The results of the Indian software leaders, Tata Consultancy Services and Infosys Technologies (Cognizant, which is now number three, does not publish comparable Indian GAAP figures), in the last quarter have been boosted by the recent depreciation of the rupee.

But under active policy intervention by the central bank, the rupee has started to rise again.

On present reckoning, the conversion rate used by Infosys for the third-quarter results for the US dollar, Rs 52, is unlikely to rule at the end of this financial year.

So the sharply improved performance may be a bit transient in nature, due to exogenous factors.

But still, the recovery from the trough created by the global financial crisis is nothing short of spectacular. In the third quarter of 2009-10, Infosys’ topline fell by 0.8 per cent.

Precisely two years on, it has grown by 30.8 per cent. Over the same period, TCS’ topline growth has transited from 2.9 per cent to 36.8 per cent. Infosys’ net margin or profitability has over the same period ranged between 27.6 and 25.5 per cent, touching a low of 23 per cent in between.

TCS’, on the other hand, has ranged between 23.8 per cent and the current 21.2 per cent, after touching a high of 25.8 per cent.

Thus, come hell or high water, these firms remain robust. In fact, value addition under conditions of depreciation has marginally improved, with the net margin for both the firms during the latest quarter remaining higher than in the previous quarter.

Revenue growth in dollar terms is of course lower, but also respectable.

The robustness of the IT leaders is explained by the fact that they have been able to decouple themselves from some of the ups and downs of the global economy.

Ordinarily, the performance of firms that have high exports will be adversely affected when the global economy is down. The difference for software is that, under conditions of depressed growth, companies across the developed world redouble their efforts to improve efficiency.

Explaining his overall optimism, N Chandrasekaran, CEO of TCS, has underlined that technology is a “key resource” for global business to tide over the “current economic climate” and his firm is partnering with them to achieve this objective.

However, two major challenges remain. One is acquiring consulting skills, in which the global incumbents are strong.

The other is the pressure, political and technical, to locate more, and higher paid, staff near the customer, raising costs and affecting margins.

Indian leaders may not be acquiring consulting skills at the pace they would like to.

But given that incumbents are offshoring more and more (this should up their margins) and the challengers are relying less and less on commoditised work (this should lower their margins), the difference in margins between the two remains substantial.

So there is a durability in the performance of India’s software leaders which goes well beyond transient favourable exchange rate fluctuations.

Source:http://www.rediff.com/business/slide-show/slide-show-1-column-rupee-depreciation-helps-indian-it-companies/20120123.htm

Infosys has hired Jan Erik Aase, a banking industry veteran and one of the top analysts at research firm Forrester, to increase focus on large outsourcing contracts and compete better with rivals such as Tata Consultancy Services and Cognizant.

According to an updated profile of Aase on networking site Linkedin, he has joined Infosys as associate vice president to be based in the US. An MBA in operations management from Brigham Young University, Jan Erik has joined India’s second biggest software exporter as member of the strategic global sourcing (SGS) team, reponsible for research, increasing new client pipeline, sales advisory and support, and client advocacy, according to Linkedin.

Infosys had not replied to an email query seeking confirmation of this development at the time of writing this story.

Last week, Infosys reported 33% rise in its net profit to Rs 2372 crore for the December quarter aided by a weakening rupee but scaled down its annual forecast signalling weak demand ahead for the country’s IT sector. The company revised its Dollar revenue forecast for the full year ending March 2012 to 16.4% compared with 17.1 to 19.1% growth it expected to achieve.

The more immediate problem for the company is that its main clients are worse off than their competitors. This means that financial firms like Bank of America and UBS-the biggest customers of Infosys-are spending less than the rest on technology. On the other hand, financial firms like Citigroup and JP Morgan that work with Infosys’ rivals, are not crimping on technology spending. This partly explains why Infosys has been sounding woebegone.

This is not the first time that a top IT firm has poached senior industry analyst.

Cognizant, which overtook Wipro last year as the third biggest software exporter from India, hired Paul Roehrig who was principal analyst at Forrester Research to lead the company’s cloud computing strategy two years ago. Last year, Cognizant also hired Benjamin Pring who was a Vice President at Gartner.

Source:http://economictimes.indiatimes.com/tech/ites/infosys-hires-forrester-analyst-and-former-ameriprise-cio-to-increase-focus-on-large-deals/articleshow/11520701.cms

Infosys cut its revenue growth forecast for its fiscal year ending March 31, the outsourcing company citing slowing demand in Europe caused by the debt crisis.

The company, which is India’s second largest outsourcer, said yesterday that revenue growth for the year would be 16.4%, down from the 17.1% to 19.1% it had projected in October.

“There is still a lot of uncertainty,” said Ashok Vemuri, member of the board and head of Americas at Infosys.

Infosys revenue breaks £1 billion despite troubled economic times Infosys looks to UK public sector
While the economic indicators in the US appear to be looking up, the outlook for Europe is still dim, Vemuri said. The company is investing in its operations in Japan, Australia, China, and Latin America to increase revenue from these markets.

Partner at market intelligence and advisory services firm Information Services Group Siddharth Pai said that customers were delaying purchase decisions because of the uncertainty about the economy, and that this was affecting IT services companies across the world.

Infosys and most other Indian outsourcers earn most of their revenue from North America and Europe.

For the quarter ending December 31, the company’s revenue was $1.8 billion, up by about 14% from the same quarter in the previous year. Net profits at $458 million were up 15.4%. Revenue and profit growth was more than double in rupee terms mainly because of the fall of the Indian rupee against the dollar in which the company earns most of its revenue.

Infosys has been attempting to move from services priced around the number of staff working on a project, to value-added services around consulting and development of products and intellectual property.

Fixed price contracts accounted for 41% of revenue in the quarter, as compared to 37% in the previous quarter, mainly on increased consultancy contracts, Vemuri said.

