High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.

Shares in IT outsourcing company Computer Sciences Corp soared as much as 25 per cent in the morning session as the company wrote down losses from a UK government contract.

The shares pared gains but still closed up 18.5 per cent to $31.39.

CSC booked a loss of $1.5bn, or almost $10 a share, on a contract to computerise the records of the UK’s National Health Service. Shares had fallen 50 per cent in the 12 months to the end of last week on concerns about the UK contract and an accounting probe by the Securities and Exchange Commission, and, although CSC had pre-warned about the writedown in late December, some analysts said the move provided a degree of closure for investors.

“The risk of further large writedowns is significantly smaller than it was yesterday,” said Tien-Tsin Huang at JPMorgan. “People feel like we may have seen a bottom for CSC.”

But other analysts were unimpressed, and suggested investors might be well advised to take profit, with CSC now trading at an earnings multiple equal to industry peers.

“To say CSC should trade in line with its peers when it can’t give guidance for 2012, is subject to an SEC accounting investigation and has the overhang of further potential losses on the UK NHS contract is presumptuous,” said Darrin Peller at Barclays Capital.

He said the share price move was largely a result of short sellers covering positions. More than 10 per cent of available CSC stock had been on loan to short sellers at the start of the day, with many investors anticipating a sell-off if the company declared a larger writedown on the NHS contract.

Elsewhere, US stocks climbed, but gains were moderate as eurozone worries once again weighed on Wall Street.

The S&P 500 climbed 0.2 per cent to 1,349.96. The Dow Jones Industrial Average edged up 5 points to 12,883.95, while the Nasdaq Composite index rallied 0.4 per cent to 2,915.86.

Energy stocks were the laggards with coal miners falling for a second successive day, as SocGen analysts said iron-ore shipments to China through Australia’s Port Hedland fell in January compared with December.

Peabody fell 1.6 per cent to $41.27 and Alpha Natural Resources fell 2.1 per cent to $21.85.

Option traders appeared sceptical about the latest rally in the face of renewed Greek default concerns, with data showing large bearish bets that would profit from a fall in the Dow Transport index.

The index is closely watched as a leading indicator for movements in broader indices.

But some analysts remained bullish. “Given other efforts to stabilise the eurozone, we tend to think a Greek default would only lead to a momentary pullback in US stocks, lasting one or two days, and indeed would present a good buying opportunity,” said Randy Frederick, managing director for active trading at Charles Schwab.
Luxury clothing chain Ralph Lauren rose 9.2 per cent to $17.73 after forecasting stronger than expected 2012 revenue.

Unlike jeweller Tiffany , Ralph Lauren did not see a slowdown in US or European sales in the fourth quarter, leaving investors free to focus on strong sales growth in emerging markets that Ralph Lauren reported in common with other luxury brands. The company also raised its forecast for 2012 margins.

“If we were to look for trouble, a cause for concern could be the recent gross margin deterioration, which reflects an increasing amount of technology resale that both boosts revenue growth and hurts gross margin,” said George Hill at Citigroup, although, along with most other analysts, he was upbeat on the results.

Bank stocks traded higher despite the Greek concerns. Citigroup was up 3.5 per cent to $34.23 and Bank of America topped $8 for the first time since September, closing up 3.6 per cent to $8.13 for the best performance in the Dow Jones Industrial Average.

Walt Disney shares climbed 0.7 per cent to $41.27 as earnings rose despite flat revenues.

The initial public offering of Caesars Entertainment made a surprise leap on its debut, jumping 71 per cent to $15.39 over its $9 debut price, the most of any US IPO since Zillow last July.

The offering of just 1.8m shares had been intended only to provide liquidity to a small clutch of investors in its 2008 leveraged buyout, ahead of potential larger exits by investors such Paulson & Co, Apollo Group and TPG Capital. But traders said that retail investors swooped on the offering at the discounted valuation, despite the risk of future dilution.

Source:http://www.ft.com/intl/cms/s/0/5231a8f8-5264-11e1-a155-00144feabdc0.html#axzz1llILQk4A

India on Tuesday expressed hope that the current economic woes in the US would not lead to protectionism and said that concerns of the Indian IT industry over anti-outsourcing measures announced by President Barack Obama recently will be addressed quickly.

Foreign Secretary Ranjan Mathai on his first bilateral visit to the US said that the Indian IT industry in the US has contributed $15 billion in taxes alone in the last five years and underlined the need to eliminate discriminatory actions.

Mathai is believed to have raised the issue in his meeting with the officials of Commerce Department yesterday in the backdrop of Obama’s State of the Union address in which he outlined measures to bring jobs back to the country.

Obama had said his administration would offer incentives to those firms which will create jobs in the country.

Mathai in his address to the Centre for Strategic and International Studies said, “Indian IT industry contributed $15 billion in taxes over the last five years. This success story should not be set back by stringent visa regulations which act as a non-tariff barrier.”

“We do hope the current economic challenges in the US would not lead to protectionism and that concerns of Indian IT industry will be addressed quickly,” he said.

NASSCOM estimates that Indian industry employs over 100,000 in the US up from 20,000 six years ago, he said adding it supports 200,000 other jobs, including indirect ones, apart from enhancing the competitiveness of some the US industries.

Source:http://ibnlive.in.com/news/address-concerns-of-it-industry-india-to-us/228143-2.html

Private equity (PE) players in the business process outsourcing (BPO) companies might have hit on a trend of selling a part of their holdings in the public market. This, experts say, is due to a paucity of strategic exits i.e to other companies or to financial investors.

So far, the BPO sector saw two such exit announcements. US-based PE major Warburg Pincus, which has investments in WNS, has chosen to sell its stake to public investors. PE player Oak Hill Capital Partners also took the open market route to exit from Nasdaq-listed BPO firm ExlService.

WNS, in a recent Securities and Exchange Commission (SEC) filing, said Warburg Pincus would sell 5.25 million American depository shares (ADS) with an option to sell another 1.57 million shares in case of over-allotment. This accounts for 15 per cent of Warburg’s stake in the company.

Warburg Pincus holds 21.3 million shares or 48 per cent holding in the company. At the current price of $9 per share of WNS, the 5.25 million shares would fetch Warburg $47.25 million. Warburg’s entire stake would be valued at $192.4 million (around Rs 942 crore). The company is yet to decide on the price at which the issue would be sold.

Warburg had invested in WNS in 2002 by acquiring a majority stake in the firm from British Airways. While the amount invested by the PE players is not disclosed, in 2006 when the firm was listed on New York Stock Exchange, Warburg had sold part of its stake at $20 per share.

In recent times, PE players in the domestic market, too, chose the public route for exit. Some of these happened as the companies saw a rally of stock prices in domestic markets, allowing these exits.

