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.

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

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

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

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

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

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

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

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

Growing in the shadow of larger software services peers, Indian product firms are beginning to make a mark, as they shift focus to finding solutions for the domestic market instead of attempting to ape product ideas in the developed markets of the US.

During a discussion organised by The Economic Times with Nasscom, entrepreneurs such as Sridhar Vembu of online office software maker Zoho, Duke University professor Vivek Wadhwa, Nasscom president Som Mittal and CEO of Zinnov Management Consulting Pari Natarajan said Indian entrepreneurs are learning from their failures and are now scripting the next version of the Indian product story.

The roundtable is part of a series of such discussions being organised to celebrate ET’s 25 years in Bangalore — the Silicon Valley of India.

“India’s IT revolution is about 20 years old right now and you have thousands of people with over 10 years of experience who are tired of working for other people. This entire cadre of people will become entrepreneurs,” says Vivek Wadhwa, director of research, Center for Entrepreneurship and Research Commercialisation, Duke University.

Indian start-ups also have a larger support system to grow new companies. Risk capital flow into the country has been higher over the past year with nearly $6.6 billion of private equity funding across 38 transactions as per data available with Venture Intelligence. Incubation centres and new models of start-up funding, including entrepreneur-in-residence programmes, and a growing number of angel investors are helping to kickstart new models of entrepreneurship.

Nearly a decade after the Indian software services industry moved into the global spotlight, a new wave of innovation is emerging in the country’s technology sector. Software product development in sectors such as education and training, artificial intelligence and automation, recruitment and talent management, mobile and telecom are triggering what industry observers believe will be the third wave in the country’s software revolution.

“I believe we are at the right cusp at this point of time, because we have been through one cycle with the software services group,” says Som Mittal, president of Nasscom who feels India now has a pool of mentors with experience and capital to nurture young companies.

In the last three years, software product exports have grown to reach a revenue level of $ 1.14 billion, according to a report by industry body Nasscom. Over 125 start-up companies have been set up in this period with an eye on businesses emerging from multiple sources such as the launch of the UID project — the world’s largest biometric project that is slated to throw up new business of $4 billion by 2015.

New trends in technology such as cloud computing and the exploding mobile market are also driving software product development by a pool of highly skilled technologists across the country.

The hour-long interaction threw up three key factors that will determine the progress of start-up enterprises in this space — a vibrant ecosystem, right talent to build companies and, most important of all, the risk-taking ability of entrepreneurs.

“In India, you are not meeting a market need, you are creating it. It is not about market share. If you have a really good product you can reach out and really create a market for yourself here,” says Mr Mittal who sees the role of industry bodies today as facilitators.

“We have more than 3,000 people exchanging ideas on the (Nasscom) blog. We intervene when we think we need to provide some thoughts there, we have to find newer models to scale,” he added.

Industry observers also reckon that for Indian entrepreneurs the big test will be to create business models that address the domestic market.

“Indian companies cannot solve American problems whereas the opportunities here are so great, as the economy will grow at 8-12% a year over the next decade, while the American economy is stagnant, at best it will grow at 3%, if lucky,” says Mr Wadhwa.

As the start-up community gathers behind this emerging wave, support from policy and higher risk-taking by entrepreneurs will determine the progress of this tryst with technology.

Source:http://economictimes.indiatimes.com/tech/software/Indian-cos-now-script-new-version-of-IT-product-story/articleshow/6926965.cms

Obama administration know the vitality India is creating through our contributions, and making US

companies competitive and prosper, Harsh Manglik Chairman of National Association of Software and Services Companies (NASSCOM) and managing director of Accenture India, said on the sidelines of Bangalore IT.biz 2010.

To a question on the US protectionism, Manglik said it has entered government level negotiations and it would not be appropriate for him to make a comment.

However, he said, “We live in a global environment that has political and economic dynamics. There were many comments from people on how they see the protectionism environment. Our view has always been economies, societies and countries are best served when there is free access to market, free exchange of ideas, open markets and free trade. Mutual economic relationship is the key to growth.”

