Posts Tagged ‘Software’

Now, leading IT firms like TCS and Wipro pay upfront to win big contracts

July 30th, 2014

The battle for winning information technology contracts is getting fiercer as leading software exporters are either paying money upfront or buying assets to swing the deal in their favour, a trend some industry executives and experts believe will gain traction in a year that has $55 billion (Rs 3.3 lakh crore) of contracts up for renewal. Outsourcing38

At least four large deals bagged by the country’s largest IT firms, including TCSBSE 0.18 % and WiproBSE -0.85 % this year, have seen the homegrown firms edge past competition from global outsourcing firms after innovative structuring of contracts.

“Any deal you do, there will be a certain level of structuring that goes in,” said TK Kurien, chief executive officer, Wipro, after the country’s third-largest software exporter paid about $200 million to buy the IT subsidiary of Canadian utility Atco as part of its single-largest outsourcing deal worth $1.2-billion.

In April, TCS signed an agreement with Mitsubishi under which the country’s largest software company merged its Japanese subsidiary with IT Frontier Corp (ITF), a unit of Mitsubishi. The deal was structured in such a way that gives TCS 51% holding in the new entity.

“It’s very much a trend,” said Sid Pai, who heads the Indian arm of outsourcing advisory TPI. “As deal economics move inexorably toward usagebased models to include the adoption of cloud technology, service providers will have to absorb an ever increasing portfolio of client hardware and software and human resource assets,” said Pai.

The strategy of paying cash upfront is not an entirely new trend. Back in 2007, when ABN Amro signed an over $1 billion contract with InfosysBSE 0.05 % and TCS, the deal involved transfer of people and assets, and some upfront payment. Then, in 2012, IBM beat both Infosys and Wipro to win a billion-dollar contract from Mexico’s biggest cement firm Cemex.

As leading IT firms now bid against global outsourcing firms, homegrown IT majors have started structuring deals to stay competitive. In May, the country’s fourth-largest software services firm, HCL TechnologiesBSE -0.95 %, bagged a $500 milion contract from PepsiCo for infrastructure management services, thereby pipping IBM. Experts said the Gurgaon-based company’s decision to sweeten the deal by putting in money upfront helped the company seal the seven-year deal. The money paid upfront to a client is a part of the sum which the IT outsourcer expects to spend over the total deal.

“It is not a standard kind of payment term,” said Suresh Senapaty, chief financial officer at Wipro, adding that buying the captive IT centre brings its own benefits. “Depending upon how the customer is looking at, it varies. I won’t say across the board but there are quite a few deals where you are able to protect your downside and able to structure the deal to take it forward by putting something upfront,” Senapaty told ET. However, some experts doubt if the structuring done by companies can be dubbed as a secular trend and said that taking “over assets and people is the DNA of outsourcing.”

“Given the maturity of the outsourcing market, most providers apply a portfolio management approach to sourcing large deals based on their penetration of specific verticals,” said Tom Reuner, an analyst at Ovum, a Londonbased IT research firm.


‘BPO can create jobs, contribute to economic growth’

July 15th, 2014

Government officials have said private sector should tap the prospect of Business Process Outsourcing (BPO) for employment generation.Outsourcing21

Speaking at a workshop on ´Prospects and Challenges of BPO and Software Outsourcing in Nepal´, Minister for Science and Technology Keshav Prasad Bhattarai said the government was ready to help IT companies to resolve problems related to BPO. “IT companies need to invest more in this sector and stop brain drain by creating employment opportunities at home,” said Bhattarai.

IT companies in the country have been facing problem in getting skilful workforce due to brain drain of youth.

Stakeholders attend a workshop on ‘Prospects and Challenges of BPO and Software Outsourcing in Nepal’ organized by the Department of Information Technology (DoIT) in Thapathali, Kathmandu on Monday.(Republica)

“Most of the IT graduates prefer to go abroad as they earn much more there. If BPO companies create better job environment there, we can retain such talents,” Karmath Dangol, vice president of engineering at, said.