For instance, in the latest round, Warburg Pincus sold its stake in Kotak Mahindra Bank for Rs 857 crore (around 2.3 -2.4 per cent stake). In total, Warburg has sold stake worth Rs 2,000 crore in the bank over several transactions.

ExlService, too, announced last December it was making a public offering of two million shares of common stock by certain stockholders affiliated with Oak Hill Capital Partners.

On December 6, 2011, the company through a press statement announced the closing of the previously announced public offering. According to the SEC filings, Oak Hill Capital Partners have sold two million shares at $25 per share in the open market gaining $50 million.

According to the company’s Nasdaq filings, it seems Oak Hill Capital Partners too has exited. In three separate transactions on December 6 it sold two million shares.

“In both cases, the investors have been with the company for 9 to 10 years. They would have evaluated all offers in the market and only then opted for the current route. Perhaps, they think that rolling out their stake in the market is a better option,” said the head of a private equity firm on condition of anonymity.

Separately, WNS has also proposed to sell newly issued 5.25 million ADS to raise funds of $50 million (around Rs 245 crore).

The fund raised would be used for general corporate purposes, which may include capital expenditures, acquisitions, refinancing of indebtedness and working capital. At present, the company management is conducting road shows in the US for both the sales.

Source:http://business-standard.com/india/news/pe-firms-exit-bpos-via-us-public-floats/463710/

The Philippine government should not pin too much hope on call centers and other business process outsourcing (BPO) companies as a means of boosting local employment and the economy, warned the independent think tank Ibon Foundation.

Ibon, which advocates nationalist industrialization, said United States President Barack Obama’s recent statements calling outsourced jobs back to the US highlighted the risk of relying on BPOs.

Ibon warned of this and other adverse trends facing the BPO sector, adding that the money that the government intends to spend to promote it would be better used to support Filipino industry and science and technology.

The Philippines is a popular location for call centers and other outsourced services, and has edged out India as the world’s leading BPO center. Some government leaders have even gone so far as to suggest that education be geared toward providing the manpower for BPOs.

In a statement, Ibon Foundation noted the government had set aside P575 million in subsidies for private foreign BPO investors, with the money going to training, curriculum and teacher development, career marketing and scholarships.

It could think of better ways to spend the money, Ibon said.

“These funds are more productively spent supporting Filipino industry, science and technology than for a sector that is such a small part of the economy and by its nature will never give much added value,” it said.

“The BPO sector is barely integrated into the local economy outside of its relatively few jobs and so does not stimulate or encourage domestic production,” it added.

According to Ibon, Obama’s move to bring outsourced jobs back to the US underscores the dangers of relying on BPOs and foreign economies for jobs for Filipinos.

“Even if it is still unclear if President Obama’s proposed ‘insourcing’ legislation will pass, the vulnerability of the sector and the government’s misplaced attention to this is increasingly apparent,” it said.

The Business Processing Association of the Philippines (BPAP) said, however, that it was not alarmed and noted that outsourcing had allowed US companies to survive and grow amid the global financial crisis.

Ibon countered that even if Obama’s “insourcing” plan —which some dismiss as an election ploy—does not come to pass, the BPO industry is nevertheless facing setbacks.

“(Obama’s) initiative is just another example of adverse trends facing the sector and more of this are likely to emerge as the crisis in the US and the rest of the world worsens in the coming years,” it said.

The BPO sector has been growing, but the group said this had slowed slightly. It said the 21.9-percent growth in BPAP-related jobs in 2011 was slightly slower than the 24.1-percent growth in 2010. The 22.5-percent growth in revenues was also slower than the 25.3-percent growth in 2010.

It also said that government and industry estimates for the BPO industry at 1.3 million jobs and $25 billion in revenues in 2016 was too optimistic. It noted that an earlier plan to generate one million jobs and $12 billion in revenue in 2010 fell short of the target. Only 525,000 jobs and $8.9 billion in revenue materialized, it said.

Ibon further said that the slowing global and US economy appeared to have affected the BPO industry, despite reports that the Philippines had overtaken India as the world’s leading BPO center.

“Developments in the US economy are particularly relevant because the latest Bangko Sentral ng Pilipinas data notes that the US accounts for 72 percent of foreign investment and 80 percent of BPO service exports,” it said.

It also noted that the deployment trend of Filipino nurses in the US dropped between 2008 and 2010, and Obama had campaigned for prioritizing American nurses over migrants. The US congress has already approved a bill that would reduce the number of visas allowed for temporary registered nurses.

Source:http://business.inquirer.net/41981/ph-should-not-pin-hopes-on-bpo-says-think-tank

The Department of Trade and Industry remained confident that the recent declaration of President Barack Obama to withdraw support for “businesses that ship jobs overseas” will not make a dent in the booming business outsourcing process (BPO) industry in the Philippines.

At the sidelines of the Philippine Business Registry launching Friday, Trade Secretary Gregory Domingo noted that the passage of the pending US bill – the US Call Center and Consumer Protection Act – that seeks to withdraw incentives from US firms that will outsource jobs, was unlikely.
“We are monitoring the developments … but we are not concerned. The rally for this bill may be election related,” Domingo said, adding that this was a scenario seen in previous election years, 2004 and 2008.

And even if this bill will be passed, its impact on the Philippine BPO industry will only be minimal, according to the trade chief, as the bill will cover companies that serve federal offices or those that receive federal funding.

“Outsourcing will be here to stay no matter what legislation will be passed,” Domingo further stressed, noting that at the end of the day, competitiveness will play a huge role on the companies’ decision to outsource jobs to lower operating costs.

He also pointed out that the country’s BPO industry is already “very diversified” as it has since progressed from being “telephone operators” to those that offer varied services whether for IT, accounting or other services. The country is currently regarded as the world’s top call center destination as more companies from markets like the United States turn to the Philippines due to the local workforce’s good English communication skills and strong cultural affinity to the US – reportedly an edge that would be hard to replicate anywhere else in the world.

The Business Processing Association of the Philippines said in its 2011 report that the BPO industry was now the second biggest contributor to the local economy next to remittance inflows from overseas Filipinos.

The report further stated that the BPO sector contributed close to $9 billion in export revenues last year, representing a 4.8-percent share of the country’s GDP. The target for 2012 was set at $11 billion.

By 2016, the industry group expects the country’s BPO revenue to hit the $25-billion mark, or a 10-percent share in the global market and at the same level as OFW remittances.

Source:http://business.inquirer.net/41765/dti-us-bill-on-outsourcing-unlikely-to-hurt-ph-industry

Lorelie Cadiz, Aegis PeopleSupport Inc. senior marketing manager, said the Anti-Outsourcing Bill pending in the United States congress will not affect the firm’s global operations.