The Indian IT sector, which gets 60 per cent of its export revenue from the US, has raised concerns against US moves to ban outsourcing.

The country’s concerns on outsourcing and the steep hike in visa fees are expected to be raised during Obama’s visit to India in November.

Source:http://www.mydigitalfc.com/it/us-knows-india%E2%80%99s-value-nasscom-620

NBC is launching a new sitcom called “Out Sourced.” It’s about a business manager from the US going to India to train a team of customer service reps to deal with American customers. That should be interesting and I look forward to watching it on Thursday nights.

As a person of East Indian ethnicity, I am proud to see the US embrace India as an important economic ally. Of course Indians have contributed greatly to the USA society for decades. Indians are America’s wealthiest ethnic group, earning an average of $60,000 a year. However, I am an American first.

Businesses should hire American citizens first! I know many programmers who are talented and can get the job done right here on our soil. Oh, they can be of East Indian ethnicity (or any ethnicity), so long as they are tax-paying American citizens. Here are some of my arguments in favor of keeping web design and other forms of programming ‘in-house.’

The time difference

One of many factors to be considered is the time difference between the US and the other side of the world. I have spoken to developers as late as 2 a.m. California time when they are just getting into work.

This became an issue when a local customer orders corrections or edits but has to wait 24 hours before requests can be fulfilled.

The Economic Impact

Outsourcing takes jobs away from our own citizens; which drives the US economy down. Hiring illegal immigrants has the same effect. Unemployment results in a down economy. With a down economy, people are afraid to spend for products and services. If no one is buying or ordering work, no one wins regardless how much money you think you will have saved outsourcing.

Outsourcing pricing schemes

Good US web developers can charge $20 to 35 per hour. One team I used from overseas charged me only $15 an hour.

Beware! Just because the overseas developers rates are lower does not necessarily result in a lower invoice. My former overseas team charged me nine hours to add a single item to a shopping cart. My developer here in the US took no more than ten minutes.

I discovered that my US programmers cost me less because their work was done fast, efficient, and honest.

Where’s the human touch?

The phone connection with overseas companies is often poor and often disruptive with static. While Skype is a good solution, it will never replace the face-to-face interaction with programmers when necessary. Sometimes, it’s necessary to have that personal meeting to discuss a project, followed by a handshake.

A bad experience

Previously, I hired an overseas team to work on a project that required heavy database programming. At first all was going well. Then suddenly the programming grew so sloppy that the site did not function. Deadlines were missed. I was helpless. I had given the overseas team the funding needed and the programming was too complex for me to handle myself. The client grew frustrated to the point where he cancelled the project and sued to get some money back. Fortunately, we came to an agreement and no money was exchanged. However, that ended the project as well as the relationship between me and the overseas team.

If you find great programmers from overseas that get the job done, then keep their services. It’s all up to your discretion. I, however, will not hire from outside of Southern California.

Source:http://www.thevillagenews.com/story/51804/

IT, The Americas IT Partner, today announced two new member companies on the heels of announcing key U.S. customer and partner wins for its five original member companies in September. Now Eticsa, a leader in datacenter and control room design, along with Datco, a provider of IT consulting services and Microsoft technology solutions, will join the ranks of Chile-IT’s member companies. Since its founding in mid-2009, Chile-IT has assisted its member companies in partnering with U.S.-based companies and the addition of Eticsa and Datco further solidify Chile as a primary IT high end outsourcing destination for U.S. companies.

“Datco and Eticsa are two high end and specialized companies in Chile and we are excited to add them to Chile-IT’s growing list of member companies,” said JC Munoz, CEO, Chile-IT. “The addition of integration technology, IT infrastructure and specialized engineering signifies the diverse range of technology specialization that Chilean-based IT companies can offer to U.S. businesses.”