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Some banks for example are asking Infosys to not only run some operations, but to also transform the bank’s processes, creating opportunities for some of the outsourcer’s platforms, including one for fraud surveillance, he added.

Infosys added 3,266 employees in the quarter, taking the total to 145,088 employees at the end of the quarter. The company continues to invest and plans to add 49,000 staff in the fiscal year, Vemuri said.

Infosys expects its fiscal year revenue to be about $7 billion, but Vemuri said that uncertainty will continue in the next fiscal year.

Source:http://www.computerworlduk.com/news/outsourcing/3329924/infosys-cuts-revenue-forecast-citing-european-crisis/

Quarterly profits at Infosys beat expectations, but the outsourcing bellwether said Thursday that the global economic slowdown and chaos in Europe would hit growth going forward, disappointing investors.
Profit for the December quarter was 23.7 billion rupees ($458 million), up 15.4 percent in dollar terms from a year ago, beating expectations.
Revenues were 93.0 billion rupees ($1.8 billion), up 13.9 percent in dollar terms.
The company said that while slowing global growth and the crisis in Europe could ultimately spell opportunity for Indian outsourcers, in the short term growth will be less than expected. It said revenue and earnings growth this quarter, in dollars, would be flat and cut its guidance for the year.
It said it expects revenues for the fiscal year ending March to grow 16.4 percent in dollar terms and earnings per share to grow 14.5 percent. In October, it had said revenue growth could be as high as 19.1 percent and earnings per share could rise as much as 16.8 percent in dollar terms.
Nearly two-thirds of the company’s revenues come from the United States. Europe is its second-biggest market, accounting for another 23 percent of revenues.
Executives expressed hope that companies, especially in Europe where levels of offshoring are low, eventually will send more work overseas as cost pressures intensify. In the short term, however, the failure to resolve Europe’s deep debt problems has hurt sentiment and made clients cautious.
“There is no definitive answer to the Eurozone crisis at this point. Client confidence is down,” chief executive S.D. Shibulal told CNBC-TV18. “Spending is going to be choppy.”
Revenues from European clients grew 13.7 percent from the prior quarter, executives said. The company added 49 new clients, including 6 Fortune 500 companies and closed several $5 million plus deals, including one in Europe, executives said.
“Investment has become very challenging in most of the markets where we operate,” chief financial officer V. Balakrishnan told reporters. “We are seeing clients much more cautious in their spending.”
He said volumes grew 3.1 percent and pricing ticked up 5 percent from a year ago. Executives said they expect pricing to remain stable this quarter, even as client budgets remain flat or shrink slightly.
Operating margins grew 3 percent during the quarter, as extreme rupee depreciation made up for higher costs, executives said.
Earnings in rupee terms were helped by the weakness of the Indian rupee, which plunged 11 percent during the December quarter from the prior quarter.
Balakrishnan said managing such extreme currency volatility going forward would be a challenge for the industry.
The stock plunged, closing down 8.4 percent.
“The body language and tone seem to suggest that clients are not confident because of the challenging environment in Europe,” said Manish Sonthalia, a fund manager at Motilal Oswal in Mumbai. “Extending into next year’s guidance we could look at 16 to 17 percent dollar revenue growth, which is lower than what the street has been expecting.”
He said that over the next five to 10 years, Indian outsourcers like Infosys and Tata Consultancy Services — both stocks Motilal Oswal owns in its funds — could benefit from cutbacks in developed markets.
“Austerity is the buzzword happening in Europe,” he said. “If you are looking to cut costs, you can do that through offshoring.”

Source:http://www.google.com/hostednews/ap/article/ALeqM5je4mOSxZY6YS3OY9RYR-IrY4tYpA?docId=ebfe0a896ed44bdd9c1d3dd4ae4d6729

Infosys Ltd. (INFO), India’s second-largest software exporter, reported third-quarter profit that beat analysts’ estimates as customers outsourced more work and the rupee’s decline boosted the value of repatriated earnings.

Net income rose 33 percent to 23.7 billion rupees ($458 million) in the three months ended Dec. 31, from 17.8 billion rupees a year earlier, Bangalore-based Infosys said today. That compares with the 22.8 billion-rupee median of 44 analyst estimates compiled by Bloomberg.

Infosys shares fell after the company cut its full-year forecast for sales in dollar terms, citing weaker growth in developed economies including Europe, which together with North America accounts for more than 80 percent of revenue. The company joins Accenture Plc in posting better-than-expected quarterly earnings as clients outsource information-technology services to reduce costs.

“They beat some estimates because of forex, not because of improvements in their core business,” said Pralay Kumar Das, an analyst at Elara Securities Ltd. in Mumbai. “What the market looks at though is the future.”

Infosys dropped as much as 7.7 percent, the largest intraday decline since Nov. 11, and traded 7.4 percent lower at 2,618.50 rupees as of 9:16 a.m. in Mumbai. The stock was the biggest contributor to the the benchmark Sensitive (SENSEX) index’s 0.6 percent decline.

Dollar Sales Outlook

The company, which designs software programs, maintains computers and provides IT and outsourcing services for clients including BT Group Plc, said sales in the year ending March 31 will range from $7.029 billion to $7.033 billion, down from the $7.08 billion to $7.2 billion it forecast in October.

“The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry,” Chief Executive Officer S.D. Shibulal said in the earnings release.

Sales in the fourth quarter may range between $1.806 billion and $1.810 billion, Infosys said today.

The company raised its outlook for sales in rupee terms. Full-year revenue will range from 342.7 billion rupees to 342.9 billion rupees, higher than the October projection of 335 billion rupees to 340.9 billion rupees.

The rupee’s 7.7 percent decline against the dollar in the three months ended Dec. 31 would have boosted margins at India’s software exporters, Pratik Gandhi, an analyst at IDBI Capital Markets Services Ltd. in Mumbai, said before the earnings were released.

Third-quarter revenue rose 31 percent to 93 billion rupees, exceeding the 91.7 billion-rupee median of 48 analyst estimates.