“Philippine industry leaders, however, expect a slowdown in US-based companies,” said Cadiz.

She said Aegis is focused on the overall outsourcing market rather than the off-shore market in the Philippines and the rest of their Asia Pacific operations as it serves local and international clients in the region.

“For the Philippines, some of the largest companies in the banking, telecommunications and travel industries, however, a large percentage of their revenues come from international clients, majority of which are US-based. How is this bill going to impact our Philippine operations and what contingencies do we have in place?” Cadiz asked.

BUSINESS MODEL

Cadiz cited the firm’s business model, which according to their managing director Aparup Sengupta, revolved around “citizens serving citizens.”

“This is true in our Philippine operations. In each geography in where we operate, Aegis serves local customers through local citizens. We have over 5,000 people in Argentina, over 2,000 in Australia, almost 2,000 in South Africa. We have local accounts and part of our growth plans this year is to grow our existing local accounts and acquire new business,” said Cadiz.

Cadiz, declined to give more details about their expansion plans in the local market.

She said that the firm would be more bullish here to slowly shift businesses toward areas projected as next growth economies in the world.

N-11 ECONOMIES

Recently, major investment bank Goldman Sachs dubbed the Philippines among the N-11 or Next 11 economies that will contribute greatly to global growth within the decade and will likely advance to “growth countries” accounting for at least 1 percent of global gross domestic product (GDP).

Aside from the Philippines, other countries such as Mexico, Korea, Indonesia, Turkey, Iran, Egypt, Nigeria, Bangladesh, Pakistan and Vietnam are among the N-11 countries.

The nine economies from the N-11, along with Brazil, Russia, India and China (BRICs) are expected to contribute the most to global growth from 2011 to 2020.

WITHOUT A FIGHT

US House Bill 3596 or the Call Center and Consumer Protection Act recently caused a stir among many stakeholders not only in the Philippines but other countries, like India, which have booming outsourcing industries.

Executives and business group leaders in Cebu, however, said they believe that the bill won’t prosper because American companies that outsource their operations won’t just agree without a fight.

“It’s the means to global competitiveness. They cannot just say yes to that (bill),” said Cebu Investments and Promotions Center managing director Joel Mari Yu.

Nevertheless, Cadiz said that it is always important to look for new opportunities in other areas and diversify the business so as not to be dependent on a single large market.

Source:http://newsinfo.inquirer.net/131269/bpo-firm%E2%80%99s-answer-to-us-insourcing-tap-local-market

According to Ronald Rittenmeyer, NCO president and chief executive officer, the new building will have capacity of 1,200 seats. Since hiring for the Sta. Mesa site began in October, 850 seats have already been filled as of yesterday, he added.

“It’s not just the price or that it’s cheaper [to operate] here in the Philippines,” Mr. Rittenmeyer explained of NCO Group’s decision to expand. “We come here because of the quality of work our employees here do — which is excellent.”

NCO operates four other sites in the Philippines located in: Quezon city (with 2,151 seats); Clark, Pampanga (1,213 seats); Fort Bonifacio, Taguig City (893 seats); and Marikina City (641 seats).

While declining to give growth forecasts, Mr. Rittenmeyer said the firm will employ “as many as the business demands.”

When asked about concerns regarding the pending US bill that might prevent BPO firms to put up sites outside the US, Mr. Rittenmeyer declined to comment. “We’ll wait and see what kinds of laws will be taken [by the US government] and we will abide by those laws… but at this stage, it would be inappropriate for me to speculate,” Mr. Rittenmeyer said.

NCO has a pending merger with APAC Customer Services, Inc., announced in July last year.

Mr. Rittenmeyer said while the merger hasn’t been finalized yet, the two firms have started synergies such designating people in management positions.

“The merger would bring the number employees in the Philippines to total 13,000, composed of 8,000 from NCO and 5,000 from APAC,” Mr. Rittenmeyer said.

NCO offers BPO solutions such as accounts receivable management, customer management services, and back office services. The firm operates in 11 countries worldwide, employing over 34,000 people.

Source:http://www.bworldonline.com/content.php?section=Corporate&title=US-based-BPO-firm-opens-5th-site-in-Manila&id=45192

There should be one group not tied to the national government that should lobby against the passage of House Bill 3596 or “Call Center and Consumers Protection Bill” in the US Congress.

Joel Mari Yu, Cebu Investments and Promotions Center managing director and outsourcing specialist of Cebu, said this amid a call from Congress to the Aquino administration to lobby against the bill pushed by US President Barack Obama.

Yu made the proposal even as top Cebu business leaders questioned whether the bill will be passed since it will be disadvantageous to US firms that outsource their operations due to lower production costs.

“In my own opinion, I don’t think these companies will just agree right away and not fight back. I’m sure mosukol jun ni sila (they will fight this) and all we need to do is just let them know that we have their backs. We’ll support them,” Yu said.

Yu said outsourcing is practical and a product of market forces that have raised the bar for global competition.
Without outsourcing, Yu said some companies cannot stay competitive and may eventually shut down.

“Like Citibank, which is competing with HSBC (Hong Kong Shanghai Banking Corp.) and other companies, which are outsourcing. It’s good if Citibank is only competing with other American banks hiring American labors,” he said.

If these companies cannot stay competitive and shut down, Yu said this will only result to more job losses to the Americans.
Yu said the Department of Labor and Employment (DOLE) should take the lead in the campaign against the US bill.

“What we can do and should do now is sit down with these companies and talk to them on how we can support them. What they need for us to do to fight this,” he said.
Yu admitted that the US bill will not only affect call centers but may also impact on higher-skilled outsourced jobs in the Knowledge Process Outsourcing (KPO) and Information Technology Outsourcing (ITO) sectors.

Yu said based on the Call Center Directory, there are 500 American companies with outsourcing operations in the country with Cebu having 75 call center and VOIP (Voice-Over Internet Protocol) companies.

Jerry Rapes, Information Communication Technology (ICT) committee chairperson of the Cebu Chamber of Commerce and Industry, said more than half a million people are employed in outsourcing companies in the country.

Majority of them work in call centers and in Cebu, the number of people working in outsourcing companies is pegged at 60,000.
Rapes said at present, the BPO sector is a fast-growing industry that earned P9 billion in 2010.

“This year the target is P11 billion. By 2016, we shall be going at the level of the OFW (overseas Filipino workers) remittances of $25 billion. With that huge potential for revenue, the industry should be given due recognition,” he said.

Even if the US House bill is still pending Jun Sa-a, Cebu Educational Development for Information Technology Foundation (CEDF-IT) executive director, said this should serve as a challenge to the Cebu BPO sector to remain competitive.