Eticsa is the leading Datacenter and Control Rooms designer and integrator in Latin America. Its services consist of design, implementation and managed services for data centers and control rooms across numerous industries. These industries include education, manufacturing, mining, utilities and financial. The company has partnerships with some of the most reputable technology companies, such as Cisco, Hewlett-Packard, Honeywell and Dell.

Datco is an 11-year-old company that provides a wide range of IT consulting services and Microsoft technology solutions. Professional services include software and collaborative development for business solutions, integration of SOA-ESB connectors, business process management, administration and content management solutions, and more.

Chile-IT is the international umbrella organization of the Chilean Association of Information and Communications Technologies (ICT) companies (ACTI), an industry association of leading IT companies based in Chile. ACTI is supported by CORFO, the Chilean Economic Development Agency. Chile-IT member companies consist of some of the most successful and influential companies in Chile and Latin America. In addition to Datco and Eticsa, member companies also consist of:

Chile-IT plans to sign more partnerships with Chilean-based companies in 2011, continuing its efforts to widen member company expertise and cements Chile’s position as a premier nearshore destination and partner for the IT outsourcing needs of U.S.-based firms.

Source:http://manufacturing.net/News/FeedsAP/2010/10/mnet-industry-focus-design-and-development-eticsa-and-datco-further-solidify-chile-as-it-outs/

Infosys Technologies Ltd.’s head of U.S. operations said he expects the company’s clients in its biggest market to be more open to spending on long-term outsourcing contracts in 2011 than in the previous couple of years, unless there is a Lehman-like situation.

The crumbling of Lehman Brothers Holdings Inc. in 2008 and the economic slowdown that followed had led to a steep decline in orders for Indian outsourcing services providers–which get the largest share of their revenue from the U.S.–as clients cut back or slowed spending on non-essential and long-term projects.

Infosys and other outsourcing companies are recovering from the effects of the economic crisis as clients started giving long-term contracts again, though the risk of a double-dip recession coupled with high unemployment and deflation in the U.S. are major concerns for them.

“Unless there’s a cataclysmic situation…from an economic perspective or one of our clients going the Lehman way, I don’t think we’ll have a repeat of that situation” when orders had dried up, Ashok Vemuri, senior vice president and member of executive council at Infosys, told Dow Jones Newswires in a recent interview.

The company gets about 66% of its revenue from the U.S. and counts Goldman Sachs and Bank of America among its top clients. On Friday it posted a more than 13% rise in its second-quarter net profit and raised its forecast for the current fiscal year, helped by improving demand for outsourcing services.

Mr. Vemuri said he is worried about the macroeconomic environment in the U.S., but is optimistic that the company’s customers will release their technology budgets for 2011 on time and will be “more open with the budget flows.”

He declined to comment on the likely size of technology budgets for 2011, expected to be finalized by the end of this year.

Last week, a report by Forrester Research said it expects technology spending in the U.S. to grow 7.4% in 2011, compared with 8.1% this year, mainly due to the slow pace of recovery in the economy.

The ailing health of the economy and the high rate of unemployment has led the U.S. administration to up the ante against outsourcing, including a hike in visa fees and with one state even banning shipping of jobs outside the country.

But, clients are unperturbed by the “protectionist noises” before the November elections in the U.S., Mr. Vemuri said.

In August, the U.S. passed a legislation, which almost doubled the cost of skilled worker visas for Indian companies.

Infosys on average sends about 4,000-5,000 employees to the U.S. for business purpose a year and had said it will take a 30-40 basis point hit on the operating margin from the next fiscal year starting April due to the fee hike. The company had also said it plans to pass on the cost to clients “at some point.”

“If it (cost) becomes something that is unsustainable to us, then we’ll probably speak to the clients,” Mr. Vemuri said. However, “we’ve not had any conversations with clients. We have not felt the need to have any conversations.”

