crore in the corresponding period of last year.

However, on a quarter-on-quarter basis, net profit was down by 5.8%, but revenue grew 7.7%.


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