“As long as we continue to deliver the right quality and cost, we will continue to be a preferred location,” Sa-a said. Gordon Allan Joseph, Cebu Business Club president, agreed.

“We therefore need to act and to act now to evolve the quality of our education to allow training of students and graduates in the competencies needed to evolve our BPO industry into sophisticated knowledge process outsourcing,” said Joseph.

Mandaue Chamber of Commerce and Industry president Eric Ng Mendoza is optimistic that the bill will not be passed into law.
But if passed, it may cause a temporary slowdown in the BPO sector.

“It’s a lot more expensive to operate call centers in the US and they cannot afford not to be competitive; otherwise, they will lose and close shop,” Mendoza said.
Cebu City Mayor Michael Rama said if the bill is approved, it will hurt the local BPO industry.

He said he will write President Benigno Aquino III to support a plan to create a lobby group that would lobby against passage of the bill.
He said the City Council should pass a resolution for the same purpose.

Vice Mayor Joy Augustus Young said he will still consult with the council on the issue.

Young said the national government to determine who will be part of the lobby group.

He said it will be wise if the government coordinates with the BPO firms instead of sending their own lobby group.

At the Capitol, Provincial Board (PB) Members Arleigh Sitoy and Rimobapil Holganza said they will sponsor a resolution calling on Congress to lobby against the passage of the US bill.

Cebu Vice Gov. Agnes Magpale said the bill may affect 50,000 BPO employees, a lot of whom came from neighboring towns to work in Metro Cebu.
Cebu Gov. Gwendolyn Garcia said the bill should serve as a challenge to the BPO sector.

“We should believe that the Filipino has the talent and the industry to meet all challenges head on and continue our quest for excellence especially in the BPO industry, bill or no bill. Barack or no Barack,” she said. Aileen Garcia-Yap, Reporter with Chief of Reporters Doris C. Bongcac and Correspondent Carmel Loise Matus

Source:http://newsinfo.inquirer.net/125603/us-bill-on-bpos-won%E2%80%99t-prosper-say-biz-leaders

LABOR Secretary Rosalinda Baldoz admitted on Wednesday that a proposed law that would discourage American companies from outsourcing its operations will definitely affect the country’s employment sector.

She was, however, unable to provide an estimate of the impact should the bill be approved by the US Congress.

Plan your Sinulog week ahead and find out what’s in store for Sinulog 2012.

Instead, she directed Philippine Labor Attaché to Washington Luzviminda Padilla to immediately conduct an impact management assessment and brief the Department of Labor and Employment (Dole) on the bill’s possible effect to the country.

In 2010, the 600,000-strong sector grew by 26 percent to $8.9 billion and was projected to post revenues of $11 billion last year.

Of this amount, industry representative Business Processing Association of the Philippines (BPAP) told Sun.Star that US companies hold an 80-percent market share.

“Naturally, if there’s a slowdown, of course there will be a negative impact because many outsourcing companies here in the Philippines are based in the United States,” Baldoz said.

House Bill (HB) 3596, otherwise known as the “Call Center and Consumers Protection Bill” was introduced last year in the US Congress.

Last Tuesday, Eastern Samar Representative Ben Evardone asked the Aquino government to mount a massive lobby in the US Congress to block the bill.

Among the provisions of the proposed legislation is requiring of call center operators, who answer calls, to identify their location while giving US callers the option of choosing a local operator.

Sought for comment, BPAP external affairs director Martin Crisostomo said it is understandable that some American lawmakers chose to follow a protectionist policy in light of the weakening global economy.

But such measures are only “short-term or even disruptive to the economy,” he said.

“In a free and matured world marketplace, we see that at the end of the day, it will be the natural global market forces which will dictate and prevail. We also believe that not only government leaders but also the consumers of countries will come to this realization,” he told Sun.Star.

In the meantime, Crisostomo said the 250-member BPAP is committed in “providing high-value, quality, and cost effective outsourcing services to its clients.”

Earlier, the BPAP said it expects an increasing revenue share for the non-voice sector which includes higher value type of services like finance and accounting, engineering services, and transactional services.

Source:http://www.sunstar.com.ph/manila/business/2012/01/04/us-bpo-bill-would-affect-local-employment-198787

India today expressed concern over the proposed US Call Centre Bill but said that it is premature to assess the impact of the decision on the domestic IT industry.

A bipartisan bill has been tabled in the US House of Representatives to make companies, that move call centres overseas, ineligible for grants or guaranteed loans from the federal government, a move aimed at stemming the tide of jobs heading to nations like India.

“… Yes, it is something to be concerned about, yes, it is something to be worried about,” Commerce Secretary Rahul Khullar told reporters here while releasing a report at the Assocham function here.

He, however, said that at this stage it would be premature to say anything on the possible impact of the proposed bill on the Indian industry.

Khullar said that the global economy is facing severe crisis and “you would continuously see such things quite simply because there is a real problem all over”.

The rate of unemployment is very high in several countries like the US, Spain and the UK, he said.

“Let me assure you that if it is happening in the US, something may happen in Spain tomorrow, in the UK tomorrow … then what you will do … you can not be consciously worried about reactions,” Khullar said.

IT industry body Nasscom has said that the proposed Bill would restrict free trade and establish discriminatory trade practices.

“It is indeed disappointing to see the US adopting ‘protectionist’ measures like these that restrict free trade and establish discriminatory trade practices. US lawmakers seem to have developed the practice of unfairly taxing companies working overseas, to pay for domestic issues,” Nasscom President Som Mittal has said yesterday.

The Bill by Representatives Tun Bishop and David McKinley also proposes a penalty of USD 10,000 per day on US call centres, for failing to report relocation to an offshore location, within 60 days to the US Department of Labour.

Also, call centre operators who answer calls will need to identify their location and the caller will have a choice of choosing a US-based operator.

According to Nasscom estimates, the BPO export segment is anticipated to grow by 14 per cent to reach USD 14.1 billion in FY 2011.

Source:http://economictimes.indiatimes.com/tech/ites/us-bill-on-outsourcing-cause-of-concern-india/articleshow/11205753.cms

The offshoring of work by foreign corporations has helped build India’s showpiece $76-billion IT industry.

Now many small businesses and families in the US and Europe are doing a mini version of offshoring by engaging ‘virtual assistants’ from Indian firms for their personal tasks, creating lucrative business opportunities. In the process, they are calling upon these loyal aides to play matchmaker, agony aunt and consciencekeeper.

Unlike traditional outsourcing which is a business service, remote assistance is a consumer-focused service that even provides emotional support to many.

One such provider is Bangalore-headquartered GetFriday, whose name is drawn from the term Man Friday, or personal assistant. Among the requests it received recently was one from an Australian client who wanted help before she had a chat with her boss.