The company is looking to hire 100-150 more highly skilled experienced employees in the U.S. by the end of March 2011, over the current program to recruit 1,000 local people, Mr. Vemuri said.

Source:http://online.wsj.com/article/SB10001424052702304510704575561681015408498.html

Indian outsourcing companies are making double-digit increases in quarterly revenue, but locating a lot of their workers in the U.S.; U.S. service companies can go anywhere, but stay here because the skills to deliver cutting edge cloud and virtualization systems is still a homegrown product.

There is not shortage of H-1b visas this year
You say “- some undoubtedly new immigrants using H-1B visas, but most, because of the shortage of H-1B visas”.

There has been no shortage of H-1b visas this year.

Clearly, when outsourcing companies are experiencing boom times, there should be a shortage, but no, this is not the case.

What’s happened is that the U.S. Government has stepped up enforcement, the foreign companies are scared to bring people in.

And they should be, these companies don’t even try to hire local candidates, before turning the L-1 and H-1b visa. You just can’t abuse our immigration system, for the sole purpose of bring in cheap-indentured servants, and then say there is a shortage of H-1b visas.

Yet, that is exactly what foreign politicians are saying. The truth is there is no shortage of H-1b visas, there has been surplus of visas all year long, and it will continue. Because we can’t allow the H-1b visa to continue to be the “Outsourcing” visa, that robs U.S. citizens of any opportunity for a job in their own country.

Source:http://www.itworld.com/comments/124436

It is not going to be very rosy for the information technology industry for the year 2010. IT research firm Forrester Research has significantly reduced its outlook for the US technology markets on a weak US economy. It has also reduced its estimates for the global tech industry.

The industry is expected to grow 7 per cent globally, with US economy growing at “snail’s pace” of less than 2.5 per cent of real GDP in 2010. “This is lower than 7.8 per cent we forecast in July,” Forrester said in its latest market outlook for the tech industry.

Software purchases will pick up, resulting in increase in IT consulting and systems integration services revenues. Revenue growth for IT outsourcing will lag growth in IT consulting and systems integration, while telecommunications services revenues will start to turn positive in 2011.

“We have trimmed our forecasts for the US tech market to a still-robust 8.1 per cent growth for 2010, down from our 9.9 per cent forecast in July,” Mr Andrew Bartels, Vice-President and Principal Analyst of Forrester Research, said.

The US business and government purchases of ICT products and services are pegged at $758 billion in 2010. The telecommunications services market would be at $198 billion and IT outsourcing spending at $95 billion.

Forrester has added the telecom market for the first time in its analysis. The combined US information and communications technology (ICT) market growth in 2010 will be 5.6 per cent and 6.6 per cent in 2011. US software purchases will go up 9.1 per cent, with operating system software, middleware, and applications sharing the growth.

However, the research firm anticipates better performance in European markets and stronger growth rates in Latin America, the Gulf, Africa, and Asia-Pacific.

Global scenario

By category, the growth picture is generally similar to the US, with computer equipment (11.7 per cent) and software (8.2 per cent) growing fastest in 2010, followed by communications equipment at 6.1 per cent and IT consulting and systems integration services at 4.8 per cent. Growth in IT outsourcing will be weakest at 2.7 per cent.

Source:http://www.istockanalyst.com/article/viewiStockNews/articleid/4588169

A national technical consulting firm said it has opened a Southside office that will employ about 10 people by the end of the year, said a company spokeswoman.

San Diego, Calif-based SkillStorm provides information technology services, including mobile application development and IT outsourcing, at its office at 10175 Fortune Parkway, said company spokeswoman Rebecca Amesbury. The Jacksonville office can also handle insurance, finance, and transportation and logistics specific IT services, according to a news release.

SkillStorm, which was founded by University of Central Florida graduates, has offices in San Diego, Fort Lauderdale, St. Petersburg, Indianapolis and Dallas.

