Posts Tagged ‘Indian’

TCS CEO N Chandrasekaran sends AS Lakshminarayanan to head TCS’ Japan business

July 21st, 2014

Tata Consultancy Services’ CEO N Chandrasekaran has deputed one of his top lieutenants, AS Lakshminarayanan, to head the company’s Japan business and grow its revenue as the largest Indian IT player looks to grow in that large and largely unpenetrated market.Outsourcing28,

Japan was a very small part of TCS’ business — with just about $100 million in revenue. But in April, the company announced it was acquiring Mitsubishi Corp’s IT arm, which has about $500 million in revenue a year, and about 2,400 employees. The deal, which closed at the end of June, gives TCSBSE 0.30 % the greatest scale of any Indian IT firm in Japan.

Lakshminarayanan, who joined TCS in 1983, has a history of being sent to build businesses from the ground up at the Mumbai-based company. He built the UK-business at TCS almost from scratch and since 2011 has been leading the emerging verticals business — including hi-tech and media and entertainment — which now accounts for over 10% of TCS’ revenue.

“I am moving from one island to another. It is a personal challenge and it is hugely exciting. In the UK, we built our platform there organically. In Japan, with the acquisition, I am being given a platform that has its advantages and challenges. We have to bring our Japanese workforce onto the TCS processes and the TCS way of doing things,” Lakshminarayanan told ET.

The challenge is not just a personal one. When Chandrasekaran offered Lakshminarayanan the job, he also issued a target — to double the company’s revenue in a set period of time.

“I can’t tell you the time frame but knowing TCS, you should know we always have plans and they are ambitious,” Lakshminarayanan said. Japan is the second-largest market in terms of IT outsourcing. Its total outsourced IT spending is about $109 bn and it has been tough for non-Japanese vendors to gain a foothold. Of the total, almost 70% is serviced by Japanese players. Indian IT’s share of business is less than 1%.

But analysts expect TCS to grow quickly after its acquisition. “I expect their internal target should be to grow that business to $1-$1.5 billion in the next three to five years,” a Mumbai-based analyst said. He declined to be identified because he is not authorized to talk to the media. TCS’ Chandrasekaran has said he expects Japan to grow to a billion dollar business in the next few years.

One of the reasons that Japan has been tough for Indian IT is the insularity of the culture. TCS is already taking steps – from town halls to translating the internal magazine to Japanese – to welcome its new employees.

“We held a town hall and there were about 2,000 employees. And a lot of young people came up to me and they were very excited about working for TCS. We’ve met clients and the initial feedback is that they are also happy. Now we have to work to convert that excitement to actual results,” Lakshminarayanan said.

Talking to employees will be an on-going process, to explain the company’s long term vision for Japan and working with the middlemanagement. Lakshminarayanan is learning Japanese and is encouraging his top management to speak in English, a language they know but aren’t very comfortable with, to smooth communication.

He is relocating to Japan from the UK for the next few years. His wife will join him once his daughter, who is in her final year at school, goes to university. TCS, through Lakshminarayanan, will be spear-heading the biggest push into Japan and growth in that new market will help the company retain its lead over the rest of the industry.

“The law of large numbers would catch up with TCS if the footprint and capability were the same as other Indian IT. The reality is that growth leadership will sustain; what sets it apart is that its addressable space is the largest among Indian IT and capabilities wellspread across the entire IT spectrum,” Kawaljeet Saluja, analyst with Kotak Institutional Equities said in a note after Mitsubishi deal was announced.

Source:http://economictimes.indiatimes.com/tech/ites/tcs-ceo-n-chandrasekaran-sends-as-lakshminarayanan-to-head-tcs-japan-business/articleshow/38763588.cms

Indian Outsourcers Hope Budget Will Help Them Evolve

July 11th, 2014

India’s booming software services and outsourcing industry is hoping Thursday’s budget will give it the tools and tax incentives it needs to graduate from being just a big pool of inexpensive telemarketers and programmers.Outsourcing14

New Delhi needs to get behind the country’s biggest success story by committing  government money to rebranding the $110 billion outsourcing technology services industry as an innovation hub rather than just a cost arbitrage center, said Krishnakumar Natarajan, the chief executive of Indian software exporter Mindtree Ltd.

