Posts Tagged ‘Indian’

Indian IT Companies On The Global Tech Field

January 13th, 2015

India is renowned for a world class skilled talent pool, especially in the technology and science field. When talking about India and technology, the word IT quickly comes to mind. Worldwide IT spending is expected to rise by 2.4% in 2015 and the IT sector is expected to cross $3.8 trillion. A sizable cOutsourcing44hunk of this business is expected to be handled by Indian IT companies. Most of the amply funded technology companies have made it big in a short while and earned big bucks for the investors and stakeholders. Two prominent Indian IT stocks which quickly come to mind are Infosys Limited (INFY) and Wipro Limited (WIT). Both companies provide Business Consulting, Information Technology solutions, Software Services and Outsourcing solutions. Both companies aggressive compete with each other in the Indian and global market.

Infosys and its Global Footprint

Infosys Limited, with a market cap of close to $37 billion, is an Indian software technology giant which has found its way on the list of the most preferred Indian IT stocks. Infosys provides IT Consulting, Software Development and Outsourcing services. Infosys clients are spread across 50 countries which it services through 72 global offices. Its annual revenue exceeded $8 billion and the company made a profit of $1.75 billion in 2014. According to Gartner, Infosys is poised to become the leader in Magic Quadrant for International Retail Core Banking solutions. This is the eighth time that Infosys has managed to bag the leader position in Magic Quadrant. The company has more than 15 offices and development centers in USA alone. Some of its US clients include Kellogg’s (K), Harley Davidson (HOG), JFK Health Systems, and NovaSom Inc., The company’s stock is currently trading at $33. Aspen Technology Inc. (AZPN), Advent Software Inc. (ADVS), CoreLogic Inc. (CLGX) are some of its closest competitors.

Wipro Trots the Global Path

Wipro Limited is a provider of comprehensive IT solutions and services which include Consulting, System Integration, Information Systems Outsourcing, IT enabled and R&D services. Wipro is also amongst the preferred Indian IT stocks listed on NYSE since 2000. It is currently trading at $11 and has a market cap of $28 billion. The company revenue exceeded $7.3 billion in 2013-14 and the profit made in the same year was approximately $1.3 billion. The company has achieved ISO 14001 certification and ISO 9000 certification. US based Technology Infrastructure Consulting company cMango Inc., is amongst one of its international acquisitions. NCI Inc. (NCIT), Datalink Corporation (DTLK), Globant S.A. (GLOB) are some of its competitors operating in a similar price band. Besides IT, Wipro also has Consumer Care and Lighting businesses. This division manufactures Personal care, Baby care, Wellness, Lighting, Electric Wire devices and Modular office furniture.

Some other IT companies to watch out: Few other IT MNC’s which have large development centres in India and compete with Infosys and Wipro in the Indian and Global Markets are US based Cognizant Technology Solutions (CTSH), Ireland-based Accenture Inc (ACN) and France-based Capgemini S.A. (CGEMY).

Last Impression

Infosys and Wipro are in the forefront of the race to grab a big chunk of $3.8 trillion global IT business. The stock forecast for both companies looks bullish. From an investor’s perspective, considering the rapid foray that the Indian economy is making in the Global arena, it would be a good idea to make some space in your investment portfolio for these Indian stalwarts to add a good variety to your portfolio and stand at the gaining position with the world economy heading towards India and China.

Source:http://www.gurufocus.com/news/306330/indian-it-companies-on-the-global-tech-field

Indian IT staff could unionise, putting offshore model into question

January 8th, 2015

Trade union organisations in India are calling on millions of Indian IT workers to unionise as fears over mass redundancies spread across the country’s IT services industry.Outsourcing39

Talk of Tata Consultancy Services (TCS), India’s biggest IT services provider, reducing its workforce of more than 300,000 by 10% has fueled fears in India’s IT sector.

It’s also been speculated IBM is planning to cut its workforce in the country by 50,000. According to a report from India, the IT giant has already reduced its India-based workforce from about 165,000 in 2011 to 113,000 in 2014.

According to the International Business Times, the All India Trade Union Congress and the Centre of Indian Trade Unions has asked software engineers to plan a strategy to resist the alleged workforce cut planned by India’s largest software services firm. This collective activity would amount to unionisation.

Unionisation a major shift in Indian IT

Unionisation would be a major shift in the industry as Indian IT workers are not actually allowed to unionise. It would also make offshore services delivered from the country less competitive as staff demand higher pay and better working conditions.

Staff cuts in India are inevitable as the outsourcing sector goes through a period of major change. The traditional offshore model, where businesses paid for full-time equivalents, is less relevant today with the advent of modern technology, such as automation software and cloud services.

IT services firms traditionally grew in a linear way – typically, they win more business, then add more staff to support it. In many cases this has involved building large offshore workforces.