According to Karmath, Nepal holds great prospect for BPO as the country has large number of IT graduates, low labor cost and low cost of running business compared to other countries. Likewise, he cited lack of top talents, growing brain drain, low salary, difficulty in closing companies, lack of investment opportunity in the country and lack of industry meet ups as the challenges facing the BPO industry.

He also said companies should focus on Business Process as a Service (BPaaS) now. BPaaS is the delivery of BPO services that are sourced from the cloud and constructed for multi-tenancy.

Manohar Kumar Bhattarai, former vice chairman of High Level Commission for Information Technology said BPO is an opportunity for Nepal as it can create youth employment and contribute in economic growth.


Ankur Bhatia sets new standards in global outsourcing with Rs 12 crore venture

July 15th, 2014

Outsourcing20In 2003, cheap labour and talent pool made India the world’s call centre hub, with BPO majors making a killing. It was at this time that Ankur Bhatia, then 31, created a niche market by focusing on core competence and catering to the small needs of large organisations.

Today, the Gurgaon-based Navigant Technologies services about 30 clients spread across North America, Australia, the UK and Singapore, and reported a turnover of Rs 12 crore in 2013-14. “I started with Rs 25 lakh from my own savings and made inroads with contracts that big players were not interested in and those that required specialised skills,” says the now 42-year-old founder CEO of Navigant Technologies.

What worked in Bhatia’s favour and made him stand out in the crowd was his understanding of the manufacturing, IT, software and telecom industries, as well as the limitations of BPO companies. “I had worked across business verticals and had held senior sales positions with many international organisations, including HCL, PTC, Digital Equipment Corporation and Trivium Systems.

I realised that most call centres were not being able to support knowledge-based selling and seemed to buckle down if something went off the calling script,” he says. So he recruited 30 professionals with core competence in key areas to bridge this gap.

Bhatia, a commerce graduate with an MBA from Fore School of Management, New Delhi, says what he learnt on the job made a world of difference when it came to running his business. “The go-getter attitude propelled me towards conquering the unknown,” he says.

Innovation also played a key role. At a time when language factories were set up to transform a ‘Sanjay Mishra’ to ‘Sean’ responding to calls from Europe and the US with a tortured Americanised twang, Bhatia pitched for companies with a large Indianorigin customer base overseas.

“It was common knowledge that the calls were being handled out of India and, therefore, many companies faced a backlash from their customers. As an industry first, we offered services where our executives would speak with an accent that would be understood by customers all over the world, but would not adopt pseudo names or an accent they were not comfortable with. I also promised an overhaul in our strategy if it did not work,” says Bhatia. Fortunately, for him, this initiative was well-received and the clients witnessed greater businesses growth.

Now, about half of Navigant’s clients are in the utilities sector, followed by real estate, telecom, IT and software, and pharma. It provides services such as market research, Internet marketing, CRM customisation, multi-lingual support, and database cleaning and validation. Navigant also has a large client base in the domestic market, catering to both government agencies and private players.

“We are, perhaps, the only player in the mid-sized segment with 800-plus seats and are looking to grow by another 1,000 this year. In the next two years, we may consider securing venture capital funding to grow to the next level,” he says.


Infosys beats estimates, Q1 profit rise 21.6 pc

July 11th, 2014

Software behemoth Infosys posted a YoY growth of 21.6% with Net profit at Rs 2,886 crore for the quarter ended June 30, 2014 riding on outsourcing contracts it bagged.Outsourcing17
Beating estimates and despite high employee attrition, Infosys revenues were Rs 12,770 crore for the quarter, registering QoQ growth of 0.8%. Q1 revenue growth was at 13.3% YoY in INR terms.

India’s second largest software exporter’s FY 15 revenues are expected to grow 7%-9% in USD terms; 5.6%-7.6% in INR terms.

Its Earnings per share (EPS) was Rs 50.51 for the quarter ended June 30, 2014

According to the company, Liquid assets including cash and cash equivalents, available-for-sale financial assets, certificates of  deposits and government bonds were Rs 29,748 crore as on June 30, 2014 as compared to Rs 30,251 crore as on March 31, 2014.

