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Posts Tagged ‘USA’

BPO sector told not to worry

January 6th, 2012

BUSINESS Process Outsourcing (BPO) firms should stay focused and continue rendering high-quality services to clients while waiting for developments on a proposed bill filed before US Congress that seeks to discourage US firms from outsourcing their operations.

“There is no cause for worry now. The bill is still pending in the US Congress,” said Jerry Rapes, Cebu Chamber of Commerce and Industry (CCCI) chairman for information and communications technology.

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He said US companies outsource operations to the Philippines because of the good service quality of local firms.

“The US is going through economic hardships. They have been doing measures to promote jobs to improve their economy,” he said.

Challenges

He said, however, that it is important for the industry to recognize the challenges and find ways to mitigate risks. “We need to continue to strive to be the best in what we do so that we continue to be the preferred outsourcing destination globally,” he said.

Last Dec. 7, Reps. Tim Bishop (Democrat, New York), David Mckinley (Republican, West Virginia) and Mike Michaud (Democrat, Texas) filed House Bill (HB) No. 3596 or the “Call Center and Consumers Protection Bill.

If enacted into law, the legislation will “require a publicly-available list of all employers that relocate a call center overseas and to make such companies ineligible for federal grants or guaranteed loans and to require disclosure of the physical location of business agents engaging in customer service communications.”

When sought for comments, Cebu Investment and Promotion Center managing director Joel Mari Yu said he is positive the bill will not be passed. “Not in this present time,” Yu said in a phone interview.

He said the US Congress needs to understand the nature of outsourcing. “Companies outsource not because they want to evade jobs in their own country but because they want to be globally competitive,” Yu said.

Banks, for instance, outsource their operations because they wanted to “stay alive” in the market. They look for alternative destinations, where there is cheap labor that can provide high quality service to their clients, he said.

Here to stay

Cebu Educational Development Foundation for Information Technology (Cedf-it) executive director Jun Sa-a said that if American businessmen will look at things on a business perspective, Philippines will not be affected since the country is a “more cost-
effective location to do business in.”

Cebu Business Club president Dondi Joseph said in a text message that he sees little possibility the bill will be enacted into law. “Outsourcing is here to stay. It makes too much business sense to outsource and US businesses will oppose this,” Joseph said.

However, if enacted, Joseph said the industry should “develop other countries as markets and more importantly, start gearing up to offer high-value BPO services and products as opposed to call centric BPO services.”

“We need to move up the BPO-value chain as soon as possible. Quality Knowledge Process Outsourcing (KPO) will always have a ready market and will continue to flourish,” Joseph said.

While BPO stakeholders are on a “wait and see” stance, Eastern Samar Rep. Ben Evardone is reportedly set to file a resolution as soon as session resumes on Jan. 16, urging the Aquino government to launch a campaign against the passage of the proposed measure.

Evardone said the Philippines needs to act immediately by sending a strong lobby team to the US Congress. He said the country should “protect and promote the BPO industry, which is now the largest in the whole world.”

Impact

Labor Secretary Rosalinda Baldoz said if passed into law, the measure would have negative impact on the country, whose labor sector relies heavily on BPO/call center industry.

She said the information and communications technology industry in the country has about half a million workers.

She said the Department of Labor and Employment will now closely monitor the BPO companies here. She will also ask the Philippine Overseas Labor Office in Washington to monitor developments.

Described as a sunshine industry, the BPO industry is poised to grow stronger in the years ahead. Cebu recorded an annual growth rate of 20 percent.

Source:http://www.sunstar.com.ph/cebu/business/2012/01/05/bpo-sector-told-not-worry-199003

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Two-thirds of U.S. tech firms send jobs offshore, survey shows

October 5th, 2011

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Offshoring has become so engrained in IT processes that 65% of businesses now do it for some aspect of their business, according to an annual survey of IT budgets and technology trends by the Society of Information Management (SIM).

This survey, which is based on data collected from CIOs and senior IT leaders at 275 companies, found that nearly a quarter of the companies using offshore services did so to run existing systems applications. And another 20% said they used offshore services to manage their infrastructure.

This survey is wide-ranging and offers a number of findings about how corporations and workers are dealing with continuing economic problems.

For instance, employee turnover in 2010 was 5.5%, almost the same level it is this year. From 2006 to 2011, employee turnover averaged 5.92%, reported SIM.

“The boomers that were expecting to leave aren’t leaving,” said Jerry Luftman, a management professor at Stevens Institute of Technology who heads SIM’s survey project.