But service providers are now trying to reach the holy grail of non-linear growth. This means adding business without needing to add to the workforce to support it – reducing the proportional increase in the cost of providing an additional service.

At the same time, increased use of cloud-based IT is forcing IT services firms to add more higher-level support services, while the move to platform-based services in the cloud means there is less need for businesses to develop their own software.

The lack of labour rights in India also benefits businesses that want a flexible workforce that can be scaled up and down easily.

Massive consquences for offshore IT services
One IT outsourcing industry source said unionisation will have massive ramifications on offshore IT services.

“This will mean less flexibility,” he said. “Offshore IT operations will no longer be able to be ramped up and scaled down easily because it will no longer be easy to lay people off.”

He added if talk of TCS laying off 30,000 people in India is true, it will be evidence of the company’s move towards non-linear business models.

“Because TCS is a bellwether this could spread across the Indian IT industry,” he said.

Indian companies need to change if they are to continue to grow. According to ISG, between 2005 and 2008, Indian suppliers’ revenues grew at a combined annual growth rate of 32%.

But the recession, which began in 2008, has been a shot across the bows. In the years since, Indian firms have experienced half the growth rate, at 16%.

Source:http://www.computerweekly.com/news/2240237667/Millions-of-Indian-IT-staff-could-unionise-putting-low-cost-offshore-model-in-question

IT stocks gain on weak rupee

December 30th, 2014

Five IT stocks rose by 0.37% to 0.85% at 13:35 IST on BSE as rupee edged lower against the dollar.Outsourcing32

Meanwhile, the S&P BSE Sensex was up 199.16 points or 0.73% at 27,440.94.

Among IT stocks, Infosys (up 0.6%), Tech Mahindra (up 0.56%), TCS (up 0.59%), HCL Technologies (up 0.85%) and Wipro (up 0.37%) gained.

A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.

In the foreign exchange market, the rupee edged lower against the dollar due to appreciation of the greenback against other currencies overseas. The partially convertible rupee was hovering at 63.68, compared with its close of 63.57 on Friday, 26 December 2014.

Optimism about growth of US economy also supported IT stocks, US is the biggest outsourcing market for the Indian IT firms.

Source:http://www.business-standard.com/article/news-cm/it-stocks-gain-on-weak-rupee-114122900667_1.html

Indian IT companies lag behind global peers in SaaS space

December 12th, 2014

The rise of software-as-a-service cloud delivery model poses a threat to the dominance of the homegrown software exporters as most of them lag behind the foreign companies, including IBM and Accenture in offering services to customers.Outsourcing12

Although significant investments are currently being made by Infosys and Wipro in strengthening their cloud offerings, some of the fastest growing SaaS firms globally do not even name any of the country’s largest IT firms as their strategic partners.

“We’ve got strong partnerships with Deloitte and Accenture and IBM and increasingly, PWC and KPMG, Towers Watson and Aon Hewitt,” said Aneel Bhusri, co-founder and co-CEO of Workday, in an analyst call last month, underlining the fact none of the Indian tech giants made the list.

For now, Indian companies are catching up with the foreign IT firms, as Wipro entered into a partnership with Workday in 2011, three years after Accenture first became Workday’s global deployment partner.

“We are there but we may not be matching them (IBM, Accenture)…It requires a lot of investments. They are ahead of us,” said Satishchandra Doreswamy, chief business operations officer at Wipro. “(But) we are also picking up…we are currently building cloud business platforms.”

Software-as-a-service, in which companies pay for software based on their usage, is expected to top $22 billion through 2015, up from about $14 billion in 2012, according to research firm Gartner.

The impact of this is most visible in Indian tech giants losing out to global software exporters when it comes to migrating existing infrastructure to cloud model. One of the examples is when IBM won a 10-year, multi-billion dollar deal to provide computer infrastructure services to Dutch bank ABN Amro running on its cloud systems. As in most deals, the biggest names, including Infosys and Wipro were in the race to bag this contract.

Another wrinkle for Indian tech majors is the inability to offer IPs in cloud space which can help them bag large contracts when competing for large deals.

“We have acquired industry leading cloud intellectual properties (IPs) which help us provide our customers with a strong orchestration layer to manage diverse cloud platforms in a seamless manner,” claims Anand Sankaran, president, Infrastructure and cloud computing at privately-held Dell services.

For this reason, some analysts believe cloud could pose a long-term challenge, capping upside potential in a sector growing at 13-14% annually.

“In the long run (5-10 years), we think cloud will eat into the enterprise application services (EAS) revenues of India’s IT services companies (15-20% of total), assuming ‘ERP on cloud’ becomes a reality,” Yogesh Aggarwal, an analyst with HSBC Securities said in a report dated November 25. “In the near term, the risk is more manageable at just 5-6% of total business, as cloud companies have achieved little in terms of operating metrics.”

