Posts Tagged ‘TCS’

Why IT Honchos are Queuing up to Meet Barack Obama

January 27th, 2015

The US is the biggest market for India’s over $100-billion outsourcing industry and it also contributes to the creation of lakhs of jobs in the IT sector. Unsurprisingly, the delegation of Indian CEOs meeting US President Barack Obama is packed with IT honchos. Infosys founder NR Narayana Murthy, current CEO Vishal Sikka, M&M chief Anand Mahindra, who is also the chairman of Tech Mahindra, and Cyrus Mistry, who as head of Tata Sons is also the chairman of India’s biggest outsourcer TCS, are all representing India Inc at the meeting with President Obama on Monday.Outsourcing57

Here’s why the IT industry is key to Indo-US trade:

1) The IT industry is estimated to contribute nearly 25 per cent to total domestic exports (merchandise plus services).

2) Indian firms get a lot of business from US, while American companies benefit from lower costs in the country; they also gain access to extensive intellectual capital, which enables them to concentrate on their core competencies.

3) Initially, Indian IT firms provided low-cost technical support and fixed software bugs, but now they optimise financial transactions and develop advance technologies. So, companies are moving up the value chain.

4) Indian firms are increasingly expanding their presence in the US by setting up onshore businesses. Most of the leading Indian IT companies have set up their sales and marketing offices and delivery operations in various US cities.

5) Till 2010-11, Indian IT-BPO sector supported 2.80 lakh jobs in the US, according to Nasscom. Over the last few years, the trend has picked up. Infosys hired 2,000 employees in Wisconsin in 2012; TCS hired 1600 in 2013-14 and plans to add another 2,000 in 2014-15.

6) The IT industry leads in total merger and acquisitions with US companies. Between October 2012 and December 2014, the IT sector led the M&A pack with 29 out of 71 total outbound acquisitions in the US, according to a study by EY on behalf of industry body Ficci.

7) US is likely to continue to be the favourite destination for Indian IT-BPO players because of large scale reforms in the healthcare segment (being undertaken by the US government) and Big Data and automation wave is luring tech companies.

8) According to a study by Egon Zehnder, in 2011 S&P 500 companies had more Indian CEOs than of any other nationality except American. Shantanu Narayen (CEO, Adobe Systems) and Satya Nadella (CEO, Microsoft) are some of the leaders heading global US tech firms.

9) People of Indian origin dominate US-based tech-start-ups funded by immigrants. According to an EY-Ficci study, India-born entrepreneurs represented 33 per cent of such companies.

10) A significant number of workforce in tech companies such as Google and Microsoft are of Indian origin. Sundar Pichai is leading Google’s Android, Chrome and Google app divisions; Amit Singhal is heading Google’s core ranking team and Krishna Bharat is leading Google’s news product team.

Source:http://profit.ndtv.com/news/corporates/article-why-us-is-important-for-indias-it-industry-733916

TCS profits rise on US, European demand

January 16th, 2015

India’s biggest outsourcing firm Tata Consultancy Services has reported a 5.1 per cent rise in quarterly net profits, driven by demand in its key markets of the United States and Europe.???????????????????????????????

The firm, commonly known as TCS, inked seven major agreements in the final quarter of 2014 and has ‘a strong pipeline of deals,’ said chief executive N Chandrasekaran.

Net profit for the three months to December 31 rose to 54.44 billion rupees ($A1.07 billion), from 51.80 billion rupees a year earlier, the firm said.

That missed the 54.8 billion-rupee median forecast from 37 analysts surveyed by Bloomberg.

The IT giant’s revenues also rose to 245.01 billion rupees in the October-December quarter, against 212.94 billion rupees a year ago.

Revenues were hit by ‘sharp cross-currency movements,’ according to chief financial officer Rajesh Gopinathan, who added that margins were maintained through ‘discipline and rigour’.

India has become a back office to the world as companies have sought to cut costs by outsourcing some functions to its industrious, English-speaking population.

But the sector has been hit by hard times as some US and Britain-based clients were reluctant to fix new budgets for IT-related services in the face of weaker growth.

That trend now seems to be reversing, with TCS’s main rival Infosys last week reporting a better-than-expected 13 per cent jump in third-quarter net profit.

TCS’s Chandrasekaran on Thursday also dismissed speculation the company is planning large-scale layoffs.

‘TCS is in high growth mode and there is no truth in the rumours of layoffs,’ he said.

In fact, the company ‘was likely to hire more’ than the 55,000 people it had announced earlier, he added.