“For 20 years we were the back office of the world. I think we need to change from that to becoming the innovation hub,” said Mr. Natarajan, who was previously the chairman of India’s main software trade body the National Association for Software and Services Companies.

The future growth drivers for the industry will be high-end, high-margin businesses such as big data, analytics, cloud services and consulting, which many industry representatives say require a new kind of Indian company and a different nurturing environment.

Mr. Natarajan expects the government to create a technology investment fund of 10 billion rupees ($167 million) to 50 billion rupees to help support startups.

Nasscom president R. Chandrashekhar expects the government to announce an India Technology Entrepreneurship Mission which will support startups and simplifies the rules to set up business in India.

The organization also expects the government to announce measures to streamline the process of procuring technology products and services.

Source:http://blogs.wsj.com/indiarealtime/2014/07/09/indian-outsourcers-hope-budget-will-help-them-evolve/

London Stock Exchange outsources to outsource

July 11th, 2014

IT outsourcing has moved way beyond just cutting the cost of internal IT and now finds itself as an important mechanism for businesses to generate new business lines.Outsourcing16

Gone are the days that a business looking to move into a new area has to build its own IT to support it. It can work with an expert. They call them partnerships these days more often than not.

I wrote an article yesterday about how the London Stock Exchange is offering finance firms a platform based reconciliation service. The exchange offers finance firms its UnaVista reconciliation platform as a service.

Now in an effort to increase its customer base for this it is working with Indian IT service provider Wipro. Wipro has the infrastructure and expertise delivering software to customers globally via platforms so the partnership makes sense. It gives the stock exchange global reach.

The multi-tenanted platform is aimed at finance firms but could potentially go wider in the future. The combination of the exchange’s good trusted brand and Wipro’s reliable and secure infrastructuremight be attractive to customers.

So this is an example of an IT services firm supporting businesses in generating new revenue streams, rather than just cutting costs. This is how most services firms sell themselves these days.

It is also likely to increase as service providers invest in global delivery services and the infrastructures to support them.

Source:http://www.computerweekly.com/blogs/outsourcing/2014/07/london-stock-exchange-outsources-to-outsource.html

Indian IT firms may report healthy revenue growth

July 9th, 2014

The top five Indian information technology (IT) services providers are expected to post healthy dollar revenue growth in the seasonally strong June quarter, following stable demand from the US and UK, which account for over three-quarters of overall sales of sales. Outsourcing8

Margins, however, may come under pressure because of wage increases in April, higher visa costs and a strengthening of the Indian rupee, said analysts.

India’s second largest software exporter Infosys Ltd is widely expected to post a 2-2.5% revenue growth in the three months ended 30 June over the preceding quarter, and also maintain its full-year revenue guidance of 7-9%, as it kicks off the earnings season for Indian IT firms on 11 June.

India’s largest IT services provider, Tata Consultancy Services Ltd (TCS), is estimated to post the highest revenue growth among top software exporters.

“TCS looks like the strongest of the pack, expect at least 5% sequential growth for them not just in June quarter, but also for September,” said an analyst at a foreign brokerage who did not want to be named.

“For Infosys, we expect a slower quarter and expect about 2.4% sequential growth—an improvement from their fourth quarter though. Infosys’s guidance will also be a crucial indicator of whether the recent top-level exits from the company have hurt them or whether it’s business as usual. When someone like a B.G. Srinivas leaves the company, it can have an impact on key client relationships.”

Infosys recently named former SAP board member Vishal Sikka as its first non-founder chief executive. He will join the company on 1 August.