The average tenure of a CIO is 4.36 years, the survey reported. That finding lines up well with similar surveys.

Companies aren’t cutting IT. Last year, 65% of the firms responding to this survey said their budgets would be equal or greater to the previous year. That increased to 83% this year, and 85% of the respondents said next year’s budgets would be equal or better than their current budgets.

Although the timing of this report was before the stock market’s August-September swoon, Luftman believes that respondents weren’t necessarily optimistic about the economy. “Nobody is confident that the economy is turned around,” he said.

The top management concern, according to the survey, is business alignment; the last concern, in the list of 10, is IT cost reduction. The reason IT cost reduction is such a low priority is that many companies are trying to leverage IT to reduce costs instead of cutting IT to save money, said Luftman.

The other IT priorities, in order, were business agility, business process management, IT strategic planning, IT reliability and efficiency, enterprise architecture, security and revenue-generating IT innovations.

Of the firms using offshore outsourcing, 58% had turned to Indian-based companies, with the next largest segment, China at 10%. That was followed by Mexico, 7%; Western Europe, 6%; and Eastern Europe, Philippines and the Caribbean, all tied at 4%. Russia and Brazil were tied at 3%, the survey said.

Source:http://www.computerworld.com/s/article/9220476/Two_thirds_of_U.S._tech_firms_send_jobs_offshore_survey_shows

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Tags: Jobs offshore USA

IT stocks tumble on US, Europe woes

August 19th, 2011

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Ten IT shares fell 0.46% to 6.15% at 10:37 IST on BSE, extending recent steep losses triggered by concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients.

India’s second largest software company by sales Infosys was down 6.15% to Rs. 2216.95. The stock hit a 52-week low of Rs. 2,172.65 today, 19 August 2011.

India’s third largest software company by sales Wipro was down 1.62% to Rs. 322.70. The stock hit a 52-week low of Rs. 310.20 today.

HCL Technologies was down 2.97% to Rs. 385. The stock hit a 52-week low of Rs. 365.75.

MphasiS was down 2.45% to Rs. 348. The stock hit a 52-week low of Rs. 337.50. iGate Patni was down 3.10% to Rs. 257.90. The stock hit a 52-week low of Rs. 253.50. Oracle Financial Services Software was down 1.98% to Rs. 1795.10. The stock hit a 52-week low of Rs. 1,765.05.

Among other IT shares, Mahindra Satyam (down 4.31% to Rs. 65.50), TCS (down 3.88% to Rs. 924.75), Rolta India (down 3.82% to Rs. 98.30) and Tech Mahindra (down 0.46% to Rs. 659.15), declined.

The BSE IT index was down 4.64% at 4,726.66. It underperformed the Sensex, which was down 1.29% at 16,257.83.

The BSE IT index has tumbled 19.69% in 13 trading sessions from a recent high of 5,885.80 on 1 August 2011. The BSE IT index underperformed the market over the past one month until 18 August 2011, tumbling 14.68% compared with the Sensex’s 11.01% fall. The index had also underperformed the market in past one quarter, tumbling 17.62% as against 8.94% decline in the Sensex.

Infosys’ Chief Operating officer S.D. Shibulal on Thursday, 18 August 2011, said Infosys is facing a challenging environment as the main outsourcing markets, the US and Europe, remain weighed by debt crisis and slowing economic growth. The US and Europe are the two biggest markets for Indian IT firms. Standard & Poor’s downgraded US sovereign debt rating to AA+ from AAA with negative outlook on 5 August 2011. In Europe, industrial production in the Euro zone dipped in June 2011.

HCL Technologies said early this month that the historic downgrade of US debt may lead to a slowdown in decision-making on technology spending by clients in the world’s largest outsourcing market.

Source:http://www.indiainfoline.com/Markets/News/IT-stocks-tumble-on-US-Europe-woes/3898477891

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Tags: Europe IT USA

US ratings downgrade: IT sector could face difficult times

August 9th, 2011

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With the US and European economies looking fragile, the Indian IT sector could be in for difficult times. The US accounts for almost 60% of the sector’s revenues, and Europe another 20%.

Though the present problem with the US economy is around sovereign debt concerns, the worry is that going ahead this will affect US private sector growth, and therefore their IT spends.

Siddharth Pai, MD of global sourcing advisory services firm TPI India, said that if the US government cuts public spending to control its deficit, then private sector growth could be impacted. This is because public spending cuts could lead to lower investments and job creation, thus slowing down overall private sector growth.