In the just-ended quarter, the IT giant added 16,561 people to its workforce, taking its employee base to 318,625.

Source:http://www.skynews.com.au/business/business/world/2015/01/16/tcs-profits-rise-on-us–european-demand.html

Indian IT staff could unionise, putting offshore model into question

January 8th, 2015

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

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

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

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

Unionisation a major shift in Indian IT

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

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

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

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

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

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

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

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

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

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

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

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

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

Wipro spending $200 million on building next generation platforms

December 16th, 2014

Wipro is spending more than $200 million annually on building next generation platforms that focus on disruptive technologies including cognitive technologies, automation and machine-to-machine learning as the country’s third-largest software firm seeks to edge out competition in winning large deals. Outsourcing10

Over the past two years, the company has ploughed $400 million in developing about ten intelligent solutions, some of which it has started using internally and a few it is using for customers, said a senior executive. “Wipro has significantly stepped up its funding of the R&D projects in the last couple of years,” said chief technology officer RK Sanjiv.

“This is to not just ensure that we become the next generation services firm of future, but also to be future-ready for our customers,” said Sanjiv, declining to put a number. But he said the company invests more than the industry average in these initiatives.

This focus on building intelligent platforms coincides with the stint of Rishad Premji, son of chairman Azim Premji, as head of strategy, making some believe the younger Premji could be potentially driving this change at the Bengaluru based company.

Incidentally, it was Azim Premji who brought Tata Consultancy Services veteran Satishchandra Doreswamy, now chief business operations officer at Wipro, in 2011 to help transform the company by putting together a team of engineers to focus on these technological platforms. Wipro’s thrust on building internal intellectual property-led platforms comes at a time when cross-town rival Infosys, under new chief executive Vishal Sikka, too is aggressively talking about building platforms.

Homegrown technology companies invest on an average 2-3% of revenue on building platforms. Wipro’s revenue for the fiscal through March 2014 was $6.7 billion, and if it invests more than the industry average, it is putting in $200 million every year in new solutions.

Wipro is now a team of “hundreds of engineers and research scien tists”, according to Sanjiv. His mandate is to focus on three key themes: cognitive technology, machine-to-machine learning and in building smart devices.

According to some experts, information technology companies are investing internally in building these solutions because of the desire to win large outsourcing deals as every customer is looking to its IT vendor to bring in more valuegeneration business rather than merely maintaining the back-end technology infrastructure.

Doreswamy last month told ET that Wipro’s energy and utilities vertical managed to bag its $1.2 billion, 10-year outsourcing deal with Canadian utilities firm ATCO on account of the “transformational benefits” it could help offer.

“(Two other) examples of Wipro’s solutions are Base and Fixomatic suite of tools,” said Tom Reuner of London-based IT research firm Ovum. “The direction of this journey is to protect margins by automating low-level tasks while hiring and retaining talent for value-creating activities.”

Reuner and other experts said the focus of software exporters on intelligent solutions is also driven by their desire to increase revenue without increasing headcount.

In September, ET reported about Wipro’s plans to start with its most ambitious reorganization exercise, under which it aims to become a leaner 1,00,000-strong company from the current levels of 1,52,000 in three years.

The company plans to do this without resorting to mass layoffs but by “selectively filling” in roles of executives who leave.

As Wipro seeks to embrace automation and artificial intelligence, the company can do away with engineers who are currently doing basic-level repetitive work. Already, Wipro has started using, internally, a cognitive platform for its help desk system, thereby simplifying work process for employees. One other intelligent technology platform which the company has started work on for its retail clients is “Wipro Sight.”

Source:http://timesofindia.indiatimes.com/tech/tech-news/Wipro-spending-200-million-on-building-next-generation-platforms/articleshow/45523422.cms

Shares In India’s TCS Fall After Indicating ‘Weakness’ In Financial Services, North American Businesses

December 16th, 2014

Shares of Tata Consultancy Services Ltd., India’s largest software services company by revenue, took a beating Monday after warning of slackening demand among financial services clients, the company’s biggest business segment. Shares fell 90 rupees at close of trading in Mumbai, or nearly 3.7 percent, to 2,365 rupees from 2,455 rupees at Friday’s close.Outsourcing20

Demand in North America and Britain — the Indian IT outsourcing provider’s largest markets — will also be affected by “seasonal weakness” as well as because of cuts in spending by clients in the insurance sector, TCS had said in a statement on Friday, after market hours. The seasonality refers to fewer working days in the holiday season and furloughs that are seen as reducing the number of billable days of work during the October-December quarter.