Analysts with Kotak Institutional Equities Research expect “solid 4.6% c/c (constant currency) growth for TCS, while HCL Technologies Ltd will chug along with 3.9% US dollar growth”.

“Certain company-specific issues at Infosys and Wipro Ltd mean they will report revenue growth towards the lower end of the pack. We expect 1.8% and 1% c/c growth for Infosys and Wipro, respectively,” the analysts added in a 30 June note.

Analysts expect Infosys’s “margins to narrow 210 bps (basis points) on account of rupee appreciation, wage hikes and visa costs. Infosys is likely to retain its full-year 7-9% revenue growth guidance”.

One basis point in one hundredth of a percentage point.

TCS, according to the Kotak analysts, will report a “solid quarter with broad-based growth…sequential growth to accelerate to 5.1% (4.6% in constant-currency terms)” but its operating margins may decline by 210 bps due to wage hikes and rupee appreciation.

Hitesh Shah, director of equity research at IDFC Securities Ltd, expects 1-5% sequential growth for the top 5 IT firms due to a healthier demand environment for IT outsourcing in key markets like the US and Europe.“TCS would be at the higher end with about 5% growth and Wipro at the lower end with about 1%. Infosys, TechM (Tech Mahindra Ltd), and HCLT (HCL Technologies) would report 2-3% qoq growth. Small and mid-cap companies are estimated to report a wider gap in qoq USD (US dollar) revenue growth (-3% to +5%),” said Shah. He, however, added that wage hikes, US visa costs and rise in the rupee could affect margin in the June quarter.

Companies that have increased wages from 1 April are likely to report 220-450 bps sequential decline in margins, according to Shah. Hence, those with no wage hikes—TechM and HCL Tech—“are better placed in Q1FY15”.

According to a 30 June note by Motilal Oswal Securities Ltd, revenue growth for Tech Mahindra, Persistent and KPIT Technologies Ltd will be muted, while margins will decline.

Tech Mahindra, the note said, “will suffer from the base effect of Comviva, a single project execution and one-month impact of discontinued BT amortization—collectively upwards of $10m; KPIT is likely to suffer from a change in scope of work from its Telematics account in India; while Persistent is facing a decline in IP-led revenue on a strong 4Q base and also deferral in execution of certain projects due to delayed visa issuance”.

Ashwin Mehta and Pinku Pappan of Nomura Securities Co. Ltd, in a 1 July note, have forecast Infosys to retain its guidance of 7-9% dollar revenue growth for fiscal 2015, and expect TCS to “reiterate its bullish outlook on FY15F growth”, on the back of growth in the US and better growth in the BFSI (banking, financial services and insurance) sector.

Analysts expect Wipro to guide for 2-4% sequential dollar revenue growth in the June quarter on the back of “recent strong deal flow announcements”. They have forecast Cognizant Technology Solutions Corp. to “keep its FY14 revenue growth guidance unchanged at 16.5%+ and guide for a 5%+ growth for 3QFY14F”.

On Tuesday, Infosys shares lost 0.30% to close at Rs.3,333.80 apiece on BSE. TCS closed down 1.36% at Rs.2,449.70 per share, while Wipro fell 1.26% to close at Rs.550.65 per share, and HCL Technologies ended down 2.24% at Rs.1,474.25 per share. The BSE IT Index lost 1.05% to close at 9,455.41 points, while the benchmark Sensex ended down 1.98% at 25,582.11 points on Tuesday.

Source:http://www.livemint.com/Industry/19WAIEBl1BbCNOtPghm2kM/Indian-IT-firms-may-report-healthy-revenue-growth.html

Bharti Airtel will be watched as RBI hikes foreign investment limit

July 4th, 2014

Bharti Airtel will be in focus after the Reserve Bank of India (RBI) gave permission to increase Registered Foreign Portfolios Investors (RFPIs) limit in the company to 74% of the paid up capital of Bharti Airtel under the Portfolio Investment Scheme.Outsourcing3

State-run iron ore miner NMDC has kept price of iron ore unchanged for July 2014. In a communique to stock exchanges, NMDC said it has rolled over the June 2014, price of lump ore (Rs 4600 per tonne) and fines (Rs 3160 per tonne) to the month of July 2014. The company reviews prices every month.