To be sure, some of that impact is already showing. The time-and-material model of payment, where companies pay for the effort rather than the outcome, has been dropping steadily over the past few years.

“Clients are asking for a significant sub set of the existing work to be converted into a pay for use model. This will pose significant challenges to the Indian based providers which currently utilize an FTE base model,” said Peter Bendor Samuel, CEO of outsourcing advisory firm Everest. “Its impacts are already showing in the slowing growth and the increased need for investment.”

A senior executive of Infosys acknowledges the company’s limitations, with lack of certified consultants who can help customers to move to cloud space.According to the HSBC Securities report, Accenture leads the pack among IT outsourcers, with about 3100 certified Workday consultants. Additionally, the outsourcer also has 1800 Salesforce-certified consultants. In comparison, top five Indian IT firms collectively have a little more than 2,000 Salesforce certified professionals.

Still all is not lost as some believe a recognition by the leading IT firms to increase their investment can help them battle again the likes of Accenture when it comes to winning large deals.

“The two things that they need to do is to build these strategic alliances with companies that have cloud-based products and second is to have hosting either in their own data centres in geographies where they want to provide these services or they should have tie-ups with data centres in those regions,” said Biswajeet Mahapatra, research director at Gartner.

To combat the long-term threat, companies will also have to change how their services are delivered as the lowered complexity of cloud-based solutions will reduce the need to employ armies of engineers.

“Companies will have to invest in robotic process automation, artificial intelligence, analytics tools and capabilities, business process skills, consulting talent. They will need to change the revenue model from one driven by selling just labour to one selling products and expertise weaved into those services,” Phil Fersht, CEO of advisory firm HfS Research, said.

Source:http://timesofindia.indiatimes.com/tech/it-services/Indian-IT-companies-lag-behind-global-peers-in-SaaS-space/articleshow/45491781.cms

SoftBank betting $10 billion on Indian Internet market

October 29th, 2014

Japanese telecommunications and Internet company SoftBank is planning to invest US$10 billion in India, the country’s government said after meetings with the company’s chairman and CEO Masayoshi Son.Outsourcing51

The SoftBank head met with India’s leaders including Prime Minister Narendra Modi and Minister for Communications Ravi Shankar Prasad during a visit this week to the country.

SoftBank also announced Tuesday an investment of $627 million in online retailer Snapdeal, making it the largest investor in the company. SoftBank is also leading an investment of $210 million in Ola Cabs, a company that links consumers with cab drivers through mobile apps, the Web and call centers.

SoftBank did not comment on the investment plan in India, although it said in a statement that it planned to “deploy significant capital in India over the next few years.” Son told a TV channel that he had a “strong wish and willingness to invest more like” $10 billion in India in the next 10 years.

The company hopes to benefit from opportunities for developing the country’s nascent online market, created by its large Internet user base.

Amazon.com said in July it was investing $2 billion more in the country, attracted by the online retail opportunities. The online retailer did not say how or over what period it will make the investment.

SoftBank already has made investments in India, including in a joint venture in 2011 with Bharti Enterprises group, which has India’s largest mobile operator, Bharti Airtel, as a group company. Bharti Softbank Holdings is focused on the mobile Internet.

Source:http://www.cio.co.nz/article/558403/softbank-betting-10-billion-indian-internet-market/

Indian IT firms expected to be more acquisitive going forward: Peter Bendor-Samuel

October 24th, 2014

Peter Bendor-Samuel,  founder & CEO of management consulting and advisory firm Everest Group is one of the few global consultants who have been watching the Indian IT outsourcing landscape quite closely. In an interview with Bibhu Ranjan Mishra , he talks about how the Indian IT services firms have now reached a level of maturity when they are expected to be more acquisitive. He also talks about how Tata Consultancy Services (TCS) has been able to differentiate itself from rest of the pack backed by consistency in strategy and execution. Edited excerpts:Outsourcing37

Recently we saw Cognizant, an offshore-centric IT services company showing rare aggression BY acquiring US-based healthcare solutions provider TriZetto for a whopping $2.7 billion. What does it mean for Indian IT services companies?

It (Cognizant’s acquisition of TriZetto) is really going to change the competitive dynamics. But there is no doubt that companies like Infosys and TCS can do it because they have got great balancesheets to do these kinds of things. My guess is they will (do it). This is time for the industry to consolidate and this is an appropriate time for Indian heritage firms to step up their inorganic growth pursuits.

You have been tracking the Indian IT services companies quite closely for long. Are you seeing any change in the way these companies operate now as compared to few years ago?

Clearly, the Indian IT services majors are a matured lot now. They have got much more seasoned leadership. Look at TCS; it has a very seasoned and matured leadership team, very strategic in operation. They are riding a huge wave. They are running down the hill. I can say that no one else at the moment has that kind of capability. The next step for them is to be acquisitive.

