Posts Tagged ‘Infosys’

Infosys, Wipro, TCS caught in outsourcing price war

March 26th, 2015

Top software service exporters are under pressure to drop prices to retain contracts with marquee customers such as American Express and Home Depot that are up for renewal this year, according to executives and experts involved in the contract negotiations.Outsourcing17

Rates have fallen by double digits for some of the biggest customer accounts in the past six months, with companies such as Infosys and Wipro sacrificing profit margins to gain market share and incremental revenue from these key accounts, they said.

Retaining strategic outsourcing contracts — that generate at least $100 million annually — is crucial to top IT firms such as TCS, Infosys and Wipro.

“We’re definitely feeling the heat in some of our key accounts — and there’s no way we can afford to lose a top customer since gaining new logos to make up for the shortfall is not an option,” said a Wipro executive, who requested anonymity.

An executive at another top IT firm, also declining to be identified, said as traditional businesses have become commoditised, no company could afford to charge a premium.

“Top customers are more aware now of the changing dynamics in the market and are taking the opportunity to negotiate multi-million dollar contracts at lower prices,” this person said.

Experts tracking the contract negotiations said prices could drop further over the next 3-4 quarters.

“It’s become a dog-eat-dog business more than ever,” said Phil Fersht, chief executive of outsourcing advisory firm HfS Research. “There is a clear downward pressure on all IT services pricing. We estimate this is a 3% price decrease per FTE (full time equivalent) per deal, on average, over the last 6 months.”

TCS, Cognizant and Infosys declined to comment for the story.

Infosys, TCS and Wipro are increasingly automating commoditized businesses like infrastructure management to improve margins but are forced to pass on a majority of the benefits to key customers such as Bank of America and Citigroup.

“We are seeing big price movement, some of it betting on increased maturity of autonomics. TCS, Wipro and Infosys have all signaled their move away from (automation company) IPSoft and towards internally developed autonomics solutions. I assume that this will give them more pricing flexibility than they were getting with third-party software,” said Bill Huber, a former IBM executive and managing director at outsourcing advisory firm Alsbridge.

For Infosys and Wipro, which have lagged average industry growth rates over the past three to four years, gaining market share at the cost of margins seems to be their best option in the near term to revive double-digit growth rates.


Rs 900-crore Oz outsourcing deal: It’s Infosys vs Accenture

March 24th, 2015

It’s raining IT deals. Infosys and Accenture have entered the final lap to clinch a Rs 900-crore ($150 million) IT outsourcing contract from Australia-based financial services provider Macquarie Group.Outsourcing13

The five-year contract will include application development, testing and infrastructure management services, said sources privy to the development.

Macquarie provides banking, financial, advisory , investment and funds management services. It employs over 13,900 people in 28 countries.

As of last September, Macquarie had 295 billion-euro worth of assets under management. When contacted by TOI, Infosys and Accenture, they declined to comment.

Both Accenture and Infosys have engaged with Macquarie in the past.


Infosys, Accenture in last lap for Rs 900-crore deal in Australia

March 23rd, 2015

Infosys and Accenture have entered the final lap to clinch a Rs 900-crore ($150 million) IT outsourcing contract from Australia-based financial services provider Macquarie Group. The five-year contract will include application development, testing and infrastructure management services (IMS), said sources privy to the development. Outsourcing13

Macquarie provides banking, financial, advisory, investment and funds management services. It employs more than 13,900 people in 28 countries. As of last September, Macquarie had 295 billion euro worth of assets under management. When TOI contacted Infosys and Accenture, they declined to comment on the deal. Both Accenture and Infosys have engaged with Macquarie in the past. Accenture has assisted Macquarie in its core banking implementation, while Infosys had won a $25-million procurement and account payable BPO deal in 2012.

Sources told TOI that HCL, Cognizant and Genpact-Headstrong are some of Macquarie’s incumbent IT service providers.

“Under Vishal Sikka (Infosys CEO), and with his focus on digital technology, design thinking and automation, Infosys could well be positioning itself to return to its former glory, especially in the financial services sector where it is still a very strong performer,” said Phil Fersht, chief executive officer of US-based IT advisory firm HfS Research.

