Posts Tagged ‘US’

US government goes tough on Indian IT outsourcing; deals with Disney, Fossil under lens

June 15th, 2015

After reports that the US government is investigating an outsourcing contract involving utility firm Southern California Edison and India’s largest software exporters, Tata Consultancy Services and Infosys, similar pacts signed now or recently are coming under the scanner, people familiar with the matter said.Outsourcing13

The latest contract to be scrutinised is one with Walt Disney, which recently signed a deal with US-based Cognizant Technology Solutions. Other recent deals with companies like Fossil are also being investigated, people familiar with the probes said.

On Sunday, IT industry body Nasscom said an investigation could have long-term ramifications on future contracts between US corporations and Indian IT firms and that it would intensify efforts to resolve the issue. “Undoubtedly (these probes) would have a damaging impact on future business. It is a serious concern,” Nasscom president R Chandrashekhar told ETon Sunday.

“This has the potential of seriously destabilising the way the sector does business…and frankly, we are also dismayed by the way a hostile business environment is being created,” Chandrashekhar said.

Cognizant did not immediately respond to an email seeking comment. Indian IT companies have vehemently denied wrongdoing.

On Sunday, communications and IT minister Ravi Shankar Prasad told PTI the government would intervene in this issue of alleged visa violations if the need arises. He said the government was confident that TCS and InfosysBSE 0.78 % would address the matter.

The US Labor Department plans to investigate whether top outsourcing corporations can use H-1B visa workers to replace fulltime technology workers, according to US media reports last week, citing Senators Dick Durbin and Jeff Sessions.

“A number of US employers, including some large, well-known, publicly traded corporations, have laid off thousands of American workers and replaced them with H-1B visa holders. To add insult to injury, many of the replaced American employees report that they have been forced to train the foreign workers who are taking their jobs,” the senators said.

Southern California Edison laid off about 500 workers, beginning August last year, and replaced them with H-1B visa holders from TCS and Infosys.

India’s $146-billion information technology industry is undergoing the biggest transition in its history amid a rapidly evolving landscape. The sector is struggling to match the explosive growth rates that it enjoyed in the 2000s amid volatile currency fluctuations that hammered profits and margins of all top Indian IT firms in the March quarter.

According to a Computerworld story last week, the Disney ABC Television Group cancelled a plan to farm out about 35 application developer jobs, amid a widespread outcry against outsourcing.

“Disney is also part of the overall investigation —it’s quite worrying for Indian IT firms, since a lot of other contracts that are being signed now are also going to be in the spotlight,” said an analyst with a top US-based research firm.

Experts said the politically charged debate on outsourcing is bound to heat up over the coming months with the US elections on the horizon. Infosys and TCS issued statements on Friday saying they are fully compliant with US immigration and visa laws.

“Infosys is committed to complying with US immigration laws. The US Department of Labor (DOL) regularly selects a percentage of visa and labor condition applications for extra scrutiny in this industry, and we work closely with the DOL to assist them in this activity in the ordinary course of our business. We have received no indication of any broader investigation of Infosys visa practices,” Infosys said. TCS said that the company “maintains rigorous internal controls to ensure we are fully compliant with all regulatory requirements related toUS immigration laws.”


IT stocks gain on weak rupee, positive US economic data

May 21st, 2015

Six IT stocks rose by 0.85% to 3.24% at 13:20 IST on BSE on positive economic data in US and weakness in rupee.Outsourcing44

Meanwhile, the S&P BSE Sensex was up 204.09 points or 0.74% at 27,849.62.

Among IT stocks, Infosys (up 1.32%), MphasiS (up 0.85%), HCL Technologies (up 2.56%) and Wipro (up 1.2%) gained.

TCS rose 1.66% after its client, Euroclear Finland launched platform, Infinity powered by TCS BaNCS for market infrastructure. The company made the announcement during market hours today, 20 May 2015. Tata Consultancy Services (TCS) announced that its client – Euroclear Finland – the central securities depository (CSD) for the Finnish capital markets, has launched a new transaction processing platform known as ‘Infinity’. Infinity is a multi-year program powered by TCS BaNCS for Market Infrastructure, and is a key component of Euroclear Finland’s outsourcing its securities settlement processing to TARGET2Securities (T2S) as part of the European Central Bank’s fourth migration wave in February 2017.

Tech Mahindra gained 3.24% after company said Ontario Ministry of Energy and the company invested in innovative Smart Grid solution powered by analytics. The announcement was made after market hours yesterday, 19 May 2015. Tech Mahindra announced that it will build an Intelligent Electric Vehicle Charging System (IEVCS) designed to help build Ontario’s clean energy future. The project, sponsored by the Ministry of Energy and funded in part through the Ontario Smart Grid Fund initiative, will analyze the effects of electric vehicle charging on transformers by creating a real time transformer monitoring and analytics solution.