Source:http://jacksonville.bizjournals.com/jacksonville/stories/2010/10/11/daily18.html

will support India’s stand against protectionist policies, adopted by the United States in the last few months, at the major international forums, including the upcoming G20 Seoul Summit, its envoy has said.

“Protectionism is a poison. It is not good for any country. We share India’s concern and will fully support its stand at G20 and any other forum,” German Ambassador to Thomas Matussek told IANS.

He said Germany was “very skeptical” about the recent developments in the US, which was aimed at creating trade barriers.

“In the medium or long term it is not in the interest of the United States. It is an absolute poison and will harm the US economy. We are against any such move,” said Matussek adding that the recent developments in the US were populist policies aimed at appeasing a section of voters.

In the last few months, the US has adopted a number of policies to discourage outsourcing of works by American companies. It includes hike in visa fee, that is estimated to put an additional burden of $250 million annually on Indian IT firms. The US increased the visa fee by $2,000 for certain H-1B and $2,250 for L-1A and L-1B.

Another protectionist approach was by the US state of Ohio, which recently banned offshore outsourcing by government departments.

India has termed such moves as “restrictive and protectionist”, saying they would negatively affect the business of Indian outsourcing firms and might derail the global economic recovery.

Finance Minister Pranab Mukherjee said recently India would raise the issue at the upcoming G20 summit, scheduled to be held on Nov 11 and 12 in the South Korean capital.

Matussek, who earlier headed Germany’s permanent mission to the United Nations in New York, said India and Germany would work together to bring structural reforms in the international economic and political system.

“Emerging economies like India have to be given greater say in world economic and political affairs. How can you talk about South Asia without India? It is ridiculous. This is why, I believe, India should be a permanent member of the United Nations Security Council,” Matussek said.

He said a major reform in global financial system was likely at the G20 Seoul Summit.

Restructuring the 66-year-old International Monetary Fund (IMF) with a greater say for countries like India and a greater fiscal coordination to ensure sustainable economic recovery, will be top agenda of the fifth meeting of the group of 20 developed and emerging economies in Seoul, Changyong Rhee, secretary general of the Presidential Committee for the G20 summit told IANS recently.

Source:http://economictimes.indiatimes.com/infotech/ites/Germany-to-support-Indias-stand-against-US-protectionism/articleshow/6672796.cms

In a relief to the Indian IT industry, the Republicans in the US Senate blocked an anti-outsourcing bill that would have deterred American companies from shifting jobs to competitive locations overseas. Seen as a blow to President Barack Obama, the 53-45 defeat vote blocked the bill on Tuesday, as it fell six votes short of passage. At least 60 votes were needed to clear the Republican procedural hurdle to the Democrat bill.

The bill proposed a ban on government contractors from using American taxpayers’ money to move jobs offshore. A relieved India Inc that lobbied hard against anti-outsourcing campaign in the US, hailed Republicans for blocking the bill that denied tax breaks to US companies moving jobs offshore. The setback to the anti-outsourcing campaign, propelled among others by Obama himself, comes a week after a Nasscom delegation comprising representatives of top IT companies such as Infosys, Wipro and TCS visited the US and lobbied with key Congressmen and American corporations.

As part of efforts to boost employment in the US, Obama is vigorously pushing to end the tax break for companies who ship jobs overseas, saying it should go to companies that create jobs in the United States. India, which already holds at least 50% of the global outsourcing market, has become the world’s back office as Western companies set up call centres, number-crunching and software development outlets to cut costs.

Democratic backers, who vow to make the vote a campaign issue in the November 2 Congressional election, claimed that Republicans have undermined their efforts to create jobs. On the other hand, Republicans and business groups dismissed the bill as a political stunt that would increase taxes on companies and undermine job growth.

In what was seen as an electoral populist move by the Democrats, the Creating American Jobs and End Offshoring Act aims at small manufacturers and included a payroll tax exemption for companies that encourage jobs to US. But it also contains provisions to prevent businesses from deferring US taxes on the income they make from foreign subsidiaries. Several business groups were strongly opposed to the anti-outsourcing legislation.