The woman wanted to switch to a work-from-home schedule and needed assistance and tips on how to handle objections by the boss, mock sessions that simulated the event, and loads of emotional support. The switch did not happen because some key employees were about to leave and the work-from-home option wasn’t feasible at that point.

“Nonetheless, the client was happy,” said Sunder Prakasham, CEO of TTK Services, which runs GetFriday. Virtual assistance is fast catching up in US and Europe, opening opportunities for Indian entrepreneurs and start-ups such as Brickwork India and GetFriday.

Evalueserve, a research firm, predicts that person-to-person offshoring, both consumer services and services for small businesses, will grow to over $2 billion (Rs10,000 crore) by 2015 from the current $887 million.

At Brickwork, one of the more unusual requests it got was from Gail Dick, the owner of Millermeade Farms in the US and a passionate breeder of hedgehogs. When Dick wanted her website to be an encyclopedia of information on hedgehogs, she outsourced the work for around $12-30 an hour to a virtual assistant at the Bangalore-based knowledge process outsourcing start-up founded by former Karnataka IT secretary Vivek Kulkarni and his wife Sangeeta.

The virtual assistant helped her to format and reference the huge number of articles she had gathered over the years. The articles were based on hedgehog behaviour, including eating, bathing and sleeping habits, the diseases they suffer and patterns of hibernation they follow.

“Great! I feel like having a party as we are moving ahead on a project that has been in a stand-still for several years,” said Dick. The project was stalled for several years as Dick could find neither the time nor the experts who could do this job for her in the US. She would also have had to pay nearly double the amount for a similar service in the US.

Source:http://economictimes.indiatimes.com/tech/ites/offshoring-us-europe-opening-opportunities-for-indian-entrepreneurs-and-start-ups/articleshow/11100593.cms

These days, what would a firm that outsourced 400,000 U.S. jobs be called? The answer: labor union. Monday’s Canada-Colombia free-trade pact is its masterpiece.

Leo Gerard, the proudly Canadian president of the United Steelworkers Union, is one of many who ought to stand up and take a bow.

He and his fellow Big Labor union bosses loudly opposed the U.S.-Colombia free trade agreement, using their political muscle to keep the already-negotiated deal on ice in Congress and the White House for nearly five years.

It’s come at a massive cost to American workers’ jobs.

Gerard’s native land put its free trade agreement with Colombia into force Monday, meaning tariffs have been cut to zero on 80% of all goods Canadian companies sell to Colombia.

Meanwhile American companies continue to shell out tariffs of 15% to 50% more.

That means American market share on wheat, barley, chemicals and machine-tool parts — made of USWA steel — that once belonged to America will shift to Canada. Already U.S. market share is down — corn, for one, plunged 56% in 2009. It may go to zero.

Now hundreds of thousands of jobs will also be going to Canada, instead of the U.S.

How’s that for an outsourcing accomplishment? By opposing free trade deals, Big Labor is shipping jobs abroad by the hundreds of thousands. It claims to represent the little guy, then kills jobs in the U.S.

Not only will 250,000 high-paying American export jobs not be created — as estimated by the U.S. International Trade Commission — but nearly 400,000 American jobs will actually be lost too.

That’s what a U.S. Chamber of Commerce study found if the U.S. failed to pass its free trade pacts with Colombia, South Korea and Panama — valued at $13 billion in total trade — while other nations signed their own.

And now, it’s happening.

Besides Canada going live with Colombia free trade on Aug. 15, the European Union put its own free trade deal with South Korea into force last July 1. In just six weeks, Europe’s exports to Korea have shot up 16%.

The big loser? Us. As in, U.S.

“Today’s entry into force of the trade agreement between Canada and Colombia means that — for no good reason — U.S. workers and exporters are now disadvantaged in Colombia, a key export market for American-made goods and services,” said House Ways and Means Chairman Dave Camp of Michigan and Trade Subcommittee Chairman Kevin Brady of Texas in a joint statement.

Source:http://www.investors.com/NewsAndAnalysis/Article/581573/201108151900/Outsourcing-Jobs-Union-Style.htm

In a rollercoaster ride that mimics the recent ups-and-downs of the stock market, the Republican Party moves ever closer to picking a 2012 presidential candidate.

In Saturday’s much-watched Iowa Straw Poll, a Republican fundraiser that’s viewed as a barometer of candidate’s viability, Minnesota congresswoman Michele Bachmann walked away as the voters’ top choice with 28 percent of the votes.

In a close second was Ron Paul, the congressman from Texas, with 27 percent of the straw poll votes. Tim Pawlenty, a former governor of Minnesota, came in a distant third with 13 percent, prompting him to surprise supporters by announcing on Sunday that he was exiting the race altogether.

“I wish it would have been different. But obviously the pathway forward for me doesn’t really exist so we are going to end the campaign,” Pawlenty said on ABC’s “This Week.” “What I brought forward, I thought, was a rational, established, credible, strong record of results, based on experience governing — a two-term governor of a blue state. But I think the audience, so to speak, was looking for something different,” he said.

The 2012 US election cycle will likely be dominated by the debate around jobs and outsourcing. Jim Young / Reuters
A buzzy event where voters are fed corn dogs and ice cream, the Iowa straw poll certainly isn’t a fool-proof indication of who will ultimately snag the Republican National Committee’s (RNC) presidential nomination next August.

For example, Mitt Romney, a frontrunner in the race according to recent polls, declined to officially participate in the Iowa straw poll. And Texas Governor Rick Perry stole the spotlight on Saturday when he announced his presidential candidacy at a meeting of conservative bloggers in South Carolina as the Iowa straw poll was underway.

These events came on the heels of a Thursday GOP debate marked by inter-partisan jabs and some memorably bizarre moments.

Bachmann, the only female participating, was incomprehensibly asked whether she would remain “submissive” to her husband if she were elected. Meanwhile, Romney remarked that he would not “eat Barack Obama’s dog food” when asked about why he was so late to the party on the debt ceiling debate.

On the topic of immigration, most candidates sang a similar tune that decried illegal immigration, and called for increased border security.

Romney was the only candidate to address high-skilled immigration directly when he said he liked the idea of stapling green cards to PhDs. ”I want the best and brightest to be metered into the country based upon the needs of our employment sector and create jobs by bringing technology and innovation that comes from people around the world,” he said.

Anything can happen

Though some campaigns bank on the Iowa poll numbers, anything can happen in the battle for the RNC presidential nomination. (Sarah Palin and former New York City Mayor Rudy Giuliani are both rumored to throw their hat in the ring.) At the moment, however, it appears that Romney, Perry, and Bachmann are the current candidates to beat.