Source:http://www.bloomberg.com/news/2012-01-12/infosys-profit-beats-estimates-as-outsourcing-weakening-rupee-lift-sales.html

Software companies are bracing for a slower pace of outsourcing contracts in 2012 when they kick off quarterly earnings this week because of the lingering debt crisis in Europe, their biggest market after the United States.

Infosys, the country’s No.2 software services exporter, bigger rival TCS and third-ranked Wipro get about three-quarters of their revenue from the United States and Europe.

“Right now the discretionary spend into the calendar year will be the key challenge to watch out, for the tech companies,” said Dhiraj Sachdev, a senior fund manager at HSBC Asset Management Ltd. “There is some kind of sense or early indication that sales cycles may lengthen.”

Global spending on information technology will rise at the slowest pace in three years in 2012 as Europeans, worried about the region’s sovereign debt crisis are cutting back on investments, research firm Gartner Inc said on Jan 5.

Gartner predicted global IT spending would rise 3.7 per cent in 2012, down from its earlier estimate of 4.6 per cent. The forecast for Western Europe was slashed to a 0.7 per cent drop in spending from a previously expected rise of 3.4 per cent.

Infosys is expected to report on Thursday a 30 per cent profit rise for the December quarter, helped by an 8 per cent slide in the rupee, but the market will be focusing on any revision in forecast for the fiscal year ending March 31, comments on demand momentum, hiring and acquisition plans.

Brokerage Kotak Securities said in a report that it expects Infosys to lower its dollar revenue growth guidance for the year to March to 17 per cent to 17.5 per cent from its October guidance of 17.1 per cent to 19.1 per cent.

HSBC’s Sachdev said the budget for technology spending by the financial services sector in Europe will be a decisive factor for Indian software companies, which compete with Accenture Plc and IBM Corp for contracts to maintain computer systems and write software applications.

Accenture posted strong quarterly results last month, but the technology outsourcing and consulting company gave a cautious view of the second quarter amid the worsening global economy.

The rupee was the worst performer among Asian currencies in 2011, losing nearly 16 percent against the dollar.

The weaker rupee may help Infosys gain about 295 basis points in margins for the December quarter, compared with July-September, while Wipro may gain 55 basis points, CLSA analysts said in a report.

“One percent depreciation in rupee (leads to) a net inflow of some 30 basis points in margins,” Infosys chief executive officer S.D. Shibulal told Reuters in an interview in November.

However, economic uncertainties are slowing decisions on technology spending by overseas companies, said Shibulal, who is also a co-founder of Bangalore-based Infosys, a pioneer in India’s nearly $76 billion IT services sector, said.

“We’re clearly seeing it. The slowness has increased in the last month or month and a half,” he said in November.

German and French leaders met on Monday to discuss how to boost growth in euro zone states struggling to tackle the sovereign debt crisis, amid growing market worries about the health of the global economy.

“We forecast net profit to grow faster than revenue for the top three vendors despite unfavourable cross-currency movements and hedging losses during the quarter,” said UBS analyst Diviya Nagarajan in a note, referring to the October-December quarter.

She has a ‘neutral’ rating on Infosys and a ’sell’ rating on TCS and Wipro. Shares in TCS dropped 0.4 percent and Infosys fell nearly 20 percent in 2011, compared to a nearly 16 percent drop in the BSE IT index and roughly 25 percent loss in the BSE Sensex.

Infosys, which has a market value of nearly $31 billion, trades at 17.5 times its forward earnings, compared with nearly 19 times for Tata Consultancy and 15.5 times for Wipro, according to Thomson Reuters StarMine data.

Infosys’ operating margin at 28.2 per cent for the three months ended Sept 30 was the highest among its local peers and ahead of IBM’s 19.8 per cent with Tata Consultancy, which has recently seen its quarterly profit growing at a faster pace, at 27.1 per cent, the data show.

Source: http://www.deccanchronicle.com/channels/business/companies/infosys-q3-profit-seen-30-cent-757

Some outsourcing customers are asking software companies to bid for low-end back-office and application development projects through reverse auctions, adding to the competitive pressures for large companies like Tata Consultancy Services and Infosys.

For established outsourcing clients such as General Electric, as well as small- to -mid-sized firsttime outsourcers in the US, Europe and the Middle-East, reverse auctions are bringing down billing rates by up to 40% in some instances and 10-15% on average.

Unlike an ordinary auction where buyers compete to procure goods or services, in a reverse auction, sellers of outsourcing services are asked to compete with each other for a portion of a software or contact centre project.

As this auction using specialised software progresses, outsourcing firms try and outbid each other real time over the Internet, bringing down the rates rapidly during the process.

For example, instead of issuing a request for proposal, appointing an outsourcing consultant, and then going through various rounds of selecting an outsourcing vendor, clients ask tech firms to bid real time on the Internet. This helps them save on both time and procurement costs.

“Thank God, this is not a mainstream trend, and does not look like it will ever get there,” said a sales executive at one of the toptier Indian technology firms.

Reverse auction in IT sector still a niche trend

He requested anonymity because he did not want to upset his customers. For now, reverse auctions are not going to affect profit margins of tier-1 Indian tech firms because it’s still a niche trend and currency fluctuations will absorb most of the pricing pressures in the coming year.

“We saw some shades of this trend after the 2008 Lehman crisis, when banks and customers like GE put out a quarter of their budget for bidding through reverse auctions,” he added. Phil Fersht, founder CEO of sourcing advisory firm HfS Research, said nearly 75% of projects with a total contract value of over $5 million have some element of reverse auctioning between outsourcing vendors.

“This is very much commonplace today as buyers become experienced at procuring IT labour for project work. I can see it only increasing in the next few years as long as there continue to be so many suppliers,” he said. Partha Iyengar, vice-president and regional research director India at Gartner, said this trend is gaining visibility because of the economic slowdown.