“There is a cut-throat race to close out deals like Macquarie – much will depend on which provider wants it more and is prepared to take a risk on the margins down the road. It also depends on how much ancillary business the providers think that can glean if they win the application development and testing pieces,” Fersht added.

Infosys’s cross-town peer Wipro has bagged an IT contract from Greater Cincinnati Water Works (GCWW) to transform the utility’s CRM (customer relationship management), billing and service bureau operations. GCWW provides about 133 million gallons of water a day to over 1 million people across the states of Ohio and Kentucky in the US.

Hewlett-Packard (HP) has won three multi-million dollar IT outsourcing contracts with sizable work expected to be done offshore (much could come to India). It has signed a seven-year infrastructure and applications services agreement with Dutch retailer Ahold, which has presence in the US and Europe and which did net sales of 32.8 billion euro last year.

“This is a major deal renewal. Originally it was an EDS contract (EDS was acquired by HP), but HP pulled out all the stops to provide end-to-end services. This was not easily won as the Ahold team sought concessions for giving HP more of its business but should be a win-win for both companies,” said Ray Wang, CEO of US-based Constellation Research.

When TOI contacted Ahold on the deal, spokesperson Tim van der Zanden said, “We do not disclose all the partners we work with, and cannot comment on speculation regarding contract values.”

HP has won a $52-million (Rs 312 crore) IT contract from Victoria Police. HP pipped IBM, Fujistu and Capgemini to bag the five-year deal to provide application development, workload and cloud solutions and managed mainframe services. HP has also bagged an over $3.2 million (Rs 18 crore) contract from JP Morgan where HP will support critical processes for its investment banking business and trading floor for securities services. When TOI contacted HP for comments on the Ahold and JP Morgan deals, the company said, “Request you to direct your enquiry directly to the organizations concerned.”


Wipro’s long search for a dogma breaker

March 20th, 2015

Ten months. Five candidates. Three countries. That is the journey Wipro Ltd chief executive officer T.K. Kurien and human resources head Saurabh Govil undertook before the company named Abid Ali Neemuchwala as chief operating officer (COO) on 16 March. Outsourcing8

Kurien and Govil, who flew to London, Seattle, Dallas and New York between April and November on this mission, had at least a dozen meetings with external candidates.
So secretive was the management about the hunt for a COO that even the Wipro board was informed only a day before India’s third largest software services exporter announced the appointment.

“This thought process started in March (2014), but we kept it under wraps. For a long time, only two of us knew,” Kurien said in an interview on Wednesday. One executive privy to the developments said on condition of anonymity that he got to know about the COO search only in November.

In the summer of 2014, Wipro reported another set of feeble growth numbers, recording annual revenue growth of 6.4 % for the year ended 31 March last year. Although this was better than the 5% growth in 2012-13, Wipro’s revenue increase paled in comparison with that of larger rival Infosys Ltd, which posted 15% growth.

Both Kurien and Govil realized that it was time to act.

Kurien, who took the helm of Wipro in February 2011, had first discussed the need for a COO with Govil in March.

One theme that recurred during Kurien’s interactions with many of Wipro’s 986 customers was the impact of technology on the way the traditional outsourcing work was done by Indian outsourcers. Is Wipro embracing open source software to which many of its biggest clients, including Citigroup Inc.,were switching? Is it investing enough in next generation technologies, including automation of back-end infrastructure maintenance?

Although by now Wipro had a team working under intelligent technology platforms, Kurien knew it would take some time before results start to show up. He needed someone who could execute his plans.

“If you look at the way technology is being bought, it is very different from the way three years ago,” said Kurien. “Three years ago, CIOs (chief information officers) took infrastructure from us, took application from someone else, and acted as integrator. But now more and more specific workloads are getting stack-based. People take a process view and say how do I integrate applications, hardware and data. So which means how can you (an IT vendor) integrate applications, infrastructure and data together, and present it before the customer.”

“So we started meeting people from April,” said Kurien, who a few days later read in the press that cross-city rival Infosys, too, had started its hunt for a CEO to replace S.D. Shibulal, who wanted to leave. Infosys asked two search firms, US-based Development Dimensions International, a specialist in executive evaluations, to rank leaders within the company and executive search firm Egon Zehnder to help it identify leaders outside the company.