Bachmann chairs the Tea Party Caucus in the House of Representatives, and she has positioned herself as a populist, anti-Big Government candidate who has been vocal about her opposition to raising the debt ceiling, and who promises to repeal Obama’s health reform. “I am unwilling to accept the new normal of ramped-up spending. We have to grow the economy and reduce government spending. That’s how we will get to balance,” Bachmann said Sunday on CNN’s “State of the Union.”

Romney has historically had difficulty proving his conservatives credentials, although the Washington Post reported that recent polls show that he is currently more popular among Republicans than ever before. His biggest political Achilles heel may be the fact that Republicans oppose health care reform under Obama, but the Massachusetts’ universal healthcare program came online under his watch as governor. It’s sure to be a political liability; Pawlenty has famously dubbed health care reform “Obamneycare.”

Meanwhile, Perry is painting himself as the “jobs candidate” who is pro-business, anti-government spending, and who understand the needs of the everyday American. A social conservative who is not shy about his religious devotion (he hosted a Christian prayer rally last weekend that involved international prayer partners from India), Perry has a mighty arrow in his quiver with his record for job creation. According to to the Dallas Federal Reserve, nearly half of the new jobs created since June 2009 have been in Texas. (Some challenge this finding.)

More jobs, less outsourcing

The GOP candidates’ recent activity makes it clear that jobs and the economy will be the focus of the campaigning leading up to the Republican primaries—and it could prove to be the hot-button topics during the presidential campaign itself.

In a down economy and an era of globalisation, this means that Americans and those running for higher office will be confronted with what it means to create jobs in a new economy.

Given the increasingly international flow of workers and capital, efforts that merely focus on outsourcing is an antiquated way of looking at job creation. A recent San Jose Mercury News report found that Indian companies are creating thousands of jobs in the US, and immigrant entrepreneurs have created companies that currently employ 200,000 Americans.

Firstpost has also argued that the cure to “capitalism’s crisis” is freer immigration; some policy makers—including the conservative think tank Heritage Foundation—have also cautioned against economic protectionism.

Still, the popular conversation on jobs and immigration don’t tend to consider the developments and nuances of business and employment in a global economy. A March 2011 Gallup Poll, for instance, found that one in four Americans believed that the best way to create more jobs in the US is to stop outsourcing.

As campaigning for the Republican primaries heats up, the high-skilled immigration debate will rear its head again, and so will charged and at times uninformed rhetoric about the perils of outsourcing and “sending jobs overseas.

Source:http://www.firstpost.com/world/outsourcing-could-become-hot-target-in-us-election-cycle-60900.html

India’s main outsourcing trade body on Monday said the US rating downgrade could boost the South Asian country’s flagship information technology sector by pushing overseas clients to seek more savings.

At the same time, the National Association of Software and Service Companies (Nasscom) added in a statement it was “also counseling the Indian IT sector to maintain a cautious outlook going forward.”

The $60-billion sector, which employs around two million people, earns 70 percent of its revenues from the United States and accounts for five percent of India’s gross domestic product.

The Standard & Poor’s downgrade of the US credit rating last Friday has sparked fears about a return to the global financial crisis of 2008-2009 when India’s software industry was hit by lower technology spending by customers.

The Nasscom statement came as shares of Indian outsourcing firms slumped on the Bombay Stock Exchange, weakening more sharply than the overall falling market.
Leading outsourcer TCS shed around 4.49 percent to 1,009.25 rupees while India’s second-largest outsourcer, Infosys, dropped 4.73 percent to 2,468 rupees.

Nasscom said it was optimistic that the industry could ride out the renewed global economic turmoil.

The United States “will continue to be one of the largest markets for us,” the group said.

In fact, Nasscom said it believed the US economic woes could spur clients to increase the work they farm out to cheaper Indian companies.

“In the case of an economic slump, we see the Indian IT industry strengthening its partnership with the US customers to build-in greater business efficiencies,” it added.

While the industry is closely intertwined with the global economy, it also has “a burgeoning domestic market which is equipped to sustain growth,” Nasscom added.

US and other foreign firms, drawn by India’s English-speaking workforce and lower costs than in the West, have farmed out a wide range of jobs from answering bank client calls to processing insurance claims and equity analysis.

Outsourcing work to India is estimated to save a company up to 80 percent in costs.

The major Indian information technology companies have recently reported a jump in business volumes as they emerge from the 2008-2009 credit crisis.

Source:http://business.inquirer.net/11545/india-outsourcers-hope-for-boost-from-us-rating-woes

Lobbying has been a taboo for India’s wildly successful software companies: that distasteful activity was supposed to be the preserve of those looking to prosper from the licence permit raj. And anyway, their markets were mostly overseas.

But now, in the home of free market capitalism, as their encounters with disguised protectionism grow more frequent, the ‘L’ word does not appear so dirty any more. That is why, while America keeps inventing reasons to make it harder for them to do business, many Indian software companies are spending large sums hiring professional help to win friends and influence people in their biggest market.

At stake is over $30 billion (Rs 1.3 lakh crore) in business every year, about half of India’s total outsourcing revenue. Among the companies mounting an aggressive PR effort is Wipro, India’s third-largest software exporter. Last year, it hired Melanie Carter-Maguire, a government relations professional, to launch its lobbying effort in Washington DC.

Between January and March this year, Wipro spent nearly $60,000 (Rs 27 lakh) to lobby lawmakers and other officials about restrictive visa rules and policies that favour local companies. Cognizant , which is headquartered in the US but employs over 80% of its staff in India, spent $350,000 during the first quarter this year. Two years ago, it hired Robert Hoffman, a Capitol Hill regular, to lead its lobbying efforts.

“Engaging with policymakers and local communities through lobbyists and PR professionals was long considered a taboo. Now, some senior managers, especially those based there, are questioning that stance and asking us to step up,” said the CEO of a tech firm.

Direct & Indirect Attacks

As America struggles with anaemic growth and stubbornly high unemployment, the campaign for the presidential election next year is well underway. With many citizens still associating unemployment with outsourcing firms, rhetoric is being combined with direct and indirect attacks on the business interests of Indian software companies.