“This is replicating retailing in the sourcing world. I would ask customers to be very careful while doing it this way.” He added that applying reverse auction to outsourcing could be dangerous for customers as they tend to be less rigorous while selecting vendors through this mode.

“Also, many consultants are trying to pitch this as a differentiated tool that could bring prices down magically,” Iyengar said. While carving out the commoditised portions of projects for reverse auctions is not good for large IT services providers, the mid-sized ones are not complaining.

Reverse auctions give vendors like Mindtree UST Global, Hexaware and others an opportunity to bid for projects from large outsourcing customers who have traditionally worked with tier-1 Indian companies like TCS and Infosys.

“Some customers are beginning to ask if it makes sense to bring IBM, Infosys and the like for commoditised projects with the overhead of managing tier-1 vendors,” Iyengar said. Not all software services firms are keen to enter a dogfight for projects put under reverse auctions.

“As a matter of principle, we have walked away from three such projects in past six months. One of the customers, a bank in the US, continues to work with us on other contracts,” said a senior executive at one of the top three Indian tech firms. Iyengar said as more low-end projects are automated and standardised, reverse auctions will only gain traction.

“For smaller companies that cannot afford high sales and marketing costs, this becomes a no-brainer.” Companies like Infosys are staying away from such bids as they prefer not to compromise on margins. And mid-sized rivals are more than happy to fill in.
“We are already seeing top-tier providers staying away from some of these low-cost bake-offs and the client choosing from second-tier providers,” Fersht of HfS Research said. For India’s over $70-billion IT industry, which is trying to cope with economic uncertainty in the top markets of the US and Europe, trends like reverse auctions threaten profit margins.

“If the outsourcing industry gets caught in a cycle where the lowest common denominator wins (i.e. the cheapest wage rates per hour), margins will decrease, quality of personnel will diminish and valuations will get hit,” said Fersht.

Source:http://economictimes.indiatimes.com/tech/ites/clients-ask-it-firms-like-infosys-tcs-to-bid-for-low-end-projects-through-reverse-auctions/articleshow/11429049.cms

The Sri Lankan IT sector which commands a high value addition compared with many other industries posted a revenue of US $ 250.3 million with an impressive 46% growth rate in 2010 as against the year 2009, according to a survey conducted by the Export Development Board.

“Even though the local industry is still considered to be in its nascent stage, it is happy to note that many high profile investors particularly Infosys-India and other IT related companies have expressed willingness to invest in the IT and Information Technology enabled service industry in Sri Lanka,” Export Development Board Chairman Janaka Ratnayake said.

In 2010, 147 companies contributed the export revenue of the industry while 137 companies contributed to the export revenue in 2007. It is relevant to note that some companies who had contributed to the growth in export revenue in 2007 have not exported services in 2010 while some companies have entered the export industry in 2009 and 2010.

According to the Sri Lankan Information Technology forecast, the addressable domestic IT market is expected to grow from US $ 393 million in 2011 up to over US $ 742 million over the next five year period. The survey has identified 147 ICT companies and 28 Business Process Outsourcing (BPO) companies in Sri Lanka and these two sectors consist of around 16,800 skilled workforce.

The top three markets for the Sri Lankan IT export are Europe (UK and Ireland), USA, South Asia and the major BPO markets are New Zealand, Asia mature markets, Middle East and Canada.

Source:http://www.dailynews.lk/2011/12/30/bus02.asp

Infosys Ltd has made another small acquisition, this time of an Australian-based outsourcing company. Portland Group Pty Ltd is a provider of strategic sourcing and category management services, with revenues of A$31.3 million (US$31.7 million) and an employee count of 113.

The acquisition price isn’t steep at around 1.2 times revenue and 5.7 times earnings before interest, tax, depreciation and amortization (Ebitda). According to a report by Prabhudas Lilladher Pvt. Ltd, Portland operates at an Ebitda margin of 21% and a net profit margin of 14.5%. Based on these numbers, the price-earnings multiple also looks reasonably cheap at 8.2 times. Given the state of the markets currently, it’s not surprising that Infosys has managed a good deal, especially for a company that operates on healthy double-digit margins. It’s a deal that works out to be earnings accretive.
Having said that, there’s nothing much for investors to get excited about. The acquisition won’t even consume 1% of Infosys cash balance of $3.5 billion (end-September cash balance at current exchange rates). And similarly, Portland’s revenue will be merely a drop in the ocean when compared to Infosys’ large size. Now that the company has been underperforming in the past many quarters, investors will clearly be looking forward to a substantive acquisition, which will drive the company back to industry-leading growth.

Still, the Portland acquisition is a move in the right direction and it’s heartening to note that Infosys is looking for companies to acquire and plug the gaps it has in its service lines. Portland will help the company increase its presence in the Australian region, as it counts several ASX 200 companies (an index of top Australian companies) as its clients. According to the Prabhudas Lilladher report, Portland has assisted around 50 of the ASX 200 clients as well as some other large customers in Australia and New Zealand.

On a year-to-date basis, Infosys shares have performed in line with the markets, falling by over 20%, even while shares of its top competitor, Tata Consultancy Services Ltd, have remained flat. This is because of the latter’s superior growth parameters in recent quarters. Some analysts believe Infosys’s financial underperformance will soon end and its shares will do better vis-à-vis peers. Investors, however, are yet to be convinced. Even in the past one month, the company’s shares have underperformed.

Source:http://www.livemint.com/2011/12/26223052/A-good-deal-for-Infosys.html

Infosys BPO, the business process outsourcing subsidiary of the information technology giant, has signed an agreement to acquire all the share capital in Portland Group, an Australian company, for A$34 million (Rs 180 crore).

This is its second acquisition in Australia, the first being Expert Information Services, which it got in 2003 for $23 mn. Founded in 1999, Portland Group provides strategic sourcing and category management services and employs 113 professionals. The Sydney-headquartered company reported revenue of A$31.3 mn in the year ended June 30.