“Executive names normally come through referencing. But TK is one CEO who is always meeting clients and he knows most people well enough,” said Navnit Singh, country head for India at executive search firm Korn/Ferry International. “I think that explains why they did not seek any outside help,” said Singh, whose firm helps companies, including Wipro, fill senior management ranks.

Two months later, in June, Infosys named Vishal Sikka as the first non-founder CEO and MD-designate of the company. Unlike Infosys’s hunt for Sikka, which took two months, spanning three continents and the three-member nominations panel of the company meeting a dozen external and internal candidates, Wipro’s search was a long-drawn affair.

By now, Wipro leaders had just had two meetings with executives, names of which the management declined to share. Mint now learns that these executives were from Microsoft Corp. and Google Inc. But Kurien knew their decision to bring in an outsider was the right one.

“We wanted someone who could challenge the existing dogmas that sat within the enterprise. Within an enterprise you typically don’t question things which are done for many years. We wanted a little bit of external challenge the way we have worked,” Kurien said, explaining the rationale for selecting an external candidate.

A few months later in August, both Kurien and Govil first met Neemuchwala in Dallas over dinner, according to the executive cited above.

Neemuchwala, 48, was no stranger to the outsourcing sector: He is credited with having doubled the revenue at Tata Consultancy Services Ltd’s (TCS’s) back-office division in the six years he headed the business and also helping the company win some billion-dollar deals, including a multi-year contract with Nielsen.

Wipro’s management declined to share details of what transpired in the dinner meeting, but this it was followed by at least two more meetings in Dallas, according to the executive cited above, before Neemuchwala flew down to Bengaluru to meet Wipro chairman Azim Premji in late December.

“Such meetings with chairman are never so short,” Kurien laughed when asked if it was a quick 15-20 minute meeting, again declining to share details.

To be sure, once Premji approved of the choice, Wipro knew by February it had found the right candidate to lead the operations team. But it wanted to wait for another six months before naming Neemuchwala as COO.

“Things in the last month moved way too fast than we had anticipated. He (Neemuchwala) left TCS (in early February) and by then, other than Wipro, he had four other offers (including one from a private equity-backed technology firm). So he took a decision and we are happy he joined us,” said the executive cited above.

“The biggest quality he (Neemuchwala) has is the ability to execute. He integrates all these stacks. All the stacks (technology service lines at Wipro) report to him. He will be building service integration layer that sits on the top,” said Kurien.

“He (Neemuchwala) genuinely understands how to marry business process delivery with IT delivery—an expertise also shared with T.K. Kurien, who used to lead Wipro’s BPO business before becoming the company CEO,” said Phil Fersht, CEO of US-based HfS Research, an outsourcing-research firm. “He can truly help globalize an indian-heritage provider with his experience, which is essential for a firm like Wipro.”

For now, Neemuchwala lives with his family in Dallas. But Wipro won’t dictate where Neemuchala should work from. “He will be wherever he wants to be, be it in India or the US,” said Kurien.

Neemuchwala declined to comment.


Infosys to make second startup investment in air quality detector company

February 24th, 2015

InfosysBSE 0.94 % is about to make its second startup investment this year, in a firm that makes air quality detectors as India’s second-biggest software company doubles down on identifying nextgeneration technologies under the new CEO Vishal Sikka.Outsourcing1

“There is a small company we are investing in that makes an air quality detector that you can just drop in stores, in hospitals, in mines and it detects air quality and it is connected to the cloud and you can stream the data,” Sikka said in an interview last week.

He declined to identify the startup by name but observed that it specialises in the area of the Internet of Things – an emerging network of computing and non-computing devices talking to each other and creating chunks of data that can be converted into business insights and new revenue streams.

The deal is expected to close by April. “The world around us is fundamentally being reshaped by software, and IT companies are not serving IT needs. So investing in these companies is essential,” Sikka said. Earlier this year, Infosys made its first startup investment, tapping into the newly established $500 million fund, in a Dream-Works spin-off. Infosys bought a minority stake in the startup for around $15 million (Rs 90 crore).