Source:http://economictimes.indiatimes.com/tech/software/wipro-cognizant-lobbying-us-to-ease-visa-rules/articleshow/9143509.cms

Indian technology outsourcers have recently highlighted their U.S. hiring plans in a bid to show they are creating jobs in the country, not stealing them.
This, they hope, will help counter an intensifying backlash in the U.S. against outsourcing.
India’s largest outsourcing company Tata Consultancy Services Ltd. Tuesday said it planned to hire more than 1,200 staff in the U.S. this fiscal year through March 2012, a marginal increase from the 1,150 people it hired there last year.
And last week, India’s second-largest software exporter Infosys Technologies Ltd. said it planned to hire 1,500 Americans this year, up from about 800 last year.
Combined, the two outsourcers aim to add more than 100,000 staff worldwide in this year. The global figure makes the U.S. headcount plans look somewhat paltry, especially as that market is the source of more than half their revenue.
But Indian outsourcing companies have their reasons. Ajoyendra Mukherjee, vice president and global head of human resources at Tata Consultancy, says hiring is constrained in the U.S. because employees there tend to be less mobile.
“It’s easier for me to move somebody from Delhi to Delaware . . . but from Los Angeles to New York, it’s very difficult to move people if the project shifts,” Mr. Mukherjee said in an interview.
He said another challenge is the ready availability of talent, a concern that has been previously flagged by other outsourcing companies, including Infosys.
“From a services point of view it is a different kind of culture. So, whether that talent is ready to be deployed for these kinds of activities needs to be seen,” Mr. Mukherjee said.
The outsourcing industry has come under fire in the U.S. against a backdrop of high unemployment. The country is cracking down on the industry, first imposing a mammoth fee on H1 B visas issued for skilled workers coming to the country.
That move hit Indian outsourcing companies hard, and the number of skilled workers’ visa applications unsurprisingly dropped sharply this year. Infosys said it has applied for only 2,000 H1 B visas for this fiscal year, against 3,000 last year. Tata Consultancy Services hasn’t provided a figure.
The dust on the visa fee increase is settling, but a new issue has come to the fore, with the U.S. now probing a case of alleged abuse of a temporary work visa program by Infosys Technologies.
Indian companies and the country’s main software trade body – the National Association of Software and Services Companies -dismissed these latest developments as U.S. election-year political gimmicks.
Indian outsourcers will hope their recently announced hiring plans silence some critics, but they will have to wait and see.

Source:http://blogs.wsj.com/indiarealtime/2011/06/15/indian-outsourcers-try-to-blunt-u-s-backlash/

Infosys on Tuesday said it had received a subpoena from a grand jury in a district court in Texas, indicating that the case filed by a former US employee, Jack Palmer, cannot be taken lightly.

North America, which includes the US, is the largest revenue earner ($6 billion) for Infosys and accounted for 66 per cent of its sales last year. Infosys, which mentioned the employee lawsuit effects as a risk in its latest annual report, said the subpoena required it to provide information to the grand jury regarding the company’s sponsorships for, and uses of, B-1 business visas.

A subpoena is a writ by a government agency, most often a court, that has authority to compel a witness to give testimony or production of evidence. “We intend to comply with the subpoena and cooperate with the grand jury’s investigation,” Infosys said.

B-1 visas are issued for short-term business trips for such purposes as attending business seminars and restricts employees from engaging in gainful employment during their stay. On the other hand, H-1B visas are longer-term visas issued to people with a minimum bachelor’s degree who work in specialty occupations.

Palmer in his lawsuit had alleged, among other things, that Infosys was improperly utilising B-1 business visitor visa programme.

He had alleged that he was threatened and harassed after refusing to help Infosys bring workers on B-1 visas for work, which he believed required H-1B visas.

Following the filing of the lawsuit, US senator Chuck Grassley submitted a letter to secretary of state and the secretary of homeland security, requesting that their respective departments review the B-1 business visa programme and investigate the manner in which it was being used by companies, including Infosys.

Palmer, who is said to have worked for Infosys as a principal for enterprise solutions since August 2008, had filed the lawsuit early this year.

Infosys immediately did not comment on business effects due to the subpoena. “At this time we are not able to comment further… but do want to reiterate that we take our legal compliance obligations very seriously,” the company said.

Grassley, in a letter to the US administration, including Hillary Clinton, had earlier said, “If the allegations against Infosys are substantiated, American workers will have been hurt by this company’s fraudulent actions, and the integrity of both the B-1 and H-1B visa programmes will have been compromised.”

The subpoena, disclosed by Infosys after trading closed on Tuesday, could have an impact on its share price. “Though right now it is difficult to judge the monetary impact… on the company, the news may surely have some negative impact on the sentiments. The US government may cap short-term B-1 visas which may not only have a structural impact on Infosys but on the whole IT sector,” said Sanjeev Hota, assistant vice-president of research and IT analyst with Sharekhan.

Other analysts see the US senator’s support to the lawsuit adding to the anti-outsourcing decibel, but Som Mittal, president of Nasscom, India’s industry lobby representing the $76 billion outsourcing sector, did not see any threat to the IT industry immediately.

“At this point, it (the subpoena) is very company-specific,” said Mittal. Asked about US protectionist moves, Mittal said, “Since a jury has sent the subpoena, concerns about protectionism are not warranted.”

As of March 31, 2011, the majority of Infosys technology professionals in the US held H-1B visas. They number about 10,100, not including Infosys BPO employees or employees of wholly-owned subsidiaries. This visa allows an employee to remain in the US for up to six years during the term of the work permit and work as long as he or she remains an employee of the sponsoring firm.

Source:http://www.mydigitalfc.com/news/infosys-gets-subpoena-us-visa-use-142

Federal budget clashes represent one major front in the struggle to spur a sustainable American economic recovery – but only one. Also vital is getting U.S. trade policy right.

That’s why President Obama must scrap his business-as-usual approach to this often overlooked issue, and push to strengthen pending trade deals with Colombia, Korea and Panama negotiated by his predecessor.

Indeed, trade policy can be an especially important U.S. recovery option. Unlike most alternatives, it can spur private sector growth and employment without worsening budget deficits or consumer indebtedness. But accomplishing these goals requires policies that improve the U.S. trade balance, which has been massively in deficit for decades.

Unfortunately, the Obama-Bush trade agenda is bound to worsen America’s trade balance, thus reducing growth and hiring on balance, and adding to still-dangerous levels of national debt. For the new agreements repeat in toto the blunders that have turned U.S. trade policy into an engine of deficit and debt creation, and therefore of output and job loss.

The Korea agreement continues America’s longstanding tradition of expanding commerce with economies structurally different enough to preclude mutually beneficial trade. Worse, like many predecessors, this deal proposes to eliminate troublesome foreign practices with expertly written clauses in treaty texts.

What Washington keeps ignoring is that economies like Korea’s – and the German and Japanese systems that have frustrated Americans for decades – are best seen as national systems of protection. Their fundamental purpose is maximizing national wealth by protecting home markets and by helping their companies penetrate foreign markets with all manner of subsidies.

Moreover, competitors like Korea feature political and legal systems dramatically different from America’s, too. In particular, they reject using Anglo-American-style rule of law, with its emphasis on black-letter, publicly accessible statutes and transparent, non-political rule-making and regulation.