According to Infosys [ Get Quote ], Portland’s expertise in strategic sourcing and category management services would complement its own global sourcing and procurement capabilities. The acquisition is expected to be completed by early January 2012, subject to certain conditions, it added.

“In a dynamic marketplace such as Australasia, this will strengthen the top-end of our service offering in the strategic sourcing and category management functions,” said Swaminathan D, managing director and CEO of Infosys BPO.

In 2007, the company acquired the captive BPO operations of Dutch consumer electronics giant Philips in India, Poland and Thailand. In December 2009, it acquired an Atlanta-headquartered BPO services provider, McCamish Systems, for $58 mn.

Infosys BPO reported revenue of $426.8 mn in the year ended March 31, 2011 and employs 20,620 people across 12 centres, including five in India. As on September 30, it had a cash reserve of Rs 18,601 crore (Rs 186.01 billion).

Source:http://www.rediff.com/business/report/infosys-bpo-buys-australian-firm/20111221.htm

Infosys BPO Limited, the business process outsourcing subsidiary of Infosys Limited, has signed a definitive agreement to acquire all of the outstanding share capital in Australia-based Portland Group Pty Ltd.

Portland Group is a leading provider of strategic sourcing and category management services. The acquisition is expected to be completed by early January 2012, subject to certain closing conditions being met. Portland Group was founded in 1999 and today counts several large ASX 200 organizations within the Australia region as clients. It is headquartered in Sydney and has offices in Melbourne, Brisbane, and Perth.

The company reported revenue of approximately AUD 31.3 million for the fiscal year ending 30 June 2011. The company employs 113 professionals. Swaminathan D, CEO and MD, Infosys BPO said, “We are delighted to have an outstanding team of domain specialists in Portland Group join us. This acquisition would significantly deepen our capabilities and domain expertise in our Sourcing and Procurement practice. Further in a dynamic marketplace such as Australasia this will strengthen the top-end of our service offering in the strategic sourcing and category management functions. This will also enhance the competitiveness, spread of offerings and global reach for our clients.”

Gavin Solsky, CEO of Portland Group Pty Ltd said, “We believe the combination of Portland Group and Infosys will provide our clients with a highly compelling proposition that does not currently exist in the sourcing and procurement services market in Australia. It will allow us to offer our clients a truly integrated and globally competitive solution to deliver procurement benefits in the most effective and efficient way possible.”

Portland Group’s expertise in strategic sourcing and category management services is expected to complement Infosys BPO’s global Sourcing & Procurement capabilities to create a market offering that will positively impact client’s business efficiency and effectiveness. The purchase consideration for the deal is AUD 37 million, subject to customary post-completion adjustments.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/Infosys-buys-Australia-based-Portland-BPO/articleshow/11181134.cms

Shares of Indian IT outsourcing firm Infosys ( INFY , quote ) have shed 5% over the past few weeks, erasing two weeks of progress and bringing the stock within range of its two-year low of $46.12. And yet, at least one analyst sees this as an opportunity to buy.

Sudarshan Sukhani of India-based charting firm s2analytics stunned CNBC India by remaining bullish.

“Traders need to focus on Infosys also,” he said. “Wipro ( WIT , quote ) remains a buy and so does INFY. In fact, all the four IT majors should be looked at only for buying on dips.”

Sukhani may be correct. Over the last two years, the stock has usually traded in the $55 to $60 range, so it could easily return to form unless we are back in a “new normal” mode.

However, even INFY management has taken a much more cautious outlook on the company’s prospects.
Analysts at JM Financial report that Infosys executives are concerned about the worsening business environment.
They expect delays in new client decisions and the ramp up of existing contracts, as well as flat or declining IT budgets.
JM Financial expects Infosys to report sequential revenue growth of 4% for the third fiscal quarter.
Even the JMF analysts remain positive on the stock from a 12-month perspective, expecting 15% to 20% returns.

Source:http://community.nasdaq.com/News/2011-12/infosys-management-gets-nervous-but-analysts-remain-bullish-infy-wit.aspx?storyid=109563

Not being able to find work after studies is not the worst nightmare for India’s rural youth: most of them have experienced it. But when 21-year-old Rajagopal finished his BCom in Anatapur, Andhra Pradesh, he didn’t give up hopes of finding a full-time job and go back to farming like his elder brothers.

Without a fixed income, he wasn’t going to be able to support his family or pay back his education loan. That’s when he contacted Rural Shores, a firm that had just set up a business process outsourcing (BPO) centre in Bagepalli district of Karnataka — two hours from his home in AP.

After an interview and a basic English test, Rajagopal was asked to join work the next day. “It was unbelievable. I didn’t know they were going to give me job”, says Rajagopal who now earns Rs 4,000 a month.

“All of us were trained to speak English and work on computers. We sit here and sort out the payrolls of HDFC’s employees. We don’t need to go to Bangalore or Hyderabad for a job now.” Founded in 2008, Rural Shores Business Services is one of the largest providers of BPO services out of rural areas, offering jobs to 1,000 educated youth.

Brainchild of former Ernst & Young partner VV Ranganathan, Mastek MD Sudhakar Ram, former MD of Xansa India Murali Vullaganti and CN Ram, president and group CIO of Essar Group, Rural Shores today serves over 20 clients including HDFC, Infosys, Wipro Technologies and Genpact. It aims to employ over 10,000 youth by 2014.

“There is a lot of energy here. After offshoring, we are now moving towards rural shoring. It offers great opportunity to the youth in rural areas, improves their skills and gives them a fixed salary”, says Vullaganti, CEO of Rural Shores.

“Attrition rate at rural BPO centres is a measly 3-5% compared to 50% at urban centres and operational expenses are 30 to 40% lower. This has encouraged many companies to shift to rural areas. The idea has become bigger than any of us ever imagined.”

In three years of business, Rural Shores has set up 10 centres across 7 states with investments from HDFC and Lokpal Capital Venture Fund. The firm plans to break even in 12 months. India for long has been the favourite destination for offshore BPO centres over the past several years.