Meanwhile, NMDC said that production rose 13.48% to 78.54 lakh tonnes in Q1 June 2014 over Q1 June 2013. Despatches rose 16.65% to 85.85 lakh tonnes in Q1 June 2014 over Q1 June 2013.

IT stocks may gain on positive economic data in US, the biggest outsourcing market for the Indian IT firms. US employers added 288,000 workers to nonfarm payrolls in June, following a 224,000 increase in May that was bigger than previously estimated. A 1.39 million increase in employment over the past six months was the largest since early 2006, while the unemployment rate fell to 6.1%, the lowest level since September 2008.

HDFC turns ex-dividend today, 4 July 2014, for dividend of Rs 14 per share for the year ended 31 March2 104 (FY 2014).

Kotak Mahindra Bank turns ex-dividend today, 4 July 2014, for dividend of Rs 0.80 per share for the year ended 31 March2 104 (FY 2014).

Sesa Sterlite turns ex-dividend today, 4 July 2014, for final dividend of Rs 1.75 per share for the year ended 31 March2 104 (FY 2014).

Glenmark Pharmaceuticals S.A., a wholly owned Swiss subsidiary of Glenmark Pharmaceuticals, announced after market hours on Thursday, 3 July 2014, that GBR 830, a novel monoclonal antibody is entering human trials. GBR 830 is a pure antagonist of OX40, a co-stimulatory receptor expressed on T cells mediating T cell activation and survival. OX40 is a very well validated target with the potential to treat a wide array of autoimmune diseases. Glenmark has now completed the Phase I enabling preclinical development program for GBR 830 and has filed a Phase I clinical trial application with The Netherlands authorities, it said.

Reliance Communications (RCom) clarified on media reports that the company will raise Rs 5000 crore by selling real estate. RCom said that no new event has happened which would require any intimation and disclosure. The company continues its efforts to deleverage or monetisation of assets. As and when any such actions require disclosures, the company will promptly disclose information, it added.

Aban Offshore said that the capital Issue committee of the company at its meetings held on 3 July 2014, approved the closure of QIP on 3 July 2014. It also approved the issuance of 1.07 crore equity shares of face value of Rs 2 to Qualified Institutional Buyers at an issue price of Rs 695.50 per equity share, which is at a discount or Rs 36.47 per share to the floor price Rs. 731.97 per equity share.

Source:http://www.business-standard.com/article/news-cm/bharti-airtel-will-be-watched-as-rbi-hikes-foreign-investment-limit-114070400206_1.html

IT stocks in demand

July 4th, 2014

Eight IT stocks rose by 0.04% to 0.74% at 9:39 IST on BSE on positive economic data in US, the biggest outsourcing market for the Indian IT firms.Outsourcing1

Tech Mahindra (up 0.74%), MphasiS (up 0.63%), HCL Technologies (up 0.62%), Oracle Financial Services Software (up 0.59%), Hexaware Technologies (up 0.46%), Infosys (up 0.41%), CMC (up 0.04%) and Wipro (up 0.04%), edged higher. However, TCS fell 0.35% to Rs 2,409.35.

The S&P BSE IT index was up 0.13% at 9,306.73. It underperformed the Sensex, which was up 0.16% at 25,865.47.

The S&P BSE IT index had outperformed the market over the past one month till 3 July 2014, rising 9.93% compared with 3.88% rise in the Sensex. The index had, however, underperformed the market in past one quarter, rising 3.68% as against Sensex’s 14.73% rise.

US employers added 288,000 workers to nonfarm payrolls in June, following a 224,000 increase in May that was bigger than previously estimated. A 1.39 million increase in employment over the past six months was the largest since early 2006, while the unemployment rate fell to 6.1%, the lowest level since September 2008.