Instead, their economies are based on informal relationships between national commercial interests and powerful, largely unaccountable bureaucrats. Policies are formulated and administered largely behind closed doors. And rules are published and enforced selectively at best, to keep outsiders flummoxed.

Paper agreements by these countries therefore can’t reasonably be seen as serious commitments to change – especially when their systems of protection have achieved such spectacular successes. No wonder the more America trades with these export-obsessed, import-phobic economies, the higher U.S. deficits rise.

The Colombia and Panama deals typify Washington’s other big trade policy mistake. Since the NAFTA negotiations of the early 1990s, America repeatedly has sought economic integration with countries too small, or too poor, or too indebted, or some combination of these characteristics, to possibly become big net importers.

At the same time, these countries have often become major exporters to America thanks to super-cheap but highly trainable workers, lax regulatory regimes, and governments willing to pay to attract business.

Through production and jobs outsourcing by U.S. and other multinational companies, Mexico, China and others like them have made impressive economic progress. Yet because domestic incomes have remained so meager, their production and exporting power and export orientation will long dwarf their consumption and importing power.
Agreements with these developing economies have enabled America’s Big Corporate sector to reduce its global cost base and boost profits – by guaranteeing access to the lucrative U.S. market from low-cost export platforms.

And the multinationals hope to turn Colombia and Panama into new outsourcing options. Yet for the American economy as a whole, trade expansion with emerging exporters has been another sure-fire formula for bigger U.S. deficits and their growth-retarding effects.

For two decades, the fake prosperity created by internet, stock market, credit and housing bubbles masked the economic costs of deficit-boosting trade strategies. But the bubbles’ bursting has exposed agreements like the Colombia, Korea and Panama deals as unaffordable, and turned a fundamentally new approach to trade into a national imperative.

Source:http://www.bellinghamherald.com/2011/05/12/2011253/one-sided-pacts-only-encourage.html

Genpact Ltd., a firm listed on the New York Stock Exchange, has completed its $550-million acquisition of Boston-based Headstrong Corp. in a bid to expand its footprint in the world’s booming outsourcing sector.

The merger between the two firms, both of which employ thousands of employees in the Philippines, is expected to result in operational efficiencies and cost savings.

“We are thrilled to welcome the highly talented employees from Headstrong to the Genpact team. The critical domain and technology expertise we have gained today … creates a uniquely powerful value proposition for our clients from whom we’ve already received terrific feedback,” said Pramod Bhasin, president and CEO of Genpact.

“Joint teams are focused on several potential cross-selling opportunities and we have dedicated senior leaders from Genpact and Headstrong working on the integration,” Bhasin added. “We are confident of delivering enhanced value to our clients, shareholders and employees.”

Genpact is currently one of the biggest business process outsourcing (BPO) companies based in India.

The company, which posted $1.26 billion in revenue last year, manages over 3,000 processes for more than 400 clients worldwide. The company has over 43,000 employees around the world.

The acquisition gives Genpact a significant interest in outsourcing services for the capital markets and securities industry, a sector which Headstrong currently dominates.

Headstrong says it delivers targeted domain solutions and a full complement of services, from strategy and business consulting to technology and operations, using multi-shore resources and global project management tools, methods and standards.

Headstrong maintains operations in seven countries, including offshore centers in India and Manila, with more than 3,700 employees globally.

“On behalf of the Headstrong team, we are excited to continue on this journey in becoming the leading global provider of domain-led services to the capital markets industry and other high-growth verticals,” said Sandeep Sahai, CEO of Headstrong.

“Now that the transaction is complete, Headstrong is elated to be a part of Genpact with its extensive global footprint, employee development focus, deep business process management expertise, and performance-driven commitment to its clients,” he added.

Source:http://business.inquirer.net/money/topstories/view/20110509-335553/BPO-firm-seals-550M-US-acquisition

India’s HCL Technologies Ltd. expects the improving economic climate in the U.S. and recently won large orders to spur revenue growth in its largest outsourcing market in April-June, after a blip in sales growth from the region in the just-ended quarter.

“The overall economic environment in the U.S. is looking positive and that should be reflected accordingly [in the ongoing quarter's revenue],” HCL America Inc. President Shami Khorana said in a recent interview.

HCL Technologies is India’s fourth-largest software exporter by sales and gets more than half its revenue from the U.S.

But even as the U.S. grapples with a bloated fiscal deficit and political discord on tackling the mounting debt, Mr. Khorana expects clients’ technology spending to gather pace, taking cues from positive economic data such as the rising stock market and climbing pending home sales.

HCL Technologies posted a better-than-expected 34% surge in January-March earnings, driven by strong 4.8% rise in business volume–touted to be the best in India’s software industry in the quarter–as clients continued to pour money into outsourcing technology services.

But revenue growth from the U.S. for the just-ended period was tepid as some contracts that matured were shipped to low-cost destinations, while others were in initial stages of generating income, Mr. Khorana said.

Sales from the U.S. grew just 0.7% to $496.6 million, much lower than the average quarterly growth rate from the country of more than 5%.
Still, the transformational projects the company has been winning in the region, coupled with a healthy pipeline of deals, indicate the average revenue growth momentum will continue in the ongoing quarter, he said.

India is one of the most preferred technology outsourcing destinations for companies in the U.S. and Europe. A recent report by research firm Forrester said technology spending in the U.S. is expected to increase 8% to $805 billion in 2011 and that the growth would come largely from businesses wanting to invest in IT projects.

The new orders from the U.S. are mostly discretionary or non-essential in nature and translate to projects that are for a limited period of time, Mr. Khorana said. This reflects the fast-pace recovery in the region from the slowdown, he added.

In contrast, revenue generated in Europe is mostly from on-going cost-saving projects, which are for longer duration, he said. Such projects are bread-and-butter type of contacts for software exporters.

Revenue growth in the U.S. continues to be driven by increased spending by clients in healthcare and pharmaceutical businesses, and regulatory changes in financial services, he said.

Uncertainty still prevails on the future of spending in telecommunications, said Mr. Khorana.

In a bid to address the rising demand for outsourcing, the company is making a “significant investment” to open a new office in Redmond, Washington, in May that will house its 400 staff currently working for software giant Microsoft Corp., Mr. Khorana said.

He expects to hire another 400 staff in this office in the next two-to-three years to service other clients in the region and increase its employee count in North Carolina to 500 from 100 in three years.

Clients in the U.S. have confirmed that their technology budgets for the year are either flat or expanding, whereas in Europe, the second-largest market, budgets are either flat or shrinking, he added.

Source:http://online.wsj.com/article/SB10001424052748703655404576292284126068972.html?mod=googlenews_wsj