For a generation of young graduates in urban areas, the BPO sector had offered immense opportunities and stable pay. Drawn to this promise, many firms are now seeking ways to set up BPO centres in rural areas. The clearest indicator is some of the top software exporters in the country entering this space.

In August this year, Wipro BPO, the BPO arm of Wipro Technologies had launched its first rural BPO centre at Manjakkudi Village in Tamil Nadu. In October, Infosys BPO had signed an agreement with the Andhra Pradesh government for rural BPO centres in 22 districts.

In the recent past, independent rural BPO initiatives like Desicrew, GramIT, Next Wealth, FOSTeRA and Tata Business Support Services have also got their feet wet. “Most youngsters you meet in an urban BPO would have migrated from a rural area in search of work. So, we thought, why not take the job to their villages and employ them there ? “, asks Manish Dugar, who heads BPO operat ions at Wipro. While erratic telecom and power connections continue to be a challenge in rural areas, Dugar says low attrition rates and infrastructure costs make rural BPO centres an attractive option.

Nasscom says IT-BPO firms plan to increase the total rural BPO employee base by more than 10 times over the next three years, from 5,000 now. So, where is this trend headed for? India may still be a strong player in the global BPO industry but HDFC Chairman, Deepak Parekh says that countries like China, Malaysia, Vietnam and Philippines have already begun to eat into the pie.

“India’s English speaking advantage is fast diminishing as countries like China are making huge efforts to increase their English speaking population. The BPO industry is costsensitive and clients will not hesitate to shift BPOs or move to countries that offer services at lower costs. One answer lies in encouraging more rural BPOs”, he said.

While most rural BPO centres tend to be cost-effective, the journey has not been a smooth one for initiatives such as the rural Shores.. “It has not been an easy ride. Rural Shores is yet to make any profits,” says Sudhakar Ram, co-founder of Rural Shores and Mastek MD.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/Infosys-Wipro-moving-into-rural-BPOs/articleshow/11092203.cms

Not being able to find work after studies is not the worst nightmare for India’s rural youth: most of them have experienced it. But when 21-year-old Rajagopal finished his BCom in Anatapur, Andhra Pradesh, he didn’t give up hopes of finding a full-time job and go back to farming like his elder brothers.

Without a fixed income, he wasn’t going to be able to support his family or pay back his education loan. That’s when he contacted Rural Shores, a firm that had just set up a business process outsourcing (BPO) centre in Bagepalli district of Karnataka — two hours from his home in AP.

After an interview and a basic English test, Rajagopal was asked to join work the next day. “It was unbelievable. I didn’t know they were going to give me job”, says Rajagopal who now earns Rs 4,000 a month.

“All of us were trained to speak English and work on computers. We sit here and sort out the payrolls of HDFC’s employees. We don’t need to go to Bangalore or Hyderabad for a job now.” Founded in 2008, Rural Shores Business Services is one of the largest providers of BPO services out of rural areas, offering jobs to 1,000 educated youth.

Brainchild of former Ernst & Young partner VV Ranganathan, Mastek MD Sudhakar Ram, former MD of Xansa India Murali Vullaganti and CN Ram, president and group CIO of Essar Group, Rural Shores today serves over 20 clients including HDFC, Infosys, Wipro Technologies and Genpact. It aims to employ over 10,000 youth by 2014.

“There is a lot of energy here. After offshoring, we are now moving towards rural shoring. It offers great opportunity to the youth in rural areas, improves their skills and gives them a fixed salary”, says Vullaganti, CEO of Rural Shores.

“Attrition rate at rural BPO centres is a measly 3-5% compared to 50% at urban centres and operational expenses are 30 to 40% lower. This has encouraged many companies to shift to rural areas. The idea has become bigger than any of us ever imagined.”

In three years of business, Rural Shores has set up 10 centres across 7 states with investments from HDFC and Lokpal Capital Venture Fund. The firm plans to break even in 12 months. India for long has been the favourite destination for offshore BPO centres over the past several years.

For a generation of young graduates in urban areas, the BPO sector had offered immense opportunities and stable pay. Drawn to this promise, many firms are now seeking ways to set up BPO centres in rural areas. The clearest indicator is some of the top software exporters in the country entering this space.

In August this year, Wipro BPO, the BPO arm of Wipro Technologies had launched its first rural BPO centre at Manjakkudi Village in Tamil Nadu. In October, Infosys BPO had signed an agreement with the Andhra Pradesh government for rural BPO centres in 22 districts.

Source:http://economictimes.indiatimes.com/tech/ites/many-big-it-firms-like-infosys-wipro-genpact-moving-into-rural-bpos/articleshow/11087971.cms

Infosys Ltd.’s business process outsourcing company McCamish Systems LLC Wednesday said it had entered into a strategic business alliance with Pegasystems Inc. to offer services to the insurance and retirement services industries.

No financial terms of the deal were disclosed.

While McCamish Systems specializes in life insurance and retirement business process, Pegasystems offers business process management and software for customer management, a press release said.

Source:http://online.wsj.com/article/SB10001424052970203413304577083891683593810.html

Today announced that it has been awarded the Corporate Social Responsibility (CSR) award at the 8thNational Outsourcing Association (NOA) Awards, 2011in London for ‘Project Genesis’, a community project entirely sponsored by Infosys BPO.

The awards recognize the efforts of companies and individuals who have demonstrated excellence in the outsourcing industry. Project Genesis aims at improving the employability of students from Tier 2 and 3 towns in India through focused training interventions conducted through the medium of their college academicians.

The curriculum of Project Genesis includes two modules: ‘Language Enhancement’ and ‘Analytical Skills’. The Language Enhancement module aims at improving the written and spoken communication capabilities of students from these towns. The Analytical Skills module aims at improving the aptitude capability of these students.