How has TCS managed to leapfrog the rest of the peers?

For TCS, much has to do with their leadership team. From the early days when they were about an in-ward focused company, TCS was among the earliest ones to take a customer-centric view. TCS thought about value to clients whereas Infosys continued to focus on maintaining high margin. So, TCS was more forward looking and more consistent in their approach. I think Infosys struggled with that. They (Infosys) were too much focused on growth and profits, and customers did not agree.

But TCS has now improved its profit margins to one of the industry leading?

That’s true. But just think how they are doing it? From the very beginning, Infosys was focused on making a margin play whereas TCS became a low cost producer. They (TCS) drove huge investments in labour pyramid to make it flatter and more efficient. They invested more in automation and productivity tools. I think the other aspect is, in this business scale helps. So TCS was able to benefit from the scale advantage. It is particularly important in two aspects. They were able to get large wallet share in big clients while they were able to price lower than Infosys.

With Vishal Sikka at the helm, people say perhaps Infosys is going to make a much larger product play now that before. What is your view?

I think they will unlikely do so at this stage of their services business. They have to do significant intellectual property (IP) acquisition. Infosys has a huge capacity to do that. They have got a great balance sheet and the right structure. They have got a separate organisation which they can run differently for products. I like that structure. Putting the investment to the product side makes a lot of sense. I think that will be a very attractive strategy to look for.

What are the key changes that you are seeing at Infosys after the joining of Vishal Sikka?

I think he is still trying to have the feet on the ground. He has met many clients. But these are still early days. I think his next step will be get talents. I won’t be surprised if he does not get talents from outside. It is not that Infosys does not have enough of them inside, but more so to drive the kind of changes he wants to. I would encourage him to bring in non-Indian talents. Infosys needs to do with multi-cultural aspects as it is very Indian-centric now.

What are your view about Wipro and HCL Technologies?

There is no doubt that Wipro has become a much aggressive company, led by T K Kurien. Wipro is competing in the multi-tower transactions in domains which used to be the focus of companies like IBM and Accenture earlier. So, they are certainly seeing a lot of momentum right now. As far as HCL is concerned, while they are very much focused on infrastructure services, they need to strengthen their applications and BPO offerings.

Beyond these four companies, any other companies that come to your mind who can be the challenger in the IT services space?

The guy you should keep an eye on is Virtusa – they are very aggressive, very strong in digital; they are quite well-positioned to take advantage of the new technologies. They are growing very fast. So also is Syntel; they are growing very fast backed by a very aggressive management team. Syntel’s success lies in their ability in turning some key accounts to very large accounts. Then there are companies like Mindtree, but I think they have really to figure out how to differentiate in a market where scale really matters.

Source:http://www.business-standard.com/article/companies/indian-it-firms-expected-to-be-more-acquisitive-going-forward-peter-bendor-samuel-114102300505_1.html

More IT Cos Now Screens Start-Ups For Partnerships

October 15th, 2014

Startups seem to be expanding and successfully attaining higher rates of success by building a larger consumer base not only in their own country, but around the globe as well. Startups are not only gaining the consumers trust but are making the mega corporations turn their heads towards them. It seems that after Infosys and Wipro more IT companies are investing in start-ups.Outsourcing22

Infosys and Wipro explored more in order  to pick up stake in startups focused on disruptive technologies have made investment bankers optimistic that country’s declining outsourcing sector could see more deals in the coming months.

However, both foreign and domestic bankers believe that the small acquisitions and partnerships would not be enough and a big buy-out has to be done before the rainmakers interfere and help companies merge and raise capital.

It sees that Wipro isn’t the only IT services company eyeing a model of acquiring a minority stake in a software product start-up, keeping it at arm’s length from its core business and, possibly, playing the role of a venture capitalist. There is company like Mindtree which is looking forward to explore this model.

This venture-capital model is in line with those of global technology companies. It is only in recent months that Indian IT services majors like Infosys and Wipro — announced setting aside $100 million each towards investment in start-ups. The way these funds will be utilized hasn’t been decided yet.

“This is certainly a trend that has picked up in recent days. Last year, when we were looking to raise funds for expansion, a few technology companies had approached us. Now, we are approached every day,” said Nishant Singh, chief executive of Noida-based CRMnext. “This is what I call ‘lazy innovation’.

A company with a size exceeding $1 billion finds it really hard to innovate. “Huge companies sitting on huge funds can easily keep some money aside and plant it into 20 different planters and wait for it to grow,” Adds Singh. CRMnext, is a cloud-based customer relationship management solution company, which works with several IT services companies such as Tata Consultancy Services, Wipro, Tech Mahindra and Polaris Financial Technology.

Source:http://www.siliconindia.com/news/startups/More-IT-Cos-Now-Screens-StartUps-For-Partnerships-nid-173927-cid-100.html

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