IT stocks have been amongst the worst hit since the US ratings downgrade. The BSE IT index on Monday fell 4.33% to 5,222 points. That was on top of the 5% decline on Friday. In the last one week, the index has dropped over 11%.

“IT companies are export oriented and are hugely dependent on the US markets. Therefore negative news emerging from that region can lead to fall in stock prices,” said Srishti Anand, IT analyst at Angel Broking.

Analysts also say that emerging markets like India would not make up for the loss of revenues that would emerge in case of a situation where clients in the West were to cut IT spends. Apart from being a smaller sized market, the Indian market also offers lower margins.

In the 2007-09 global financial crisis, the Indian IT sector was severely impacted. While revenue growth rates for top tier companies like TCS and Infosys fell to single digits, gross hiring numbers were also hit. Mid-tier IT companies were impacted to a greater extent as clients preferred to work with larger and more trusted names.

Sameer Dhanrajani, country head, Fidelity National Financial, said that BPOs were the worst hit in the previous recession as unlike technology investments which require concerted efforts and are long term in nature, BPO processes can be sized down faster and more easily.

Hari Rajagopalachari, ED for consulting at PricewaterhouseCoopers, expects shorter-term pains for the IT sector if decision making on IT spends slows down following economic turbulence. From a longer-term perspective, there could be more pain if US companies become more protectionist. Otherwise there could be positives, as clients would look to improve cost efficiencies and profit management through greater levels of offshoring.

Glen Serrao, manager, Zinnov Management Consulting, said that another immediate concern is that of currency appreciation. “The RBI has managed to keep the Indian rupee at Rs 44-45 to the dollar. But if this was to fall to Rs 39 as we saw in the previous recession the profitability of IT companies could be hit,” he said.

IT companies say there have been no immediate calls from clients to re-negotiate contracts or any sign of IT budgets being cut. T K Kurien, CEO of Wipro’s IT business, said that it is too early to make an assessment. But he said the industry is far more prepared for any change in the macroeconomic environment now than it was in 2008.

Industry body Nasscom also issued a statement saying that though the global economic environment is a cause for concern, “it is not likely to impact the Indian IT industry, in the near-term future.”

Source:http://timesofindia.indiatimes.com/business/india-business/US-ratings-downgrade-IT-sector-could-face-difficult-times/articleshow/9534547.cms

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Tags: Indian IT USA

IT stocks crash, US sounds trouble

August 8th, 2011

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IT stocks were amongst the most to fall on Friday’s stock market crash. TCS, India’s largest IT exporter, fell 3.6% to Rs 1,056.70, while Infosys, the second most weighted sensex scrip dropped 4.4% to Rs 2,590.55 a share. Wipro was down 2.2%. The BSE IT index fell 3.93%.A turbulent US market means trouble for the Indian outsourcing sector as it accounts for close to 60% of the total revenues. It will put pressure on the toplines of companies as clients postpone investments and renegotiate contracts to reduce cost. But industry bigwigs say it’s too early to make any predictions.Phaneesh Murthy, CEO of iGate Patni, says the US economy is so uncertain that it is becoming difficult to do even a one-month prediction on macro factors. “A double-dip is possible in the third or fourth quarter of this year. The housing sector is already in a double dip. Customer budgets are not yet impacted and pricing environment is stable as of now,” he said.Pankaj Sharma, chief trustee of the Centre for Transforming India, a think tank, however believes a double dip is inevitable, impacting Indian IT. “Structurally not much has improved in the US and the world economy. The major spending sectors for IT services in the US — banks, insurance firms, healthcare providers — are still deep in red and whatever profitability they are showing are mainly due to their monetary juggling than anything else,” he said. Mid-size companies would feel the maximum burden, he added.Gaurav Gupta, managing partner of outsourcing consultancy Everest Group, said the long term impact of the US situation is not yet clear. “But recovery will be very slow and it will put very large IT investments and customer decisions on hold,” he said.

Source:http://articles.timesofindia.indiatimes.com/2011-08-06/india-business/29858351_1_double-dip-outsourcing-stocks

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Tags: IT USA

Remote consulting USA increases ROI for it development using on-shore outsourcing resources

April 21st, 2011

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American corporate IT departments nationwide are beginning to ‘bring the jobs back home’ by reallocating their outsourcing initiatives from off-shore companies to on-shore companies. Current statistics indicate an overall savings on applications and systems development for most corporate IT departments when using on-shore outsourcing resources instead of overseas outsourcing resources. Additional savings can be realized through federal tax breaks for companies participating in on-shore outsourcing by recognizing their contribution to the U.S. economy.