The latest investment also aligns with the new strategy being pushed by Sikka, which bets on big data and artificial intelligence among the ideas that could potentially become big revenue earners.

James Mawson, founder of magazine Global Corporate Venturing, said companies such as Infosys are finding good response from startups in the Silicon Valley.

“Most Silicon Valley startups and investors and corporations and governments would love to work more with Infosys etc. (because) India carries fewer geopolitical risks than, say, China,” Mawson said.

And apart from tapping into the next technology disruption, there’s money to be made too.

“Most academic literature shows companies that have some corporate venture backing are more likely to exit at higher valuations and benefit the corporate ventures that do it well,” he said.

Wipro, Infosys, TCS have all understood that “linear” growth models for outsourcing no longer holds for the future, hence, they need to look at “exponential” growth models through innovation, said Martin Haemmig, a global expert on corporate venturing.


Emirates Islamic Bank to use Infosys product

January 21st, 2015

Dubai-based Sharia-compliant Emirates Islamic Bank has selected Finacle banking software product of Indian IT bellwether Infosys for its operations across the Gulf region.Outsourcing49

“Finacle will enable the Islamic bank to serve its customers with greater efficiency, manage its operations more effectively and meet reporting and compliance obligations,” the software major said in a statement here Tuesday.

With Finacle, the bank will also be able to create a range of products and services that are compliant with the stringent Sharia business rules and accounting rules.

“Our solution will also ensure transparency of accounting and profit-sharing along with operational risk control,” the statement said.

According to Michael Reh, Infosys vice president and global head of Finacle, Islamic banks have shown strong growth over the years with global potential for expansion.

“To leverage this opportunity, Islamic banks need a robust and flexible technology backbone which can empower them to innovate faster and deliver personalised banking experiences,” Reh said.

The IT outsourcing firm hopes the partnership would act as a model deployment for banks offering Islamic banking services.


IT stocks advance on positive jobs data in US

January 9th, 2015

Outsourcing41Key benchmark indices held firm in early afternoon trade. The barometer index, the S&P BSE Sensex remained past the psychological 27,000 level which it had attained in early trade. The Sensex was currently up 291.11 points or 1.08% at 27,199.93. The market breadth indicating the overall health of the market was strong with almost three gainers for every loser on BSE.

IT stocks advanced on positive jobs data from US. Infosys dropped amid volatility ahead of its Q3 December 2014 results tomorrow, 9 January 2015.

Foreign portfolio investors sold shares worth a net Rs 1073.18 crore yesterday, 7 January 2015, as per provisional data.

In overseas markets, Asian equity markets were higher today, 8 January 2015 as the fall in oil prices and concerns over Greece’s potential departure from the euro zone abated, while a positive finish on Wall Street overnight lifted trading sentiment.

In the foreign exchange market, the rupee edged higher against the dollar.

Brent crude futures recovered from the lowest level since April 2009 as investors weighed whether crude’s selloff was excessive amid signs of improving demand in the US.

At 12:15 IST, the S&P BSE Sensex was up 291.11 points or 1.08% at 27,199.93. The index surged 341.06 points at the day’s high of 27,249.88 in early trade, its highest level since 6 January 2015. The index rose 193.12 points at the day’s low of 27,101.94 in morning trade.

The CNX Nifty was up 94.90 points or 1.17% at 8,197. The index hit a high of 8,209.85 in intraday trade, its highest level since 6 January 2015. The index hit a low of 8,167.30 in intraday trade.

The BSE Mid-Cap index was up 164.53 points or 1.61% at 10,399.08. The BSE Small-Cap index was up 199.37 points or 1.81% at 11,188.36. Both these indices outperformed the Sensex.

The market breadth indicating the overall health of the market was strong with almost three gainers for every loser. On BSE, 1,870 shares advanced and 627 shares declined. A total of 83 shares were unchanged.

IT stocks advanced on positive jobs data in United States. Tech Mahindra (up 1.15%), Oracle Financial Services Software (up 0.97%), CMC (up 0.89%), TCS (up 0.76%), MindTree (up 0.71%), Wipro (up 0.53%), MphasiS (up 0.13%), and HCL Technologies (up 0.06%) edged higher.