Source:http://www.business-standard.com/article/news-cm/it-stocks-in-demand-114070400217_1.html

Infosys new CEO’s tech background may be key in getting the Indian firm back on track

July 3rd, 2014

Tech visionary and former SAP CTO Vishal Sikka is the new CEO of Infosys. His credibility as a technical professional could help win customers’ trust, and ultimately transform the IT services firm. Outsourcing32

After being led by cofounders for three decades since its inception, India’s second-largest IT services firm, Infosys, has hired an outsider CEO. Vishal Sikka, until recently the chief technology officer at SAP AG, will take over on August 1, 2014, replacing cofounder S.D. Shibulal. Infosys executive chairman Narayana Murthy is also leaving the company.

The $8.25 billion-in-revenues Infosys is a key player in the global IT services outsourcing industry with nearly 900 customers in 30 countries. However, the market-leading firm has been floundering in recent years. Even as the founder-driven firm prepared for a leadership change, a series of top-level executive departures and high attrition levels of 18% have compounded the crisis. Its market share has fallen, and the firm has had four consecutive years of shrinking profit margins.

Sikka, 47, needs to give Infosys a much-needed leadership overhaul and get it back on track as the smoothly-running services engine once favoured by customers. The firm counts Nike, Levi’s, Kimberly-Clark, and Toyota among its customers.

Regaining the old momentum will be the new CEO’s primary challenge and a tricky one. The industry is shifting around Sikka even as he attempts to get the company on a solid footing, said Partha Iyengar, country manager for research at Gartner India. “Infosys needs to create some organizational agility, which can only come through a very effective and decentralized sales engine,” said Iyengar. Regional leaders will have to be given the latitude to make quick decisions by themselves.
Customers are waiting to see how the situation evolves. Key markers like attrition level, senior level executive exits, and client growth numbers will provide its clients with good insight into whether the leadership change game plan is working.

“Explore extending work with the firm only after the situation settles, and you know the gamble is working (four to six months), they are in a delicate situation today,” said Sudin Apte, research director and CEO of Offshore Insights, a Pune-based IT consultancy, in an advisory to customers.
The leadership succession was originally scheduled for 2015 when the current CEO Shibulal was to retire, and the sudden changeover could surprise some clients. “However, there is no need for a Plan B to replace Infosys just yet,” said Apte. In the coming months, customers could continue evaluating the services of the company.

CEO-designate Sikka, who was instrumental in building SAP’s groundbreaking cloud-based database management system called HANA, is likely to focus on pitching innovative solutions to customers, which could stabilize revenues in the besieged company.

Having a technology professional as its CEO might help Infosys refashion its strategy. From the market standpoint, Sikka’s credibility as a technology visionary will win him trust from customers, said Karthik Ananth, director at consultancy firm, Zinnov Management Consulting. “For the last four years, Infosys has been talking about innovation, products, and platforms — now the market will take them seriously.” Customers would be more willing to discuss complex business challenges with the firm if Sikka consolidates with a new team that has technology depth, said Ananth.

Products currently accounting for a miniscule 6% of the firm’s revenues could get more focus. Until now the company earned most of its $8 billion revenues by developing solutions around product software for its customers. Sikka has been quoted as saying that the line between software products and software services are rapidly blurring.

For Infosys, the changeover will be a transformation. For the first time its cofounders will all have exited executive positions in the Bangalore-headquartered company. That includes its primary founder Narayana Murthy, who hauled himself out of retirement last year to take charge of the firm. Sikka will be able to make a fresh start. His base in the Silicon Valley, close to the technology ecosystem as well as Infosys’ main customer base (the US), may give him an advantage as he navigates the 160,000-employee company out of a morass.

Source:http://www.techrepublic.com/article/infosys-new-ceos-tech-background-may-be-key-in-getting-the-indian-firm-back-on-track/

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