Infosys and its subsidiaries added 61 clients during the quarter and 11,506 employees (gross) during the same period.

The company has 161,284 employees as on June 30, 2014 for Infosys and its subsidiaries.

“We continue to enjoy the confidence of our clients by demonstrating superior execution capability and value realization.” said S. D. Shibulal, CEO and Managing Director.

“As I transition the CEO mantle to Vishal, I am confident that he will leverage this strong foundation to take Infosys to greater heights. I wish him the very best.”

U. B. Pravin Rao, COO, said: “We saw positive trends in our large deal wins during the quarter. We believe that this momentum will hold us in good stead as we focus on increasing volumes.”

“Employee attrition rates are worrisome and we are implementing various initiatives to retain good talent,” he said.

Rajiv Bansal, CFO, said: “We improved operational performance as a result of our cost optimization initiatives and a focus on increasing productivity and utilization. This partially offset the impact of compensation increases for our employees this quarter.” said . “It will help us invest in areas that will accelerate growth.”


IBM to invest $3B in R&D for next-generation chips

July 11th, 2014

IBM is going to pump $3 billion over the next five years into a research and development plan that advances its chip smarts as the company addresses the rise of cloud computing and big data. Basically, IBM hopes this new research initiative will eventually lead to semiconductors that measure only 7 nanometers, which is tiny compared to their current size of 22 nanometers. The smaller the chip, the faster it can be, which is important to cloud computing and big data, both of which require powerful compute.Outsourcing15

Additionally, IBM is preparing for a future in which silicon isn’t even needed for chips, as its research endeavor involves looking into other manufacturing areas like quantum devices, carbon nanotubes, photonics, graphene and other exploratory areas of manufacturing.

It’s interesting to note that while IBM is making this broad announcement, which should keep other chip makers like Intel on their toes, the focus of Big Blue’s news is on research and development and not necessarily the actual production of the supposed chips of the future.

In June, it seemed as if IBM was on the verge of selling its chip-making prowess to GlobalFoundries, and today’s news doesn’t throw that out of the water yet. IBM can still end up outsourcing its chip-manufacturing and save some cash while it concentrates on the design at home.

While the company is almost finished with selling off its server business to Lenovo in a $2.3 billion deal first announced in January that is still pending U.S. regulatory approval, today’s announcement makes it seem as if IBM is not ditching the hardware scene altogether, it’s just repositioning itself to deal with the future of chip making.


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.


Bulgaria’s IT Market Continues to Grow

July 11th, 2014

The IT market in Bulgaria continues to grow, shows a survey of Computerworld magazine on the Top 100 ICT companies in the country. Outsourcing12

In 2013 the turnover of the largest companies in the sector surpassed BGN 1.57 B and grew by 21%, compared to 2012.

One third of the market is for distribution of hardware, software and communications products. The second spot is for the outsourcing services with 17.2%. Third is the system integration sector with 17.2% of the IT market in Bulgaria.

The segment of export of IT products and solutions posted a record growth of 36%, shows the Computerworld survey. It is one of the main driving forces of the sector in the country and accounts for one third of its total revenues.

As a whole, however, the IT sector, together with telecoms, accounts for only about 5% of Bulgaria’s GDP, with a revenue of BGN 3.955 B.

Compared to the IT sector, in 2013 the telecom services sector posted a 10% drop, year-on-year – mostly because of shrinking consumption of such services and the regulatory pressure for lower prices.

Leader in the Top 100 list is the outsourcing center of Hewlett-Packard – Global Delivery Center with income of BGN 233.1 M. It is followed by the distributors of hardware equipment Most Computers with income of BGN 152.2 M and Polycomp with BGN 128.3 M, the Bulgarian producer of cash registers, electronic scales, digital maps and POS terminals Datecs with BGN 106.2 M and another distributor – Solytron with BGN 104 M.

The top 10 is completed by the software and hardware distribution company Asbis, the system integrator Stemo, the supplier of telecommunications equipment Telelink and the Bulgarian branches of the developers SAP and VMWare.

In the Computerworld Top 100 2013 survey took part 106 IT companies and 12 telecommunications companies.


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