Meanwhile, a report in US yesterday, 19 May 2015, showed a sharp increase in housing starts last month, pondering the effect it might have in determining the course of the Federal Reserve’s interest rate policy. Investors will get a closer look at the US Federal Reserve’s thoughts about interest rates and economic data when the minutes of the Federal Open Market Committee meeting from its meeting held in late April 2015 are released in the global day today, 20 May 2015.

US is the biggest outsourcing market for the Indian IT firms.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 63.82, compared with close of 63.68 during the previous trading session. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.


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.


IT stocks advance on positive jobs data in US

January 9th, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Lufthansa signs $1.25 billion outsourcing deal with IBM

November 18th, 2014

IBM has won an outsourcing contract from Germany’s Lufthansa worth 1 billion euros ($1.25 billion) that will see the U.S. company take over the airline’s information technology infrastructure services division and staff.A German airline Lufthansa A380 Airbus aircraft flies over Frankfurt

The move is part of plans by Lufthansa to restructure and cut costs as it seeks to compete with fast-growing rivals in both Europe and the Gulf.

Under the seven-year deal, IBM said it will make the airline’s IT processes more efficient, such as moving it more toward cloud computing, saving Lufthansa around 70 million euros a year.

Around 1,400 Lufthansa Systems employees will transfer to IBM as part of the deal, which was first outlined in October.

The deal is subject to approval by antitrust authorities and the Lufthansa supervisory board.


Very Few CIOs Concerned by Risks of Outsourcing IT

September 12th, 2014

More than 75% of IT executives in the U.S. corporate world believe that their company’s decision to outsource IT infrastructure services will have no impact on their careers.outsourcing43

This was one of the findings of a recent survey of 1,014 IT executives in U.S. businesses by Information Week.

Only 3% of executives fear that outsourcing would lead to their dismissal, while a similar number of executives feel worried that they could be relocated as a result of such a decision. On the contrary, 19% of executives believe that their responsibilities will be expanded as a result of outsourcing.

Across North America, according to another survey from Information Week, businesses have continued to struggle to implement information technology, largely due to a lack of human skills and budget.

“CIOs pay top dollar for namebrand technology and believe it’s generally worth it because they do have limited staff and that staff has specific but limited expertise,” the report said.

Many CIOs surveyed for the report expressed concern that IT leadership would slip out of their hands because the decision for IT procurement typically comes from business units.

The swiftly advancing technology world has offered businesses with several alternatives to their in-house IT infrastructure: Software-as-a-Service, Infrastructure-as-a-Service, and other Cloud-based offerings.

“The bottom line, though, is that IT leaders need to change their outlook and tactics, and embrace today as a time of golden opportunity. They need to borrow tactics and strategies from digital-native businesses, and adapt them to their needs, to create an infrastructure that’s as responsive as the company demands,” the report noted.

With businesses increasingly aware of the need to adapt technology to stay one step ahead of their competitors, IT budgets are ballooning more than ever, with the majority of CIOs surveyed talking of increasing their IT budgets.


Google has to face US privacy suit over new user data policy

July 23rd, 2014

A California court has allowed a privacy class action suit against Google to continue, though only in part.
After evaluating each claim of each sub-class in the suit, Magistrate Judge Paul S. Grewal has allowed two claims of the “Android Application Disclosure Subclass,” which includes all persons and entities in the U.S. that acquired an Android-powered device between Aug. 19, 2004 and the present, and downloaded at least one Android application through the Android Market or Google Play.

On March 1, 2012, Google introduced a single, unified policy that allows the company to comingle user data across accounts and disclose it to third-parties for advertising purposes.

This move triggered the class action lawsuit in March, 2012 in the U.S. District Court for the Northern District of California, San Jose division, which argued that by switching to the less-restrictive privacy policy without user consent, Google violated both its prior policies and consumers’ privacy rights, according to court records.

The Android Application Disclosure Subclass claimed Google’s disclosures to third parties caused increased battery and bandwidth consumption as well as invasions of their statutory and common law privacy rights.

The suit was filed over two years ago and since then the court twice dismissed the plaintiffs’ claims. Google moved for a third dismissal.

The claims allowed by the judge includes a breach of contract claim that Google breached terms of the contract by disclosing user data to third parties following every download or purchase of an app, resulting in damages in the form of resource consumption. The second claim is under California’s Unfair Competition Law.

Claims by persons and entities in the U.S. that acquired an Android-powered device between May 1, 2010 and Feb. 29, 2012 and switched to a non-Android device on or after March 1, 2012 were dismissed.

Google could not be immediately reached for comment.


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