The program is conducted in four well planned phases such that the impact on the students is highest, and that provides them with the proficiency required to enter and perform well in this dynamic industry.

Speaking about the award, Raghavendra K., Head – Human Resources Development, Infosys BPO said, “We are delighted to have received this award. We consider this award an acknowledgement that Project Genesis is heading in the right direction, and we are truly proud of this initiative, which is bound to aid students from Tier 2 and 3 towns in India, and also the BPO industry as a whole. Over the past six years, Project Genesis has helped us reach out to over 85,569 students through 3,138 academicians in 1,594 educational institutions across 7 states in India.” Project Genesis follows the ‘Train the Trainer’ model, in which academicians from identified colleges are trained over a period of 10 days on the Global Skills Enhancement curriculum at Infosys campuses. The complete training program is sponsored by Infosys BPO with no expense being incurred by the participating academicians.

Source:http://www.indiaprwire.com/pressrelease/information-technology/20111129104920.htm

Infosys BPO Ltd. today announced the launch of its ‘Alternative Delivery Model’ BPO strategy at Kaup in Karnataka. Kris Gopalakrishnan, Executive Co-Chairman, Infosys Ltd. and Swami Swaminathan, CEO and MD, Infosys BPO, launched the Alternative Delivery Model and inaugurated the HR shared services operation in collaboration with Infosys BPO’s service partner, Desicrew.

The focus areas of this Alternative Delivery Model include providing the next frontier in flexibility & competitiveness for clients, enhancing the ability to create a competitive model for outsourcing and creating a sustainable model to access and provide long term career options for BPO talent in India.

Kris Gopalakrishnan, Executive Co-Chairman, Infosys Ltd. said, “We are pleased to announce the launch of the ‘Alternative Delivery Model’, an important component of our strategy, wherein we are constantly looking for the next wave of differentiation and benefits for our clients. Our success in establishing and commencing live service from a Tier 4 town in India, based on a model of collaboration with an outsourced service provider, reiterates our long-term vision and commitment to rural BPO.”

“Over the last few years, Infosys BPO has invested extensive time and effort towards continually evolving our operating models. Subsequent to constant introspection on our delivery model, and regular analysis of the business landscape of our clients, we decided to enhance our delivery capabilities in Tier 3 and Tier 4 towns through partnerships with service providers. We expect this model to play a huge role in accessing and retaining BPO talent in India. We have established a network of partnerships with service providers such as Desicrew and other firms to enable us to do the same,” said Swami Swaminathan, CEO and MD, Infosys BPO.

In the coming months, Infosys BPO expects this model to play an important role in delivering value to its clients based on their changing needs. The company also expects this model to significantly accelerate access to talent that may not be geographically mobile. Besides, the talent pool in these towns will hugely benefit by learning about and working on world-class processes and technologies, enabling them to build a ‘Career for Life’ in the BPO industry.

Source:http://www.4-traders.com/INFOSYS-LTD-9058861/news/INFOSYS-LTD-Infosys-BPO-Launches-an-Alternative-Delivery-Model-as-Part-of-its-BPO-Strategy-13895615/

Infosys, the technological giant is again seeing volatility in customers’ decision making in IT spending.

In an interview, Co-Chairman S. Gopalakrishnan said, “Probably there will be some budget cuts for next year,” according to a report by Bloomberg.

In the past four quarters, there was a constant decrease in Infosys’s sales as economic slowdown forced companies to reduce their outsourcing contracts.

Earlier this year, S.D. Shibulal, the new CEO had also said that clients might curb their budget plan on information technology this year.

According to the CEO, the economic slowdown in the US and Europe is the main cause of the delay of the spending decision for each client. He also added, the company is quite focused on its target of $7.13 billion for the fiscal year through March, growing in a range of 18 per cent to 20 per cent from a year earlier.

Earlier the company had announced that it would like to witness more acquisition in Europe and Japan and in industries including healthcare and public services. During the announcement, Gopalakrishnan said in a media statement that by investing in new industries and geographies, Infosys would look to build multiple engines of growth over the next 3-5 years.

Infosys is ready to expand by spending $700 million on acquisitions in areas where the company has “very small” exposure, according to Gopalakrishnan.

Acording to the company, customers in the healthcare industry had contribution of 1.8 percent of Infosys’s revenue in the quarter ended Sept. 30, compared with 35.1 percent contributed by customers in the insurance, banking and financial services industry.

No matter how clients may behave finally at their IT spending, the company still believes in bringing a change in its sales growth in near future.

Source:http://www.itpro.in/626845/infosyss-clients-may-cut-it-budget-next-year-as-well

Infosys Ltd, India’s second-largest software exporter, said growth may slow next year because of a possible reduction in technology spending by clients.

Infosys is seeing “volatility” in customers’ decision-making, co-chairman S Gopalakrishnan said in an interview in Mumbai yesterday. Sales growth at the Bangalore-based company fell in each of the past four quarters as a global economic slowdown prompted companies to reduce their outsourcing contracts.

“Probably there will be some budget cuts for next year,” said Gopalakrishnan, 56. “In the short term, you will take a hit. You can’t restructure your business, look at new areas fast enough to replace everything that is lost.”

The comments are the first the code writer made since it slashed the dollar-based sales forecast for the year ending in March last month while increasing the rupee estimates because of a weaker currency. Infosys, which has the biggest cash pile in India’s computer-services industry, aims to expand by spending $700 million on acquisitions in areas where the company has “very small” exposure, the former chief executive said.

“Budgets in Europe will come down quite substantially,” said Ankur Rudra, an analyst at Ambit Capital Pvt in Mumbai, who has a “sell” rating for Infosys shares. Budget reductions in Europe will be bigger than among the US companies, he said.

Rupee, forecast Last month, Infosys decreased its forecast for sales in dollar terms in the year ending March 2012 to a range of $7.08 billion to $7.2 billion, from a range of $7.13 billion to $7.25 billion it estimated in July.