“Q3 is a seasonal quarter, and our revenue is going to reflect, unfortunately, the negativity of this seasonality, Rajesh Gopinathan, TCS’s chief financial officer, told analysts Friday.

Manik Taneja, an analyst at Mumbai brokerage Emkay Global Financial Services, said in a note, after the briefing: “TCS’s slight cautiousness on demand (indicating that ‘demand momentum has seen some slackening in recent months’) coupled with weak revenue performance in Dec’14 quarter will drive revenue downgrades for TCS as well as the sector as a whole.”

While the underlying macro-level reasons for growth in Indian IT companies’ outsourcing business remain strong, TCS’s commentary suggests that prospects for strong acceleration in demand seem increasingly remote. Heading into its last quarter of the current fiscal year, which ends March 31, the $118 billion outsourcing industry is not likely to grow faster than last year, Taneja said.

Referring to the analyst briefing, Taneja wrote in the note: “TCS’s indication of ‘relative mutedness’ in constant currency revenue growth is a tad disappointing.” While the company didn’t give any detailed outlook for the calendar year 2015 or the fiscal year 2016 that ends Mar. 31, 2016, TCS indicated some “demand slackening in recent months,” the analyst wrote.

“This in our view poses downside risks to growth estimates not only for TCS but for the sector as a whole,” he said in the note.

Sales to financial clients, accounting for over 40 percent of the company’s revenue, “continues to be impacted by weakness in insurance and products,” TCS said, in a statement to the Bombay Stock Exchange. North America accounts for more than half of the company’s revenues. Demand for its services to retail, manufacturing and technology clients could also be affected, the company added in its statement.

TCS will report its December-quarter earnings on Jan. 15, according to its website.

Source:http://www.ibtimes.com/shares-indias-tcs-fall-after-indicating-weakness-financial-services-north-american-1757536

Optimism wanes: TCS warns of seasonal trends impacting revenue in Oct-Dec

December 15th, 2014

The country’s largest software services firm Tata Consultancy Services (TCS) expects its revenue in October-December to be ‘in line with seasonal trends’.Outsourcing18

The third quarter of the fiscal is traditionally weaker for IT companies as business is impacted by low volume growth amid Christmas and New Year holidays and furloughs in the US and Europe.

The US and Europe are the key markets for the over $100 billion Indian outsourcing sector.

“Q3 2015 revenue expected to be in-line with seasonal trends. Retail, Manufacturing and Hi-Tech likely to see impact of holidays and furloughs,” TCS said in an investor presentation today.

It added that banking, financial services and insurance continue to be impacted. According to a report on CNBC-TV18, the company said it was more positive at the start of the year and expressed difficulty in predicting the sentiment at this point.

Meanwhile, the company expects telecom and smaller verticals to grow better than the company average, the report said adding that it has maintained its operating margin guidance of 26-28 percent.

On geographies, TCS said the demand environment in North America is in-line, adjusted for seasonal weakness. It said pricing trends were fairly stable, and that demand environment in the US was in-line with expectations, the CNBC-TV18 report said.

It said growth in Europe revenues would be better than the company’s average, though the UK was expected to be weak.

“Europe to grow better than average while UK remains weak due to seasonality and impact of insurance,” it said.

In India, the demand environment was fragile, and growth from its India and Asia Pacific businesses would be in line with the company’s average growth.

The company is expecting a slight uptick in realisations and a 10-20 basis points positive impact due to dollar strengthening. However, it expected a negative 220 basis point impact due to cross currency headwinds.

Shares of the company closed 1.48 percent down at Rs 2,455.70 apiece on the BSE on Friday.

Source:http://firstbiz.firstpost.com/corporate/optimism-wanes-tcs-warns-of-seasonal-trends-impacting-revenue-in-oct-dec-113125.html

Wipro, Infosys outpacing each other to meet demands in unfavourable global environment

December 9th, 2014

Battling to regain lost glory, Wipro and Infosys are stepping up their age-old rivalry, this time to out-innovate each other as the two Bengaluru-based software exporters invest in disruptive technologies pegged to artificial intelligence and design thinking to bring greater efficiencies for themselves and their customers.Outsourcing11

Infosys Chief Executive Vishal Sikka, at an analyst event in Pune on Thursday, said some of his company’s rivals were imitating it and went as far as labeling their moves proverbially as “imitation is the best form of flattery”. While he did not name any rival, for veteran watchers of Bengaluru’s software scene, the company he was referring to was clear: cross-town rival Wipro, which, on its part, claims to be investing “heavily” since 2012 in building data analytics and other next-generation platforms to help customers in the retail and healthcare space to improve their businesses.