United States is the world’s biggest outsourcing market for Indian IT firms.

Infosys fell 0.1% at Rs 1,962.85. The stock hit a high of Rs 1,996.85 and a low of Rs 1,951. Due to cross currency headwinds, analysts expects Infosys’ management to prune the company’s revenue growth guidance in dollar terms for the year ending 31 March 2015 (FY 2015) when the company announces its Q3 December 2014 results tomorrow, 9 January 2015. The IT major is widely expected to prune its FY 2015 dollar revenue growth to 7%-8%, from 7%-9%.

At the time of announcement of Q2 September 2014 results, Infosys had on 10 October 2014 retained its earlier guidance of 7% to 9% growth in revenue in dollar terms for FY 2015. At that time, the company had raised its revenue growth guidance in rupee terms due to rupee depreciation. The company had raised the revenue growth guidance for FY 2015 in rupee terms to 6.7%-8.7% from earlier 5.6%-7.6% at that time. The revised guidance was based on rupee dollar conversion rate of 61.

Bharat Electronics fell 1.77% at Rs 3,160. The stock hit a high of Rs 3,265 and a low of Rs 3,154.05. The company during market hours today, 8 January 2015 said it has inaugurated its modernised BEL Software Technology Centre (BSTC) of Navratna Defence PSU Bharat Electronics yesterday, 7 January 2015. BSTC is a part of the Central Development & Engineering Group of BEL-Bengaluru and is the software development centre of BEL, the company said in a statement.

On the macro front, data to be released in near future is expected to show industrial production growth remaining muted in November 2014 and consumer price inflation accelerating in December 2014. Industrial production is seen rising 1.6% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil industrial production data for November 2014 after trading hours on Monday, 12 January 2015. Industrial production had witnessed a surprise contraction of 4.2% in October 2014.

The rate of inflation based on the consumer price index (CPI) is seen accelerating to 5.4% in December 2014 from 4.4% in November 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the data on CPI inflation for December 2014 after trading hours on Monday, 12 January 2015.

The Reserve Bank of India (RBI) aims to limit consumer-price gains to 8% by January 2015 and 6% by January 2016. Over the longer term, the RBI aims to limit consumer-price gains to 4%, within a 2% band.

The rate of inflation based the wholesale price index (WPI) is projected at 0.5% for December 2014, as per the median estimate of a poll of economist carried out by Capital Market. WPI inflation stood at zero in November 2014. The government will release data on WPI for December 2014 at 12 noon on 14 January 2015.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.9675, compared with its close of 63.18 during the previous trading session.

Brent crude futures recovered from the lowest level since April 2009 as investors weighed whether crude’s selloff was excessive amid signs of improving demand in the US. Brent for February settlement was up 30 cents at $51.45 a barrel. The contract had advanced 5 cents to settle at $51.15 a barrel during the previous trading session.

Asian equity markets were higher today, 8 January 2015 as the fall in oil prices and concerns over Greece’s potential departure the euro zone abated, while a positive finish on Wall Street overnight lifted trading sentiment. Key indices in Hong Kong, Japan, Singapore, Taiwan, South Korea, and Indonesia were up 0.24% to 1.67%. In China, the Shanghai Composite was off 1.36%.

Trading in US index futures indicated that the Dow could gain 129 points at the opening bell today, 8 January 2015. US stocks surged yesterday, 7 January 2015, with the S&P 500 rebounding from a five-session dive, as US crude stopped a four-day skid and Germany left the door open to discussing options with Greece’s next government on its debt. Federal Reserve policymakers said they could begin raising interest rates before inflation starts to pick up, according to minutes of their meeting on 17 and 18 December 2014. However, the Fed officials added that “they would want to be reasonably confident that inflation will move back” toward the Fed’s annual 2% target “over time”.

US private sector employment gains accelerated in December as employers added 241,000 jobs, Automatic Data Processing Inc. reported yesterday, 7 January 2015. ADP revised November’s gain to 227,000 from a prior estimate of 208,000.

The US Labor Department reports monthly payroll data for December 2014 tomorrow, 9 January 2015.

In Europe, the uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.


Protected by تهنئة
Get Adobe Flash player