Infosys raised the guidance in rupee terms to between 335 billion rupees and 340.9 billion rupees, from an earlier forecast for 317.8 billion rupees to 323.1 billion rupees.

Last week, the rupee fell to the lowest since April 2009, which helps inflate the repatriated value of overseas sales at Infosys and other Indian software companies.

Gopalakrishnan said some of the budget cuts may be offset by customers allocating a greater portion of their spending to offshore software-service providers.

Infosys is looking to acquire companies that specialize in providing technology services to health-care companies and utilities, companies that build software platforms, or those based in non-English speaking countries, including Germany, France and Japan, Gopalakrishnan said. Infosys is looking at three to four targets at a time, he said.

Acquisition targets “We are seeing volatility in all sectors except some, like utilities and health care, which are countercyclical,” he said. “But our exposure to these sectors is very small. We want sectors that are countercyclical to become a larger part of our portfolio.”

Customers in the health-care industry contributed 1.8 percent of Infosys’s revenue in the quarter ended September 30, compared with 35.1 percent contributed by customers in the insurance, banking and financial services industry, according to the company.

Global IT spending Infosys had 185 billion rupees ($3.7 billion) of cash, near-cash items and short-term investments at the end of September, according to Bloomberg data.

Tata Consultancy may spend as much as $500 million on an acquisition in Germany or Japan, Chief Executive Officer N Chandrasekaran said in February.

Growth in worldwide spending on IT goods and services by businesses and governments, which includes computer equipment and outsourcing, will slow to 5.5 percent in 2012 for a total of $2.15 trillion, from estimated growth of 11 percent this year, according to a Sept. 16 Forrester Research Inc. report.

The outlook for IT demand in 2012 is “not bright,” as weak economic growth in the US and Europe will make business and governments more cautious about investing in technology, according to the report from the Cambridge, Massachusetts-based researcher.

Source:http://timesofindia.indiatimes.com/tech/news/software-services/Infosys-sees-budget-cuts-in-2012/articleshow/10739136.cms

Indian equities are among the worst performers this year compared to other big emerging markets like China and Russia. The Bombay Stock Exchange`s Sensex has lost more than 13% year to date, while the Shanghai market is down about 9% and the Russian index down 10%.

India faces many short-term macro challenges including a string of corruption scandals and persistently high inflation. Fears that rising borrowing costs and an overall global slowdown will hurt corporate profits continue to weigh heavily on sentiment towards Indian equities.

However, the long-term story in India continues to be attractive, and there are a few Indian firms posting strong performances despite global uncertainties. But investors must understand the unique positioning of companies considering the backdrop of global macro issues. Investing without a clear understanding of the environment can lead to sub-par performance.

With that in mind, here are two key themes to consider and assess:

Strong Consumer Consumption
Unlike China, India has one of the youngest population profiles in the world, with more than 70% of the population under 35, according to the latest Indian Census. As economies grow, the middle-class tends to expand and that is what is happening in India today. Citigroup estimates that the middle class (people with an income of between USD 6,000 and USD 30,000 a year) is around 160 million, and within five years, this is forecast to grow to 267 million people.

One only needs to walk down the bustling streets in any major Indian city to see that consumption is alive. While high inflation certainly does negatively impact middle class consumption, in the long term, a favorable demographic bodes well for economic growth over the next 20 year.

As a result, look at companies that are poised to capitalize on the Indian consumption story. Companies like Hindustan Unilever, the Indian unit of Unilever, which sells personal care products and packaged food, may hold promise for investors. The firm reported a 21% growth in profit over July-September this year with sales expanding 18%, and has been raising prices, which should help boost value. The stock is one of the best performers on the BSE Fast Moving Consumer Goods Index.
The transportation industry (auto and motorcycle) sales tend to rise as the middle class expands. According to the Society of Indian Automobile Manufacturers, India`s automobile industry is expected to grow 11-13% in the fiscal year ending March. India`s largest motorcycle maker,Hero MotoCorp (formerly Hero Honda Motors) continues to perform well; the company posted a 19% rise in quarter two profit.

Additionally, Hero MotoCorp`s recent break from its 26-year joint venture with Japan`s Honda Motors is seen as a positive as it gives the firm the opportunity to explore new products and export markets.

Investors should note that even for these strong companies, raw material costs, high inflation and weak currencies, are all legitimate concerns. However, these concerns are in the short to medium term. In the long term, we see demand that is likely to thrive.

India`s Niche in the Tech World
Despite an uncertain global environment, Indian IT firms still have managed to hold their own. The recent July-September quarter results reflected stable growth for Indian IT companies with no major downside surprises.

Over the years, Indian tech companies have successfully found a niche in the back office of companies in the more established economies. Indian tech firms continue to provide low costs IT solutions and have been able to maintain global economic market share. The cost differentials are significant enough for services to still be priced at a level that is highly competitive relative to other countries.

There is recognition among India IT giants that they need to go beyond just low cost outsourcing. Some, like TCS, are adopting strategies to climb up the value chain by offering higher-value services.

Infosys, a company that provides business consulting and technology outsourcing services, continues to perform well. While many Indian companies are highly diversified, Infosys continues to focus on its core strength and target its service offering.
Another tech company, Wipro, is beginning to show encouraging volume growth of 6% quarter on quarter, and increased revenue from all geographies despite a difficult global environment. In its latest second quarter report, revenue from America and Europe increased by 2.2% and 6.8% quarter on quarter, respectively.

Long-term Positives
However, the short-term issues facing India are serious. Headlines of fresh corruption scandals continue to weigh on investor sentiment.
As with any emerging market risks have to be factored into investment decisions. But short-term concerns must be measured against long-term opportunity. India, while facing challenges, can be a profitable investment for prudent investors. Choose wisely and with a view towards participating in future trends. That`s the best strategy for maximizing the odds for investment success.

Source:http://www.moneycontrol.com/news/fii-view/india-stillgood-long-term-bet-expert_614899.html