In the past few years, both Infosys and Wipro have lost quite a bit of their sheen as they struggled to adjust with changing customer demand in an uncertain global business environment, leaving Mumbai-based bigger rival Tata Consultancy Services record phenomenal numbers since 2011. The original posterboys of India’s IT sector are trying cover the ground lost – by investing in technologies that can shake up the industry by disrupting the existing order and processes that are customer-focused – and their initiatives pit them against each other more than ever in the past.

The unfazed response of Wipro to Sikka’s comments was a testimony to the increased rivalry between the two. “I can say that we have a competitive edge,” said Satishchandra Doreswamy, chief business operations officer at Wipro. “We have been investing heavily in building the next-generation platforms for over two years with a focus on AAA (automation, artificial intelligence and analytics).

Platforms such as ServiceNXT, CloudCLM have started delivering value for some of key clients,” said Doreswamy, who was hired by Chairman Azim Premji three years ago to help transform Wipro by bringing in some of these advanced technologies. Although Doreswamy declined to quantify the impact of these disruptive technologies in Wipro’s growth, he said the range of productivity improvement differed from client to client. The former TCS veteran also said Wipro had over the last 24 months seen a “20-30% efficiency improvement” in the application development, maintenance and infrastructure management space.

Sikka, ever since he took the role of the first non-founder CEO at Infosys on August 1, has outlined a strategy of “building a new Infosys” by making fresh investments in bringing machineto-machine and automation platforms to the company’s traditional approach of delivering outsourcing services to customers. Sikka, who earlier this week completed four months at the company, said in Thursday’s analyst meet that he would share more details of what it was doing in this area in April next year.

For now, Infosys is training its software engineers on design thinking – a creative and systematic approach to problem-solving by placing the user at the centre of the experience – and is also in the process of launching an online training module on artificial intelligence for its employees. Doreswamy said Wipro has already brought in the customercentric approach and its overall net promoter score – a tool to gauge customer loyalty – has improved 30 percentage points.

Some experts, including Tom Reuner of London-based IT research firm Ovum said some of the next-generation service-delivery methods are still in nascent state and IT outsourcers are coy to talk in public as the full impact is still not fully understood. “(Nonetheless) Indian providers are at the forefront of this development as part of their push on nonlinear models,” said Reuner.

“Providers like TCS or Wipro have invested significantly in proprietary tools. The key to a broader adoption of robotic process is to build out robust cognitive engines (RPA) and artificial intelligence. These will be the conduit to moving RPA to the core of service delivery backbones.” Doreswamy said the immediate target for the company remains to adopt these disruptive technologies for at least 50% of customers. He declined to share further details.

Both companies are also looking to engage with startups to get access to new technologies. Wipro, after making minority investments last year in data analytics firm Opera Solutions and machine-to-machine learning-focused Axeda – although it exited Axeda this year – is setting up a corporate venture arm to be spearheaded by Rishad Premji that will initially invest up to $100 million (Rs 619 crore) in startups. Infosys too has set aside $100 million and is actively scouting the San Francisco Bay Area to find potential startups which could help the company with the missing innovation strand.

The focus of both companies is to win back the lost glory as rivals TCS and Nasdaq-listed Cognizant consistently outpaced them, and the industry, in revenue growth. Infosys, which was once the bellwether of the country’s information technology and commanded a premium in pricing compared with rivals, has been struggling to expand revenue in the last three years – it reported below-industry growth numbers for two years and was even forced to call founder Narayana Murthy back from retirement to steer the company last year.

In the last one year, Infosys even conceded to the fact of bidding for projects at prices which the company would not have done a few years earlier. Wipro has also been reporting disappointing growth numbers. Since the appointed TK Kurien as the CEO in January 2011, Wipro’s sequential quarterly revenue growth rate has not crossed 3% since the September 2012 quarter, making analyst Viju George of JP Morgan call Wipro’s situation as “a Curate’s egg”: good in parts but it must get multiple engines firing in tandem for it to qualify as a secular pick.

Source:http://economictimes.indiatimes.com/tech/ites/wipro-infosys-outpacing-each-other-to-meet-demands-in-unfavourable-global-environment/articleshow/45423814.cms

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