Source:http://timesofindia.indiatimes.com/business/international-business/Big-blow-to-Obama-US-Senate-blocks-fresh-anti-outsourcing-bill/articleshow/6654899.cms

India reacted strongly to the US increase in work visa costs and the Ohio governor’s statements against offshoring. But as emotions give way to cold calculations and analyses, two points are emerging powerfully.

One, there’s no reason for India to be paranoid. The economics of outsourcing is too compelling for American companies. And the US government can do little to stem it. Two, Indian companies should increase their employee strength in the US with more locals, a strategy that some companies have already said they would adopt. This will help to calm American nerves, and also eventually make Indian companies a more global force with a better understanding of the US market.

Ross Tisnovsky, v-p of research in outsourcing consulting firm Everest, says, “the US government is indeed serious about protecting American jobs, but in professional services there is very little that the government can do. It’s not like closing a factory in Michigan and opening one in Mexico. In IT, its practically impossible to track where a code has been developed or where a service has been delivered from, since global companies typically have operations in multiple countries, including the US.”

John McCarthy, v-p in Forrester Research, says, “there is no reason for India to react hysterically to what the US government is doing. He says the visa cost increase will have an insignificant impact on profits of IT companies; and it certainly can’t change the economics of Indian IT.

Indian IT companies too are not looking at a strategy change in response to the US protectionist moves. “The company has long-term strategies for global markets and it will not react abruptly or think differently based on individual events, statements or a temporary environment ,” says Girish Paranjpe , joint CEO of Wipro.

Any move away from the US does not appear viable at all. The economic recovery in Europe is behind that of the US, and Europe remains more conservative than the US in outsourcing. Asia-Pacific is growing rapidly, but the base is small. Tisnovsky says even companies that focused on Europe were now looking more at the US, given Europe’s troubles. McCarthy believes there is still a lot of opportunity in the US that Indian IT has not tapped, and urges Indian IT to look at the US as a glass half full, not as one that’s half empty.

One thing that appears certain to happen as a reaction to the US protectionist moves is the acceleration of local hiring in the US. “The company is increasing its focus on the US market, increasing localization and increasing the share of onsite presence (the number of people deployed at the client site, as against those doing the clients work in India),” says, V Balakrishnan, CFO of Infosys Technologies.

S Mahalingam, CFO of TCS, has also been quoted as saying local recruitments appear to be the most viable option as of now. “Wipro has been increasing its local hiring in the US. A year ago, when recession was at its peak, we set up a centre in Atlanta , recruiting local talent . The City Council in Atlanta commended Wipro for creating local jobs, even during tough times. Currently, 38% of Wipro’s employees outside of India are local hires; we want to take this to 50%,” says Paranjpe.

While for Indian companies this acceleration of local hiring may be a shortterm strategy to appease US, some analysts say it will have a bigger positive impact in long term. “It’s healthy for Indian companies to have bigger operations in US. They will become more global, will understand the market better and learn to do complex things,” says Tisnovsky.

NO NEED TO PANIC

There’s no reason for India to be paranoid. The economics of outsourcing is too compelling for American companies. And, the US govt can do little to stem it.

At the same time, Indian companies should increase their employee strength in the US with more locals (more onsite hiring), a strategy that some companies have already said they would adopt. This will help to calm American nerves, and also make Indian companies a more global force with a better understanding of the US market.

Source:http://timesofindia.indiatimes.com/business/india-business/Cost-advantage-US-cant-curb-offshoring/articleshow/6610420.cms

The outsourcing row between India and the US is set to heat up ahead of President Barack Obama’s visit to India.

India is going to make a strong protest when the trade delegations of the two countries meet.

Union Commerce and Industry Minister Anand Sharma is in Washington to hold talks with US trade representative Ron Kirk. The issue of outsourcing is bound to be raised during the trade policy forum meet in New York.