Remote Consulting USA announced today that it has entered the on-shore outsourcing industry by offering mainframe applications and systems development resources nationwide to American corporate IT departments. Using the nation’s top echelon of seasoned professional mainframe applications and systems developers, Remote Consulting USA’s resources help corporate IT departments reduce their cost of mainframe applications and systems development by providing the following cost saving initiatives:

· Cost reductions from not having to provide or maintain office space and facility resources for on-site employees or consultants
· Cost reductions from not having to pay for employee benefits or high overhead for on-site consultants/contractors
· Reduced project completion timelines from having project specific resources not interrupted by daily “office distractions” or “application or system maintenance issues” normally incurred by employees or on-site consultants/contractors
· Deliverables produced and scrutinized by tenured American IT professionals who understand the American business models used by corporate America
· Lack of any language barriers or phonetics issues when communicating project specifics often found when outsourcing with overseas companies
· Cost reductions from not having to provide software licensing for temporary development resources

Remote Consulting USA provides access to all of these cost saving initiatives by providing remote consulting for applications and systems development while adhering to industry standards for SDLC and utilizing CMMI principles and ISO policies and procedures.

With over 25 years of mainframe applications and systems development experience, Remote Consulting USA offers a wide range of technical expertise across multiple computer platforms and environments. Whether implementing new business intelligence systems or modernizing existing legacy applications, Remote Consulting USA has the resources and expertise to propel your development initiatives to completion ahead of schedule and well under cost.

Source:http://pr-usa.net/index.php?option=com_content&task=view&id=698477&Itemid=30

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Satyam sees U.S. revenue rising

November 29th, 2010

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India’s Satyam Computer Services Ltd. expects revenue from the U.S., its biggest market, to show growth from the second half of next year as the beleaguered software company starts cashing in on increased technology outsourcing spending, an executive said.

“Right now is a period where we are investing selectively in focus areas,” Atul Kunwar, president of business development and customer relationships, told Dow Jones Newswires in a recent interview. Growth in revenue “will start coming in from the second half of next year which will be significant.”

Satyam, based in Hyderabad, is in the midst of recovering from one of India’s biggest corporate scandals. In January 2009, the company plunged in turmoil after its founder and then chairman, B. Ramalinga Raju, confessed to overstating the company’s profits for years, using a fictitious cash balance of more than $1 billion.

After the scandal, Tech Mahindra Ltd., a joint venture between India’s Mahindra & Mahindra Ltd. and U.K.-based BT Group PLC, bought a controlling stake in Satyam in April 2009 and rebranded it as Mahindra Satyam.

The company became eligible to bid for several deals that required the firm to declare financial details after it reported quarterly results earlier this month for the first time since reporting July-September 2008 earnings.

Mr. Kunwar said the company’s recent investments in employees and technology will help it get large contracts.

This should also help Satyam receive contracts where revenue won’t depend on the number of people working on each project, thereby helping to improve the company’s operating margins.

Once India’s fourth-largest software exporter by sales, Satyam hasn’t been able to take advantage of the strong rebound in demand for outsourcing services which its rivals have been able to cash in on, because of the scandal that has tarnished its reputation. In October, top technology companies Tata Consultancy Services Ltd. and Infosys Technologies Ltd. posted strong July-September quarter results as business volumes continued to rise.

“We do encounter this problem [of tainted image] when we are bidding for new deals,” especially large IT contracts, Mr. Kunwar said.

For the quarter ended Sept. 30, Satyam posted a net profit of 233 million rupees [$5.1 million], or 0.20 rupees a share, on revenue of 12.42 billion rupees. The U.S. accounted for 58% to 60% of Satyam’s total revenue in the just-ended quarter.

In the current quarter ending Dec. 31, new contracts will diminish after the U.S. Thanksgiving holiday, said Kunwar. However, before Thanksgiving, the company saw “a lot of action in the U.S.,” in terms of deal proposals, which the clients will consider in the next month, Kunwar said.

“Some more deals are going to come into the pipeline starting January,” said the executive.

The company said it is chasing multiple large contracts worth more than $50 million over three to five years, and several smaller deals in the $10 million-$30 million range with some below $10 million.

The large deals are mainly in the media, technology and entertainment space, manufacturing and banking, as well as financial services and insurance segments, he said.

“It takes roughly six to nine months for business to start getting realized [into revenue],” Mr. Kunwar said.

Source:http://online.wsj.com/article/SB10001424052748704700204575643670201560234.html?mod=googlenews_wsj