Obama has already made his stand on the issue clear, saying he supports cutting down tax incentives to companies outsourcing jobs.

“We were seeing jobs being shipped overseas because of the way our tax structure gave them (companies) incentives,” Obama said.

“We have put forward proposals, for example, to accelerate investment here in the US instead of overseas, in research and development, in plants and equipment that could put people back to work,” he said.

Source:http://indiatoday.intoday.in/site/Story/113467/Business/india-to-take-up-outsourcing-row-with-us.html

Indian IT outsourcing companies are making a push to recruit more staff in the US, stung by tougher immigration regulations for foreign software engineers on short-term contracts who are allegedly “stealing” American jobs.

Tata Consultancy Services, Infosys and Wipro, the three largest Indian outsourcing companies, are together hiring 2,300 staff, which would increase their combined US payroll by about 13 per cent.
S Gopalakrishnan, Infosys chief executive, told the FT that the hiring campaign, which comes ahead of US President Barack Obama’s visit to New Delhi in November, was partly a response to increasing business in the US and partly a reaction to a recent tightening of US visa rules.

However, Indian outsourcing companies could face challenges with any concerted effort to ramp up their US workforce. They had told the FT last month that scant availability of engineers made hiring difficult in the US.

Asked if the industry was worried about US protectionism, Mr Gopalakrishnan said: “Until now it has not been a factor in our business. But certainly sentiment has changed and this is a cause for concern. Hopefully, it won’t be sustained.”

The changes to immigration rules and associated increase in visa fees had raised costs, “a small impact” that companies had had to absorb, he added.

Last month, the mid-western US state of Ohio banned the outsourcing of government contracts to overseas operations, a move that sent a chill through the Indian outsourcing industry.

Infosys, which employs more than 115,000 worldwide, is increasing its currently 1,600-strong US payroll by 1,000.

TCS, which derives over half its revenues from North America, has about 16,000 working in the region, of its total 160,000 employees. It plans to increase its global workforce, of which currently only 7 per cent are foreign nationals, by 40,000 this year, adding 800 jobs in the US.

“A US presence helps TCS compete against US rivals to win some of the expected $52bn in contracts that the US federal government will have outsourced in 2010 alone,” said Ken Chan, vice president of Moody’s Investment Services.

“However, TCS’s hiring a worker in the US can cost seven to eight times as much as one hired to do similar work in India, so it has kept its permanent local US workforce at a small fraction of the global total,” he said.

Wipro plans to double jobs in its Atlanta Development Centre to 1,000 within the next three years, and about 85 per cent of recent hiring in the US has been of US nationals. The company, which employees about 110,000 people worldwide, aims for non-Indian nationals to comprise half its overseas workforce within two years.

“We have crossed the 500-person mark in the Atlanta centre. We will continue to localise our team overseas,” a Wipro spokesman said.

The move to hire more staff in the US comes ahead of a high-profile visit to India by Mr Obama. The issue of access for outsourcing companies to the US economy is likely to be one of the top items on the agenda as the US wrestles with an unemployment crisis.

Mr Gopalakrishnan said that despite the global economic uncertainty the industry would see revenue growth of 13-15 per cent this year over last year’s $60bn. This was well in line, he said, with reaching a forecast total of $300bn in 2020, as predicted in a report by McKinsey, the management consultancy.

Other analysts concur that the long-term trend of growth in outsourcing to low-cost countries like India remains firmly intact in spite of protectionist rhetoric in the US.

The outsourcing industry was doing well because some companies were now placing orders that had been delayed in the economic crisis, said the Infosys chief, while IT suppliers were developing new revenue streams in emerging markets.

But he added that economic uncertainty was a hindrance because customers were reluctant to make long-term commitments. “They are committing to a quarter or two quarters but will not commit for, say, three years.”

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Source:http://www.ft.com/cms/s/2/6d46698c-c212-11df-9d90-00144feab49a.html